The International Air Transport Association (IATA) has revised upward its financial forecasts for the airline sector in 2025, highlighting strong resilience amid economic, geopolitical, and regulatory pressures impacting the global environment. While some figures fall short of previous estimates, the overall outlook is positive, with improvements in profitability, efficiency, and projected demand.

Profits Rise, but Margins Remain Tight

IATA estimates airlines will generate a net profit of $36 billion in 2025, up from $32.4 billion in 2024, though slightly below the $36.6 billion projected last December. This represents a net margin of 3.7%, compared to 3.4% in 2024.

“2025 will be a better year for airlines in many ways, though not without its challenges,” said Willie Walsh, IATA’s Director General. “A key driver of this improvement is the 13% drop in jet fuel prices compared to the previous year.”

Return on invested capital stands at 6.7%, barely above the 6.6% of the previous year. In absolute terms, profit per passenger remains modest: just $7.20 per flight segment.

Record Revenues and Peak Efficiency

Total industry revenue is expected to reach $979 billion (+1.3%), with expenses totaling $913 billion (+1.0%). The slight growth margin between revenue and expenses supports overall sector profitability.

Passenger traffic is projected to reach a record 4.99 billion travelers (+4%), with average annual load factors hitting a historic 84%, indicating more efficient fleet utilization despite ongoing challenges in the aerospace supply chain.

Passenger revenue will amount to $693 billion, supported by $144 billion in ancillary revenue, which is growing at 6.7%. However, passenger yields are expected to fall by 4% due to competitive pressures and lower fuel costs.

Air Cargo: Declining Revenues, Stable Performance

The air cargo segment is forecast to generate $142 billion (-4.7%) in revenue, affected by a global economic slowdown exacerbated by protectionist policies. Demand is expected to grow by just 0.7% in 2025, although April showed promising signs with 5.8% year-on-year growth.

Yields are expected to drop 5.2%, consistent with lower fuel prices and downward pressure on rates.

Operating Costs: Fuel, Sustainability, and CORSIA

Operating costs will be significantly impacted by falling fuel prices, which are expected to average $86 per barrel, amounting to a fuel bill of $236 billion. This represents a notable reduction from $261 billion in 2024.

At the same time, sustainable aviation fuel (SAF) production is set to double to 2 million tonnes, though this still accounts for just 0.7% of total industry fuel consumption. The high cost of SAF — estimated at 4.2 times the price of traditional kerosene — remains a major challenge in the sector’s path to decarbonization.

“The way fuel providers are implementing SAF blending mandates is unacceptable,” said Walsh. “The added cost of regulatory compliance is slowing progress toward the industry’s 2050 net-zero emissions goal.”

Additionally, the estimated cost of complying with the CORSIA program is expected to reach $1 billion in 2025, with limited progress in the availability of high-quality certified carbon credits.

Fleet: Limited Deliveries and Strained Supply Chains

Airlines are facing increasing challenges in renewing and expanding their fleets. Deliveries of 1,692 aircraft are expected in 2025, a 26% drop from previous projections. There are over 17,000 aircraft on order, but average wait times now stretch up to 14 years, due to persistent supply chain bottlenecks.

Adding to the problem is the issue with PW1000G engines, which has grounded more than 1,100 aircraft under 10 years old, accounting for 3.8% of the global fleet, well above historical averages.

“Frustration among airlines is widespread,” said Walsh. “Manufacturers have consistently failed to resolve these bottlenecks. It’s alarming to think this could continue until the end of the decade.”

Geopolitical and Economic Risks on the Horizon

Key risks identified for the industry include:

• Geopolitical conflicts, such as the Russia-Ukraine war, which could reshape key air routes and airspace.
• Trade tensions, particularly given uncertainty around U.S. foreign and tariff policy, impacting both cargo and business travel.
• Regulatory fragmentation, which could increase operating costs if multilateral frameworks are weakened.
• Oil price volatility, driven by a mix of economic, strategic, and environmental factors.