A Delta Air Lines Boeing 767-332(ER).
Joan Valls | Nurphoto | Getty Images
Airline stocks slid further on Tuesday as Wall Street’s concerns about weaker-than-expected travel demand amid looming tariffs and a pointy drop in consumer confidence proceed to weigh on the sector.
Shares of Delta Air Lines fell greater than 2% in trading Thursday after Jefferies downgraded the carrier, essentially the most profitable within the U.S., to a hold rating from buy, and nearly halved its price goal to $46, several weeks after the airline cut its first-quarter guidance.
The bank said Delta would “likely” reduce its 2025 forecasts. While concerns have grown, particularly about more price-sensitive travelers, Delta executives have said the airline has been growing its share of revenue from its higher-end cabins like top quality, in addition to its lucrative bank card partnership with American Express.
Delta kicks off U.S. airlines’ earnings season when it reports results next Wednesday morning.
Jefferies also cut its rating on American Airlines, Southwest Airlines and Air Canada, which has outsize exposure to a slowdown in cross-border travel with the U.S.
American also dropped 2%, while Southwest sank greater than 5%.
United Airlines stays Jefferies’ sole buy airline of the U.S. carriers, though it also slashed its price goal by 48%.
Airline executives at a JPMorgan industry conference in mid-March warned about softer-than-expected demand, particularly for domestic travel, which makes up the majority of the U.S. travel industry’s revenue.
U.S. household credit and debit card spending overall was up 1.5% over last 12 months as of March 22, but spending on airlines dropped 7.2%, in keeping with a Bank of America report last week.
On Monday, the Bank of America Institute wrote in a report that the decline in travel card spending “may very well be that the recent drop in consumer confidence is translating into people hesitating to book trips, or considering paring them back” but added that “bad weather and a late Easter this 12 months are also likely playing an element.”
The NYSE Arca Airline Index, which tracks mostly U.S. carriers, fell 18% in the primary quarter, outpacing the S&P 500′s decline and marking the sector index’s biggest percentage drop for the reason that third quarter of 2023.
Correction: The NYSE Arca Airline Index fell 18% in the primary quarter. A previous version misstated the drop.
