JetBlue Airways swung at a loss at quarter quarter and predicts lower production capacity this year as it tries to return to profitability.
The airline expects revenue to fall between 5% and 9% in the first three months of the year, more than the 5.5% drop that Wall Street analysts had predicted. Capacity in the first quarter will fall by as much as 6%, the airline said.
JetBlue said it expects 2024 capacity to fall into the low single digits and that its adjusted margins could approach breakeven. Its shares fell 4.7% on Tuesday.
In an investor presentation, JetBlue said it has seven Airbus planes out of service for engine inspections stemming from a production problem at manufacturer Pratt & Whitney, a unit RTX. He said that number could rise to 15 by the end of the year.
The airline faced higher costs, operational challenges and changing travel patterns just as a federal judge blocked its plan to acquire Spirit Airlines for $3.8 billion. JetBlue warned last week that the deal with Spirit could end, but did not provide further details on Tuesday. JetBlue is also offering buyouts to some employees to reduce costs.
The New York-based carrier said Tuesday it plans to defer spending $2.5 billion on new aircraft until the end of the decade. Joanna Geraghty, JetBlue’s COO and new chief executive, declined to say on the call whether Airbus was incentivizing JetBlue to delay the planes as other carriers scramble for new planes. Reuters reported earlier this week that united airlines is seeking Airbus A321neo planes, which JetBlue also has on order, after expressing frustration over production problems at Boeing.
Geraghty, however, said of the gains: “I think it’s been a win-win for both of us [Airbus] and ourselves in the coming years.”
Here’s what JetBlue reported for the fourth quarter, compared to Wall Street expectations compiled by LSEG, formerly Refinitiv:
- Adjusted loss per share: 19 cents vs. 28 cents expected
- Income: $2.33 billion vs. $2.29 billion expected
The New York-based airline reported a net loss of $104 million for the final three months of 2023, compared with a profit of $24 million a year earlier. On a per-share basis, JetBlue lost 31 cents in the fourth quarter, or 19 cents on an adjusted basis, compared with a gain of 7 cents in the prior period.
Revenue for the fourth quarter fell 3.7% year-over-year, though still slightly higher than Wall Street estimates.
JetBlue has tweaked its network to focus on more profitable flights. CNBC reported on JetBlue’s planned flight cuts earlier this month.
“Peak demand remains strong and we continue to manage our off-peak capacity to reflect evolving demand trends,” Geraghty said at earnings. release. “We intend to continue to improve our network and product offering to better serve our leisure customers while diversifying revenue with margin-enhancing initiatives.”
Other airlines incl Southwest they have also slowed their growth or improved their networks to avoid excess capacity—and low fares—during off-peak periods while discounting less popular flights.
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