Delta slashes profit forecast as economic uncertainty hits domestic travel

ATLANTA - Delta Air Lines has sharply reduced its first-quarter profit forecast, pointing to growing economic uncertainty that has weakened both business and leisure travel, according to multiple sources. The Atlanta-based airline is the first major U.S. carrier to report that financial concerns among consumers and corporations are directly impacting domestic travel demand.

Year-over-year growth rate lowered

What we know:

Delta originally projected a 7% to 9% year-over-year growth rate, but the airline has now lowered that estimate to just 3% to 4%, according to Reuters. The company also cut its earnings per share forecast, reducing it from up to $1 per share to a range of $0.30 to $0.50. In a regulatory filing on Monday, Delta says its profits are down because people and businesses are feeling less confident about the economy. As a result, fewer people are booking flights within the U.S.

Despite these challenges, Delta stated that demand for its premium and international travel segments remains steady, suggesting that higher-spending travelers are less affected by the current economic climate.

Businesses and consumers pulling back

The backstory:

The airline industry saw a post-pandemic boom, as travelers engaged in so-called "revenge spending" on experiences, including flights. However, Delta's downward revision signals that the trend may be cooling as both businesses and consumers pull back on spending amid broader economic concerns.

CEO Ed Bastian spoke about the shift in demand during an interview on CNBC’s "Closing Bell" on Monday. While he stated that he does not expect a recession, he acknowledged that consumer confidence has weakened, and that both leisure and business travelers have cut back on bookings.

Safety concerns also a factor

What they're saying:

Bastian also addressed safety concerns, acknowledging that they have had some impact on Delta’s business. He cited the deadly midair collision between a regional jet and an Army helicopter in January in Washington, D.C., as well as Delta’s non-fatal crash landing in Toronto last month, as events that may have made some travelers more hesitant to fly.

RELATED STORIES

• 2 passengers treated after Delta flight forced to return to Atlanta airport due to 'haze'
• Delta plane crash: Passenger describes landing of flight 4819 in Toronto
• Delta plane crash: What we know after jet flips on Toronto runway
• Who was on the plane that crashed in DC? What we know so far about the victims

By the numbers:

• Delta's first-quarter growth estimate is now 3%-4%, down from 7%-9%.
• The airline’s earnings per share projection was cut from up to $1 to just $0.30-$0.50.
• Delta’s stock dropped 14% on Monday following the revised outlook.

Other airlines preparing reports

What's next:

Delta’s financial performance will be closely watched as other major U.S. airlines prepare to report their earnings. If other carriers report similar slowdowns in domestic travel demand, it could signal a broader shift in the industry. Meanwhile, Delta says it will continue to focus on its premium and international segments.