JetBlue Shares Plummet 20% on Rising Cost Concerns
New York-based JetBlue Airways (JBLU) witnessed a significant 20% decline in its stock value on Tuesday following a warning about rising operational expenses.
Escalating Costs Pose Challenges
JetBlue's fourth-quarter earnings report revealed a projected 5-7% increase in cost per available seat mile (CASM), excluding fuel, for 2025. This increase is expected to impact the airline's financial performance.
Revenue Projections and Outlook
Despite the cost concerns, JetBlue anticipates a 3-6% growth in revenue per available seat mile (RASM) this year. For the first quarter of 2025, revenue is estimated to range from a 0.5% decline to a 3.5% increase compared to 2024.
Strategic Focus on Profitability
Ursula Hurley, JetBlue's CFO, emphasized the company's commitment to achieving positive operating margin in 2025. This goal will be pursued through revenue enhancement, reliability improvements, and cost control measures.
Market Value and Business Initiatives
JetBlue's shares traded at $6.40 as of Tuesday, with a market capitalization of $2.2 billion. The company has implemented various initiatives to improve its financial performance, including route optimization and the introduction of premium amenities for passengers.
Regulatory Penalty and Strategic Direction
Earlier this month, JetBlue faced a $2 million penalty for excessive runway delays. CEO Joanna Geraghty remains optimistic about the company's future, emphasizing the execution of the "JetForward" strategy and the mitigation of challenges.
Fourth-Quarter Financial Results
JetBlue's fourth-quarter net loss amounted to $44 million, accompanied by a 5.1% decline in capacity compared to the same period in 2023.