JetBlue Airways(NASDAQ:JBLU) adjusted its annual revenue forecast downward on Tuesday following tepid first-quarter earnings, citing overcapacity issues in Latin America, resulting in a premarket share decline of over 12%.
Facing profitability challenges, JetBlue announced plans last month to discontinue unprofitable routes and markets, including Bogota in Colombia and Lima in Peru, reallocating resources to more lucrative regions. Despite strong demand during peak periods and successful premium seating options, oversupply in the Latin American market is anticipated to impact the airline’s performance this year.
In 2023, the Caribbean and Latin American regions accounted for more than 33% of JetBlue’s overall capacity, as indicated in regulatory filings.
JetBlue now projects a low-single-digit percentage decline in fiscal 2024 revenue, compared to the previous forecast of relatively flat revenue. Analysts, per LSEG data, had expected a marginal full-year revenue dip to $9.61 billion.
For the second quarter, JetBlue forecasts revenue to drop between 6.5% and 10.5%, contrasting estimates of nearly 4% decline.
Citi Research analyst Stephen Trent noted that the second-quarter and full-year revenue projections fell short of expectations, signaling weaker performance compared to some full-service airline peers.
Despite upbeat current-quarter forecasts from United Airlines and Delta Air Lines, JetBlue’s report impacted airline stocks on Tuesday. American Airlines(NASDAQ:AAL) and Southwest Airlines (NYSE:LUV)saw declines of about 3% and 1%, respectively, while United Airlines(NASDAQ:UAL), Delta Air Lines(NYSE:DAL), and Alaska Air (NYSE:ALK)slipped about 1% each.
JetBlue’s cost-cutting initiatives yielded positive results, with an adjusted per-share loss of 43 cents in the first quarter, narrower than estimates of a 52-cent loss. Total operating revenue decreased by 5.1% to $2.21 billion, aligning with estimates.
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