JetBlue Posts a Loss as Engine Issues Persist

23.04.2024 - 20:27 / skift.com / Spirit Airlines / Latin America / Joanna Geraghty / Summer Travel / Marty St George / Ursula Hurley / Meghna Maharishi

As the airline industry enjoys an enduring surge in demand for premium and international travel, JetBlue is taking a hit. 

The carrier reported a $716 million loss on Tuesday and expected revenue in the second-quarter to drop by as much as 10.5%. Full-year revenue is expected to be down by single digits. 

The loss was partly caused by the hefty fees JetBlue had to pay to terminate its merger with Spirit Airlines. The break-up fees cost JetBlue $530 million during the first three months of 2024, according to Ursula Hurley, the carrier’s chief financial officer. 

JetBlue CEO Joanna Geraghty said the airline has now officially moved past the merger and is now fully focused on returning to profitability as a standalone carrier. 

“With the Spirit transaction now resolved, we are moving quickly to execute on our refocused stand-alone plan,” Geraghty said on a call with analysts on Tuesday. 

As leisure travel remains popular, airlines have been increasing capacity in destinations like Mexico and the Caribbean. But that surge in capacity has put pressure on JetBlue’s revenues, Geraghty said in an earnings release. 

Marty St. George, JetBlue’s president, said Latin America made up 35% of JetBlue’s total capacity and that industry capacity in the region had increased by 60% since 2019. 

“These are core JetBlue geographies, and they remain a top part of our refocused strategy and a meaningful component of our profit engine,” St. George said on the call. 

A major part of JetBlue’s new strategy has been scrapping underperforming routes and focusing more on leisure ones. As part of that push, JetBlue has cut routes from New York and Los Angeles, reallocating capacity to places like Florida, Mexico and the Caribbean. 

St. George said JetBlue also plans to reduce the number of flights out of LaGuardia Airport to 30 daily flights, down from 50 last year. He added that JetBlue will further reduce this number some time in October. 

JetBlue’s strategy also includes revamping its loyalty program and premium product offerings to attract more leisure travelers. St. George said members of JetBlue’s frequent flyer program accounted for a record percentage in overall revenue during the first-quarter. He said JetBlue plans to expand the number of opportunities for flyers to earn points and is adding new global redemption partners this month. 

Issues with Pratt & Whitney’s geared turbofan engines, which are commonly found on Airbus jets, are continuing to hamper JetBlue’s operations. 

Hurley said the carrier expects an average of 11 aircraft to be out of service throughout the year due to the engine issues. She added that it’s unclear how many aircraft would be grounded in 2025 and 2026, but expected the number would increase.

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