JetBlue expects second quarter revenue per available seat mile (RASM) to decrease around 1.2% year-over-year. This includes a 2.5 point headwind from holiday placement and a 1.25 point headwind from completion factor and co-brand incentive payments. This decline in RASM could hurt the company’s performance. However, the airline might see some benefits from lower taxes, which could help its earnings.
In April, traffic increased 5.7% compared to the same period last year while capacity increased 5.3%. During May, traffic saw an 8.9% increase on a capacity growth of 7.6%. In June, traffic increased 7.8% while capacity increased 5.9%.
JetBlue announced that it is planning a corporate restructuring along with job cuts in order to reduce expenses. Although the company did not specify how many positions would be eliminated, it is said that the cuts will not impact flight crews. The airline plans to reduce several positions through layoffs and voluntary buyouts. This decision is part of its efforts to deal with high fuel and other costs.
JetBlue’s founder David Neeleman has teamed up with other investors to launch a new airline in the US named Moxy. The group ordered 60 jets worth $5.4 billion from Airbus earlier this week. JetBlue is also said to be planning a fleet transition in 2020, which is expected to increase unit costs in the short-term but the savings over the long-term are projected to be substantial.
