IATA talks blocked funds, SAF and profitability at 2025 AGM

The International Air Transport Association (IATA) covered a wide range of issues during its recent AGM in New Delhi.

One of the issues on the agenda was the $1.3 billion in airline funds that are blocked from repatriation by governments as of end April 2025. This is a significant amount, although it is an improvement of 25% compared with the $1.7 billion reported for October 2024.

IATA is urging governments to remove all barriers preventing airlines from the timely repatriation of their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.

Willie Walsh, IATA’s Director General, said that: “Ensuring the timely repatriation of revenues is vital for airlines to cover dollar-denominated expenses and maintain their operations. Delays and denials violate bilateral agreements and increase exchange rate risks.”

He continued: “Reliable access to revenues is critical for any business—particularly airlines which operate on very thin margins. Economies and jobs rely on international connectivity. Governments must realize that it is a challenge for airlines to maintain connectivity when revenue repatriation is denied or delayed.”

Ten countries are responsible for 80% of the block funds and include:

• Mozambique – US$205 million
• XAF Zone* — US$191 million (includes Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon)
• Algeria – US$178 million
• Lebanon – US$142 million
• Bangladesh – US$92 million
• Angola – US$84 million
• Pakistan – US$83 million
• Eritrea – US$76 million
• Zimbabwe – US$68 million
• Ethiopia – US$44 million

IATA reports that Pakistan and Bangladesh, previously in the top five blocked funds countries, have made notable progress in clearing their backlog to $83 million and $92 million, respectively (from $311 million and $196 million in October 2024, respectively).

Mozambique has climbed up to the top of blocked funds countries, withholding $205 million from airlines, compared with $127 million in October 2024. The Africa and Middle East (AME) region accounts for 85% of total blocked funds, at $1.1 billion as of end April 2025.

The most significant improvement was noted in Bolivia, fully clearing its backlog that stood at $42 million at end October 2024.

IATA talks SAFs at AGM

Sustainable Aviation Fuel (SAF) was on the agenda as well, with IATA reporting that it expects Sustainable Aviation Fuel (SAF) production to reach 2 million tonnes (Mt) (2.5 billion liters) or 0.7% of airlines’ total fuel consumption in 2025.

Walsh observed that: “While it is encouraging that SAF production is expected to double to 2 million tonnes in 2025, that is just 0.7% of aviation’s total fuel needs. And even that relatively small amount will add $4.4 billion globally to the fuel bill. The pace of progress in ramping up production and gaining efficiencies to reduce costs must accelerate.”

However, IATA points out that most SAF is now heading toward Europe, where the EU and UK mandates kicked in on Jan. 1, 2025. Unacceptably, the cost of SAF to airlines has now doubled in Europe because of compliance fees that SAF producers or suppliers are charging.

For the expected one million tonnes of SAF that will be purchased to meet the European mandates in 2025, the expected cost at current market prices is $1.2 billion. Compliance fees are estimated to add an additional $1.7 billion on top of market prices — an amount that could have abated an additional 3.5 million tonnes of carbon emissions. Instead of promoting the use of SAF, Europe’s SAF mandates have made SAF five times more costly than conventional jet fuel.

Said Walsh: “This highlights the problem with the implementation of mandates before there are sufficient market conditions and before safeguards are in place against unreasonable market practices that raise the cost of decarbonization. Raising the cost of the energy transition that is already estimated to be a staggering $4.7 trillion should not be the aim or the result of decarbonization policies. Europe needs to realize that its approach is not working and find another way.”

To support the development of a global SAF market, IATA has worked on two initiatives:

• A SAF registry managed by the Civil Aviation Decarbonization Organization (CADO) that brings a transparent and standardized system for tracking SAF purchases, usage and associated emissions reductions in compliance with international regulations such as Carbon Offsetting Scheme for International Aviation (CORSIA) and the EU Emissions Trading Scheme.
• The SAF Matchmaker that will facilitate SAF procurement by matching airline requests for SAF with supply offers.

IATA is urging governments to create more effective policies; to develop a comprehensive approach to energy policy that includes SAF; and to ensure the success of CORSIA as the sole market-based mechanism to address international aviation’s CO2 emissions.

Despite Headwinds, things are looking up

IATA’s 2025 airline industry financial outlook, showed improved profitability over 2024 and resilience in the face of global economic and political shifts.

Highlights of the expected 2025 financial performance include:

•  Net profits at $36.0 billion, improved from the $32.4 billion earned in 2024, but slightly down on the previously projected $36.6 billion (December 2024).
• Net profit margin at 3.7%, improved from the 3.4% earned in 2024 and the previously projected 3.6%.
•  Return on invested capital at 6.7%, improved from the 6.6% earned in 2024 and largely unchanged from previous projections.
•  Operating profits at $66.0 billion, improved from an estimated $61.9 billion in 2024, but down from the previously projected $67.5 billion.
•  Total revenues at a record high of $979 billion (+1.3% on 2024, but below the $1 trillion previously projected).
•  Total expenses at $913 billion (+1.0% on 2024, but below the previously projected $940 billion).
•  Total traveler numbers reaching a record high 4.99 billion (+4% on 2024, but below the previously projected 5.22 billion).
•  Total air cargo volumes reaching 69 million tonnes (+0.6% on 2024, but below the previously projected 72.5 million tonnes).

Walsh said that: “The first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections.”

IATA’s Director General continued: “The biggest positive driver is the price of jet fuel which has fallen 13% compared with 2024 and 1% below previous estimates. Moreover, we anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence.”

And he adds: “The result is an improvement of net margins from 3.4% in 2024 to 3.7% in 2025. That’s still about half the average profitability across all industries. But considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify.”

Go to www.iata.org for more.