Challenges Impact JetBlue’s Q2 Earnings

JetBlue Airways giveth and taketh away – in the same day.

In practically the same breath after announcing it made a modest profit in the second quarter and beat Wall Street expectations, JetBlue announced it was cutting back its yearlong profit views in light of the dissolution of the Northeast Alliance with American Airlines.

JetBlue announced a profit of 45 cents per share, beating Wall Street estimates by a penny.

Meeting or beating Wall Street predictions is an important factor in the stock market.

But the airline’s share price fell 8 percent in early morning trading on Tuesday, when it announced it would have to severely cut back its full year profit estimates because of the dissolution of the Alliance. A federal judge ruled in May that because of competition reasons, JetBlue could no longer partner with American Airlines.

JetBlue said it was forced to drop its full-year profit estimates from 70 cents to $1 a share, to five cents to 40 cents per share.

“While we remain on track to deliver a profitable year and record revenue performance, we are taking action, including redeploying capacity to mitigate these current challenges and improve margins,” JetBlue Chief Operating Officer Joanna Geraghty said. “Overall leisure demand trends are healthy and we continue to see robust demand during peak periods.”

But a TD Cowen analysts disagreed.

“JetBlue is caught in the cross-hairs of slowing domestic leisure air travel demand, operating in some of the most constrained US airports, and dealing with idiosyncratic distractions (NEA wind-down, SAVE merger lawsuit),” he wrote.