Delta sees sharp fluctuations in revenue in Q2
Domestic travel bookings have softened
Company’s plan to cut capacity growth
CEO says airlines will postpone aircraft delivery to avoid tariffs
Chicago – Delta Air Lines canceled its 2025 financial forecast and expected lower than expected current quarterly profits on Wednesday, saying travel demand is largely “stagnant” as our tariffs fuel economic uncertainty.
The American airline said it faces soft demand for aircraft facing tariffs and cuts to protect its profit margins. These comments reassure investors and helped Delta make up 6% of the afternoon trade.
Consumer and business confidence in the United States has slashed sharply as President Donald Trump’s tariffs on imports on most parts of the world raise the ghost of inflation and lower economic growth. Global brokerage firms have also removed their expectations of recession opportunities.
Travel is a disposable commodity for many consumers and businesses, so the growing risk of recession shrouds the airline’s prospects and triggers a stock sell-off.
While Delta expects to provide “stable” profitability and “meaningful” cash flow this year, CEO Ed Bastian said the year-round outlook that providing an updated year will be “premature birth.”
“Growth has largely stopped given the broad economic uncertainty of global trade,” he said in his earnings call.
Delta forecasts profit per share of $1.70 to $2.30 for the quarter ended June. According to data compiled by LSEG, the midpoint of the forecast is $2 per share, while the average estimate for analysts is $2.30.
The company highlighted uncertainty, with its total revenue in the second quarter going to be 2% to 2% lower than a year ago.
It said both leisure and corporate customers have eased bookings, meeting demand for family travel. However, demand for premiums and international travel remains resilient.
Delta forecasts record profits this year as a dramatic reversal starting in January. The airline’s stock lost 37% this year.
The broad decline of the New York Stock Exchange ARCA Airline Index was about 31%, underperforming, while the S&P 500 was underperforming.
Delta is the first major operator in the United States to report its earnings. United Airlines will report its first-quarter results on April 15.
Analysts expect similar comments from Delta competitors. Last month, major airlines cut their first-quarter earnings estimates, citing increased economic concerns.
Some indicators indicate future pain. Air tickets for summer trips sold through third-party online travel agencies have dropped about 13% from a year ago, according to aviation analytics company Cirium.
“The airline is in the storm,” TD Cowen’s Tom Fitzgerald said in a note.
Aircraft delivery
As demand slows, U.S. airlines have begun cutting flights to avoid lowering fares and protecting margins.
Delta said on Wednesday that the growth in the second half of the year had decreased since a year ago. Previously, it expected its capacity to grow by 3% to 4%.
Bastian said the company would postpone its aircraft delivery instead of paying tariffs to it.
By the end of 2024, Delta estimates it will acquire 43 aircraft from European strategic maker Airbus this year. Trump’s 20% tariff on EU products has expanded the cost of many aircraft.
“If you start putting 20% incremental costs into practice on the plane, it’s very difficult to make that math work,” Bastian said. “We’re going to delay any delivery to them about the tax.”
In addition, about 30 aircraft will be retired this year to save maintenance costs. It is estimated that its staff is still lower than last year.
Savi Syth, an analyst at Raymond James, said the Delta’s measures to protect its profits are likely to be well received by investors.
This article was generated from the Automation News Agency feed without the text being modified.
