The Gulf Talk Business Desk | June 2025
Global airlines are projected to close 2025 with a net profit of $36 billion — a slight dip from the previously forecasted $36.6 billion — amid mounting trade tensions and macroeconomic uncertainty, the International Air Transport Association (IATA) revealed in its latest industry outlook. Yet, in contrast to the cautious global sentiment, Gulf carriers continue to outperform on profitability and resilience.
Despite the revision, the updated profit figure still surpasses the $32.4 billion net income posted in 2024, thanks largely to a 13% decline in jet fuel prices — a key operating cost for airlines.
Global Outlook: Rising Revenues, But Challenges Persist
Total airline industry revenue is forecast to hit a record $979 billion in 2025, up 1.3% from the previous year. However, this falls short of the symbolic $1 trillion mark projected earlier. Meanwhile, industry-wide expenses are expected to rise just 1%, allowing for modest margin improvement — with net margins increasing to 3.7% from 3.4% in 2024.
Passenger volumes are also trending upward, with 4.99 billion travellers expected to take flight this year — a 4% rise year-on-year, though still short of the 5.22 billion projected earlier.
“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,” said Willie Walsh, IATA’s Director General.
He added that while demand for both cargo and passenger travel is growing, geopolitical instability and eroding consumer confidence, particularly in Western markets, are limiting the pace of recovery.
Key Pressures: Trade Tensions and Supply Chain Snarls
A major factor in the profit revision has been the reintroduction of tariffs under the U.S. administration, leading to slower global trade and potential reversals of longstanding international aviation agreements. These policy shifts, along with ongoing supply chain disruptions, have hampered fleet expansion efforts.
Aircraft delivery delays from manufacturers like Boeing and Airbus have further complicated airline operations worldwide, forcing some carriers to delay growth strategies or absorb higher maintenance costs to keep older aircraft flying.
Additionally, several U.S. carriers — including Delta and American Airlines — have withdrawn their 2025 financial guidance, citing unpredictable macroeconomic trends.
Gulf Airlines Lead the Way
While the global industry adjusts to economic headwinds, the Middle East — and particularly the Gulf — continues to set the benchmark for profitability. Regional airlines are expected to earn $27.20 in profit per passenger, nearly quadruple the global average of $7.20. Although slightly down from 2024’s $28.50 per passenger, it exceeds earlier projections of $23.90.
Middle East airlines are now forecast to earn $6.2 billion in net profit for 2025, up from $6.1 billion last year, and surpassing IATA’s December estimate of $5.9 billion. The region is also expected to post the world’s highest net margin at 8.7%.
“Gulf carriers continue to outperform due to solid economic fundamentals, continued tourism growth, and strategic investments in aviation infrastructure,” said IATA in its regional breakdown.
Backed by government-led policies to diversify economies and boost non-oil sectors, Gulf nations are investing heavily in airport upgrades, aircraft retrofits, and tourism campaigns — all of which are reinforcing aviation’s growing contribution to GDP.
Capacity Constraints Loom
Despite their strong performance, Gulf airlines are not immune to global supply chain challenges. Delivery delays of new aircraft are expected to slow capacity expansion in the short term. As many carriers focus on retrofitting older aircraft to meet evolving sustainability standards, growth may be temporarily constrained.
“Aircraft delivery delays will restrict capacity expansion, even as airlines invest in fleet modernization,” IATA warned.
Outlook: Gulf Resilience Amid Global Uncertainty
While global airlines face an uncertain second half of 2025, Gulf-based carriers remain well-positioned to navigate turbulence. Their agility, strategic investments, and government backing offer a buffer against global volatility — making the region a model of resilience in a challenging industry landscape.
As always, The Gulf Talk will continue to monitor developments impacting the region’s aviation and transport sectors.
