JetBlue Airways (NASDAQ:JBLU) reported a third-quarter adjusted loss per share of $0.39, attributing the results to weather disruptions and increased jet fuel costs. The airline also updated its four-year outlook, expecting a full loss per share of $0.45 to $0.65. Despite these challenges, the company highlighted its competitive advantage in the New York market and plans to control costs, address operational issues, and align capacity with demand.
Key takeaways from the earnings call:
- JetBlue anticipates a Q4 revenue drop of 6.5% to 10.5% year-over-year (YoY), but expects full-year revenues to grow between 3% and 5% YoY.
- The airline plans to expand its premium offerings, with Mint RASM outperforming CORE by 4.5 percentage points in Q3. Transatlantic routes are performing well and new services to Amsterdam, Dublin, and Edinburgh have been announced.
- JetBlue is reducing its footprint at LaGuardia and reallocating capacity to stronger-performing geographies like the Caribbean.
- The company's loyalty program is performing well, with active member growth of nearly 10% YoY and member engagement doubling.
- JetBlue has secured financing for $1 billion and expects to take delivery of 17 new aircraft this year. It has also hedged 30% of its expected fuel consumption for Q4.
- The airline is facing challenges including GTF engine issues, which are expected to impact capacity plans and cost outlook for 2024.
JetBlue executives also discussed the airline's growth plans and challenges for the upcoming year. They acknowledged aircraft delivery delays and the impact of GTF engine inspection requirements, which could ground up to six aircraft by the end of this year and a high single-digit to low double-digit number of aircraft by the end of next year. The company is working on its 2024 planning assumptions but expects to maintain competitive unit costs, despite headwinds such as maintenance costs and labor pressure.
The airline is also reallocating capacity based on demand trends, with a focus on right-sizing capacity in shorter-haul and business markets. The company expects a slower but full recovery in New York and is hopeful that air traffic control staffing issues will be addressed.
In terms of future plans, JetBlue is preparing to take full advantage of the slot portfolio it has in New York. The introduction of the A220 aircraft has expanded the range of markets that JetBlue can serve. The company has also seen improvement in corporate travel since Labor Day, with a step up in bookings.
JetBlue is taking steps to ease disruptions, such as adding reserves during peak periods and using AI tools for better planning and decision-making. The company is confident in its ability to compete and win in leisure markets, which align with its core strengths and product offerings.
The airline is also reallocating capacity to focus on margin-accretive leisure and VFR (Visiting Friends and Relatives) markets. They are confident in their ability to compete and win in these markets, which align with their founding principles and loyalty program. They will make adjustments as needed, and have closed or announced closures in some markets. They are also taking a proactive approach to identify markets that may have future capacity constraints. The goal is to fly in the most margin-accretive markets given the engine issues and delivery delays they are facing in 2024.
InvestingPro Insights
In the context of JetBlue's recent challenges and future plans, InvestingPro provides valuable insights. According to InvestingPro, JetBlue operates with a significant debt burden and is quickly burning through cash. This could be related to the increased jet fuel costs and weather disruptions mentioned in the earnings report. Furthermore, the company's stock has taken a significant hit over the last week, month, and six months.
InvestingPro's real-time data also provides a comprehensive picture of JetBlue's financial health. The airline's market cap is approximately 1250M USD, indicating its size in the industry. The Price / Book ratio as of Q3 2023 is 0.35, suggesting the stock is trading at a low multiple. The revenue growth for the last twelve months as of Q3 2023 is 13.15%, but the quarterly revenue growth for Q3 2023 is -8.16%, indicating that revenue growth has been slowing down recently.
These insights, along with over 10 additional InvestingPro Tips, are available through InvestingPro's platform, providing investors with valuable information to make informed decisions.
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