JetBlue Airways Corp. (NASDAQ:JBLU) saw its shares soar by the most in nearly four years as the airline’s new CEO unveiled a strategic turnaround plan aimed at revitalizing operations and boosting profits.
The carrier announced it will withdraw from several cities and defer approximately $3 billion in new aircraft purchases until 2030 and beyond. This decision came alongside the company’s report of a surprise profit for the second quarter.
Under the new plan, JetBlue will shift its focus toward leisure customers in regions where it has historically performed well, such as New York, New England, Florida, and Puerto Rico. The company expects these changes, along with enhancements in on-time performance and loyalty programs, to generate an additional $800 million to $900 million in pretax profit from 2025 through 2027.
JetBlue’s stock climbed as much as 23% in midday trading, marking the largest intraday gain since November 2020. The stock had already risen over 6% this year through Monday’s close.
CEO Joanna Geraghty, who took over from Robin Hayes earlier this year, is leading efforts to turn the airline’s fortunes around amid high costs and reduced growth prospects following the end of several partnerships. To cut expenses, JetBlue will postpone $3 billion in spending on new aircraft deliveries through 2029. The revised schedule with Airbus SE now includes 44 A321neo aircraft arriving in 2030 or later, extending the timeline for new plane acquisitions.
The airline will also exit 15 cities and has already cut more than 50 routes to eliminate unprofitable operations. JetBlue President Marty St. George emphasized that while the decision to close markets and routes is challenging, the primary goal is to achieve profitability as swiftly as possible.
Geraghty, who has made returning the carrier to consistent profitability her top priority, is also dealing with pressure from activist investor Carl Icahn. Icahn revealed a roughly 10% stake in February and has been advocating for increased shareholder value. The company has since granted Icahn’s investment firm two board seats.
In the second quarter, JetBlue reported earnings of 8 cents per share, exceeding Wall Street’s expectations for a loss. However, the company projected lower revenue and higher non-fuel unit costs than analysts anticipated for both the current quarter and the full year.
JetBlue also indicated that flying capacity will remain at 2024 levels through next year due to ongoing engine repairs. The number of aircraft grounded because of issues with geared turbofan engines from RTX Corp.’s Pratt & Whitney unit is expected to rise to the mid-to high-teens from approximately 11 today, according to Geraghty, who described the situation as “incredibly frustrating.”
Adding to the challenges, JetBlue is expanding without the advantage of acquisitions, as federal courts recently blocked its regional alliance with American Airlines Group Inc. (NASDAQ:AAL) and its planned $3.8 billion acquisition of Spirit Airlines Inc. (NYSE:LUV).
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