JetBlue posts bigger loss on fuel costs, but CEO says margins improving

JetBlue Airways reported a bigger loss in the third quarter compared with last year, but the New York carrier said strong travel demand is helping to offset higher fuel prices as it seeks to calm investors after shares fell to a new low Monday.

JetBlue stock soared roughly 11% in after-hours trading Monday.

JetBlue on Monday posted a net loss of $257 million for the three months ended Sept. 30, compared with a loss of $143 million a year earlier. The carrier’s fuel bill rose 61% to $868 million.

“Resilient demand and strong yields drove revenue well ahead of our initial expectations, allowing us to recapture more of the increase in fuel costs than we initially expected,” CEO Joanna Geraghty said in an earnings release. “That momentum has carried into the fourth quarter, and Fort Lauderdale continues to deliver exceptional results even as we significantly grow capacity.”

JetBlue’s average fares rose more than 19% to $245.11 in the third quarter from $205.67 in the year-earlier period.

JetBlue executives are set to hold an earnings call on Tuesday at 10 a.m. ET, where they will face questions from analysts about the company’s long-term health amid sustained losses. A group of the airline’s senior creditors is reportedly working with restructuring adviser PJT Partners, the Wall Street Journal reported Friday.

The carrier said it ended the quarter with $2.2 billion in liquidity and that its unencumbered asset base is now $7 billion, including $2.8 billion in aircraft and engines.

JetBlue had total debt of $8.4 billion as of Sept. 30, the carrier said in its earnings filing Monday.

“Importantly, we believe we have the liquidity and financing options to create a strong bridge to at least $1 EPS and positive free cash flow in 2028,” CFO Ursula Hurley said in a statement. “We remain focused on disciplined cost execution and capital management as we work toward sustained profitability and positive free cash flow.”

Here is what JetBlue reported in the third quarter compared with Wall Street estimates compiled by LSEG:

• Loss per share: 60 cents adjusted vs. a loss of 55 cents expected
• Revenue: $2.81 billion vs. $2.82 billion expected

JetBlue last posted an annual profit in 2019. The airline is in the middle of a multiyear turnaround plan that includes cutting cuts and boosting revenue by investing in premium seats, like a new domestic first class section that recently went on sale.

Fuel costs have eaten into airline profits across the board. JetBlue said travel demand has remained strong despite higher fares, which are up more than 20% this year.

JetBlue has struggled not just with higher costs but also with competition from larger rivals.

It sought to acquire now-defunct carrier Spirit Airlines, but that deal was upended by a federal judge who ruled it was anticompetitive. A judge also blocked a regional partnership between JetBlue and American Airlines, which the airlines argued would help them compete better against carriers in the congested Northeast U.S. JetBlue now has a partnership with United Airlines.