JetBlue Scales Back Routes in ‘Urgent’ Effort to Restore Profitability

JetBlue is removing and scaling back routes as it tries to regain profitability.

The air carrier on Tuesday (April 23) released earnings that showed the company reducing its revenue forecast for the year, as it exits some cities and reduces flights out of Los Angeles.

“As we look to the full year, significant elevated capacity in our Latin [America] region, which represents a large portion of JetBlue’s network, will likely continue to pressure revenue and we expect a setback in our expectations for the full year,” CEO Joanna Geraghty said.

“We have full confidence that continuing to take action on our refocused standalone strategy is the right path forward to ultimately return to profitability again.”

Speaking during an earnings call, Geraghty noted that demand trends in the airline’s core geographies and customers have changed immensely since before the pandemic.

“Many of these changes played to JetBlue strengths,” Geraghty told analysts. “For instance, leisure travel remains an increasing priority for customers, and there is no longer the same divide between corporate and leisure travel as more people can take advantage of the ability to work from anywhere.”

“However, that also means most of the industry has shifted a portion of their flying to meet this increasing demand for leisure travel, allocating capacity to many of JetBlue’s bread and butter routes,” she said.

Specifically, that means increased capacity in Latin America, which accounts for 35% of JetBlue’s available seat miles (ASMs), a metric of the number of seats available for purchase on an airline.

“The elevated capacity in this region is significantly pressuring the overall revenue acceleration we expected to see from the first quarter into the second quarter,” Geraghty said. “We’ve therefore revised our full year guidance and no longer expect to approach break-even adjusted operating margin for the full year.”

Recent earnings reports from other airlines show that tech companies are helping to drive a rebound in business travel.

Andrew Nocella, executive vice president and chief commercial officer at United Airlines, said during the company’s quarterly earnings call last week that corporate travel was strong both domestically and internationally.

“We saw, I think, nine of our top 10 corporate booking days this year, in our history,” Nocella said. “So, really, across the board.”

Ed Bastian, CEO at Delta Air Lines, said during an earnings call earlier this month that corporate accounts were returning to business travel, especially those in the technology, consumer services and financial services spaces.

“Business travel demand has taken another meaningful step forward this year with growth accelerating into the mid-teens over last year,” Bastian said.