JetBlue's quarterly loss widens as jet fuel costs climb

what happened

JetBlue Airways reported a wider adjusted loss for the quarter ended September 30, Reuters said, as higher fuel expenses outweighed gains from fares and extra fees. The loss came to 60 cents per share, against 40 cents a year earlier and a 55-cent loss expected by analysts polled by LSEG.

The airline paid an average of $3.91 per gallon of fuel in July through September, 57% more than a year before and slightly below the $3.96 it had forecast last month. Unit revenue rose only 18.4%. Even so, JetBlue lifted its full-year unit revenue growth forecast to 13.5%-14.5% from 10%-12.5%, and ended the quarter with $2.2 billion of liquidity.

Shares rose 8% in choppy trading after the bell, having fallen nearly 10% earlier in the session after reports that creditors were working with restructuring advisers amid debt concerns.

why it matters

Fuel is one of the largest costs for airlines, so when jet fuel climbs faster than fares, margins shrink even as revenue grows. JetBlue's results show US carriers trying to pass costs on to passengers through higher fares, bag fees and capacity limits, a strategy that has not fully worked for this carrier. Its debt burden makes the stock especially sensitive to fuel price swings and restructuring news.

market impact

US airlines and jet fuel: higher fuel costs squeeze margins; JetBlue (JBLU) faces added pressure from its debt load

tags

instruments