JetBlue Airways (NASDAQ:JBLU) is breaking the trend of positive earnings releases from airlines on Tuesday morning as increased operating expenses and schedule trimming tempered enthusiasm on the stock.
Despite a narrower than expected loss and a push beyond estimates on revenue, shares slid on the print amidst lingering concerns on operation capability. Among the overhangs on the stock, a decline in capacity by 0.3% from 2021, a 7.2% fall in revenue, and a stark 17.5% increase in operating expenses per available seat mile.
COO Joanna Geraghty also noted that inclement weather on the east coast, where the company operates 95% of flights, ate into quarterly results.
The air carrier also expects further cuts in capacity as labor shortages and other operational hang-ups cloud the company’s ability to capitalize on improving travel demand.
“To help restore our operational reliability, we are reducing our capacity growth further as we plan more conservatively for the summer and make investments to de-risk the operation,” CEO Robin Hayes explained. “These actions will create more resiliency in the operation, and set us up for a better May, and an even better June and strong summer peak.”
The airline has been at the forefront of schedule trimming, canceling nearly 10% of flights and delaying nearly 30% more thus far in 2022. The lack of a reliable schedule has prompted outcry not only from customers, but pilots.
Shares fell about 2% in pre-market trading.
Read more on the expected questions for management during the airline’s upcoming earnings call.