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 within the quarter ending March 31 to rise not more than 5% from last 12 months, down from a forecast in January of 6% to eight% 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 greater than 13% in after-hours trading after falling greater than 5% within the regular session on Monday.
“The outlook has been impacted by the recent reduction in consumer and company confidence attributable to 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 doesn’t expect a recession but said consumer confidence has weakened and that each 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., in addition to 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 by 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 remains to be consistent with its expectations.
American Airlines, Southwest Airlines and United Airlines are among the many other carriers that will even 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 within the wake of the Covid-19 pandemic.
