Recently, major U.S. airlines such as American Airlines, Delta Air Lines, and Southwest Airlines have lowered their financial forecasts for the first quarter, warning that domestic demand in the U.S. is slowing—this has become the latest signal of weakening consumer confidence in the U.S.

As a result, U.S. airline stocks faced widespread selling yesterday, with American Airlines' stock price dropping 8.3% on Tuesday, Delta Air Lines down 7.2%, and United Airlines down 2%. Southwest Airlines was one of the few airlines to rise, as it announced it would begin charging for checked luggage, leading to an 8.3% increase in its stock price.

The weak demand for air travel has also dragged down stocks in the leisure industry, including theme park operators and holiday booking platforms: Disney's stock price fell 5%, online travel service company Expedia plummeted 7.3%, and Booking Holdings dropped 2.2%.

Moreover, the most concerning aspect of the U.S. stock market on Tuesday was the weakness in consumer-related sectors: the Middle-Income Consumer Index (GSXUMIDC Index) fell by 210 basis points, and the travel sector excluding gaming (GXUTRVL Index) dropped by 170 basis points, primarily influenced by Delta Air Lines' weak guidance and the poor outlook from Kohl's and Dick's Sporting Goods.

Analysts believe that Trump's tariff policy is eroding consumer and business confidence, and the warnings from airlines are among the strongest signs to date. A report released yesterday by the National Federation of Independent Business indicated that small business optimism weakened in February, while the U.S. Consumer Confidence Index recorded its largest decline since August 2021 last month, with consumers' short-term outlook on the economy falling below the threshold that typically indicates a recession.

Latest Financial Warnings from U.S. Airlines

On Tuesday, American Airlines lowered its revenue growth and profit guidance for the first quarter, attributing the reasons to "the aircraft collision incident over Washington at the end of January and the weak domestic leisure market."

United Airlines CEO Scott Kirby stated at the JP Morgan conference that he has observed weakness in the domestic market and expects "the economic situation to become more severe in the future." Kirby added that the weak demand "started with the government sector," with public sector clients accounting for about 2% of the company's business, and consultants, contractors, and government-related work accounting for another 2-3%:

"These clients' spending has decreased by about 50%, and we have already seen this impact spreading to the leisure market."

Kirby also noted that traffic from Canada to the U.S. has significantly declined—U.S.-Canada relations have become strained due to tariff issues.

Southwest Airlines CEO Bob Jordan stated that the company has lowered its guidance for revenue per available seat mile (a key airline industry metric) by 3 percentage points, primarily due to weak bookings caused by the macroeconomic environment Delta Air Lines issued a profit warning on Monday, attributing the reason to a decline in consumer and business confidence caused by economic "uncertainty." CEO Ed Bastian stated that customers "are waiting to see what happens with trade, tariffs, and macroeconomic policy changes."