JetBlue shares were losing altitude in Tuesday’s premarket trade as higher operating costs per passenger took a bite out of the carrier’s Q1 profit. The company also lowered its FY24 revenue forecast as oversupply in Latin American markets continues to weigh.
“As we look to the full year, significant elevated capacity in our Latin region, which represents a large portion of JetBlue’s network, will likely continue to pressure revenue and we expect a setback in our expectations for the full year,” CEO Joanne Geraghty said.
Last month, in the wake of its shelved merger with Spirit Airlines (SAVE), JetBlue (NASDAQ:JBLU) eliminated flights to certain South American cities to focus on more profitable transcontinental routes, and “bread and butter” routes along the East Coast and Caribbean.
“With less aircraft time available and the need to improve our financial performance, more than ever, every route has to earn its right to stay in the network,” VP of network planning Dave Jehn said at the time.
For Q2, JetBlue (JBLU) now expects revenue to decline by 10.5% to 6.5% and available seat miles to be down 5% to 2%. Cost per available seat mile excluding fuel is forecasted to increase by 5.5% to 7.5%.
For FY24, revenue and available seat miles are both expected to be down low single digits versus initial estimates to be flat, while CASM is forecasted to increase by mid-to-high single digits.
“Our structural cost program and fleet modernization are on track to deliver around $275M in cumulative savings this year…we’ll remain nimble in responding to the unique and dynamic challenges we face in the industry, while executing on our refocused strategy to generate earnings again,” CFO Ursula Hurley said.
For the current quarter, JetBlue (JBLU) reported a loss of $0.43 per share, widening from a loss of $0.34 in the same quarter last year but nine cents above expectations. Sales were down 5.1% to $2.2B, in-line with estimates.
Among operating expenses, salaries and wages remained the largest cost, increasing 11% from a year ago, while fuel costs were down 20.4%. Maintenance and repair costs were down 24.2%.
Load factor for Q1 was roughly unchanged at 79.7%.
JBLU is down 12% in premarket trading with shares in the airline sector lower in sympathy.
