Airline stocks fall as consumers pull back on travel spending

On Tuesday investment banking company Jefferies downgraded its rankings on Delta, American Airlines, Southwest Airlines, and Air Canada. This has caused airline stocks to trade significantly lower today with Delta down over 3%, Southwest Airlines down over 5%, and American Airlines down around 2.9%. Even United Airlines, which remains the only US airline Jefferies continues to keep in the buy category, is down around 2.5%. Jefferies analyst Sheila Kahyaoglu explained that “corporate and consumer sentiment [are expected] to remain soft on swelling macro uncertainty.” Indeed, the US Consumer Expectations Index, which measures consumer expectations for business, income, and job prospects has reached its lowest level in 12 years to 65.2 points amid Americans’ concerns over Trump’s tariffs. With a threshold of 80 typically signaling a recession in the future, it is needless to say that consumer outlook is not looking up at the moment. According to Stephanie Guichard, a Senior Economist at the Conference Board, “consumers’ optimism about future income… [has] largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.” In these circumstances, one of the ways that Americans are addressing these fears is by tightening their belts on travel expenses. Over the month of February, Bank of America reported a reduction of 7.2% in users’ credit and debit card spending. Additionally, according to United’s Chief Financial Officer Mike Leskinen, government travel “has fallen off here post-inauguration,” in part due to mass government worker layoffs by the Trump Administration. With government air travel making up around 2% of United’s revenue and travel from consultants and contractors making up another 2-3%, the airline has seen a sharp decline in revenue from these cuts.

Apr 1, 2025 - 21:12

Airline stocks fall as consumers pull back on travel spending

On Tuesday investment banking company Jefferies downgraded its rankings on Delta, American Airlines, Southwest Airlines, and Air Canada. This has caused airline stocks to trade significantly lower today with Delta down over 3%, Southwest Airlines down over 5%, and American Airlines down around 2.9%. Even United Airlines, which remains the only US airline Jefferies continues to keep in the buy category, is down around 2.5%.

Jefferies analyst Sheila Kahyaoglu explained that “corporate and consumer sentiment [are expected] to remain soft on swelling macro uncertainty.” Indeed, the US Consumer Expectations Index, which measures consumer expectations for business, income, and job prospects has reached its lowest level in 12 years to 65.2 points amid Americans’ concerns over Trump’s tariffs. With a threshold of 80 typically signaling a recession in the future, it is needless to say that consumer outlook is not looking up at the moment. According to Stephanie Guichard, a Senior Economist at the Conference Board, “consumers’ optimism about future income… [has] largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”

In these circumstances, one of the ways that Americans are addressing these fears is by tightening their belts on travel expenses. Over the month of February, Bank of America reported a reduction of 7.2% in users’ credit and debit card spending.

Additionally, according to United’s Chief Financial Officer Mike Leskinen, government travel “has fallen off here post-inauguration,” in part due to mass government worker layoffs by the Trump Administration. With government air travel making up around 2% of United’s revenue and travel from consultants and contractors making up another 2-3%, the airline has seen a sharp decline in revenue from these cuts.