JetBlue Airways’ shares tumbled the most since the early days of the pandemic after the carrier forecast a worse-than-expected loss and said it would trim flying, citing constraints ranging from air traffic control limits to too many seats for sale across the industry.
The adjusted loss in the fourth quarter will be 35 to 55 cents a share, the company said in a statement Tuesday. That compares to an average 21-cent deficit projected by analysts in estimates compiled by Bloomberg.
“While we have been able to offset some of the cost associated with the challenging operational backdrop, the sheer magnitude of the air traffic control and weather-related delays has been staggering,” Chief Financial Officer Ursula Hurley said in the statement.
The comments show how some US carriers have been hit worse than others by a shortage of air traffic personnel and flying limits at several major airports in the northeast US to help ease congestion. The industry is also grappling with waning domestic demand, aircraft delivery delays and parts shortages, while some mid-sized carriers are cutting fares to help fill their planes.
JetBlue’s “results confirm our view that US domestic-market capacity has outpaced demand, putting fares — particularly leisure — under pressure,” George Ferguson, a Bloomberg Intelligence analyst, said in a note. The airline said its average fare slumped 12.3% last quarter.
Its shares plunged as much as 19% Tuesday in New York, the biggest intraday decline since March 2020. The stock pared the decline to 12% as of 1:18 p.m.
JetBlue expects to cut flying capacity in the first quarter from the prior year’s level as it shifts operations away from the US market and toward more-popular international routes. The carrier recently began flights to Amsterdam, in addition to existing service to London and Paris from New York and Boston, and announced plans for seasonal flying to Dublin and Edinburgh starting next year.
It recently ended service to two cities and said it would “meaningfully” reduce flying at New York’s LaGuardia Airport, where demand has been slower to recover than it expected, moving it to higher demand areas like the Caribbean. Business travel remains about 20% below pre-pandemic levels.
Six JetBlue aircraft are currently grounded for inspections and repairs linked to a manufacturing defect in geared turbofan engines made by RTX Corp.’s Pratt & Whitney. That number may increase to the low double digits by the end of next year, the airline said.
Revenue in the fourth quarter will decline in a range of 6.5% to 10.5% from 2022, JetBlue said, missing expectations. The carrier also cut its forecast for full-year earnings and sales growth.
Air traffic disruptions are expected to continue “for the foreseeable future,” Chief Operating Officer Joanna Geraghty said on a conference call.
The carrier had a third-quarter adjusted loss of 39 cents a share, worse than the 28-cent loss expected by analysts. Revenue was about $2.4 billion, roughly in line with estimates.
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