Federal government job cuts and a decline in consumer confidence have caused airlines to downgrade their financial forecasts for the first quarter.
The industry was also hurt by the Los Angeles wildfires in January, Southeast snowstorms and the fatal plane crash on Jan. 29 near Washington, D.C.
In a series of regulatory filings and remarks from airline executives in concert with Tuesday's J.P. Morgan Industrial Conference, each of the four largest U.S. airlines put figures behind a disappointing first quarter.
Delta now expects $500 million less in revenue for the first three months of the year than it had forecast in January. The airline said its profit margin is expected to be between 3% and 4%, down from 6-8%.
Speaking at the J.P. Morgan conference, Delta CEO Ed Bastian attributed approximately half of the revenue hit to Southeast snowstorms, the Los Angeles wildfires and changes in booking behavior following the Jan. 29 midair collision of an American Airlines regional jet and Army helicopter near Washington Reagan National Airport, which killed 67 people and elicited safety concerns among the flying public.
Bastian attributed the other half of revenue decline to decreased consumer confidence, the Trump administration's policies and a decline in government travel.
Impacts will continue into the second quarter, Bastian said.
Other airlines pointed to similar causes as they put out their downward forecasts. The Trump tariffs on Mexico, China and Canada -- combined with the president's reluctance to rule out the possibility of a recession in a Fox News interview on Sunday -- led to a sharp drop in stock prices, while surveys and other economic metrics show consumer confidence to be in decline.
Southwest Airlines now expects revenue per seat mile flown for the first quarter to be up 2% to 4% year over year, a drop from its previous guidance of a 5% to 7% increase. The airline attributed half of that underperformance to a decrease in government travel and the Los Angeles wildfires.
"The remainder of the decrease is primarily attributable to softness in bookings and demand trends as the macro environment has weakened," Southwest said.
American Airlines now expects total revenue for the first quarter to be flat year over year, down from its earlier forecast of a 3% to 5% increase. United CEO Scott Kirby said United will come in at the bottom end its January guidance, which was for earnings per share of between 75 cents and $1.25.
Knock-on effect from government job cuts
The airlines said most of the recent demand softness is in domestic flying. Corporate travel demand has fallen from late last year, and domestic leisure demand has also weakened.
American CEO Robert Isom said the airline is seeing an especially significant demand decline in the D.C. area, where it is the top carrier at Washington Reagan National Airport. Contracted government business amounts to approximately 1.5% of American's revenue, but business related to government, often involving government contractors, also has taken a hit.
The federal workforce cuts by the Trump administration's Department of Government Efficiency are also fueling uncertainty among government workers, Isom said.
"We know there are some follow-on aspects for leisure travel," Isom said. Kirby also noted carry-over effects and said that United's government and government-adjacent business is down approximately 50%.
There also has been a big drop in Canada demand, Kirby said. The Trump administration's tariffs on Canada and rhetoric from the president about adding Canada as the 51st state has caused a tourist backlash.
United said it will reduce capacity on U.S.-Canada routes and on routes considerably affected by a reduction in government travel. The airline has decided to retire 21 aircraft early.
Airlines said that long-haul international demand remains strong despite the broader downturn.
"Honestly, with all the noise, it's one more reason to get away," Bastian said.