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Airlines kicked off this year bullish, predicting heightened demand, bustling airports, and rising profits. But just like the peppy customer service rep will tell you at the gate after your flight to Boston has been delayed three times, not everything goes as planned.
If you’ve tuned in to any kind of news this year, you’ve seen the slew of high-profile crashes, aviation failures, and general chaos that’s marked the travel industry in 2025. That, along with a broader consumer slowdown, is spurring vacationers to swap the Bahamas for a blow-up backyard pool this summer.
Just take American Airlines, which despite beating top and bottom line expectations for Q2, projected a third-quarter loss and lowered its full-year guidance late last week.
CEO Robert Isom told CNBC that the culprit was cost-conscious vacationers staying home, along with a dip in corporate travel spending and operational challenges. But American Airlines isn’t the only major carrier feeling pessimistic: United, Delta, and Southwest all offered full-year 2025 guidance that was lower than their original projections in January.
Southwest had an especially brutal Q2: It not only underperformed both profit and revenue expectations, it had to tell investors that the $1.8 billion in earnings before taxes it had expected to rake in this year had been cut all the way down to between $600 million and $800 million.
To get back on track, Southwest is—for the first time ever—going to start selling tickets with assigned seats, and is getting rid of former policies like two free checked bags for all customers.
Sunnier skies ahead?
But there were some bright spots in airlines earnings. For instance, the wealthiest customers are still splashing out on summer travel, especially abroad. The US’s passenger revenue per available seat mile declined 6% domestically in Q2, while it surged 3% internationally, according to CNBC.
That’s one reason why airlines have been focusing on catering toward the upper echelon of travelers, rolling out more and more deluxe perks.
Ready for takeoff: While the first half of 2025 has been tough, airlines are assuring investors that they’re seeing demand for travel slowly but surely tick up.
Delta, for example, not only beat top and bottom line expectations last quarter but also forecast a stronger Q3 than analysts expected. That was a pretty big comeback from April, when the airline pulled its full year forecast altogether.
Delta also mentioned that it plans to use AI to set ticket prices, a tactic already drawing scrutiny from members of Congress who’ve dubbed the move “surveillance pricing.”
First they take away our free checked bags, and now this?—LB