JetBlue Airways, a major airline in the United States, has experienced a significant drop in its stock value following a revised revenue forecast for 2024. The company’s shares plummeted by 14% in early trading on Tuesday after it announced that second-quarter revenue would likely decline by as much as 10.5% compared to the previous year. This decrease is more than double what analysts had predicted.
The airline also revised its full-year sales forecast, stating that it expects sales to drop in the low single digits. This is below expectations from Wall Street, as the company had previously estimated flat sales for the year in its January report. JetBlue has been implementing cost-cutting measures, such as discontinuing unprofitable routes and focusing on routes with steady demand and high sales for premium seats. Despite these efforts, the airline’s financial outlook remains challenging.
One factor contributing to JetBlue’s declining revenue is the significant capacity in its Latin American region. This region represents a large portion of JetBlue’s network and is expected to continue putting pressure on revenue. Despite this setback, JetBlue’s CEO, Joanna Geraghty, expressed confidence in the company’s refocused standalone strategy and believes it is the right path to return to profitability.
JetBlue is also facing challenges related to a Pratt & Whitney engine recall, which has grounded some of its planes. To address its financial difficulties, the airline stated that it is actively exploring additional cost-cutting measures. Earlier this year, JetBlue announced that it would defer $2.5 billion in aircraft spending until the end of the year.
In the first quarter of 2024, 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 of the previous year. However, after adjusting for one-time items, such as break-up charges related to the failed merger with Spirit Airlines, JetBlue’s adjusted loss was $145 million, or 43 cents per share. This narrower loss was better than what analysts had anticipated.
Despite the challenging financial situation, there were some bright spots for JetBlue in the first quarter. The company experienced strong demand during the peak travel period and saw positive performance in domestic and Europe flights. Additionally, there was continued high demand for JetBlue’s premium seating options.
JetBlue’s recent stock decline highlights the growing divide between the airline and its larger rivals, such as Delta and United, who have projected profits, strong revenue, and record demand for the summer. As JetBlue navigates these challenges and continues to pursue its standalone strategy, it remains to be seen how the company will fare in the coming months.
