Airlines Report Bookings Drop Amid Macroeconomic Uncertainty

A day after Delta Air Lines cut its guidance, citing lower U.S. consumer confidence, three more airlines made similar comments about the current macroeconomic environment.

In presentations made Tuesday (March 11) at the J.P. Morgan Industrials Conference, American Airlines, Southwest Airlines and United Airlines revised their outlooks downward or said they expect earnings to come in at the lower end of their guidance.

American Airlines updated its first-quarter guidance to call for its first-quarter revenue to be flat compared to a year earlier, rather than seeing a gain of 3% to 5% as it had previously forecast, according to a presentation issued Tuesday.

The company attributed the change to wildfires, Sunbelt weather, the Flight 5342 crash, softness in the domestic leisure segment and “increasing macroeconomic uncertainty.”

Southwest Airlines said in a Tuesday presentation that it expects its RASM — a measure of operating revenue production based on available seat miles flown — to see a year-over-year increase of 2% to 4% rather than the 5% to 7% it forecast in its prior guidance.

Speaking at the conference, Southwest Airlines CEO Bob Jordan said the airline lowered its guidance primarily because bookings have weakened in the current macroeconomic environment, the Financial Times (FT) reported Tuesday.

United Airlines said it now expects its first-quarter earnings to come in at the lower end of its forecast, Reuters reported Tuesday.

The airline said it had seen that government-related travel bookings were down 50% and that the domestic leisure market was also being impacted by government spending cuts, according to the report.

Delta Air Lines said in a Monday (March 10) press release issued ahead of the conference that it now expects its total revenue to grow 3% to 4% year over year during the March quarter, down from its earlier guidance of 7% to 9%, and its operating margin to be 4% to 5%, down from its previous guidance of 6% to 8%.

“The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand,” Delta said in the release. “Premium, international and loyalty revenue growth trends are consistent with expectations and reflect the resilience of Delta’s diversified revenue base.”