Airline shares fell on Tuesday morning as investor sentiment softened amid a drop in travel spending and lower consumer confidence. Market analysts describe uncertainties linked with tariff concerns and a shift in spending habits that have put pressure on the sector’s earnings outlook. One significant response was observed from a leading financial analyst firm, which lowered ratings on several major carriers.
Among the industry leaders, Delta Air Lines experienced a decline of around five percent in early trading. The analyst firm changed its recommendation on the carrier from a buy to a hold and nearly cut its price projection by half to $46. This adjustment comes on the heels of Delta’s revision of its first-quarter forecast, and the firm hinted that expectations for 2025 might see similar reductions. Delta officials mentioned that revenue from premium travel services and an important credit card partnership continues to contribute to the company’s results.
The earnings season for domestic airlines is underway, with Delta set to release its financial results next Wednesday morning. Meanwhile, United Airlines stands as the only U.S. carrier still rated as a buy by the analyst firm, even though its price projection has also been reduced by 48%. Business executives offered cautionary observations during a recent industry meeting held by a major financial institution, noting that domestic travel accounts for the largest share of the market’s revenue.
Recent financial data illustrate the situation clearly. As of March 22, overall credit and debit spending in the United States increased by 1.5% compared to last year, yet expenditures for airline travel dropped by 7.2%. A report from a respected financial institute suggested that waning consumer confidence may be slowing travel bookings, while atypical weather patterns and an off-cycle Easter season might have further influenced the downturn.
Investor reactions remain vigilant. The NYSE Arca Airline Index dropped nearly 17% in the first quarter, outpacing declines recorded by broader market indexes and marking the steepest fall observed since the third quarter of 2023.
Market strategists continue to evaluate conditions as carriers adjust plans for the coming quarters.
