Delta Shares Nosedive as Airline Slashes Q1 Forecast Amid Weakening Demand
Staff Editor Delta Air Lines Stock Plummets Following Revised Earnings Forecast
Delta Air Lines experienced a significant drop in stock value on Tuesday after revising its first-quarter revenue and earnings forecast downward. The airline’s shares fell by as much as 11%, reaching $44.5, contributing to a 16.81% decrease for the year.
The company attributed the decline to “macro uncertainty,” which has led to decreased domestic demand. Delta revised its first-quarter revenue growth forecast to a maximum of 4%, down from the initial 7%-9% projection. Additionally, earnings per share are now expected to be between $0.30 and $0.50, approximately half of the original estimate.
Delta cited reduced consumer and corporate confidence due to increased macroeconomic uncertainty as the primary cause for the softened domestic demand. This revised outlook suggests challenging conditions for the airline industry and signals broader economic concerns as consumer spending weakens.
The stock market experienced a downturn on Monday, fueled by recession fears linked to political uncertainty. This declining consumer confidence in travel spending has negatively impacted other airlines as well. United Airlines and American Airlines both saw pre-market stock drops in response to the news.
Southwest Airlines also adjusted its first-quarter forecast, predicting a 2%-4% revenue growth. However, despite the forecast revision, Southwest Airlines’ stock rose over 9%, driven by its decision to end the free bag policy.
The airline industry’s current situation reflects broader economic trends, with Delta’s revised forecast serving as a potential indicator of challenges ahead for both the sector and the economy as a whole.
