JetBlue Slides As Fuel Costs, Weather Muddy Outlook

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00:00It's not just that JetBlue's shares are declining, they're plunging down 11 percent.

00:04So something about this earnings report really bothered investors.

00:07Yes. As we saw the reports come in, we would have expected, I think, the 4Q

00:12company guidance to be a little bit better. So JetBlue particularly affected by Spear Airlines.

00:21And so as Spear Airlines is going through its shrinkage, they're going to cut like 32 percent

00:26of seats in 4Q. I would have expected that to be reflected a little more in company guidance for

00:32fares. And what we saw was fares kind of look like they're still going to be down pretty decently

00:37at JetBlue in 4Q. And, you know, I think Spirit is sort of consolidating at Fort Lauderdale,

00:45which is one of JetBlue's focus cities, one of their three focus cities. So I think that presents,

00:51you know, an even larger challenge for JetBlue. JetBlue cash is about, it's a little bit above

00:57where we'd like to see it, right? They've had a series of losses this year and they've been using

01:02cash. And so as they go into next year, they're talking about raising cash for some 700 million

01:08plus they need in CapEx, which would be a bunch of airplanes and other items they're going to spend

01:14money on. I mean, we're probably at a level of cash at JetBlue that we they could come down a bit on it,

01:20but we don't see them. We don't see those cash balances come down dramatically. We don't see a great

01:25backdrop for profitability into 2026. Management didn't really talk it up that much. So I think

01:33that's the challenge we're kind of watching right now at JetBlue. JetBlue sounds very much like it's still a

01:37turnaround story that hasn't really hit its stride yet, because I don't recall you're talking about cash levels

01:42at Delta or United when we covered those earnings. What is it about JetBlue that is that puts it in a

01:48more challenging position? It's not one of the premium carriers the way that Delta and United have

01:53kind of positioned themselves. It's also not the budget airlines that Spirit has positioned itself

01:57as. Agreed. So it kind of lives in that middle ground. And I think that middle ground is pretty

02:01hard right now. Right. So it's so hard, though, because I think, you know, I think sort of the basic

02:06economy, the back of the airplane is just really challenged for fares because there's just too much

02:12supply right now. And I think if you're if you're I know if you're Delta, United and to some extent

02:18American, one of the things that you're using both premium demand to bring you more revenue for,

02:26you know, from every flight and you're using your loyalty program where you've got your credit card

02:31in the hands of your loyal flyers. They're out buying their groceries, their dinners on it.

02:36You're getting that loyalty stream, which is boosting your your income. JetBlue, you know,

02:42it's kind of in the middle ground there. It's got it's got a bunch of loyal customers.

02:46I have their credit card. Do you? OK. But they're not Delta, right? They're not.

02:50It's not a brand that look that looks that nice from a premium perspective and they can't sort of

02:56take you around the world. So we see a couple hundred million dollars or I think less than that,

03:01one hundred fifty million dollars from loyalty premium per quarter. Delta is in the two billion

03:07dollars. It's a different ballpark entirely. And yeah. And everyone sort of down here in the basic

03:11economy world where the customer is a little more mercantile. They're a little more focused just on

03:17fare. They're having to lower fares to put people in the airplane. And that's hurting results. Yeah.

03:23Again, I look at the news release on JetBlue's earnings and the company is talking about things like

03:29the shutdown and how much that's affecting it. This is not something that mattered when we looked at Delta

03:35or United's results at all. They're talking about rising fuel prices, the hurricane going through the

03:40Caribbean. These are all external factors that are kind of hitting the airline all at once. And I would say

03:46those probably those aren't in the guide from what I hear from management. But I think even more

03:52interestingly, they're talking about lounges right at JetBlue. Right. So now the whole market is going premium,

03:59going upstream. It'll be very interesting as we watch 2026 develop. There's a lot of airlines that are

04:05bringing more premium seating. They're all redoing their credit card agreements. They're all focused on getting

04:11that loyalty revenue up. So that space airlines typically run to where the money is. Yeah. That space will probably get

04:18pretty crowded as we get into 2026.

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