Despite a Record Year, Airlines Are Grappling With Big Challenges (economist.com) 31
The global airline industry is on track to post an all-time profit high of nearly $40 billion in 2025, according to trade group IATA, surpassing the pre-pandemic 2019 figure of $26 billion, but carriers are still managing a net margin of just 4% -- roughly $7.90 per passenger. Economist adds: Not everything has been in the ascent. European and North American airlines, which account for three-fifths of the industry's net profits, have had to contend with circuitous long-haul routes to avoid Russian airspace since the start of the war in Ukraine. This year parts of the Middle East became no-go zones after Israel's strike on Iran in June. America's airlines were hit by a government shutdown that stopped federal workers from travelling and kept unpaid air-traffic controllers at home, disrupting flights.
What is more, despite a drop in fuel prices, which account for 25-30% of airlines' operating expenses, other costs have risen. Airlines flew 4.8 billion passengers in 2024, beating the 2019 peak, and that figure likely reached 5 billion in 2025 as combined revenues topped $1 trillion for the first time and load factors hit a record of nearly 84%.
But the industry is flying older planes because Boeing and Airbus can't deliver enough new ones. The duopoly shipped under 1,400 aircraft in 2025, well below the 2018 record of just over 1,600. Boeing has struggled since two fatal 737 MAX crashes in late 2018 and early 2019 led to a 20-month grounding, and a fuselage panel blew off another 737 MAX mid-flight in early 2024. Airbus cut its 2025 delivery target from 820 to 790 in early December due to a supplier's production flaw, and Pratt & Whitney engine problems have grounded a third of the global A320neo fleet.
IATA estimates the aircraft shortage won't resolve before 2031 at the earliest, and the global fleet's average age has climbed to 15 years from 13 in 2019. Annual fuel efficiency gains have slowed from about 2% to 0.3% in 2025, and an IATA and Oliver Wyman report pegs the cost of aging fleets -- extra fuel, repairs, spare parts -- at over $11 billion in 2025.
What is more, despite a drop in fuel prices, which account for 25-30% of airlines' operating expenses, other costs have risen. Airlines flew 4.8 billion passengers in 2024, beating the 2019 peak, and that figure likely reached 5 billion in 2025 as combined revenues topped $1 trillion for the first time and load factors hit a record of nearly 84%.
But the industry is flying older planes because Boeing and Airbus can't deliver enough new ones. The duopoly shipped under 1,400 aircraft in 2025, well below the 2018 record of just over 1,600. Boeing has struggled since two fatal 737 MAX crashes in late 2018 and early 2019 led to a 20-month grounding, and a fuselage panel blew off another 737 MAX mid-flight in early 2024. Airbus cut its 2025 delivery target from 820 to 790 in early December due to a supplier's production flaw, and Pratt & Whitney engine problems have grounded a third of the global A320neo fleet.
IATA estimates the aircraft shortage won't resolve before 2031 at the earliest, and the global fleet's average age has climbed to 15 years from 13 in 2019. Annual fuel efficiency gains have slowed from about 2% to 0.3% in 2025, and an IATA and Oliver Wyman report pegs the cost of aging fleets -- extra fuel, repairs, spare parts -- at over $11 billion in 2025.
My deepest sympathies (Score:1)
Re:My deepest sympathies (Score:4, Insightful)
"Oh, we are so poor, we cant afford anything. This will justify our raising prices again, putting money locks on bathrooms, and charging you for each peanut in the bag while we ignore our safety and maintenance needs on the planes"
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Yup, this is the rinse/repeat playbook of the Airlines for the past 40 years. "Oh, we are so poor, we cant afford anything. This will justify our raising prices again, putting money locks on bathrooms, and charging you for each peanut in the bag while we ignore our safety and maintenance needs on the planes"
It's attitudes like this that make consumers want a small Recession. Just to bitch slap corporate greed right across the fucking face. As many times as it takes.
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The government will bail them out at our expense.
Disagree with your portrayal of airlines (Score:2)
I vehemently disagree. Airplanes continue to be the safest way to travel, and airlines are mandated to follow maintenance schedules routinely. Because insurance. If airlines (at least in the US and EU) don't follow standard safety and maintenance procedures with their aircraft, then they have an accident resulting from that, the FAA and NTSB will discover the negligence, and then ohhhh boyyyy, there'll be hell to pay.
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The plane where the engine fell off earlier this month, is just another indicator people should really look into.
As for relying on the past to justify feeling safe, well... you have never died, so you must be invincible... yet you co
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You are displaying a great example of availability bias [wikipedia.org], where you're using immediate examples of recent events to quickly reinforce your existing stereotype. Yes, we have had two significant commercial airline accidents in the United States this year, the Potomac Mid-Air Collision and UPS 2976. But these are outliers in an otherwise continual trend downwards for accidents and fatalities as a whole in the commercial airline industry. You cannot deny these statistics. [panish.law] And we can use these accidents and l
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talk about bias...
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This will justify our raising prices again
Most price rises have zero to do with any airline. Yeah I lament the loss of being able to fly to the other side of the continent for $35 (yes I did that), but the reality is that these days there's almost an order of magnitude more than that just in taxes, handling fees, and airport access fees incorporated into the tickets.
Airlines haven't actually meaningfully changed their prices in the past decade. The industry and governments around them have.
Re:My deepest sympathies (Score:4, Informative)
Here's what the article author is missing:
Airlines don't make money flying passengers. At least, not if they are competing. They make money through branded credit card / miles programs.
The airplanes are a loss leader that gets you to be loyal to them and use their credit card as much as possible, and they get paid by BofA / American Express / Chase for each dollar of spend on your branded card.
Airlines that don't have branded credit cards and such are now losing money, because they drove down the costs and the big boys met them with alternate revenue streams to keep them profitable. And now the Spirit / Frontiers of it all are fucked.
Re: My deepest sympathies (Score:1)
Lockheed should buy Boeing (Score:2)
Lockheed should buy Boeing, and then rip and replace whatever management style Douglas brougt in, with Kelly Johnson's 14 Rules.
Because, goddamn it, Boeing isn't Boeing since the merger. What survived was the worst of both.
https://www.scribd.com/documen... [scribd.com]
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I imagine Lockheed is pretty pleased with shuttering it's commercial aircraft division.
Whatever the justification for a Federal stake in Intel I would think it would then go triply so for Boeing because I agree, something is rotted at the culture there.
That said though I think once you acknowledge the corporate rot at Boeing you'd be forced to reckon with it in so many other American corporations.
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Constellation was too much, too late, just like DC-7. The jets had arrived. They still sold many Constellations, and they served well.. except for that nasty habit of coming in with one out of four engines feathered. But, that's really on Pratt, not Lockheed.
L1011 got caught in the Rolls-Royce implosion, caused by delays of the RB211, the engine for the L1011 (and others.)
i imagine Lockheed should by now be "over it," and see an opportunity to slide in and deliver something remarkable again.
There is a r
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Last I had heard is that Lockheed was considering coming back to commercial flight but with something supersonic based on the results of the X-59 demonstrator since it's goal is to solve the sonic boom issue which makes the idea feasible. That's probably the kindof remarkable they would go for than trying to fix the mess Boeing got itself into. Lockheed still has got some odd 2000+ F-35 to deliver.
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Mergers and Acquisitions should not be a thing. It's why the economy is the way it is, and more merging won't make it better.
Normally I'd agree with you. M&A usually leaves both weakened, or one dead and one strong.
But, this is already an industry rife with M&A. That's how we got McDonnel-Douglas, who bought Boeing with Boeing's own money. That's how we got Lockheed-Martin, and I have no idea WTF Grumman is at these days, or North American, or.. Chance-Vought, or.. or ... you get the idea.
It pains me to see Boeing floundering like this. That was Douglas' job, not Boeing's. I'd rather Lockheed buy it and sort it out th
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Cheaper to wait for the inevitable bankruptcy fire-sale and get the assets you want without the baggage. Kind of like Nvidia did with 3dfx back in the day - get the patents, leave behind the legacy product support costs.
Rising profits, falling doors. (Score:3)
But the industry is flying older planes because Boeing and Airbus can't deliver enough new ones.
I'm sure with the liberal application of glue, Boeing can keep the doors on.
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What's remarkable about that, is that Airbus is targeting manufacturing ~1,000 aircraft a year by the end of 2026. I would imagine that Boeing is similar. That's ~2,000 new airliners, about 75% of them narrow-body. And they cannot keep up with demand.
Sounds like there's market opportunity for a competent third player.
profits vs. revenues (Score:2)
Is it just me or does it seem like the article consistently used the word "profit" when they mean "revenue"? They're confusing the whole subject by talking about how record profits are ruined by expenses, but profit is what you get after you take expenses out of revenue. Bad AI article, or an author who doesn't really understand how P&L works?
Re:profits vs. revenues (Score:5, Informative)
Is it just me or does it seem like the article consistently used the word "profit" when they mean "revenue"? They're confusing the whole subject by talking about how record profits are ruined by expenses, but profit is what you get after you take expenses out of revenue. Bad AI article, or an author who doesn't really understand how P&L works?
What makes you think they're using the wrong term? All of the numbers look reasonable for the labels given. $1T in global revenues, $40B in global profits. That's a crazy low profit number, for that revenue number; it means airlines are basically just breaking even. They flew 5B+ passengers, so that's a profit of $7.90 per passenger.
So what makes you think they're saying "profit" when they mean "revenue?
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So what makes you think they're saying "profit" when they mean "revenue?
Say that shit again after you rattle off every single executive bonus paid in the last 12 months.
When they say "costs" they mean obscene lifestyles.
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So what makes you think they're saying "profit" when they mean "revenue?
Say that shit again after you rattle off every single executive bonus paid in the last 12 months.
When they say "costs" they mean obscene lifestyles.
I don't see how that's related to my question.
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That's because they *are* breaking even on actually flying airplanes carrying cargo, whether it be breathing meat-sacks or crates of plastic shit from China.
The profitable airlines either are charging more for their tickets and delivering higher value through entertainment options and comfort, or co-branding credit cards and operating the aircraft as a loss-leader to getting you to spend as much as possible on the co-branded credit card, so that BofA / Chase / Amex pays them, and it's pure profit.
That's why
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They also make a lot of money on selling loyalty points, even outside of the credit cards. For example, when you rent a car with Hertz you can get Delta SkyMiles, and the way that works is that Hertz buys the miles from Delta. This is big business for them, and most of their profits.
That said, I don't think the cited figures are exclusive of the card/mileage stuff, it's total airline profits. So without the loyalty stuff they'd be losing money. This is consistent with a few articles I've read over the
Wrong reason Boeing is failing (Score:4, Interesting)
Boeing has struggled since two fatal 737 MAX crashes in late 2018 and early 2019 led to a 20-month grounding, and a fuselage panel blew off another 737 MAX mid-flight in early 2024.
They aren't struggling because of that. They're struggling because the MBAs got rid of all the experienced engineers, gutted QA, and cut corners everywhere possible. They're now realizing that when you cut a corner you just make more corners.
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when you cut a corner you just make more corners
I'm going to start using this phrase when I hear people suggesting doing stupid shit to save time / money / whatever and the likelihood of being successful at the prime task - and / or saving the time / money whatever - has a low probability of success. Thank you.