Delta, United, and American Adjust Schedules as Economic Fears Loom

Two major U.S. airlines will operate leaner summer schedules than initially planned due to consumer uncertainty following the January crash and amid Trump’s economic changes.

Delta Trims Summer Schedule

Delta President Glen Hauenstein told a JP Morgan investor conference this week that his airline will scale back its summer flying schedule, which he suggested was “overbuilt.”

“We had a bias to fly whatever we could as we head into summer,” he said. “We’ve tempered that down to fly what needs to be flown.”

Hauenstein didn’t name any routes on the chopping block. Those will be revealed when Delta publishes its summer schedule on March 22.

Photo: Delta Centennial Gala. Courtesy of Delta Air Lines

His announcements came just days after Delta slashed its first-quarter profit estimate by half, citing economic worries among travelers and corporations.

Instead of the expected 8 percent revenue growth this quarter, Delta now anticipates to see just 4 percent.

“We saw companies start to pull back. Corporate spending started to stall,” Delta CEO Ed Bastian told CNBC. “Consumers in a discretionary business do not like uncertainty.”

Travelers and corporate travel planners aren’t just concerned about the economic impact of Trump’s threatened tariffs and deep government job cuts. They’re also concerned about travel safety in the wake of the deadly crash of American Airlines Flight 5342 at Ronald Reagan Washington National Airport (DCA) on January 29.

Photo: Courtesy of Wei Feng / Unsplash

“The deadliest aircraft incident in almost 25 years caused a lot of shock among our consumers. A whole generation didn’t realize these things could happen,” Bastian said.

“We saw a pretty immediate stall in both corporate bookings, and consumer confidence in air travel started to wane a little bit,” he added.

Delta also blamed harsh winter weather in the Southeast, which led to a wave of flight cancellations in its Atlanta (ATL) hub in January.

United Retires 21 planes 

Just weeks after United brought onboard its 1,000th aircraft, the carrier will shrink its fleet, retiring 21 planes early, CEO Scott Kirby announced at the same investor conference.

United is also anticipating a drop in demand from two groups targeted by Trump: government employees and Canadians.

The airline will cut capacity in markets with heavy government travel, citing a 50 percent reduction in government bookings. Trump has controversially fired tens of thousands of federal employees, with more mass lay-offs planned and frozen credit cards used to book government travel.

Photo: United Airlines, Boeing 737-700. Courtesy of Chris Leipelt / Unsplash

United cited the drop in government revenue as it adjusted its first-quarter earnings forecast downward, adding that reduced government spending is already having a ripple effect on the leisure travel market.

United will also cut capacity to Canadian destinations. The U.S.’s northern neighbors, furious at threatened tariffs and Trump’s bellicose words about annexation, have launched a boycott of the United States, shunning everything from Kentucky bourbon to Florida vacations.

Outgoing Canadian Prime Minister Justin Trudeau has urged Canadians to travel domestically this year instead of heading to the United States, and Canadians have already taken his advice. According to data from Statistics Canada, 23 percent fewer Canadians drove to the U.S. in February than the previous year.

Photo: Air Canada Embraer E170. Courtesy of David Preston / Unsplash.

Flight bookings are down as well. Flight Centre Travel Group, a major Canadian travel agency, told Business Insider that leisure bookings to the U.S. were down 40 percent last month year on year.

United will also trim red eyes favored by business travelers, suggesting corporate bookings may also look weak.

“From industry level, I expect you will see modest supply changes in the short term,” Kirby said. “By the time we get to August, every analyst will be writing about capacity cuts.”

He added that airlines are cutting capacity in markets in which they’re in weaker positions. “Where you see people cutting is the places they’ve lost money” and aren’t the number one carrier. He suggested that United won’t cut capacity in its dominant markets, such as Chicago (ORD) and Denver (DEN).

American cuts capacity in Washington

American Airlines CEO Robert Isom spoke at the same conference and was downbeat. “Economic uncertainty is a big deal,” he said.

American hasn’t publicly announced any capacity cuts. However, it has quietly trimmed capacity to Ronald Reagan Washington National Airport (DCA), an airport favored by government travelers and the site of the January crash.

Photo: Courtesy of Washington-Reagan National Airport.

American Airlines isn’t cutting flights to avoid losing slots at the airport, its main hub in the region, but starting in May, it will swap out Airbus A319s for smaller regional jets on some routes, as reported by Cranky Flier.

Shares in the Big Three dropped further this week amid the gloomy forecasts.

Delta stock fell 30 percent in the last month, while United’s fell 29 percent over the same period. American shares are trading 32 percent lower than a month ago.