Companies From This Sector Are Lowering Guidance Ahead of Q1 Earnings Reports

Published: March 14, 2025.

• The Q4 2024 earnings season ended on a high note with S&P 500® EPS growing 18.3% YoY

• This week, three major airlines issued 8-Ks to lower the previous earnings and sales guidance given in those Q4 reports

• Delta kicks off Q1 airline reports when they release results on April 9 (unconfirmed, projected based on historical earnings report dates

The fourth quarter earnings season ended on a fairly upbeat note, with S&P 500 EPS growth settling around 18.3% YoY.¹ While most of the information provided in earnings reports is backwards looking, much of the forward-looking guidance was positive, especially that provided for the second-half of 2025. Despite releasing those outlooks just six to eight weeks ago, several companies within one industry did a complete about-face this week when they issued downward revisions to their earlier guidance.

It’s not the norm for companies to issue new guidance between quarterly earnings reports. Corporations are not required to update their outlooks even if there are events that make those initial projections less likely, but can do so by releasing an 8k to announce anything they deem significant for shareholders to know. For example, some companies may choose to do so when prior estimates now seem too high, in order to distance themselves from bad news before the next earnings release. By going public with the news, the company is giving investors time to adjust and manage expectations before the next report.

Airlines See Sky-High Travel Demand from Last Year Moderating in 2025

This week, a few major airlines did just that, after a tumultuous start to the trading week on Monday and Tuesday. Delta, American, Southwest and United warned that ticket demand has started to soften.

Delta Air Lines now expects revenue for Q1 2025 to rise 5%, lower than the January forecast of 6-8% growth.² EPS is now expected in the range of $0.30 - $0.50, from a prior projection of $0.70 - $1.00.³ The airliner said they’ve been “impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand.”⁴ CEO Ed Bastian continued with that sentiment at the JPMorgan Industrials Conference on March 11, saying “I think people are cautious and they’re pulling back a little bit on travel, not in an organized manner but just kind of waiting to see what’s going to transpire, whether it’s trade and tariff challenges or macroeconomic policy changes or just a little bit of the unsettledness of the market that we all see.”⁵ The change came exactly two months after the international carrier announced their Q4 results, during which CEO Ed Bastian prophesied that 2025 would be the “best financial year in the company’s history.”⁶

American Airlines made similar comments in a securities filing released Tuesday morning. The airliner said it now expects EPS to fall in a range of $0.60 - $0.80 in Q1, steeper than the previous forecast for a $0.20 - $0.40 loss.⁷ Revenues are now estimated to come in flat YoY, vs. the prior expectation for 5% growth.⁸ The company commented “the revenue environment has been weaker than initially expected due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March,” referring to the lethal collision of one of its regional jets with an Army helicopter in Washington, D.C. at the beginning of the year.⁹

The last of the big three international carriers, United Airlines, did not reduce their forward-looking metrics, but CEO Scott Kirby did make it clear at the JPMorgan conference that he expected earnings to be “at the low end” of their guidance range.¹⁰ Kirby commented that weakness “started with government,” noting less demand for flights from public sector workers, “and we’ve seen some of that bleed over into the domestic leisure market.”¹¹

The world’s largest low-cost carrier, Southwest Airlines, not only cut guidance, but announced they’d be charging for checked luggage for the first time ever. Southwest reduced revenue guidance for Q1 to 4% growth, vs. the prior estimate for 7% growth.¹² However, the additional revenue to be collected on checked baggage was applauded by investors who took the stock up 8% after the announcement. As you can see in the chart below, it was the only one of the four airlines mentioned to see shares lift in the last week.

Source: StockCharts

Q1 Earnings Reports Set to Take-Off in April

The next time you are likely to hear from the airlines is during their Q1 earnings calls next month. Delta is anticipated to kick things off for the sector as they usually do, with a projected report date of April 9 (unconfirmed), followed by United on April 15 (unconfirmed) and then American (unconfirmed) and Southwest (confirmed) on April 24.

1 Earnings Insight, FactSet, John Butters, March 7, 2025, https://advantage.factset.com 
2 Delta Guidance Update, March 11, 2025, https://s2.q4cdn.com 
3 Delta Guidance Update, March 11, 2025, https://s2.q4cdn.com 
4 Delta Guidance Update, March 11, 2025, https://s2.q4cdn.com 
5 Airline CEOs warn domestic travel demand is slowing, CNBC, Leslie Josephs, March 11, 2025, https://www.cnbc.com 
6 Delta Air lines Q4 2024 Earnings Call, January 10, 2025, https://s2.q4cdn.com 
7 Form 8-K for American Airlines Group, March 11, 2025, https://americanairlines.gcs-web.com 
8 Form 8-K for American Airlines Group, March 11, 2025, https://americanairlines.gcs-web.com 
9 Form 8-K for American Airlines Group, March 11, 2025, https://americanairlines.gcs-web.com 
10 US airlines’ warnings of lower demand cast shadow over economic outlook, Financial Times, Peter Wells, March 11, 2025, https://www.ft.com 
11 US airlines’ warnings of lower demand cast shadow over economic outlook, Financial Times, Peter Wells, March 11, 2025, https://www.ft.com
12 Form 8-K for Southwest Airlines Co., March 11, 2025, https://otp.tools.investis.com

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