Yahoo Finance JetBlue stock plunges as much as 19% as profitability goal hits setback
JetBlue’s (JBLU) stock sank as much as 19% on Tuesday after the airline cut its annual revenue forecast.
It's another setback in the company's attempts to get back to a black bottom line.
"We've got to get the business back to profitability," JetBlue CFO Ursula Hurley said during the airline's conference call. Profitability would mean free cash flow, the CFO said, which would allow the airline to pivot to paying down its debt.
Hurley added that JetBlue was profitable in March but that "it's challenging to tell whether we'll break even in [the second half of year]."
JetBlue now forecasts revenue will be down 6.5% to 10.5% in the second quarter, potentially more than double the analyst estimates of a 3.8% drop. Full-year revenue is expected to fall in the low-single digits compared to the prior expectation of flat sales.
The airline attributed the setback to "significant elevated capacity" in its flights to Latin America, which account for roughly 35% of JetBlue's overall capacity. JetBlue sees those challenges as temporary, however.
“[Latin America] is a very strong market for JetBlue from a margin perspective," CEO Joanna Geraghty told analysts on Tuesday's call. "These headwinds are transitory, and we will continue to double down in this area."
JetBlue management highlighted its focus on trimming costs and making changes to its existing network.
The airline initiated the exit from seven cities, including Baltimore; Burlington, Vermont; and Kansas City, Missouri. It also has scaled back flying at Los Angeles International Airport to focus on more profitable markets.
Last quarter, JetBlue launched a new nonstop seasonal service to Dublin, Ireland, from New York and Boston and launched a new daily nonstop service to Paris from Boston.
Management on the earnings call said the company is not done with making changes in its focus toward profitability. The airline's investor day has been postponed from May to this fall.
JetBlue’s guidance highlights a divergence from its larger peers like Delta (DAL) and United (UAL) with more international routes.
Delta recently signaled strong travel demand in its better-than-expected earnings results as United beat expectations for its latest quarter — despite costs associated with Boeing's (BA) 737 Max jets challenges.
Earlier this year a federal judge blocked JetBlue's proposed $3.8 billion merger with Spirit Airlines' (SAVE), a move which would have created the fifth largest carrier in the US.
JetBlue's adjusted loss per share came in at $0.43 versus Wall Street estimates for a loss of $0.52. Its revenue of $2.21 billion came in line with analyst expectations.
Despite the stock's slide on Tuesday, JetBlue is up roughly 18% year to date.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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