Delta Air Lines Cuts Profit Forecast By 50-70%, Blames Eroding Consumer Confidence + Economic Uncertainty

Shares prices of Delta Air Lines are tanking after the Atlanta-based carrier sharply revised its profit forecast downward, blaming eroding consumer confidence and growing economic uncertainty over the US economy.

Delta Air Lines Cuts Profit Forecast Citing Diminished Domestic Demand, Lower Consumer Confidence, And Uncertainty Over Economy

After markets closed on Monday, Delta filed an 8-K (regulatory form) reflecting updated guidance on profit expectations. For the first quarter of 2025, Delta now projects:

• Revenue growth of 3-4% (down from 7-9%)
• Operating margin of 4-5% (down from 6-8%)
• Earnings per share of $0.30 – 0.50 (down from 0.70 – 1.00)

Delta explains:

The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand.

At this point, it has not seen any adverse changes to premium cabin, international, or loyalty growth:

The news has hurt Delta’s stock price, with share prices down over 11% in after-hours trading (as of press time):

What Is Going On Here?

Everyone may live in their own echo chamber, but there is one reality and one truth. However, I think it’s too early to assign “blame” over this poor guidance. Instead, I think we are seeing many factors coming together in what amounts to a perfect storm:

• waning of revenge travel
• new contracts for pilots and flight attendants that are unsustainable
• economic uncertainty created by the new administration
• a settling of the economy that precedes the current administration
• reckoning of the crazy amount of debt Americans hold as individuals and as a nation
• destruction of loyalty by airlines and credit card companies, particularly the devaluation of points
• overcapacity on international routes based on earlier revenge travel years
• overall uncertainty of consumers in general

Are some factors more to blame than others? Likely, but I think the above factors heavily play into what is going on here.

Later this morning, Delta and other carriers will present at the JP Morgan Industrials Conference. Will United Airlines and American Airlines announce similar weakness, or is this uniquely a Delta issue? My hunch is we will see similar guidance from United and American.

If America is enering a recession and market correction, I think the vast networks of the “Big 3” will provide some cushion, but a worsening economy may also present a repevie for budget carriers liek Sprit and Frontier if more Americans flock to “cheaper” otoins in the wake of growing economic storm clouds.

CONCLUSION

Delta has revised revenue and profit forecasts downward, blaming reduced domestic demand caused by sinking consumer confidence and economic uncertainty.

I’m not surprised…I predicted this last week with all the uncertainty over the on-again, off-again tariff policy and the general breakdown of historical alliances in the West. But assigning blame at this point is premature: we will have to see how this unfolds.

Later today, we should get a better idea when we hear from United and American as well.

image: Delta Air Lines