By Jon Sindreu

The wobbles suffered by the U.S. economy in 2023 and early 2024 were dubbed a "richcession," as they were most felt by wealthy households. Judging by what airlines are saying, current recessionary risks are of the more usual kind.

On Thursday, American Airlines cut its second-quarter profit forecast. It also pulled its full-year guidance, echoing what other carriers such as Southwest Airlines, Delta Air Lines and Alaska Air have recently done. United Airlines has been even more creative by issuing an outlook for a stable economy, and another for a tariff-induced recession. The Dow Jones US Airlines Index has lost roughly 30% since the start of the year.

But American's results contained another key piece of information: The company's Vice Chair, Steve Johnson, told analysts Thursday that there is now "significant weakness" in demand coming from travelers who book through indirect channels, such as online portals.

"We believe it is mostly our most price sensitive customers, for whom travel is most discretionary," he added.

The Fort Worth, Texas-based carrier reported a jump in passenger unit revenues in international routes, which have a higher density of corporate and high-paying flyers, but was dragged down by a 0.7% fall domestically. Figures from rivals such as Delta and United seem to confirm that the travel recovery hasn't really been derailed among premium-cabin, loyalty program and co-branded credit card users, all higher-end cohorts.

Meanwhile, shares in budget airlines such as Southwest and Frontier Airlines have suffered the most.

To be sure, most economists have always expected less-affluent Americans to bear the brunt of higher import prices, though these have for the most part yet to feed through to the retail level.

A separate question has been whether the uncertainty caused by the trade war will itself make most consumers spend less, rather than just affecting wealthy individuals who have seen the value of their stock portfolios plunge. So far, the answer isn't encouraging.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

April 24, 2025 11:14 ET (15:14 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.