Travel Data Points Flashing To An Imminent Recession
Warning signs from the travel space are flashing a recession is coming, here are those points and a reason it may not be entirely bad.
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American, Delta, And United All Revise Down
American Airlines indicated on a recent earnings call that it would revise its first quarter to be even worse than expected. Already projecting a loss, the airline has doubled to tripled its first quarter losses.
“American Airlines on Tuesday forecast a bigger first-quarter loss, amid concerns that tariff pressures and government spending uncertainties could dampen travel demand.
The airline now expects adjusted loss per share in the range of about 60 cents to 80 cents, compared with its previous forecast for a loss of about 20 cents to 40 cents.” – Reuters
Ed Bastian, CEO of Delta Airlines, advised that his profitable airline would make less money in the first quarter of 2025:
“The revised outlook called for sales growth of 3%-4% (vs previous expectations of 7%-9%) and an operating margin of 4%-5% (vs. previous expectations of 6%-8%). Similarly, EPS was revised to $0.3-$0.5 (vs earlier expectations of $0.7 – $1.0).” – Yahoo! Finance
United’s business may have a more direct relationship to government and consultancy accounts based on its Washington-Dulles hub and it is forecasting a weakened first quarter of 2025 too. Here’s what Scott Kirby, United CEO had to say:
“We have also seen weakness in the demand market,” Kirby said. Government travel is about 2% of United’s business, but other workers’ travel is also affected, like consultants and contractors, which account for another 2% to 3%.” – CNBC
Americans Planning Vacations Down 20% From 2024
Fortune cited a report from The Conference Board that showed a sharp drop in Americans planning to take a vacation in the next six months.
“In February, the number of Americans planning a vacation in the next six months was the lowest in 15 years, excluding the pandemic when travel was pretty much obsolete, according to a survey conducted by the Conference Board. Apollo chief economist Torsten Slok points to uncertainty as the underlying rationale.” – Fortune
Last year at the same time, 49.7% of Americans planned to take a vacation in the next six months, but that’s down to 39.7%. The last time it was this low corresponded to the latter months of the credit crunch, or the 2008 housing crisis – about 20% lower than last year.
It’s important to note that while this is not business or government travel, those that work in the government or businesses that serve the government may not feel confident about their jobs and thus are not planning to take a vacation until the future becomes clearer. It’s unknown how much (if any) of this is related to such sentiment and how much of this is simply a souring outlook generally.
Benefits Of A Recession
While no one wants to talk about a recession, I stated here on Live And Lets Fly more than a year ago that the economy was defying all logic and business sense. It could be that compounding inflation, though it’s nearly stopped entirely at this point (core inflation was up just 0.2% from the prior month), that has finally caught up to the economy. It could be the concern of the future economy, the affect tariffs, trade restrictions, and travel bans could be causing concern. It could be something else entirely.
A recession, especially for an economy that