JetBlue Negotiates Compensation with Pratt & Whitney for Grounded Aircraft Due to Engine Inspections

JetBlue Airways (B6, New York JFK) is actively seeking compensation from engine manufacturer Pratt & Whitney for the ongoing groundings and inspections of its Geared Turbofan (GTF) engines. The discussions, revealed during the airline’s first-quarter financial results for 2024, involve an unspecified amount which will be reflected in JetBlue’s accounting either as a reduction to aircraft assets or through the amortization of maintenance expenses, according to Ursula Hurley, the airline’s Chief Financial Officer.

JetBlue anticipates that, on average, 11 aircraft will be out of service for the remainder of 2024 due to issues with the GTF engines, with the number expected to peak in the “low teens” during the late second to early third quarter. The airline currently has seven Airbus A321-200NX and two Airbus A220-300s grounded, as per the ch-aviation fleets module. These A220-300s, along with all 29 delivered to JetBlue since 2020, are also powered by Pratt & Whitney’s PW1000 engines, which are affected by the recalls.

The uncertainty around the number of aircraft that will be grounded in 2025 and 2026 is expected to increase, adding further challenges to JetBlue’s operations. “The situation remains frustratingly fluid,” Hurley stated, reflecting the ongoing uncertainty faced by the airline and its plans for future fleet management.

This issue is not unique to JetBlue. Other carriers, including Volaris (Y4, México City International), have also experienced significant disruptions due to the GTF engine issues, with Volaris reporting an average of 29 Airbus aircraft parked in the first quarter of 2024. Volaris management has expressed skepticism regarding the turnaround times and the speed at which the impacted engines can be returned to service.

To mitigate the impact of these engine problems on its growth plans, JetBlue is exploring alternative ways to expand its fleet. This includes the acquisition of twelve Airbus A320s off-lease that were initially intended for return to lessors. The airline is also considering the possibility of extending the service life of approximately thirty A320 aircraft, which constitutes about 10% of its current fleet.

In terms of fleet expansion, JetBlue took delivery of eight aircraft in the first quarter of 2024 and plans to add 19 more by the end of the year, totaling 27 deliveries. These will predominantly be A220-300s, with 20 expected. Looking further ahead, JetBlue plans to receive 25 twinjets in 2025, 24 in 2026, and 14 in 2027.

The financial strain from these operational challenges was evident in JetBlue’s first-quarter performance, with the airline posting USD 2.2 billion in operating revenues and a net loss of USD 716 million. Following the termination of its planned merger with Spirit Airlines, JetBlue has launched initiatives aimed at restoring profitability and achieving breakeven operating margins, potentially delivering over USD 300 million in revenue benefits.