Global Airline Industry to Report Record Profit Next Year, IATA Predicts

(Yicai) Dec. 10 -- Global airlines are expected to achieve record net profits next year, mainly thanks to record-high load factors and fleet utilization despite softening fares and continuous cost pressure, according to the latest report by the International Air Transport Association.Net profit of the global airline industry will likely grow 3.9 percent to USD41 billion next year from this year’s projected USD39.5 billion, setting a new historic high, according to the Global Outlook for Air Transport report released yesterday. Revenue will probably jump 4.5 percent to USD1.05 trillion.“That’s extremely welcome news considering the headwinds that the industry faces -- rising costs from bottlenecks in the aerospace supply chain, geopolitical conflict, sluggish global trade, and growing regulatory burdens among them,” said Willie Walsh, director general of the IATA. “Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability.”Global passenger traffic is expected to increase 4.4 percent to 5.2 million in 2026 from this year. Despite that, the average net profit per passenger transported will likely remain at USD7.90 next year, the same as this year but lower than the historical high of USD8.50 set in 2023.“Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies,” Walsh noted. “They stand at the core of a value chain that underpins nearly 4 percent of the global economy and supports 87 million jobs. Yet Apple will earn more selling an iPhone cover than the USD7.90 airlines will make transporting the average passenger. “Even within the air transport value chain, airline margins are totally out of balance, particularly when compared to margins of engine and avionics manufacturers and many of our service suppliers,” he added. “Imagine the additional power that airlines could bring to economies if we could re-balance value chain profitability, reduce regulatory and tax burdens, and alleviate infrastructure inefficiencies.”Fuel costs are expected to decrease 0.3 percent to USD252 billion next year from 2025, according to the IATA. The market widely forecasts that Brent crude oil prices will drop 11 percent to USD62 per barrel.Non-fuel costs will probably climb 5.8 percent to USD729 billion in the period, mainly because of rising maintenance costs, driven by an aging fleet and parts shortages caused by supply chain disruptions. Leasing prices have also reached historic highs, further increasing ownership costs. Airport and air navigation fees will also continue to rise.By region, Asia Pacific is estimated to post a net profit of USD6.6 billion in 2026, with China and India leading regional growth, primarily because of increased intra-regional tourism activities and the expansion of the middle class.However, airlines in the Asia-Pacific region earn the least per passenger at just USD3.20. The highest profit per passenger is in the Middle East at USD28.60, followed by Europe at USD10.90 and North America at USD9.80.Cargo volume is expected to grow 2.4 percent to 71.6 million metric tons next year from this year, defying many pessimistic predictions by bucking the trend amid drastic changes in the global trade environment.Despite a decline in China’s exports to the United States, the substitution effect has offset the impact of trade tensions as Chinese goods have found alternative markets. This reflects a shift in global trade flows.Against a backdrop of continuously tightening capacity and despite an overall slowdown in global trade, cargo yields are expected to remain stable next year, with only a marginal decline of 0.5 percent, staying at a level about 30 percent higher than pre-pandemic figures.“The resilience in air cargo has been particularly impressive,” Walsh said. “As trade flows adapt to a protectionist US tariff regime, air cargo has been the hero of global trade, buoyed in part by robust e-commerce and semiconductor shipments to support the boom in artificial intelligence investments.“Notably, air cargo enabled front-loading to deliver products ahead of tariff deadlines, and it flexibly accommodated demand surges as tariffed goods normally destined for the US found new markets,” he noted. “The critical role of air cargo is front and center as the global economy adjusts to new realities.”Editor: Futura Costaglione