Airline CEOs this month warned Wall Street that passengers’ appetite for domestic trips is coming in lighter than they had hoped when they set forecasts high at the start of 2025.
On a series of earnings calls, they said the reasons range from President Donald Trump‘s whipsawing tariff policies to volatile markets and, most notably, economic uncertainty.
“Nobody really relishes uncertainty when they’re talking about what they could do on a vacation and spend hard-earned dollars,” American Airlines CEO Robert Isom said on a quarterly earnings call on Thursday.
That means airlines have too many seats on their hands — again. Delta Air Lines, Southwest Airlines and United Airlines said they will cut back their capacity growth plans after what they still hope to be a strong summer travel season.
Delta, Southwest, Alaska Airlines and American Airlines pulled their 2025 financial outlooks this month, saying the U.S. economy is too tough to predict right now. United Airlines provided two outlooks, one if if the U.S. falls into a recession and said it expects to be profitable in either scenario.
That is leading to cheaper plane tickets. Airfare fell 5.3% in March from last year, according to the Bureau of Labor Statistics’ latest data. Easter, a peak travel period that coincides with many school vacations, fell in March of last year, though fares also dropped 4% in February this year.
Adding to pressure, executives said, is slower-than-expected growth from corporate travel, which is facing the same challenges many households are. Government travel plunged, too, amid the Trump administration’s cost cuts and mass layoffs this year.
“If uncertainty pops up, the first thing that goes away is corporate travel,” said Conor Cunningham a travel and transportation analyst at Melius Research .
Delta CEO Ed Bastian said on April 9 that corporate travel was trending up 10% year on year at the start of 2025, but that growth has since flattened.
Business travel is key to major carriers because those customers are less price-sensitive and often book last minute when tickets are likely to be more expensive.
The overhang of seats in the domestic skies is forcing airlines to cut prices to fill their planes.
Alaska Airlines warned Wednesday that weaker-than-expected demand will likely eat into second-quarter earnings. Chief Financial Officer Shane Tackett told CNBC that demand has not plunged, but the carrier has lowered some fares to fill seats.
“The fares aren’t as strong as they were in the fourth quarter of last year and coming into January and first part of February,” Tackett said in an interview Wednesday. “Demand is still quite high for the industry, but it’s just not at the peak that we all anticipated might continue coming out of last year.”
At the front of the plane, executives say demand is holding up far better, while U.S.-based customers are still flying overseas in droves.
But lingering concerns are still weighing on the industry.
“Certainty will restore the economy, and I think it will restore it pretty quickly,” Isom said.
China has ordered its airlines not to take any further deliveries of Boeing Co. jets as part of the tit-for-tat trade war that’s seen US President Donald Trump levy tariffs of as high as 145% on Chinese goods.
Bloomberg | Bloomberg | Getty Images
Boeing could hand over some of its aircraft that were destined for Chinese airlines to other carriers after China stopped taking deliveries of its planes amid a trade war with the United States.
“They have in fact stopped taking delivery of aircraft due to the tariff environment,” Boeing CEO Kelly Ortberg told CNBC’s “Squawk on the Street” on Wednesday.
Ortberg said that a few 737 Max planes that were in China set to be delivered to carriers there have been flown back to the U.S.
He said some jets that were intended for Chinese customers, as well as aircraft the company was planning to build for China later this year, could go to other customers.
“There’s plenty of customers out there looking for the Max aircraft,” Ortberg said. “We’re not going to wait too long. I’m not going to let this derail the recovery of our company.”
The CEO’s comments came after Boeing reported a narrower-than-expected loss for the first quarter and cash burn that came in better than analysts feared as airplane deliveries surged in the three months ended March 31.
Kelly Ortberg, CEO of Boeing, speaking on CNBC’s Squawk Box on Jan. 28th, 2025.
CNBC
President Donald Trump earlier this month issued sweeping tariffs on imports to the U.S. While he paused some of the highest rates, the trade war with China has only ramped up.
Trump said Tuesday that he’s open to taking a less confrontational approach to trade talks with China, calling the current 145% tariff on Chinese imports “very high.”
“It won’t be that high. … No, it won’t be anywhere near that high. It’ll come down substantially. But it won’t be zero,” Trump said.
Boeing is preparing to ask for Federal Aviation Administration approval to ramp up production of its bestselling 737 Max jets to 42 a month later this year, CEO Kelly Ortberg said Wednesday, as airplane deliveries picked up this year and the company narrowed its losses.
Boeing reported a first-quarter net loss of $31 million, improvement from a loss of $355 million a year earlier, as revenue rose 18% to $19.5 billion, slightly ahead of analysts’ estimates.
The company’s cash burn of about $2.3 billion was an improvement over the nearly $4 billion it used in the first quarter of 2024, and was better than analysts expected. Ortberg told CNBC’s “Squawk on the Street” that the company is on track to generate cash in the second half of the year.
Shares of Boeing gained about 6% in premarket trading.
The results include only the impact of global tariffs as of March 31, the company said. Executives will get questions on Wednesday’s 10:30 a.m. ET earnings call about tariffs as the manufacturer is currently caught in the crosshairs of President Donald Trump’s trade war, which is set to drive up prices of aircraft and imported parts and materials.
GE Aerospace CEO Larry Culp said Tuesday that he’s met with Trump and suggested restoring duty-free trade for the aerospace industry, a major U.S. exporter that helps soften the United States’ trade deficit. GE, which makes aircraft engines, and RTX said they expect tariffs to cost more than $1 billion combined this year.
“While we are closely watching the developments in global trade, our strong start to the year combined with the demand for airplanes and our half trillion-dollar backlog for our products and services gives us the flexibility we need to navigate this environment,” Boeing CEO Ortberg said in a staff note Wednesday.
Here’s how Boeing performed compared with what Wall Street analysts surveyed by LSEG expected for the first quarter:
Loss per share: 49 cents adjusted vs. $1.29 loss expected
Revenue: $19.5 billion vs. $19.45 billion expected
On a per-share basis, the company reported a loss of 16 cents, compared with a loss of 56 cents during the same quarter a year earlier. Adjusting for one-time items related to pensions costs and income taxes, among others, Boeing reported a loss of 49 cents per share.
Ortberg, who was hired last year and tasked with getting the manufacturer past a series of safety and manufacturing crises, outlined progress, including production rates of its best-selling 737 Max.
The CEO has in recent months touted improved safety and manufacturing processes at Boeing’s factories as he tries to guide the company past several accidents, including a door plug that blew out from a packed flight midair in January 2024 after the 737 Max left Boeing’s factory without key bolts installed. There were no fatalities or major injuries.
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Last week, Boeing released results of an employee survey that showed that only 27% would highly recommend working at Boeing and that 67% felt proud of working at Boeing, down from 91% in 2013. Less than half of employee respondents said they had confidence in senior leaders’ ability to “make decisions, communicate direction and respond to concerns raised by employees.”
Since the January 2024 accident, Boeing must receive approval from the FAA to increase production of the 737 Max to above 38 jets a month. Boeing had been producing significantly below that level after the accident and a nearly two-month union strike last year halted much of the company’s production.
Revenue in Boeing’s commercial airplane unit rose 75% during the first quarter from a year ago to $8.1 billion, with deliveries up to 130 planes from 83 a year ago.
“We are moving in the right direction and making progress as we reported our first-quarter 2025 results today,” Ortberg said in Wednesday’s staff memo. “From delivering more airplanes to scoring a transformational win for the fighter of the future, there is a lot of good work happening across our teams, and we are seeing positive results in the four key areas of our recovery plan that will position us for the rest of the year and beyond.”
Boeing has been refocusing its efforts on its core businesses. On Tuesday, it announced it would sell parts of its digital aviation businesses, including its Jeppesen navigation unit, to Thoma Bravo for $10.55 billion in an all-cash deal.
Revenue in its defense unit, which has been plagued with cost-overruns and quality issues, fell 9% during the first quarter to $6.3 billion, though the company recently scored a major win after Trump awarded Boeing a contract to build the U.S. Air Force’s all-new fighter jet, dubbed the F-47.
Netflix co-CEO Ted Sarandos attends Netflix’s FYSEE event for “Squid Game” at Raleigh Studios Hollywood in Los Angeles, June 12, 2022.
Charley Gallay | Getty Images Entertainment | Getty Images
Netflix posted a major earnings beat Thursday, as revenue grew 13% during the first quarter of 2025.
The streamer attributed its better-than-expected revenue to higher-than-forecast subscription and advertising dollars.
In late January, the company increased its pricing across the board, raising its standard plan to $17.99 a month, its ad-supported plan to $7.99, and its premium plan to $24.99.
The report marks the first time the streaming giant did not disclose quarterly subscriber data, as it shifts its strategy to focus on revenue and other financial metrics as performance indicators.
Netflix’s earnings also come as traditional media stocks have been slammed by a tumultuous market prompted by President Donald Trump’s trade policy.
Netflix, however, said it continues to forecast full-year revenue of between $43.5 billion and $44.5 billion.
“There’s been no material change to our overall business outlook,” the company said in a statement Thursday.
As investors worry about the potential impact of tariffs on consumer spending and confidence, Netflix’s co-CEO Greg Peters said on the company’s earnings call, “Based on what we are seeing by actually operating the business right now, there’s nothing really significant to note.”
“We also take some comfort that entertainment historically has been pretty resilient in tougher economic times. Netflix, specifically, also, has been generally quite resilient. We haven’t seen any major impacts during those tougher times, albeit over a much shorter history,” Peters said.
Netflix shares gained about 2% in extended trading Thursday.
Here’s how the company performed for the quarter ended March 31, compared with estimates compiled by LSEG:
Earnings per share: $6.61 vs. $5.71 expected
Revenue: $10.54 billion vs. $10.52 billion expected
Net income for the period was $2.89 billion, or $6.61 per share, up from $2.33 billion, or $5.28 per share, during the same quarter a year earlier.
Revenue in the first quarter jumped nearly 13% year over year, reaching $10.54 billion.
Netflix has been leaning on advertising as it seeks to soften slowing subscriber growth. “A key focus in 2025 is enhancing our capabilities for advertisers,” it said.
The company launched its in-house ad tech platform in early April in the U.S., with plans to extend into other markets in the coming months.
“We believe our ad tech platform is foundational to our long term ads strategy,” the company said. “Over time, it will enable us to offer better measurement, enhanced targeting, innovative ad formats and expanded programmatic capabilities.”
A United Airlines Boeing 767 passenger aircraft approaches Newark Liberty International Airport as trucks travel near the Port Jersey Container Terminal in Jersey City, New Jersey, on April 8, 2025.
Charly Triballeau | Afp | Getty Images
United Airlines maintained its full-year forecast on Tuesday but took an unusual step of offering a second forecast should the U.S. slip into a recession, calling the economy “impossible to predict.” Either way, it expects to turn a profit.
The carrier warned alongside its first-quarter earnings that a recession could drive down profits this year, but said booking trends are stable.
The company left in place expectations issued in January for adjusted earnings per share of $11.50 to $13.50, but said that in a recession, it would expect to earn between $7 per share and $9 per share on an adjusted basis.
“The Company’s outlook is dependent on the macro environment which the Company believes is impossible to predict this year with any degree of confidence,” it said in a securities filing.
United Airlines said Tuesday that it plans to cut flights starting this summer to match disappointing domestic travel demand while bookings for pricier, international trips remain strong. The carrier plans to trim domestic capacity by about 4% starting in the third quarter. Rival Delta Air Lines is also slowing its growth plans this year.
United Airlines CEO Scott Kirby said the airline “will continue to execute our multiyear plan that has allowed United to thrive in any demand environment.”
“It has given us industry-leading margins in the good times and we expect to expand our lead further in challenging economic times,” he said in an earnings release.
For the first quarter, United Airlines swung to a $387 million profit, or $1.16 a share, from a $124 million loss, or a loss of 38 cents per share, a year earlier. Adjusted earnings of 91 cents per share, which exclude one-time gains related to aircraft sale-leasebacks, outpaced Wall Street’s expectations of 76 cents per share.
Unit revenue for domestic flights fell 3.9% from last year during the first quarter, while unit sales from international routes rose more than 5%. Revenue of $13.21 billion was up more than 5% from a year ago, and came in slightly below the $13.26 billion that analysts expected, according to LSEG. Capacity was up almost 5% from the first quarter of 2024.
United Airlines shares were up more than 5% in after-hours trading.
Future bookings over the past two weeks have been stable, the company said, adding that premium-cabin bookings are up 17% from the same point last year and international bookings are up 5%, though the carrier did not provide a figure on domestic coach-cabin demand.
United Airlines said it expects to post second-quarter adjusted earnings per share of $3.25 to $4.25, in line with estimates, citing strong demand for premium-cabin bookings and international travel.
Here is what United Airlines reported for the quarter that ended March 31 compared with what Wall Street was expecting, based on estimates compiled by LSEG:
Earnings per share: 91 cents adjusted vs. 76 cents expected
Revenue: $13.21 billion vs. $13.26 billion expected
The latest trend shows how profitable airlines such as United and Delta are capitalizing on demand from travelers willing to pay more for pricier seats and other higher-end products, even as economic concerns weigh on consumer sentiment amid President Donald Trump’s trade war, mass government layoffs and other factors.
Delta last week said it could not reaffirm its full-year outlook, citing uncertainty in the market.
Delta Air Lines won’t expand flying in the second half of the year because of disappointing bookings amid President Donald Trump‘s shifting trade policies, which CEO Ed Bastian called “the wrong approach.”
The carrier said it is too early to update its 2025 financial guidance, a month after it confirmed the targets at an investor conference, though Delta said Wednesday it still expects to be profitable this year. Last month, Delta cut its first-quarter earnings outlook, citing weaker-than-expected corporate and leisure travel demand.
It is a shift for Delta, the most profitable U.S. airline, which started 2025 upbeat about another year of strong travel demand, with Bastian predicting it would be the “best financial year in our history.”
Bastian’s new comments show growing concern among CEOs about consumers’ souring appetites for spending and the impact of some of Trump’s policies. In November, Bastian said the Trump administration’s approach to industry regulation would likely be a “breath of fresh air.”
“In the last six weeks, we’ve seen a corresponding reduction in broad consumer confidence and corporate confidence,” Bastian told CNBC. He said that demand, overall, was “quite good” in January and that things “really started to slow” in mid-February.
Bastian said main cabin bookings are weaker than previously expected. He said that travel demand that was growing about 10% at the start of the year has since slowed because some companies are rethinking business trips, the Trump administration has cut the government workforce and markets are reeling. The White House didn’t immediately respond to a request for comment.
Bastian said international and premium travel, which has been growing faster than sales from the coach cabin, have been relatively resilient.
Delta planned to expand flying capacity by about 3% to 4% in the second half of 2025, Bastian said in an interview. Now the carrier’s capacity will be flat year over year.
Delta Air Lines planes are seen parked at Seattle-Tacoma International Airport on June 19, 2024 in Seattle, Washington.
Kent Nishimura | Getty Images
“We expect this to be the first of many 2H25 capacity reduction announcements from the airlines this quarter,” TD Cowen airline analysts Tom Fitzgerald and Helane Becker wrote after Delta released its outlook.
Some of the future capacity cuts could include Canada, where U.S.-bound travel has declined, and Mexico, Delta President Glen Hauenstein said. For Mexico, he said there is less demand for travelers visiting friends and family rather than a drop in business travel.
“With broad economic uncertainty around global trade, growth has largely stalled,” Bastian said in Wednesday’s earnings release. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control.”
Delta is the first of the major U.S. carriers to report earnings. United, American, Southwest and others are scheduled to report later this month.
Tariffs and potential retaliatory duties could drive up the costs of imported components for the U.S. aerospace industry.
Delta’s Bastian, however, said the company will defer any Airbus aircraft that is affected by tariffs. Airbus produces airplanes in Europe but also uses imported components in its Mobile, Alabama, factory.
Delta’s stock, along with other airlines, rallied after Trump’s surprise announcement that he would lower some tariff rates for 90 days. Delta was up about 24% in late-afternoon trading, though it is still down more than 26% this year.
Here’s how the company performed in the three months ended March 31, compared with what Wall Street was expecting, based on consensus estimates from LSEG:
Earnings per share: 46 cents adjusted vs. 38 cents expected
Revenue: $12.98 billion adjusted vs. $12.98 billion expected
In the first quarter, Delta’s net income rose to $240 million, up from $37 million last year, with revenue up 2% year over year to $14.04 billion.
Stripping out Delta’s refinery sales, Delta posted adjusted earnings per share of 46 cents, up 2% from last year and above analysts’ expectations, and adjusted revenue of $12.98 billion, up 3% from last year and in line with Wall Street expectations.
The production line for the Boeing P-8 Poseidon maritime patrol aircraft is pictured at Boeing’s 737 factory in Renton, Washington, November 18, 2021.
Jason Redmond | Reuters
President Donald Trump‘s sweeping tariffs are set to drive up the cost of Boeing and Airbus planes, GE Aerospace engines, and hundreds of other aerospace and defense products, threatening an industry that helps soften the U.S. trade deficit by more than $100 billion a year.
“It certainly makes things more expensive for the industry,” Dak Hardwick, vice president of international affairs at the Aerospace Industries Association, which represents Boeing, GE Aerospace, Airbus and dozens of other aerospace and defense companies, said of the tariffs.
The industry group said it is asking the Trump administration to uphold provisions in a nearly half-century old trade agreement that allows for duty-free trade of civilian aircraft and imports tied to defense and national security.
“The line is certainly long” for requests to the White House, Hardwick said.
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Trump’s executive order announcing the tariffs said trade and economic policies around the world have exacerbated a decline in overall U.S. manufacturing.
Regarding innovation in the defense sector, the order stated, “If the United States wishes to maintain an effective security umbrella to defend its citizens and homeland, as well as for its allies and partners, it needs to have a large upstream manufacturing and goods-producing ecosystem to manufacture these products without undue reliance on imports for key inputs.”
The aerospace industry has long been a top exporter for the United States. At Boeing alone, more than two-thirds of its airplane orders over the past decade came from customers outside of the United States, according to company data.
“Free trade is very important to us,” Boeing CEO Kelly Ortberg said at a Senate hearing Wednesday. “We really are the ideal kind of an export company where we’re outselling internationally. It’s creating U.S. jobs, long-term high value U.S. jobs. So it’s important that we continue to have access to that market and that we don’t get in a situation where certain markets become closed to us.”
President and CEO of Boeing Kelly Ortberg testifies before the Senate Commerce, Science, and Transportation Committee in the Dirksen Senate Office Building on April 02, 2025 in Washington, DC.
Win Mcnamee | Getty Images News | Getty Images
The industry has mostly bought and sold planes and parts without having to pay tariffs under a 45-year-old trade agreement, which would be derailed by Trump’s new tariffs. The president this week introduced levies of 10% on countries around the world, with higher duties on certain countries and regions, some of which like Europe, are key to the aerospace industry.
Imported steel and aluminum, other key materials in airplanes, are subject to separate sector-level duties that Trump announced earlier this year.
“President Trump has been clear: if you make your product in America, you won’t have to worry about tariffs,” White House spokesman Kush Desai said in an email.
Tariffs are paid by the importer, and the increased prices due to the levies would either have to be absorbed by the airplane or engine maker, by the still-fragile supply chain or by the end consumer, said Hardwick.
Jefferies analyst Sheila Kahyaoglu said in a note Thursday that a price jump on “any product within 12 months is eaten by the [original equipment manufacturer], assuming new inventory buy. Outside that time period, ultimately the buyer and hence consumer.”
Boeing and the S&P 500
Prices for planes are negotiated in advance, and airlines have to often wait years for aircraft, so material costs can shift dramatically over that period.
“This is not where you put money down for an automobile and it ends up in your driveway” in three months, Hardwick said.
Shares of Boeing, engine maker GE and airlines tumbled again Friday, adding to the market rout after Trump announced the tariffs Wednesday.
“This is the one manufacturing sector where America has, has enjoyed a tremendous trade surplus,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “So the idea of fighting a trade war for this industry, it’s living in a crystal palace hurling giant boulders.”
Global supply chain
The tariffs are also a new strain on the aerospace industry, which still has a fragile supply chain in the wake of Covid, with some parts in short supply. Major supplies have tried to quickly hire workers and ramp up production during a post-pandemic travel boom.
But airplane makers still haven’t kept up with demand.
An Airbus SE A321 plane fuselage is lifted with a crane at the company’s final assembly line facility in Mobile, Alabama
Luke Sharrett | Bloomberg | Getty Images
Even a “Made in the USA” label for an airplane is a misnomer.
For example, the supply chain for a Boeing 787 Dreamliner, which is assembled in South Carolina, spans from Japan to Italy.
Its European rival, Airbus, has a Mobile, Alabama, factory but is still on the hook for tariffs for imported parts, from wings to fuselages.
“It doesn’t matter who owns the company. If an item crosses the border, it will have to be paid by importer of record,” Hardwick said.
Airbus has expanded the factory since the first Alabama-assembled Airbus A321, an aircraft for JetBlue Airways named “BluesMobile,” rolled out nine years ago. Its bet on increasing U.S. output of its jets, which are still largely made in Europe, also includes assembly of smaller A220s in Alabama, for customers that include JetBlue and Delta Air Lines.
American Airlines workers perform maintenance on CFM-56 engine in Tulsa, Oklahoma
Erin Black | CNBC
Meanwhile, continuing along the supply chain, General Electric and France’s Safran have a joint venture in which they make top-selling CFM engines, which power both Boeing and Airbus narrow-body jets. Each company manufactures certain portions of engines, which are sent to factories in Ohio, Indiana and North Carolina for GE and outside of Paris for Safran.
Thousands of imported replacement parts for engines and other aircraft parts, many of which come from abroad, could also become more expensive.
“There’s no such thing as a national jet,” Aboulafia said.
President Donald Trump expanded his trade war this week, placing a 10% baseline tariff on almost every country and much steeper levies on dozens of others. Among those hit with higher tariffs were China and Vietnam — two nations that are vital to the domestic toy industry.
For decades, U.S. toy companies have worked with Chinese manufacturers to bring the hottest action figures, dolls and games to retail shelves. Vietnam became a solid secondary market for companies looking to diversify their factory locations amid growing trade tensions between Washington and Beijing.
Trump slapped China with an additional 34% duty Wednesday, bringing the total tax on goods from the nation to 54%, and hit Vietnam with a 46% tariff. The levy is far higher than what toy companies expected and could lead to massive price hikes on toys, industry experts said.
“Everyone is really in scramble mode,” Greg Ahearn, president and CEO of The Toy Association, told CNBC. “This is going to have massive negative repercussions for the consumer and for our industry.”
Adding to the tensions, China is set to impose a retaliatory 34% levy on all U.S. products, its commerce ministry announced Friday.
“I think the Vietnam situation will be a little bit easier to negotiate, as far as I think we will see the Vietnamese country and government come to the table quicker than China trying to resolve any trade disputes,” said Curtis McGill, co-founder of Hey Buddy Hey Pal, which makes the Eggmazing Egg Decorator, a crafting tool that spins eggs so kids can use markers to color them. “They’re just not in a place where they can stand losing much of the business.”
Around 77% of toys imported into the United States come from China, according to data from The Toy Association. Vietnam is third, just behind Mexico. Trump previously placed a 25% tariff on goods from Mexico that aren’t compliant with the United States-Mexico-Canada Agreement.
Hasbro and Mattel, leaders in the toy space, both incorporated a 20% tariff impact from China in their guidance projections for 2025 and had strategies in place to shift production to other countries, like Vietnam, Indonesia and India, all three of which were also hit with tariffs — 46%, 32% and 26%, respectively.
“As a result, relocating production may not be financially viable,” wrote Eric Handler, analyst at Roth, in a research note to investors published Thursday. “The consumer should soon see price increases to partially offset the tariff impact.”
Hasbro and Mattel report first-quarter earnings this month, and Handler said investors will likely see guidance cuts from both companies.
Toy companies have already been slammed on Wall Street in the wake of the tariff announcement. Mattel shares fell more than 16.5% in Thursday trading, Hasbro lost more than 12% and Funko, which also has manufacturing in China and Vietnam, saw its stock plummet 18%.
While Handler expects companies to try and lower costs through contract renegotiations with manufacturers and, perhaps, even altering packaging to improve margins, he said there is little doubt that consumers will bear the brunt of Trump’s duties.
“You could have anywhere from 35% to potentially even a point-for-point price increase on products depending upon what margin those products run at,” The Toy Association’s Ahearn said. “It may actually just be a 50% price increase, given it’s a 54% tariff.”
Most toy margins are in the high single digits, he noted. So, there is very little wiggle room for companies to absorb these fees.
“There’s no place for it to go, but to the consumer,” Ahearn said, noting that The Toy Association expects price hikes to coincide with this year’s back-to-school season.
“The greatest budgetary impact on are the folks, unfortunately, who can afford it the least,” he said.
Canadians hold an “Elbows Up” protest against U.S. tariffs and other policies by U.S. President Donald Trump, at Nathan Phillips Square in Toronto, Ontario, Canada March 22, 2025.
Carlos Osorio | Reuters
Canadians are skipping trips to the U.S. and visitors from other countries could soon follow threatening to deepen the United States’ $50 billion travel deficit.
Experts say they’re pulling back for a variety of reasons, ranging from an unfavorable currency exchange rate to the U.S. political climate given President Donald Trump‘s trade policies and his public statements on annexing Canada, as well as high-profile detainments of people who already had visas to be in the U.S., long wait visa times and other policies that have added to tensions with longtime close allies.
Reached for comment Friday, a White House spokesperson said by email that “everybody wants to come to President Trump’s America.”
Canadians “will no longer have to endure the inconveniences of international travel when Canada becomes our 51st state” and that “Europeans are eager to enjoy the Golden Age of America if they so choose to,” the spokesperson said.
In response to President Trump’s tariff plans at the time, former Canadian Prime Minister Justin Trudeau last month urged Canadians to “choose Canada” and suggested “changing your summer vacation plans to stay here in Canada and explore the many national and provincial parks, historical sites and tourist destinations our great country has to offer.”
The cross-border travel trends and Trump administration’s policies are worrying some in the United States’ travel industry, which draws in more than $1 trillion in direct spending a year.
The U.S. Travel Association said in a statement to CNBC that there is a “a question of America’s welcomeness, a slowing U.S. economy and recent safety concerns.
“These challenges are real and demand decisive action,” the organization, whose members include large hotel groups, airlines and other major travel companies, said, adding that is “actively working with the White House and Congress to advance policies that drive economic expansion and keep the U.S. competitive on the global stage.”
There are billions of dollars on the line. People from the United States already travel abroad and spend more in other countries than the U.S. brings in from foreign travelers.
Last year, the United States’ travel deficit was more than $51 billion, meaning Americans spent that much more abroad than foreigners visiting the U.S. spent, stripping out spending for medical and educational purposes, which still showed a deficit, according to Commerce Department data.
The U.S. brought in more than 72 million visitors last year, still below pre-Covid levels, according to a report from Jefferies. Visitors from Canada were the largest group, accounting for 28%, followed by Mexico at 23%, the bank said in a note this month.
Travel and tourism of inbound visitors are counted as U.S. exports, and they accounted for about 8% of U.S. exports of goods and services, according to the Commerce Department.
International visitors from overseas are especially important because they tend to stay longer and spend more money than local tourists, according to the U.S. Travel Association.
Some Canadians travel elsewhere
Both air travel and land crossings between the United States and Canada are down.
In February, Canadians’ return flights to Canada fell 13% over last year while return trips by car dropped 23% according to Statistics Canada.
Hotel demand in some area along the Canada-U.S. border are also down. As of March 15, they were off 8% in Bellingham, Washington, and 3.5% in the Niagara Falls area, according to hotel data firm STR. However, demand throughout Florida, a top destination for Canadian travelers, is up 3% over last year, the firm said.
Canadian airlines are cutting some routes and flights to the U.S.
Canadian airline Flair, for example, said it canceled its planned Toronto to Nashville, Tennessee, route.
“Our network decisions are driven solely by consumer demand—we deploy our aircraft where demand is strongest to provide the lowest fares to the most travellers,” a spokeswoman for the airline said by email.
Canadian airline WestJet said it has seen Canadian customers shift bookings from the U.S. to other popular sunseeker destinations like Mexico and the Caribbean.
“The airline remains focused on knowing where people want to go, and we will continue to fly where there is demand,” a spokeswoman said.
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The shift comes as travel executives have warned about weaker-than-expected bookings for domestic U.S. trips, meaning more local tourism might not be able to make up for the drop in trans-border travel. While U.S. household credit and debit card spending overall was up 1.5% over last year as of March 22, spending on airlines dropped 7.2%, according to a Bank of America report this week.
United Airlines CEO Scott Kirby, for example, said at an investor conference earlier this month that the carrier is trimming routes in part because it’s seeing “a lot of it trans-border, big drop in Canadian traffic to go into the U.S.,” as well as a sharp drop in flights that had previously catered to U.S. government-tied travel.
Lara Harbachian, who works for a digital printing company in Montreal, and eight friends (so far) had been considering several U.S. destinations this year to celebrate their 40th birthdays: San Diego; Palm Springs, Calif.; Savannah, Georgia; or Nashville. The winner was farther east: Barcelona, Spain.
While the flights to Europe were more expensive than the ones to the U.S. destinations, Harbachian said it will be cheaper for her and her friends to visit the popular Spanish city, where they won’t need to rent a car and high-end meals and hotels are cheaper, especially with a weaker Canadian dollar over the greenback.
“I can get a 15 euro meal but I can’t get a $15 meal” in the U.S., she said.
Trump earlier this month created a task force for the 2026 FIFA World Cup that the U.S. is co-hosting with Mexico and Canada to “showcase the Nation’s pride and hospitality while promoting economic growth and tourism through sport.”
Travel warnings about the U.S. grow
Another challenge for the U.S. travel industry this year is a growing number of travel warnings about the visiting the United States. So far, Germany, the United Kingdom, France, Denmark and Finland have issued travel warnings for their citizens who are planning to go to the United States.
Those were prompted by detentions even of individuals who had visas to be in the United States as well as Trump’s executive order that the country would only recognize two biological sexes, prompting concerns from governments in Europe about travelers whose passports state a different gender than the one they were born with.
For example, Germany said that “travelers with the gender entry “X” or whose current gender entry differs from their birth date should contact the responsible U.S. diplomatic mission in Germany before entering the country to find out about the applicable entry requirements.”
Travel warnings “could deter international visitors, especially first-time travelers,” said Carolin Lusby, assistant professor in tourism at the Chaplin School of Hospitality & Tourism Management at Florida International University.
She said there is often a rebound after an incident or tragedy occurs, such as after the Paris terror attacks in 2015. “But a lot of times is we know that once a destination image changes, it takes a lot of effort to bring back the trust,” she said.
“In terms of the economic consequences, that could turn into billions of lost dollars,” she added.
Foley artist Gary Hecker recreates sounds (in this case, galloping horses) on the Foley sound stage at Todd-AO Studios in Santa Monica, California, July 3, 2012.
Don Kelsen | Los Angeles Times | Getty Images
In a small studio tucked within the Sony Pictures lot, Gary Hecker makes art with sound.
His canvases are some of Hollywood’s biggest blockbusters — from Zack Snyder’s “Justice League” and Quentin Tarantino’s “Once Upon a Time in Hollywood” to Disney and Marvel’s Spider-Man flicks and the Academy Award-winning “Master and Commander.”
Hecker is a Foley artist, the maestro tasked with crafting the everyday sound effects that occur in a scene: squeaky doors, swishing cloaks, the slap of leather reins and even the “thwip” of Spider-Man’s webbing.
“Foley is a key element in this magic trick we do of convincing the audience to believe in the movie they’re watching,” said Rodger Pardee, professor at Loyola Marymount University. “Foley is not for explosions or jet engines. It’s for the footsteps of someone running through a forest or rock climbing, or the swish of a superhero’s cape, that kind of thing. Foley gives you the details. It’s the sound texture that anchors the sound mix.”
As Hollywood is grappling with the rampant growth of artificial intelligence capabilities — and how, or whether, they should be used — Foley artists remain a stalwart and deeply human part of the moviemaking process.
The performative nature of the craft makes it difficult for studios to use AI to match the artists’ skill. However, there are few people who work full time as Foley artists, and there is currently no collegiate program for Foley. Those who wish to break into the field have to get apprenticeships with already established industry veterans.
The art of making noise
A cluttered collection of kitchen items used on the Foley stage at Sony Pictures Studios.
Sarah Whitten | CNBC
Created by Jack Foley in the late 1920s, the sound technique that became his namesake emerged in Hollywood when the industry transitioned from silent films to “talkies.” Early recording equipment couldn’t capture dialogue and ambient noise, so sounds had to be added after the film was shot.
Foley discovered that performing the sound effects live and in sync with the finished product created a more authentic soundscape and helped keep audiences immersed in the film.
Artists today still use many of the same techniques that were employed nearly 100 years ago.
“We do the film from top to bottom,” Hecker said. “Anything that’s moving on that screen, we provide a sound for it.”
More than 50 pairs of shoes are aligned on shelves in Hecker’s studio. Some are sturdy and produce thick thuds, while others create the sharp, click-clack of high heels. There’s even a set of spurs crafted by a blacksmith in the 1800s that Hecker used in Tarantino’s “Django Unchained.”
“The true art of Foley is to master the sound,” Hecker said. “I’m a 200-pound guy, so if I’m doing Arnold Schwarzenegger, I’ve got to dig deep, but if I’m doing a little geisha girl from ‘Memoirs of a Geisha,’ a 90-pound girl in those little wooden shoes, I have to match that performance.”
His sound lab has a makeshift kitchen area teeming with cups, bottles, bowls, cloches and spray bottles of varying sizes and materials. Bins of rakes, shovels and mops galore stand next to a pile of rocks, and in the corner is a well-worn battleship howitzer shell.
He’s even got a stash of swords, guns, shields, armor and chains, as well as a specially built metal tower to create unique, rich metallic sounds.
The floor has a collection of Foley pits — areas of wood, concrete, stone, gravel — the doors feature an assortment of handles, locks and chains, the closets are filled with a collection of jackets so Hecker can find just the right zipper sound, and, of course, there are some coconut shells.
Hecker’s collection of props is more than 45 years in the making. He got his start apprenticing on “Star Wars: The Empire Strikes Back” and has more than 400 film titles under his belt, including “The Running Man,” “Three Amigos,” “Bill & Ted’s Excellent Adventure,” “Home Alone” and “300.”
The hodgepodge flooring in Gary Hecker’s Foley studio on the Sony Pictures lot in Culver City, California.
Sarah Whitten
Hecker’s partner in sound is Jeff Gross, a mixer who transforms the crashes, clatters and clops captured in the microphone into a resonant symphony.
Hecker and Gross’ partnership started in the middle of the Covid pandemic while they worked on the sound effects for the video game “Call of Duty: Modern Warfare III.” Since then, they’ve worked on both “Rebel Moon” films, “Venom: The Last Dance,” and “Mufasa: The Lion King,” among other projects. Last year, the pair were nominated for a Golden Reel, one of the most prized accolades in the sound editing world, for “Mufasa: The Lion King” and won for their work on “Rebel Moon – Part Two: The Scargiver.”
‘Anything to get a sound’
Hecker and Gross tackle one film at a time and typically spend 18 to 20 days per project, depending on the film’s sound budget. Bigger-budgeted movies get more time, while smaller or independent features often get much less.
While the tag team of Hecker and Gross operate out of the Sony lot, they work with all of Hollywood’s major studios. These companies provide six to eight reels that contain around 15 minutes of the film each. Hecker and Gross then go reel by reel, adding all the footsteps, prop sounds and ambient sounds.
The footsteps come first. Hecker stomps, trots and sidesteps in pace with each actor’s performance, often accompanied by a smattering of coffee grounds to add grit to the sound of the shoes, creating the illusion of walking outside. Then he begins layering in the prop sounds.
To create the metallic scrape of a sewer cover against a paved street, for example, Hecker grates the howitzer shell against a concrete slab. Gross then adds resonance to the captured sound via computer to give it a more realistic quality.
Hecker has even developed techniques to recreate the sound of explosions, pushing the limits of what sound artists can provide studio movie projects.
The mixing studio of Jeff Gross at the Sony Pictures lot in Culver City, California.
Gary Hecker
Gross, who sits in a sound booth while Hecker works the microphone, often can’t see what his partner is using to mimic what’s on screen.
“You have to just get in your head and go, ‘Yeah, that sounds like it,’” he said. “And then I’ll stand up and look down onto the stage and I’m like, ‘Are you using a shopping cart and a toothbrush?’”
And Hecker’s skills aren’t just in the physical performance. For decades, he’s lent his voice to Hollywood’s gorillas, aliens, dragons, monsters, horses and even lions.
He’s snorted, chortled and grunted to bring to life the dragon from “Shrek,” the aliens from “Independence Day,” zombies in “Dawn of the Dead,” the giant gorilla in “Mighty Joe Young,” and, most recently, a pride of lions from “Mufasa: The Lion King.”
Foley artist Gary Hecker performs vocalizations for Disney’s “Mufasa: The Lion King.”
Gary Hecker
“It just was really cool to do all the breathing and the purrs and the efforts,” Hecker said of working on “Mufasa: The Lion King.” “The actors do the voices of the character and tell the story, but these lions are moving around throughout the whole movie, and there’s nothing there. So, it all had to be custom crafted and performed. So I would do that, and then Jeff would help me with making it sound like a giant beefy lion.”
A human touch
Hollywood is at a crossroads. New AI technology offers studios a chance to cut ballooning production budgets, but copyright law and a desire to keep human art in films has led to tensions.
Those conversations were reignited in the wake of “The Brutalist” earning a best actor win for Adrian Brody even as his performance was altered using AI voice-generating technology — and amid fears that President Donald Trump‘s White House could roll back copyright protections at the behest of AI companies.
Adrian Brody in “The Brutalist”
Source: A24
When it comes to Foley sound, Hecker and Gross aren’t too worried about AI programs taking away their jobs.
“Actors’ performances, between motion and detail, AI can’t do that,” Hecker said. “And an artist expresses themselves by acting and performing these things, you know, with a light touch, a heavy hand, emotion to it, those kinds of things that I don’t think AI will be able to reproduce.”
Loyola Marymount’s Pardee noted that companies are already working on software programs to try to create Foley sound, but “the results lack these very subtle, specific variations.”
Independent studios and productions may opt for these programs in the future, but Pardee doesn’t expect the major studios to follow suit.
Where Hecker and Gross see trouble is in the shrinking number of film releases coming out of Hollywood.
“We typically try to work on 10 to 11, but the industry is definitely changing,” Hecker said. “They are making fewer movies right now.”
Part of the decline has come from pandemic-era production restrictions and the labor strikes, but also from the merging of prominent Hollywood studios. Executives have become more budget conscious as well, slimming down the number of features outside the typical blockbuster franchise fare.
And streaming isn’t going to pick up the slack. Hecker noted that streaming content doesn’t have the same sound budget as feature films and so the creators often turn to smaller Foley houses.
In the meantime, Hecker, who has garnered the nickname “Wrecker,” is known for putting his human body on the line for Foley.
“I would do anything to get a sound,” he said. “If a guy’s getting slammed into a door, against a car, you’ve got to physically put that same intensity that you see on the screen. If you don’t, it just won’t sound right.”
