JetBlue Airways' operating profit continues to decline in the second quarter of 2013, bucking profit gains reported by nearly every other US carrier.
Only Dallas-based Southwest Airlines, which some analysts have called a close JetBlue peer, also reported declining profits in the second quarter.
Despite acknowledging difficulties during the period, JetBlue's chief executive David Barger insists the New York-based airline's strategy is sound.
He also argues that the US airline industry has room for the type of airline JetBlue has become - one with a leisure and business focus and middle-of-the-road costs.
"We are not the next super discount value carrier," Barger tells analysts during the carrier's second quarter earnings call today. "There is room for more than two models in the industry landscape, and I think we are proving that."
He adds that JetBlue has found its "sweet spot" in the "middle space" between major US legacy airlines and ultra-low cost competitors.
In the second quarter, JetBlue reports an operating profit of $102 million, down 22% from the same period in 2012.
Though the company has been profitable for 13 consecutive quarters, the results mark three consecutive quarters of falling profits.
JetBlue's operating profits dipped 33% in the first quarter of 2013 and 48% in the fourth quarter of 2012, according to securities filings.
In addition to declining profits, JetBlue's operating margin slipped to 7.6% during the second quarter of 2013, from 10.2% during the same period last year.
Barger attributes the decline to many factors, including the fact that the busy Easter holiday was in late March this year - during the first quarter - and not in the second quarter.
He also notes that maintenance costs climbed more than 30% during the period to $111 million largely because it performed more than expected overhauls on the General Electric CF34-10E engines that power its 54 Embraer 190 aircraft.
The airline has since entered into a contract with GE Engine Services to maintain the engines, an agreement Barger says will help JetBlue "smooth out" and better predict maintenance costs.
Still, the dip in profits sets JetBlue apart from nearly all its competitors, which have recently seen increasing profits.
Quarterly securities filings
During the second quarter, operating profits climbed 244% at American Airlines, 582% at Delta Air Lines, 34% at United Airlines and 19% at US Airways, according to securities filings.
Likewise, US low-cost airlines reported sizeable gains: Allegiant Air's profits climbed 2.4% in the second quarter year-over-year, and Spirit Airlines' profits increased more than 21%.
The only other carrier to report declining operating profits in the second quarter is Southwest, which saw its returns fall 6% to $433 million.
Some analysts have likened JetBlue's position in the US industry to Southwest's. Though Southwest is much larger, both airlines began life as low-cost carriers but now have middle-of-the-road cost structures and increasingly cater to business travellers.
JetBlue's cost per available seat mile (CASM) during the second quarter was 11.36 cents and Southwest's was 12.30 cents, according to securities filings.
By comparison, Spirit and Allegiant reported CASMs of 9.96 cents and 9.98 cents, respectively during the period, and the four major legacy carriers reported CASMs of between 12.88 cents and 14.69 cents, according to quarterly reports.
Barger insists JetBlue is on the right track. He notes that the airline is still a young carrier - it began service in 2000 - and continues to acquire new aircraft and expand its route map.
The airline has excelled at attracting both leisure and business travellers not only at its home turf in New York, but also in newer focus markets like Boston and Fort Lauderdale, Barger adds.
The growth in Boston has been "unprecedented", Barger says, noting that JetBlue now has 49 direct flights from the city, more than any carrier ever from Boston.
JetBlue has also captured a loyal base of customers who travel between New York and Florida, and the airline's superior product has allowed it to distinguish itself on those routes, Barger says.
And he says the airline is well positioned to continue growing its Latin American presence from Fort Lauderdale.
"We believe there are many Latin American markets with tremendous growth potential [that are] currently underserved," Barger says.
JetBlue is also seeking to remedy what Barger calls a "disadvantage" in revenue per available seat mile (RASM) on its transcontinental routes from New York.
On those routes, JetBlue is "missing out" on high-revenue flyers because it doesn't have a premium product.
In response, the airline has plans to install four "mini suites" on each of four Airbus A321s being delivered in the fourth quarter of this year.
Barger calls the suites a "best in class offering that will revolutionise" travel on the route and narrow JetBlue's "revenue gap."
In addition, the airline expects to begin rolling out its inflight wireless internet system, called Fly-Fi, across its entire fleet next year.
The carrier also recently upped its reservation change fees. Customers now pay a flat $75 for changes made 60 days or more before departure. Within 60 days, change fees are based on the cost of the ticket, ranging from $75 to $150.
JetBlue's executive vice president and chief commercial officer Robin Hayes says the new fees will increase revenue without alienating customers.
"We don't believe that change fees are material to the decision to purchase a ticket," he says.