JetBlue Airlines stock was down nearly 19% today on its earnings report – on a day when the broader market, including Delta and United, were up. (The stock is down by two-thirds over the past 5 years – a performance worse than American Airlines.)
The airline announced a loss of $716 million for the quarter, three quarters of which they attribute to breakup fees for moving past the planned acquisition of Spirit Airlines. However they aren’t out of the woods and expect revenue to decline more than 10% in the second quarter and to decline overall for the year.
Part of their troubles is a focus on Latin America, which they report makes of 35% of their capacity and where total industry capacity has grown 60% compared to before the pandemic. They will have a strong window into what markets work well and which do not from new President Marty St. George, a JetBlue veteran who most recently served as Chief Commercial Officer for regional megacarrier LATAM. I suspect though that they’re especially hurting not from Latin competition, but from Frontier’s move into San Juan.
JetBlue is planning to reduce New York LaGuardia capacity. The loss of its American Airlines partnership involves the return of slots, and many of these flights were unprofitable in any case. This means downsizing from a peak of 50 flights at the airport to 30 departures.
Going forward they plan a focus on a revamped loyalty program and leisure-focused premium product offering. The new loyalty program made a lot of sense with a bigger global footprint enabled by its American Airlines partnership, which they should probably seek to revive in a fashion outlined by the anti-trust judge who ruled against their schedule coordination and revenue-sharing.
Much was expected from today’s earnings call, but the airline still doesn’t appear to have a clear plan to return to profitability. Additional route changes were expected this month but appear to have been put off until they gain greater clarity, though it’s likely that deeper cuts in Los Angeles were warranted. A $6 share price and lack of crisp plan don’t help in the face of Carl Icahn.
I would love to see David Neeleman to swoop in and acquire control of the company he started and combine it’s route network with his Azul, and instead of being the 29th daily frequency to London and the 19th daily frequency from New York to Paris – or whatever it is – he can open the first routes to many Brazilian cities that have no direct flights and super high average fares to the USA as well as ultra long travel times through Sao Paulo . . . which I think was one of his original plans.
Scrap for the planes and the slots. Who needs a Boston hub?
@ Joseph — BOS has to be about the most incovenient place in the US for a hub, but PrimoAir seems to think it is a great idea.
Cue the theme music from “Jaws”.
This is really sad. I enjoy flying JetBlue. It’s a favorite of all my family members.
Shocking.
B6 will be acquired in chunks, mostly by AA and UA. AA solves its NY problem. UA gets back into JFK meaningfully and balance in the NYC market achieved across the big 3 US carriers.
I used to fly B6 a couple times a week for several years. What to do with all my points?
The upside here is that Icahn takes a bath.
@Joseph – if AA/B6/DL are all still fighting over Boston, it’s probably a good airport to be dominant in
Seems to me that, with the strong help of Slow Joe, liquidation is a real possibility, if not soon, then eventually.
The cold hard reality is that the only airline business model that works in the United States right now is the traditional one. Delta, United and American will all make lots of money this year. Southwest will also make good money, but their business model is being hurt by DL, UA and AA abandoning their massive change fees, which was apparently artificallly increasing demand for WN flying.
Nothing else really works in the US airline industry, at least at scale. JetBlue is the canary in the coal mine, but none of the other small players are immune to this reality. As this trend has remained consistent since the pandemic waned, I’m not sure if ANY management team can navigate around it.
Larry
You think the DOJ is going to allow AA or UA buy any assets? They won’t.
And JBLU won’t die
Gary, With all due respect, you’ve been the CEO of *how* many airlines? I’m simply questioning your qualifications about suggesting how an airline is supposed to run its businesses. That isn’t to suggest that airline managers never make mistakes. All of us, even airline executives, are human.
Tim, can you *prove* or guarantee beyond all doubt that the DOJ wouldn’t allow American (or United) to purchase at least some of jetBlue’s assets if the need arises? I can envision a possible scenario where there could be some asset exchanges between jetBlue and American in New York at some point, but I’m stating this as an opinion, not as a fact, as you did above. I don’t see a possible transaction between jetBlue and United, given the latter’s strength in the New York market at Newark. But again, this is my opinion, not a fact.
Maybe Carl Icahn will use this opportunity to buy more JBLU stock at “bargain” prices.
The comments here sound like a bunch of idiots who armchair quarterback a playoff game with rants based on no experience or understanding of the nuances involved. Especially Gary. How many times have you called the demise of various airlines over the years and been wrong, Gary? Most recently American. And,, go figure, you have yet to be right about any of them. Including becoming ill from non-disposable shower bottles in hotels.
You are not a thought leader. You are an attention seeker. And you guide your sheep for clicks with glee.
@Stuart, if you dont like Gary’s blog, why are you investing the energy in reading and commenting on it? You are welcome to start your own blog, rather than just riping on someone who did.
@Brian. VFTW is not a private group. It’s a public blog from someone who affects and comments within an industry for all to see with a tagline of being a thought leader: So you propose that anyone who disagrees should just not read, assess and comment an alternative? I will read. And I will disagree and call out BS when appropriate.
@Stuart –
I did not ever ‘call the demise’ of American. That’s simply not true. I described a specific scenario of economic recession and high fuel prices that, if those things happened at a particularly vulnerable time of high debt, could lead to a chapter 11 reorganization.
And JetBlue is clearly a money-loser without yet a strategy for turning that around, hence the delay of their investor day – they don’t yet have a plan to tout to investors.
Factual statement: the airline’s stock fell nearly 20% in a single day on its earnings and guidance. Also fact, management hasn’t articulated a path forward and has delayed its investor day. What that I’ve written here in this post do you even think is inaccurate? Or is it just the ‘vibes’?
@Tim Dunn,
If B6 ends up in Chapter 11 or Chapter 7, a real possibility, the feds are not going to let dozens of slots at constrained airports like JFK, LGA, BOS, DCA just sit there. At minimum, an auction may take place. Who will find it difficult to grab more slots in the NY area airports, specifically JFK and LGA, would be you beloved Delta, the world’s most perfect airline. So perfect, it makes Singapore Airlines look like an ULCC.
Larry
JetBlue is not going to end up in chapter 7. They have a fairly strong balance sheet
And they have articulated parts of their turnaround plan including increased operational reliability which will cost them revenue in the short term but make it up long term
I haven’t flown B6 since 2017 and they used to be my main carrier for 3 years from 2014-2017. I switched to American and Delta after Ben Baldanza made the company more efficient by making every late night flight late or cancelled, and making the employees look utterly miserable. I’m not surprised to see it go, and wondering if it was purposely tanked to divert customers to the 3 big carriers.
@Tim Dunn the JBLU balance sheet isn’t actually that strong.
That aside B6 has some serious low hanging fruit (First class, lounges, improved FFP and credit cards, OTP, bigger focus on busines travellers, etc) that should easily push the company into profitability if addressed.
If Trump wins in November, JetBlue will be reorganized as necessary to comport with economic realities. If Biden wins, the slow destruction will continue. Regardless of politics, I think just about everyone knows this. Biden’s team believes in economic systems that don’t effectively operate in the real world.
@Gene The upside is the Porter transfers. The downside is it feels like you have to walk across the whole damn airport after you get your luggage and then go through international check-in
Still feel there’s money to be made at LAX. Just walking away makes B6 an “Eastern Airlines” , relying strictly on leisure travel along the East coast and Caribbean. The Euro footprint is for bragging rights only. Reminds me of when Frank Lorenzo stripped it bare of its assets (System One, slots, etc) and let it whither on the vine.
As alluded to above; lounges, first class, and an up grade in image (more business, less leisure) could be the only way out of the mess. Might have a chance if Southwest continues with its open (opps, semi-reserved) seating program, and Spirit fails.
Too bad there’s no strategy game to record airline predictions. I guess the stock price is the sole agent of record.
@ Gary
You have no idea how the words “Future Looks Uncertain” in the title affects consumers. So what, the stock dropped 20%. And you know full well that in a matter of weeks it can rally again. And probably will. This is the danger of what you write. You use click bait titles to grab headlines which scares consumers and ultimately contributes to a company having to fight even harder to come back, one that is trying at least to offer a product that competes and challenges the status quo of the industry.
Look, I rarely fly Jet Blue. Nor do I own stock. But I can’t stand bloggers who are like roaches at a cheap restaurant looking for an angle to get advertising clicks and attention. You could have said there was concern. You could have said that Jet Blue will require some restructuring. But to surmise and lean into the extreme of an “uncertain future,” knowing well how deafening those words are to consumers, is blatant and callous.
As to American, you were just as harsh. You were leaning into their imminent bankruptcy with gusto,, despite your interpretation now. A convenient one given they actually survived.
@Gary
Furthermore, just read the comments to your own blog post. Half are already calling for the imminent Chapter 7 filing of Jet Blue here. Why? Because you led them there. A real thought leader understands the responsibility in being just that. That what you say, no matter how innocent you perceive it, or spin it, is going to be taken to the extreme. So you better word things more carefully and understand the repercussions. People’s livelihoods are at stake here. You are playing with the teetering of affecting thousands of families and lives for a few extra clicks to pound your pocket. Is that something you want to live with?