JetBlue Airways (JBLU) shares dived after the company served up some pretty lackluster guidance in spite of a narrower-than-expected quarterly loss.
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Shares declined as much as 8% in the pre-market session on Tuesday, January 28th, after the low-cost carrier delivered a net loss of $0.21 per share in its Fiscal fourth quarter, less than the $0.29 expected on Wall Steet. However, JetBlue offered investors some pretty tame guidance for its first quarter of Fiscal 2025.
Management said its forecast for revenue per available seat mile (RASM) in Q1 2025 ranges between contraction of 0.5% and expansion of 3.5%, well below the 4.8% growth expected by analysts.
The carrier also thinks it will fly fewer flights in the first quarter, with capacity guided down between 2% and 5%, after Fiscal fourth quarter capacity declined 5.1%.
Costs to Rise at JBLU
Operating expense per available seat mile (CASM) for the fourth quarter of 2024 decreased 0.4% year-over-year, but this metric is seen rising between 5% and 7% in Fiscal 2025, with costs seen up as much as 10% in the first quarter.
Shares of JBLU have been rising recently, however, as the company’s efforts to shave costs have borne fruit.
“We have the right initiatives in place and solid momentum headed into 2025,” said Marty St. George, JetBlue’s president. “Our reliability initiatives are driving greater customer satisfaction and our network changes are in the early stages of ramp.”
He noted that efforts to expand and enhance products and perks, including the loyalty initiatives slated to launch in 2025, are going down well with customers.
“We believe the culmination of these efforts will boost our revenue performance in 2025 to ultimately drive positive operating margin for the year,” he added.
CEO Joanna Geraghty said the company had finished the year strongly, exceeding both revenue and cost expectations.
Is JBLU a Good Stock to Buy?
Overall, Wall Street has Moderate Sell rating on JBLU, based on one Buy, six Holds and four Sells. The average JBLU price target of $6.84 implies 15% downside after the stock rose by more than 36% in the last six months.
