More U.S. Airlines Lower Outlook Due to Economic Uncertainty
Photo Credit: An American Airlines Boeing 777-300ER. Vincenzo Pace Vincenzo Pace
Skift Take
Economic uncertainty brought on by mass layoffs in the federal government and the threat of tariffs are leading more airlines to revise their first-quarter forecasts.
American, Southwest and JetBlue released lower first-quarter outlooks on Tuesday, with all three citing broader concerns about the economy.
American said it was expecting total revenues to stay flat after experiencing some softness in domestic demand and the impact of Flight 5342, a fatal collision that took place near Reagan National Airport in January.
JetBlue said it expects revenue per available seat mile, or how much revenue it generates for each seat, to stay remain the same as its previous guidance, which projected an increase by as much as 3.5%.
“JetBlue is also experiencing demand choppiness due to mixed macroeconomic indicators, resulting in trough period revenue performing below expectations in the first quarter,” the carrier said in a regulatory filing, partly attributing the weaker forecast weather-related disruptions.
Meanwhile, Southwest said California wildfires, a dip in government travel and overall macroeconomic demand trends led its lower-than-expected first quarter guidance. Southwest said it anticipates revenue per available seat mile to be up by as much as 4%, down from previous guidance of a 5% to 7% increase.
Jordan said at the JPMorgan industrials conference on Tuesday that the company was expecting the soft demand to continue into the second quarter.
Airlines Raise the Alarm on Consumer Spending
The lower outlooks come as the industry grapples with greater economic uncertainty, brought on by mass layoffs in the federal government and the threat of tariffs.
Delta also said Monday that it expects slower growth during the first quarter, mostly for the same reasons.
“Even though we just went through a little bit of a fright of horribles, we'll still be just as profitable as it was in the prior year,” Bastian said at the JPMorgan conference.
Bastian said on CNBC on Monday that the Atlanta-based carrier saw a “pretty significant shift” in GDP sentiment in February.
“As a result of that, we saw companies started to pull back in terms of corporate spending, started to stall, consumer spending started to stall,” he said.
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