While some airlines are better positioned to withstand economic ebbs and flows than others, all have been concerned about the impact that tariffs and low consumer sentiment under the current administration will have on the travel industry.
On April 7, Delta Air Lines (DAL) CEO Ed Bastian named “broad economic uncertainty” as the reason the big-three airline was now expecting annual revenue of just 2%. At the end of 2024, the airline was predicting its best year on record and growth of up to 8%.
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‘Revenue growth is anticipated to be lower’: Frontier Airlines
A day later, low-cost carrier Frontier Airlines (FRON) followed the mainstream airline in lowering its profit forecast.
While analysts initially predicted growth of 14% to $988.2 million, Frontier just announced that it expects first-quarter revenue growth of just under 5% at best. The airline also said that it is lowering capacity and offering greater fare discounts on many of its routes due to lower numbers of travelers taking them.
Related: Airline stocks are also having a terrible day
“Revenue growth is anticipated to be lower than expected due to weakened demand in March, resulting in fare discounting and promotions across the industry, amplified by the close-in nature of Frontier’s bookings,” the Denver-based carrier said in a statement.
Frontier should release its numbers for the first quarter of 2025 in the coming days, while for the quarter between April and June, it also predicts revenue to be “down low single digits.” The airline also said it will be making cuts during “off-peak days of the week.”
Frontier Airlines, a budget carrier based in Denver, is lowering its profit forecast.
Image source: Shutterstock
‘Full-service airlines have healthier balance sheets’: analyst
In another indication that investors can expect a less-than-ideal earnings report, Frontier said it is “unable to reaffirm” its previous full-year forecast of $1 per share and will be closely monitoring the “demand environment and mak[ing] further adjustments” throughout 2025.
Frontier Group shares are down 48% since the start of April and 56% in the year to date. Delta stock is down 32% in 2025.
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
Due to their size and more diversified revenue streams and customer base, full-service airlines are in general better positioned to withstand any economic eventualities and the general threat of a recession. With airlines that offer both, bookings of main cabin economy seats saw a steeper decline than premium fares that are usually booked in advance and by wealthier travelers less affected by day-to-day market fluctuations.
Eileen Crowley, a partner leading Deloitte’s transportation and hospitality branches, recently told TheStreet that travelers who are “not feeling as good about their financial position and affordability” will often mean they “are driving versus flying or staying with friends versus staying at a hotel” — all choices that inevitably seep into airlines’ traffic numbers and ultimately, their balance sheets.
“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. “Delta has billions of dollars in unencumbered assets that it can borrow against to source liquidity if it needs to in this environment, and the legacies also have pretty attractive loyalty programs that are generating billions in revenue at very high margins.”
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