Airline giant JetBlue has seen a huge surge in shares after it recorded a surprise profit increase in the second quarter of the year.
This comes as the company is also looking to defer its aircraft spending by another $3 billion for the next five years to improve cash flow and reduce losses.
JetBlue Airways
JetBlue Airways Corporation (also called JetBlue) is a popular airline in the United States of America. It was founded in August 1998 by David Neeleman. Back then, it was called NewAir. The airline’s headquarters is in Queens, New York, where it performs most of its operational activities.
It officially commenced operations on February 11, 2000, and has since been a major airline in the country.
Does JetBlue Make a Profit?
According to JetBlue Airways’ report for the second quarter of 2024, the airline company made a surprise profit when it posted that it made $25 million between April and June, down almost 82% from 2023. In the first quarter of the year, JetBlue saw a loss of $716 million and a $2.11 loss per share.
As an airline company, this is not a very good report compared to other airlines and competitors.
Wall Street Expected a Loss
However, this report is still quite good in its books because Wall Street analysts had expected JetBlue to report a loss. Since the pandemic, JetBlue has struggled to gain profit and has not reported an annual profit in the past several years.
Therefore, when it reported a surprise earning of $25 million profit in its second-quarter report, it came as a massive shock to experts and analysts. This showed that the new changes they have been making are working to an extent.
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JetBlue Shares Surge 12%
The company’s shares surged by a surprising 12% when it reported an adjusted profit of 8 cents per share between April and June. According to data from the London Stock Exchange Group (LSEG), Wall Street experts and analysts had predicted that the shares would see a loss of 11 cents.
Wall Street experts also predicted that its total operating revenue would fall to $2.40 billion, but instead, it fell by 6.9% to $2.43 billion.
What Is a Surprise Percentage?
A surprise percentage occurs when a company releases a quarterly report or its annual profit, and it is significantly higher or lower than what experts and analysts predicted. If it is higher, it is called a positive surprise, but if it is lower than what was previously expected, it is a negative earnings surprise.
JetBlue experienced a positive surprise earning after its second-quarter report exceeded all expectations and predictions.
JetBlue’s Spending Plans
The company has had many issues for the past few years, and now, its executives are tackling those issues seriously. This year, JetBlue spent its second quarter months cutting off unprofitable flight routes and reducing its costs across the board.
The airline has stopped 50 different routes and is now focusing on its profitable ones. These include New York, Puerto Rico, and New England, which has helped JetBlue save money and make more profit over time.
Better Planes
JetBlue also plans to try to deploy refurbished planes in better conditions with premium seats to help gather more revenue. By doing this, the company hopes to add between $800 million and $900 million in profit between 2025 and 2027.
The plan to deliver 44 Airbus A321neo aircraft has also been postponed until 2030 or later when the company should have a better financial standing. Therefore, the company is making many difficult but necessary decisions and changes to help JetBlue.
Taking Aggressive Action
The CEO of JetBlue, Joanna Geraghty, took over the company earlier in February this year. Since then, she has taken a direct and strict approach to getting JetBlue back on its feet. “We have and are taking aggressive action on every front,” she said on the earnings call for JetBlue.
Since the airline has long been ranked low in punctuality, she hopes to improve its reliability by adding buffer time to flights and making many other significant improvements.
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JetBlue and Pratt & Whitney Engines
JetBlue has struggled for a long time; one of the most significant reasons is its issue with Pratt & Whitney engines. Many of its planes have been grounded after these engines were inspected and removed, causing a huge strain on business.
Therefore, Geraghty also told the analysts on a call that the company was hoping to settle with the engine company to improve its operating performance.
How High Will Jetblue Stock Go?
Analysts are still unsure about how high or low JetBlue’s stock will go in the second half of the year. This is because the airline company surprised them in the second quarter of the year, and they are unsure what to expect.
However, they predict it could go as high as $8.00 per share if all goes well. The average price target is set at $6.70, and a low prediction stands at $5.00 per share.
What Is the Net Worth of Jetblue?
In the second quarter report, JetBlue recorded a net worth of $2.4 billion. This figure represents its market capitalization or the current price of its stock, multiplied by the number of its outstanding shares.
However, reports show its current market capitalization as of August 2, 2024, is $1.93 billion. Due to the company’s recent struggles, this is a 29.23% decrease in just one year.
Third Quarter Plans
The airline also plans to reduce the capacity by as high as 6% between July and September, the third quarter of the year. By the end of the year, the cut capacity is expected to be as high as 5% for the entire year.
However, this is predicted not to help the full year’s sales. They are expected to be lower than the sales of 2023, with a reduction that could be as high as 6%.
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