JetBlue Airways Stocks Plummet By 18% As Lower Revenue Indicated

JetBlue Airways

JetBlue Airways witnessed a significant decline in its shares, plummeting by over 18% on Tuesday, subsequent to the airline revising its revenue forecast for 2024, presenting a challenge as it endeavors to regain profitability.

According to the carrier, second-quarter revenue is expected to decline by as much as 10.5% compared to the previous year, surpassing the anticipated drop by analysts surveyed by LSEG, which was more than double.

JetBlue, headquartered in New York, projected that full-year sales would experience a decrease in the low single digits, falling short of Wall Street’s projections. This comes after the airline initially estimated flat sales for the year in its January report.

JetBlue has been aggressively cutting costs, discontinuing unprofitable routes, and concentrating on those with consistent demand and robust sales for premium seats.

JetBlue Airway (Credits: Johnny Del Villar)

Last month, the carrier terminated its merger agreement with budget carrier Spirit Airlines after a judge blocked the $3.8 billion deal on antitrust grounds.

This updated outlook on Tuesday underscores a widening gap between JetBlue and its larger competitors, such as Delta and United, which possess extensive international networks and have forecasted profits, robust revenue, and record demand for the upcoming summer.

Joanna Geraghty, who assumed the role of CEO in February, remarked in an earnings release,

“As we look to the full year, significant capacity in our Latin America region, which represents a large portion of JetBlue’s network, will likely continue to pressure revenue and we expect a setback in our expectations for the full year.”

She emphasized confidence in the strategy of focusing on a refocused standalone approach to ultimately restore profitability.

Regarding the challenges faced by JetBlue, Geraghty told, “It’s definitely a big hinderance… Pratt’s a good partner. We’re focused on trying to make progress on compensation with them.

We’re not where we need to be. … But that is ultimately what is depressing our growth.”

She mentioned that the airline anticipates reduced capacity next year.

Jet Blue Airlines Plane (Credits: Mike Segar/File Photo)

In an investor presentation on Tuesday, the airline indicated that it is actively looking for additional cost-cutting measures. Earlier this year, JetBlue announced the deferral of $2.5 billion in aircraft spending until the end of the year.

In the first quarter of the year, JetBlue reported a loss of $716 million, or $2.11 per share, compared to a loss of $192 million, or 58 cents a share, in the same period of 2023.

Adjusting for one-time items, including break-up charges related to the failed Spirit merger, JetBlue’s loss narrowed to $145 million, or 43 cents per share, which was narrower than the 52-cent adjusted loss anticipated by analysts surveyed by LSEG.

Revenue saw a 5.1% decrease from the previous year to $2.21 billion, in line with LSEG’s revenue expectations.

Bright spots highlighted by JetBlue’s President, Marty St. George, who rejoined the airline earlier this year, included robust demand during the peak travel period, domestic and Europe flights, “as well as continued outsized demand for our premium seating options.”

Nate O'Hara
Nathan is a seasoned commerce writer with a passion for unraveling the intricacies of the business world and distilling them into engaging narratives. During his academic journey, he delved deep into subjects like economics, marketing, and entrepreneurship, honing his analytical skills and developing a keen understanding of market dynamics.