Delta drops outlook for 2025, citing Trump's tariffs
NEW YORK - Delta Air Lines withdrew its full-year 2025 guidance on Wednesday, citing the growing impact of US President Donald Trump's tariffs on both consumer and business spending.
"With broad economic uncertainty around global trade, growth has largely stalled," Delta Air Lines CEO Ed Bastian said in a statement.
The escalating uncertainty has begun to depress bookings across the travel sector, with the airline warning that shifting economic conditions are clouding visibility into future performance.
"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 to flat over last year while actively managing costs and capital expenditures," said Bastian.
In the first quarter, Delta reported a net income of $240 million, or 37 cents per share, a sharp rise from $37 million, or 6 cents per share, a year ago. On an adjusted basis, excluding one-time items, earnings came in at 46 cents per share, beating Wall Street's forecast of 40 cents per share, according to Zacks Investment Research.
Despite the earnings beat, Delta's shares traded lower ahead of the market open. The stock has been down 41 percent so far this year, a steep decline, though less severe than the losses suffered by competitors like American Airlines and United Airlines. The broader airline sector has been battered as investors retreat in response to tariff-driven economic uncertainty.
Delta's quarterly operating revenue rose to $14.04 billion, up from $13.75 billion a year earlier and surpassing analysts' estimate of $13.81 billion, while lower fuel costs offered some relief, with the average fuel price per gallon dropping to $2.47 from $2.79.
Still, Delta already warned investors in March that demand was softening. The airline cut its first-quarter guidance at the time, citing waning consumer and corporate confidence. It also revised its revenue growth expectations to a range of 3 to 4 percent, down from an earlier forecast of 7 to 9 percent.
Bastian said the airline expects second-quarter profits within the range of $1.5 billion to $2 billion. However, he added that the company will not update its full-year earnings forecast "given the lack of economic clarity."
Delta had previously projected 2025 earnings of more than $7.35 per share and free cash flow exceeding $4 billion, targets built on the assumptions of continued robust travel demand. However, the outlook has since changed dramatically.
"2025 is playing out differently than we expected at the start of the year," Delta President Glen Hauenstein said, adding "as a result, we are adapting to current conditions while staying true to our long-term strategy."
Underscoring growing corporate caution, Walmart also trimmed its quarterly operating income forecast, citing pressure from the Trump administration's tariffs.
In a news release, Walmart said it aims to "maintain flexibility to invest in price as tariffs are implemented," signaling that it may absorb some of the added costs to keep prices low for consumers.
The retail giant said it has widened its operating guidance for the fiscal first quarter but did not offer a revised range for expected operating income. Previously, Walmart had projected an increase of 0.5 to 2.0 percent in adjusted operating income for the quarter.
