JetBlue’s Awful Financial Results: This Can’t Be Good

JetBlue’s Awful Financial Results: This Can’t Be Good

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In the past couple of weeks, we’ve seen most major US airlines report their second quarter earnings. Despite high oil prices, most US airlines reported impressive profits, given the huge leisure demand for air travel, plus high airfare.

Well, JetBlue has just reported its financial results, and they’re pretty bleak. It’s especially bad when you consider that JetBlue is in the process of buying Spirit.

JetBlue reports big loss despite high revenue

JetBlue has reported a GAAP pre-tax loss of $151 million in the second quarter of 2022, compared to pre-tax income of $236 million in the second quarter of 2019. Excluding one-time items, the loss was “only” $102 million, compared to a profit of $238 million during that same period in 2019.

In other words, the airline’s results were $350-387 million worse than the last “normal” second quarter before the pandemic, depending on which metric you want to look at.

Here’s what makes this so bad — JetBlue’s revenue increased by 16.1% compared to the same period in 2019. That makes this one of the highest revenue quarters ever, and the revenue was even better than JetBlue’s initial outlook.

So, what went wrong? JetBlue’s operating expenses per available seat mile increased by 34.7% over the past three years. Excluding high fuel prices, operating expenses increased by 14.5%. Things could still get worse — the airline acknowledges “rising cost headwinds,” related to operating new terminals, planes getting older, and inflight employees getting pay raises.

JetBlue is now making an effort to decrease costs. This will include retiring Embraer 190 aircraft earlier than planned, and replacing them with Airbus A220s, which have lower operating costs. JetBlue is also “investing in automation across the business,” and is creating “a new Enterprise Planning team to help unlock structural efficiencies across the airline longer-term.” JetBlue claims that these initiatives alone will drive down costs by approximately $250 million through 2024.

JetBlue is also emphasizing how a merger with Spirit will create $600-700 million in net annual synergies once integration is complete.

Unlike competitors, JetBlue posted a second quarter loss

Is JetBlue a viable airline in the long run?

Let me say that I greatly appreciate JetBlue, and that the airline takes a different approach than competitors:

Flying JetBlue is an absolute pleasure, with two major caveats:

  • JetBlue can’t seem to run its operation on-time anymore, and reliability is more important than free Wi-Fi and TVs
  • While this is minor in comparison, I think JetBlue has lost its spark when it comes to having great customer service; Mint crews continue to be great, but other than that, JetBlue staff are a mixed bag (and I don’t blame them, to be honest, because I’d be frustrated working at JetBlue as well)

Now, here’s the thing — the airline you want to invest in and the airline you actually want to fly are often not the same. JetBlue is in a rut, and I’m not sure how the airline can get out of it. JetBlue has higher costs than ultra low cost carriers, though historically the airline had some other advantages, purely by being pretty new.

That meant most employees were toward the bottom end of the payscale, planes were new, etc. As JetBlue is now 20+ years old, the airline doesn’t have those cost advantages anymore.

So how is JetBlue supposed to compete with others, whether it be American or Spirit?

  • JetBlue doesn’t have nearly as much premium business traffic as the legacy carriers, purely due to the kind of airline it is and the routes it flies
  • JetBlue doesn’t have nearly as many revenue opportunities as ultra low cost carriers; these airlines often make a majority of their revenue through ancillaries
  • Never mind that JetBlue seems to increasingly be competing head-to-head on routes with ultra low cost carriers, which isn’t exactly going to work in the long run with price sensitive consumers and high costs

Now you have JetBlue trying to take over Spirit:

  • The integration of these two airlines is going to be really costly, and this is a behemoth acquisition, and Spirit has a bigger market cap than JetBlue
  • If you ask me, Spirit has a much better business model than JetBlue, yet JetBlue is planning on bringing its business model to Spirit with this merger

JetBlue’s management essentially seems to argue that if it didn’t acquire Spirit, the airline would be in big trouble. But I’m not sure the argument of “well if only we had more planes our business model would work better” is sound logic either. That’s especially true when you consider just how much JetBlue is paying to acquire Spirit.

JetBlue is now trying to acquire Spirit

Bottom line

While most major US airlines reported second quarter profits, JetBlue reported a significant loss. While revenue exceeded 2019 numbers by a significant margin, costs went up even more. As much as it’s a pleasure to fly JetBlue (when the airline can operate on-time), I think this fundamentally gets at issues with the carrier’s business model.

Now JetBlue wants to acquire Spirit, which is going to be a massive, costly undertaking. Never mind that I’d argue that Spirit has a better business model than JetBlue (as much as I’d rather fly JetBlue). Maybe JetBlue should be looking at acquiring Spirit and adopting its business model? That’s also less likely to face regulatory scrutiny.

What do you make of JetBlue’s financial results?

Conversations (46)
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  1. Eric Guest

    That plane has left the airport, jetBlue attempting to buy NK & copy the ULCC model. They should have done that day one. Their on the Titanic now, & they’ve said they’ll be ripping out seats on NK planes & integrating Spirit into their biz. model, which will raise B6’s costs exponentially. Which in turn sux on all fronts. Primarily, & most importantly their bottom line. But also more so to pax., as potentially there’s...

    That plane has left the airport, jetBlue attempting to buy NK & copy the ULCC model. They should have done that day one. Their on the Titanic now, & they’ve said they’ll be ripping out seats on NK planes & integrating Spirit into their biz. model, which will raise B6’s costs exponentially. Which in turn sux on all fronts. Primarily, & most importantly their bottom line. But also more so to pax., as potentially there’s one less ULCC carrier to choose from. And NK employees, who’ll be bounced out of employment should the DOJ approve this merger. I personally don’t think it’s going to pass muster. Either way it plays out, it’s a bad place to be for blue.

  2. Jasmine Guest

    Another delay - Google: "jetBlue 151". My flight was delayed for six hours. Instead of arriving at my destination - Orlando - on Friday 8/5/22 at 9:41pm. I arrived on Saturday 8/6/22 at 3:37am. This was only a three hour non-stop flight. Well, at least I got there.

  3. PJ Guest

    Lost it's spark when it comes to customer service? Wait until they fold Ghetto Air into the route map!

  4. Harold Guest

    I used to love JetBlue, and flew them almost exclusively (if possible). Now, I won't even dream of flying them. Forty-five minutes to get luggage at JFK? Cancellations and delays galore? And a charge for carryons? REALLY??

    Delta has come up in the world, and is much more reliable than JetBlue for me. And it manages to get luggage out at JFK in less than 15 minutes. Carryons are free, and the flight personnel are...

    I used to love JetBlue, and flew them almost exclusively (if possible). Now, I won't even dream of flying them. Forty-five minutes to get luggage at JFK? Cancellations and delays galore? And a charge for carryons? REALLY??

    Delta has come up in the world, and is much more reliable than JetBlue for me. And it manages to get luggage out at JFK in less than 15 minutes. Carryons are free, and the flight personnel are friendly.

    When an airline holds its passengers in almost-total contempt, the end is near.

  5. Paige A Guest

    I used to love JetBlue. I used to go out of my way to fly JetBlue. That ended when they started charging for carry-on bags. It started out as $30 and, now, I think it's up to $65. For a carry-on bag. Nope. These days, I go out of my way to NOT fly JetBlue. They chose to screw over passengers who fly economy. I imagine there are hundreds of thousands of people like me who simply fly other airlines, now.

    1. Mort Guest

      What? JetBlue doesn’t charge for carrry-on bags. You’re obviously confusing it with some other airline, possibly Spirit, which it just acquired.
      It’s extremely easy to check this stuff before you post incorrect info like you just did.

    2. Jm Guest

      And you're both right and wrong. Your bag fees (if any) are based on the price of your ticket and your FF status. Cheaper the ticket the more the bag fee (including carry-on). The more expensive the ticket, the higher your status, free bags.

    3. Ty Guest

      Agree, when searching for fares between JB and Delta, JB always gets the "nickel and dime" award and Delta has been having lower fares when comparing fares that include the same things.

  6. Grey Member

    Hopefully this helps kill the merger. Does anybody outside of the industry (other than perhaps some major JetBlue fans) actually want this to happen?

  7. Yo Guest

    Man if you’re going to write something, get your facts straight. Inflight did not get any pay raises, as a matter of fact their pay has been stagnant and is on the low spectrum. Flight crews aka Pilots got an increase and a huge bonus.

  8. Ralph Spielman Guest

    It’s the Penn-Central Merger of 1968 all over again. Read up on what happened. History DOES
    A repeat itself.

    1. Lost Luggage Guest

      Better yet, this reminds me of the PAN AM and National merger of 1980. The ensuing recession of 1980-81 forced PAN AM into a fire sale of key assets (Euro hotels) and routes (Pacific). It all fizzled away by the 1991 bankruptcy.

  9. Greg Guest

    Where is that B6 investor fanboy TPHuang was his handle? Convinced B6 would disrupt UNITED at EWR

    1. Tim Dunn Diamond

      what is not known if if the DOJ will require JetBlue to divest itself of the Spirit flight access at EWR. JetBlue is already there so, on a combined basis, B6 could still end up as the 2nd largest airline at EWR.

    2. MN Guest

      Many of those EWR routes are northeast / AA alliance routes….. I see AA taking them back if a meter occurs.

  10. jns Guest

    JetBlue is the only USA airline I fly these days. I'm glad I started flying them instead of dealing with the lies and uncertainty of the others. I flew on JetBlue Economy in April and May of this year and had good experiences.

  11. Brian Gasser Guest

    B6 has some of the most valuable slots at JFK and some at LGA/EWR. There is little reason this airline should be so poorly functioning compared to its peers. It reminds me of investing in ATT. Some companies just cant sort themselves out and their board wont change the leadership.

    I wonder if the merger of B6/Spirit is similar to Penn/NY Central Railroad merger that sunk both companies.

  12. Omar Guest

    Other than the rare mint flight, I avoid Jetblue like the plague.

  13. FLLFYER Guest

    B6 truly needs to get their house in order - as other posters have commented often mergers do not turn out as well as projected and do not deliver the promised financial results.

    My last flight on B6 in June was not pleasant. E190 was hot as hell, an hour late and at 3pm they had no beer/wine on board. Crew said they had not been catered all day - yet the flight arrived into...

    B6 truly needs to get their house in order - as other posters have commented often mergers do not turn out as well as projected and do not deliver the promised financial results.

    My last flight on B6 in June was not pleasant. E190 was hot as hell, an hour late and at 3pm they had no beer/wine on board. Crew said they had not been catered all day - yet the flight arrived into DCA from BOS. Crew was pretty lackluster - so this may have been something the crew came up with.

  14. skedguy Guest

    Is B6 headed down the path of CP, AN and EY(v1.0): GREAT airlines; terrible businesses?

    Also contemplate how much worse these results will be when debt service on the $3.8B they are going to pay to buy NK is factored in.

    Airline synergies are invented in the minds of the C suite to hoodwink investors. I remember how the AC/CP merger was supposed to reap synergies of $1.2B+. What a load of old cobblers as the Brits would say.

  15. Never In Doubt Guest

    Big acquisitions have wrecked much better run companies than Jet Blue.

    I’ve got a bad feeling about this…

  16. SwimBikeFly Guest

    I wonder if having personal tv's, on domestic routes, is actually a hindrance to an airline. It seems like those units, added up across an A320, probably add a significant amount of weight. Not saying that this is the sole reason for bad results, it's definitely more nuanced than anyone on this site will admit or realize. However, it seems like the legacy carriers might have been onto something by removing the devices and forcing...

    I wonder if having personal tv's, on domestic routes, is actually a hindrance to an airline. It seems like those units, added up across an A320, probably add a significant amount of weight. Not saying that this is the sole reason for bad results, it's definitely more nuanced than anyone on this site will admit or realize. However, it seems like the legacy carriers might have been onto something by removing the devices and forcing passengers to use the devices that they already have with them.

    1. Regis Guest

      Every and all Delta flights - more than 20 - I took this year had seat back TV screens. Delta is a legacy carrier.

    2. SwimBikeFly Guest

      Durrrr anecdotal evidence proves correlation durrr

      Delta doesn't have to deal with union wages which equate to higher costs and lower margins

    3. Katiria Soto Guest

      You surely don’t know what you are talking about. Delta pays the same amount of money in wages as the legacies because they got to shut up and quash the union movement at Delta.

    4. Tim Dunn Diamond

      It's worth noting that Delta has returned to the position of being the most profitable global airline in the world and second only to Southwest in the most recent quarter. Since Delta and Southwest have completely opposite approaches to onboard amenities, the absence or presence of seatback TVs isn't the reason for B6' failures or DL or WN's success.
      Delta is the largest airline at JFK and has passed JetBlue at Boston based on...

      It's worth noting that Delta has returned to the position of being the most profitable global airline in the world and second only to Southwest in the most recent quarter. Since Delta and Southwest have completely opposite approaches to onboard amenities, the absence or presence of seatback TVs isn't the reason for B6' failures or DL or WN's success.
      Delta is the largest airline at JFK and has passed JetBlue at Boston based on seat miles and local market revenue because of DL's major international expansion - and that is probably the biggest reason why B6 can't find a niche. DL flies just about everywhere B6 does, has a stronger presence to many markets than B6 and still manages to deliver higher profits.

      B6 needs its merger because it can't figure out how to succeed with its present business model or even the Northeast Alliance w/ AA

  17. SMR Guest

    There’s only one thing that can save JetBlue. Johanna Garretty’s exit. She is the reason and the sole reason there is no operational directive. She’s the worst. She’s a female Jeff Smisek just working at JetBlue to destroy the operation. Whether she’s trying to or not she is proving an attorney can’t run an airline. Let’s hope for JetBlue’s sake she finds herself another home fast because the world is way too woke to fire her.

  18. Tom Guest

    Convinced they are fully planning on hurtling towards Chapter 11, where they can off load their debts from the Spirit deal and renegotiate staff contracts. Whether or not they can ever get back to what they were is debatable.

    1. Eskimo Guest

      The only problem is intentionally running your company into Chapter 11 doesn't benefit anyone. Not the management, not the shareholders, not even debtors or creditors.

  19. LEo Diamond

    Dear jetblue, this is not arwu rankings, your results don't look good after you merge with another company which have equally bad results.

  20. George Romey Guest

    The only other airline to lose money in the period is Spirit so combining these 2 airlines doesn't equate to profits. Particularly when you think about combining these 2 different airlines. Jetblue's issues in part due are to a heavy concentration in the clogged East Coast and being somewhere between a LCC and legacy carrier. Spirit has some of the same East Coast issues but I have to wonder what's in store for the future...

    The only other airline to lose money in the period is Spirit so combining these 2 airlines doesn't equate to profits. Particularly when you think about combining these 2 different airlines. Jetblue's issues in part due are to a heavy concentration in the clogged East Coast and being somewhere between a LCC and legacy carrier. Spirit has some of the same East Coast issues but I have to wonder what's in store for the future of an ULCC. At some point with maturing planes and workforce their costs are going to rise, not to mention what's happen with fuel, and can they continue to fly people around for bargain basement fares? And make money?

  21. Dartagnan79 Guest

    No, the spirit model doesn’t work if jetblue adopts it. ULCC’s work best at smaller size airlines and the geography of where jetblue has a large presence would drive many of its customers to delta or united. You think of ny and Boston, they would go in droves to thier competitors. Also lax and south Florida, they need the size and depth. Overtime it will work out, look at history, the growth and building up...

    No, the spirit model doesn’t work if jetblue adopts it. ULCC’s work best at smaller size airlines and the geography of where jetblue has a large presence would drive many of its customers to delta or united. You think of ny and Boston, they would go in droves to thier competitors. Also lax and south Florida, they need the size and depth. Overtime it will work out, look at history, the growth and building up an airline is costly, but they have to invest in future. London is doing great, they increased market share in high yeilding markets like nyc/Boston/la basin, but the road will be bumpy. Unfortunately articles like these just report on numbers now and don’t look deeply into historical data and understanding of differ is yes markets. Sadly this type of journalism is more common these days and it’s very lazy reporting.
    Also they posted a profit for June and plan on reporting a profit for Q3 and beyond, so in all they had 2 less months of profit vs their competitors.

    1. Reno Joe Guest

      In a merger, the target company's operations are typically grafted onto the acquiring company's financial model. And, roughly 75 percent of M&A deals do not meet projected financial objectives. Time will tell.

  22. DLPTATL Gold

    These results are shockingly bad given the strong leisure demand in the market and the results of Southwest, Delta, etc. It's bizarre that they think they can "grow" their way to profitability by acquiring Spirit and changing their profitable business model to JetBlue's less/not profitable one.

    @Lucky - Unrelated, did you see the AA Stand Up to Cancer donation email today. Good way to acquire miles while supporting a good cause.

    1. AA70 Gold

      I think he blew his whole annual points purchasing budget when he bought 7 million AA miles

    2. Eskimo Guest

      And not writing about it probably means he's bitter than he didn't get CK like Gary.

    3. Who dat Guest

      Starts at the top leadership and lack of it. Operational goals and initiatives are pathetic and at a bare min good enough to manage a 7-11.

  23. rjb Guest

    I used to fly B6 twice a week for years and accumulated a large stash of Jet Blue points. Then they stopped flying my routes and i have not been on them in years. their reliability is so bad I can't fly on them even if they have a flight that works. Now what to do with my jetBlue points?

    1. Sean Guest

      A terrible use of points would be to burn them on Hawaiian Airlines, but at least it's an option if you don't want to fly B6. A not-as-awful way to burn points would be on Mint flights as part of a big vacation. Also, if you have immediate family member/extremely close friend who could use the miles, create a point pool with them--giving them access to use your miles as needed.

    2. Dan T Guest

      Theoretically you should be able to redeem TrueBlue points for AA flights "sometime soon." Not clear what the redemption rates will be, though.

    3. William Guest

      Reminds me of when Pan Am bought National as a growth strategy - it didn’t go well..

  24. Davis Guest

    JetBlue has simply been making a string of ridiculous financial decisions over the years, and their mistakes are finally catching up with them. Why would you launch flights to Europe in the most competitive market in the world or acquire an airline with a different business model when you can’t even reliably operate domestic flights from your hubs? Hope they can get back on track soon. I wouldn’t be surprised to see a leadership shakeup in the coming months.

    1. TravelinWilly Diamond

      “Why would you launch flights to Europe in the most competitive market in the world or acquire an airline with a different business model when you can’t even reliably operate domestic flights from your hubs?”

      Honestly, prestige and arrogance/ zealotry/ hubris are the only things that come to mind for your two questions.

    2. Brian Gasser Guest

      The JFK-LHR route is a huge profit engine. British Airways alone netted over $1B in earnings on this route in 2019. If B6 can offer more frequency, it will help its bottom line. A handful of flights a day wont get that done though.

    3. Tim Dunn Diamond

      no, British Airways didn't generate $1 billion in earnings on JFK-LHR. They carried $1 billion in revenue on that route.

    4. Gaurav Community Ambassador

      My understanding is that they can't operate flights reliably because they do not have the crews and planes. Acquiring spirit does allow them to beef up on both those areas pretty quickly...

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Tim Dunn Diamond

It's worth noting that Delta has returned to the position of being the most profitable global airline in the world and second only to Southwest in the most recent quarter. Since Delta and Southwest have completely opposite approaches to onboard amenities, the absence or presence of seatback TVs isn't the reason for B6' failures or DL or WN's success. Delta is the largest airline at JFK and has passed JetBlue at Boston based on seat miles and local market revenue because of DL's major international expansion - and that is probably the biggest reason why B6 can't find a niche. DL flies just about everywhere B6 does, has a stronger presence to many markets than B6 and still manages to deliver higher profits. B6 needs its merger because it can't figure out how to succeed with its present business model or even the Northeast Alliance w/ AA

2
Regis Guest

Every and all Delta flights - more than 20 - I took this year had seat back TV screens. Delta is a legacy carrier.

2
Paige A Guest

I used to love JetBlue. I used to go out of my way to fly JetBlue. That ended when they started charging for carry-on bags. It started out as $30 and, now, I think it's up to $65. For a carry-on bag. Nope. These days, I go out of my way to NOT fly JetBlue. They chose to screw over passengers who fly economy. I imagine there are hundreds of thousands of people like me who simply fly other airlines, now.

1
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