JetBlue lowers annual revenue forecast as Latin America oversupply bites

FILE PHOTO: A JetBlue aircraft comes in to land at Long Beach Airport in Long Beach, California, U.S., January 24, 2017. REUTERS/Mike Blake/File Photo

(Reuters) – JetBlue Airways trimmed its annual revenue forecast on Tuesday after reporting lukewarm first-quarter revenue due to bloated capacity in Latin America, sending its shares down 10% premarket.

Struggling to return to profitability, JetBlue last month outlined plans to cut a number of its routes and markets that were unprofitable, including Bogota in Colombia and Lima in Peru, and reallocate resources to better-performing markets.

The carrier said on Tuesday there was healthy demand in peak periods during the quarter and noted its premium seating options performed well, but said oversupply in the Latin American market would eat into its business this year.

The Caribbean and Latin American regions represented more than 33% of JetBlue’s overall capacity in 2023, according to a regulatory filing.

The company now expects fiscal 2024 revenue to decline in the low-single-digit percentage range, compared with its prior forecast for revenue to remain roughly flat. Analysts had expected full-year revenue to dip very marginally to $9.61 billion, according to LSEG data.

JetBlue forecast second-quarter revenue to fall between 6.5% and 10.5%, compared to analysts’ expectations of a near 4% drop.

“The Q2 and full-year revenue guide looked a little worse than expected … not nearly as strong as recently reported results from some of the carrier’s full-service peers,” Citi Research analyst Stephen Trent said.

United Airlines and Delta Air Lines both issued upbeat forecasts for the current quarter in recent weeks.

Still, JetBlue’s efforts to cut costs showed signs of bearing fruit, as it posted an adjusted loss of 43 cents per share in the quarter ended March 31, compared with estimates of a loss of 52 cents.

The company’s total operating revenue fell 5.1% to $2.21 billion, in line with estimates.

(Reporting by Deborah Sophia in Bengaluru; Editing by Shounak Dasgupta)