JetBlue to cut flights, as economic uncertainty led to ‘softened travel demand’
How did your country report this? Share your view in the comments.
Diverging Reports Breakdown
JetBlue to cut flights as economic uncertainty led to ‘softened travel demand’
CEO Joanna Geraghty told employees it is “unlikely” that it will reach break-even operating margin this year. JetBlue stock is down more than 40%, underperforming its airline peers, Southwest (LUV) and Delta (DAL) The latest Consumer Price Index report showed airfares were down 7.3% in May from a year ago, following a 7.9% decline in April.”This summer might be just kind of middle of the road as far as travel is concerned,” AAA Northeast’s Robert Sinclair Jr. said in an interview with Yahoo Finance. “We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost”
In an internal memo obtained by Yahoo Finance, CEO Joanna Geraghty told employees it is “unlikely” that it will reach break-even operating margin this year and will need to cut flights and change routes.
“We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost this year, and our path back to profitability will take longer than we’d hoped,” Geraghty said, adding, “We’re still relying on borrowed cash to keep the airline running.”
As part of the plan to “rein in spending and preserve cash,” the company plans to reduce flights, particularly on Tuesdays and Wednesdays; cut underperforming routes and replace them with other destinations that have “profit potential”; and pause upgrades to its Airbus A320 jet.
Job cuts among leadership may also be on the way. Geraghty said the company is “assessing the size and scope of our leadership team and [has] identified ways to combine or restructure certain roles for greater efficiency at the leadership level.”
Year to date, JetBlue stock is down more than 40%, underperforming its airline peers, Southwest (LUV) and Delta (DAL), which are also below the S&P 500’s (^GSPC) 2% gain for the year.
In late April, JetBlue reported mixed first quarter results. Revenue came in at $2.40 billion, slightly below the $2.41 billion analysts expected, per Bloomberg consensus data, while the company’s loss per share of $0.59 was narrower than a $0.62 loss expected.
Passenger revenue of around $1.97 billion also slightly underperformed, and the company pulled its fiscal 2025 guidance.
At the time, JetBlue president Marty St. George said in a release that the airline expected “softened demand for off-peak travel to continue into the second quarter, where the booking curve is more exposed to macro uncertainty and deteriorating consumer confidence.”
Read more: A beginner’s guide to travel hacking
As consumers pull back, airline fares have gotten cheaper. The latest Consumer Price Index report showed airfares were down 7.3% in May from a year ago, following a 7.9% decline in April.
But travel isn’t expected to rebound, even with lower prices.
“This summer might be just kind of middle of the road as far as travel is concerned,” AAA Northeast’s Robert Sinclair Jr. told Yahoo Finance.
JetBlue aircraft is on display at the 55th edition of the International Paris Air Show at the Paris-Le Bourget Airport, in a suburb of Paris, on June 17. (Bertrand Guay/AFP via Getty Images) · BERTRAND GUAY via Getty Images
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.