Has the wind suddenly changed due to the US air travel, or is it just an instantaneous turbulence?
That was a question discussed by leaders of the nation’s biggest airlines as they reported weaker than expected performance in the first quarter at JP Morgan Investors Conference on Tuesday.
“The core business is healthy,” said Ed Bastian, CEO of Delta Air Lines. “We need to continue to reset better what we see in demand and the environment.”
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The Atlanta-based carrier quoted weather American Airlines Flight 5342 and Delta Flight 4819 Accidents and broader macroeconomic uncertainty regarding movements to halve first quarter revenue growth forecasts.
American, JetBlue, Southwest Airlines and United Airlines joined the Delta to lower first quarter expectations. Common themes: weakness in the macroeconomic environment and lower consumer confidence, especially after the AA5342 accident at the Ronald Reagan Washington National Airport (DCA) in January.
What was not said was a source of many of the economic uncertainty. Since Trump’s inauguration on January 20, government travel spending has slowed dramatically, freeing trial federal employees from the public, and the administration has threatened or enforced steep tariffs on goods from China and the US’s closest trading partners, including Canada and Mexico.
American CEO Robert Isom called both economic uncertainty and the AA5342 accident “a big deal” for the airline business.
According to ISOM, Americans bring about 1.5% of their revenue from government travel. The business segment has shown a “significant impact” from recent government spending cuts.
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“Historically, DCA has been one of our most profitable hubs and we are confident that we will return to our full share of profitability in the long run,” he said.
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United also suffered a hard hit by the pullback of US government spending, thanking the hub at Washington’s Dulles International Airport (IAD). Government-related revenues have fallen about half since the start of the year, CEO Scott Kirby said. This segment previously accounted for around 2% of United’s global revenue.
The Chicago-based airline is revising the losses in government operations by retiring 21 aircraft earlier than planned and cutting some flights. Cuts include select flights to Canada.Significant drop in Canadian traffic to the US“And some red eyes are flying,” Kirby said.
“Nothing we saw in the short term has an impact on what we think is going on for a year from now,” he said.
Southwest is the third largest airline in the Washington region. Baltimore/Washington International Thurgood Marshall Airport (BWI) is one of the busiest bases in the area and the busiest.
Bob Jordan, CEO of the Dallas-based career, said he views “softness in bookings and demand.” He did not specify whether it was linked to government travel reductions or due to Baltimore Base in Southwest.
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The airline is optimistic, as Bastian said, that the weakness in travel demand for the first quarter is “temporary.”
“There’s a sense that March is at its bottom,” added Delta CEO.
His competitors and Wall Street mostly agree.
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JetBlue CEO Joanna Geraghty said Tuesday that while the late calendar weeks have been “under pressure,” the peak travel days and durations remain strong. And she is optimistic about the upcoming spring break and summer travel period.
“A prospect [the second quarter is] On Tuesday, Raymond James analyst Savanti Sythe wrote:
TD Cowen Airline analyst Tom Fitzgerald wrote in early March that the airline has been making “significant capacity reductions” in the US domestic market since mid-2024. The domestic schedule for the April-June quarter is expected to increase by around 3.5% year-on-year in 2025, compared to the 6% jump last year.
As the industry learned at the beginning of the 2020 Covid-19 pandemic, warnings dominated the roost on Tuesday, given that travel demand could change at one point.
“While reservations for summer trends appear to be stable now, we assume a moderate level of softness in revenue trends, which continues for the rest of the year,” said Jordan of Southwest.
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