Delta Air Lines filed an 8-K this afternoon with updated financial guidance, in advance of presenting at J.P. Morgan 2025 Industrials Conference. And the news is not good. They’ve cut first quarter revenue growth in half – and earnings per share down 50% – 70%.
The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand.
Delta does say that “premium, international and loyalty revenue growth trends are consistent with expectations” which suggests that weakness is domestic but not yet affecting what they’re seeing in co-brand credit card spend from American Express. That surprises me, although perhaps there’s a lag in Delta’s visibility into consumer spending trends.
I’ve been suggesting for some time that I thought this summer’s travel would have some weakness. American Airlines launching promotions to goose March (bonus loyalty points, Flagship lounge passes for businesses) told me that things were already week there.
Tomorrow’s conference comments – where American and United will be represented as well – should be interesting. It was this event five years ago where United’s Scott Kirby raised the urgency level across the industry over Covid, American’s Doug Parker kept largely to his status quo ante script, while Delta’s Ed Bastian struck something of a middle ground.
I wrote recently that President Trump’s tariffs could bring back the best frequent flyer deals in 15 years.
Crashing the economy is a bad thing! But it’s not equally bad in all ways. In fact there are always some beneficiaries. It just so happens that one of those is likely to be the value of airline miles.
Fewer seats sold mean more empty seats in the short run, and programs often liquidate those seats as saver inventory through their frequent flyer programs and try to goose incremental business by offering loyalty program bonuses.
Even Delta does this – though when they do it doesn’t seem like a deal compared to other programs, only compared to the miserly approach they usually take with the SkyMiles program.
As of this writing, Delta’s stock is down over 12% in after hours trading. United’s and American’s are down around 10%, assuming that what Delta is describing represents macro trends being felt across the airlines.
Markets broadly today, though, were down sharply as well. The Atlanta Fed’s GDPNow model predicts -2.4% growth for this quarter. When the model was suggesting negative growth initially, there were arguments that lags and anomalies were driving the number. It has recovered from even lower numbers. But the economy does appear to be in negative territory – bad for airlines, but airlines usually suffer when everything else does, too.
Zero sympathy for me all around.
Gary,
A number of retail companies and others have “sounded the alarm”. This isn’t new news except for impact on future earnings for DL ;and likely other airlines). Personally I’m fine with a recession and correction (or even a bear w over 20% reduction from the highs). Yes it hurts to see my portfolio go down 6 figures in a day but I’m a buyer, not a seller, at these prices and don’t need to cash anything out for quite a while. The market needed to reset, blow off some of the froth and form a base for the next leg up
Delta gets it. Anyone who isn’t willfully ignorant gets it. And no, a recession is not worth the potential deals, Gary.
@AC — Bah! Nice attempt at sane-washing. What happened to the ‘price of eggs’ and fixing everything on ‘Day 1’—now it’s ‘give Him time’ and other excuses. Your ‘team’ is wrecking the economy yet again. It’s His idiotic tariffs. But, but…He’s a ‘stable genius’!
@runningjock-
You’re right, we have zero sympathy for you.
Or did you mean “from you?”
Haha autocorrect
@AC.
Like you, I’m not happy seeing my portfolio down the past week or so however 25% of my portfolio is in cash (fixed income) ready to be deployed.
That being said, I’m not so sure I’ll be deploying it too quickly as I believe the market is still over-valued, not to mention all of the uncertainties, etc.
Regarding Delta…eeks!
I was under the impression, based on the writings of one of your regular commentators, that Delta is the world’s only PERFECT airline. If an airline really is perfect, would it have to cut its investor guidance? Asking for a friend. LOL!
@DesertGhost — Macroeconomics vs. microeconomics. Delta realizes that the overall economy is going to shit; and that as a result, it’s going to negatively affect their bottom line as a company. Tell your friend!
Zero sympathy for a country that was so stupid, it elected this monster twice. The economy is headed for stagflation.
@lavanderialarry — As an American, I have sympathy for all the innocents here and around the world that will be harmed by our failure. We knew better.
Trmp-Msk-Vnce are king of this chaos economy of their making and this month’s stock market crash. They inherited a strong economy from the prior Admin on January 20th of 2025, and already they have trashed it and crashed it.
MAGA and its enablers are bad for America, and it even shows in the airlines’ financials and stock prices. AAL, DAL and UAL nose-dived even further in after hours trading.