Economic turbulence shakes US airlines as travel demand falters

Doyinsola Oladipo - Reuters - 27/03
U.S. airlines were flying high less than two months ago on talk of a new golden age, as strong travel demand and tight industry-wide capacity raised the prospect of a multi-year profit boom.
  • Passenger traffic growth slows, fares decline
  • Airlines cut June quarter capacity amid slowing demand
  • S&P 500 passenger airlines index down 15% this year
CHICAGO/NEW YORK, March 27 (Reuters) - U.S. airlines were flying high less than two months ago on talk of a new golden age, as strong travel demand and tight industry-wide capacity raised the prospect of a multi-year profit boom.
But President Donald Trump's broad tariffs and a crackdown on government spending have upended that optimism. Tourists and companies have reduced spending amid rising economic uncertainty, forcing carriers to cut their first-quarter profit forecasts.

Sign up here.

With travel a discretionary item for many consumers and businesses, growing odds of weak economic growth and high inflation have clouded the outlook for the remainder of the year as well.
The S&P 500 passenger airlines index (.SPLRCALI), opens new tab is down about 15% this year and widely underperforming the broader S&P 500 index (.SPX), opens new tab. Shares of Delta (DAL.N), opens new tab and United Airlines (UAL.O), opens new tab have fallen about 20% each this year. Discounter Frontier Airlines (ULCC.O), opens new tab is down 2%.
"Your first needs are food and shelter. And then, we're a little bit down the list of expenditures," said David Neeleman, CEO of low-cost carrier Breeze Airways, in an interview. "If you don't have a job, you're not going to go buy an airline ticket."
With demand slowing, airlines have started culling flights to avoid lowering fares and to protect margins. Frontier (ULCC.O), opens new tab, Delta, United, American Airlines (AAL.O), opens new tab, JetBlue (JBLU.O), opens new tab and Allegiant (ALGT.O), opens new tab all trimmed their April-June quarter capacity in the past two ...
[Short citation of 8% of the original article]