Airline shares slide as issues develop over client journey

A Delta Air Lines Boeing 767-332(ER).

Joan Valls | Nurphoto | Getty Images

Airline stocks slid further on Tuesday as Wall Street’s concerns about weaker-than-expected travel demand amid looming tariffs and a sharp drop in consumer confidence continue to weigh on the sector.

Shares of Delta Air Lines were down more than 3% in afternoon trading after Jefferies downgraded the carrier, the most profitable in the U.S., to a hold rating from buy, and nearly halved its price target to $46, several weeks after the airline cut its first-quarter guidance.

The bank said Delta would “likely” reduce its 2025 forecasts. While concerns have grown, particularly about more price-sensitive travelers, Delta executives have said the airline has been growing its share of revenue from its higher-end cabins like first class, as well as its lucrative credit card partnership with American Express.

Delta kicks off U.S. airlines’ earnings season when it reports results next Wednesday morning.

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Jefferies also cut its rating on American Airlines, Southwest Airlines and Air Canada, which has outsize exposure to a slowdown in cross-border travel with the U.S.

American was also down about 3% in afternoon trading, while Southwest sank more than 5%.

United Airlines remains Jefferies’ sole buy airline of the U.S. carriers, though it also slashed its price target by 48%.

Airline executives at a JPMorgan industry conference in mid-March warned about softer-than-expected demand, particularly for domestic travel, which makes up the bulk of the U.S. travel industry’s revenue.

U.S. household credit and debit card spending overall was up 1.5% over last year as of March 22, but spending on airlines dropped 7.2%, according to a Bank of America report last week.

On Monday, the Bank of America Institute wrote in a report that the decline in travel card spending “could be that the recent drop in consumer confidence is translating into people hesitating to book trips, or considering paring them back” but added that “bad weather and a late Easter this year are also likely playing a part.”

The NYSE Arca Airline Index, which tracks mostly U.S. carriers, fell 18% in the first quarter, outpacing the S&P 500′s decline and marking the sector index’s biggest percentage drop since the third quarter of 2023.

Correction: The NYSE Arca Airline Index fell 18% in the first quarter. A previous version misstated the drop.

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