Skift Take
JetBlue is doing its best to ensure its cost-cutting approach won't affect passengers. But on the periphery, the airline's customers might notice some differences as JetBlue tries to remove $300 million in non-fuel cost by 2020.
As JetBlue Airways retrofits its oldest aircraft, making them look factory fresh with new leather seats and high-definition television screens, it is earning higher satisfaction marks from travelers, according to its customer survey data.
But the airline, which reported second quarter earnings Tuesday, is not winning similar plaudits from investment analysts, as some question whether JetBlue can control costs and deliver the industry-leading margins it seeks as it grapples with spiking fuel costs.
JetBlue reported a pre-tax net loss for the quarter of $160 million. The loss isn't a big concern for analysts, since it includes a pre-tax impairment charge of $319 million related to the carrier's decision to retire its Embraer E190 fleet sooner than expected. Instead, it will add 60 new-technology Airbus A220-300s, with deliveries beginning in 2020. JetBlue expects the replacement jets to produce better revenue at lower costs.
What's more concerning is that, without the impairment charge, JetBlue's profit growth fell considerably. Without the charge, JetBlue would have reported $159 million in pre-tax profit, a 51 percent decrease, year-over year. JetBlue's pre-tax margin was only 8.2 percent, off 9.5 points compared to last year, when the impairment i
