A JetBlue Airways jet comes in for landing after planes were grounded during an FAA system outage at LaGuardia Airport in New York City on January 11, 2023.
New Mike | Reuters
Shares of JetBlue Airways rose on Tuesday after the airline reported a surprise profit and said it would defer another $3 billion in aviation costs through 2029 to improve cash flow.
The carrier posted a profit of $25 million in the second quarter, down nearly 82% from last year. Wall Street analysts had expected a quarterly loss.
JetBlue hasn’t posted an annual profit since before the pandemic. Faced with high costs and an oversupplied domestic market, it has spent recent months cutting unprofitable channels and cutting costs to stop losing money.
JetBlue said on Tuesday it was dropping 50 routes and focusing more on service from historically strong New York, New England and Puerto Rico. It tries to better line up its planes with premium seats like its Mint plane to increase revenue.
JetBlue says the changes will help it add $800 million to $900 million in pretax profits from 2025 to 2027.
This postpones the delivery of 44 Airbus A321neo aircraft to 2030 or later. Air service has also been affected by the Pratt & Whitney engine recall.
“We’re taking aggressive action on every front,” CEO Jonah Geraghty said on an earnings call Tuesday.
Geraghty said on Tuesday that the airline is taking additional steps to improve reliability, such as adding more buffer time to flights. JetBlue has consistently ranked toward the bottom of US carriers in terms of time.
The airline plans to reduce capacity by 6% in the third quarter and 5% for the full year. Even with the cuts, it expects third-quarter revenue to fall 5.5% from last year and full-year sales to fall 6% from 2023.
Airline executives have blamed this summer’s weaker-than-expected revenue potential for oversupply.
Tuesday’s results and investor reception are a win for Geraghty, a JetBlue veteran who took the helm in February. Hours after he started in the principal role, activist investor Carl Icahn released a nearly 10% stake in the company. Two days later he won the board seats.
JetBlue and Spirit Airlines terminated their merger agreement earlier this year after a federal judge blocked the New York airline’s acquisition of the budget carrier. Both carriers have said it will be challenging to compete with larger rivals.
