Delta Air Lines has announced a reduction in its forecast for first-quarter earnings and revenues, attributing the change to a decline in consumer and corporate confidence due to economic uncertainties. This shift has resulted in weakened demand domestically. Despite these challenges, Delta notes that its premium, international, and loyalty revenue growth trends have remained steady and aligned with expectations.
Following this announcement, Delta’s stock price fell by 13.2% in after-hours trading, having already dropped by 5.5% during regular trading hours. Overall, the airline’s stock has decreased by 16.8% since the beginning of the year. The update was issued just before Delta executives were scheduled to present at the J.P. Morgan Industrials Conference.
Delta now anticipates that its first-quarter revenue will increase by 3% to 4% compared to the same period last year, which is a downgrade from its initial forecast of a 7% to 9% rise. Additionally, the airline adjusted its expectations for first-quarter earnings per share to fall between 30 cents and 50 cents, a reduction from the previous projection of 70 cents to $1 per share.
Earlier in January, Delta reported fourth-quarter financial results that surpassed Wall Street’s expectations for both profit and revenue, helped by robust demand during the holiday season. However, in subsequent weeks, signs of a weakening U.S. economy have emerged, indicated by surveys showing an increase in pessimism among consumers and businesses alike. The Federal Reserve Bank of Atlanta’s real-time economic indicators also suggest the possibility of an economic contraction.
Market uncertainties have been exacerbated by concerns surrounding the effects of tariffs imposed by the Trump administration on goods imported from several key trading partners, including Canada, Mexico, and China. These uncertainties are contributing to volatility in the stock market.
Adding to Delta’s challenges was a recent incident in which one of the company’s planes caught fire and overturned during a landing attempt in Toronto. Miraculously, all 80 passengers aboard the flight from Minneapolis to Toronto’s Pearson International Airport survived the ordeal unharmed.
