JetBlue Airways is planning to reduce numerous financially-draining routes, including those from Los Angeles, and stop providing services to multiple cities. This decision forms part of JetBlue's ongoing strategy to cut costs, according to a memo shared with staff.
The airline is currently making a loss and is experiencing external pressure to reduce its costs and become profitable once again. This need comes after a dip in performance projections for the upcoming year. In late January, JetBlue reported a net loss for the fourth quarter in comparison to a profit gained during the same period in the previous year. Furthermore, JetBlue predicted decreases in revenue and capacity for the first quarter and for the fiscal year 2024.
Moreover, in February, activist investor Carl Icahn disclosed a nearly 10 percent stake in JetBlue and secured two board seats. He revealed this in a filing with the U.S. Securities And Exchange Commission, explaining his belief that the airline's shares were undervalued.
Adding to the airline's difficulties, JetBlue was unable to finalize its anticipated acquisition of Spirit Airlines Inc., due to unsuccessful attempts at meeting required closing conditions, such as the acquisition of necessary legal and regulatory approvals. As a result, JetBlue has agreed to pay Spirit $69 million.
JetBlue also has restricted aircraft availability as some of its Airbus planes were grounded whilst checks were made for Pratt & Whitney engine issues.
The airline plans to decrease its departures from Los Angeles International Airport to roughly 24 from the present 34 a day. The proposed reductions include flights from Los Angeles to San Francisco, Seattle, Miami, Las Vegas, Reno, and Puerto Vallarta, among others.
JetBlue is also discontinuing flights to chosen cities in Colombia, Ecuador, Peru, and in Missouri, among others too.
The firm's future strategy will focus on benefiting from profitable transcontinental routes, with priority on its Mint business class cabin. JetBlue also plans to concentrate on specific routes along the East Coast and those serving popular Caribbean vacation destinations.
Dave Jehn, JetBlue's vice president of network planning and airline partnerships, stated that these changes would allow the company to transfer its fleet to increase frequencies on successful routes from JetBlue's focus cities. Meanwhile, it will also help increase crucial ground time for the aircraft, lowering the risk of delays for passengers.
Meanwhile, the proposed changes will not affect the airline's planned capacity for fiscal 2024, which is expected to be slightly lower.
In response to unimpressive fourth-quarter results, JetBlue is taking aggressive action, including initiating revenue initiatives worth $300 million, in an attempt to return to profitability. In addition, the company is working towards realizing savings estimated between $175 to $200 million by the end of 2024, aided by Ursula Hurley, JetBlue's chief financial officer, who confirms the company's close examination of greater cuts to controllable expenditure beyond its current fleet modernization and structural cost programs.
