JetBlue slashes profit outlook on slowing domestic demand

JetBlue Airways Corp. slashed its full-year profit forecast over signs of a slowdown in domestic demand, becoming the latest carrier to warn of a shift toward international routes and renewing questions about the durability of a post-pandemic surge in US travel.

The company also said Tuesday that it would earn less this quarter than analysts expected, echoing comments from Alaska Air Group Inc. last week that waning demand and fares would hurt near-term results.

“The guidance is extremely disappointing,” Helane Becker, a TD Cowen analyst, said in a note about JetBlue. “The current revenue environment where domestic fares are trending lower is driving the big reduction in earnings expectations.”

The shift has been unexpectedly rapid for US airlines, after industry leaders for months talked of a boom in demand that was expected to persist even through an uncertain economy. As more countries have relaxed pandemic-era policies, travelers have increasingly opted for overseas flights at the expense of domestic routes.

Along with Alaska’s warning, Southwest Airlines Co., the largest carrier to derive most of its revenue from US flights, spooked investors last week after it didn’t say whether it expected an early-summer travel surge to carry into the second half of the year.

JetBlue shares fell 5.5% as of 8:02 a.m. before the start of regular trading in New York, dragging down other US airlines. The stock had risen 20% this year through Monday.

Adjusted full-year earnings will be 5 cents to 40 cents a share, compared to the carrier’s earlier outlook for 70 cents to $1, JetBlue said Tuesday in a statement. Revenue for 2023 will increase as much as 9%, compared with its earlier outlook for a jump in the high single digits to low double digits on a percentage basis .

Adjusted profit in this quarter will be flat to a loss of 20 cents a share, compared with 40 cents on average from analyst estimates compiled by Bloomberg. Revenue will fall as much as 8% year over year.

“While we remain on track to deliver a profitable year and record revenue performance, we are taking action, including redeploying capacity, to mitigate these current challenges and improve margins,” Chief Operating Officer Joanna Geraghty said in the statement.

Adjusted earnings were 45 cents a share in the second quarter, a penny better than analysts’ estimates. Revenue of $2.6 billion met expectations.

JetBlue said the court-required wind-down of its Northeast Alliance with American Airlines Group Inc. in the Boston and New York City areas, along with congested air-traffic operations in the US northeast, were hurting results. It was among airlines that earlier agreed to trim summer flying capacity in New York and Washington because of a shortage of air traffic controllers.