Josh Gilbert, Market Analyst at eToro

Dubai, United Arab Emirates – May 22, 2025

Etihad Airways has reported a record first quarter for 2025, with a net profit of AED 685 million, showing a 30% increase from last year. This strong Q1 performance marks the airline’s highest-ever quarterly profit, thanks to surging travel demand and operational efficiencies. For investors, this is exciting news with Etihad’s IPO potentially around the corner with CEO, Antonoaldo Neves, confirming that the airline is 'ready' for an IPO.

According to Josh Gilbert, Market Analyst at eToro, Etihad’s success comes amid a broader uplift for airlines in the region. Dubai’s budget carrier flydubai just reported a record profit of around AED 2.5 billion for 2024, buoyed by a rise in passenger volumes. Air Arabia, listed on DFM, also achieved an all-time high profit of AED 1.6 billion in 2024, carrying nearly 19 million passengers as travel demand has stayed in full swing. This strong growth is reflected in its shares, climbing over 55%, including dividends, within the last 12 months. Even legacy giants are thriving: Emirates airline posted record profits of AED 21.2 billion for the year ending March 2025.

The UAE, already a global international travel hub, continues to launch cultural attractions, luxury resorts and visa reforms to attract visitors year-round. The announcement of Disney’s new park in Abu Dhabi is a clear example of that, with these initiatives driving inbound travel and filling planes. At the same time, the Gulf’s strategic geography – sitting between Europe, Asia and Africa – cements its airlines’ role in international connectivity. Major hubs in Dubai, Doha and Abu Dhabi consistently rank among the world’s busiest for long-haul flights.

Industry forecasts suggest Middle East airlines will continue climbing. The International Air Transport Association (IATA) projects passenger traffic in the Middle East to grow ~4.1% annually through 2043, outpacing the global average. The beauty of the Middle East carriers is their premium offerings, but often lower cost bases allow margins to be higher, with airlines in the Middle East earning about $23 profit per passenger in 2024—more than double the figure in North America, according to IATA. The fact that investors may then get access to own one of these thriving companies through the Etihad IPO is an exciting prospect.

U.S. President Donald Trump’s recent visit to the UAE also highlighted international confidence in the region. During the trip, over $200 billion in US-UAE business deals were announced, including a $14.5 billion Etihad order for Boeing jets, showing that they believe that demand is only set to keep growing from here.

The airline industry doesn’t come without risks, though. Supply chain constraints and aircraft delivery delays could slow the pace of expansion. Emirates recently noted that these delays could impact their ability to grow new routes and increase capacity.  Other factors, such as a global slowdown or oil price volatility, can also be hurdles. However, these airlines are in the sweet spot of enjoying robust demand, cost advantages and strong state backing, putting them in a solid position. With record profits rolling in, growth in stocks like Air Arabia and marquee events such as a potential Etihad IPO and maybe even Emirates on the horizon, the UAE and wider Gulf aviation sector is one for investors to watch closely.