Economic uncertainty: Delta Air Lines lowers its outlook

Delta Air Lines reduced its first-quarter profit and revenue outlook on Monday. The airline cited a recent decline of consumer and corporate confidence, as well as growing economic uncertainty, for reducing domestic demand. The company noted its premium, international, and loyalty revenue growth rates remained consistent with expectations.

Shares of the Atlanta-based airline fell 13.2 percent in after-hours trades after closing 5.5 percentage lower in the regular session. The stock has dropped 16.8 per cent this year. The airline released updated guidance a few hours before its executives were due to present at the J.P. Morgan Industrials Conference.

Delta expects the first-quarter revenue to rise between 3 and 4 percent compared to last year. This is below the previous forecast of revenue growth between 7 and 9 percent.

The airline also forecast its first-quarter profit per share to range between 30 and 50 cents. The airline’s previous guidance called for earnings per shares between 70 cents and US$1.

Delta’s fourth-quarter results were released in January and exceeded Wall Street’s profit estimates. The company also benefited from a strong holiday season.

In the weeks that have followed, the US economy has started to show signs of weakness, mostly through surveys that show increased pessimism. The Federal Reserve Bank of Atlanta has compiled a collection of real-time economic indicators that are widely followed. This suggests that the US economy is already shrinking.

Stock market volatility is also due to uncertainty over the impact of tariffs imposed by the Trump administration on imports from Canada, Mexico, China, and other countries.

Delta’s gloomier outlook comes less than one month after an airline jet exploded into flames as it attempted a landing in Toronto. All 80 passengers on the flight from Minneapolis’ Pearson International Airport to Toronto’s Pearson International Airport miraculously survived.