The International Air Transport Association (IATA) has updated its 2025 financial outlook for the airline industry. Compared to earlier predictions made at the end of 2024, the organisation is slightly more pessimistic due to the current trade tensions.
2025 has been an eventful year for the airline industry so far and as previously expected, aviation numbers have been affected by the current trade tensions. After multiple airlines had already said they would adapt their forecasts to the political and economic climate, the IATA has now published a new 2025 forecast for the industry.
“The first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections. But considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” said Willie Walsh, IATA’s Director General, about the projections.
According to the IATA, net profits are scheduled to reach $36 billion in 2025. Compared to the $32.4 billion earned in 2024, this is an improvement, although the IATA previously projected $36.6 billion in December 2024. The net profit margin went up to 3.7% and the return on invested capital lies at 6.7%. While operating profits are now expected to reach $66.0 billion, earlier, this number was expected to reach $67.5 billion. Moreover, total revenues stand at a record high of $979 billion, which is slightly less than the $1 trillion previously projected.
Numbers put in perspective
As far as air traffic goes, the total amount of travellers is set to reach a record high of 4.99 billion. This is 4% more than in 2024 but significantly less than the previously projected 5.22 billion. The air cargo volumes are expected to reach 69 million tonnes, whereas they were projected to attain 72.5 million tonnes.
“Perspective is critical to put into context such large industry-wide aggregate figures. Earning a $36 billion profit is significant. But that equates to just $7.20 per passenger per segment. It’s still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry’s resilience to the test. Policymakers who rely on airlines as the core of a value chain that employs 86.5 million people and supports 3.9% of global economic activity, must keep this clearly in focus,” said Walsh.
According to Walsh, the biggest positive driver is the price of jet fuel. Aside from international conflicts such as the Russia-Ukraine war, trade tensions, and fragmentation of global standards, oil prices are a major driver of airline profitability. As the price has gone down by 13% compared to 2024 and lies 1% below previous estimates, fuel prices thus play a major role in the outlook.
Although according to the IATA Gross Domestic Product (GDP) is the traditional driver of airline economics, this won’t be true for 2025 as the GDP growth is expected to fall from 3.3% in 2024 to 2.5% in 2025. Efficiency, however, is a significant driver of the outlook. Passenger load factors are expected to reach an all-time high in 2025 with an average of 84%, as fleet expansion and modernisation remain difficult.
According to IATA’s April 2025 polling data, 40% of respondents expect to travel more over the next 12 months than they did in the previous 12-month period. Only 6% said they expect to travel less. Additionally, 47% of respondents expect to spend more on travel and amid trade tensions, 68% of business travellers expected increased business travel.
