Delta, Airbnb lead travel stock sell-off on consumer worries

WASHINGTON – Travel stocks from airlines to cruise lines and online booking sites came under pressure on March 11 after Delta Air Lines cut its profit forecast, deepening concern over weakening consumer demand and an economic slowdown.

Delta led losses in an S&P index tracking US airlines, with the gauge falling 2.3 per cent to the lowest level in nearly five months.

Meanwhile, Airbnb was among the worst performers in a gauge of hotels, resorts and cruise line index, which fell for a fourth day in the longest slump since early January. 

Fears around consumer spending spurred by US President Donald Trump’s policies, including a crackdown on immigration and tariffs against the largest US trading partners, has made companies such as Delta, United Airlines Holdings, Carnival Corp and Norwegian Cruise Line Holdings among the worst performers in the S&P 500 year to date.

“The weakness in demand appears to have accelerated over the past couple of weeks, with a drop in close-in bookings reflecting possible concerns about the US economic outlook,” wrote Mr Jay Cushing, a senior bond analyst at credit research firm Gimme Credit. “We expect some of the underperformance in the quarter to be transitory (weather and accidents), but prolonged tariff uncertainty and signs of a slowing economy point to a more challenging backdrop.”

Delta’s financial update was the first instance of a major company reducing its forecast because of Washington-linked policy volatility.

The airline cut its profit expectations roughly in half for the first quarter as economic volatility and concerns over flight safety weigh on domestic travel demand.

Earnings will be 30 US cents (40 Singapore cents) to 50 US cents a share in the period, down from an earlier forecast of as much as US$1, the US carrier said on March 10 in a statement.

Delta also lowered its guidance for revenue growth to reflect a US$500 million reduction.

Along with Delta, peer American Airlines Group also cut its outlook for the current quarter due to weakness in the domestic market.

Growing concerns over softer demand trends are being reflected in the shares of theme park operators, hotel chains, and the travel sites used to book such vacations, such as Airbnb, Booking Holdings and Expedia Group, the latter of which having the highest US exposure versus peers.

Nervousness around consumer spending and slowing economic growth also dragged down the shares of trucking and transportation companies, which can see demand for their services suffer in times of turmoil. 

The Dow Jones Transportation Average fell 3.1 per cent, sinking to its lowest level since November 2023, led by declines in car rental company Avis Budget Group, airlines Delta and American, as well as trucking companies such as Old Dominion Freight Line, Expeditors International of Washington and CH Robinson Worldwide.

“For a few months there, Wall Street was convinced that the economy had found its footing again,” said Ms Callie Cox, chief market strategist at Ritholtz Wealth Management. “But there were still cracks to be concerned about, and there’s a chance all of this policy speculation could split them wide open.” BLOOMBERG