What happened
JetBlue Airways (JBLU 1.05%) reported second-quarter results that came in slightly ahead of expectations, but provided guidance that fell significantly short of expectations. Investors are booking alternative accommodations, sending shares of JetBlue down as much as 11%.
So what
JetBlue, like other airlines, is seeing significant demand and full planes this summer. The company reported second-quarter adjusted earnings of $0.45 per share on revenue of $2.61 billion, slightly edging Wall Street's consensus of $0.44 per share on $2.6 billion in sales.
Revenue was up 6.7% year over year, and operating expenses decreased by 12.2% as the company realized about half of a planned $75 million in savings from its fleet modernization program.
"Thanks to the hard work of our fantastic crewmembers, we generated our highest quarterly profit since 2019, demonstrating the progress we have made since the pandemic," CEO Robin Hayes said. "These results were underpinned by record quarterly revenues and strong operational performance, reflecting the benefits from our significant investments and robust preparations for the peak summer travel period."
But the company's results are unlikely to sustain that momentum through the rest of the year. JetBlue forecast the third quarter would be breakeven to a $0.20-per-share loss, and predicted full-year earnings of between $0.05 and $0.40 per share. Analysts had been expecting a $0.40-per-share profit in the current quarter, and $0.78 per share for the year.
Now what
It is a complicated period for the airlines, pulled between strong demand, capacity constraints due to a shortage of equipment and crews, and lingering worries that higher interest rates and an economic slowdown could make this surge short-lived.
JetBlue is juggling more right now than most. The company is getting hit by the regulatory-mandated unwinding of a joint venture with American Airlines Group, Federal Aviation Administration-required scheduling shifts in the crowded Northeast U.S. airspace, and litigation surrounding its planned acquisition of Spirit Airlines. It also faces disruptions up ahead stemming from inspections needed for engines produced by RTX.
JetBlue through the years has carved out an attractive niche and a loyal following for its "some-frills" cabin, and if everything comes together as management hopes there is a lot of opportunity to grow from here. But there is also a lot of uncertainty, and a lot of potential headwinds in the near term. On Tuesday, investors are choosing to deplane and watch this story play out from the terminal.
