The two words in Delta’s profit warning that could have bigger implications
Delta’s decision to slash its forecast may indicate a deeper problem: it’s not just the consumers who are white-knuckling their wallets. It’s the companies.
If you squint at the SEC filing Delta Air Lines put out yesterday afternoon, you’ll find a reason for the slash-and-burn job it did on the quarterly profit forecast that it gave three short months ago.
“The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand,” the company wrote.
That filing sent Delta Air Lines and some of the airline industry — which has already been wounded to the tune of $24 billion in collective market cap lost over the past month — even farther into a spiral.
Delta was down as much as 11.5% in premarket trading, though it managed to rise back to about 2% down just before the opening bell.
But if you read between the lines, this isn’t just about Delta, or even just about airlines. The broader business world should pay attention to two words from that passage in the Delta filing: “corporate confidence.”
It’s obvious things don’t feel great right now. Markets have been under sustained pressure from several angles — wild uncertainty around tariffs that could reignite inflation, an unwind of bets on riskier assets like tech stocks and cryptocurrencies, and fears that consumers are tightening up and spending more carefully.
But Delta’s filing indicates a deeper problem: it’s not just the consumers who are white-knuckling their wallets. It’s the companies.
When an airline says it notices that businesses aren’t as confident — i.e. Corporate America’s suits aren’t booking as many business trips — pay attention. There will be ripple effects.
If you don’t book that business trip, you don’t book a hotel stay. If you don’t stay at the hotel, you don’t expense a drink at the hotel bar. You don’t book a rental car, pay for gas, or take an Uber to your destination. You don’t go out to dinner with friends in the city where you’re staying, you don’t tip the server, and so on.
Business expenses are a serious revenue engine. The Global Business Travel Association, an industry group that no doubt has some bias, says the US was the nation that spent the most on business travel, with total expenditures of $421.1 billion in 2022, the latest data available. To put that in perspective, that’s more than double the revenue that Amazon, the company with the most revenue in the US, generated last year. The GBTA says business travel also “supported 6 million jobs and represented 3.5% of total employment.” It’s an extreme example, but the Harvard Growth Lab in 2020 estimated that if the US were to cease all business travel, global GDP would drop by 1.1%.
But a reduction in business travel isn’t the only impact here. The other important thing to remember is that when businesses are clamping down on travel, that means they’re undoubtedly also starting to look for other places to cut.
What happens next? People start getting laid off. Companies’ payrolls have swelled in recent years, so executives will certainly find room to cut. According to the Bureau of Labor Statistics, the number of people employed full time was 3.8% higher in January 2025 than it was in January 2020, just before COVID-19 broke into the US.
Delta’s forecast cut is also interesting because the drop was so steep in such a short time. The company had given its previous forecast on January 10, calling for earnings per share of $0.70 to $1 in the first quarter, with revenue expected to rise 7% to 9%. At the time, Delta’s CFO said, “We have good visibility as we sit here today, as it relates to first quarter, and really the first half of the year. We feel good about that.” Three months later, the situation has starkly changed. The new forecast is for $0.30 to $0.50 of earnings and revenue growth of 3% to 4%.
It’s a remarkable pivot for an airline, and one that indicates a serious deterioration in what Delta is seeing that we can’t yet.
To be sure, there’s always the chance this moment may wind up being a blip, just a moment for investors to buy the dip. But we’re living in a time when people are credibly worried about rising prices, slowing economic growth, and being laid off all at the same time. If a cutback in business travel is already starting, like Delta says it is, it’s certainly not a good sign.
