Delta Air Lines Tops Lowered Expectations Amid Economic Turbulence, Cautions on Outlook

Delta Air Lines reported first-quarter results that came in above analysts’ lowered expectations, offering a momentary reprieve for investors in an otherwise turbulent environment for travel stocks. The carrier posted adjusted earnings per share of $0.46, beating the $0.38 consensus, while adjusted revenue of $12.98 billion came in right on target. Despite better-than-expected execution in the March quarter, management struck a cautious tone on the broader macro outlook, choosing not to reaffirm full-year guidance amid weakening demand and escalating trade tensions.

The first quarter results follow a March 10 guidance cut, in which Delta slashed its EPS estimate to $0.30–$0.50 from a prior range of $0.70–$1.00 and trimmed its revenue growth forecast to 3–4% from 7–9%. In this context, the $0.46 in EPS and 3.3% year-over-year revenue growth landed at the high end of the revised outlook—offering validation that Delta managed to preserve profitability despite a deteriorating demand backdrop.

Delta’s CEO Ed Bastian didn’t mince words in his commentary, warning that “growth has largely stalled” due to broad economic uncertainty and trade instability. “We’re acting as if we’re going into a recession,” Bastian told CNBC, citing a noticeable deterioration in both consumer and corporate travel sentiment. He added that while January bookings were strong, activity slowed materially in February and March. Delta is now scaling back its planned capacity expansion in the second half of 2025 to flat year-over-year, a meaningful shift from earlier plans to grow 3–4%.

Consumer behavior is clearly evolving. Bastian noted that main cabin bookings have softened, especially among price-sensitive travelers, while premium and international demand remained more resilient. Loyalty-related revenue streams held up well: Delta’s partnership with American Express generated a record $2 billion in the March quarter, up 13% year-over-year. That reflects strength in Delta’s high-margin segments, which helped offset pressure in domestic and basic economy bookings.

Guidance for the June quarter reflects continued caution. Delta now expects second-quarter adjusted EPS between $1.70 and $2.30, compared to the $2.23 consensus from FactSet. Revenue is projected to be flat to down 2% year-over-year, which underwhelms versus analyst expectations for 1.9% growth. Operating margin is forecast in the range of 11% to 14%. While not a collapse by any means, these numbers mark a sharp turn from the optimism expressed earlier in the year, when Bastian called 2025 potentially “the best financial year in our history.”

Importantly, Delta declined to reaffirm its full-year 2025 outlook. Management cited the evolving macro landscape, higher uncertainty around global trade policy, and the difficulty in predicting consumer behavior beyond the summer. While bookings for summer travel are said to be “in line with a year ago,” the company is clearly not taking demand resilience for granted.

Despite all the caution, Delta shares are holding up reasonably well. After falling 28% since the March 10 guidance cut, the stock is up 3.6% in Wednesday’s premarket session and is finding support around the $36 level. That resilience may reflect investor appreciation for Delta’s operational discipline and cost control efforts. Non-fuel unit costs rose just 2.6% year-over-year in Q1, better than expected, and the airline reaffirmed its target for low-single-digit growth in non-fuel costs for the remainder of 2025.

Delta’s results kick off a high-stakes earnings season for the airline industry, with peers like United, American, and Southwest set to report later this month. Given the mounting tariff pressures and signs of weaker consumer spending, investors will be watching closely to see whether Delta’s cautious tone is echoed across the sector.

In the end, Delta’s Q1 performance may be best summed up by Bastian’s own words: “While the first quarter unfolded differently than initially expected, we delivered solid profitability… In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control.” So far, that approach appears to be working—but storm clouds remain firmly on the radar.

We would note that DAL has held the $36 level in immediate reaction to the news. The stock had fallen from $50 to $36 since its March 10 guidance. This could suggest that the bad news has been priced in. Traders should continue to monitor the price action around the $36 level.