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(Bloomberg) — JetBlue Airways Corp. withdrew its full-year financial outlook and said a slowdown in demand for air travel is poised to worsen as President Donald Trump’s trade war erodes consumer confidence.
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A sudden downturn in demand for trips during the first three months will extend into this quarter, fueled by worried consumers and concerns about the broader economy, JetBlue President Marty St. George said in a statement. Unit revenue, a measure of fares and demand, could fall as much as 7.5% this quarter, JetBlue said.
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Slowing air travel threatens to derail a plan crafted by Chief Executive Officer Joanna Geraghty to return the airline to profitability. JetBlue focuses largely on domestic trips, particularly in the northeastern US and along the East Coast, areas hit hard by the slowdown.
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“Given the macroeconomic uncertainty, we are not re-affirming our prior full-year guidance,” Geraghty said in a statement as JetBlue detailed first-quarter earnings.
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The carrier separately said it expects to announce a new partnership agreement this quarter after the breakup of talks with American Airlines Group Inc. to revive a version of their alliance in the northeastern US. That agreement was blocked by a federal judge, who ruled it violated antitrust laws. American has sued JetBlue to recover money it says is owed from an unwinding of the partnership, which focused on flights in Boston and the New York area.
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Joining forces with another airline could help JetBlue contend with an increasingly challenging environment. JetBlue’s shares rose 4.3% as of 1:41 p.m. in New York. The stock had tumbled 48% this year through Monday’s close, far worse than the S&P 500 Index’s 6% decline.
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JetBlue had already been trimming flying capacity on days with weaker demand in March and April, reducing operations in 20 cities. Revenue for each seat flown a mile rose by high-single digits during periods of peak demand in those months compared with last year, but fell by double-digits during less popular times, St. George said during a conference call with analysts and investors.
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“JetBlue, like peers, is grappling with negative consumer sentiment amidst heightened macro uncertainty,” TD Cowen analyst Tom Fitzgerald said in a note.
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JetBlue also canceled planned daily flights between Boston and Halifax, Nova Scotia. The new route — JetBlue’s first to be dropped before service began — had been set to start in June. The company scrapped the flight after travel from Canada to the US collapsed earlier this year.
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