For the first time since discount airline and Motley Fool Stock Advisor pick JetBlue (NASDAQ:JBLU) went public in April 2002 -- and soared $18 a share from its $27 offer price -- the company is posting a quarterly loss. Besides the red ink, there are many warnings signs that investors should examine.

First, though, let's look at the quarter. Operating revenue increased 34% over the comparable year-ago period, but after excluding two one-time charges, the company posted a $32 million ($0.19 a share) loss.

Warning sign #1: Rising expenses
The rapidly expanding airline increased seating capacity by 24.7%. That would be good news, given the revenue increase, if there wasn't also an 18.9% increase in operating expenses per available seat mile (CASM). The major factor here was an 89.5% increase in reported fuel costs, which, as a percentage of total expenses, increased from 24.9% to 31.8%.

Warning sign #2: Load factor
One operating advantage that JetBlue has had is the ability to fill seats. The latest quarter's load factor was a still-robust 81.1%. That's down, though, by 1.8% from the comparable year-ago quarter.

But load factors in the industry are on the rise. For the comparable period, American Airlines' (NYSE:AMR) load factor was 77.9%, up 3.6%. Discount competitor Southwest Airlines (NYSE:LUV) filled 69.6% of its seats, up 4.2%. And regional discounter AirTran (NYSE:AAI) saw a 2.2-percentage-point increase to 71.5%.

Warning sign #3: Debt
It's common knowledge that high debt levels and operating losses have sent Delta Air Lines and many others to bankruptcy court. While today's operating loss is hardly worrisome, JetBlue's debt level is headed skyward. Net debt (total debt minus cash and equivalents) has risen from $1.1 billion last year to $1.8 billion this year. To the extent that the company's losses may affect interest coverage on a continuing basis, this bears watching.

Warning sign #4: The outlook
For 2006, the company expects to report a net loss for both the first quarter and the full year. Prior to today, analysts were looking for a $0.13 per-share profit.

The Motley Fool discussion board about the company is full of hopeful comments. For example, a firsthand experience with one of the new Embraer-Empresa Brasileira (NYSE:ERJ) jets acquired by JetBlue indicates that it meets the lofty standards that JetBlue's Airbus aircraft have established. If JetBlue can keep operating costs low and attract customers, it may have a competitive advantage.

But the reality is that the airline business is a tough one, and it will get tougher still with discounter Virgin America ready to launch its service. JetBlue has done a great job of distinguishing its service, and this shows in its load factor. It has also done a great job of keeping costs low. Southwest's operating expenses per ASM were $8.42 for the last quarter of calendar year 2005. JetBlue's were only $7.51 per ASM.

But the bottom line is that 2006 looks to be a disappointing year -- one in which JetBlue will continue to pile on debt to build its business. The stock has reacted to today's news by falling 14% and setting a new 52-week low. Until ticket prices firm or fuel costs drop sharply, the outlook for JetBlue has more red ink all over it.

Embraer-Empresa Brasileira and JetBlue are both recommendations of the Motley Fool Stock Advisor newsletter service.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.