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Investing.com -- Delta cut its first-quarter guidance on Monday as softness in domestic demand is expected to weigh on performance, sending its shares down more than 4% after the Tuesday market open.
For the three months ended Mar. 31, the company sees non-GAAP earnings in the range of $0.30 to $0.50 on revenue of $13.9B to $14.1B, compared with prior estimates for EPS of between $0.70 to $1.00 on revenue.
"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 said.
While Delta reaffirmed its long-term targets, including 10% annual earnings per share (EPS) growth, mid-teen EBIT margins, and a 15% return on invested capital (ROIC), Citi analysts said they "understand why the market is disappointed in the short-term guide."
"However, a 27% share price drop from 2025’s peak, through Monday’s close, had already seemed to incorporate at least some of this downside," they added.
After a strong January, Delta noted a slowdown in leisure and main cabin demand in early February, followed by weaker business travel later in the month.
Wells Fargo (NYSE:WFC) analysts estimate that about half of the first-quarter revenue shortfall is "due to a weaker economic backdrop," while the rest was impacted by weather disruptions and temporary effects from plane accidents.
Looking beyond this month, Delta reported strong bookings for April and May, with premium and international travel trends remaining solid.
"We believe DAL has made some adjustments to their revenue management system which should provide support to 2Q revenue," Wells Fargo analysts led by Thomas Wadewitz continued.
"We also note they should see a meaningful benefit from lower fuel prices which are tracking $0.20/gal lower versus DAL’s original full year forecast," they added.
Yasin Ebrahim contributed to this report.