JetBlue has put out some new updated guidance for Q3 of 2024, and it is looking (relatively) good. In a year when airlines have had nothing but downward revisions, JetBlue says things are looking significantly better than the previous guidance suggested. This is great, but it’s also the easiest part of the process. The hard part will be coming in the not-too-distant future.
As we all know, JetBlue has had some rough years since the pandemic began. In 2019, it was doing quite well. with a full year operating margin of nearly 10 percent. For Q2 2019, the adjusted operating margin was 12 percent. Q2 of this year? It was a meager 2.4 percent. And that’s during the good spring break and summer months.
JetBlue seemed to flail during the pandemic under the leadership of CEO Robin Hayes. He departed this Feb and new CEO (previously President) Joanna Geraghty re-made the management team. Since that time, things have been changing at a torrid pace under her and President Marty St George’s leadership.
The latest investor presentation from the airline gives a progress report of sorts on how it’s all going.
As promised, the airline has slowed growth dramatically. It’s a far cry from the days of the expected merger with Spirit where it was all about growth and synergy and other silliness that was not rooted in reality.
To be clear, the fleet has grown from 254 and the end of Q2 2019 to 284 at the end of Q2 2024, and much complexity has been added. But that topline number is misleading. You can see the breakdown here:
Data via SEC filings and other sources
This looks like adequate growth, but it’s like watching a duck glide peacefully across the water. Down below the surface, that duck is paddling like crazy.
Several of those A321neos are on the ground thanks to the Pratt & Whitney engine issue. There will be 11 on average out of service this year with that spiking to the mid- to high teens next year. But to blame that for JetBlue’s woes doesn’t make much sense when you think about how little capacity JetBlue wants right now. It has also deferred airplanes on order to further reduce commitments and most importantly, capital expenditure.
To offset that to some extent, JetBlue is extending leases on A320s. Why? It’s cheap. It’s a lot cheaper than buying a brand new A321neo. It does also continue to replace the 100-seat Embraer 190s with 140-seat A220s. That process will be done next year.
Then we have to think about the network. Europe has become a thing since 2019. Though further growth there is unlikely, JetBlue is flying longer distances than it did back in the day.
The end result is an airline that has not grown all that much in some ways but has actually grown in others. Longer flights with more seats in Q2 2024 vs Q2 2019? ASMs are up, seats are down, and flights are WAY down.
Data via Cirium
The network is a key piece of this. As I’ve already written, JetBlue has shrunk back down to being primarily a Northeast and Florida carrier. Everything else has been culled.
via JetBlue
With all this work well underway, we get back to JetBlue’s changed Q3 guidance. Revenue was supposed to be down year-over-year between 1.5 and 5.5 percent. Now, it’ll be down no more than 2.5 percent and could even be UP by 1 percent. (Costs are lower as well, but I’m focusing on the revenue side today.) This is welcome news.
In short, JetBlue has been doing all the right things. Much of this is just about fixing the previous regime’s problems. This is good and it shows the new team has its priorities in order, but it’s also low-hanging fruit.
The airline is refocusing on Boston, reconfiguring New York, and rethinking how it will best serve Florida and San Juan. It will shrink down as needed, or at least keep growth numbers low. And it says it will continue to work on running a better operation, something that is at best a work in progress. It may not sound like it, but this is the easy stuff.
Once JetBlue’s previous mistakes have been fixed and the airline is running well, then what? There’s no real opportunity to grow in New York. The airline can keep filling out New England and Florida, but it needs to find future strategic growth opportunity.
I know what many of you are saying… “JetBlue needs a midcontinent hub.” No, it doesn’t. Now if there is a city with opportunity that happens to be in the middle, then great. This can’t be just about looking at a route map and trying to fill in white space. This is about looking at spreadsheets and data to try to find where an opportunity might exist.
This, I should note, is not a job with easy answers. And frankly, those answers may not exist today. If Spirit goes bankrupt? There’s one easy opportunity to backfill. Should American pull down Chicago further? That’s another to consider. (I don’t expect it to happen, however.) There are also things that can be done with fleet to create new opportunities.
JetBlue is working on its reset, and it’s doing it well. But the airline has to become nimble and ready to pounce whenever the right opportunity presents itself. Finding and executing those opportunities? That’s the hard part.
34 comments on “JetBlue is Doing the Easy Part Well, But The Hard Part is Coming”
I’m sorry but most of these criticisms aimed at Jetblue Airways are ridiculous.
Shrinking?
– US Airways, Alaska, United all successfully shrunk in the 2000s.
Concentrating on the Eastern Seaboard?
– Airlines do best where they’re strongest, which has been proven time and time again.
Cost base too high to compete?
– Costs have risen for everyone else too
B6 never has and will perform well?
– They had the best margins in the industry (apart from Southwest) until 2018
They’re wasting JFK slots?
– They are the airline who hoards the LEAST amount of New York slots.
– Other airlines don’t use their JFK slots as efficiently as B6
– Main reason why B6 went for the NEA was to take over underutilised AA JFK slots
I won’t go any further but I think you get the point.
There is still tons of low hanging fruit too. Talks of a Houston hub or LGA slots or a BOS/PHL gate swap can come later
JetBlue is refocusing itself to being an airline focused on Northeast to Florida and Puerto Rico markets, and a much lighter transcontinental presence, with a seasonal TATL operation. Not a winning combination. All of these are seasonal, leisure routes, and all of this noisy execution that JetBlue is committing to is coming as the economy slows and discretionary leisure spending may be ebbing. JetBlue has no future. It is a mess of an airline with a poor reputation for reliability. It will end up being carved out and sold off in pieces. American’s northeast problem and United’s JFK conundrum both easily solved by splitting the spoils and they will.
Florida and Caribbean in Winter, Europe in Summer that sounds about right. Plenty of airlines shift planes on a seasonal basis.
You going to suggest that Delta can’t make NYC-LHR work because there are stronger competitors on that route? Of course you aren’t.
And again, you cannot suggest B6 is solely vulnerable to something like the economy. Yoy suggesting that the other airlines are somehow immune and B6 is special?
There is no proof that demand is waning. It’s a supply issue and if it wasn’t experts would have told that by now.
B6 is improving it’s operation, like many other airlines before it.
And finishing off with a statement that explains **why** so many despise B6. Shocker.
OK Boomer. Whatever.
Ageist comment, and not clever.
Interesting analysis.
The old summary of B6’s route network traditionally went something like, “If an airport isn’t within ~100 (or 200, or pick a number) miles of the ocean, few people there know that JetBlue exists.” While that’s a slight exaggeration, I would argue that the point is still mostly true, as it looks like B6 serves ~7 destinations east of the Rockies that are 200+ miles from the ocean (though CLT is right on the edge of that), and ~3 destinations west of the Rockies that aren’t on/near the ocean. (Personally, I was surprised to see B6 competing against DL on BOS-ATL.)
To Brett’s point, I don’t think B6 really NEEDS to concern itself with the heartland; that’s not JetBlue’s focus and never has been. From a marketing side, though, I think it would be interesting (perhaps in an “Across the Aisle” interview or as a topic for a podcast discussion?) to get a better sense of types of pax segments B6 is getting to fly it and what types of pax B6 thinks it can realistically target. (Premium leisure pax from NYC/BOS to the Caribbean & FL’s Atlantic Coast? Is B6 even getting much tech-focused business travel anymore? What type of pax is B6 for?)
B6 is exiting CLT, in a move which should really help it lure more BOS business travel. B6 is for leisure and I wouldn’t even call it premium leisure. With some of their schedules, they are scraping bargain basement fares.
Those maps are ancient. SAT, TLH are dropped entirely. ISP not shown. LAX-NAS is still shown. I thought LAX-PBI was starting which isn’t on there. And that’s just off the top of my head…
Yes agree many of those destinations from LAX were pulled recently too. Looks like the map from before all the route adjustment, not what they’ll be flying now.
Those maps are route eliminations from the JetBlue presentation pack Brett linked to.
Thanks for calling that out. Things make more sense now that I realize that I was misreading those route maps.
Makes sense now but that’s totally unclear in the graphic. Thanks
Does JetBlue care about the overall experience, or is that a different article?
I flew Mint from JFK to LAX yesterday. Couple of things:
1. I charged the ticket on the right card, I selected Free Bags as a Mosaic 4 perk, and I flew Mint. The app would not let me check in without paying $125 for a checked bag. I asked the person who checked me in at the Mint counter if she could fix that, she said no. After I got through security, I asked a live agent at the help desk if she could fix that. She said no, and to call the 800 number. Again, Mosaic 4 and Mint passenger.
2. The Mint and Mosaic check-in counter is as fast from TSA Pre as possible in that terminal. Space issue? Maybe. Why not put Mint check-in where the old HA check-in counter was?
3. T5 is showing its age. The outlets are loose and not plentiful. The bathrooms are not the new JFK standard, like T4. The charging station seats are few and supremely uncomfortable.
4. The FA did a comedy routine during the safety briefing. Felt like I was on Southwest and not in a good way.
5. The hot food options were dry and cold. The bread was stale.
6. Do I even need to mention what T5 at LAX is like?
Nothing about the experience felt premium. Why have Mint if everything else is going to feel like you’re in 44C? And the old Mint seats are not great anymore. They just aren’t.
I know it all matters and they need to make money, but what’s the reason to choose B6 if not the experience?
How were you charged for a bag if you were flying Mint or as a Mosaic? That just makes no sense.
I’ll continue with Delta First Class until Jet Blue finally adds Mint to its entire fleet and its on time arrivals and departures improve.
This is a great post, Brett, and I hope the folks at JetBlue are paying attention. I agree that right now they should be getting their cards in order on the east coast, but that is not long term sustainable, and they really need to focus and study on where there are opportunities outside of the Eastern seaboard.
They have in the past, if I recall let opportunities outside of the East pass them by. I truly hope that if something presents itself that they are in fact nimble and ready to pounce. I truly in my guy feel that JetBlue will get one more, a I mean one more lucky opportunity, and they’d better take it. What that opportunity is, who knows, but they’d better be ready when it comes.
Yet interestingly Alaska does the same thing on the west coast & there’s little criticism about it except when they retreat to Seattle when there’s the slightest pushback from Delta, United or Southwest.
I’d argue AS execution of it’s strategy on the West Coast has been much better that B6 out of JFK/BOS. Better operational reliability, similar or better operating margin over last 15 years (and definitely better post-pandemic), and better defense of SEA against DL than B6 in BOS. Plus AS does seem to have a future strategy in play with the HA merger.
I’ve flown AS long enough to remember reading in their in-flight magazine (when those were a thing) about operations of the 727 into the Russian Far East, when the hope of the post-Cold War was at it’s zenith. I doubt they ever go back to Vladivostok, but I would not at all be surprised to see them grow a transpacific operation with the HA wide bodies that is more than just from HNL. In someways this gives them the missing piece to really push back on DL in SEA (and even potentially look at routes where UA maybe has higher than average margins at SFO ). I’ve been tempted to try Zipair to NRT next time I go to Japan, AS competing with a similar product and price point would get my attention.
Off topic, and I don’t know the area, but I’ve always felt like there might be some interesting potential for tourism in eastern Siberia and the parts of Russia/Siberia near the Pacific Ocean. SEA is 100 statute miles closer to the Kamchatka peninsula than JFK is to LHR, so the distances & flight times wouldn’t be extreme, and I could see outdoor tourism having potential, in addition to mineral extraction related business travel.
Sadly, I doubt that will come to pass anytime soon, given the usual geopolitical tensions with Russia, Russia’s military sensitivity to foreigners visiting its areas near the Pacific Ocean, Russia not being perceived as being very welcoming to tourists, etc etc, but it’s interesting to imagine what could be.
This comparison to Alaska would make sense if Alaska only flew to leisure destinations from SEA, but they are profitable flying to all the cities B6 has been exiting. SEA – midwest is Alaska’s honeypot (outside of interior Alaska)
Is focusing their energy on the northeast/Florida leisure network even a good idea (especially when those yields are historically bad)?
In this environment, poor customer service issues get put into the social media spaces quickly. Seems like customer service/experience is the only angle they have now to jump on.
In addition, the House of the Mouse is in disarray due to creative direction and decisions across the theme parks and into their media outlets which is giving them a less than traditional family friendly image. That just pushes demand down. MCO does NOT have endless demand.
And frankly, Delta, United and even American are better equipped to fight back.
What has Disney done to give them a “less than traditional family friendly image” besides say that it’s ok for gay people to be part of their (or any) family? Which facts or statistics to substantiate that MCO demand has been pushed down in any way?
I guess that’s why Disney World is a ghost town….
Oh, wait…
It’s not a ghost town, but their image has been tarnished to a degree by raising prices to a point that it becomes unaffordable to the average family. Also with recent comments, it’s become an open secret that they don’t want you to come if you make under a certain dollar amount. I think it’s 100K, but I can’t recall the exact number even though I did see it.
You can look it up. Park attendance is way off. Seasoned imagineers run off or chose not to continue.
That has an effect on airlines.
https://insidethemagic.net/2024/07/disney-world-crowd-levels-2024-emd1/
https://insidethemagic.net/2023/10/attendance-dips-at-disney-world-as-worrying-trend-continue-ld1/
https://youtu.be/Hyasrd9Rt_Y?si=HjDWqO3CyHZ4FHKy
Many many other examples
I can’t wait to read the article linking the decline in “seasoned imagineers” to reduced traffic at MCO.
“There’s no real opportunity to grow in New York. The airline can keep filling out New England and Florida, but it needs to find future strategic growth opportunity.”
This is exactly what I’ve been saying. And the latest rounds of market announcements don’t instill a sense of confidence that there is a viable path forward for B6. B6 avoided airports like MHT and ISP for a long time because they are low-yield airports and would cabotage its hubs, but they are entering now because they’re running out of places to put planes.
Not being able to make money flying to FL from slot-controlled DCA is deeply concerning. They’ve abandoned EWR and failed in all of the VFR and Mint markets attempted there without ever coming close to the 75 daily departures promised. They’ve also had to give up on markets which should work such as SAT, MSP, CLT, MCI, BWI, SJD and PSP and redeployed those aircraft into the only markets that do work which is the I-95 corridor. Even along I-95, they’ve failed to make RDU, RIC, and DCA work. The industry is finally realizing that there is finite demand to FL, and B6 has proven that they cannot make anything else work. Is the growth plan to fly daily 20x JFK-FLL and MCO?
I was shocked to see they were REDUCING flights from DCA to Florida this winter. That is damning for sure if those don’t make money.
Really, “shocked” that an airline reduced service in the trough winter months? And the comment that they are losing money there to why they are scaling back dca, dca is a very good operation for B6, but when demand falls you prune back service do you don’t keep losing money. You realized AA cut back a bunch of frequencies in dca for winter also.
And rdu and ric are also string stations, where you coming with that out if no where is beyond me. They didn’t even cut back in those stations.
I think they are doing the right thing to look attractive for the next merger. M&A isn’t done yet, and if I were to guess a B6+AS tie up is in the cards. For all the chatter about AS management and how savvy they are, pursuing HA is pure folly. Complexity in fleet will drive costs sky high. And a money pit operation. For just 56 aircraft. B6 buying spirit some through it was folly for many reasons, but at least that would’ve given them 185 aircraft and a more national network!
Yes, shocked. Most airlines INCREASE flights from the NE to Florida during the winter. Florida doesn’t have “tough winter months,” Florida has huge winter months. Not to mention comparing any airline to American likely has the opposite effect that you think it does.
The rest of your reply does not make sense either as I didn’t even mention RDU and RIC and honestly don’t know whether they are “string” stations or not.
DCA is one of very few slot controlled airports. If B6 can’t make money flying its slots, they should go to an airline that can.
It’s not hard to quit doing what loses money when you have corporate raiders breathing down your neck to get on the board which will make it very apparent what works and doesn’t work at a company; same thing is happening at WN right now.
The hard part is figuring out how B6 can be viable as a premium leisure airline with a limited route map; that is what they had initially and made money then.
The competitive environment is very much changed but some competitors might see a smaller, very focused B6 as a better alternative than having them try to keep horning into other markets.
US airline stocks had a good day today as lower fuel prices and generally upbeat markets lifted many stocks. JBLU was up 7% – above the industry average of closer to 4%. JBLU is still a volatile stock but investors keep believing that B6 can figure it all out.
I tried posting multiple links several times, but the software won’t let me.
The weak redemption opportunities with jet blue points and the lack of benefits with mosaic tiles have jet blue missing the biggest profit engine of the big 3, credit card point sales.
I think jet blue has given up on corporate flyers, particularly as delta is strong at both jfk and BOS. Jet blue’s key demographics are vfr to the carribean, and northeast families that vacation in the sun and don’t fly much for work. Leaning into that demographic a bit – companion certificates for credit card spend, or included mears shuttles to Disney could help them win more of the spirit and frontier fliers.