Travel industry outlook: Why United & Delta could come out on top
Airlines are dialing back expectations as macro concerns and safety incidents weigh on summer travel, with several major airlines revising and even pulling their full-year outlooks. In fact, international spending in the US is expected to decline $12.5 billion this year.
Third Bridge global head of sector analysts Peter McNally joins Market Domination to break down what's ahead for major carriers and how they're adjusting capacity.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Airlines have been signaling caution with several pulling or revising their folio outlooks on macroeconomic uncertainty. International travel spending in the United States is expected to decline $12.5 billion in 2025. That's according to the World Travel and Tourism Council, adding on to demand worries. We know are these safety concerns, incidents in the past two weeks tied to air traffic control at Newark Airport has raised worries over the safety of flying. For more on what this all means for travel and major airlines, we have Third Bridge Global Head of Sector Analyst, Peter McNally here. Peter, it is good to see you as always. So start big picture, Peter, summer travel season, it's here. What's coming, Peter? What are your expectations?
Well, I mean, the expectations across the board have been lowered, but they're still okay. You know, these safety issues have come up in the past and they've tended to be short-lived. Uh, I'm not really sure, you know, how long the uh, the issues in Newark are are going to go on, but United has been pretty emphatic that uh, it is safe to fly. Um, you know, that said, the the underlying demand for the industry is pretty healthy. I think airlines have been proactive in managing their capacity. Uh, so pricing just, you know, remains pretty good. Um, there's not like too many seats out there putting downward pressure at this point from from what we can see, and I think people are gearing up for a good summer.
Well, talk to me about that because some of the sources I've talked to, Peter, have said the opposite. There are concerns about all of this trade war headlines hurting international travel, particularly to the United States, uh, which is obviously a potential headwind for some of these big airlines. Then you've also got the safety challenges and then if we can pull up our CPI numbers, you also have airline fairs coming down a touch. Which of those headwinds I just mentioned is the most concerning to you as we head into the summer?
Well, I I think that the international travel is more impactful, let's say to a British Airways or a Lufthansa than it is for a Delta or United. Though those concerns more for Europeans coming here than it is for Americans going going to Europe where like that's 80% roughly of Delta's, you know, clients or the US traveler heading overseas. Um, and there really hasn't been a slowdown from anything we've seen out of the result on that yet. Um, but it is it is something that uh that that we're watching. Now, fairs, you know, coming off a bit, they're they're manageable, you know, at this point. Uh, I would also add that uh fuel prices coming down do offer a little margin relief for, you know, for these airlines that they they can offer a little bit of a discount um at this point, but they but they are taking some of the planned capacity out of the market.
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