Trump Tariffs Blamed for Drop in Travel Demand, Forcing Delta to Reconsider Financial Projections

Delta Air Lines pulled its financial projections for 2025, and forecast the current quarter's profit to be lower than its expectations on Wednesday, noting that demand for flights is "largely stalled" as sweeping U.S. tariffs fuel economic uncertainty.

Delta, the U.S. carrier said it will hold off aircraft deliveries which are subject to tariffs, and cut capacity to safeguard its margins in the event of a slowing in demand.

U.S. consumer and business confidence has plummeted sharply in the wake of President Donald Trump's tariffs against imports coming from most of the world increase the possibility of higher inflation and slow economic growth. International brokerages have also raised their expectations of the likelihood of an economic recession.

For a lot of businesses or domestic traveler traveling within the country, it is considered an expense that can be considered as discretionary. With the growing concern about a recession in the near future as well as the uncertainty surrounding the aviation industry has been shattered, leading to the decline of the value of airline stocks.

Although Delta anticipates delivering "solid" profitability and "meaningful" cash flow this year, Delta's CEO Ed Bastian said it would be "premature" to provide an up-to-date outlook for the full year.

"Given broad economic uncertainty around global trade, growth has largely stopped," said the president stated on an earnings call.

For the quarter that ends on June 1, Delta expects earnings to be in the range of $1.70 and $2.30 per share. The median of the estimate will be $2 per share as opposed to analysts' average estimate of $2.30 according to the information compiled by LSEG.

To underscore the uncertainties, the company stated that its Q2 revenue total for the quarter to be between 2% lower to 2% more than last year's.

Bookings from leisure as well as corporate customers have slowed which has impacted the need for domestic travel according to the report. The demand for international and premium travel however, has remained robust.

It's a stark reversal of January, when Delta was forecasting record profits for the year. The shares of Delta have fallen 37% over the course of the year.