JetBlue Tumbles as 2025 Cost Outlook Disappoints Investors

(Bloomberg) — JetBlue Airways Corp. shares tumbled after the carrier projected higher costs this year than Wall Street expected.

Unit costs in 2025 will rise as much as 7% excluding fuel, the airline said Tuesday in a statement, outpacing analysts’ estimates on higher spending for compensation and aircraft maintenance. JetBlue shares fell as much as 18% as markets opened in New York, their biggest slump since Aug. 12.

The outlook is a setback to Chief Executive Officer Joanna Geraghty’s plan to turn things around after two failed attempts with other carriers to broaden its flying network. The company is working to cut non-fuel unit costs for each seat flown a mile, an important gauge of efficiency, and already has eliminated unprofitable routes and suspended or dropped some services to South America and Europe as part of a sweeping overhaul of its network.

“On one hand, the carrier certainly seems to be making unit revenue gains, with benefits of the JetForward strategy accruing more quickly than expected,” Stephen Trent, a Citi analyst, said in a note. “On the other, ex-fuel seat mile costs continue to increase faster than unit revenue” on the same basis.

Cost pressures excluding fuel are expected to be most elevated in the first quarter and ease later in the year, Tom Fitzgerald, a TD Cowen analyst, said in a report.

JetBlue opted to pull back to core areas of service in the US northeast and southeast and Puerto Rico after it was dealt back-to-back setbacks when federal courts blocked its planned acquisition of Spirit Airlines Inc. and broke up a joint venture with American Airlines Group Inc.

The company’s fourth-quarter loss was 21 cents a share, better than analysts expected. Revenue was $2.28 billion, just over Wall Street projections on winter holiday travel that was higher than the carrier expected, particularly in international and cross-country routes.

American Airlines Group Inc. last week warned of a surprise loss this quarter, in part on higher operating costs. The guidance contrasted with robust outlooks from rivals United Airlines Holdings Inc. and Delta Air Lines Inc.

(Updates shares, adds analyst comment in fourth paragraph.)

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