NEW YORK — Airlines expect a strong tailwind from travel demand in 2025, even as the industry faces a capacity crunch.
United Airlines, Delta Air Lines and several other U.S.-based carriers have all given investors strong forecasts for the year. Wall Street expects major airlines to increase revenue and profit in 2025. Lower jet fuel prices have also helped brighten those forecasts.
Delta Air Lines CEO Ed Bastian said the airline is already on track for the best “financial year” in its history.
“The U.S. consumer is financially healthy and continues to prioritize spending on experiences,” he said, following the airline’s latest quarterly earnings report.
Consumer spending remained strong across most goods and services in 2024. Air transportation was among the stronger categories, with spending increasing each month through November, according to the data on personal consumption expenditures.
Airlines were among 2024’s biggest gainers on Wall Street, with Delta’s stock rising 50% and United Airlines more than doubling. Most airline stocks have continued gaining ground into 2025, along with expectations for profit growth.
Still, the industry faces supply chain problems that have crimped capacity.
“The capacity challenges of 2024 will continue into 2025 and indeed through to 2026 as airlines struggle with the fallout from maintenance, repair, and overhaul issues and production delays from major aircraft manufacturers,” said John Grant, chief analyst at travel data company OAG.
Airlines and airplane makers face broad supply chain delays for parts. Boeing remains one of the biggest drags for the sector. The beleaguered airplane maker continues to face production issues and said it incurred nearly $3 billion worth of charges in the fourth quarter of 2024. It faced a strike by the machinists that halted production at several facilities.
Those supply issues kept capacity growth in check in 2024 and will continue to do so in 2025, according to the International Air Transport Association, or IATA. The organization expects global passenger capacity to growth 7.5% in 2025, with 2.8% growth in North America. That would mark a continued slowdown from 2024.
“This is limiting growth opportunities and driving up several cost areas, including aircraft leasing and maintenance,” the IATA said in a forecast for 2025.
Crimped capacity growth has weighed down passenger traffic growth. The IATA expects global growth of 8% in 2025, with 3% growth in North America.
Still, that’s enough growth to help fuel forecasts for major airlines. Wall Street expects profit growth of 23% for Delta in 2025. Analysts expect United Airlines’ profit to grow about 24% and American Airlines profit to rise 23%.
The industry in the U.S. also faces the potential for a friendlier regulatory climate under President Donald Trump. That could include an easing of oversight on airfare fee disclosures and penalties for flight delays.
