Delta Air Lines withdrew its 2025 financial guidance on Wednesday and warned of deteriorating travel demand in the face of escalating global trade tensions triggered by President Donald Trump's tariff regime. CEO Ed Bastian cited "broad economic uncertainty around global trade" as a primary reason for halting expansion plans and signaling potential recessionary pressures.
Delta forecast second-quarter revenue could decline by as much as 2% or increase by up to 2%, falling short of Wall Street expectations for 1.9% growth. The airline anticipates earnings per share in the range of $1.70 to $2.30, compared to analyst estimates of $2.23.
"We expect this to be the first of many 2H25 capacity reduction announcements from the airlines this quarter," TD Cowen analysts Tom Fitzgerald and Helane Becker wrote following the update.
Bastian told CNBC on Wednesday that Delta will not move forward with plans to expand flying capacity by 3% to 4% in the second half of the year. Instead, capacity will remain flat year-over-year. "With broad economic uncertainty around global trade, growth has largely stalled," Bastian said in the earnings release. "In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control."
Delta had initially entered the year with confidence, calling 2025 potentially the "best financial year in our history." But Bastian's tone has shifted dramatically. "In the last six weeks, we've seen a corresponding reduction in broad consumer confidence and corporate confidence," he said. He noted demand was "quite good" in January but "really started to slow" in mid-February.
While international and premium travel remains relatively steady, the airline reported that main cabin bookings have underperformed. The CEO attributed the downturn in part to Trump's tariff policies, workforce cuts, and increased market volatility. "I think everyone is going into a defensive posture," Bastian said. "As a result of that, if that continues, and we don't get resolution soon, we'll probably end up in a recession."
Delta's results for the first quarter showed some strength despite the headwinds. Adjusted net income rose to $240 million from $37 million a year earlier, with total revenue increasing 2% to $14.04 billion. Stripping out refinery sales, adjusted revenue was $12.98 billion, up 3% and in line with forecasts. Earnings per share came in at 46 cents, exceeding the consensus estimate of 38 cents.
Nevertheless, Bastian said it was too early to revise full-year guidance. The airline acknowledged its earlier optimism may no longer hold amid rising uncertainty. Last month, Delta lowered its first-quarter earnings forecast due to weaker corporate and leisure demand.
