Airline, Cruise Stocks Dive as Tariffs Threaten Travel Demand -- Analysis

Dow Jones
04-04
 

By Katherine Hamilton

 

Travel stocks slumped after President Trump's latest round of tariffs fueled concerns about less spending by Americans and reduced international travel.

"What you're seeing in the travel stock movement is uncertainty," Oppenheimer analyst Jed Kelly said. "It's more of a sentiment-related issue, and when sentiment's not as good, people don't travel as much."

Shares of United Airlines fell 12% to $62.90 on Thursday, while Delta Air Lines lost 8.6% to $39.64 and American Airlines gave up 7.7% to $9.78. Cruise-line shares also declined, with Carnival slipping 11% to $17.80 and Norwegian Cruise Line down 13% to $17.01.

The reciprocal tariffs announced Wednesday, which affect more countries in Asia and Europe, will likely result in less inbound travel from other countries, BMO analyst Ari Klein said in a note. Already there has been less travel from Canada to the U.S., and Air Canada has said it is reducing supply across that border. U.S. demand is also expected to get shakier as rising fears of a recession could tighten Americans' wallets.

"I think what's the most concerning is the breakage of those global connections," Visual Approach analyst Courtney Miller said.

Shares of hotel chain Marriott International fell 5.9% to $228.35, and Hyatt dropped 5.4% to $117.97 Thursday. Analysts believe hotels and cruise lines could experience falling demand if the new tariffs wreak more havoc on the U.S. economy.

Shares of the online-booking platform Expedia fell 7% to $155.91 on Thursday, dropping more steeply than Booking, which declined 3.8% to $4,510.96, because Expedia has more exposure to the U.S., Kelly said. Those companies won't necessarily have higher costs related to tariffs, but they may experience a trickle-down decline in demand, he said.

Tariffs could also put a dent in business travel, analysts said. Some airlines have said they expect to see less corporate travel as businesses hit especially hard by tariffs cut back and move more operations into the U.S.

Airlines have started to lower prices to try to attract more leisure travelers, but that will become more difficult as the cost of supplies rises. About 20% of aircraft materials are imported, meaning tariffs will drive up the cost of making airplanes, Vertical Research Partners analyst Robert Stallard said in a note. Ultimately, those costs are expected to be passed on to airlines, he said.

"If the intent is to bring business back to local economies, well, local economies don't require travel," Miller said.

 

Write to Katherine Hamilton at katherine.hamilton@wsj.com

 

(END) Dow Jones Newswires

April 03, 2025 12:45 ET (16:45 GMT)

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