JetBlue outlook sparks sell-off in shares

By Shivansh Tiwary and Rajesh Kumar Singh

(Reuters) -JetBlue Airways shares plunged 28% on Tuesday after the New York-based carrier forecast lower-than-expected unit revenue and higher costs in the current quarter.

The company, however, said it expects improvements in its performance in subsequent quarters and sees an adjusted operating margin in the range of 0.0% to 1% in 2025.

Analysts at Raymond James said the forecast implied a loss of 75 cents a share for the year. That compares with analysts' average expectations for a loss of 58 cents a share, according to data compiled by LSEG.

JetBlue's shares were down 28% at $5.82 in afternoon trade.

The carrier forecast first-quarter revenue per available seat mile (RASM), an industry metric commonly known as unit revenue and a proxy for pricing power, of a decline of 0.5% to 3.5% growth. Analysts had been estimating a 6.88% growth.

JetBlue said it expects Easter falling in the second quarter this year will reduce unit revenue by about 1.5% in the current quarter, delaying often strong holiday sales.

The outlook contrasts with that of rivals such as Delta and United, which have forecast stronger-than-expected revenue.

JetBlue attributed its downbeat outlook to lower exposure to corporate traffic as well as greater competitive pressure in some of its key markets.

"We expect competitive capacity will continue to ebb and flow," JetBlue President Marty St. George told analysts on a call to discuss results.

GROUNDED JETS, HIGHER COSTS

The airline, which has reported a profit in just two of the last eight quarters, is grappling with the fallout from ongoing inspections of RTX's Pratt & Whitney Geared Turbofan engines, which has forced it to ground several aircraft and driven up operating costs.

The company said the grounded aircraft count this year would be in the "mid-to-high teens," shaving about 3 percentage points from its core profit. It said it expects the situation to start improving by 2027.

"The Pratt and Whitney aircraft groundings have been and will continue to be a significant impediment to margins in the near term," said CEO Joanna Geraghty.

The company is also facing higher maintenance and labor expenses. As a result, its non-fuel operating costs are estimated to rise as much as 10% in the first quarter from a year ago.

For the fourth quarter, JetBlue reported a smaller-than-expected loss of 21 cents per share, aided by its cost-saving initiatives and improved pricing. Analysts were expecting a loss of 31 cents per share.

(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Tasim Zahid and Bill Berkrot)