Delta Froze Expansion… and the Ripple Effect Could Hit the Whole Sector

Yesterday, we broke down how Spirit Airlines CEO Ted Christie stepped aside after two years of failing to close a merger with Frontier to save the company from bankruptcy (which they were forced to file in November). His timing was really bad luck… just months before he was set to collect a $3.8 million bonus.

Today, it’s Delta Air Lines making headlines. No CEO exit here… but the company is signaling trouble ahead in a very different way. This morning before the market opened, Delta announced it’s pulling back on its growth plans for the second half of the year. The airline had been planning to increase capacity by 3–4% later this year. But now they’re saying that’s off the table and that capacity growth will be flat (props to them for getting ahead of the bad news).

CEO Ed Bastian pointed to weakening demand in the U.S. and uncertainty tied to (you guessed it) tariffs. He didn’t beat around the bush either, calling President Trump’s shifting trade policies “the wrong approach.” So if you were planning to blame high ticket prices on inflation, Delta would like to redirect your complaints to the White House.

What’s wild is that just six weeks ago, Delta was sounding pretty upbeat. In January, the airline reaffirmed its 2025 forecast, aiming for more than $7.35 in adjusted EPS. But by mid-February, things started unraveling. Domestic bookings slowed. Corporate travel got stingier. The vibe shifted from “Let’s grow” to “Let’s not get caught off guard.” “We’ve seen a corresponding reduction in broad consumer confidence and corporate confidence,” Bastian said.

Now, Delta has pulled its full-year guidance entirely. They’ll revisit it “later this year” once the haze clears… which is pretty hopeful, considering no one knows what direction trade policy is heading or whether consumers will keep traveling if airfare climbs alongside everything else.

What makes Delta’s situation especially interesting is that, on paper, their first-quarter results were actually solid. The airline delivered adjusted earnings of 46 cents per share, beating analyst expectations of 38 cents. Revenue came in at $12.98 billion (up 3% from the same period last year) and net income climbed to $240 million, a significant jump from $37 million a year ago.

But in today’s market, investors don’t care much about what you just did… they want to know where you’re headed (you could make the argument that this is one of the most forward looking markets in history). And right now, Delta is holding up a big cardboard sign that says: “We don’t know yet.” The airline says it still expects to be profitable in 2025, but walking back full-year guidance this early in the year sends a pretty clear message that conditions have shifted faster than expected.

Part of the issue is that Delta is seeing a mixed picture. International and premium travel are holding up better than expected, but the main cabin (where most passengers fly and where the bulk of revenue lives) is slowing down. That’s where the pressure is building. CEO Ed Bastian also pointed to broader economic uncertainty, including recent “wealth destruction” in the markets and the ripple effects of unpredictable trade policy, which he says are both dragging down consumer confidence (so nothing new here).

To be clear, this isn’t like 2020 where demand fell off a cliff. This is a slower, murkier decline. And while it may not feel as dramatic, it’s just as dangerous for a business built on thin margins and precise planning. That’s why instead of doubling down on expansion… Delta’s shifting into defense, protecting cash and watching expenses rather than chasing growth that may not materialize.

Delta’s stock is already down 39% year-to-date, a big contrast for a company that was once considered the gold standard in U.S. aviation. And as the first major carrier to spill the beans this quarter, Delta’s cautious tone could be a warning sign for what’s to come from United, American, and Southwest.

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Stock.News has positions in United.