Delta Air will see a hit because of shutdown's flight cancellations. Wall Street seems relieved.

By Claudia Assis

Demand in the December quarter 'remains healthy,' airline says

Passengers boarding a Delta flight in the in U.S. Virgin Islands. Demand "remains healthy" despite a government-shutdown hit, the airline said.

Delta Air Lines Inc. on Wednesday said that U.S. government shutdown-related flight cancellations and a temporary knock on demand before Thanksgiving will cost the airline $200 million in the holiday quarter.

The news lifted Delta's stock (DAL) as well as shares of other U.S. airlines such as American Airlines Group Inc. (AAL) and United Airlines Holdings Inc. (UAL), with the sector outperforming the broader equity markets and the S&P 500 index. SPX

That's because Delta also said that demand in the December quarter "remains healthy" and the price tag was not as high as Wall Street feared.

Trends are "strong for early 2026. Growth in travel bookings has returned to initial expectations following a temporary softening in November related to the government shutdown," Delta said in a filing.

Delta's update confirmed that demand "is back on track" and that the impact on the December quarter's profit "appears to be in-line to better-than-feared," Raymond James analyst Savanthi Syth said.

The $200 million hit to profit will equal about 25 cents of per-share earnings for the quarter, Delta said.

Analysts polled by FactSet expect the airline to report adjusted earnings of $1.64 a share when it reports fourth-quarter results likely in early January. Delta has guided for adjusted earnings of $1.60 a share to $1.90 a share for the quarter.

Chief Executive Ed Bastian was a vocal critic of the shutdown's effects on air travel and had already mentioned that the flight cancellations would impact his airline's profits.

He also said that airlines were used as a "political football" amid the funding impasse in Washington.

Later Wednesday, Alaska Airlines Group Inc. (ALK) lowered its expectations for its fourth-quarter profit, in part due to the cancellations.

Alaska said that it expects adjusted earnings of about 10 cents a share for the quarter, compared with its previous forecast of at least 40 cents a share.

Several "transitory headwinds" totaling about 55 cents a share to 60 cents a share impacted the quarter, Alaska said, including an IT outage and higher fuel costs in addition to lost revenue from the shutdown problems. The company had to cancel about 600 flights, impacting some 40,000 passengers, it said in a filing.

Revenue had shown "the strongest year-over-year performance trends of 2025" before the shutdown but turned negative during it and, "although now positive again year over year, has not fully recovered to pre-shutdown trends," the company said.

Airlines lost booking momentum when some customers turned skittish and made other plans ahead of Thanksgiving holiday. Bookings for that period were on pace to surpass the 2024 season, but they then tracked lower as the mandated cancellations rolled in.

The Trump administration announced flight cuts at 40 major U.S. airports in early November, citing safety concerns.

Air-traffic controllers, classified as essential personnel, were expected to work through the funding impasse, with pay deferred until the end of the shutdown. Staffing shortages, however, had triggered flight delays and cancellations even before the flight cuts took effect.

-Claudia Assis

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12-03-25 1738ET