JetBlue Airways faces challenging 2023 outlook

JetBlue Airways (JetBlue), based in New York, has revised its 2023 outlook, anticipating potential losses in the current quarter due to a surge in travellers choosing international destinations and the conclusion of its partnership with American Airlines in the Northeast. The airline now projects adjusted earnings per share for the year ranging from 5 cents to 40 cents, a significant drop from the previous estimate of up to US$1 per share.

During the third quarter, JetBlue could experience an adjusted loss of up to 20 cents, with revenue expected to decrease by 4% to 8% compared to the same period last year. Following the release of second-quarter results, JetBlue's shares plummeted by over 8%. The airline reported net income of US$138 million for the second quarter, a stark contrast to the net loss of US$188 million recorded a year earlier. Revenue rose by 6.7% to US$2.61 billion, approximately in line with analyst predictions.

Executives in the airline industry have noted a shift in demand towards long-haul international travel, a segment that suffered during the COVID-pandemic. This change, combined with increased capacity, has contributed to declining domestic airfares as travellers explore new overseas destinations, as highlighted during recent earnings calls.

JetBlue's COO, Joanna Geraghty, acknowledged that this shift is impacting demand for domestic travel, particularly during the peak summer season. Despite working towards a profitable year and aiming for record revenue performance, the company is taking action to mitigate challenges and enhance margins by redeploying capacity strategically.

Among the difficulties faced by JetBlue are the termination of its alliance with American Airlines at New York-area airports and Boston. The decision came after a judge ruled the partnership anti-competitive and ordered its termination. The alliance allowed both carriers to share passengers and revenue, as well as coordinate routes. The cessation of selling seats on each other's flights began late last month.

Additionally, Geraghty cited air traffic constraints in the Northeast, with both JetBlue and United Airlines highlighting a shortage of air traffic controllers as a factor exacerbating flight disruptions caused by thunderstorms in late June and July.