Delta Air Lines (DAL) said it was lowering its guidance for the first quarter of 2025, citing soft domestic demand for travel and kicking off an airline stock sell-off.

The airline expects revenue for the quarter that ends on March 31 to grow between 3% and 4% and operating margins to grow by as much as 5%. Its initial guidance had accounted for revenue growing between 7% and 9%, with its operating margin rising by up to 8%. Its forecast for adjusting earnings fell from between 70 cents per share and $1 per share to a range of 30 cents per share and 50 cents per share.

In a securities filing, Delta said its outlook has been impacted by a decrease in consumer and corporate confidence caused by “increased macro uncertainty.” The stock market has been slammed in recent days by the threat of a recession, in part fueled by U.S. tariff plans and mass layoffs in the federal government.

More than half of Americans expect inflation will accelerate in 2025, according to a recent poll, which also found that inflation remains the dominant financial concern for most U.S. adults. Most of the survey’s respondents said their income is growing more slowly than inflation, with fewer than 20% of people in all age brackets saying their personal earnings are outpacing prices.

“We saw companies start to pull back. Corporate spending started to stall, largely domestic,” Delta CEO Ed Bastian told CNBC on Monday. “Consumers in a discretionary business do not like uncertainty.”

Government contractors and people who are worried about losing their job are “not out there spending money traveling,” Bastian noted, referring to the spending cuts in the federal government. He added that this is the “weakest” season of the year, and that most of the impact in the first quarter will be transitory.

Delta stock dropped as much as 6% in pre-market trading before some losses were pared back. United Airlines (UAL), Alaska Air Group (ALK), American Airlines (AAL), Frontier Group (ULCC), and Spirit Airlines stock followed suit.

JetBlue Airways (JBLU) ducked the Delta-fueled decline, rising by more than 3% in early hours trading, although the stock fell almost 10% on Monday as the broader market reacted to the threat of a recession. Southwest Airlines (LUV) stock soared more than 9% on Tuesday after ending its long-standing free checked bags policy and adjusting its loyalty program.

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