Delta Air Lines stock falls, other airlines follow, as talk of a travel slowdown compounds economic fears

[ResidentialBusiness]

U.S. airline stocks are tumbling today after Delta Air Lines (NYSE: DAL) issued revised guidance for its first quarter. The carrier said it now expects total revenue, operating margins, and earnings per share to be below what it initially forecasted for Q1 2025. Here’s what you need to know.

Delta Air Lines revises its Q1 2025 forecast

Yesterday, Delta Air Lines filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC), notifying the agency that it was revising its initial Q1 2025 forecast. Delta’s Q1 runs from January to March 2025.

In the filing, Delta said it now expects to achieve the following in the quarter that ends on March 31:

• Total revenue (YOY): growth of 3% to 4% (down from an original forecast of growth of 7% to 9%)
• Operating margin: 4% to 5% (down from an original forecast of 6% to 8%)
• Earnings per share (EPS): between $0.30 and $0.50 (down from an original EPS forecast of between $0.70 and $1.00)

Why did Delta revise its forecast?

In short, it seems Delta is concerned that not as many people as initially expected will be flying during its Q1. 

In the filing, Delta said that its “outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand.” 

Delta seems to believe that both consumers and corporations are jittery about the economy, and due to that, they are changing or will change their travel plans.

If the economy pulls back or even goes into a recession, consumers will pull back on discretionary spending, including travel.  If people jettison their travel plans, the number of airline tickets sold will also decrease.

Likewise, if the economy is headed for a downturn, companies will try to offset any losses by reducing spending. One way to reduce spending is by limiting business travel. After all, why fly to a meeting when you can just hop on a video call?

However, as noted in Delta’s 8-K, the softness Delta is seeing is limited to domestic demand: “Premium, international and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base,” the company stated.

How did Delta and other airline stocks react to the news?

Not well. Shares in Delta Air Lines were down over 10% in premarket trading this morning at one point. As of the time of this writing, DAL shares are down about 7.5%. 

Meanwhile, shares in other major U.S. carriers are also falling. American Airlines Group Inc. (Nasdaq: AAL) is currently down almost 6%, and United Airlines Holdings, Inc. (Nasdaq: UAL) is almost down 7% as of the time of this writing. 

It should be noted that today’s premarket drops, which seem to be a response to Delta’s revised forecast, come after U.S. airline stocks already got hit somewhat hard yesterday.

On Monday, the Nasdaq, S&P 500, and Dow Jones plunged after President Trump refused to rule out an upcoming recession. For weeks, economists have warned that the U.S. could undergo one due to weakening consumer confidence and the tariffs that Trump has threatened against America’s largest trading partners. Economists fear the tariffs could result in an all-out trade war.

One airline stock that is bucking today’s downward trend, however, is Southwest Airlines Co. (NYSE: LUV). As of the time of this writing, LUV shares are actually up about a quarter of a percent after the budget airline announced that it would start charging some flyers for checked baggage.

As for Delta, as of yesterday’s close, shares in DAL had fallen nearly 17% since the start of the year. As of the time of this writing, DAL shares are currently sitting around $46 in premarket trading. That’s a low not seen since September 2024.

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