Delta Air Lines slashed sales and earnings expectations for the first quarter, blaming a decline in consumer and corporate confidence triggered by economic “uncertainty”.
The Atlanta-based group’s profit warning after the market close on Monday was in stark contrast to the guidance it provided two months ago, in which it painted a much more upbeat outlook than rivals owing to expectations that passengers’ continued willingness to pay for premium seats would push it to record profits this year.
Delta’s cautious outlook, which sent its shares tumbling more than 12 per cent in after-hours trading, is one of the strongest signs so far that Donald Trump’s tariffs are eroding consumer and business sentiment. Wall Street stocks dropped sharply on Monday after the president shrugged off recession concerns even as Wall Street banks cut their US economic forecasts.
Delta on Monday said it expected total revenue growth of 3 per cent to 4 per cent in the first three months of this year, down from its January 10 guidance of 7 per cent to 9 per cent growth. Earnings are expected to be in the range of 30-50 cents a share this quarter, down from the earlier forecast of 70 cents to $1 a share.
Delta said: “The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand.”
The airline industry closely tracks GDP, with consumers buying tickets when they feel they have money to spend. JPMorgan analyst Jamie Baker noted earlier this month that most North American airlines had seen their share price gains slow compared with 2024’s final months.
“Investor consternation has crescendoed once again, focused primarily on the consumer, domestic capacity and the impact of reduced government travel,” he said.
Delta has been a standout among the big four US carriers, with a reputation for delivering higher profits than its main rivals in recent years and operating flights on time. Last year it delivered $3.5bn in net profit, compared with $3.1bn at United Airlines and $846mn at American Airlines.
Chief executive Ed Bastian struck a bullish tone in early January when he told investors 2025 was “off to a great start” with the airline “on track to deliver the best financial year in our history”, driven by increasing revenue and expanding margins.
“The US consumer is financially healthy and continues to prioritise spending on experiences,” he said at the time.
By contrast, on Monday he told a CNBC interviewer: “We saw companies start to pull back. Corporate spending started to stall. Consumers in a discretionary business do not like uncertainty.”
Despite Monday’s warning, the carrier said revenue growth trends for premium, international and loyalty flyers were “consistent with expectations and reflect the resilience of Delta’s diversified revenue base”.