Just like many of its competitors, JetBlue Airways (JBLU) has faced a number of problems over the past year.
Increased competition has plagued the industry in 2024, and JetBlue was left with hefty legal fees after a federal judge — citing potential harm to consumers from the loss of a low-cost rival — rejected its plan to acquire Spirit Airlines. (SAVE)
Meantime, Spirit itself continues to tiptoe around bankruptcy proceedings, recently avoiding it until at least year-end by refinancing some of its $3.3 billion debt. (Some analysts still say the company might have to reorganize.)
Through it all a number of analysts and investors see potential in JetBlue as it navigates past a string of unprofitable quarters.
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In February the billionaire investor Carl Icahn disclosed that he bought a 10% stake in JetBlue, saying that the stock was significantly undervalued and had the potential to soar.
Highlights of JetBlue’s Q3 report
On Oct. 29 JetBlue reported quarterly earnings that surpassed analysts’ consensus expectations.
The New York carrier posted a third-quarter loss of 16 cents a share, narrower than the 25-cent loss in a survey of analysts by FactSet.
Revenue of $2.37 billion beat the $2.34 billion consensus estimate as well.
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Investors were still unimpressed by the report. JetBlue stock closed regular Tuesday trading off 17% at $6.07. At last check on Wednesday the stock was off another 3.7% to $5.84. In the year through the Tuesday close, the stock was up 64%.
Chief Executive Joanna Geraghty said that the carrier had “significant work ahead on a path toward full-year profitability.”
The biggest hits to third-quarter earnings, she said, were its inability to increase capacity after a recall of Pratt & Whitney engines could keep certain planes grounded until 2026; and unpredictable events like Hurricanes Helene and Milton, the effects of which will also be reflected in the results of the current quarter.
“Not having a clear line of sight on our long-term capacity is certainly frustrating,” Geraghty told investors.
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JetBlue raised funds, cites new strategy
In the company’s news release Geraghty said that JetBlue met all its financial targets for Q3 “and progressed on the implementation of our JetForward strategy.”
It raised $3.2 billion to retire current debt, fund capital spending in 2024 and 2025 and support the JetForward strategy.
The strategy focuses on issues like improving on-time performance, optimizing its network to its strongest routes, and enhancing perks and overall value for passengers.
The company said that its operating-profit margin widened 5 percentage points to negative 1.6% and that operating expenses for the quarter fell 4.2%. Customer satisfaction rose double-digits percent from a year earlier, she said.
Fuel prices in Q3 were lower than the company had originally projected and are expected to drop further in Q4, the airline said.
Geraghty also warned that hurricane season and uncertainty about the presidential election will be reflected in the airline’s revenue in the coming months.
Many passengers are putting off travel plans until after the election, while general uncertainty about the country’s path forward continues to ripple through the industry and wider market, she said.
JetBlue estimates that fourth-quarter revenue will fall 3% to 7% from the year-earlier period.
