Delta Air Lines is warning of a potential shift in air travel trends and “softer close-in demand” as it lowers financial expectations for the first quarter.
It is the first acknowledgement from a major US carrier that recent financial turmoil related to US President Donald Trump’s tariffs on longtime trade partners and growing recession fears are impacting airlines’ earnings expectations.
And it is a potentially ominous sign from Delta, which had previously said it was riding “accelerating” premium and international demand into the first quarter.
Ahead of presenting at a JP Morgan conference on 11 March, Delta said that it now expects first-quarter revenue to increase year-on-year by 3-4%, compared with its previous forecast of 7-9% higher revenue in three months ending 31 March.
Delta also revises margin expectations downward, to 4-5% from 6-8%.
”The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand,” Delta says. ”Premium, international and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base.”
Executives with Delta, JetBlue Airways, Southwest Airlines, Sun Country Airlines and United Airlines are scheduled to speak at the conference, which should provide insight into the market forces at play and potential impacts on air travel.
The conference is expected to focus largely on the suddenly gloomy US economic outlook, driven by growing consumer pessimism, uncertainty over tarrifs and several days of heavy stock market losses.
Delta expresses confidence that it remains in a strong long-term position, touting its balance sheet, three-to-five year financial plan and “industry-leading operational and cost execution”.
The company turned in an $843 million profit during the fourth quarter, compared with profits exceeding $2 billion during the same period of 2023.
