In the last month, multiple airlines have warned that people who fear a recession are not going to travel as much.
In a March interview, Delta Air Lines (DAL) CEO Ed Bastian said, “Employees that feel threatened as to whether they’re going to have a job are not out there spending money traveling.”
A month later, the country’s third-largest and most high-end airline announced that it expended no more than 2% annual growth after ending 2024 on expectations of a 6% to 8% spike and the strongest year on record.
Both low-cost airlines like Frontier (FRON) and full-service ones like United (UAL) have drawn attention to the fact that discretionary travel is down.
“I feel like we’re marching toward a recession scenario,” United’s Chief Financial Officer Michael Leskinen said during an April 15 call with investors.
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‘Fares aren’t as strong,’ Alaska Airlines tells investors
The latest airline to sound a similar alarm is Alaska Airlines (ALK) . On April 24, the Seattle-based carrier that recently completed its merger with Hawaiian Airlines reported a first-quarter loss of $160 million on over $3 billion in revenue.
The carrier told investors that it now expects expects second-quarter unit revenue to be down 6% from 2024 with earnings between $1.15 to $1.65 per share. An average of Wall Street analysts had earlier predicted $2.47 per share.
“The fares aren’t as strong as they were in the fourth quarter of last year and coming into January and first part of February,” Chief Financial Officer Shane Tackett said during a separate CNBC interview after earnings dropped. “Demand is still quite high for the industry, but it’s just not at the peak that we all anticipated might continue coming into last year.”
Alaska Airlines and Delta have both recently lowered their forecasts for 2025 earnings.
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Alaska additionally told investors that such softer demand is costing the carrier approximately six points in revenue impact.
The airline saw some stabilization of bookings amid greater fluctuations in the early weeks of the Trump administration, and overall, its earnings report is a comparatively positive one.
Despite low traveler numbers, Alaska says it is ‘built for times like these’
The net loss of $166 million is down from a $132 million loss in 2024 while $3.1 billion in revenue is also up 41% year-over-year.
More on travel:
United Airlines places big bet on new flights to trendy destinationGovernment issues new travel advisory on popular beach destinationAnother country just issued a new visa requirement for visitors
“Alaska is built for times like these with our relentless focus on safety, care, and performance,” President and CEO Ben Minicucci said in a statement on the earnings. “Amid the economic uncertainty, our teams controlled what they can control and delivered results that strengthen our foundation for the long term.”
Other carriers have reported that sales of seats in their regular cabins have fared worse than business and other premium fares. As a result, many have been leaning into marketing to wealthier and corporate clients.
“The big differentiator will be airlines that have healthier balance sheets overall,” Tom Fitzgerald, an analyst with TD Cowen, told TheStreet at the start of April. While earlier speaking of Delta, he also said airlines that have more unencumbered assets they “can borrow against to source liquidity” will be much better positioned to withstand the ebbs and flows of the economy.
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