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JetBlue Plans to Cut Capacity to Restore Reliability

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By Sam Boughedda

Investing.com -- JetBlue Airways Corp (NASDAQ:JBLU) stock dipped in early Tuesday trading despite the company reporting a narrower loss and revenue beating forecasts.

The airline posted an adjusted loss per share of 80 cents on revenue of $1.74 billion. Analysts polled by Investing.com expected a loss per share of 87 cents on revenue of $1.73 billion.

The company reported capacity declined by 0.3% year over three, compared to its guidance for capacity to decline 1% year over three.

They added that first-quarter results were "characterized by a very strong demand acceleration," with revenue coming in more than six points ahead of its initial view in January.

After Delta (NYSE:DAL) and American Airlines (NASDAQ:AAL) reported that they expect to return to profitability in the current quarter, it suggests that the post-pandemic travel recovery is underway.

However, the airline industry is still facing headwinds in the form of rising fuel prices. For example, JetBlue said the realized fuel price in the first quarter was $2.90 per gallon, a 41% increase versus the first quarter of 2019 realized fuel price of $2.05.

In addition, the airline is reducing capacity growth further to restore operational reliability.

"These actions will create more resiliency in the operation, and set us up for a better May, and an even better June and strong summer peak," stated Robin Hayes, JetBlue’s Chief Executive Officer.

For the full-year 2022, JetBlue said it now plans to grow capacity between 0% and 5% versus 2019.

For the second quarter, it expects capacity to increase between 0% and 3% year over three, with revenue forecast to increase between 11% and 16% year over three. This includes up to a four-point revenue impact from the operational disruption in April.

JetBlue stock is down more than 7% following the report.

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