JetBlue Airways Jet Crash Lands after Disappointing Financial Outlook
JetBlue Airways, one of the largest airlines in the United States, has seen its shares plummet by over 25% in a single day, the largest drop in the company’s history. The decline comes after the company revealed a disappointing financial outlook, which includes a projected rise in unit costs and a narrower revenue range.
According to the New York-based airline, its unit costs, excluding fuel, are expected to rise by as much as 7% this year, with a 10% year-over-year increase expected in the first quarter. The company also estimates revenue could fall by 0.5% to 3.5% compared to 2024. This forecast comes as larger competitors Delta and United Airlines are predicting higher revenue growth, indicating their strengthening pricing power.
To address the challenges, JetBlue is implementing a plan to reduce costs by cutting unprofitable routes, deferring new aircraft deliveries, and increasing revenue through higher-priced seats. The company has already cut costs by $190 million in 2023 and is on track to add up to $900 million in pretax profit by 2027.
JetBlue’sCEO, Joanna Geraghty, is pleased with the company’s progress, but acknowledges that it will take time to achieve sustained profitability. The carrier is also dealing with the impact of a Pratt & Whitney engine recall, which will ground a mid-to-high teens number of its Airbus jets this year, up from 11 last year.
The airline has faced setbacks, including losing two antitrust cases that blocked its planned acquisition of Spirit Airlines and its regional partnership with American Airlines. To adapt, JetBlue is offering senior pilots voluntary early retirement packages and is focusing on unit revenue growth to achieve sustained operating profit.
Analyst Conor Cunningham of Melius Research notes that while the current management team has met its targets, JetBlue needs to aggressively ramp unit revenue growth throughout the year to achieve sustained operating profit. The airline’s fourth-quarter loss narrowed to $44 million, with revenue of $2.28 billion, down 2.1% from the same period in 2023.
