Major US Airlines Adjust Financial Expectations Amid Economic Uncertainty

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US Airlines Lower Financial Expectations

Several major U.S. airlines have updated their quarterly financial expectations as they grapple with softer demand attributed to economic uncertainty. The airlines include Southwest, American, and Delta.

Southwest Airlines revealed a reduced forecast for its first-quarter revenue per available seat mile. Initially, the airline predicted a growth of 5-7%, but this has been revised to an increase of 2-4%.

Southwest Revises Revenue Forecast

The airline cited multiple factors contributing to the revenue guide’s decrease, including a higher-than-expected completion factor, decreased government travel, and a greater impact from the California wildfires than initially estimated. These details were shared in a filing to the Securities and Exchange Commission (SEC).

Southwest Airlines has also recently announced significant changes to long-standing passenger perks.

Multiple wildfires ravaged the Los Angeles area in early January, with the largest – the Palisades Fire – scorching over 23,700 acres before firefighters could contain it.

Southwest also attributed part of the decrease to weaker bookings and demand trends as the macro environment has softened.

American Airlines Faces Revenue Challenges

Meanwhile, American Airlines reported a weaker-than-expected revenue environment for the first quarter due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March.

The airline’s Flight 5342 collided midair with a military helicopter near Washington, D.C.’s Ronald Reagan Washington National Airport in late January, resulting in the death of all 64 people on board the plane and the three individuals in the helicopter.

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As a result, American Airlines now expects “approximately flat” total revenue for the first quarter compared to last year’s figures. It also revised its forecasted quarterly adjusted loss per diluted share to $0.60-0.80, up from the previously projected $0.20-0.40 according to an SEC filing.

Delta Anticipates Lower Revenue Growth

Delta Airlines has also adjusted its guidance for first-quarter total revenue growth. The airline now expects a 3-4% increase, a significant decrease from the 7-9% growth it predicted in mid-January.

Delta attributes the outlook adjustment to a recent reduction in consumer and corporate confidence due to increased macro uncertainty, resulting in softer domestic demand. The airline did, however, note that its premium, international, and loyalty revenue growth trends were consistent with expectations, reflecting the resilience of Delta’s diversified revenue base.

Implications for the Industry

The three airlines announced these changes ahead of presentations at the J.P. Morgan Industrials Conference. The updates also come amidst growing concerns about the possibility of a U.S. recession and uncertainty surrounding the fluid situation of tariffs. These factors have been impacting both American consumers and businesses.

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In 2024, Southwest reported nearly 175.5 million enplaned passengers. In the same year, American catered to 226.4 million passengers, while Delta served over 200 million.

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