Overview of the Airline Industry’s Financial Health in 2025
The International Air Transport Association (IATA) has issued its financial forecast for the global airline industry for the year 2025, projecting substantial improvements in profitability and passenger traffic. According to IATA’s Director General, Willie Walsh, during the Global Media Day held in Geneva, Switzerland on December 10, 2024, the industry is expected to achieve a net profit of $36.6 billion, with a net profit margin of 3.6%. This represents a modest increase from the $31.5 billion forecasted for 2024. The average net profit per passenger is anticipated to rise to $7.0, up from $6.4 in 2024, although still below the peak of $7.9 in 2023.
Total industry revenues for 2025 are projected to reach $1.007 trillion, marking a 4.4% increase from 2024 and the first time revenues will surpass the trillion-dollar threshold. Operating profits are expected to rise to $67.5 billion, with an operating margin of 6.7%, showing an improvement over the 6.4% expected in 2024. Expenses are forecasted to grow by 4.0% to $940 billion. The return on invested capital (ROIC) is predicted to improve slightly to 6.8% from 6.6% in the previous year.
Passenger and Cargo Traffic Projections for 2025
In 2025, passenger numbers are forecast to reach 5.2 billion, a 6.7% increase from the previous year, crossing the five billion threshold for the first time. Cargo volumes are also expected to rise, reaching 72.5 million tons, which is a 5.8% increase from 2024. These increases are attributed to lower oil prices, high load factors exceeding 83%, and diligent cost control measures among airlines. Additionally, investments in decarbonization and the normalization of growth post-pandemic are contributing to these positive outcomes.
Despite these optimistic projections, the industry faces several challenges, including persistent supply chain issues, infrastructure deficiencies, strict regulations, and increasing tax burdens. These factors are expected to place continuous pressure on the profitability margins, which remain thin at just 3.6%.
Strategic Importance of the Airline Industry
Walsh emphasized the strategic significance of the airline industry, which not only supports a large economic footprint but also facilitates global connectivity. The industry is projected to employ 3.3 million people by 2025 and supports broader economic activities that contribute to 3.9% of the global GDP. The expansion in aviation is set to bolster sectors like hospitality and retail, which prepare to meet the demands of an increasing number of travelers.
Moreover, the growth in aviation is vital for achieving the United Nations’ Sustainable Development Goals (SDGs), by enhancing global connectivity which in turn supports economic development, social progress, and environmental sustainability.