Supply chain pressure will not change profit momentum, global aviation industry profits are expected to reach a new high next year

The Zhitong Finance App learned that the world's top airline lobbying organization, the International Air Transport Association (IATA), said that global airlines are expected to achieve net profit of 41 billion US dollars next year and carry 5.2 billion passengers, but if the industry were able to overcome ongoing supply chain problems, these records could have been even higher.

IATA said in its annual forecast on Tuesday that this profit outlook is 4% higher than this year's $39.5 billion. The organization says this growth will benefit from steady economic growth, lower inflation, a weaker dollar, and lower fuel costs.

Europe achieved the strongest financial results in 2025, with low-cost carriers expanding at a double-digit rate and outperforming full-service carriers in terms of profit margins. The International Air Transport Association said that North America, which is generally rated as the most profitable region, has lost this status due to stagnant growth due to tariffs, stricter immigration policies, and government shutdowns.

The Asia Pacific region is expected to see the biggest increase in demand and capacity next year, thanks to a more affluent middle class and growing tourism activity.

IATA Director General Willie Walsh said at an event in Geneva: “People are clearly aware of the need to provide infrastructure to support the growth of the industry.”

Mary Owens Thomson, IATA's chief economist and senior vice president of sustainability, said the Middle East region had the highest net profit margin. Long-haul passenger traffic, infrastructure investment, and the expansion of hub airlines are driving strong growth in passenger demand.

She said that due to fragmented policies and high fuel costs, it is still difficult for African airlines to make a profit.

IATA said US President Trump's tariffs, Middle East, Russia-Ukraine conflict, and tight supply chains have boosted airline costs this year.

Stewart Fox, the organization's director of flight and technical operations, said that airlines are waiting longer for aircraft to be delivered, so they have to let old aircraft fly longer. New aircraft also take longer to certify.

The organization previously lowered the industry's 2025 profit target from $36.6 billion to $36 billion, citing trade tensions and weak consumer confidence impacting airline earnings.

IATA expects the industry's profit margin to be 3.9% next year, the same as in 2025. The organization said the industry's revenue would reach $1.053 trillion.

“We're still an industry with a net profit margin of less than 4%,” Walsh said. He was disappointed by the pace at which sustainable aviation fuel production is progressing and the air traffic control issues that have led to flight cancellations.

Regarding American Airlines, Citi pointed out that poor performance and capacity cuts in the aviation industry in 2025 created a “bullish tactical cyclical environment” for 2026, especially for giants called “superairlines.” The agency anticipates that their outstanding performance will be more resilient and sustainable than most optimistic expectations. Citibank analyst John Godyn defines traditional airlines such as American Airlines (AAL.US), Delta Air Lines (DAL.US), and United Airlines (UAL.US) as “supercarriers”. He believes that the core advantage of these carriers is “successfully integrating new travel business models with unique asset portfolios, and this asset barrier is difficult for both existing competitors and new entrants to replicate.” As shown by these supercarriers, this business model made the industry perform well both during the downturn and rise.