What happened

JetBlue Airways (NASDAQ:JBLU) reported third-quarter results on Tuesday morning that came in ahead of expectations. But investors were not impressed, sending shares down more than 5% due to the bleak outlook concerning the quarters to come.

So what

We knew going into earnings season that airlines would produce massive losses, as the COVID-19 pandemic has weighed heavily on travel demand. On Tuesday, JetBlue said it lost $1.75 per share on revenue of $492 million, which was actually considerably better than the $2-per-share loss on revenue of $457 million that was expected.

A line of JetBlue tails parked at an airport terminal.

Image source: JetBlue Airways.

Revenue was down 76% year over year, though that was better than the 80% decline the company had initially feared. Officials on the post-earnings call said they saw "modest sequential improvement" in August and September as new COVID-19 case counts decreased and quarantine restrictions were eased.

JetBlue burned through about $6.1 million per day in the third quarter, but expects to get that number down slightly to between $4 million and $6 million per day in the fourth quarter. The airline ended the quarter with about $3.1 billion in unrestricted cash, and is exploring options to raise upwards of $2 billion in added liquidity.

But investors seemingly were spooked by a flood of reports this week suggesting a second wave of the pandemic could be at hand, which could wipe out those modest gains JetBlue had been seeing. Company officials on the call admitted a vaccine isn't a panacea, with CEO Robin Hayes telling investors that although JetBlue hasn't seen an impact yet from the increased number of cases "this thing can move very quickly."

Now what

JetBlue expects fourth-quarter capacity to be down 45% year over year, with revenue down 65% and expenses down 30%. While the results were not great, we knew going in they would not be great, and the market reaction seems to be disproportionate to the quarter.

JetBlue is taking an ax to its growth plans to help it survive the crisis, reworking its orders with Airbus. The company now expects it will take delivery of 15 planes in 2021 and 11 in 2022, down by six planes over two years. That likely means a slowdown in growth, and could put JetBlue's long anticipated expansion into Europe on standby.

The airline's stock is off 36% for the year, and given the outlook I have no desire to buy in right now. But little changed concerning JetBlue's outlook following the earnings call, and the sell-off appears to be overdone.