Airline Stocks Tumble After Revised Q1 Guidance Disappoints Investors: Retail Reaction Is Mixed

Delta Air Lines now expects 3% to 4% revenue growth in the first quarter of 2025 compared to its initial guidance of 7% to 9% growth. American Airlines expects Q1 revenue to remain flat year-over-year compared to an initial guidance of 3% to 5% growth.

Airline stocks were the talk of the town on Tuesday after top carriers revised their first-quarter revenue forecasts lower as concerns about a slowdown in the world’s largest economy gathered momentum.

Delta Air Lines Inc (DAL) said it now expects revenue growth of 3% to 4% in the first quarter (Q1) of 2025 compared to its initial guidance of 7% to 9% growth. The airline has also lowered its operating margin forecast to 4% to 5% from the 6% to 8% projected earlier.

Delta also expects Q1 earnings per share (EPS) of $0.30 to $0.50 compared to the initial guidance of $0.70 to $1.00.

American Airlines Group Inc (AAL) had a similar story to tell. The airline expects its Q1 revenue to remain flat year-over-year (YoY) compared to an initial guidance of 3% to 5% growth. Losses are expected to widen to $0.60 to $0.80 per share compared to a previous forecast of a loss of $0.20 to $0.40.

Following the updates, Delta Air Lines stock fell nearly 8%, while American Airlines shares slid over 6% on Tuesday morning.

Southwest Airlines also projected a lower revenue growth in Q1, but the airline’s decision to charge passengers to check bags pushed the stock higher.

Southwest expects 2% to 4% growth in its revenue available per seat mile (RASM) compared to its previous guidance of 5% to 7% growth.

The revised forecast comes as ongoing tariff wars, a potential federal shutdown, and fears of an economic slowdown weigh on the broader market.

According to a Reuters report, Citi analyst Stephen Trent stated that although Delta's forecast cut was disappointing, it wasn’t entirely unexpected.

"Concerns about US consumer strength, possible DOGE impacts on governmental air travel demand and Federal Aviation Administration (FAA) staffing, US government tariff uncertainties, and several high-profile aviation incidents across North America have all occurred since late January," Trent said, according to the report.

On Stocktwits, retail sentiment turned out mixed for the three airline stocks.

While sentiment trended in the ‘neutral’ territory for DAL and AAL shares, it dipped into the ‘extremely bearish’ territory for Southwest Airlines.

Stocktwits user messages are implying a mixed take on the industry.

Investors are awaiting the release of the CPI inflation data on Wednesday to get further hints about the Federal Reserve’s next policy actions, which could have a significant bearing on the economy.

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