Airline stocks are also having a terrible day

Delta, United, American and Spirit shares have all tumbled.

Mar 4, 2025 - 20:56

Airline stocks are also having a terrible day

With so much of the aviation industry tied with federal regulation, airline stocks are among the first to react to any fluctuation in Washington.

After the 25% tariffs that the Trump administration threatened against Mexico and Canada came into effect on early Tuesday morning, airline stocks fell to their lowest levels of the year.

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Trump’s tariffs send airline stocks tumbling (here is by how much)

Delta Air Lines (DAL) shares were down 6% at $55 by the afternoon of March 4 while United (UAL) stock took a similar tumble to $86.53. American Airlines (AAL) is down a smaller 4% at $13.1 while JetBlue Airways (JBLU) shares tumbled by nearly 9%.

With Trump also upping tariffs against imports from China, United is among the most affected due to the airline’s large reliance on this market.

Spirit Airlines (SAVE) , which today also published earnings showing that it closed 2024 with a net loss of $1.2 billion, saw its shares fall to $0.48. The airline recently announced that it will emerge from the bankruptcy for which it filed last November by going private and ceding control to its biggest bondholders.

‘Extent and duration are not clear at the present’

“While we continue to remain constructive on the supply backdrop – which we still believe is favorable – our attention has shifted to what appears to be an emerging economic ‘soft patch,’” Deutsche Bank wrote to its investors in a March 4 report led by Michael Linenberg. “To what extent and duration are not clear at the present, however, we do think it will likely weigh on demand for air travel, particularly the domestic discretionary segment.”

While the immediate tumble came as a result of the tariffs against Mexico and Canada (on March 4, the Dow dropped by 750 points after also falling 650 points on Monday), the overall picture is complicated by a number of both political and economic factors.

‘Share price has eased considerably’: JP Morgan analyst

The U.S. Commerce Department recently released numbers showing that consumer spending in January fell for the first time in almost two years.

Amid an uncertain economy, a larger number of Americans has been putting off spending that also includes any discretionary travel.

“Investor consternation has crescendoed once again, focused primarily on the consumer, domestic capacity, and the impact of reduced government travel,” JP Morgan’s Jamie Baker wrote on a March 3 note to investor in which they justified downgrading Southwest Airlines (LUV) from neutral to underweight. “As a result, share price momentum in 2025 has eased considerably (for most) from the torrid pace witnessed in last year’s final months.”

More on travel:

Southwest stock was, as of Tuesday afternoon, down by 2.55% to $2.83. A number of other public low-cost airlines have also been seeing similar drops since the start of the week.

With many expecting laxer regulation under the new administration, airlines have continued to insist that the outlook on the industry is strong; United Chief Financial Officer Mike Leskinen said that “business is really robust” while “international leisure is very strong” at a Barclays industry conference in February.