By Alison Sider

Just about everything is going wrong for U.S. airlines.

Delta Air Lines on Wednesday ditched its full-year financial outlook and said it was too soon to say how things would play out. The company intends to reduce growth and pare its flight schedule in the second half of the year as it confronts lackluster appetite for domestic leisure and business travel.

The mounting pessimism is an about-face for Delta, which predicted 2025 would be its best financial year ever. It also could serve as a harbinger for reports from other carriers due this month.

"It looks like at the present time, growth has stalled," Chief Executive Officer Ed Bastian said.

Consumers have started putting off travel bookings as they have grown uneasy about the prospect of rising prices and economic weakness. Government travel plummeted amid the cost-cutting drive in Washington, and lucrative corporate bookings also appear to be slowing. Carriers have lost pricing power, and fares have started coming down, with the goal to nudge people into seats from the sidelines.

New U.S. trade policies have dampened cross-border travel from Canada, and European governments have updated advisories about America's border policies. Concerns about President Trump's tariff plan have sent beleaguered airline shares down further over the past week.

"It's starting to look like no, it's not just a temporary trend," said Erika Moore, president of travel-management firm World Travel Inc. "This is starting to pick up a snowball effect."

Airline executives have said demand has been more resilient from affluent customers who pay top dollar for premium seats and take long-haul international trips. The question is whether that will remain the case if a softening economy makes broad numbers of consumers feel worse off.

Airlines including American and Southwest last month warned that the first quarter was shaping up to be weaker than they had anticipated. Analysts expect carriers, as Delta did with its announcement Wednesday, will have to revisit their rosy forecasts.

Delta said that it still expected "solid profitability" in 2025 and that it would provide more details once air-travel market conditions become clearer.

Airlines are still hoping for a busy summer, which tends to be their strongest season.

"We've definitely seen a consumer that is clearly being a little more cautious about how they're spending their money," said Andrew Levy, CEO of budget-airline startup Avelo Airlines. "I feel good about summer, but I know it's way too early to feel really good about it."

Some consumers are sticking to their plans. Bill Mitchell and his wife still aim to take a cruise around Europe's Dalmatian and Amalfi coasts -- even if it means not looking at his stock portfolio.

"I did briefly think, well maybe I ought to back off on this since we're not sure what's going to happen and what my IRAs are going to look like, " said Mitchell, 76 years old. "I'm not getting any younger. If I'm going to do it, I'd better do it fairly quickly."

Jed Meyer was out of work for part of last year and said even though he had a new job, he wanted to be cautious.

"I've been sitting on my hands and not planning as much for summer or the latter part of the year because I don't know what's going to happen, " he said. Uncertain about how much he will be flying and fed up with an increased annual fee, Meyer canceled an airline credit card that gave him access to airport lounges.

"If I was feeling great about the year, I could stomach it," Meyer said.

Write to Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

April 09, 2025 06:31 ET (10:31 GMT)

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