Airlines expected to chop 2025 outlooks as travel demand falters

Waning travel from Canada. Signs of weaker demand across the Atlantic. Mass government layoffs. Tariffs. Consumers pulling back on travel bookings. The worst stock market swoon since 2020. All are signs of concerns for the airline industry.

U.S. airlines will likely cut their 2025 outlooks after they report earnings starting this week, analysts say, pointing to cracks in demand for travel, which customers had prioritized even through years of inflation.

“Clearly, things are softer than they were in January,” Raymond James analyst Savanthi Syth told CNBC.

Delta Air Lines last month cut its first-quarter forecast, citing weaker-than-expected corporate and leisure bookings. American Airlines and Southwest Airlines also trimmed their outlooks for the primary half of the 12 months.

Since then, airline stocks have tumbled further, as concerns have grown about weaker demand amid President Donald Trump’s policies, most recently, latest globe-spanning tariffs of at least 10%.

“The extent of sell-off is worse than the fact without delay, however it doesn’t necessarily mean it won’t be the fact six months from now,” Syth said.

Wall Street analysts have slashed their price targets and downgraded their rankings on U.S. airlines, even Delta, essentially the most profitable of the U.S. carriers. Like its foremost rival United Airlines, Delta has said high-income consumers who’re willing to shell out more for roomier seats have been a boon to its bottom line in recent times.

Nonetheless, they are not expecting anything just like the pandemic in 2020, when countries closed their borders and air travel demand essentially dried up overnight. It was still the industry’s worst-ever crisis. Demand hasn’t disappeared this time, but as an alternative is showing signs of strain that other industries have also seen.

Delta might be the primary of the U.S. airlines to report quarterly results before the market opens on Wednesday.

Airline stocks have tumbled this 12 months. Delta has plummeted greater than 38%, American has fallen over 45% and United has dropped greater than 40% up to now in 2025.

The turn in sentiment is stark for the travel industry, which has enjoyed strong demand, particularly for international destinations, because the end of the pandemic, as consumers prioritized experiences like weekslong trips through Japan and jaunts to Portugal over buying goods.

Signs of lower international demand, along with weaker travel from Canada, are emerging in U.S.-Europe bookings.

Bookings between the U.S. and Europe for June through August are down about 13% over last 12 months as of March 31, in accordance with aviation data firm Cirium, though it cautioned that the figures come from online travel agencies and never direct bookings on airline sites.

Still, some analysts are concerned.

“We expect a world of slower growth, higher inflation, and a more isolationist U.S. to significantly disrupt the competitive environment for airlines,” TD Cowen wrote on Friday. “We’re concerned that the brand new economic paradigm causes one other structural leg down in corporate travel while the negative wealth effect further dampens consumption, especially by Baby Boomers.”

The Bank of America Institute wrote last week that it “might be that the recent drop in consumer confidence is translating into people hesitating to book trips, or considering paring them back,” though it added that “bad weather and a late Easter this 12 months are also likely playing a component.”

Airline executives have said that government travel, which accounts for just a number of percentage points of their business but tens of millions of dollars in revenue, has dried up through the mass layoffs and other cost cuts. They’ll face questions on earnings calls this month about negative effects, resembling job cuts at firms like consulting giant Deloitte.

One other query might be how resilient premium travel demand is. Syth said the front of the airplane will likely still be full, but that airlines could stimulate demand, if needed, by offering attractive point redemptions for frequent flyers.

“The cabins might be full, but how good will the yields be?” she asked.