Airlines To Be Profitable In Next Two Years, But Thin Margins, Risks Remain

GENEVA—The world’s airlines are expected to post a collective net profit of $31.5 billion for 2024 and $36.6 billion for 2025, representing a remarkable turnaround from the historic money-losing pandemic years, although margins will remain in the low single digits.

In its latest financial outlook, IATA provided a summary on Dec. 10 of numbers it forecasts for the global airline industry this year and next.

Key data beyond the net profits for each year include total industry revenues for 2025, which are expected to be $1.007 trillion. That will be 4.4% above anticipated 2024 revenues and the first time that the industry will have topped the $1 trillion mark.

However, net profit margins will be fragile: 3.3% this year and 3.6% in 2025, IATA says, representing just $7 per passenger. Return on invested capital across airlines is expected to be 6.6% in 2024 and 6.8% in 2025. Passenger numbers are expected to reach 5.2 billion in 2025, a 6.7% increase over 2024 and the first time that figure will exceed 5 billion.

Air cargo volumes, meanwhile, are expected to reach 72.5 million metric tons, a 5.8% increase from 2024. Cargo revenues are expected to reach $157 billion—15.6% of total revenues—in 2025.

Airline costs are expected to grow by 4% to $940 billion in 2025, with labor accounting for much of that, including “intense salary pressure” and one-off expenses related to several employee strikes in 2024. IATA says there has also been a sharp increase in maintenance costs because of aircraft groundings and an aging fleet related to the ongoing industry supply chain issues that have severely restricted the delivery of spare parts and new aircraft.

Lower jet fuel prices and efficiency gains are the main drivers of the financial improvements, with oil about $20 per barrel cheaper than it was this time in 2023. More importantly for airlines, the so-called “crack spread”—the difference in price between crude oil and jet fuel—has closed to more normal levels of about $15-$20 per barrel versus the all-time highs of around $60 in 2022, says Marie Owens Thomsen, IATA's senior vice president for sustainability and chief economist.

As is typical, there will be wide differences in airline profitability region by region, although all geographic regions are expected to show financial performance improvements in 2025 versus 2024.

North American airlines are expected to generate the largest absolute profit in both 2024 ($11.8 billion) and in 2025 ($13.8 billion).

European airlines will be the next most profitable at $10 billion in 2024 and $11.9 billion in 2025.

There is then a big drop in net profit in other regions, with Middle East airlines placing third  ($5.3 billion in 2024 and $5.9 billion in 2025); Asia-Pacific airlines fourth ($3.2 billion in 2024; $3.6 billion in 2025); Latin American airlines fifth ($1 billion; $1.3 billion); and African airlines sixth ($0.1 billion; $0.2 billion).

However, the rankings are somewhat reversed when net profits per passenger are considered. Middle East airlines lead that ranking, at $23.90 per passenger expected in 2025, when North American carriers are forecast to make just $11.80 per passenger.

IATA notes some “significant risks” to its industry outlook, including possible worsening conflict prospects should the wars in Europe and the Middle East spread, as well as the incoming Trump administration that could bring uncertainties, such as potential tariffs and trade wars that would likely dampen demand for air cargo and affect business travel.

However, IATA Director General Willie Walsh says he believes on balance, and based on Trump’s previous administration, that the new Trump administration would bring an overall net benefit to the industry.

“I’ve met Trump twice, and he hasn’t told me what he will do, but my expectation is that it will be 2026 before we see any impact [of the Trump administration policies], and I don’t see it as a black-and-white issue—it’s more gray,” Walsh says.