JetBlue Airways Forecasts Revenue Decline in 2024

(Reuters) – JetBlue Airways has projected a larger-than-expected drop in 2024 revenue due to weakened domestic travel demand ahead of the upcoming U.S. elections, resulting in a 14% decline in shares during early trading on Tuesday.

Election Impact on Travel Demand

Election-related uncertainty is anticipated to negatively affect travel demand, as consumers tend to stay home and delay major discretionary spending.

Revenue Projections

JetBlue forecasts a one-percentage point hit to its fourth-quarter revenue per available seat mile (RASM), indicating pricing power contraction due to the elections. Furthermore, the airline expects a one-percentage point reduction in unit revenue for Q4 due to Hurricane Milton, which caused extensive damage across Florida.

The New York-based carrier projects a 4% to 5% decline in 2024 revenue, which surpasses analysts' average prediction of a 3.6% drop, as per data compiled by LSEG.

Operational Challenges

The airline is grappling with increased operational costs due to ongoing inspections of Pratt & Whitney's Geared Turbofan engines that have grounded several of its aircraft.

Third Quarter Performance

Despite these challenges, JetBlue reported a smaller-than-expected third-quarter loss due to enhanced demand and pricing in the quarter. This summer, the oversupply of airline seats resulted in discounted fares as carriers sought to fill planes, adversely affecting earnings. U.S. airlines have since reduced their capacity.

Strategic Adjustments

In response to the fallout from its attempted $3.8 billion merger with ultra-low-cost carrier Spirit Airlines (NYSE:SAVE) in March, JetBlue has taken steps to strengthen its financial position. The airline has deferred deliveries of 44 new jets from Airbus, aiming to cut planned capital expenditures by around $3 billion between 2025 and 2029.

JetBlue reported an adjusted loss of 16 cents per share, better than the estimated loss of 25 cents.