Shares in leading U.S. airlines nosedived today on warnings that trade tensions will batter profits this year.
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United Airlines (UAL) was down 0.8%, Delta Air Lines (DAL) slid 0.8% and American Airlines (AAL) reversed 0.9%, as the International Air Transport Association revised both its profit and traffic forecasts for 2025.
Tariff Woes
Cumulative airline profits will reach $36 billion this year, $600 million less than expected, IATA said. Commercial aviation revenues are expected to remain below the $1 trillion forecast in the previous December projections, with IATA now reporting $979 billion.
The organisation also expects 69 million tonnes of cargo to be transported by air this year, down from the 72.5 million previously expected. In addition, there will be fewer than 5 billion flights this year, compared with the previously forecast 5.22 billion.
Among the risks weighing on commercial aviation, IATA identified conflicts such as the war in Ukraine, as well as “trade tensions”.
“Tariffs and prolonged trade wars dampen demand for air cargo and potentially travel,” IATA said. “Additionally, the uncertainty over how the Trump administration’s trade policies will evolve could hold back critical business decisions that drive economic activity, and with it the demand for air cargo and business travel.”
Fuel Hopes
This is all despite an easing in jet fuel costs. It is expected to average $86 a barrel in 2025, well below the $99 average in 2024.
IATA’s Director General Willie Walsh, said that given the headwinds the result in fact showed the resilience of airlines.
Indeed, North American airlines have highlighted a rise in high-margin premium travel since the COVID-19 pandemic with flyers looking for experiences and hospitality rather than buying expensive goods. Airlines, like UAL, are responding by increasing premium services and seats.
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