JetBlue Airways (JBLU, Financial) has updated its Q2 guidance with positive news. Thanks to strong demand and solid cost management, JBLU now expects its revenue to decline by 6.5% to 9.5% year-over-year, an improvement from the previous forecast of a 6.5% to 10.5% decline. Additionally, the company has lowered its CASM-ex forecast to a 5.0% to 7.0% increase, down from the earlier prediction of a 5.5% to 7.5% rise.
- American Airlines (AAL, Financial) recently cut its Q2 EPS, adjusted operating margin, and TRASM guidance due to softening bookings and weaker domestic pricing. This was attributed to a supply-demand imbalance in the domestic market and company-specific issues, such as workforce reductions in corporate sales and a focus on expanding its domestic network over international business.
- United Airlines (UAL, Financial) quickly reaffirmed its Q2 EPS guidance, suggesting that American Airlines' slowdown is an exception rather than the norm in the industry.
- JBLU's improved guidance alleviates concerns about rising industry capacity affecting its bookings, pricing power, and profits. Last quarter, JBLU issued weak Q2 and FY24 revenue guidance due to elevated capacity in its Latin market. For example, Spirit Airlines (SAVE, Financial) is facing an uncertain future due to industry overcapacity affecting its margins and significant looming debt obligations.
- Although JBLU is still expected to face net losses in each remaining quarter of FY24, its route realignment efforts—removing unprofitable routes to focus on more profitable ones—are showing positive results.
- JBLU's operational performance is robust, with a 99% completion factor in Q2. This, combined with strong cost execution and healthy demand, should lead to a better-than-expected performance for Q2. Additionally, lower fuel prices, reflected in the updated forecast of $2.85-$2.95 per gallon from $2.98-$3.13, are beneficial.
Overall, while JBLU faces significant challenges, especially from overcapacity, it is executing well on controllable factors and could benefit if struggling airlines don't survive.
