JetBlue Issues Dim Outlook But Execs Remain Confident in Turnaround Plan
Skift Take
Key Points
- JetBlue has issued a dim first-quarter outlook but remains confident in its turnaround plan focused on cutting unprofitable routes and enhancing leisure travel.
- The airline plans to open its first lounge at JFK by the end of 2025 and launch a waitlist for a premium co-branded card.
- Ongoing Pratt & Whitney engine issues continue to affect JetBlue's margins, despite expected gains from the 'JetForward' strategy.
Summary
JetBlue has presented a cautious first-quarter outlook but maintains confidence in its turnaround strategy, which includes cutting unprofitable routes and focusing on leisure travel. The airline's 'JetForward' plan aims to improve earnings significantly, though ongoing engine troubles with Pratt & Whitney pose challenges. JetBlue is also planning to enhance its customer offerings by opening its first lounge at JFK and introducing a premium co-branded card.
JetBlue issued a weaker first-quarter outlook as executives continue to say they are confident in the carrier’s turnaround plan.
For the first quarter, JetBlue is expecting available seat miles, a key revenue metric, to be down 2% to 5%. It is also expecting revenue per available seat mile, a key metric for profitability, to rise as much as 3.5%.
The carrier reported a net loss of $44 million for the fourth quarter.
After its merger with Spirit Airlines and its Northeast Alliance with American were both struck down in court, JetBlue has implemented a turnaround plan that has emphasized cutting unprofitable routes, deferring aircraft deliveries and focusing more on leisure routes out of New York and Boston.
“I think, frustratingly, we would love to have, I think, even faster ramp, but this is a multiyear strategy,” said CEO Joanna Geraghty during a call with analysts on Tuesday, “and it's not linear, and we're focused on the long-term here in getting JetBlue back to sustained profitability.”
JetBlue Expects to Open First Lounge at End of 2025
JetBlue President Marty St. George said the carrier was seeing increased capacity in some of its key markets, which was partly the reason why it issued a dim first-quarter outlook.
“We expect competitive capacity will continue to ebb and flow, and we remain committed to competing in these geographies, core to our JetForward strategy,” he said during the call.
He added that JetBlue is expecting to launch the waitlist for its premium co-branded card and plans to open its first lounge at New York’s JFK during the fourth quarter this year.
Geraghty said the turnaround, coined as “JetForward,” is expected to bring in about $200 million in incremental earnings before interest and taxes, but cautioned that ongoing Pratt & Whitney engine issues would continue to eat into JetBlue’s bottom line.
“We recognize, however, there is still significant room to grow and close the gap to our industry peers,” she said. “The Pratt & Whitney aircraft groundings have been and will continue to be a significant impediment to margins in the near term.”
JetBlue's stock price was down 28% to around $5.80 in late afternoon trading.
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Photo Credit: A JetBlue A320 at JFK. Vincenzo Pace Vincenzo Pace / Vincenzo Pace
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