Uncertainty surrounding global trade is casting a shadow over Delta Air Lines Inc.’s outlook for the remainder of 2025, executives for Atlanta’s largest private employer indicated during their March earnings call.
Market fluctuations and stalled growth, partly triggered by a series of Trump tariffs—some implemented, others retracted or delayed—may lead to a reduction in flights during the latter half of the year.
This shift in outlook marks a significant contrast to just a quarter ago when the airline anticipated ‘strong demand for travel to continue’ and announced new routes to destinations including Morocco and several spots in the Caribbean.
Chief Executive Officer Ed Bastian highlighted the challenges of making broad projections amidst recent volatility, stating that the airline is ‘focusing on what we can control.’
Mr. Bastian noted, ‘This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.’
He estimated that profits could reach between $1.5 billion and $2 billion in the June quarter ‘on revenue that is essentially flat to last year.’
According to a corrected transcript of the earnings call, Delta President Glen Hauenstein mentioned that the airline will be ‘eliminating unprofitable flying’ wherever feasible within its network.
The impact of this move on Delta’s expanding international route map from Atlanta remains uncertain, although the airline recently announced plans to launch new flights to St. Vincent and the Grenadines and Grenada in December.
Travelers in Canada, where boycotts against the U.S. have begun, and Mexico might see reductions in flight offerings as discretionary travel declines in those regions, despite what appears to be continued robust business demand.
Mr. Hauenstein underscored that the airline continues to experience strong transatlantic bookings for the peak summer season.
Adding to the resilience of its international market, he noted that 80 percent of Delta’s cross-border bookings originate from the U.S., which could insulate the company from any demand decreases originating in Europe and Asia.
While Mr. Hauenstein offered scant specifics on the planned capacity cuts in the latter half of 2025, he mentioned that the schedule remains largely intact for the second quarter, with reductions expected to begin in August, particularly targeting the Southeast U.S., where schools start earlier.
In the first quarter, Delta recorded a 7 percent increase in international revenue, showing strength alongside loyalty and premium revenue; however, domestic revenue grew by only 1 percent, reflecting persistent softness in the main cabin.
Mr. Hauenstein noted that this softness has not yet impacted higher-margin aspects of the business and added that the company is closely monitoring the situation, especially given the wealth that was lost in the markets in early April.
Traffic on the Pacific lane, particularly to Seoul—where Delta partners with Korean Air—and Tokyo, saw a 16 percent increase in the first quarter compared to the same period in 2024.
Executives asserted that Delta has minimal direct exposure to tariffs, with 85 percent of its overall cost base allocated to services and its goods mainly sourced domestically.
However, cargo revenue, which increased by 17 percent this quarter, could face reductions if trade flows decline.
image source from：https://www.globalatlanta.com/delta-stalled-global-growth-means-flight-cuts-though-international-remains-a-bright-spot/
