JetBlue Airways (NASDAQ:JBLU) said Wednesday it intends to cut April and May capacity by at least 40% and is seeking to delay new plane deliveries, the latest airline to cut as the industry attempt to deal with a dramatic slowdown in travel demand due to the COVID-19 coronavirus pandemic.
Airlines have been scrambling to cut flights and conserve cash as global travel demand has evaporated, with the pandemic expected to cost the global industry more than $100 billion in lost revenue in 2020.
JetBlue in a letter to employees Wednesday said that so far in March it is taking in about $4 million in bookings daily, down from about $22 million daily in March 2019, while issuing more than $20 million per day in credits.
"This is a stunning shift, which is being driven by fewer new bookings, much lower fares, and a customer cancel rate more than 10 times the norm," CEO Robin Hayes and president Joanna Geraghty wrote. "If you do the math, $4 million per day does not come anywhere close to covering our daily expenses. It is hard to predict how long these conditions will last and how much more challenging the environment may become."
JetBlue in response is bringing down its April and May schedules, and said it also expects "substantial cuts" in June and July. The airline is also grounding some airplanes, cutting spending where possible, and is in talks with Airbus to slow new aircraft deliveries and reduce aircraft pre-delivery.
Both Hayes and Geraghty are also taking a 50% pay cut.
JetBlue also called on the U.S. government to assist the airline industry during the crisis. There are concerns that absent government intervention there will be a global wave of bankruptcies in the sector, though the U.S. industry is relatively healthy compared to many international airlines.
JetBlue said it has entered into a term loan credit agreement providing up to $1 billion in added liquidity to help it through the crisis.