Global airlines cut profit forecast - Trade tensions and supply problems will increase costs
Global airlines cut a key forecast for industry profits in 2025, blaming trade tensions and falling consumer confidence. They also criticized "unacceptable" delays in aircraft deliveries that have hampered their growth plans.
Industry body IATA now expects global airlines to post a combined profit of $36 billion this year, slightly below a previous forecast of $36.6 billion in December, before U.S. President Donald Trump took office. Since then, he has launched a trade war and tightened enforcement of U.S. border controls.
The International Air Transport Association released the forecasts, which provide data on the economy as a whole, during an annual meeting of more than 300 member airlines in New Delhi.
"A wonderful figure, but when you translate that into a margin, it's a 3.7 percent margin, and that remains a very small margin for the airline industry," IATA Director General Willie Walsh told Reuters.
This is a very thin layer of protection against any future demand or tax shocks as the industry returns to a more normal regime following the significant recovery of air travel from the pandemic, he said.
Trump's sweeping tariffs have fueled fears of an economic slowdown and squeezed spending, causing many consumers, especially in the United States, to delay or reduce travel plans.
Meanwhile, delays in aircraft deliveries have hampered airlines' ability to meet growing travel demand in certain regions. These delays have also increased operating costs as carriers are forced to keep older aircraft in service or pay more for the dwindling number of spare parts available.
Total spending for the industry is forecast to reach $913 billion in 2025, up 1.0% from 2024 but below previous forecasts of $940 billion, as lower fuel prices help offset rising aircraft maintenance costs.
IATA predicted that cargo revenues would fall by 4.7% to $142 billion in 2025, largely due to reduced global economic growth and protectionist measures, including tariffs.
Walsh acknowledged that some manufacturers could pass on the costs of tariffs to their customers, but warned that this would also increase ticket prices. "Ultimately, consumers will have to pay for any higher costs that the industry faces," he stressed.
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