The International Air Transport Association (IATA) has recently updated its financial outlook for the global airline industry, projecting a significant increase in profits by 2025.
Despite the ongoing supply chain difficulties, which have been exacerbated by production delays from Boeing (NYSE:BA) and Airbus, the industry is expected to see a record-breaking number of passengers and revenues surpassing the trillion-dollar mark for the first time.
Airlines have been struggling to expand their fleets with newer, more fuel-efficient aircraft due to the aforementioned delays. This has prevented them from reducing jet fuel expenses while accommodating an increasing number of travelers.
Nevertheless, IATA is optimistic about the industry's prospects, forecasting a net profit of $36.6 billion for the year, an increase from the $31.5 billion net profit anticipated in 2024.
IATA's Director General, Willie Walsh, acknowledged the challenges faced by the sector, including persistent supply chain issues and a growing tax burden. However, he emphasized the industry's efforts to overcome these obstacles to maintain profitability.
The positive outlook for 2025 marks a stark contrast to the $140 billion loss the industry suffered in 2020 due to the pandemic. The recovery has been fueled by a strong resurgence in travel demand. Additionally, a decrease in jet fuel prices is expected to provide some financial relief to airlines.
Despite the promising forecast, IATA cautioned that there are uncertainties that could impact the sector's recovery. These include ongoing global conflicts, particularly in the Middle East and Ukraine, and potential policy changes from the upcoming U.S. presidential administration. Furthermore, passenger yields are projected to decline by 3.4% in comparison to 2024, indicating that the average cost for passengers to fly will decrease.
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