Major US airlines warn demand is slowing
The major U.S. airlines thought they were going to have a strong first quarter, but things are not going as well as expected.
Each of the major U.S. airlines has put out guidance pointing to significant economic uncertainty that is directly affecting their domestic bookings this spring.
For its part, Delta was sure this would be a strong first quarter, but this morning the airline's CEO admitted they were wrong.
Speaking out Tuesday during the J.P. Morgan industrials conference in New York, Southwest, United and American all echoed the same message.
The reasons: Two major plane incidents -- including the deadly midair collision between an American Airlines regional jet and U.S. Army Black Hawk helicopter over Washington, D.C. -- the uncertain economic future, plummeting government travel and reductions to corporate travel.
Overall, bookings fell after the deadly Jan. 29 D.C. crash, rebounded a bit, and then fell again after the Feb. 17 crash in Toronto, in which a regional jet crashed upon landing, overturned and caught fire.
"It caused a lot of shock amongst consumers. There’s a whole generation of consumers that didn’t realize these things can happen," Delta CEO Ed Bastian said during the J.P. Morgan conference on Tuesday.
Consumer confidence is unsettled and companies are waiting to see how things shake out. While companies wait, they are booking fewer seats.
Delta expects revenue to be down $500 million -- or 4% less than it anticipated this quarter.
Airlines say they will cut capacity -- reducing the number of seats they are flying -- in order to stabilize the market.
American Airlines has taken a significant hit at the D.C.'s Ronald Reagan National Airport from both the January crash and reductions in government travel.
The airline is reducing capacity there to limit the losses.
United says government travel is down 50%.
One bright spot: Airlines say despite the domestic bookings being weak, international travel remains strong -- and airlines believe this summer will still be strong.
