JetBlue trims routes to boost profitability post-Spirit deal fallout

JetBlue (JBLU) has officially canceled its proposed merger with Spirit Airlines after failing to secure regulatory approval. In the wake of this development, the company has announced its intention to cut certain flight routes as part of a broader strategy to refine its long-term initiatives and enhance financial performance.

Yahoo Finance's Seana Smith and Brad Smith break down the details.

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Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Shares of JetBlue as the company looks to eliminate some flight routes and end service at several cities. The move, coming after the termination of its merger with budget carrier Spirit Airlines. We should also note, it comes after we saw a successful challenge to the Northeastern alliance that had had with American Airlines.

That of course, much of the discussion last year and, ultimately, now, it's put JetBlue in a position to try and figure out where they're going to spur in a demand environment that is increasingly leaning more premium, where it's going to spur more of those opportunities to continue to transport consumers.

And ultimately, the company saying when they moved away from, and had to scrap that deal with Spirit, that it was going to give some additional details on the long term strategy, the initiatives for costs. And that investor day is going to take place on May 30. We'll see what more they have to say going ahead of that event and into that event as well.

SEANA SMITH: Yeah. It certainly will. I mean, this is a company obviously struggling just in terms of regaining that momentum and has seen pressure on its business. Obviously, the fact that the merger with Spirit was blocked adding some uncertainty there, some questions about their ability to compete with those larger players, Brad, that you were just talking about.

So the fact that they are realigning or adjusting, I should say, their routes are focusing on the routes that they see as more profitable. Now, when you take a look, many of those is on the East Coast, Puerto Rico. They're also announcing more routes or more service to Orlando, one of the other airports and Tampa, where they are adding capacity.

So JetBlue, it's been under some pressure, revenue had been falling. They also posted a net loss there. So at least the argument that they are making is that these adjustments are going to pay off in the long run and will help the airline better compete with some of those larger players.

BRAD SMITH: Yeah. Nine routes out of L.A, it sounds like among those impacted here, also some of those Fort Lauderdale, Florida flights. And then Kansas City, Missouri found itself really linked in with some of the more exotic flight routes that this company was taking to Bogota, Colombia, and Quito, Ecuador, Lima, Peru as well. And then naturally, they mentioned Kansas City, Missouri right after that.