JetBlue Airways (NASDAQ:JBLU) shares plunged by nearly 10% in the early trading session today after the air carrier reported a decline in its first-quarter topline and issued a disappointing outlook.
JBLU’s Lackluster Q1 Numbers
Revenue declined by 5.1% year-over-year to $2.2 billion, while its net loss per share of $0.43 came in $0.09 narrower than expectations.
During the quarter, JetBlue’s capacity declined by 2.7%, and operating expenses shot up by 14% to $2.9 billion. Concurrently, its operating expense per available seat mile (CASM) increased by 17.1%.
Focus on Growth and Cost Savings
Amid this performance, JetBlue is undertaking multiple changes to drive growth. The company is scaling back flying at Los Angeles International Airport and reallocating flying to more lucrative opportunities in core leisure markets. Additionally, it has launched new routes to Dublin and Paris.
Moreover, JetBlue is banking on cost-saving initiatives to improve performance. The company has achieved nearly $100 million in structural cost savings so far and aims to reach run-rate savings of $175 million to $200 million by the end of 2024. It expects cumulative savings of nearly $275 million this year.
JetBlue’s Outlook Disappoints
However, elevated capacity in the Latin region, where JetBlue has a substantial portion of its network, is seen as a factor weighing in on the company’s performance for the full year. The company anticipates that there will be a decline of 5% to 2% in available seat miles (ASMs) for the upcoming quarter. Additionally, revenue in Q2 is expected to contract within the range of 10.5% to 6.5%. For the full year, JBLU expects a low single-digit decline in its top line and ASMs.
Is JBLU a Buy, Sell, or a Hold?
Today’s price decline comes after a nearly 68% jump in JetBlue shares over the past six months. Overall, the Street has a Hold consensus rating on the stock, alongside an average JBLU price target of $6.06. However, analysts’ views on the company could see a revision following today’s earnings report.
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