JetBlue shares surge most since 2020 on new CEO’s turnaround plan

(Bloomberg) — JetBlue Airways Corp. (JBLU) shares jumped the most in nearly four years after the company’s new chief executive outlined plans to revamp the company’s operations and boost profits.

JetBlue Airways said Tuesday it plans to pull out of more cities and make about $3 billion in new aircraft purchases through 2030 and beyond, as it reported a surprise second-quarter profit.

JetBlue is moving to focus more on leisure customers in New York, New England, Florida and Puerto Rico, regions where it has historically had strong operations. The change, along with improvements in on-time performance and other areas such as enhanced loyalty benefits, should generate an additional $800 million to $900 million in pre-tax earnings from 2025 to 2027, the company said in a statement.

JetBlue shares were up 23% as of 12:02 p.m. in New York, the biggest daily gain since November 2020. The stock had risen more than 6% this year through Monday’s close.

The moves are the latest in Chief Executive Joanna Geraghty’s efforts to revive the carrier’s fortunes in the face of ever-rising costs and dwindling growth prospects following the dissolution of multiple partnerships.

To cut costs, JetBlue will defer spending $3 billion on new aircraft until 2029. The renegotiated delivery schedule with Airbus now calls for 44 A321neos to arrive in 2030 or later, extending a previous plan to defer spending on new aircraft.

The company said it would also exit 15 cities as part of a refocusing of its network, which has now cut more than 50 routes to trim unprofitable flying.

“While it is difficult for us to make the decisions to close markets and close routes, our primary goal is to move to profitability as quickly as possible,” JetBlue CEO Marty St. George said during the company’s earnings call.

Geraghty, who took over from Robin Hayes earlier this year, said her top priority was to return the carrier to consistent profitability, which it has not seen since 2019. She is also facing pressure from activist investor Carl Icahn, who disclosed a stake of about 10% in February and has been pushing to boost shareholder value. The company has since given his investment firm two seats on the board.

Second-quarter earnings came in at 8 cents a share, beating Wall Street expectations for a loss. At the same time, JetBlue forecast lower revenue and higher non-fuel unit costs than analysts had expected for the quarter and the full year.

The company added that flying capacity should remain at 2024 levels through next year as more of its aircraft are grounded for long-term engine repairs.

The story continues

JetBlue’s fleet of planes is grounded because of faulty turbofan engines made by Pratt & Whitney Inc., a unit of RTX Corp. The number of grounded planes is expected to rise to the mid-to-high teens next year from about 11 today, Geraghty said, calling the situation “very frustrating.”

JetBlue faces an additional challenge in growing without the benefit of acquisitions. Earlier, federal courts struck down a regional alliance with American Airlines Group Inc. and blocked JetBlue’s planned $3.8 billion takeover of Spirit Airlines.

(Updates on stock activity, executive comments from first paragraph. An earlier version corrected reference to second-quarter earnings results.)

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