Airlines expected to show resilience, improved profitability
Muscat:
With 5 billion expected to travel annually by air, in 2025, airlines will make a $36 billion profit on revenues of $979 billion.
According to IATA's latest report, airlines are, however, expected to make a net margin of only 3.7% or $7.20 net profit per passenger while showing resilience in the face of global economic and political shifts.
Willie Walsh, the director general of the International Air Transport Association (IATA), said, "Our profitability is not commensurate with the enormous value that we create at the heart of a value chain supporting 3.9% of global GDP and providing and supporting jobs for 86.5 million people.
"While airline margins are half what most other industries earn, including those in the air transport value chain, airline resilience is the stuff of legend, as proven in our post-COVID bounce-back..
Net profits at $36 billion improved from the $32.4 billion earned in 2024, but were slightly down on the previously projected $36.6 billion (December 2024).
Net profit margin at 3.7%, improved from the 3.4% earned in 2024 and the previously projected 3.6%.Return on invested capital at 6.7%, improved from the 6.6% earned in 2024 and largely unchanged from previous projections.
"The first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures, including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections. The biggest positive driver is the price of jet fuel, which has fallen 13% compared with 2024 and 1% below earlier estimates. Moreover, we anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence. The result is an improvement of net margins from 3.4% in 2024 to 3.7% in 2025. That's still about half the average profitability across all industries. But considering the headwinds, it's a strong result that demonstrates the resilience that airlines have worked hard to fortify,' said Walsh
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