DAL - JetBlue slips as the carrier's profit forecast slides

2023-08-01 09:54:56 ET

JetBlue Airways Corporation ( NASDAQ: JBLU ) tumbled after lowering EPS forecasts for 2023. Shares fell 2.3% on Tuesday morning.

Adjusted EPS for the full year is now expected at $0.05 to $0.40 from a previous estimate of $0.70 to $1.00.

For the second quarter, the carrier reported non-GAAP EPS of $0.45, which beat the average analyst estimate by $0.02, and revenue of $2.61B, in-line with expectations.

“Looking ahead, we are updating our full-year earnings outlook to reflect near-term headwinds related to the termination of the NEA, a challenging operating environment in the Northeast and a greater than expected shift of pent-up COVID demand to long-haul international markets which is pressuring demand for domestic travel during the peak summer travel period,” Chief Operating Officer Joanna Geraghty said in a statement.

The NEA refers to the Northeast Alliance was a 2020 agreement between JetBlue ( JBLU ) and American ( AAL ) meant to increase competition in the Northeast. The airlines cited the dominance of Delta Air Lines ( DAL ) and United Airlines Holdings ( UAL ) in the region and the need to create a third full-scale competitor to face them.

Earlier this year, a federal judge ruled that the NEA was anticompetitive and ordered the airlines to undo the accord.

“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,” Geraghty said.

Last August, JetBlue ( JBLU ) had said that the NEA was "growing well in excess of the U.S. market."

"The NEA added over 50 new routes, and increased frequencies on another 130 routes," the company said. "Through the NEA, JetBlue ( JBLU ) is able to serve a broader set of customers, including business travelers, fly to more markets, and create thousands of jobs in the process."

JBLU has said it will focus on its planned acquisition of Spirit Airlines ( SAVE ).

Airlines traded lower amid the news, including Southwest Airlines Co. ( LUV ), Spirit Airlines ( SAVE ), Alaska Air Group ( ALK ), Delta Air Lines ( DAL ), American Airlines Group ( AAL ) and United Airlines Holdings ( UAL ).

More on airlines:

• Airline turbulence: Southwest Airlines and peers fall after cost outlook rattles investors
• Airlines could face downtime from RTX engine issue
• JetBlue gains amid activist investor speculation

For further details see: