In recent months, we’ve seen demand for air travel dip a bit. If you ask executives at the major US airlines, they say that premium and international demand continues to be strong, while economy and domestic demand is down a bit.
This is partly being offset by lower fuel prices, but as you’d expect, this poses an especially big challenge for airlines that primarily fly domestically, and airlines that don’t have premium cabins on most of their planes. Along those lines, there’s a pretty grim update from JetBlue.
In this post:
JetBlue looks to aggressively cut costs, reduce losses
JetBlue is an airline that has struggled with profitability in recent years, given how the industry has evolved. JetBlue’s current management team is doing the best it can, after years of (what I’d describe as) mismanagement, and a focus on the wrong things.
Executives have largely tried to improve the company’s financial situation through their JetForward program, primarily by focusing on reducing costs, rather than by focusing on ways to increase revenue (of course there have been some attempts, but the focus has primarily been on the cost side). So we’ve seen JetBlue defer new aircraft deliveries, offer pilots early retirement options, etc.
Along those lines, JetBlue has just issued an internal memo (shared with me by an employee), sharing an update on the carrier’s turnaround plan. Here’s how the memo starts, which all sounds pretty dark:
Over the past few months, we’ve discussed how economic uncertainty has shaken consumer confidence and softened travel demand — hurting our plans for the year. While most airlines are feeling the impact, it’s especially frustrating for us, as we had hoped to reach break-even operating margin this year, which now seems unlikely.
We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost this year and our path back to profitability will take longer than we’d hoped. That means we’re still relying on borrowed cash to keep the airline running.
JetForward is making strong progress and remains the right long-term strategy. However, we must now take near-term steps to rein in spending and preserve cash.
Here are the changes that JetBlue is planning:
- JetBlue will continue to reduce capacity to match weaker demand, especially during trough periods, on Tuesdays and Wednesdays, and in markets with multiple frequencies
- JetBlue will continue to look for opportunities to wind down underperforming routes and shift flying to places with profit potential
- JetBlue will reduce cabin updates on its classic A320s, so four A320s that were initially supposed to be reconfigured in 2026 will no longer be reconfigured
- JetBlue will be assessing the size and scope of its leadership team, looking for opportunities to restructure roles
- JetBlue will update its travel and expense policy, asking team members to closely scrutinize and reduce business travel spending
The memo finishes with a more optimistic tone:
We’re investing in JetBlue’s future. New aircraft are still on the way. Our first-ever domestic first class is in development. We continue to launch new BlueCities and routes. Our Blue Sky collaboration with United will unlock new benefits for our customers. Lounges are coming. These are the building blocks of a stronger JetBlue, and they remain in motion.
There’s a lot to be optimistic about and just a huge thank you to teams across JetBlue who are putting so much heart into our operation and our JetForward strategy to set us up for long-term success.
I really feel like JetBlue can be fixed pretty easily
I don’t want to play armchair CEO (or maybe I do?) and claim that something is much easier than it actually is, but in some ways, I think that JetBlue can be fixed relatively easily. If JetBlue remains independent, it should be like the Alaska Airlines of the East Coast, and be able to turn a profit, given its strong hubs.
I know JetBlue plans to introduce first class fleet wide, but this needs to be done ASAP, and the slow rollout is a serious problem. JetBlue’s plan for introducing first class is perfect — the airline will basically introduce first class without changing aircraft capacity, by reducing legroom in economy.
If you ask me, this will be a game changer for JetBlue. Not only will the airline be able to get more revenue from passengers, but it’ll make the TrueBlue program much more lucrative. I would imagine there’s hundreds of millions of dollars in upside per year here.
However, I don’t understand why it’s taking so long, and Frontier is even beating JetBlue to the punch with introducing first class seats. I think this premium pivot could single handedly turn the airline around.
Second, and this is always my more controversial take, I think consumers and the entire industry would benefit from JetBlue being acquired, assuming the profitability situation doesn’t change soon. People always respond “no, we need more competition, and consolidation is bad.” I agree we need more competition. What I disagree on is how that’s achieved.
Our airline tickets are subsidized by credit card companies. Even profitable airlines like Delta and United earn much of their profits from their loyalty programs, and don’t actually make much money flying passengers.
So we need to reframe how we view competition. To me, good competition means having as much capacity as possible flying for airlines that generate good margins with their co-brand credit card partners, because that requires scale.
The fact that our tickets are largely subsidized by credit cards means that airlines without lucrative credit card agreements can’t really compete. Want small airlines to remain independent? Well, with the current economic realities of the industry, they just keep shrinking until they become sort of irrelevant. I mean, just look at what has happened to Spirit.
Bottom line
JetBlue continues to struggle with profitability. While the airline was making good progress with reducing losses, unfortunately economic uncertainty has caused a dip in demand, and that’s not good for JetBlue. The airline is now looking for even more ways to reduce costs.
If you ask me, JetBlue needs to be focused on its premium pivot ASAP, especially with how efficiently the airline can reconfigure aircraft. There’s hundreds of millions of dollars in upside per year, but the airline is taking its sweet time.
What do you make of this JetBlue memo, and the carrier’s current situation?
JetBlue will find hitching their wagon and hopes to UAL will NOT be the answer for their survival longterm. Being a niche Airline like JetBlue, they are too Big for any of the key players to want All of in its entirety, they only want pieces. Not really sure what made them choose UAL over AA or any other offers but I do not see them surviving in the longterm if there is a downturn...
JetBlue will find hitching their wagon and hopes to UAL will NOT be the answer for their survival longterm. Being a niche Airline like JetBlue, they are too Big for any of the key players to want All of in its entirety, they only want pieces. Not really sure what made them choose UAL over AA or any other offers but I do not see them surviving in the longterm if there is a downturn in the economy and if anything it will be retracting of the network and downsizing. UAL only wants access to JFK and possibly aircraft and AA only wanted more slots at JFK because both of those carriers are capable to doing anything that JB does on their own and are members of Huge Global Networks.
Unfortunately, did not see any of the improvements would come with this change, only stupidity like cutting costs as economy downturns and rehire with more expensive prices after the demands hikes. No human thoughts behind to look at why the hell their routes and connections look like.
The fact that we're halfway through 2025, and they're STILL retrofitting A320 cabins to match the 321s is wild.
It was announced in 2014, and finally started in 2018...I'm sure the pandemic caused a pause, followed by some supply chain issues, but wow.
"expensive policy" , context is more like "expense policy"?
I status matched last year to Mosaic 4. That should have given me the best of everything. I then flew Mint JFK-LAX roundtrip twice and one JFK-MVY roundtrip.
Every single one of those flights was delayed. And never to weather. Mechanical, missing crew, late arriving pilots. JFK T5 hasn't been spruced up in a long time. The seats are terrible, the outlets don't work, the food options aren't great. Sure, they're opening a lounge...
I status matched last year to Mosaic 4. That should have given me the best of everything. I then flew Mint JFK-LAX roundtrip twice and one JFK-MVY roundtrip.
Every single one of those flights was delayed. And never to weather. Mechanical, missing crew, late arriving pilots. JFK T5 hasn't been spruced up in a long time. The seats are terrible, the outlets don't work, the food options aren't great. Sure, they're opening a lounge eventually but that won't solve everything.
Phone customer service was not good, often huge wait times and rarely able to solve easy problems. I kept getting charged for baggage even though I had the credit card and the right perks in Mosaic 4.
Why would I choose that? If B6 is that bad in good times, it's going to be worse in rough times.
Say what you will about Delta and JFK T4 and over-crowded lounges but on its worst day, DL feels so much more professional than B6.
To me, this all seems to be setting the stage for United eventually acquiring JetBlue.
B6 has had two major strategic proposals shot down by the DOJ. They aren't interested in making it 3 when their very life likely depends on finding a white night.
DL and UA are neck in neck as the two largest airlines in NYC and as much as UA fans want you to believe otherwise, the NYC market is defined by the DOJ as including all 3 NYC airports.
Either DL or UA would be...
B6 has had two major strategic proposals shot down by the DOJ. They aren't interested in making it 3 when their very life likely depends on finding a white night.
DL and UA are neck in neck as the two largest airlines in NYC and as much as UA fans want you to believe otherwise, the NYC market is defined by the DOJ as including all 3 NYC airports.
Either DL or UA would be viable if not a single other airline in the industry expresses interest.
AS is a lower cost competitor than B6 though it is not clear where their costs will end up after they integrate HA and add multiple fleet types and become a longhaul international carrier which will push up labor costs.
AS makes the most sense but WN and AA both have far less competitive concerns than either DL or UA.
JBLU's SINGLE and ONLY strategic failure is in having what Warren Buffett calls a lack of moats, or markets where it is the dominant carrier.
Every other network airline has moats - or hubs or markets where they are the dominant carrier.
The entire thesis of JBLU was to create a value oriented high quality low cost airline in competitive markets.
As much as Scott Kirby wants to think he is the smartest person...
JBLU's SINGLE and ONLY strategic failure is in having what Warren Buffett calls a lack of moats, or markets where it is the dominant carrier.
Every other network airline has moats - or hubs or markets where they are the dominant carrier.
The entire thesis of JBLU was to create a value oriented high quality low cost airline in competitive markets.
As much as Scott Kirby wants to think he is the smartest person in the room and industry, DL execs - the top two of which have been in their positions almost as long as JBLU has been in existence - moved quickly to grow in NYC and then in BOS, JBLU's two largest markets. AA's own wobbling and back and forth cooperation/compete with JBLU stance has only made DL's job easier.
DL is larger than B6 in both JFK, also has LGA - and is the largest airline in NYC based on latest Port Authority data for most flights and total passengers for NYC - and has also quickly grown in BOS to overtake JBLU.
Add in the DL came out of covid by leading in raising labor costs which has pressured the low cost segment of the US industry the most and DL has ensured that it holds B6' destiny.
AS succeeds because it is the largest carrier at SEA but notably, like B6, far underperforms DL in international markets.
From a competitive standpoint, the best competitive solution for B6 is to be acquired by AS and as much as the UA fan kiddos want to believe otherwise, B6 is buying time for AS to acquire them in a transaction that the Feds will bless, something that is unlikely to happen with UA or any other of the big 4.
There is still residual bad blood between AS and B6 because of the Virgin America acquisition and B6 probably could have retained more of Virgin America than AS did but AS will likely get the last laugh.
and it would be beyond fitting for AS and DL to compete in the PNW where AS is stronger and in BOS and NYC where DL is and will be the strongest.
Some good points here. AS is also dominant at PDX and ANC and is very competitive with WN at SAN. It also serves smaller markets in the west in a manner that surpasses others. Look at the rapidly growing BOI - they're staking a claim there too. Good niche for them.
Meanwhile, JetBlue set up shop at JFK and BOS. Going for the numbers in these big population centers. They do a good business...
Some good points here. AS is also dominant at PDX and ANC and is very competitive with WN at SAN. It also serves smaller markets in the west in a manner that surpasses others. Look at the rapidly growing BOI - they're staking a claim there too. Good niche for them.
Meanwhile, JetBlue set up shop at JFK and BOS. Going for the numbers in these big population centers. They do a good business at JFK and not being #1 in the NYC metro overall isn't the worst thing in the world; they're completive. At BOS, they've slipped way behind DL and are a distant #2 which is not good. They're decent at FLL, but do not dominate in any way. So, in not one market are they a leader. Unlike AS, they lack these other outposts or focus cities. It's JFK, BOS, FLL. That's it. And when you're like that, you're only competitive in those 3 markets. It's not like they're also strong in Buffalo or Scranton or Norfolk (which is how AS is in the west). No, it's only the three markets, of which only one is really strong.
Not sure how B6 got here, but here they are. It's a shame because they have nice aircraft, great inflight service, etc. Their on-time stats are pretty bad too. Partnering with UA will be helpful, but I don't see them having as solid of a path to relevance as AS has had.
remember that B6 is a lower cost airline than the big 4.
Much of B6' route system won't work at big 4 costs.
The notion that UA is going to acquire B6 and operate their network is not realistic.
and B6' value will fall the more of their slots they sell off to UA.
@Tim,
Sure it will. The other big 3 are so large, that they can spread out their costs across the system, including whatever is left of the B6 network, "if" it is acquired. Take out all the overhead, HR, back office, improve the yield with First and Econ+, merge the CC programs, and cut out all the silly B6 extraneous flying, any of the big 3 could make it work. If not, they just redeploy the resources elsewhere. Something that B6 can't realistically do today.
I get the economics of larger and larger companies. but that is not the point
you and others think that the DOJ is going to bless the consolidation of the US airline industry into 4 players.
I don't think that will be the case - current administration or not.
@Tim,
You're moving the goal posts again. Note I said, "If," and I never expressed that a merger was going to happen, or if the DOJ would approve or not. I was rebutting your earlier statement, "Much of B6' route system won't work at big 4 costs." I disagreed with my statements above.
However, "if" the economic situation at B6 doesn't improve, the government is likely not inclined to let 10's of thousands of employees...
@Tim,
You're moving the goal posts again. Note I said, "If," and I never expressed that a merger was going to happen, or if the DOJ would approve or not. I was rebutting your earlier statement, "Much of B6' route system won't work at big 4 costs." I disagreed with my statements above.
However, "if" the economic situation at B6 doesn't improve, the government is likely not inclined to let 10's of thousands of employees lose their jobs. But we'll see what happens.
Either way, I could care less if a merger with UA or anyone else happens.
Tim, off this topic but still aviation …. a question if you please?
What is your take on the marked lack of Boeing news coming from Paris this week?
Thanks, in anticipation of a sensible response.
Not grim for me. I'm going to pop a bottle of Krug the moment the final flight of this abomination lands and this misbegotten entity vanishes into history.
The airline is borrowing money to fund losses (operations). In a capital intensive business that is very problematic as airlines have a huge cash burn. What if lenders begin to restrict lines of credit?
The issue with first class and lounges is that those initiatives are huge investments and dividends might not be right away. Not to mention the time required to plan and build out lounges and take
planes offline for retrofits. Jetblue...
The airline is borrowing money to fund losses (operations). In a capital intensive business that is very problematic as airlines have a huge cash burn. What if lenders begin to restrict lines of credit?
The issue with first class and lounges is that those initiatives are huge investments and dividends might not be right away. Not to mention the time required to plan and build out lounges and take
planes offline for retrofits. Jetblue doesn't have a couple of years. Probably one year, if that, at best.
What Jetblue really needs is an acquisition partner but the opportunities there are very limited. Or a Chapter 11 might enable the airline to walk away from contracts, leases and obligations and slim down the airline. But cutting your way to profitability usually doesn't work long term. Just look at Eastern, Pan Am and TWA.
How would JetBlue being acquired make it profitable? Unless the acquisition is done by a hedge fund, surely it would no longer exist if acquired by another airline.
@ justin dev -- JetBlue's operation could instantly be profitable if it were flying for an airline that is better able to monetize customers with its loyalty program, by offering more scale.
Just look at Alaska's acquisition of Hawaiian. Hawaiian had been losing money for years, but by better leveraging its loyalty program and better allocating resources, Alaska has been able to improve the situation very quickly.
except there really isn't any indication YET that AS is turning HA around more than just cutting routes that clearly lost money - like HNL-NRT - and better using widebody assets.
A big part of HA's downfall was WN's aggressive expansion to and within Hawaii which hurt HA the most (WN is suffering as well) on top of reduced travel between Hawaii and E. Asia, mostly Japan.
AS hasn't fixed those issues. They have...
except there really isn't any indication YET that AS is turning HA around more than just cutting routes that clearly lost money - like HNL-NRT - and better using widebody assets.
A big part of HA's downfall was WN's aggressive expansion to and within Hawaii which hurt HA the most (WN is suffering as well) on top of reduced travel between Hawaii and E. Asia, mostly Japan.
AS hasn't fixed those issues. They have just diluted the impact of those as part of a larger, generally more profitable AS system.
One thing AS has done is actually to improve fleet utilization at HA. This is a start: https://crankyflier.com/2024/12/23/alaska-optimizes-flying-by-retiming-a321s-and-hubbing-portland/. Of course, the question is whether the can fill the planes, but they're dramatically increasing block hours out of their A321neos and working that fleet harder. It'll be interesting to see if something similar applies to the wide-bodies.
I'm not sure about AS' foray into long-haul at SEA though.
One thing AS has done is actually to improve fleet utilization at HA. This is a start: https://crankyflier.com/2024/12/23/alaska-optimizes-flying-by-retiming-a321s-and-hubbing-portland/. Of course, the question is whether the can fill the planes, but they're dramatically increasing block hours out of their A321neos and working that fleet harder. It'll be interesting to see if something similar applies to the wide-bodies.
I'm not sure about AS' foray into long-haul at SEA though.
I've read that Alaska's SEA-NRT has been a mixed bag in terms of yields and loads.
Perhaps that's why they've preemptively swapped in the 787-9 for ICN.
Overall, succeeding in longhaul is a very different story. And I could forsee the longhaul actually being a drag on AS profitability.
I'm also seeing that Alaska will largely be cannibalizing its own OW partners, most Alaska flyers weren't even flying Delta longhaul in the first place. They...
I've read that Alaska's SEA-NRT has been a mixed bag in terms of yields and loads.
Perhaps that's why they've preemptively swapped in the 787-9 for ICN.
Overall, succeeding in longhaul is a very different story. And I could forsee the longhaul actually being a drag on AS profitability.
I'm also seeing that Alaska will largely be cannibalizing its own OW partners, most Alaska flyers weren't even flying Delta longhaul in the first place. They were booking things like JAL and BA.
I don't understand jetblue's priorities AT ALL. I think their problem is add first class only works with some of their markets (NYC & BOS) while it'll have little monetary benefit in Florida. And the lounges make zero sense to me. There are already multiple AmEx/Chase...etc lounges in LGA, BOS, MCO. Yes, it would be a nice add it for Mint customers but not at the cost of operating what will likely have cheap offerings!...
I don't understand jetblue's priorities AT ALL. I think their problem is add first class only works with some of their markets (NYC & BOS) while it'll have little monetary benefit in Florida. And the lounges make zero sense to me. There are already multiple AmEx/Chase...etc lounges in LGA, BOS, MCO. Yes, it would be a nice add it for Mint customers but not at the cost of operating what will likely have cheap offerings! Remember, this is the airline that recently dropped Titos & Bacardi for generic, 'plastic bottle' liquor replacements on flights, to say nothing of their snack reduction. Does anyone have any faith their lounges won't be crappy UA or AA level, at best?
Jetblue has (had?) the best hard product of any domestic airline. If I were them, I'd go the other direction--get rid of all basic economy fares and advertise that all fares include free seat selection & one checked bag (along with free wifi, directv & on-demand). With Southwest gone, Jetblue *could be* the beloved airline it was with premium selection and in most of their markets, people would pay more for these benefits.
The last thing I want is for Jetblue to get acquired, because we all know it would solely be for the JFK slots & BOS terminal.
@ sean -- In fairness, NYC and BOS are the biggest parts of JetBlue's operation. I hear where you're coming from with offering a differentiated economy experience, but I just don't think there's any data pointing to that working.
The other issue is that if you try to introduce a great economy experience, you're going after premium leisure travelers. These are basically the same people with an Amex Platinum who will choose Delta, because they...
@ sean -- In fairness, NYC and BOS are the biggest parts of JetBlue's operation. I hear where you're coming from with offering a differentiated economy experience, but I just don't think there's any data pointing to that working.
The other issue is that if you try to introduce a great economy experience, you're going after premium leisure travelers. These are basically the same people with an Amex Platinum who will choose Delta, because they get access to a Sky Club when flying with Delta in economy. At least that's my two cents...
It's really interesting how JetBlue has not been able to succeed properly, especially when making the comparisons to being the "Alaska Airlines of the East Coast".
Mathematically speaking, there's much more people on the East Coast and Europe demand is much stronger, so they had all the demographics and geography working out in their favor with the BOS, JFK hubs plus the solid FLL hub too. JetBlue also has premium transcon in Mint and Alaska...
It's really interesting how JetBlue has not been able to succeed properly, especially when making the comparisons to being the "Alaska Airlines of the East Coast".
Mathematically speaking, there's much more people on the East Coast and Europe demand is much stronger, so they had all the demographics and geography working out in their favor with the BOS, JFK hubs plus the solid FLL hub too. JetBlue also has premium transcon in Mint and Alaska doesn't.
Just goes to show you that running a disciplined, on-time operation goes much further.
Some of that is due to the fact that AS has been around for years and has built up a huge flyer base. Moreover, there isn't as much competition out west (SEA/PDX/ANC) and you don't have price pressure say from NE to Florida routes.
I can agree to part of that. Alaska has built up a strong loyalty base through its FF programme. JetBlue's has long been useless until recently, when they started adding partners.
But I wouldn't really say the West Coast has no competition, pretty much every airline needs a hub there for Asia/Pacific traffic. United operates one of the biggest hubs in SFO. Southwest has some of its largest operations in California.
PDX/ANC are pretty negligible...
I can agree to part of that. Alaska has built up a strong loyalty base through its FF programme. JetBlue's has long been useless until recently, when they started adding partners.
But I wouldn't really say the West Coast has no competition, pretty much every airline needs a hub there for Asia/Pacific traffic. United operates one of the biggest hubs in SFO. Southwest has some of its largest operations in California.
PDX/ANC are pretty negligible sized airports. PDX has just over 4M annual mainline passengers, which is barely larger than some outstation operations. East Coast point of sale will always be stronger.
At least until the acquisition of HA, AS is a very disciplined airline and understood their niche. That's led to fairly low costs, and they run a pretty tight ship overall. The folks at Mileage Plan also rightly understood that they need to differentiate on loyalty to be able to better compete with the big guys.
It'll be interesting to see how things change with the HA acquisition. Their operation is going to be much more complex as a result.
I always found it strange that JetBlue had such a small fleet with business class and the rest being all-economy. There was no continuity beyond the non-stops.
I hope this comes in well aligned for all premium customers to get more choices in travel!