01:22 PM EDT, 04/07/2025 (MT Newswires) -- Major US airlines' 2025 earnings and revenue are likely to face pressure as President Donald Trump's tariffs on other countries increase the risks of a recession at home, UBS Securities said Monday.

The brokerage now estimates Delta Air Lines ( DAL ) , United Airlines (UAL), American Airlines ( AAL ) , Southwest Airlines ( LUV ) , Alaska Air ( ALK ) and JetBlue Airways ( JBLU ) to all report lower bottom-line results for this year than it previously forecast. UBS also cut its full-year projections for the airlines' key revenue per available seat mile, or RASM, metric, which is commonly used to measure their efficiency.

UBS reduced its 2025 US economic growth outlook to 0.4% from a 1.6% rate projected previously. The brokerage has two quarters of negative gross domestic product performance within its 2025/2026 guidance, indicating a technical recession, according to the note.

UBS factored in a worsened economic performance in its outlook revisions amid deteriorating demand for domestic leisure travel, a slowdown in corporate travel and the rising risk from the impact of higher tariffs. The brokerage cited recessions in 2001 and 2009, which showed that the US airline industry's RASM was down 10% to 11% in each case.

Last week, the White House announced tariffs on imports from several countries, including China and Japan. China on Friday responded with its own retaliatory duties on US products. Trump on Monday threatened additional 50% tariffs on China unless Beijing reverses its retaliatory actions.

UBS downgraded its ratings on the stocks of Delta, United Airlines and Alaska Air ( ALK ) to neutral from buy. The brokerage said it continues to favor the position and strategies of the three companies in the medium term, but doesn't expect them to be immune to the "significant cyclical pressure" that typically occurs during a recession.

"The current backdrop of a weaker economic outlook (plus) the sharp move up in tariffs appears likely to cause deterioration in both international and premium segments which is a significant risk for these names," UBS analysts Thomas Wadewitz and Atul Maheswari said in a note to clients. "We recognize falling fuel prices are a helpful support and the US airlines are essentially unhedged on fuel."

The brokerage has neutral ratings on the stocks of American Airlines ( AAL ) and Southwest ( LUV ) and a sell rating on JetBlue ( JBLU ).

UBS believes negative momentum from the first quarter has likely continued into the ongoing period, and a downshifting in economic activity suggests further downside. Last month, Delta cut its first-quarter revenue growth forecast and EPS target range, while Southwest ( LUV ) lowered its RASM estimate for the quarter.

UBS expects airlines to withdraw their full-year outlooks when they release their latest quarterly results due to the lack of visibility to activity in the future.

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