JetBlue Airways CEO Joanna Geraghty told staff that the carrier is implementing a host of new cost cuts as softer-than-expected travel demand is making break-even operating margins this year “unlikely.”
“We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost this year and our path back to profitability will take longer than we’d hoped. That means we’re still relying on borrowed cash to keep the airline running,” Geraghty said in a note to staff dated Monday, which was seen by CNBC.
JetBlue didn’t immediately comment.
JetBlue will further cut off-peak flights and trim unprofitable routes. It will also pause plans to retrofit four of its older Airbus A320 jets with new interiors and park them, while the six remaining jets slated for the refurbishment are still on track for next year, Geraghty wrote.
The carrier is also assessing its hiring plans and could combine some leadership roles and rein in travel spending, according to the memo.
U.S. carriers have announced plans to trim capacity, particularly in the second half of the year, as bookings for domestic travel came in weaker than expected this year and fares fell. Airfare in May was down 7.3% compared with last year, according to U.S. Department of Labor’s inflation report.
The carrier has been looking for ways to increase revenue and reduce costs after its acquisition of budget Spirit Airlines was blocked by a federal judge. That failed merger came after judge blocked its Northeast U.S. alliance with American Airlines in 2023. The airline last posted an annual profit in 2019.
Last month, JetBlue announced a new partnership with United Airlines that will allow customers to book flights on each other’s airline and earn and use frequent flyer programs.
Geraghty, who took the reins at JetBlue in February last year, told staff that while the carrier is assessing its hiring plans, it will continue to bring on new frontline employees and fill other positions, including a new director for the United partnership, “given its importance to our business.”
JetBlue has invested heavily in premium-class seats in an effort to win over travelers willing to splurge on their trips. The memo said it’s still planning to outfit some of its planes with its first domestic-first class and build airport lounges.
“These are the building blocks of a stronger JetBlue, and they remain in motion,” Geraghty said.
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