In a bid to strengthen its finances, JetBlue Airways is putting a lid on growth in 2024, deferring aircraft deliveries and planning for many of its Airbus jets to be grounded due to Pratt & Whitney engine problems.
Seven of JetBlue’s Airbus A320-family aircraft are currently parked due to P&W’s recall of hundreds of PW1100G engines, and as many as 15 of its geared turbofan (GTF)-powered jets could be grounded by year’s end, chief financial officer Ursula Hurley said during JetBlue’s fourth-quarter earnings call on 30 January.
JetBlue lost $104 million on $2.3 billion of revenue in the fourth quarter of 2023, after making $24 million and generating $2.4 billion of revenue during the prior-year period. It lost $310 million on the full year, compared with a loss of $362 million in 2022.
Looking ahead, the carrier is forecasting no revenue growth for the full year of 2024. It also expects its capacity (in available seat miles) to decline in the low-single-digit percentage range.
“While we work through the near-term growth challenges stemming from the GTF issues, we recognise this level of growth is not in line with our historical performance,” Hurley says.
Chief operating officer and incoming chief executive Joanna Geraghty says the New York-based company is taking “aggressive action to get back to profitability” – a plan that assumes JetBlue’s deal to acquire rival low-cost carrier Spirit Airlines is dead.
Most significantly, the company has deferred some $2.5 billion of Airbus aircraft deliveries expected in 2024-27, to 2028 and beyond.
“It is worth noting that we are still taking over 50 aircraft over the next two years… which isn’t the same as acquiring another airline,” Geraghty says. “And we have the ability to defer some of our A320 deliveries… It will give us a path to sustainable, profitable growth over the next few years.”
”The deferral, we believe, is imperative because the number one priority is getting this business back to sustained profitability,” Hurley adds. “We had 35 aircraft that were supposed to be delivered in 2025 and 45 in 2026, and we just didn’t feel like that was the capital investment that we should be making.”
“So, we’ve slowed the growth – on average, we’ll take 24 aircraft per year over the next five years,” she says.
Cirium fleets data show that JetBlue has 130 aircraft orders on the books – 100 A220s and 30 A321neos.
JetBlue now expects to receive 27 new aircraft in 2024. It is prioritising deliveries of A220s as it continues phasing out Embraer 190s, which it plans to fully retire next year. The company is also delaying retirement of 30 older Airbus A320s ”to provide a growth tailwind”, Hurley says.
Earlier in January, long-time CEO Robin Hayes announced his retirement shortly before the carrier’s proposed $3.8 billion acquisition of Spirit was blocked on antitrust grounds by a US district judge. While the carriers are requesting an expedited appeal of that decision, it is possible the deal has been voided through expiration.
“Last week, we notified Spirit that certain conditions to close may not be satisfied prior to the date set in the merger agreement,” Hayes says.
He adds that JetBlue considers its merger agreement with Spirit valid until terminated, but declines during an earnings call to otherwise discuss the state of the combination.
Looking ahead, JetBlue executives say they are focusing on “organic growth” and doubling down on JetBlue’s core leisure customers and core markets in Boston and New York.
“In a world where we’re not growing, we need to be more selective about where we fly,” says Geraghty, who will step in as CEO on 12 February.
JetBlue is the latest major US carrier to forecast slower growth in 2024, as Southwest Airlines recently disclosed that it is slowing both expansion and hiring to improve efficiency and counter surging costs.