JetBlue (NASDAQ:JBLU) Airways revised its annual revenue forecast downward on Tuesday following a tepid first-quarter performance attributed to excess capacity in Latin America, causing its premarket shares to drop over 12%.
Struggling to achieve profitability, JetBlue disclosed plans last month to discontinue unprofitable routes and markets in Latin America, such as Bogota in Colombia and Lima in Peru, reallocating resources to more profitable regions. Despite robust demand during peak periods and strong performance in premium seating options, the carrier cited oversupply in the Latin American market as a hindrance to its business for the remainder of the year.
According to regulatory filings, the Caribbean and Latin American regions accounted for over 33% of JetBlue’s total capacity in 2023.
JetBlue now anticipates a low-single-digit percentage decline in fiscal 2024 revenue, contrasting with its previous projection of revenue remaining relatively flat. Analysts, referencing LSEG data, had predicted a marginal decline in full-year revenue to $9.61 billion.
For the second quarter, the company forecasts a revenue decline ranging between 6.5% and 10.5%, compared to estimates of a nearly 4% drop.
Citi Research analyst Stephen Trent remarked, “The Q2 and full-year revenue guide looked a little worse than expected… not nearly as strong as recently reported results from some of the carrier’s full-service peers.”
JetBlue’s financial report exerted downward pressure on airline stocks on Tuesday, despite upbeat current-quarter forecasts from United Airlines and Delta Air Lines in recent weeks. American Airlines(NASDAQ:AAL) and Southwest Airlines(NYSE:LUV), scheduled to report quarterly earnings later this week, experienced declines of about 3% and 1%, respectively. Meanwhile, United Airlines(NASDAQ:UAL), Delta Air Lines(NYSE:DAL), and Alaska Air (NYSE:ALK)each dipped approximately 1%.
Efforts by JetBlue to reduce costs yielded positive results, as its adjusted per-share loss of 43 cents for the quarter ended March 31 was narrower than estimates of a 52-cent loss. Total operating revenue decreased by 5.1% to $2.21 billion, aligning with expectations.
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