In this article, JetBlue Airways shares experienced a decline of over 25% on Tuesday, marking the largest one-day percentage drop since the company’s initial public offering more than twenty years ago. This decrease came after the airline’s financial forecast failed to meet investors’ expectations.
The New York-based carrier projected that its unit costs, excluding fuel, could increase by up to 7% this year compared to 2024. For the first quarter, it anticipated a potential rise of up to 10% in this metric year-over-year.
JetBlue estimated that revenue for the quarter could range from 0.5% lower to as much as 3.5% higher than in 2024. Competitors like Delta and United have been predicting higher revenue growth, indicating a strengthening pricing power for these airlines.
As part of its cost-cutting strategy, JetBlue is eliminating unprofitable routes, delaying the acquisition of new aircraft, and generating revenue through higher-priced seating options. The company disclosed that it reduced costs by $190 million last year.
CEO Joanna Geraghty, who assumed the position last year, emphasized that the cost reduction plan is a long-term strategy that may not progress linearly. She expressed satisfaction with the company’s advancements, aiming to boost pretax profit by up to $900 million by 2027.
JetBlue anticipates a revenue increase of 3% to 6% by 2025 with flat capacity. The impact of a Pratt & Whitney engine recall is expected to be more severe this year, resulting in the grounding of several Airbus jets, as mentioned by CFO Ursula Hurley during the earnings call.
JetBlue faced setbacks in two antitrust cases that hindered its growth initiatives. In 2024, a federal judge blocked the airline’s proposed acquisition of Spirit Airlines, which had filed for Chapter 11 bankruptcy protection. Additionally, in 2023, JetBlue lost a case related to its regional partnership with American Airlines.
Despite meeting their financial targets, JetBlue’s management team has been unable to keep pace with the solid earnings growth seen in the airline industry. Analyst Conor Cunningham from Melius Research highlighted the need for JetBlue to significantly increase unit revenue throughout the year to achieve sustained operating profit.
In the fourth quarter, JetBlue reported a narrowed loss of $44 million, or 13 cents per share, compared to a loss of $104 million, or 31 cents per share, in the same period in 2023. The carrier’s revenue stood at $2.28 billion, reflecting a 2.1% decline from the previous year.
