Airlines expected to cut 2025 outlooks as travel demand falters

Waning travel from Canada. Signs of weaker demand across the Atlantic. Mass government layoffs. Tariffs. Consumers pulling back on travel bookings. The worst stock market swoon since 2020. All are signs of concerns for the airline industry.

U.S. airlines will likely cut their 2025 outlooks when they report earnings starting this week, analysts say, pointing to cracks in demand for travel, which customers had prioritized even through years of inflation.

“Clearly, things are softer than they were in January,” Raymond James analyst Savanthi Syth told CNBC.

Delta Air Lines last month cut its first-quarter forecast, citing weaker-than-expected corporate and leisure bookings. American Airlines and Southwest Airlines also trimmed their outlooks for the first half of the year.

Since then, airline stocks have tumbled further, as concerns have grown about weaker demand amid President Donald Trump’s policies, most recently, new globe-spanning tariffs of no less than 10%.

“The level of sell-off is worse than the reality right now, but it doesn’t necessarily mean it won’t be the reality six months from now,” Syth said.

Wall Street analysts have slashed their price targets and downgraded their ratings on U.S. airlines, even Delta, the most profitable of the U.S. carriers. Like its main rival United Airlines, Delta has said high-income consumers who are willing to shell out more for roomier seats have been a boon to its bottom line in recent years.

However, they’re not expecting anything like the pandemic in 2020, when countries closed their borders and air travel demand essentially dried up overnight. It was still the industry’s worst-ever crisis. Demand hasn’t disappeared this time, but instead is showing signs of strain that other industries have also seen.

Delta will be the first of the U.S. airlines to report quarterly results before the market opens on Wednesday.

Airline stocks have tumbled this year. Delta has plummeted more than 38%, American has fallen over 45% and United has dropped more than 40% so far in 2025.

The turn in sentiment is stark for the travel industry, which has enjoyed strong demand, particularly for international destinations, since the end of the pandemic, as consumers prioritized experiences like weekslong trips through Japan and jaunts to Portugal over buying goods.

Signs of lower international demand, in addition to weaker travel from Canada, are emerging in U.S.-Europe bookings.

Bookings between the U.S. and Europe for June through August are down about 13% over last year as of March 31, according to aviation data firm Cirium, though it cautioned that the figures come from online travel agencies and not direct bookings on airline sites.

Still, some analysts are concerned.

“We expect a world of slower growth, higher inflation, and a more isolationist U.S. to significantly disrupt the competitive environment for airlines,” TD Cowen wrote on Friday. “We are concerned that the new economic paradigm causes another structural leg down in corporate travel while the negative wealth effect further dampens consumption, especially by Baby Boomers.”

The Bank of America Institute wrote last week that it “could be that the recent drop in consumer confidence is translating into people hesitating to book trips, or considering paring them back,” though it added that “bad weather and a late Easter this year are also likely playing a part.”

Airline executives have said that government travel, which accounts for just a few percentage points of their business but millions of dollars in revenue, has dried up during the mass layoffs and other cost cuts. They’ll face questions on earnings calls this month about side effects, such as job cuts at companies like consulting giant Deloitte.

Another question will be how resilient premium travel demand is. Syth said the front of the airplane will likely still be full, but that airlines could stimulate demand, if needed, by offering attractive point redemptions for frequent flyers.

“The cabins will be full, but how good will the yields be?” she asked.