US legacy carriers capacity to increase in second quarter, while ULCCs set to shrink

US legacy characters are set to expand in the second quarter of 2025, while ULCCs are expected to cut capacity, TD Cowen analysts Tom Fitzgerald and Helane Becker said in a report. The analysts said US airlines have shifted their focus from delivery constraints to rebalancing the post-pandemic overcapacity.

The legacy carriers — consisting American, Delta, and United — are expected to grow capacity by 5.2% in the second quarter of 2025. Domestic will be up 6%, while international capacity up 3.9%. The analysts said American will see the most growth, while Delta is expanding the most.  

Meanwhile, LCCs are scheduled to grow capacity at a more limited 1.8% in the second quarter. Domestic capacity is expected to grow 1.9%, while international is set to be up 1.2%. Southwest is making the most costs out of the LCCs, while Alaska is growing the most. Additionally, JetBlue is increasing capacity at Luis Munoz Marin International Airport in Puerto Rico and Boston Logan International Airport, while cutting capacity at LAX and Fort Lauderdale-Hollywood International Airport.

However, ultra low cost carriers — such as Spirit and Frontier — are shrinking their capacity by 3.6% in the second quarter. Domestic is set to be down 1.6%, while international is to be cut by 23.8%. 

Overall, US capacity is scheduled to grow 0.9% in the first quarter of 2025 and 3.5% in the second quarter, the report said. Domestic capacity is scheduled to grow 1.3% in the first quarter and 3.8% in the second. International capacity is set to decline marginally at 0.2% in the first quarter of 2025, while second quarter capacity is expected to grow 2025. 

The report said most markets are seeing growth softening, except for Asia Pacific, which was the latter market to reopen after the pandemic. 

“Latin America and US domestic had been the most oversupplied markets with substantial capacity cuts taking place in the US since mid-2024,” the analysts said. “We expect improvements in supply and demand continue throughout 2025.”

The analysts further noted that the Pratt & Whitney geared turbofan (GTF) engine groundings had “severely limited” capacity growth last year, but the constraints are starting to ease, with domestic capacity expected to increase by 9.2% in the second quarter of 2025. 

Additionally, Canada domestic and international capacity is projected to be up 4.8% and 3.3%, respectively, in the second quarter.