Airlines see lower customer demand, cut back financial expectations

Several major U.S. airlines dialed back their quarterly financial expectations as the industry contends with softer demand from economic uncertainty and other factors. 

Southwest, American and Delta were among the carriers to announce changes to their guidance.

Southwest said its revenue per available seat mile was now expected to go up 2-4% in the first quarter, a lower forecast than the 5-7% growth it had previously predicted.

“Compared with the Company’s previous estimation, roughly a point of the lower unit revenue guide is primarily due to higher-than-expected completion factor, less government travel, and a greater impact from the California wildfires than originally estimated,” the carrier said in a Securities and Exchange Commission (SEC) filing. 

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Multiple wildfires raged in the Los Angeles area in early January, with the largest of the blazes – the Palisades Fire – scorching over 23,700 acres before being contained by firefighters. 

“The remainder of the decrease is primarily attributable to softness in bookings and demand trends as the macro environment has weakened,” Southwest also said. 

Meanwhile, American Airlines said the “revenue environment has been weaker than initially expected” for the first quarter “due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March.”

A military helicopter and American Airlines Flight 5342 collided midair near the Washington, D.C.-area’s Ronald Reagan Washington National Airport in late January. All of the 64 people on board the plane and the three individuals in the helicopter were killed.

In light of those factors, the airline said it was now expecting to see “approximately flat” total revenue for the first three months of the year compared to last year’s first quarter. It had previously forecasted an increase of 3-5%. It also changed the range for its forecasted quarterly adjusted loss per diluted share from $0.20-0.40 to $0.60-0.80, according to an SEC filing. 

Delta guided for lower first-quarter total revenue growth, expecting a 3-4% increase now instead of the 7-9% growth it had expected when it issued earlier guidance in mid-January. 

“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 said. “Premium, international and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base.” 

The three airlines released the updates to their guidance ahead of presentations at the J.P.Morgan Industrials Conference. They also come as concerns about whether the U.S. could fall into a recession and uncertainty stemming from the fluid situation of tariffs have grown in recent weeks, weighing on both American consumers and businesses. 

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Southwest saw nearly 175.5 million enplaned passengers in 2024. In the same year, American notched 226.4 million, while Delta reported over 200 million.