U.S. economic indicator warning! Delta Air Lines' first-quarter guidance "halved"

On Monday after the market closed, Delta Air Lines issued a shocking first-quarter earnings warning that left investors stunned, with revenue and profit expectations nearly "halved," raising concerns about the outlook for the U.S. economy.

The sudden shift from this aviation giant is seen as a significant signal that consumer confidence and business activity in the U.S. may be weakening, with the company's stock price plummeting over 13% in after-hours trading.

Economic Concerns Behind the Plummeting Expectations

Delta Air Lines stated in a document, "Due to increased macro uncertainty leading to a decline in consumer and business confidence, domestic demand is weak, and performance outlook is affected." The airline has significantly lowered its first-quarter revenue growth expectation from the previous 7%-9% to 3%-4%, and adjusted earnings per share expectations from $0.7-$1 to between $0.3-$0.5, far below the consensus analyst expectation of $0.82.

This sudden turn contrasts sharply with the optimistic outlook expressed by Delta Air Lines CEO Ed Bastian at the beginning of January. At that time, he told investors that 2025 was "off to a good start," and the airline "is expected to achieve its best performance in history." However, just two months later, Bastian stated in an interview:

"We are seeing businesses start to contract, and corporate spending is beginning to stagnate. In discretionary spending, consumers dislike uncertainty."

Notably, as a leader in the U.S. aviation industry, Delta Air Lines has consistently outperformed its major competitors financially. In 2023, Delta achieved a net profit of $3.5 billion, far exceeding United Airlines' $3.1 billion and American Airlines' $846 million.

Over the past 12 months, Delta Air Lines' stock price has risen by 19%, surpassing the S&P 500 index's 10% increase. However, this advantage has disappeared this year, with Delta's stock price down 17%, while the broader market has only declined by about 5%.

Analysts point out that the airline industry is closely tied to GDP, as consumers tend to buy tickets when they feel financially secure. Therefore, Delta Air Lines' warning is one of the strongest signals that Trump's tariffs are eroding consumer and business confidence. On Monday, while President Trump dismissed concerns about an economic recession, Wall Street banks downgraded their expectations for the U.S. economy, leading to a significant drop in the stock market.

Earlier this month, JP Morgan analyst Jamie Baker pointed out that compared to the last few months of 2024, the stock price increases of most North American airlines have slowed down:

“Investor panic has once again reached a peak, primarily focused on the impact of consumers, domestic capacity, and reduced government travel.”