JetBlue shares sink after disappointing forecast for unit revenue and costs

JetBlue Airways forecast higher costs and unit revenue below analysts' expectations for the first quarter on Tuesday, sending the New York-based carrier's shares down 14% in morning trade.

The carrier forecast first-quarter revenue per available seat mile (RASM), an industry metric commonly known as unit revenue, a proxy for pricing power, to range from a 0.5% decline to 3.5% growth, compared with analysts' average expectations of 6.88% growth, according to data compiled by LSEG.

JetBlue said it expects the shift of Easter, which typically sees a strong holiday rush, to the second quarter will reduce its unit revenue by about 1.5% this quarter.

It also expects unit costs, excluding fuel, to increase by 8% to 10% in the current quarter.

The airline is facing higher operating costs as ongoing inspections of RTX's Pratt & Whitney Geared Turbofan engines have grounded several of its aircraft.

Grounded aircraft will cause about 3 percentage point reduction in its core profit in 2025, compared to a 2.5 percentage point reduction the previous year, JetBlue said.

For the fourth quarter, JetBlue reported a smaller-than-expected loss of 21 cents per share, aided by its cost-saving initiatives and improved pricing. Analysts were expecting an adjusted loss of 31 cents per share.

After its $3.8 billion merger with the now-bankrupt Spirit Airlines fell through in March 2024, JetBlue moved to bolster its finances by postponing the delivery of 44 Airbus jets.

The move is expected to reduce its projected capital expenditures by about $3 billion from 2025 to 2029.

It has also cut unprofitable routes and has revealed plans to move underperforming capacity to premium leisure and popular markets.

The company's operating revenue fell 2.1% to $2.28 billion for quarter ended Dec. 31, compared with Wall Street expectations of $2.25 billion.