MW Airline stocks have taken a beating, and tariffs aren't even the biggest worry

By Tomi Kilgore

Airline stocks add a bad week to a tough month, as Trump's tariffs spark fears of an 'economic and touristic slowdown' in the U.S.

Airline stocks have been hit particularly hard in the past week, as Wall Street has grown increasingly worried that President Donald Trump's ramped-up tariffs will cause a lot more problems than just trade friction.

The fear is that the impending higher prices on consumer products, along with a slowing economy, will keep people from traveling far from home for vacations - or from taking vacations at all.

"A big question is if travelers will simply make geographic shifts in their vacations or if there will be net declines," wrote Truist analyst Gregory Miller.

In the wake of all the chaos in the stock market, falling consumer sentiment and warnings from airlines last month about a dip in leisure travel, there are increasing concerns that both those travel scenarios could play out.

Miller said that since Trump's April 2 tariff announcement, he's heard from travel companies that expect that those Americans who still plan to travel this summer will do so domestically more than previously expected.

In addition, "it is increasingly evident that some potential travelers to the U.S. are vacationing elsewhere," Miller wrote, which doesn't bode well for the larger legacy airlines.

Among the airline stocks hit the hardest, Delta Air Lines Inc. $(DAL)$ has dropped 15.7% this week, after being the worst performer on the S&P 500 index SPX in March with a plunge of 27.5%. And United Airlines Holdings Inc. shares $(UAL)$ have tumbled 18.6% this week, after sinking 26.4% in March.

Southwest Airlines Co.'s stock $(LUV)$ has taken a 22.2% hit this week, and shares of American Airlines Group Inc. $(AAL)$ have shed 12.1%.

Those four airlines are all components of the Dow Jones Transportation Average DJT. That index, which is viewed by many as an economic barometer, has fallen 10% this week, highlighted by a one-day record drop of 1,371.64 points on Thursday.

The Dow transports, which are watched closely for how their movements correlate with the Dow Jones Industrial Average DJIA - as the saying goes, the transports take what the industrials make - have slid 26.1% since their Nov. 25, 2024, record close, while the Dow industrials are down 14.7% from their Dec. 4 record.

Meanwhile, the U.S. Global Jets exchange-traded fund JETS has given up 14.4% this week, which would be the ETF's worst week since its record 31.4% selloff during the week that ended March 20, 2020, at the height of the pandemic panic.

One thing Truist's Miller worries about is that the worst of the travel slowdown may take more time to play out.

He thinks the global ramifications of a "U.S. economic and touristic slowdown" - resulting from "choppier" U.S. government policies - "may take time to manifest."

And that could lead to further deceleration in global travel trends in the second half of the year.

-Tomi Kilgore

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April 04, 2025 15:11 ET (19:11 GMT)

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