Delta Air Lines planes are seen parked at Seattle-Tacoma International Airport on June 19, 2024 in Seattle, Washington.
Kent Nishimura | Getty Images
Delta Air Lines slashed its first-quarter revenue and profit outlooks, citing weaker domestic demand, backing up growing concerns about lackluster sales in some corners of the travel industry.
Delta expects revenue in the quarter ending March 31 to rise no more than 5% from last year, down from a forecast in January of 6% to 8% growth. It slashed its adjusted earnings forecast to 30 cents to 50 cents per share from a previous guidance of 70 cents to $1 a share. Delta’s shares were off more than 13% in after-hours trading after falling more than 5% in the regular session on Monday.
“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 in a securities filing.
Delta CEO Ed Bastian told CNBC’s “Closing Bell” on Monday that he does not expect a recession but said consumer confidence has weakened and that both leisure and business customers have pulled back on bookings.
He said concerns about safety “somewhat exacerbated the impact on us” after the deadly midair collision between a regional jet and an Army helicopter in January in Washington, D.C., as well as Delta’s crash on landing in Toronto last month that was not fatal.
Bastian’s comments come after a broad market sell-off.
Delta’s forecast, delivered after the market closed on Monday, comes a day before a JPMorgan airline industry conference in which CEOs are expected to update investors on current demand trends. Delta said in a filing that demand for premium travel, international travel and loyalty revenue growth is still in line with its expectations.
American Airlines, Southwest Airlines and United Airlines are among the other carriers that will also update Wall Street on demand trends.
Airline shares prices have dropped sharply in recent days as growing signs of weaker consumer spending hit the sector, which had been resilient compared with other industries in the wake of the Covid-19 pandemic.