JetBlue Airways Shares plunged greater than 18% on Tuesday after the airline cut its revenue forecast for 2024, a setback because it tries to return to profitability.
The airline said second-quarter revenue was expected to fall as much as 10.5% year-on-year, greater than double the decline analysts polled by LSEG had expected. New York-JetBlue forecast full-year revenue would fall within the low single digits, also below Wall Street's expectations, after the corporate forecast flat revenue for the 12 months in its January report.
JetBlue has gone on a cost-cutting spree, eliminating unprofitable routes and specializing in routes with stable demand and high revenue for premium seats. The airline terminated its merger agreement with the budget carrier last month Spirit Airlines after a judge blocked that $3.8 billion deal on antitrust grounds.
Tuesday's forecast update shows a growing gap between JetBlue and its larger competitors which have large international networks delta And Unitedwho’ve forecast profits, strong sales and record demand this summer.
“If we look at the year as a whole, the capacity in our Latin has increased significantly [America] “The region, which represents a large part of JetBlue's network, will likely continue to put pressure on revenues and we expect a setback in our full-year expectations,” said Joanna Geraghty, who became CEO in February in an earnings announcement. “We firmly believe that continuing to implement our realigned standalone strategy is the right path to ultimately returning to profitability.”
JetBlue stock is falling on Tuesday.
JetBlue is affected by an engine recall from Pratt & Whitney that has caused a few of its planes to be grounded.
“It's definitely a big obstacle,” Geraghty told CNBC of the engine problem. “Pratt is a good partner. We are focused on working with them to make compensation progress. We are not yet where we need to be. … But that’s ultimately what’s slowing our growth.”
Geraghty said the airline expects lower capability next 12 months.
In an investor presentation on Tuesday, the airline said it was “actively exploring” further cost reductions. JetBlue announced earlier this 12 months that it could defer $2.5 billion in aircraft spending until the top of the 12 months.
In the primary three months of the 12 months, JetBlue lost $716 million, or $2.11 per share, compared with a lack of $192 million, or 58 cents per share, in the identical period in 2023.
Adjusted for one-time items, including breakup costs related to the failed Spirit merger, JetBlue lost $145 million, or 43 cents per share, lower than the adjusted lack of 52 cents that analysts surveyed by LSEG had expected.
Revenue fell 5.1% 12 months over 12 months to $2.21 billion, consistent with LSEG's revenue expectations.
Bright spots included strong demand during peak travel, domestic and European flights “as well as continued strong demand for our premium seating options,” said JetBlue President Marty St. George, who returned to the airline earlier this 12 months.
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