Shares of major U.S. airlines slumped in premarket trading on Tuesday after Delta Air Lines slashed its profit forecast, stoking concerns about the hit to travel from a weakening U.S. economy.
The legacy airline's shares fell 10%, while peers United Airlines (UAL.O) and American Airlines (AAL.O) were down 4% and 6%, respectively. Budget carrier Southwest Airlines (LUV.N) fell 2.4%.
The sector-wide slump followed a broad market sell-off on Monday after concerns about a potential federal government shutdown and tariff woes ignited fears that the U.S. economy could be heading towards a recession.
U.S. President Donald Trump's tariffs have raised concerns about an economic slowdown and reduced discretionary spending, prompting travelers to exercise caution when planning trips.
This abrupt shift comes as a setback for the big U.S. carriers, which just two months ago were benefiting from strong travel demand and high pricing across their networks.
Major U.S. airlines are set to speak at the J.P.Morgan Industrials Conference on Tuesday and are expected to provide insights on the current demand environment and any update to their expectations for the current quarter.
Citi analyst Stephen Trent said Delta's forecast cut was disappointing but not entirely unexpected.
"Concerns about US consumer strength, possible DOGE impacts on governmental air travel demand and Federal Aviation Administration (FAA) staffing, US government tariff uncertainties and several high-profile aviation incidents across North America have all occurred since late January," Trent wrote in a note.
Delta now expects profit in the range of 30 cents to 50 cents per share, compared with its previous estimate of 70 cents to $1.
