The nation’s big airlines are worried about weakening demand. Here’s why ...

Have the winds suddenly shifted for U.S. air travel, or is it just some momentary turbulence?

That was the question discussed by the leaders of the country's largest airlines as they reported weaker-than-expected performance in the first quarter at a J.P. Morgan investor conference on Tuesday.

"The business at the core is healthy," said Ed Bastian, CEO of Delta Air Lines. "We just need to continue to better reset around demand and what we're seeing in the environment."

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The Atlanta-based carrier cited weather, the American Airlines flight 5342 and Delta flight 4819 accidents and broader macroeconomic uncertainty for the move to halve its revenue growth forecast for the first quarter.

American, JetBlue, Southwest Airlines and United Airlines joined Delta in lowering their expectations for the first quarter. The common theme: a weak macroeconomic environment and lower consumer confidence, particularly after the AA5342 accident at Ronald Reagan Washington National Airport (DCA) in January.

Unsaid was the cause of much of that economic uncertainty. Since President Trump's inauguration on Jan. 20, government travel spending has slowed dramatically, probationary federal employees have been laid off en mass and the administration has threatened or implemented steep tariffs on goods from China and some of the U.S.'s closest trading partners, including Canada and Mexico.

Robert Isom, CEO of American, called both the economic uncertainty and the AA5342 accident a "big deal" to the airline's business.

American brings in about 1.5% of its revenue from government travel, a large part from its hub at DCA, said Isom. That segment of its business has seen a "big impact" from the recent government spending cuts.

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"DCA, historically, has been one of our most profitable hubs and, over the long run, I am confident it will return to its full share of profitability," he said.

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United has also been hit hard by the pullback in U.S. government spending thanks, in part, to its hub at Washington's Dulles International Airport (IAD). Government-related revenue is down by about half since the beginning of the year, CEO Scott Kirby said. The segment previously made up roughly 2% of United's global revenue.

The Chicago-based carrier is correcting for the loss in government business by retiring 21 aircraft earlier than planned and cutting some flights. The cuts include select flights to Canada, where there is a "big drop in Canadian traffic to the U.S.," and some red-eye flying, Kirby said.

"Nothing that we have seen in the short term impacts what we think is going to be happening even a year from now," he said.

Southwest is the third airline with a large Washington-area presence. Baltimore/Washington International Thurgood Marshall Airport (BWI) is one of its largest bases and the busiest in the region.

Bob Jordan, CEO of the Dallas-based carrier, said they broadly see "softness in bookings and demand." He did not specify how much of that was related to cuts in government travel or attributable to Southwest's Baltimore base.

A spring break thaw?

Airlines are optimistic that the travel demand weakness in the first quarter is, as Bastian put it, "transitory."

"We have a sense that March will be the bottom," added the Delta CEO.

His competitors and Wall Street largely agree.

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JetBlue CEO Joanna Geraghty said Tuesday that, while slower days and weeks on the calendar are "under pressure," peak travel days and periods remain strong. And she is optimistic for the upcoming spring break and summer travel periods.

"The outlook for [the second quarter is] stronger due to the greatest peak period exposure and self-help steps," wrote Raymond James analyst Savanthi Syth on Tuesday. Capacity cuts are the primary "self-help steps" she referred to, though lower fuel prices are also a boost to airline bottom lines.

TD Cowen airline analyst Tom Fitzgerald wrote earlier in March that airlines have made "substantial capacity cuts" in the U.S. domestic market since mid-2024. Domestic schedules in the April-through-June quarter are expected to increase roughly 3.5% year-over-year in 2025 compared to a 6% year-over-year jump last year, he wrote.

Caution still ruled the roost Tuesday, given that, as the industry learned at the outset of the COVID-19 pandemic in 2020, travel demand can turn on a dime.

"While booking trends for the summer currently appear stable, we have assumed a moderate level of softness in revenue trends and that continues throughout the remainder of the year," said Southwest's Jordan.

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