Delta Air Lines (DAL) stock plummeted 5.11% in pre-market trading on Thursday following the release of its first quarter 2025 earnings report and subsequent earnings call. The airline reported pre-tax earnings of $382 million, or $0.46 per share, which was flat compared to the previous year. While revenue increased by 3.3% to a new record for the March quarter, the company faced headwinds from a challenging macro environment and uncertainty surrounding global trade.

During the earnings call, Delta executives highlighted several key issues affecting the airline's performance and outlook: 1. Softness in domestic demand, particularly in the main cabin, with both consumer and corporate travel showing weakness. 2. Plans to keep second-half capacity growth flat over last year, with domestic main cabin sales expected to decline. 3. Uncertainty surrounding the impact of recent tariffs, especially on aircraft deliveries from Airbus. 4. Greater resilience in international and diversified revenue streams, including premium and loyalty programs. 5. A commitment to protecting margins and free cash flow through cost management and capacity adjustments.

In response to these challenges, Delta announced plans to reduce capacity growth in the second half of the year, focusing on eliminating unprofitable flying and aligning supply with demand. The airline also stated it would not pay tariffs on any aircraft deliveries, potentially leading to deferrals if the issue is not resolved.

Despite the headwinds, Delta's management expressed confidence in the company's ability to navigate the uncertain environment, citing its diversified business model and strong brand as key advantages. However, the airline withdrew its full-year outlook due to the broad macro uncertainty.

Following the earnings release, several analysts adjusted their price targets for Delta, with Morgan Stanley cutting its target to $88 from $95, Raymond James reducing its target to $60 from $62, and JP Morgan lowering its target to $66 from $83. These adjustments reflect the challenging operating environment and uncertain outlook for the airline industry.