JetBlue Airways shares plummeted over 10% in premarket trading after the airline announced a lower revenue forecast for 2024. The carrier anticipates a sharp drop in second-quarter revenue, more than double the decline predicted by analysts. This setback comes as JetBlue strives to regain profitability, with full-year sales projected to decrease in the low single digits, falling below Wall Street expectations.
JetBlue has been implementing cost-cutting measures by discontinuing unprofitable routes and focusing on routes with stable demand and high premium seat sales. The decision to terminate the merger agreement with Spirit Airlines, worth $3.8 billion, due to antitrust concerns further highlights JetBlue’s commitment to financial recovery.
CEO Joanna Geraghty acknowledged the challenges JetBlue faces in the Latin America region, a significant portion of the airline’s network. Elevated capacity in this region is expected to continue to exert pressure on revenue, leading to a revision in the full-year outlook. Despite these challenges, Geraghty remains confident that JetBlue’s refocused strategy will pave the way for a return to profitability.
JetBlue is grappling with the repercussions of a Pratt & Whitney engine recall, resulting in the grounding of some aircraft. The airline is exploring additional cost-cutting measures as part of its ongoing efforts to navigate through the current financial challenges. JetBlue previously announced a deferment 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 per share, in the same period last year. When adjusted for one-time items, the loss narrowed to $145 million, or 43 cents per share, surpassing analysts’ expectations. Despite the revenue decline of 5.1% to $2.21 billion, it aligned with revenue projections.
Overall, JetBlue Airways is facing a challenging period as it grapples with revenue forecast setbacks, cost-cutting initiatives, and operational challenges. The airline’s strategic decisions will play a pivotal role in determining its path to profitability in the coming months.