JetBlue falls as rising costs, hurricane dim travel rebound
JetBlue Airways Corp. fell sharply as the carrier laid bare a raft of challenges through the holiday travel season, from rising fuel prices and a hurricane rifling through the Caribbean to a US government shutdown that is slowing air travel.
Like other US airlines, JetBlue executives trumpeted stronger demand for its premium offerings compared with the main cabin as air travel rebounds from past months, when consumers spooked by inflation and the impact of tariffs reined in spending.
But investors are falling impatient with executives’ ability to meet cost-cutting targets and worry about muted demand for the final months of the year. One analyst noted that the US government shutdown probably cut roughly $500 million in revenue for JetBlue.
“Peaks are expected to remain healthy, while troughs continue to see challenges,” President Marty St. George told analysts on a call after the carrier posted a smaller-than-expected loss for the third-quarter on Tuesday.
“People are still taking that one vacation at Thanksgiving or Christmas,” he said. “They’re not all taking the second vacation they may take.”
JetBlue shares fell 9.6% to $4.27 as of 11:19 a.m. New York time. The stock has declined 45% this year.
The Long Island City, New York-based company posted a quarterly loss on Tuesday that is more than double that from a year earlier, despite its efforts to cut money-losing routes and reduce its fleet. JetBlue reported a loss per share of 40 cents in the third quarter, lower than the average loss of 43 cents expected by analysts.
The airline hasn’t seen any material impact so far from the extended US government shutdown. JetBlue, which has extensive East Coast operations, halted flight to Jamaica due to Hurricane Melissa. The Category 5 storm is on its way to the island nation, which represents about 2.6% of scheduled capacity in the fourth quarter.
The airline will need to revise some of its fourth-quarter estimates amid higher oil prices, the impact of an extended government shutdown or Hurricane Melissa, Tom Fitzgerald, a TD Cowen analyst, said in a note.
Both passenger revenue per available seat mile, which reflects the sales environment, and the load factor, a measure of how full planes are, missed analyst estimates. The number of passengers carried also fell short of the consensus.
Non-fuel operating expenses rose 3.7% in the third quarter from a year ago, the company said.
JetBlue also said that they have “some reliability challenges” on the Airbus SE A220. They said ‘it is impacting us” in terms of capacity growth next year.
—
With assistance from Mary Schlangenstein.
link
