The International Air Transport Association (IATA) announced its financial outlook for the global airline industry in 2025, which shows a slight strengthening of profitability amid ongoing cost and supply chain challenges.  

Based on the outlook, net profits are expected to be $36.6 billion in 2025 for a 3.6 percent net profit margin, marking a slight improvement from the expected $31.5 billion net profit in 2024. 

Average net profit per passenger, on the other hand, is expected to be $7.0, below the $7.9 high in 2023 but an improvement from $6.4 seen this year.

According to IATA director-general Willie Walsh: “We’re expecting airlines to deliver a global profit of $36.6 billion in 2025. This will be hard-earned as airlines take advantage of lower oil prices while keeping load factors above 83%, tightly controlling costs, investing in decarbonization, and managing the return to more normal growth levels following the extraordinary pandemic recovery. All these efforts will help to mitigate several drags on profitability which are outside of airlines’ control, namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation, and a rising tax burden.”

Potential developments

Operating profit in 2025 is expected to be $67.5 billion for a net operating margin of 6.7 percent, an improvement from the 6.4 percent projected for 2024. expected in 2024).

The return on invested capital (ROIC) for the global industry is expected to be 6.8 percent in 2025; while this is an improvement from the 2024 ROIC of 6.6 percent, the returns for the industry at the global level remain below the weighted average cost of capital. 

ROIC is the strongest for airlines in Europe, the Middle East, and Latin America, where it did exceed the cost of capital.

Total industry revenues are expected to be $1.007 trillion, up by 4.4 percent from 2024 and will be the first time that industry revenues top the $1 trillion mark. 

However, expenses are expected to grow by four percent to $940 billion.

Passenger numbers are expected to reach 5.2 billion in 2025, a 6.7 percent rise compared to 2024 and the first time that the number of passengers has exceeded the five billion mark.

Meanwhile, cargo volumes are expected to reach 72.5 million tonnes, a 5.8 percent increase from 2024.

Breaching the trillion mark

Walsh opined that industry revenues will exceed $1 trillion for the first time next year, but that is a projection that needs to be put into a proper context. 

As he puts it: “A trillion dollars is a lot: almost 1 percent of the global economy. That makes airlines a strategically important industry. But remember that airlines carry $940 billion in costs, not to mention interest and taxes. They retain a net profit margin of just 3.6%. Put another way, the buffer between profit and loss, even in the good year that we are expecting of 2025, is just $7 per passenger. With margins that thin, airlines must continue to watch every cost and insist on similar efficiency across the supply chain—especially from our monopoly infrastructure suppliers who all too often let us down on performance and efficiency.” 

The IATA report also highlighted the broad benefits of growing connectivity. 

The most recent estimates show that airline employment is expected to grow to 3.3 million in 2025. 

Airlines are the core of a global aviation value chain that employs 86.5 million people and generates $4.1 trillion in economic impact, accounting for 3.9 percent of global GDP as of 2023.  

That said, connectivity is an economic catalyst for growth in nearly all industries.

Walsh concluded by saying: “Looking at 2025, for the first time, traveler numbers will exceed five billion and the number of flights will reach 40 million. This growth means that aviation connectivity will be creating and supporting jobs across the global economy. The most obvious are the hospitality and retail sectors which will gear up to meet the needs of a growing number of customers. But almost every business benefits from the connectivity that air transport provides, making it easier to meet customers, receive supplies, or transport products. On top of this, growth in aviation also contributes to achieving almost all the UN’s Sustainable Development Goals (SDGs.)”