Change of Strategy in Air Transport
The financial results for 2025 are coming in, and they give a good idea of how the sector is evolving.
European airlines have been doing well over the past year, while the American giants are still struggling somewhat. All in all, 2025 will not have been such a bad year, helped by an average oil price that remained reasonable at around $67 per barrel. Remember that in 2010, analysts expected it to reach $200. This shows that making forecasts, especially in the long term, remains a perilous exercise.
The American giants are showing some signs of weakness. Delta Air Lines’ net profit is down 5% to $3.8 billion. United Airlines’ is reportedly up 6%. However, American Airlines saw its net profit collapse by 87% to just $111 million, on revenue of $54 billion, double that of the Air France KLM group. The latter achieved a real performance by turning all its indicators green, with a net profit of €1.754 billion compared to €489 million the previous year. Its financial indicators, from equity to cash flow, are all improving. The only downside is that its low cost subsidiary Transavia France is still unable to make a profit, and its unit costs remain high for this sector at €6.73 per seat kilometre offered, compared to revenue of €6.64. The Lufthansa Group also achieved a good result, with a 32% increase in profit to €1.93 billion. Only the IAG group saw its profit fall, by 2.3%, to €1.4 billion.
The full results for the sector are not yet known because Gulf carriers and some Asian and African airlines close their accounts on March 31. Nevertheless, the outlook appears favourable.
The fact remains that many hazards can impact air transport activity, and they rarely move in the right direction. In 2025 alone, the shutdown in the USA certainly weighed heavily on the results of the major American carriers, as it occurred during the end of year holiday period. In addition, current or planned conflicts are seriously complicating operations. This is the case for European carriers, which are seeing flight times extended by around two hours on services to Asia following the ban on flying over Siberia and due to the situation in Iran, while Asian carriers do not face the same disadvantages. Furthermore, the thunderous announcements of the American President are at the very least disrupting short and medium term operating plans.
But amid these difficulties, to which one could add the impact of ecological constraints that have heavily penalised companies such as KLM, there are also some grounds for satisfaction.
First, and hopefully soon, the reopening of connections to Venezuela, a large country and an important destination for economic, touristic and family reasons. This will give a boost to South American services, which are in real need of it.
And then the airlines have taken a historic turn. Instead of continuing, as they have done for more than 30 years, to pursue fare reductions, which were often accompanied by a decline in product quality through reduced services and excessive cabin densification, we are now witnessing an improvement in product quality. In fact, the inflection point came with Covid. As soon as this disastrous pandemic ended, operators raised their prices and realised that this did not lead to a decline in demand. They might have suspected this earlier, but better late than never. The momentum has now taken hold. European airlines in particular have all decided to enhance their products. The most spectacular example can be seen at Air France KLM, which, it must be said, had fallen very low. Its policy of upgrading its offering appears beneficial, judging by the significant improvement in its financial results. Customers are willing to pay more for a better product. This is not new, and it is encouraging that airline executives have recognised it.
If this strategy continues, and if geopolitical conditions do not deteriorate during 2026, we can expect a further improvement in results that will make air transport the leading sector in the world, for the good of all.
