As airlines, hotel chains, and travel providers report earnings and adjust financial forecasts, 2025 is full of mixed results and conflicting signals.
Financial Winners, Bright Points
Focusing on the bright spots, the first quarter of 2025 produced some winners despite tourism challenges.
LATAM, United, Delta
A surprising bright spot in the first quarter of 2025 was LATAM airlines, the largest South American carrier and SkyTeam member.
“LATAM Airlines on Monday hiked its estimated core earnings for the year, citing strong first-quarter results and stable demand.
The Chilean carrier bumped up its annual outlook for earnings before interest, taxes, depreciation, amortization and rental costs (EBITDAR) to between $3.4 billion and $3.75 billion, from an earlier estimate of $3.25 billion to $3.6 billion.” – Reuters
“United Airlines swung to a profit in the first quarter and beat Wall Street’s earnings guidance despite falling air-travel demand.
The airline posted a profit of $387 million, or $1.16 a share, in the three months ended March 31, compared with a loss of $124 million, or 38 cents a share, a year earlier.” – Wall Street Journal
“With broad economic uncertainty around global trade, growth has largely stalled. In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.” – Delta
Online Travel Agencies, Royal Caribbean
Royal Caribbean, owners of Silversea, Celebrity, and its namesake brand, more than doubled its Q1 2024 profits in one of the strongest years on record. The cruising behemoth scored $730 million in net income in the first quarter. Occupancy grew 108.8% over last year thanks to a full year with a January inauguration of its largest ship, Icon, and the slightly smaller city on water, Utopia later in the year.
Booking Holdings, owner of Booking.com, Priceline, Kayak, and OpenTable among other brands, was up big in the first quarter over last year.
“I am pleased to report a good start to 2025 where healthy growth of room nights and gross bookings in the first quarter benefited from our globally diversified business,” Chief Executive Glenn Fogel said in a news release. “While there is uncertainty in the market around the near-term geopolitical and macroeconomic environment, we remain focused on driving our business for the long term by delivering value to our supplier partners and our travelers and executing on our strategic priorities.” – Investor’s Business Daily
Hyatt Hotels
Hyatt revised earnings growth down from 2-4% to 1-3% but is still projecting growth.
“The Chicago-based hotel chain posted adjusted earnings per share of $0.46 on revenue of $1.72 billion. Analysts surveyed by Visible Alpha were looking for $0.30 and $1.69 billion, respectively.
Hyatt registered revenue per available room, or RevPAR, of $134.55, slightly below projections of $135.58. Comparable system-wide hotels RevPAR growth of 5.7% beat the consensus 3.5%.” – Investopedia
Struggles And Doubt
American Airlines, Southwest Airlines
American Airlines, the carrier that can’t seem to turn a profit from running an airline (they do fine from Aadvantage), posted a larger than expected first quarter loss at $473MM and pulled its full-year guidance. Of note, American was involved in a fatal mid-air collision in Washington DC that contributed to the airline’s losses.
Southwest, which famously celebrated 38 straight years with every quarter profitable prior to the pandemic, posted another loss this quarter. Like American, it too gets an asterisk as it’s recently fought off activist investors, change of board members, and upended its business model to be just like every other carrier. Eliminating benefits and its uniqueness, customers may have left completely unrelated to any macro concerns.
Discounters
Usually discounters do well in a true recession as customers trade down for cheaper comparable products. Spirit’s challenges long pre-date the current cloudy picture, but Frontier posted losses in the first quarter, losing $43MM (a 50% increase YoY). Allegiant reports this week.
What Could Change The Outcome
What seemed all-but-certain a couple of weeks ago is now not so clear. The ability of the broader economy to absorb years of inflation was all but sure to run out. Yet, the US economy remained incredibly resilient, despite racking up record credit card debt and substantial subsidized mortgages perhaps artificially elevating the outlook.
There’s no question that the tariffs, or rather fear thereof (since true implementation has not yet been felt) sparked sell-offs and trade concerns both domestically and globally. A reduction of force in the government, and business travel has contributed to the drop-off.
Yet there have been allowances made for a variety of sectors including the electronics and auto industries. To a certain extent, businesses and perhaps consumers, are pricing in future economic effects now. However, the S&P 500 neared correction territory earlier in the cycle (down nearly 20%) but has since recovered to down just 7% without any real material change. Markets just completed nine straight days up in a row, something that’s only happened five times in history. At least two of those days were attributed to rumors that China and the US may have exchanged phone calls, pointing to signs of a potential tariff détente but without any actual movement.
If the White House is telling the truth that they have trade negotiations in progress in a meaningful way with a hundred plus nations it could reverse the current course and grow global economies. If the European Union is able to secure a zero-for-zero tariff strategy with the US, businesses on both sides of the Atlantic would have fewer barriers to consumers and consumers would have lower prices for goods from both parties. That would almost guarantee business travel growth but consumers would also have more money in their pockets for travel.
That could be a way out that works for travel providers, businesses, and consumers alike – except, of course, for American Airlines which failed to profit from its core business even when travel was at an all-time high several times in the last few years.
What do you think?
Travel these days is crowded with slobs .
Not just the travelers , but also the food , and staff .
It is an endurance contest , winding one’s way around the money-makers who are selling a pig-in-a-poke .
Tariffs are yet to be felt? They are. Last week I was hit with a $20K tariff for an import that has been, my entire career, exempt from import duties. It’s very much being felt by me and others already. Next up is Main Street. After that the entire economy. #1789
@Antwerp … Just curious What was the type or category of import ?
LATAM is not a SkyTeam carrier
With the suspended guidance from many companies, the future remains unknown to everyone. At the end of this year, families may change the course on discretionary spending.
Like the cabinet members, I too hang my head low and praise the stable genius that made all of this possible. We all want to survive
Travel numbers overall will be fine with the usual holidays Thanksgiving, Christmas, New years and Summer doing well. American however their future remains questionable they better work quickly to stop any type of partnership between United and Jetblue
The world is dumping treasuries, the dollar is making itself obsolete as reserve currency and the Euro will take over.
The world is not travelling to the US and it is going to be a disaster for leasure travel over the summer according to European, Canadian, Australian travel figures.
Grassroots are boycotting US products.
The world can still trade with the world minus the US and are in record speed diversifying.
US SME’s and consumers are going to pay a huge price for the tariffs.
Counter tariffs from the EU has not been implemented and measures from the world in general.
NATO allies will diversify from the US defence industry spendings.
The list goes on…
Most importantly on a micro and macro level the US
is being perceived as a rogue state by allies in the western community and this will have consequences
for decades.
The US is huge but the world is larger and some Americans is forgetting that.
People are staying away so that you can all keep and enjoy Trump for yourselves.
When you see sense and get rid of him and the rot he’s caused, we may or of course may not return.
You’ve got what you voted for, suck it up.
just as with every other macroeconomic event, some companies survive and thrive in difficult situations and that is true in the travel sector.
The American economy continues to be about as strong and the huge drops in tourism outside of US/Canada are largely not happening right now. Maybe it will become larger but it may be that there will be a quick turnaround if the US renegotiates trade deals w/ several major countries or blocs.
and fuel is at pandemic era lows and continues to fall as Saudi Arabia tries to keep capacity within the cartel in check. Lower fuel prices will likely heavily offset if not surpass demand reductions at least through the summer. to the benefit of all segments of the travel industry