JetBlue Falls Most Since January as Outlook Cut on Storm, Demand

(Bloomberg) -- JetBlue Airways Corp. dropped the most since January as the carrier lowered its forecast for a key financial gauge, citing soft demand, particularly in politically unstable Puerto Rico, and the effects of Hurricane Dorian.

Revenue for each seat flown a mile, a measurement of pricing power, will be flat at best and could drop as much as 2% in the third quarter, the airline said in a regulatory filing Wednesday. JetBlue previously forecast growth in so-called unit revenue of between 0.5% and 3.5%.

The Caribbean was the focal point of the revised outlook, though JetBlue cited weaker than forecast demand across its system. Puerto Rico, a reliable holiday travel destination, has been wracked by a political crisis and last month installed its third governor in five days. Dorian largely missed the island, though it punished the Bahamas and disrupted flight schedules.

Companies have been relying on consumers to keep the U.S. economy afloat despite the trade war with China, and investors have been on edge for any signs of weaker demand. JetBlue is more reliant on discretionary leisure trips than larger U.S. carriers, however, and United Airlines Holdings Inc. and Delta Air Lines Inc., which are bolstered by business travel, offered more sanguine outlooks Wednesday.

JetBlue fell 4.8% to $16.35 at 10:26 a.m. in New York after sliding as much as 5.4%, the biggest intraday drop since Jan. 10. The shares had climbed 6.9% this year through Tuesday while a Standard & Poor’s index of nine U.S. airlines gained 5.7%.

Puerto Rico

As recently as July, operating chief Joanna Geraghty had told analysts that demonstrations in Puerto Rico were having no material financial impact. Now the company says softer bookings on the island will hurt unit revenue by 1.25 percentage points. The preliminary forecast for the effect from Dorian, which swept through the Caribbean this week, lopped off 0.75 percentage point.

Weaker than expected demand across its system lowered the forecast by 1 percentage point, New York-based JetBlue said without providing details.

Other airlines were more optimistic Wednesday as they made presentations at a Cowen & Co. investor conference. United kept its outlook in line with previous forecasts, while Delta said demand remains strong and the revenue environment remains solid.

Delta’s costs per available seat mile will be at the high end or slightly above its previous forecast of up 1% to 2%, Chief Financial Officer Paul Jacobson said at the Cowen conference.

“We continue to see pockets of challenges ex-China and ex-Europe, but the domestic system is really overcoming that,” he said.

--With assistance from Mary Schlangenstein.

To contact the reporters on this story: Tony Robinson in New York at trobinson72@bloomberg.net;Anthony Palazzo in London at apalazzo@bloomberg.net

To contact the editor responsible for this story: Brendan Case at bcase4@bloomberg.net

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