Delta Air Lines’ Outlook Abruptly Darkens On Weak Consumer, Shares Hit Turbulence

Delta Air Lines lowered its sales and earnings expectations for the first quarter, citing a “recent decline in consumer and corporate confidence due to increased macro uncertainty, leading to softness in domestic demand.”

The Atlanta-based airline issued a profit warning in an 8-K filing shortly after Monday’s market close. This comes ahead of its Tuesday morning presentation at the J.P. Morgan Industrials Conference and massively differs from its outlook at the beginning of the year… 

Delta slashed its first-quarter revenue growth forecast to 3%–4%, well below the initial guidance of 7%–9%. Additionally, it lowered its adjusted earnings forecast to 30–50 cents per share, down from the previous range of 70 cents to $1 per share.

“The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand,” Delta wrote in the filing, adding, “Premium, international, and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base.” 

A slide in Delta’s presentation for the JPM conference tomorrow noted that, despite consumer and corporate confidence shifts, the airline is expected to have a “solidly profitable March quarter, reflecting Delta’s durability.”

After hours, Delta CEO Ed Bastian joined CNBC’s “Closing Bell,” informing viewers that a recession is not in the cards but noting that consumer confidence has softened. 

Delta’s downward revised forecast sent shares plunging as much as 13% in after-hours trading, adding to a year-to-date loss of 17%.

The airline industry closely tracks GDP, with a near 1:1 correlation. Take a look at Delta’s shares compared to the U.S. Economic Surprise Index…

Earlier, we shared a note with readers stating that President Trump was eager to push the U.S. economy into a recession—one he can rightly blame on the Biden-Harris regime’s failed ‘Bidenomics.’ Remember what Trump said in an interview on Sunday: “There could be a little disruption.“

Delta’s first-quarter weakness suggests continued softening of the U.S. economy and should make traders and investors consider what type of economic landing lies ahead.