Top Line
Within the last 24 hours, four major US airlines, Delta, America, Southwest and JetBlue, have bleaked the outlook for early 2025, suddenly plunging softer demand for domestic airplanes and a decline in consumer confidence into a sudden, volatile economic situation.
Major US airlines see demand for domestic air travel as low as government travel. …(+)
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Important facts
In a regulatory filing after the market closed on Monday, Delta cut its first-quarter forecast of 40-50 cents per share, noting that “recent decline in consumer and business confidence will drive increased macro uncertainty and softer domestic demand.”
American Airlines said in a SEC filing on Tuesday it expects to lose 60-80 cents share in the first quarter of 2025 at 60-80 cents. Washington DC
Southwest Airlines reduced guidance on its key industry indicator, revenue per sheet mile (RASM) in its SEC filing on Tuesday.
JetBlue Airways also adjusted its forecast down in its SEC filing on Tuesday, forecasting a 4% lowest loss rather than 2% for the quarter.
The Dow Jones US Airline Index fell about 6% before the market opened on Tuesday.
Economists say the risk of a recession is increased in part due to President Donald Trump’s hostile use of tariffs on his traditional allies, but Trump has promised that the short economic pain is worth the long-term benefits.
Important background
A decline in domestic air travel demand could be a sign of a weakening of the economy. “We know that GDP is one of the most important factors our industry is correlated,” Delta CEO Ed Bastian told CNBC on Monday. Bastian said in February that he added “a fairly significant change in GDP sentiment” and “a trust signal to monitor” that “consumer spending has begun to stall.”
Did Doge Cuts affect travel demand?
In the SEC submission, Southwest is cited as one reason for “low government travel,” with United Airlines seeing a decline in government employee travel after Trump’s inauguration. United received approximately $52 billion in passenger revenue in 2024, so the 2% decline in government passengers would translate into more than $1 billion in revenue.
Big numbers
5.7%. This is more than a 2.5% increase in capacity 2024, according to the International Air Transport Association’s (IATA) global passenger market performance data for the full year. Globally, the industry has recorded record demand for air travel, with traffic volumes increasing by 13.6% year-on-year and capacity increasing by 12.8%.
What should I see
Historically, lower demand for air travel usually results in more affordable airfares, special offers and promotions.
Read more
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