JetBlue stock gains even as fuel surge drives wider-than-expected loss

Shares of JetBlue Airways gained about 6% Tuesday, reversing a 6.2% decline in the previous session, despite the carrier reporting a wider-than-expected first-quarter loss driven by rising fuel costs. 

The airline posted an adjusted loss of 86 cents per share on revenue of about $2.2 billion for the first three months of the year.

This compares with a loss of 59 cents per share a year earlier.

Analysts had expected a narrower loss of 73 cents per share on similar revenue, according to FactSet.

On a net basis, JetBlue reported a loss of $319 million, up from $208 million a year earlier.

Revenue rose roughly 4.7% year-on-year to $2.24 billion, broadly in line with expectations.

Fuel costs remained a major headwind.

Average fuel prices rose 15% to $2.96 per gallon in the first quarter, and the company expects prices to climb further to between $4.13 and $4.28 per gallon in the current quarter.

The stock lost some of the gains and was trading up 4.27% at $5.13 at the time of writing.

Capacity cuts and Fort Lauderdale expansion in focus

To mitigate rising costs, JetBlue said it would cut capacity, particularly during off-peak travel periods.

Capacity declined 1.7% in the first quarter and is expected to be reduced further, including a nearly one percentage point cut in the second quarter versus prior expectations.

The airline also plans to reduce capacity in the second half of the year by at least 2 to 3 percentage points compared with earlier forecasts.

It expects to recapture 30% to 40% of fuel costs in the second quarter and fully recover those costs by early next year.

Despite these reductions, available seat miles—a key capacity metric—are projected to increase between 1.5% and 4.5% in the current quarter.

Fort Lauderdale, Florida, continues to be a key growth driver.

The company said the hub accounted for all expected capacity growth in the second quarter, after capacity there jumped 23% in the first quarter while overall system capacity declined.

JetBlue is expanding its presence in the city with new routes and increased frequencies across high-demand markets, reinforcing its role in the airline’s network and revenue strategy.

Strong demand offers some support

Despite cost pressures, JetBlue pointed to strong demand trends as a supportive factor.

“Demand trends strengthened as the quarter progressed, supporting improved yields, even in the face of a challenging operational environment,” said Joanna Geraghty.

The airline expects revenue per available seat mile to increase between 7% and 11% in the second quarter, following a 6.5% rise in the first quarter.

However, rising fuel prices continue to pose a challenge, particularly for low-cost carriers.

Airlines such as United Airlines and Delta Air Lines have been able to offset higher costs by raising fares, while JetBlue’s pricing model limits its flexibility.

JetBlue shares are still up about 12% so far this year, including a 24% gain over the past month, reflecting a broader recovery in airline stocks.

However, the latest results suggest that persistently high fuel costs could weigh on margins and test the sustainability of that rebound.