Unlike the boom years coming out of the Covid-19 pandemic, we’ve seen a softening in the airline industry over the last few years. While some airlines are still reporting robust profits, others are struggling.
Multiple carriers have declared bankruptcy within the last year and Silver Airways ceased operations entirely earlier this month, further proof of the struggles that the industry is facing.
JetBlue is Looking to Return to Profitability
While company financials haven’t pushed the carrier towards bankruptcy, JetBlue has been struggling to return to profitability. The carrier introduced its JetForward strategy last year and has made multiple changes across the organization in pursuit of that goal.
In the last year we’ve seen the New York based carrier defer aircraft deliveries, make changes to its route network, sell its venture capital subsidiary, and develop a partnership with United Airlines. While these changes have no doubt helped, it doesn’t appear that enough has been done to improve the situation as quickly as originally thought.
In a memo to employees obtained by ATX Jetsetter, the carrier notes that “Economic uncertainty has shaken consumer confidence and softened travel demand.” The memo goes on to state that the company is now unlikely to meet its goal of a break-even operating margin for 2025.
JetBlue is Making Significant Changes as a Result of its Financial Position
In the memo, the carrier calls out multiple changes that are being made in order to support a return to profitability. While there are seven in total, a few stand out above the rest.
More Network Changes are Coming to JetBlue
We’ve seen JetBlue pull out of and add many new routes as part of its JetForward strategy. While it appeared that the bulk of those changes were complete, the memo notes that:
“We continue to look for opportunities to wind down underperforming routes and shift flying to places with profit potential. We expect to have some changes to announce over the next few weeks, and while it’s always disappointing to end service it opens the door for us to find new routes to fly.”
I look at airports like my home airport, Austin-Bergstrom International (AUS) as a potential casualty here. While I have no official information on any changes, JetBlue is down to a single daily flight to Boston (BOS) after cutting its route between Austin and New York-JFK. That can’t be a very profitable route and JetBlue may try and offload some similar routes considering its new partnership with United.
Staff Reductions are Underway
The most unfortunate piece of news comes in the form of staff reductions. According to the memo, JetBlue will reduce the number of officers and directors within the organization, stating:
“We have been assessing the size and scope of our leadership team and have identified ways combine or restructure certain roles for greater efficiency at the leadership level.”
The airline is also reducing the budget for support centers and is evaluating hiring, business partner spending, and the purchases of other services in that space. I’ve confirmed with a JetBlue employee that while not explicitly mentioned in the memo, layoffs began in the carrier’s New York office yesterday.
Additional Changes at JetBlue
In addition to the changes outlined above, JetBlue has made additional decisions as a result of its financial state. The carrier will reduce capacity to match weaker periods of demand, specifically on Tuesdays and Wednesdays, and reduce frequencies on routes. These reductions have already been reflected in the carrier’s schedule, absent route cuts.
JetBlue will also delay restyles for some of its Airbus A320 “Classics”. The carrier has 10 remaining in the fleet and originally planned to restyle all of them by 2026. Now, the airline will defer restyles on four aircraft and park them at the end of the summer travel period. Finally, the airline is cracking down on travel costs for employees and is reducing some optional, non-operational trainings.
My Thoughts
JetBlue is in an unfortunate situation that largely isn’t its own doing. The carrier had the Northeast Alliance with American Airlines ripped up by a judge and had a proposed merger with Spirit Airlines blocked by federal antitrust regulators, both of which could have provided some support to the airline.
At this point, the only viable path forward that I see is via a merger. JetBlue’s network primarily serves the Northeast United States and Florida which has a ton of competition from legacy carriers and ultra-low-cost carriers (ULCCs).
The airline is run by smart people that by all accounts have been put in a bad situation. I feel for the employees and I hope that they can get things turned around soon, though the memo paints a dire picture of the current state of things. I continue to believe that the airline would be a great merger candidate for a company like United that wants access to JetBlue’s slots and routes in the northeast.
Summary
JetBlue is making some significant changes as economic headwinds have slowed the companies plan to return to profitability. Hopefully the situation at the company improves and they are able to emerge from this with as little impact as possible.