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IATA Sees Airlines Strengthen in 2025

[ December 13, 2024   //   ]

The global airline industry in 2025 will show a slight strengthening of profitability amid ongoing cost and supply chain challenges, according to the outlook from he International Air Transport Association, or IATA.
The overall financial performance is expected to improve in 2025 on the back of lower jet fuel prices and efficiency gains, IATA said. However, further increases are being held back by forced capacity discipline resulting from unresolved supply chain issues, which is limiting growth opportunities and driving up several cost areas, including aircraft leasing and maintenance.
Net profits in 2025 are expected to reach US$36.6 billion, a 3 percent improvement from the expected US$31.5 billion net profit in 2024 (3.3 percent net profit margin), through a combination of tightly controlled costs, investment in decarbonization and a return to more normal growth levels post-pandemic, said IATA Director General Willie Walsh.
Operating profit in 2025 is expected to be US$67.5 billion for a net operating margin of 6.7 percent (improved from 6.4 percent expected in 2024).
Return on invested capital, or ROIC, for the global industry is expected to be 6.8 percent in 2025, compared with 6.6 percent in 2024. Global industry returns 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.
Industry revenues is expected to top US$1 trillion for the first time, a 4.4 percent increase from 2024. Expenses are expected to grow by 4 percent to US$940 billion
Cargo volumes are expected to reach 72.5 million tonnes, a 5.8 percent increase from 2024. Passenger numbers are expected to increase 6.7 percent to 5.2 billion in 2025, the first time that the number of passengers has exceeded the five billion mark.
Cargo revenue is expected to reach US$157 billion (15.6 percent of total revenues) in 2025. Demand is likely to grow by 6 percent with average yield adjusting downwards by 0.7 percent but remaining well above pre-pandemic levels, IATA said. Freight rates (quoted in 2014 dollars/kg) are expected to be US$1.34, 6 cents less than in 2024 and 24.4 percent below 2014 levels. Trends expected to continue to favor for air cargo in 2025 include continued geopolitical uncertainty in sea shipments routed through the Suez Canal and booming e-commerce originating in Asia.
Among the industry risks in 2025, according to IATA are a worsening of prospects should the wars in Europe and the Middle East spread; the incoming Trump Administration, where tariffs and trade wars would likely dampen demand for air cargo and potentially also impact business travel. Should these policies rekindle inflation with higher interest rates as a policy response, negative impacts on demand would be exacerbated. However, should the business-friendly stance of the first Trump administration continue into this term, gains from deregulation and business simplification could be significant.
IATA represents some 340 airlines comprising more than 80 percent of global air traffic.

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