By Naveen Athrappully
Contributing Writer
Airline companies in the United States suffered an after-tax net loss of $225 million in the first quarter of this year following three successive profitable quarters, the Bureau of Transportation Statistics said in a Tuesday statement.
The recent decline follows a $2.4 billion net profit in the fourth quarter of 2024. On the positive side, this year’s first-quarter loss is lower than that of 2024, when the airlines registered $1.7 billion in net loss.
Both domestic and international operations registered net losses in the first quarter. However, only domestic operations were in the red in terms of pre-tax operating profit.
The BTS statement comes after executives of multiple airlines have raised concerns about economic uncertainty.
In an April 24 statement, American Airlines reported suffering a net loss of $473 million in the first quarter, with the company blaming “economic uncertainty that pressured domestic leisure demand” as one of the factors negatively affecting revenue.
American Airlines also opted to withdraw its full-year guidance, promising to provide an update on the matter “as the economic outlook becomes clearer.”
Similarly, Alaska Air Group on April 23 reported a net loss of $166 million for the first quarter and did not provide an update on full-year 2025 guidance, citing “recent economic uncertainty and volatility.”
There is also weakness in travel demand within the United States. During an earnings call on May 8, Ariane Gorin, CEO of travel company Expedia Group, said the company’s bookings and revenues were at the lower end of the guidance range due to “weaker-than-expected travel demand” in the United States and into the United States.
Meanwhile, a March 28 report from Bank of America had already warned that domestic tourism was under pressure. The bank’s aggregated card data showed “softer lodging, tourism, and airline spending,” the report said.
The softer travel spending comes amid low levels of disposable personal income among Americans compared to four years ago.
U.S. real disposable personal income stood at $17,978 in April this year, according to data from the Federal Reserve Bank of St. Louis. This is down from the peak of $20,445 hit in March 2021.
Airline Sector Outlook
In a May 29 report, JP Morgan said that overseas visitor numbers into the United States have declined. In addition, the domestic travel market has been negatively affected due to a fall in government-related flight bookings.
“In response, several U.S. airlines have reduced their earnings forecasts, and stocks have corrected accordingly,” said the report.
But despite this gloomy outlook, U.S. airlines are “well-placed to weather the storm” amid a potential economic recession, it added.
“Airline stocks traditionally lose 40% of their value over six months leading into recession before doubling from there,” said Jamie Baker, U.S. Airline and Aircraft Leasing equity analyst at the company.
In a May 14 statement, the World Travel & Tourism Council forecast that the United States would lose a “staggering” $12.5 billion in international visitor spending in 2025, representing a 22.5% fall from the previous peak.
The loss would be a “direct blow to the U.S. economy overall, impacting communities, jobs, and businesses from coast to coast,” it said.
Data on new international arrivals for March showed a “sharp and widespread drop in inbound travel from many of the country’s key source markets,” said the group.
For instance, arrivals from the United Kingdom declined by almost 15% on an annual basis, Germany by 28%, and South Korea by nearly 15%.
“Without urgent action to restore international traveler confidence, it could take several years for the U.S. just to return to pre-pandemic levels of international visitor spend, not even the peak from 10 years ago,” said Julia Simpson, CEO of the organization. “This is about growth in the U.S. economy — it is doable, but it needs leadership from DC.”
On a positive note for the airline sector, the American Automobile Association is expecting July 4 Independence Day flights to set “new records,” the group said in a June 20 statement.
“AAA expects 5.84 million travelers will fly to their destinations; that’s 8% of all Independence Day travelers. This year’s projection is a 1.4 % increase over the previous record set last Independence Day week of 5.76 million air travelers,” it said.
