Shares of Delta Air Lines, Inc. (DAL) did not perform well on the bourse on Monday, closing the trading session at $50.33 per share, down 5.54% from the previous day's closing. The downside was owing to the updated bearish financial outlook for the first quarter of 2025 unveiled by the company (a day before its executives are scheduled to give a presentation at the J.P. Morgan Industrials Conference).

Let’s delve deeper.

DAL’s Bearish Q1 Outlook

DAL lowers its first-quarter 2025 adjusted earnings per share guidance (EPS) to the range of 30-50 cents from the previously guided range of 70 cents-$1 per share. The Zacks Consensus Estimate for first-quarter EPS is pegged at 84 cents.

The adjusted operating margin in the March quarter is now expected to be in the range of 4-5%, which is lower than the prior guided range of 6-8%.

Management has also reduced first-quarter 2025 total revenues (adjusted) to increase in the 3-4% band from first-quarter 2024 actuals. The updated revenue outlook marks a downside from the previous expectation of 7-9% year-over-year growth. The Zacks Consensus Estimate for first-quarter 2025 revenues reflects a year-over-year increase of 4.4%.

The aforesaid disappointing guidance came on the back of the recent reduction in consumer and corporate confidence, which was driven by increased macro uncertainty. This led to softness in domestic demand.

On the greener side, premium, international and loyalty revenue growth trends remained consistent with expectations, marking the strength of this Zacks Rank #3 (Hold) stock’s diversified revenue base.

Tariff Tensions & Lawsuits Hurt DAL Stock

DAL has not been performing well on the bourse recently. The company has been weighed downby recent tariff-related tensions. President Donald Trump’s imposition of a 10 percent tariff on energy resources from Canada is a big blow to airline operators, including DAL, as the resultant high fuel prices would hurt their profit margins. Higher fuel costs do not bode well for airline companies, as fuel expenses represent a key input cost for any transportation player. Higher tariffs invite an overall surge in prices of goods and commodities along with currency woes.

Trade war between the United States and its biggest trading partners — Canada, Mexico and China — is likely to affect DAL’s business.

Further, lawsuits filed against Delta and its subsidiary, Endeavor Air, following the crash involving Delta Flight 4819 at Toronto Pearson International Airport on Feb. 17, 2025, have also contributed to the decline in DAL shares. 

Shares of DAL have plunged 27.1% over the past month compared with the 11.5% decline of the Zacks Airline industry. The S&P 500 index has lost 7.5% in the said time frame.

One-Month DAL Stock Price Comparison

Image Source: Zacks Investment Research

Other Airline Picks

Investors interested in the Zacks Airline industry may also consider SkyWest SKYW and Allegiant Travel Company (ALGT). While SkyWest sports a Zacks Rank #1 (Strong Buy), Allegiant carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SkyWest

SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW’s track record of successfully meeting the requirements of each of its airline heavyweight partners bodes well for the company. Revenues from flying agreements (which account for the bulk of the top line) are impressive owing to SKYW’s above ability. Owing to an uptick in air travel demand, passenger volumes have been upbeat and are likely to increase going forward as well. This is likely to keep SKYW's top line in good shape.

SKYW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 16.71%. The Zacks Consensus Estimate for 2025 earnings per share has been revised 7.9% upward in the past 60 days.

Shares of SKYW have surged 32.1% in the past year. SKYW has an expected earnings growth rate of 15.96% for the current year.

Allegiant

Allegiant has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for ALGT’s 2025 earnings per share has been revised 36% upward in the past 60 days.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 22.93%. Shares of ALGT have lost 21.4% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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