JetBlue Shares Plunge 25% as Financial Outlook Disappoints Investors

JetBlue Airways (JBLU) saw its stock drop more than 25% on Tuesday, marking its biggest one-day percentage loss since its public debut over two decades ago. This sharp decline came after the airline’s financial outlook failed to meet investor expectations, reflecting rising costs, regulatory challenges, and concerns about its profitability.

The New York-based airline forecasted that its unit costs excluding fuel would increase by as much as 7% in 2025 compared to 2024, with a 10% rise expected in the first quarter of the year. Revenue is expected to be up to 0.5% lower or 3.5% higher in Q1 2025, with larger competitors like Delta and United projecting higher revenue growth, signaling their stronger pricing power in the market.

JetBlue’s Cost-Cutting Strategy
In response to these financial challenges, JetBlue is executing a cost-cutting program aimed at improving profitability. This includes reducing unprofitable routes, deferring the delivery of new aircraft, and increasing revenue through higher-priced seats. Additionally, senior pilots have been offered voluntary early retirement packages as part of the airline’s efforts to cut operational costs. Last year, JetBlue successfully reduced costs by $190 million, according to company reports.

JetBlue’s CEO Joanna Geraghty, who assumed the role in 2023, reassured investors by emphasizing that the airline’s strategy is a multiyear process. “This is a multiyear strategy, and it’s not linear,” she said during an earnings call. “We’re focused on the long term here in getting JetBlue back to sustained profitability, so it’s going to take a little time.”

Despite the challenges, Geraghty expressed optimism about the company’s trajectory, projecting an increase of up to $900 million in pretax profit by 2027.

Ongoing Challenges and Losses
JetBlue also faces challenges from engine recalls and antitrust issues that have hindered its growth plans. The airline said the impact of a Pratt & Whitney engine recall would be more severe in 2025, with several Airbus jets grounded, potentially increasing from 11 to mid- to high teens grounded aircraft.

Additionally, JetBlue has faced setbacks in its expansion efforts due to two antitrust cases. In 2024, a federal judge blocked JetBlue’s planned acquisition of Spirit Airlines, which filed for Chapter 11 bankruptcy protection in November. In 2023, JetBlue lost a case concerning its regional partnership with American Airlines, which was also part of its growth strategy.

Quarterly Performance
JetBlue’s fourth-quarter loss narrowed to $44 million (13 cents per share) in 2024, compared to a larger loss of $104 million (31 cents per share) in the same period of 2023. The carrier reported $2.28 billion in revenue, which represents a 2.1% decline from the previous year.

Despite these losses, the airline’s management remains focused on boosting unit revenue and achieving sustained profitability over the course of 2025. Melius Research analyst Conor Cunningham noted that although JetBlue’s management has “hit their numbers,” the airline needs to aggressively ramp up unit revenue to maintain profitability throughout the year.

Looking Ahead
As JetBlue navigates its challenges, including ongoing regulatory hurdles and the pressures of rising operational costs, the airline is determined to execute its long-term strategies to improve financial performance and remain competitive in an increasingly difficult market. The company’s 2025 forecast will be key in determining if it can regain momentum and keep pace with its larger rivals.

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Sources: AirGuide Business airguide.info, bing.com, cnbc.com