The other major carriers should follow Delta Air Lines, the most profitable airline in the United States. It recently went through an incredible turnaround of its trajectory toward 2025 insolvency. The airline entered this year with optimism fueled by robust travel demand. Now, new bookings have noticeably weakened and external economic pressures have caused it to reconsider its long-term growth plans and capacity expectations.
The airline now projects it will lose money in 2025, a dramatic reversal from the airline’s previous forecasts. Delta Air Lines expects adjusted earnings per share to be in a range of $1.70-$2.30. By comparison, analysts were expecting earnings per share of just $2.23. This continued discrepancy calls into question the airline’s ability to perform in the future. In recent weeks, Wall Street analysts have been slowly lowering their earnings estimates and price targets for the company.
Delta Air Lines, one of the most profitable airlines in the world recently stated that its capacity will be flat year over year. This means the airline won’t be increasing its schedule at all in the second half of 2025, a major reversal from its previous intention to grow capacity 3% to 4%. The airline, which has the earliest spring break travel start date among big U.S. Primarily disappointing bookings in the main cabin and corporate travel sectors have led to this revision.
Delta’s first quarter net income skyrocketed to $240 million, a testament to the airline’s financial health. Demand for corporate travel has dropped, and main cabin bookings have continued to underperform. Consequentially, businesses are taking a more conservative stance towards long-term expansion.
Delta Air Lines CEO Ed Bastian has repeatedly pointed to the more uncertain economic climate as a cause for softer demand and bookings. He characterized it as a wrong-headed approach, pointing out that outside factors are driving consumer changes and the need to rethink travel demand.
Delta Air Lines was the first of the major U.S. carriers to report earnings this quarter. Its challenges will give it lots of lessons learned that will be useful for the rest of the airline industry. We are all awaiting further developments with bated breath. Though it’s anyone’s guess how Delta will learn to fly above these roadblocks, or what this fork in the road will mean for its rivals.