- Airlines CEOs are adjusting their forecasts amid economic uncertainty and softened consumer demand.
- Natural disasters and air crashes in January and February haven’t helped.
- Shares of American, Delta, Southwest, and United are all trading down this year.
At the start of the year, airline CEOs raved about what they thought would be a strong year of profits, thanks to booming travel demand and the popularity of premium seats to Europe.
But an unrelenting series of natural disasters, tragic crashes, and economic uncertainties have dampened their mood and sent stock prices careening.
Delta CEO Ed Bastian referred to the recent events as a “parade of horribles” at an investor conference hosted by JPMorgan on Tuesday. He said the airline will reduce its first-quarter revenue outlook by $500 million, or by about 4%.
American Airlines and Southwest Airlines have similarly slashed their earnings forecast for the first quarter, citing declining demand, safety concerns, and declining government travel.
“If [the wildfires and snow storms] were the only two issues, we probably wouldn’t be talking about major guidance adjustments,” American CEO Robert Isom said at the JPMorgan conference.
United didn’t adjust its guidance, but CEO Scott Kirby said the airline expects to land at the lower end of its forecast. The airline already said it could lose millions due to declining government travel following the recent mass federal firings.
Delta shares are down about 23% year-to-date, while United is experiencing a nearly 24% slump. Year-to-date performances of Southwest and American are down about 10% and 35%, respectively.
Airlines took a hit from unusually powerful natural disasters
2025 kicked off with a series of deadly wildfires in Los Angeles. These unusual January fires took place outside the area’s normal April to October fire season and temporarily paralyzed commercial air travel in Southern California.
That was followed by two major snow and ice storms that swept across the Southeast US — including Florida — in successive weeks, disrupting thousands of flights.
According to Bastian, January’s bad weather and natural disasters did about “$100 million of damage” to Delta’s finances. Jordan said Southwest was similarly impacted by the LA fires.
Isom said at the conference that the Sun Belt weather had an “inordinate impact on American,” noting the operational disruptions caused by the January storm to the carrier’s mega hubs in Dallas/Fort Worth and Charlotte.
Two crashes made fliers nervous and dampened flight bookings
After weather disruptions, the deadly midair collision between an American flight and a military Blackhawk helicopter in January set the downturn in motion.
“January actually looked pretty good,” Bastian said at the conference. “The revenue environment was pretty strong. The booking trends were healthy. Then we had the tragic American Airlines incident.”
Delta saw growth in corporate travel and bookings “immediately stall” following the crash, it said.
Southwest COO Andrew Watterson said the airline also experienced “suppressed bookings” in the days following the crash.
Before anything could recover, a Delta flight crash-landed in Toronto in February.
Even though the crash did not result in any fatalities, the compounding effect of the two back-to-back incidents — as well as a near-miss in Chicago and several other accidents involving smaller airplanes — negatively affected consumer confidence in air travel.
Despite softened bookings in the first quarter, Isom said he does not believe the DC crash will have a long-term impact on the US airline industry or American.
Recession fears have dampened demand
Waves of mass layoffs, a tumbling stock market, and a trade war have led some corporate and price-sensitive economy fliers to hold off on travel.
“We talked to all of our corporate customers, and everyone is ready to go,” Bastian said. “But in the face of the amount of macro uncertainty, they’re pulling back a little bit on travel, not in an organized manner, just kind of waiting to see what’s going to transpire.”
Delta and United said they plan to cut capacity through the summer to align with demand. United said it’s retiring 21 aircraft ahead of schedule, saving the airline $100 million this year on engine overhauls.
Soft consumer demand has been exacerbated by waning travel bookings from the US government thanks to the mass layoffs and dramatic cost cutting measures implemented by the Trump Administration and the so-called Department of Government Efficiency, or DOGE.
“Government is 2% of our business,” United CEO Scott Kirby said. “Government adjacent, all the consultants and contractors are probably another 2% to 3%; that’s running down 50% right now.”
Isom said American’s historically profitable presence at Ronald Reagan Washington National Airport in DC has taken a particular hit, but added the airline’s government-contracted business accounts for only 1.5% of its total revenue.
Airlines are still optimistic about the year
The first quarter of the year is generally the weakest financial period for airlines. So, it’s common to see airlines report losses or lower-than-expected profits in Q1, even during banner years.
United, Delta, Southwest, and American all say they remain hopeful of a turnaround, especially going into the higher-demand spring and summer months.
“Good news is that international, long haul, Hawaii, premium all remain really strong,” Kirby said at the conference.
Isom said American is “nimble” in its ability to adjust to economic and demand changes and will benefit from its renewed ticket distribution strategy that it expects will earn back high-paying corporate customers.
Jordan said Southwest is optimistic about its future profitability amid an operational shake-up that will now charge for things like bags and assigned seats.
Bastian said continued premium demand, lower fuel prices, profits from its credit card, and an expectation that much of the quarter-one hiccups are temporary have sewn optimism for the full year.
“Even though we just went through a little bit of a parade of horribles, we will still be just as profitable as we were in the prior year,” Bastian said of Delta’s first-quarter results. “We anticipate margins continuing to expand, even with the slower start to the year.”
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