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Air Traffic Control and Weather-Related Delays Cause JetBlue Stock to Plummet in Q3

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In the third quarter of FY23, JetBlue Airways Corp (NASDAQ: JBLU) reported a significant decline in operating revenue, leading to a slide in its stock price. The company’s operating revenue dropped by 8.2% year-on-year to $2.35 billion, falling short of the consensus estimate of $2.81 billion.

The adjusted loss per share for the quarter was $(0.39), missing the consensus of $(0.25). Operating expenses increased by 3.5% year-over-year to $2.51 billion. This resulted in an operating loss of $(156) million, compared to a profit of $139 million in the same period last year.

The load factor, which measures the occupancy rate of the airline’s flights, declined to 85.1% in Q3 from 86.1% in the third quarter of 2022. Despite this, revenue passenger miles increased by 5.8% year-over-year, and available seat miles increased by 7.1% year-over-year. The cost per available seat mile, excluding fuel costs, decreased by 3.3% year-over-year.

JetBlue benefited from lower fuel costs during the quarter, with the average aircraft fuel price per gallon, including taxes, at $2.94, compared to $3.84 the previous year.

The company’s adjusted debt stood at $4.16 billion, resulting in an adjusted debt-to-capitalization ratio of 55% as of September 30, 2023.

JetBlue ended the quarter with $973 million in cash and equivalents. However, the company faced challenges due to air traffic control and weather-related delays, which had a significant impact on its operations.

JetBlue’s President and Chief Operating Officer, Joanna Geraghty, commented on the situation, saying, β€œWe continue to see healthy travel demand during peak periods and the fourth quarter holidays. However, industry capacity is outpacing domestic demand during off-peak travel periods. For the fourth quarter, our growth will be driven primarily by international routes as we proactively manage our capacity and reduce schedules in off-peak periods.”

4Q23 Outlook

In its outlook for the fourth quarter of 2023, JetBlue expects a decline in revenue by (10.5%) to (6.5%), and an adjusted loss per share ranging from $(0.55) to $(0.35), compared to the estimated loss per share of $(0.15).

The company anticipates an increase in available seat miles of 0.5% to 3.5%, and a cost per available seat mile, excluding fuel costs, that increases by 8.5% to 10.5%. Additionally, the estimated fuel price per gallon is projected to be $3.05 to $3.20.

Despite the challenges faced, Ursula Hurley, JetBlue’s Chief Financial Officer, stated, β€œWhile we have been able to offset some of the costs associated with the challenging operational backdrop, the sheer magnitude of the air traffic control and weather-related delays has been staggering. We remain focused on controlling what we can, including our structural cost program and fleet modernization plans.”

FY23 Outlook, Lowered Expectations

JetBlue has lowered its outlook for the full fiscal year 2023. The company now expects revenue growth of 3% to 5%, revised down from the previous forecast of 6% to 9%. The adjusted loss per share is projected to be $(0.65) to $(0.45), compared to the earlier estimate of EPS of $0.05 to $0.40.

The anticipated increase in available seat miles for the year is 5% to 7%, and the cost per available seat mile, excluding fuel costs, is expected to increase by 4.5% to 5.5%. JetBlue also estimates the fuel price per gallon to range from $3.02 to $3.07.

Overall, JetBlue’s stock has been impacted by the challenges posed by air traffic control and weather-related delays. The company remains focused on managing these challenges while implementing cost reduction measures and fleet modernization plans.

As of the latest check on Tuesday, JBLU shares were trading lower by 14.4% at $3.60.

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