In the first quarter of 2024, JetBlue faced financial setbacks, primarily attributed to the failed merger with Spirit Airlines. The airline reported a net loss of $716 million during this period, despite exceeding initial expectations. JetBlue’s capacity experienced a 2.7% decline compared to the same period in 2023, resulting in a 5.1% decrease in operating revenue. Expenses, however, witnessed a 14% increase. The abandoned merger with Spirit Airlines, coupled with the payout to the ultra-low-cost carrier and aircraft groundings, contributed significantly to the substantial loss. In January, a federal judge halted the Spirit merger, prompting JetBlue to reach a settlement and pay $69 million to Spirit. Additional breakup costs amounted to more than $530 million in Q1. CEO Joanna Geraghty emphasized that the Spirit transaction is now resolved, and the airline is concentrating on its independent strategy. Another challenge for JetBlue lies in the growing capacity between the United States and Latin America, which accounts for 35% of the airline’s revenue. Since before the COVID-19 pandemic, capacity to Latin America has surged by over 60%, leading JetBlue to reduce fares. Upon reviewing its network, JetBlue made the strategic decision to withdraw from several South American markets, such as Lima, Quito, and Bogotá, in favor of more lucrative routes. Geraghty acknowledged that elevated capacity in the Latin American region will continue to exert pressure on revenue throughout the year, resulting in a downward revision of expectations. JetBlue is committed to implementing its revised standalone strategy in pursuit of long-term profitability. Persistent technical issues with Pratt & Whitney’s Geared Turbofan (GTF) engines continue to affect JetBlue and other airlines globally. JetBlue anticipates that 11 aircraft will remain out of service indefinitely this year, with the number expected to increase in subsequent years. The airline is seeking compensation from the engine manufacturer, but an agreement has yet to be reached. On a more positive note, JetBlue outlined its aircraft delivery schedule for the coming years. The airline anticipates receiving 27 Airbus planes in 2024, including eight already delivered in Q1. Notably, 20 of these planes will be A220s, which are intended to replace the Embraer E190s. JetBlue’s transition to A220s is projected to yield significant cost savings, estimated at approximately $100 million in 2024, an increase from the previously estimated $75 million in savings due to improved economics and reduced maintenance expenses.
JetBlue Reports Net Loss in Q1 2024, Impacted by Failed Spirit Merger
