Delta Air Lines reported a stronger-than-expected profit for the first quarter but warned that growth is slowing due to global trade uncertainties and softer booking trends.
The airline, who had entered 2025 with optimism has now scaled back its capacity expansion for the second half year.
The Atlanta-based carrier reported a 2% rise in quarterly earnings with profits reaching 46 cents a share.
FactSet reports that revenue rose 3.3%, to $12.978 Billion, exceeding Wall Street’s expectations of $12.975 Billion by a narrow margin.
Analysts had predicted a profit per share of 38 cents.
Delta has acknowledged that the initial momentum for the year is fading.
In the airline’s earnings announcement, Chief Executive Ed Bastian stated that “global economic uncertainty has largely stalled” growth.
In this slower growth environment, we protect margins and cash flows by focusing on the things we can control.”
Delta’s stock, initially up 1.7% in premarket trading after the earnings announcement, pared its gains and traded within a narrow range.
Early trading saw shares of United Airlines and American Airlines slightly lower.
Plans to expand capacity on hold due to softening demand
Delta had originally planned to increase its flying capacity by 3 to 4% during the second half of this year. However, those plans have been put on hold.
The carrier’s capacity is expected to remain flat in comparison with last year.
Bastian attributed the shift in demand to President Donald Trump’s changing trade policies.
He called them “the wrong strategy” and pointed out their impact on corporate and consumer confidence.
Bastian told CNBC that “we’ve seen a similar reduction in consumer confidence and corporate trust” over the past six weeks.
The airline also cited an overall pullback in travel expenditure, with bookings for main cabins being particularly softened.
Business travel, which was once a reliable source of revenue, is now a less frequent activity as companies rethink their expenses and the Trump administration reduces government staff.
Delta is committed to profitability throughout the year, despite these headwinds.
Bastian said, “Given our strength, our tendency to act and the decline of fuel prices, we’re positioned to deliver solid profits and free cash flow this year.”
Analysts prepare for further airline capacity cuts
Wall Street analysts are lowering their earnings expectations for airlines amid concerns over a cooling demand.
Delta’s cautious outlook could be the first in a series of similar announcements by the industry over the next few weeks.
In a note released after Delta’s results, TD Cowen analysts Tom Fitzgerald & Helane Becker wrote: “We expect that this will be the first of a number of second-half capacity announcements by the airlines in this quarter.”
Delta expects to earn between $1.70 to $2.00 per share in the second quarter. Revenue is expected to range from a 2 percent decline to a 2 percent increase.
Analysts had expected a stronger performance. Consensus forecasts pointed to earnings of $2.21 a share and a 1.7% increase in revenue to $15.6 billion.
Delta has resisted updating its full-year guidance. However, the airline still expects positive margins and is targeting operating margins of between 11% to 14% for the second quarter.
The US oil price fell 6% on Tuesday to below $56 a barrel. This could provide some cushion.
Bastian noted that the international and premium travel segments are still thriving, despite a decline in domestic leisure and corporate travel demand.
“Demand in January was good, but things started to slow down in mid-February,” said he.
This post Delta profits exceeded expectations but company warns about slowing growth and scales back plans for second half first appeared on The ICD
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