By Callum Keown

Delta Air Lines has the dubious honor of getting earnings season off the ground Thursday. But those hoping for clarity on the health of the travel sector and the U.S. economy may want to brace for disappointment.

Uncertainty about trade and travel demand overshadowed the carrier's first-quarter earnings, which came just a week after President Donald Trump unveiled his so-called reciprocal tariffs in April. Delta's results were better than expected, but management suspended its financial forecasts for the full year.

The picture is similar three months later, though the stock market is somewhat calmer ahead of the next tariff deadline, Aug. 1. But now, the airline will undoubtedly know more about the demand picture than it did in early April, and investors will be closely watching for signs of how summer travel is shaping up.

The results are due before the market opens on Thursday. Analysts are expecting second-quarter adjusted earnings of $2.06 a share from sales of $15.5 billion. The outlook will be important as well: Wall Street has penciled in a forecast of EPS of $1.34 from sales of $14.8 billion in the third quarter.

"Top-down uncertainty could continue to limit short-term visibility on U.S. discretionary spending, including air travel," Citi analyst Stephen Trent said in a note Tuesday. While he sees this as a risk for the third quarter, he said a "course correction" could follow in the final quarter of the year.

"A focus on 2026 growth and potential torque from lower interest rates could support Buy-rated United, American and then Delta," he said.

Airline stocks have had a turbulent year but things were looking much worse just three months ago. Delta's shares are down 16% this year but have climbed about 47% since hitting their 2025 lows in April. United Airlines is down 17% in 2025 and American Airlines has fallen 34%, while Southwest Airlines is up 2.7%.

TD Cowen analyst Tom Fitzgerald said he expects U.S. airlines stocks to be under pressure in the near term due to "persistent pricing weakness," though he noted that some carriers have flagged more stable demand. United is Fitzgerald's top pick, but he also has a Buy rating on Delta with a target price of $55.

"We do not expect them to catch a bid until there's greater clarity on consumer demand and 2026 industry pricing. This year increasingly looks like a lost year," he wrote.

Write to Callum Keown at callum.keown@dowjones.com

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July 09, 2025 16:32 ET (20:32 GMT)

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