Global airlines set for record net profit next year, predicts IATA

Global airline trade body IATA said on Tuesday the airline sector would post record profits next year despite ongoing supply chain issues leading to slower aircraft deliveries and a delay in rolling out more fuel-efficient jets.

The projection comes as plane manufacturer Airbus cut its plane delivery target for 2025, citing a quality issue with some metal fuselage panels on its A320 planes.

The world’s leading jetmakers Airbus and Boeing have both faced delivery delays to their airline clients in recent years.

Without newer, more efficient planes, airlines say they cannot cut back fuel costs while flying more people. Still, IATA struck an optimistic note for the year to come, pointing to Europe in particular as it overtakes the US as the region with the highest net profit per passenger.

“Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability,” said International Air Transport Association director general Willie Walsh in a statement.

He later added that a slight dip in jet fuel prices could help provide some financial relief, but regulatory costs, particularly in Europe, as well as uncertainty tied to global conflict, drone incursions and GPS interference are hampering potential for even greater profitability.

Walsh said confidence in Airbus has waned, while Boeing’s performance has improved, amid ongoing supply chain issues. Earlier this month the European planemaker was forced to slash delivery targets when defects surfaced in some of its fuselage panels, days after recalling 6,000 A320-series planes over a software glitch linked to cosmic radiation.

“I think we are seeing a shift where it’s generally recognised that Boeing’s performance has significantly improved. People have a lot more confidence in Boeing delivering the commitments that they have made, and we’re seeing people having less confidence in Airbus,” Walsh stated.

“It’s disappointing for the industry, because we will have fewer new aircraft being delivered than was expected,” he added.

Airbus cut its target by 4 per cent and confirmed deliveries had already slowed in November, weeks after the A320 series, including the best-selling A321, surpassed the recently troubled Boeing 737 MAX as the most-delivered passenger jet in history.

But ultimately Walsh pointed the finger at engine makers for hampering deliveries, saying they were far slower than the mainframe makers at delivering new and repaired engines and were forcing planemakers like Airbus in some cases to push back their timelines.

Meanwhile the global airline industry is likely to miss its targets for green jet fuel use in the coming years, the International Air Transport Association said on Tuesday, blaming fuel producers and regulators for the “disappointing” progress.

Sustainable aviation fuel (SAF), made largely from waste or used cooking oil, can cut emissions significantly compared with traditional jet fuel. However, it remains two to five times more expensive than conventional fuel.

IATA expects 2.4 million metric tonnes of SAF to be available in 2026, covering just 0.8% of total fuel consumption. The wider aviation sector committed in 2021 to achieving net-zero emissions by 2050, relying heavily on a gradual switch to SAF.

“We’re not seeing SAF produced in the volumes we had hoped for and had expected. That is disappointing,” the trade group’s director general Willie Walsh told journalists. He had previously warned that the 2050 net zero goal could be at risk.

Sustainable aviation fuel accounts for about 0.3% of the world’s jet fuel use and was projected to reach only 0.7% by 2025, according to IATA data. Experts say production needs to grow quickly for the sector to meet its emissions goals.

Airlines have long said that they are willing to buy all of the SAF available, but accuse jet fuel producers of artificially inflating prices and failing to produce enough of the greener fuel.

“It’s not an issue of price, it’s an issue of availability, and they’re just not able to get their hands on the SAF that they require to fulfil the ambition that they expressed,” Walsh said.

He added that he expected many carriers to go back on their official sustainability pledges in 2026, citing Air New Zealand as leading the way on setting more realistic expectations.

Walsh said confidence in Airbus has waned, while Boeing’s performance has improved, amid ongoing supply chain issues.

Earlier this month the European plane maker was forced to slash delivery targets when defects surfaced in some of their fuselage panels, days after recalling 6,000 A320-series planes over a software glitch linked to cosmic radiation.

“I think we are seeing a shift where it’s generally recognised that Boeing’s performance has significantly improved. People have a lot more confidence in Boeing delivering the commitments that they have made, and we’re seeing people having less confidence in Airbus,” Walsh stated.

Reuters