- In February 2025, the aviation industry exhibited a range of outcomes. China Aviation Oil's share price plunged by 9.1% as the gross margin for its trading business in 2H24 deteriorated, and its dividend payout ratio fell short of expectations. SATS's share price continued its downward trajectory amid the flip-flopping tariff, while SIA's share price extended its gain.
- - Read this at SGinvestors.io -
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US airlines warn softening demand
- American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines have highlighted a weakening in demand, driven by reduced travel from government employees and consumer uncertainty over the U.S. economic outlook.
- The Conference Board’s closely watched U.S. consumer confidence index recorded its sharpest drop since August 2021, with consumers’ short-term economic outlook falling below the threshold that typically signals a recession. This has been further validated by the Sahm Rule, which was triggered when the three-month moving average of the unemployment rate rose by at least 0.5 percentage points from its lowest level in the past 12 months.
- Adding to the pressure, Canadian travel to the U.S. has also sharply declined amid escalating trade tensions between Washington and Ottawa over tariffs. New bookings from Canada to the United States have dropped by approximately 20% y-o-y since February 25, according to flight ticketing data firm ForwardKeys, which has forced airlines to adjust their capacity due to the drop in traffic. The trend extends beyond Canada, with travellers from Denmark and Germany seeing a 27% and 15% y-o-y decline, respectively, while overall demand from Europe has only slightly declined by 1%.
- The U.S. Travel Association estimated that a 10% decrease in Canadian visitors could result in a $2.1bn loss in spending for the United States, further adding pressure to the softening economy.
Outlook
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