jetBlue Airways reluctant to cut capacity despite uncertain revenue performance outlook

jetBlue Airways had a tough start to 2017, projecting a unit revenue decline of 8% to 9% for the first month of the year. The airline's Jan-2017 unit revenue performance sets the stage for an overall negative performance in 1Q2017, and the company is offering little visibility into its outlook for 2Q2017.

The airline has outlined various factors for the surprising unit revenue decline for Jan-2017, including timing of YE2016 holidays, its new service to Cuba, and additional service from Newark Liberty International. After the less than stellar results for Jan-2017, investors were looking for jetBlue to offer remedies for the weak performance, but for the moment the company is keeping its 2017 capacity projections intact. The back and forth is a classic example of markets demanding immediate action when airlines aim to take a more measured approach in adjusting their strategies.

Investors are already concerned about the overall financial performance of US airlines in 2017 as unit costs are rising faster than unit revenues. jetBlue is facing its own cost inflation during 2017, and its rocky start will result in its revenue performance being closely scrutinised, with the potential calls for capacity cuts growing louder.