Major U.S. airlines are reducing their flight schedules and revising or withdrawing their profit outlooks for the year due to less domestic travel demand as sentiment about the national and global economies sours.
American Airlines pulled its financial guidance for 2025 on Thursday, joining rivals Southwest and Delta in declaring the economic outlook too uncertain to provide full-year forecasts. All three airlines cited weakening sales among economy class leisure travellers.
“We came off a strong fourth quarter, saw decent business in January, and really domestic leisure travel fell off considerably as we went into the February time frame,” American Airlines CEO Robert Isom told CNBC.
Consumer reluctance to book vacations would correspond with a new poll that showed many people fear the U.S. is being steered into a recession and that President Donald Trump’s broad and haphazardly enforced tariffs will cause prices to rise.
Some economic indicators point to expectations of a slowdown. Sales of previously occupied U.S. homes slowed in March, and U.S. consumer sentiment plunged in April, the fourth consecutive month of declines. However, fears of a downturn have not translated into layoffs.
Trump announced sweeping tariffs on April 2 that triggered panic in financial markets and generated recession fears, leading consumers and businesses to start pulling back on spending, which includes travel. The president put a partial 90-day hold on the import taxes but increased his already steep tariffs against China.
Beijing increased its import tax on American goods to 125% in retaliation. On Thursday China denied Trump’s assertion that the two sides were involved in active negotiations to end or mitigate their trade war.
American Airlines said it would give an update on its full-year guidance “as the economic outlook becomes clearer.” Airline executives said sales among business travellers and for premium seats on long-haul international flights remained solid.
Southwest Airlines reported late Wednesday that it would trim its flight schedule for the second half of the year due to lower demand. The company also said it could not reaffirm its 2025 and 2026 outlooks for earnings before interest and taxes, given “current macroeconomic uncertainty.”
United Airlines last week gave two different financial forecasts for how it may perform this year, one if there’s a recession and one if not. The airline said it planned to reduce its scheduled domestic flights by 4% starting in July in response to lower-than-expected demand for economy fare tickets.
“We think there is a reasonable chance things can weaken from here,” United CEO Scott Kirby said.
Delta Air Lines, the nation’s most profitable carrier, predicted as recently as January that the company was on track for the best financial year in its history. Earlier this month, the airline scratched its performance expectations for 2025 and said it was putting a planned flight schedule expansion on hold.
“With broad economic uncertainty around global trade, growth has largely stalled,” Delta CEO Ed Bastian said at the time. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year.”
The parent companies of Frontier Airlines and Alaska Airlines also pulled their 2025 guidance. —(AP)
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Story by MICHELLE CHAPMAN | Associated Press
