Delta first US airline to slash growth as trade war takes its toll on travel

The rapid expansion of U.S. airlines since the COVID-19 pandemic has come to a "self-imposed" end, as Delta Air Lines CEO Ed Bastian put it Wednesday.

Macroeconomic uncertainty around global trade has brought Delta's multiyear expansion — which has included new international markets and an expanded focus city at Austin-Bergstrom International Airport (AUS) — to a screeching halt, Bastian said during a quarterly earnings call.

"Coming into 2025, we are positioned for another year of strong growth," he said. "However, given broad economic uncertainty around global trade, growth has largely stalled."

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Delta's schedules will remain largely intact for the balance of the second quarter that runs through June, with maybe some select "trimming around the edges," said Glen Hauenstein, the airline's president. After June, however, the carrier will curtail any planned growth and instead focus on the profitability of its core business.

The news comes amid rapidly deteriorating economic indicators in the U.S. Major stock indices have fallen dramatically and wiped out trillions of dollars in wealth since President Trump unveiled his tariff plans April 2, and The Conference Board's closely followed index of short-term consumer outlook fell in March to the lowest level in 12 years.

In a social media post Wednesday after the Delta call, Trump said he would pause all new country-specific reciprocal tariffs except those on China for 90 days. His universal 10% tariff on imports remains.

Bastian and other Delta executives avoided any mention of Trump specifically during the call, instead limiting comments to uncertainty around tariffs and global trade. That avoidance was a far cry from Bastian's description in November of the then-incoming Trump administration as a "breath of fresh air" compared to the outgoing Biden administration.

"The airline sector is in the eye of the storm," Tom Fitzgerald, an airline analyst at investment bank TD Cowen, wrote on the economic uncertainty on Wednesday.

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Delta's executives on the call outlined both the good and the bad of the current situation.

Domestic economy travel is down

"The impact has been most pronounced in domestic and specifically in the main cabin with softness in both consumer and corporate travel," Bastian said of the situation.

Delta plans to cut domestic capacity, particularly in the second half of the year, in response, Hauenstein said. Most of the cuts are expected after Aug. 15 — most schools in the southeastern U.S., where Delta is strong, return from summer break in early August — and through the balance of the year.

The carrier slashed its capacity growth forecast for the second half of 2025 from up 3% to 4% to flat year over year.

The cuts, at least initially, will focus on peak versus off-peak days, Hauenstein said. That means Delta could go from five flights on a route on Tuesdays, one of the lowest-demand days of the week, to just three or four flights while keeping the five flights on busy Fridays.

Delta executives declined to elaborate further on where the cuts could occur except to say that they will be concentrated in the domestic market.

"We're going to eliminate unprofitable flying wherever that is," Hauenstein said.

One way Delta will slow growth is by accelerating aircraft retirements. The airline will remove at least 30 older Boeing 757s, Boeing 767s, Airbus A319s and Airbus A320s from its fleet in 2025, said Dan Janki, Delta's chief financial officer.

International travel is resilient ... for now

Americans are still traveling or eager to travel abroad, at least with Delta, executives said. That is even true as foreigners, including from Canada and Western Europe, are increasingly declining to make trips to the U.S.

"Internationally, approximately 80% of revenues are U.S. point of origin, with bookings remaining strong for the peak summer period," Hauenstein said. The key here is that Delta sells 80% of its seats on international flights to U.S. travelers, limiting exposure to any decline in travel from abroad.

Asked why international travel among Americans is holding up even as domestic travel slows, Hauenstein said, "The cohort that is traveling right now has an average age in the 60s, which means the Baby Boomers are traveling. And, you know — being a Baby Boomer, I can say this without fear of retribution — there's only so much time to go to Europe or go see Australia or Japan. And so, you've got this wealth effect where this cohort of retirees is wealthier than any other cohort, even with the most recent rundown, and they want to go do things.

"We're keeping a close eye on demand — closer than we've ever looked before," he added.

Delta will add service to Catania Airport (CTA) on the Italian island of Sicily as one of at least eight new routes to Europe this summer. And next winter, the airline plans to add 10 new routes to Mexico and the Caribbean.

Premium travel demand, Hauenstein added, has also proved resilient at Delta even as economy demand has slowed.

Delta will not pay tariffs on planes

"We will not be paying tariffs on any aircraft deliveries we will take," Bastian said in response to a question regarding tariffs on new planes.

The import taxes could prove costly for Delta — and all airlines — given the global nature of the aerospace supply chain. All 43 of its scheduled aircraft deliveries in 2025 are from European plane-maker Airbus, the carrier's latest fleet plan shows. That includes 12 A330-900s and A350-900s assembled in Toulouse, France; 21 A321neos, typically assembled in either Hamburg, Germany, or Mobile, Alabama; and 10 A220-300s assembled in either Mobile or Montreal.

But even the Airbus planes assembled in Alabama have global supply chains. The fuselage and other critical components on A321neos put together in Mobile are shipped aboard the dedicated Mobile Express from Europe to the U.S.

"We will defer any deliveries that have a tariff on it," Bastian said when asked how Delta would avoid the levies.

Delta has previously proved adept at avoiding import duties. In the past, it has taken delivery of new planes and then dedicated them to only international routes to avoid the levies if the aircraft were to fly a domestic flight.

"It's hard to know how this is going to play out given that this is somewhat self-imposed," Bastian said. "I'm hopeful that sanity will prevail, and we'll move through this period of time on the global trade front relatively quickly. But we're prepared in any event to make sure that we protect Delta through this."

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