Southwest Airlines became the last American carrier on Wednesday to withdraw its financial forecasts while the trade war of President Trump created the greatest uncertainty for the industry since the Pandemic COVID-19.
With little clarity on how consumers will behave in the face of potential worsening, airlines have trouble predicting their business precisely.
Travel is a discretion for many consumers and businesses. With the trade war increasing the prospect of slower economic growth and higher inflation, tourists and companies are sitting well, leading to a decline in travel expenses.
Southwest said that he was unable to reaffirm his previous $ 1.7 billion in profits before interest and taxes in 2025 and approximately $ 3.8 billion in 2026.
“In the midst of current macroeconomic uncertainty, it is difficult to predict given recent and short -term reservation trends,” said the company.
Southwest’s shares fell 3% in trade after opening hours.
Alaska Air Group also withdrew its profit forecasts in 2025 Wednesday, citing the dominant macroeconomic uncertainty.
Earlier this month, Delta Air Lines and Frontier abandoned their forecasts. Last week, United Airlines gave two different forecasts, a very unusual decision, saying that it was impossible to predict the macro environment this year.
This marks a spectacular reversal in the fortune of American carriers, who flew at the top about two months ago to speak of a new golden age, because a high demand for travel and a close capacity at the industry scale increased the prospect of a boom in multi -year profits.
The batch is worse for airlines like Southwest, which are mainly based on leisure customers sensitive to prices and mainly serve the American domestic market.
The internal market is currently the sweetest travel market, airlines with stimulating demand with lower prices. And consumption expenditure is the lowest among low -income households.
Southwest said reservations were softening throughout the March quarter in domestic leisure trips, where the airline has more exposure compared to its competitors like Delta and United.
There are few signs that the situation has improved because the company has declared that its unit income – an indirect indicator of the pricing power – would decrease up to 4% compared to a year ago during the current quarter.
The weakening of the travel request has aggravated the Southwest challenge, which has trouble finding its base after the Pandemic COVID-19. Its dull profits have fueled pressure to reorganize its business model.
Last year, Southwest announced its intention to end the open seats, which was at the heart of its brand image for over 50 years. In March, he unveiled plans to start invoicing recorded bags to customers, ending a unique free policy.
Southwest said he had seen no evidence that customers abandon the airline as a result of recent policy changes. The CEO, Bob Jordan, said that the airline plans to introduce basic costs of the economy and bags next month and stayed on the right track to start selling assigned and additional seats in the September quarter.
To protect its margins in the middle of the softening of demand, it proactively reduces the capacity or the seats on its flights, in the second half.
Southwest declared an adjusted loss of 13 cents per share in the first quarter compared to a loss of 18 cents per share expected by analysts, according to LSEG data.
The company will discuss its financial results on a call with analysts and investors on Thursday.
