Delta Air Lines Earnings: Investors Eye Summer Travel Outlook After Q1 Warning

Delta Air Lines will report Q1 earnings Wednesday morning amid heightened scrutiny after a March guidance cut signaled transitory but meaningful demand weakness. The airline now expects EPS of $0.30–$0.50 (down from $0.70–$1.00), with revenue growth of 3%–4% YoY—$500M below initial targets. While CEO Ed Bastian characterized the softness as temporary, investors will be looking closely at bookings commentary for the upcoming summer and holiday travel seasons. Given Delta's exposure to international and corporate travelers, any signs of lasting weakness could weigh on sentiment—not just for airlines.

Delta’s March 10 preannouncement cited a mid-quarter slowdown in both leisure and business travel, with weather disruptions and safety incidents also contributing. UBS noted that “roughly half” of the shortfall was macro-related, while the other half came from operational issues. The firm lowered its Q1 EPS estimate from $0.90 to the revised $0.30–$0.50 range, but reiterated a Buy rating, citing strength in international and premium travel. Barclays echoed that view, stating the guidance cut validated earlier concerns about softening domestic demand, and warned other carriers may follow with lowered forecasts.

International demand remains a wildcard. While bookings into April and May have reportedly improved, recent IATA data show North America–Europe RPKs slowed to +0.3% in February (from +5% in January), and Caribbean demand contracted. This is crucial for Delta, whose diversified revenue mix depends more heavily on cross-border and premium fares than many peers. Goldman Sachs noted these channels remain “durable revenue streams,” alongside its loyalty and maintenance businesses, but trimmed their price target to $60 from $83.

The broader environment is also pressuring sentiment. According to Deutsche Bank, falling consumer confidence (at four-year lows) has already impacted domestic travel—first among budget-conscious flyers, and now among corporate segments including manufacturing and tech. Government-related travel, per United Airlines, is trending ~50% below last year’s levels. Additionally, Canadian travel to key U.S. destinations like Florida and California is softening due to retaliation over proposed tariffs.

Still, Delta leadership is urging patience. CEO Bastian said publicly that he does not see a U.S. recession ahead and is maintaining full-year EPS guidance. Margins are expected to expand this year, and he emphasized improving trends in April/May, with international and premium categories showing relative strength. Operationally, Delta has scaled back spring/summer capacity growth and reaffirmed that most of its revenue comes from direct government sources.

Market expectations have already adjusted sharply. Shares fell ~9% on the preannounce, and analysts from Jefferies to JPMorgan have taken down estimates across the sector. Jefferies cut DAL to Hold and warned that each 1pt drop in Atlantic RASM shaves 4% off FY25 EPS. Delta's update may offer crucial color for peers like American (AAL) and United (UAL), both of which also face slowing demand in key segments.

In sum, investors want to know if Q1’s softness is behind Delta or bleeding into summer—a period critical for earnings recovery. Commentary on international bookings, corporate travel, and margin trajectory will carry outsized weight. With the stock trading at depressed levels and technical setups hinting at a potential base, a constructive update could offer long-term investors an opportunity—if Delta can convince the Street the turbulence is truly temporary.