United Airlines has announced that its first-quarter earnings will likely fall to the lower end of its forecast, driven by a 50 percent decline in government travel bookings. Meanwhile, American Airlines has reduced its capacity in the Washington area, a market long known for its profitability, also citing a drop in government-related bookings.
President Donald J. Trump, assisted by the Department of Government Efficiency (DOGE) fronted by tech mogul Elon Musk, has been making strenuous efforts to cut government waste since his inauguration in January. The fact that cutbacks on government travel are having a significant impact on commercial airlines raises questions about the extent to which public spending has been propping them up before now.
Southwest Airlines lowered its revenue expectations for the first quarter, also pointing to decreased government travel as well as the impact of California wildfires. On Monday, Delta Air Lines cut its first-quarter profit estimates in half, highlighting a broader softening in domestic travel demand.
Despite these issues, airlines report that premium and long-haul international bookings remain strong. A fall in fuel prices—a key goal of Trump administration policy—is also expected to help offset the slowdown in demand.