JetBlue Airways shares fall after air carrier says it doesn’t expect a third-quarter profit

JetBlue
JBLU,
-8.04%
swung to a second-quarter profit of $138 million, or 41 cents a share, from a year-ago loss of $188 million, or 58 cents a share.

Adjusted second-quarter income for the airline totaled 45 cents a share, ahead of the analyst expectation of 44 cents a share, according to FactSet data.

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Second-quarter revenue at JetBlue increased by 6.7% to $2.61 billion from $2.445 billion in the year-ago period, and slightly ahead of the analyst estimate of $2.607 billion.

For the third quarter, JetBlue said it would miss expectations due to the previously announced loss of its Northeast alliance with American Airlines
AAL,
-3.07%
as well as a “challenging operating environment in the northeast and a greater than expected shift of pent-up COVID demand to long-haul international markets which is pressuring demand for domestic travel during the peak summer travel period.”

For the third quarter, JetBlue now expects an adjusted loss of 20 cents a share to breakeven, below the analyst target of 40 cents a share in net income.

For full-year 2023, JetBlue is projecting earnings between 5 cents a share and 40 cents a share, below the analyst estimate of 78 cents a share.

To tap international demand, JetBlue began daily flights from New York City and Paris, with plans to fly between Boston and Paris starting in 2024, as well as new flights to the Caribbean.

“We faced a more challenging than expected operating environment driven by severe air traffic control restrictions and exacerbated by weather,” said Joanna Geraghty, JetBlue’s chief operating officer. “Our investments in the operation are making a difference and enabling us to recover more quickly as we manage through unforeseeable disruptions.”

TD Cowen analyst Helane Becker said the outlook from JetBlue “is extremely disappointing” and that the company’s view didn’t mention further potential impact from the removal of PW1100G engines.

“JetBlue is caught in the cross-hairs of slowing domestic leisure air travel demand, operating in some of the most constrained U.S. airports, and dealing with idiosyncratic distractions,” Becker said. “Management will likely tout capacity redeployments, its handful of long-haul transatlantic offerings, and cost control initiatives but this will be [a] tough story to spin.”

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