Trump's policies trigger a chain reaction! Delta Air Lines, Inc. (DAL.US) Q1 profit guidance "halved", leading to a collapse in the US aviation sector stocks.

Delta Air Lines, Inc. (DAL.US) on Monday cut its first-quarter profit forecast in half, causing its stock price to temporarily drop 14% after hours. Delta Air Lines, Inc. CEO stated that due to the uncertainty in the U.S. economy, the environment has worsened. Delta Air Lines, Inc. is the first to report that growing economic concerns among consumers and businesses are impacting the U.S. domestic travel industry for large U.S. airlines. Delta Air Lines, Inc. CEO Ed Bastian said, "We are seeing companies start to pull back. Corporate spending is starting to stall. Consumers in discretionary industries do not like uncertainty." With the imposition of tariffs by U.S. President Donald Trump and the threat of more tariffs, as well as concerns about rising prices, consumer and business confidence in the U.S. has weakened. Data tracking GDP by the Atlanta Fed, known as GDPNow, shows that the U.S. economy may contract in the first three months of this year. As travel spending is closely tied to overall economic activity, investors and analysts suggest that the economic downturn will pose challenges for the airline industry. Airlines have been hit by reduced government spending as well. Delta Air Lines, Inc. now expects first-quarter earnings per share to be between 30 cents and 50 cents, down from the previous forecast of 70 cents to $1 in January. Delta Air Lines, Inc. also stated that first-quarter revenue is expected to increase by 3% to 4% year-on-year, lower than the previous forecast of 7% to 9%. Jefferies Financial Group Inc. analysts said the profit guidance cut by Delta Air Lines, Inc. was expected, but the magnitude was much larger. U.S. airline stocks suffered heavy losses in after-hours trading. Delta Air Lines, Inc. fell by 14%, while United Airlines Holdings, Inc. (UAL.US) and American Airlines Group Inc. (AAL.US) dropped by 11% and 9% respectively. The S&P 500 Airlines Index has dropped by 22% in the past month, compared to a 7.5% decline in the S&P 500 Index during the same period. Delta Air Lines, Inc. stock has fallen by 24% in the past month. Investors and analysts had previously mentioned that Delta Air Lines, Inc.'s wealthier and more diverse customer base meant the company was better positioned to deal with weak demand. However, Bastian stated that the company has seen a decline in bookings from the aerospace and defense, automotive, media, entertainment, and technology industries. It is expected that other airlines will also adjust their guidance. Analysts at Deutsche Bank Aktiengesellschaft warned this month that a "softening trend" in the economy is casting doubt on revenue expectations for the industry. Last week, Seaport Research Partners lowered the pre-tax profit forecast for Delta Air Lines, Inc., United Airlines Holdings, Inc., American Airlines Group Inc., and Southwest Airlines Co. (LUV.US) for 2025, stating that these airlines had not taken into account the impact of a full-fledged trade war or significant cuts in U.S. government spending when formulating their outlook for 2025. An important economic advisor to Trump dismissed talk of an economic recession on Monday, claiming there are many reasons to be optimistic about the U.S. economy. However, a report released by the New York Fed on Monday showed that U.S. households' pessimism about the future is deepening.