Reduced 2025 Earnings Prediction for Global Airlines Stands at $36 Billion Net Profit
Fresh Take:
The International Air Transport Association (IATA) has recalibrated its 2025 financial forecast for the airline industry, painting a slightly gloomier picture due to the turbulent trade climate.
2025 hasn't strayed far from expectations, with the aviation sector feeling the brunt of trade tensions. After several airlines announced adjustments to their predictions in line with the debt-ridden global economy, the IATA has finally weighed in with a revised industry forecast.
"While the first half of 2025 has cast clouds over global markets, the airline industry still manages to clock better numbers than 2024, even if it's somewhat below our initial expectations. Considering the choppy waters, it's a remarkable result that underscores the resilience airlines have fought tooth and nail to cultivate," said Willie Walsh, IATA's mastermind, regarding the projections.
According to the IATA, net profits could swell to $36 billion next year, a slight improvement compared to the $32.4 billion earned in 2024. However, this falls short of the $36.6 billion envisioned in December 2024. The net profit margin is predicted to rise to 3.7%, while the return on invested capital stands at 6.7%. Operating profits, on the other hand, are projected to reach $66.0 billion, a downshift from the earlier estimate of $67.5 billion. Total revenues are on track to hit a record high of $979 billion, still shy of the $1 trillion predicted earlier.
Putting the Numbers in Perspective
The total passenger count is forecasted to break a new record in 2025, clocking in at 4.99 billion. A 4% increase over 2024, this number is, however, considerably lower than the initially projected 5.22 billion. Air cargo volumes are predicted to reach 69 million tonnes, against an earlier projection of 72.5 million tonnes.
Walsh emphasizes the importance of maintaining context when evaluating such gargantuan industry-wide figures. "Bringing in $36 billion in profits is nothing to sneeze at. But that amounts to just $7.20 per passenger per segment. It's still a precarious margin, and any sudden additional costs or burdensome regulations could quickly test the airline industry's fortitude. Governments who lean on airlines as the spine of an employment sector with 86.5 million workers and a 3.9% economic contribution [1] can't afford to lose sight of that."
Walsh pinpoints fuel prices as the principal driver of airline profitability, with the exception of international disputes such as the Russia-Ukraine conflict, trade tensions, and spotty global standards. The price of jet fuel has tumbled by 13% compared to 2024, landing at 1% below the earlier estimates [2][3].
Although GDP traditionally dictates airline economics, the IATA expects it to falter in 2025, with growth projected to slide from 3.3% in 2024 to 2.5% in 2025 [4]. Efficiency, on the other hand, looms large in the outlook, with passenger load factors projected to reach an all-time high in 2025, averaging 84% [4].
As per IATA's April 2025 poll results, a hefty 40% of respondents anticipate boosting their travel frequency compared to the preceding 12 months, while merely 6% reckon travel would decrease for them [3]. Nearly half the respondents are expecting to shell out more on travel expenditures, while among business travelers, 68% foresee an uptick in business trips amid trade tensions [3].
Insights:
- The aviation industry is weathering trade tensions, prompting adjustments in airline predictions.
- According to IATA, net profits in 2025 might reach $36 billion, a slight improvement over 2024.
- The net profit margin could tick up to 3.7%, and the return on invested capital is projected to stand at 6.7%.
- Total revenues are expected to record a high of $979 billion, slightly less than the initial projection.
- The industry's talent pool stands at 86.5 million workers, while contributing 3.9% to the global economy [1].
- Around 40% of respondents to IATA's April 2025 poll expect increased travel, and 68% of business travelers predict heightened business travel [3].
With the revised forecast from the International Air Transport Association (IATA), the airline industry is projected to generate a net profit of $36 billion in 2025, a slight improvement compared to the $32.4 billion earned in 2024. Simultaneously, the eco-friendly initiatives and efficiency gains made within the industry could contribute positively to the finance and business sectors, as passenger load factors are predicted to reach an all-time high, averaging 84%.
