NEW YORK — Airlines are anticipating significant growth in travel demand for 2025, although they may be limited by ongoing capacity challenges.
United Airlines, Delta Air Lines, and various other U.S. carriers have shared optimistic forecasts with their investors for the upcoming year. Wall Street analysts predict that major airlines will see an increase in both revenue and profits in 2025, aided by lower jet fuel prices that enhance profit projections.
According to Delta Air Lines’ CEO Ed Bastian, the airline is on track to achieve its most profitable year to date. He noted, “The U.S. consumer is financially healthy and continues to prioritize spending on experiences,” following the airline’s recent quarterly earnings results.
In 2024, consumer spending remained robust across a wide range of goods and services, with air transportation being a particularly strong sector. Spending on air travel showed consistent monthly increases throughout the year, up until November, based on data regarding personal consumption expenditures.
The airline industry made significant gains on Wall Street in 2024, with Delta’s stock experiencing a 50% increase and United Airlines seeing its stock more than double. Most airline shares have continued on an upward trajectory as they enter 2025, in line with profit growth expectations.
However, the industry is grappling with supply chain issues that have affected capacity levels. John Grant, chief analyst at travel data agency OAG, indicated that the capacity constraints experienced in 2024 are expected to persist into 2025 and possibly through 2026 as airlines deal with the repercussions of maintenance, repair, and overhaul challenges, as well as production delays from major aircraft manufacturers.
The airlines and aircraft manufacturers are facing widespread delays in the supply chain for necessary parts. Boeing, in particular, has been a significant hurdle for the sector, continuing to struggle with production issues and reporting nearly $3 billion in charges during the last quarter of 2024. The company also experienced a strike that disrupted operations at several facilities.
According to the International Air Transport Association (IATA), these supply chain difficulties have constrained capacity growth in 2024 and are likely to do so in 2025 as well. IATA projects global passenger capacity will grow by 7.5% in 2025, with North America seeing a growth margin of only 2.8%, marking a continued deceleration from the previous year.
The IATA’s 2025 forecast also pointed out that such capacity limitations are restricting growth opportunities while raising costs across various sectors, including aircraft leasing and maintenance.
Limited growth in capacity has also adversely impacted passenger traffic growth. The IATA anticipates a global growth increase of 8% in 2025, with North America expected to experience a 3% growth.
Nevertheless, this level of growth is projected to support encouraging forecasts for major airlines. Analysts project a profit growth of 23% for Delta in 2025, with similar expectations for United Airlines and American Airlines, forecasting profit increases of approximately 24% and 23%, respectively.
The U.S. airline industry may also benefit from a potentially more favorable regulatory environment under President Donald Trump, which could lead to reduced oversight regarding airfare fee disclosures and penalties linked to delayed flights.
