Aviation industry Q2 overview & outlook for the rest of 2025

Season 1, Episode 10 | August 27, 2025

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Executive summary

Despite geopolitical uncertainty and economic headwinds, Q2 2025 delivered strong operational and financial results, especially for international-focused airlines. Conservative capacity planning and fuel price relief provided stability in Mexico. The second half of the year will depend heavily on global political developments, fuel prices, and seasonal travel trends — with cautious optimism prevailing.

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Global Aviation Overview (Q2 2025)

• Passenger traffic:

  • Overall global air traffic grew 6% year-over-year, with international traffic up 11% and domestic up 3%.

  • The strongest growth occurred in April (8%).

• Key trends:

  • Strong recovery in international travel, especially driven by the U.S. market.

  • Aircraft delivery delays continued (26% below projections).

  • Jet fuel demand slowed, with lower fuel prices benefiting airline margins.

  • Leisure and luxury travel segments led demand, increasing profitability (higher yields)

Regional performance

Europe:

• Lufthansa Group: +27% EBIT YoY, driven by integration of ITA Airways and strong network planning.

• Air France-KLM: 8.7% operating margin, attributed to premium seat sales and fuel savings.

North America:

• Delta: Top performer with 12.6% operating margin; reinstated strong annual guidance.

• United Airlines: Revenue up 1.2% YoY; 8.7% margin despite Newark hub congestion issues.

• American Airlines: Record revenue of $14.4B, but investor concerns remain due to leadership changes.

• Alaska Airlines: Record $3.7B in revenue, partly due to the Hawaiian merger.

• Southwest & jetBlue: Modest or declining results, due to reliance on a weakened domestic market.

Latin America (excluding Mexico):

• LATAM: Strongest regional performance — 8.2% revenue growth, 12.9% adjusted margin.

• Copa: Stable results, 6% capacity increase with 737 MAX fleet integration.

• GOL: 22.9% revenue growth, exited Chapter 11, but still reporting net losses.

  
  

Middle East & Asia:

• Qatar Airways: Record performance driven by +17% cargo revenue.

• Etihad & Emirates: Strong full-year results with 30% and 18% growth, respectively.

• Asia: Revenue down 3.5%, affected by trade war fears and 4% cargo revenue drop.

  • Korean Air cushioned by fuel price drop; Asiana showed operational recovery.

Mexico-specific insights:

Capacity Management:

• The three major Mexican carriers reduced or limited capacity growth to adjust to softened demand.

• Examples include Volaris retracting Monterrey-U.S. route expansions and Aeroméxico reducing AIFA frequencies.

Capacity Growth:

• Combined ASK (Available Seat Kilometers) growth for top 3 airlines was 6% YoY, a stable and conservative increase in light of last year´s capacity crunch related to the grounding of A320neos.

Profitability:

• Despite improved results from Q1 to Q2, operating profit declined 50% YoY across the three Mexican major carriers, as reflected in their institutional reports:

  • Aeroméxico: -22%

  • VivaAerobus: -91%

  • Volaris: Operating in the red but not at critical levels.

  • Jet fuel price decline helped maintain positive overall performance.

Outlook & Risks (Rest of 2025 & 2026)

Short-term Challenges:

• Economic stagnation in Mexico.

• Geopolitical tensions.

• Seasonal demand dips expected in Sept-Oct and Jan-Feb.

• Risk of U.S. DOT sanctions or restrictions on Mexican carriers due to regulatory concerns involving the bilateral air services agreement.

• Potential domestic overcapacity if U.S. routes are cut and capacity floods the domestic market.

• Jet fuel price volatility remains a critical risk.

Positive signs:

• Canadian tourism to Mexico expected to surge 30–35% YoY this winter.

• Some growth in international routes returning to AICM.

• Viva to open 9 new U.S. routes from AIFA by November.

Global Industry Outlook (H2 2025 and beyond)

• Moderate demand growth expected, with international markets leading.

• North America and Asia should remain stable.

• Europe & Middle East projected to show the strongest premium demand.

• Airlines will face continued supply chain and cost pressures, including labor and MRO (maintenance, repair, and overhaul).

• Operational efficiency will be key for profitability, especially for major carriers.