Delta Air Line on Monday cut its first-quarter earnings estimates in half, reducing its stock by 14%, and CEO said the environment was weakened due to US economic uncertainty.
The Atlanta-based airline is the first major US carrier to report economic concerns among consumers and businesses hurt domestic travel.
“We saw businesses begin to pull back. CEO Ed Bastian told CNBC: “Consumers in discretionary businesses don’t like uncertainty.”
The trust of US consumers and businesses has raised concerns about the threat of tariffs and additional taxation imposed by President Trump, as well as higher prices. The Atlanta Federal Reserve, closely following GDPNOW trackers, suggests that the economy can shrink in the first three months of the year.
As travel expenses closely track wider economic activity, investors and analysts say a recession hampers the problem for the aviation industry. Airline revenues from the government have already been hit hard by crackdowns on federal spending.
Delta expects earnings in the range of 30 to 50 cents per share compared to previous estimates of 70 to 1 dollars provided in January.
Jeffries analysts said they expect a cut in Delta’s revenue estimates, but the size is even more severe.
The airline’s stock, which was already hit by a widespread sale on Monday, was routed in after-hours trading. Delta stock lost 14%, United fell 11%, and American Airlines fell almost 9%.
The S&P 500’s passenger airline index has dropped by 22% over the past month, compared to a 7.5% decline in the S&P 500 index. Delta stocks fell 24% last month.
Investors and analysts suggested that Delta’s wealthier, more diverse customer base meant it was better positioned to deal with weaker demand. But Bastian said the company sees softness in bookings from the aerospace and defense, automotive, media, entertainment and high-tech industries.
Outlook Revision
Other airlines are also looking forward to revisions to forecasts.
In a memo this month, Deutsche Bank analysts warned that the new economic “soft patch” puts a question mark on the industry’s revenue estimates.
And last week, Seaport Research Partners cut 2025 pre-tax profit estimates for Delta, United, the US and Southwest Airlines, saying that airlines did not cut a full-scale trade war on expenditures for 2025 or government spending sharply.
Several airlines will make presentations at the JPMorgan Industry Meeting on Tuesday.
Delta said it expects first quarter revenue to rise from 3% to 4% year-on-year.
On Monday, Trump’s leading economic advisers pushed back the recession, saying there are many reasons to be bullish about the US economy. However, a report from the Federal Reserve Bank of New York on Monday found that American households are becoming more pessimistic about their outlook.
