European airlines are set to achieve the “strongest financial performance” in 2025 and 2026 compared with other regions, according to the latest financial outlook from the International Air Transport Association (IATA).
IATA said that airlines globally were set to make a combined profit of $39.5 billion this year, which is forecast to increase to $41 billion next year, although the net profit per passenger is set to remain at around $7.90 in both 2025 and 2026.
Europe-based carriers are expected to make a net profit of $13.2 billion in 2025, which is forecast to increase to $14 billion next year. Profit per passenger is predicted to be $10.60 in 2025 and then rise to $10.90 in 2026.
In its analysis, IATA said that European airlines were showing “disciplined capacity management and strong load factors”, with the continent’s budget carriers “performing particularly well” as they record double-digit growth and achieve higher net profit margins than their competitors.
“Traffic growth is moderating as the market matures and amid tepid economic conditions in the eurozone where GDP growth lags the global average,” added IATA in its commentary.
IATA is predicting that both demand and capacity from European airlines will increase by 3.8 per cent year-on-year in 2026.
On a more cautionary note, the association added: “The regulatory cost burden is increasing with the ReFuelEU initiative requiring a 2 per cent SAF (sustainable aviation fuel) blend at EU airports from 2025. This coincides with mounting operational headwinds: labour unrest, drone disruptions and persistent air traffic control bottlenecks.”
On a global basis, IATA is forecasting that airline passenger numbers will reach 5.2 billion in 2026, which would be a 4.4 per cent increase on 2025’s figure of 4.97 billion passengers. It is also predicting a “record high” load factor of 83.8 per cent next year.
Willie Walsh, IATA’s director general, said the sector’s improved profitability was “extremely welcome news considering the headwinds that the industry faces”. These headwinds include geopolitical conflict, “sluggish” global trade, aerospace supply chain “bottlenecks”, and increasing regulatory burdens.
“Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability,” continued Walsh.
Although he added: “Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies.
“They stand at the core of a value chain that underpins nearly 4 per cent of the global economy and supports 87 million jobs. Yet Apple will earn more selling an iPhone cover than the $7.90 airlines will make transporting the average passenger.”