JetBlue Airways Forecasts Lower Revenue, Higher Costs
JetBlue Airways (JBLU) has projected increased expenses and revenue per available seat mile (RASM) below analyst estimates for Q1. This news has led to a significant decline in the company's share price.
The airline anticipates RASM to fall between 0.5% and 3.5%, while analysts had predicted growth of 6.88%. JetBlue attributes this discrepancy to the Easter holiday occurring in Q2 rather than Q1, resulting in a 1.5% reduction in unit revenue.
Additionally, excluding fuel costs, unit costs are expected to increase by 8-10% due to ongoing inspections of Pratt & Whitney engines, which have grounded several aircraft. This grounding is projected to reduce core profit by 3 percentage points in 2025.
Despite facing these challenges, JetBlue reported a better-than-expected loss in Q4 thanks to cost-cutting measures and improved pricing. However, the failed $3.8 billion merger with Spirit Airlines has led JetBlue to delay the delivery of Airbus jets and cut unprofitable routes.
The company's operating revenue for Q4 declined slightly to $2.28 billion, slightly above Wall Street expectations.