Delta slashes Q1 guidance due to 'soft' demand

(Sharecast News) - Airline and travel stocks were on the descent on Tuesday after Delta became the latest carrier to slash financial forecasts, cutting growth guidance for the first quarter by around a half. Ahead of the JPMorgan Industrials Conference, Delta said it was updating its estimates to reflect the "recent reduction in consumer and corporate confidence caused by increased macro uncertainty", which has driven softness in domestic demand.

The Atlanta-based airline now expects revenues in the three months to 31 March to be between $13.9bn and $14.1bn, representing 3-4% growth from last year's $13.7bn. Earlier guidance from the company pointed to growth of between 7% and 9%.

Meanwhile, operating margins are predicted to be just 4-5%, down from an earlier forecast of 6-8%, resulting in earnings per share of $0.30-0.50, down from previous guidance of $0.70-1.00.

The downwards revision follows similar adjustments to guidance recently made by American Airlines and Southwest Airlines.

Speaking at the conference, Delta's chief executive Ed Bastian is quoted as partly attributing the top-line revision to "transitory" factors, such as bad weather, poor consumer confidence and the public reaction to a recent spate of plane crashes across the country.

"In the face of the amount of macro uncertainty that's out there, I think people are too cautious and they're pulling back a little bit on travel, not in an organised manner, but just kind of waiting to see what's going to transpire, whether it's trade and tariff challenges or macroeconomic policy changes," he said.

By 1130 in New York, Delta was trading nearly 7% lower at $46.93 - its lowest since mid-September - while American fell 5.7% and United dropped 2.2%. Travel tech platforms Expedia and Booking Holdings were also down 6.4% and 1.6%, respectively.