Delta Air Lines, which had forecasted its best financial year ever as of January, announced on Wednesday that the global trade disruptions have generated such significant uncertainty that it has withdrawn its performance expectations for 2025.
This shift marks a notable change for the country’s most successful airline financially, and other corporations are starting to follow this pattern. Hours after Delta withdrew its annual forecast, Walmart also retracted its first-quarter operating profit projections due to tariff threats.
In response to an anticipated spending decrease, Delta is reducing its flight schedule as both businesses and households prepare for potential price hikes. CEO Ed Bastian explained, “Growth has largely stalled amid widespread economic uncertainty surrounding global trade. We are concentrating on controlling the factors within our reach to protect margins and cash flow, including curtailing planned capacity expansion in the second half of the year.”
During the first quarter, Delta reported earnings of $240 million, translating to 37 cents per share, compared to $37 million or 6 cents per share during the same period last year when profits were impacted by a new contract with pilots. Excluding one-time charges and benefits, earnings stood at 46 cents per share, surpassing the 40 cents forecasted by analysts surveyed by Zacks Investment Research.
Shares of Delta Air Lines Inc. experienced an increase of over 8%. Analysts from Citi have indicated that Delta might be the ideal airline for investors who desire to maintain exposure to the travel industry despite looming uncertainties.
Citi Investment Research’s Stephen Trent noted, “Overall, these results highlight a carrier with a resilient business model, despite significant uncertainties surrounding demand and global tariff issues.” Nevertheless, the sector has suffered this year, with investors diverting their funds elsewhere in anticipation of tariff-induced challenges. Delta’s shares have dropped 41% this year, although this is relatively better compared to competitors American and United.
Operating revenue for the quarter rose to $14.04 billion from $13.75 billion, exceeding Wall Street’s projection of $13.81 billion. The average fuel price per gallon decreased from $2.79 to $2.47.
Delta previously cut its first-quarter earnings and revenue expectations, citing weakened domestic demand due to declining consumer and corporate confidence induced by economic uncertainty. In March, Delta anticipated that first-quarter revenue would increase by 3% to 4% compared to the previous year, falling short of the earlier estimates of 7% to 9%.
In January, Delta’s fourth-quarter results had surpassed Wall Street’s profit and revenue assumptions, driven by robust demand during the holiday peak. However, conditions have worsened since then due to an escalating trade war, leaving consumers and businesses uncertain about future developments. This uncertainty has led to reciprocal spending constraints, including travel expenses.
Delta anticipates a June quarter profitability ranging from $1.5 to $2 billion, but refrains from updating its full-year outlook citing “economic clarity” issues. Previously, Delta had projected 2025 earnings exceeding $7.35 per share and a free cash flow surpassing $4 billion. At that time, the company expected ongoing strong travel demand, which has now evidently altered.
A month ago, Bastian was optimistic enough to maintain Delta’s annual guidance. During the JPMorgan Industrial Conference, he mentioned feeling confident about the company’s position. “There’s nothing from the past couple of months indicating any issues in this,” he said, expressing expectations for margin expansion even amidst a slow beginning to the year.
However, uncertainty surrounding U.S. trade policy has unsettled companies across all economic sectors since then. In Delta’s earnings call on Wednesday, Bastian highlighted a decline in domestic consumer and business travel amid such uncertainty, although the international market has demonstrated more resilience so far.
Bastian insisted that given the current fuel prices and actions under consideration, Delta is “well-positioned to achieve solid profitability and significant cash flow in 2025.” For the next quarter, Delta targets earnings between $1.70 and $2.30 per share, with total revenue adjustments ranging from a 2% decrease to a 2% increase. FactSet analysts anticipate earnings of $2.21 per share.
“2025 is unfolding differently than we anticipated at the year’s onset,” Delta President Glen Hauenstein remarked. “As a consequence, we are adjusting to prevailing conditions while adhering to our long-term strategy.”