Q2 2023 Earnings Report for JetBlue (JBLU)

JetBlue Airways has revised its 2023 outlook and issued a warning about a potential loss in the current quarter. The airline attributes these challenges to increased international travel and the termination of its partnership with American Airlines in the Northeast.

Following the release of second-quarter results, JetBlue’s shares fell more than 9% in early trading on Tuesday.

JetBlue has revised its adjusted earnings per share forecast for the full year to range from 5 cents to 40 cents, down from the previous estimate of up to $1.

The airline expects an adjusted loss of up to 20 cents per share for the third quarter, with a 4% to 8% decline in revenue compared to the same period last year.

Here are the actual second-quarter results compared to Wall Street expectations:

• Adjusted earnings per share: 45 cents vs. 44 cents expected
• Revenue: $2.61 billion vs. $2.61 billion expected

In the second quarter, JetBlue reported a net income of $138 million, or 41 cents per share, compared to a net loss of $188 million, or 58 cents per share, in the same period last year. Revenue increased by 6.7% to $2.61 billion, aligning with analyst estimates.

Airline executives have observed a shift in demand towards long-haul international travel, which was negatively impacted by the Covid pandemic. This, coupled with increased capacity, has led to a decrease in domestic airfare as more travelers choose new international destinations, as discussed in recent earnings calls.

JetBlue’s COO, Joanna Geraghty, acknowledges the “pressuring demand for domestic travel” during the peak summer travel period. She also states that the company is taking action to mitigate these challenges and improve margins by reallocating capacity.

Other challenges include the termination of JetBlue’s alliance with American Airlines in New York-area airports and Boston, following a court ruling deeming it anti-competitive. This partnership allowed the airlines to collaborate on passengers, revenue, and routes. Both airlines ceased selling seats on each other’s flights in late June.

Geraghty also highlights air traffic constraints in the Northeast, which affected flight disruptions caused by thunderstorms in late June and July. JetBlue, along with United Airlines, experienced a shortage of air traffic controllers during this period.

According to FlightAware, 46% of JetBlue’s flights arrived late from July 1 to July 30, with an average delay time of 85 minutes. This is higher than the national average of 28% of flights delayed, with an average delay time of 60 minutes.

The airline mentions that its outlook does not account for the impact of accelerated inspections on certain Pratt & Whitney engines. Last week, the engine manufacturer’s parent company, RTX (formerly Raytheon Technologies), revealed manufacturing flaws in those engines.