Delta Air Lines revises financial outlook as demand for domestic travel wanes   

Delta Air Lines has seen its share price slide following the airline’s revision of its first quarter (1Q25) revenue forecast down by around 50%, amid cooling demand for US domestic travel along with future uncertainty that is gripping the US economy. The fall in the share price comes as the carrier’s CEO, Ed Bastian, prepares to give an investor update at the JP Morgan Industrials update on March 11, 2025.

In a statement issued ahead of the investor presentation, Delta said it has revised its March quarter outlook downward compared to the guidance it provided on January 10, 2025. The airline now expects its total revenue to grow 3% to 4% year over year during the March quarter, down from its earlier guidance of 7% to 9%. Meanwhile, its operating margin will be 4% to 5%, down from its previous guidance of 6% to 8%.

“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 said. “Premium, international and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base.”

Stephen Reeves / ShutterstockWhen Delta announced its initial guidance for 1Q25 in January 2025, the company said in an earnings statement that it was “building momentum” as it closed out 2024 and that demand trends accelerated through the fourth quarter of that year. “With strength continuing into the new year, we expect March quarter adjusted revenue to be 7% to 9% higher than 2024 on growth in capacity and unit revenue,” Delta stated.

However, several key economic factors have come into play since that statement was released, and the airline has also suffered a widely reported accident involving a subsidiary’s aircraft while attempting to land in Toronto. On February 17, 2025, Delta Air Lines Flight 4819 landed upside down at Toronto-Pearson International Airport. While no one died in the accident, the aircraft was written off, and there was widescale adverse publicity for the carrier and the crew members involved.   

Additionally, the airline’s initial response to the crisis was to unconditionally offer $30,000 to each of the 76 passengers involved, which sparked a debate about the level of compensation offered and its potential long-term effects on customer loyalty and legal liability in such accidents.

Speaking on CNBC’s Closing Bell: Overtime to discuss the various issues that are currently affecting the Atlanta-based airline,  Bastian said that a softness in domestic demand was attributable to weaker consumer confidence among both leisure and business customers. This fall in consumer confidence has led to an overall drop in bookings as consumers hold off booking travel until the macroeconomic outlook in the US economy becomes clearer. With President Trump refusing to deny that the US economy is heading for a recession and also seemingly undecided over the extent of the imposition of international trade tariffs, these factors are hitting companies like Delta, Bastian said.

He added that concerns about aviation safety from the Toronto accident, as well as other recent evets such as the American Airlines accident in Washington DC had “somewhat exacerbated the impact on us.”

Eliyahu Yosef Parypa / ShutterstockOther challenges facing Delta are how the company manages its ongoing labor shortage amid rising labor costs. Bastian stressed in his interview the importance of investing in employees and maintaining a positive work environment to attract and retain talent. Bastian added that the carrier must continue to adapt to evolving travel patterns, such as the rise of remote work and the increasing demand for leisure travel, to keep adjusting to travel demand patterns in all classes of service onboard.

Delta Air Lines is celebrating its centenary year in 2025, having begun life as a crop dusting operation in Georgia, US, in 1925. The airline currently operates 5,000 flights per day using a fleet of almost 1,00 aircraft. The company carried 200 million passengers in 2024.

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