U.S. Airlines Face Economic Turbulence as Travel Demand Drops

U.S. airlines, once optimistic about a booming travel season, are now facing significant challenges due to economic uncertainty and rising tariffs. As a result, airlines like Delta and United have seen their shares drop around 20% this year, and the S&P 500 passenger airlines index is down about 15%. With discretionary spending on travel declining, major carriers have begun reducing flight capacity to protect profit margins. Despite some resilience in premium travel bookings, safety concerns have also affected demand, with searches about flight safety increasing by 900%. Airlines are bracing for potential further cuts in capacity if demand does not rebound, especially as consumer confidence continues to wane. The outlook for the remainder of the year remains cloudy, with high inflation and weak economic growth posing risks to the industry.