© Reuters. FILE PHOTO: A JetBlue passenger jet lands with New York City as a backdrop, at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo
By Rajesh Kumar Singh and Shivansh Tiwary
(Reuters) -JetBlue Airways said on Tuesday it was evaluating deeper cost cuts after the company forecast a fall in revenue and higher costs in the first quarter as it grapples with uneven travel demand.
The airline’s shares were down about 5% in premarket trade.
The New York-based carrier is looking to plot its path forward after a U.S. federal judge blocked its planned $3.8-billion acquisition of ultra-low-cost carrier Spirit Airlines (NYSE:). While the two airlines are appealing the ruling, many analysts are now questioning the merits of the deal amid mounting concerns about Spirit’s finances.
In its earnings release, however, JetBlue did not share any update on the merger deal.
Even as travel demand remains strong, airlines in the domestic market are being forced to adjust their network to deal with wild swings in demand between peak and off-peak travel periods. Meanwhile, an excess industry capacity in the domestic market has weakened their pricing power.
Southwest Airlines (NYSE:) last week said it has cut more flights on Tuesdays and Wednesdays when passenger volumes tend to be lower.
JetBlue said it will move underperforming capacity to premium leisure and popular markets.
“Demand during peak periods remains strong, and we continue to manage our capacity during off-peak periods to reflect evolving demand trends,” Joanna Geraghty, JetBlue’s incoming CEO, said in a statement.
The company is also dealing with engine issues related to Pratt and Whitney’s Geared Turbofan engines that multiple JetBlue aircraft use.
The carrier currently has seven aircraft out of service and the number is expected to be between 13 and 15 by the end of 2024.
JetBlue expects first-quarter revenue to fall between 9% and 5%, while full-year revenue is expected to be flat compared with last year.
Non-fuel costs are expected to jump by as much as 11% in the March quarter from a year ago and by a mid-to-high single digit percentage during the year.
JetBlue said it will defer about $2.5 billion in planned aircraft capital expenditure to 2028 and later, adding it was also “carefully” evaluating deeper cuts to the costs it can control.
The company reported an adjusted fourth-quarter loss of 19 cents per share compared with a loss of 28 cents expected by analysts in a LSEG survey.
