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JetBlue cuts profit view after ending codeshare deal with American Airlines

Aug 1 (Reuters) - JetBlue Airways Corp (JBLU.O) cut its full-year profit forecast on Tuesday, citing a hit from the termination of its revenue-sharing deal with American Airlines (AAL.O) and signs of slowing demand for domestic leisure travel.

Shares of JetBlue fell 8% in premarket trading after the carrier said it was now expecting a full-year adjusted profit of 5 cents to 40 cents per share, compared with its previous forecast of 70 cents to $1 per share.

Calling the forecast extremely disappointing, TD Cowen analysts said, "JetBlue is caught in the cross-hairs of slowing domestic leisure air travel demand, operating in some of the most constrained US airports, and dealing with idiosyncratic distractions (NEA wind-down, SAVE merger lawsuit)."

JetBlue - which is in the process of taking over Spirit Airlines - and American Airlines are winding down their Northeast Alliance following a U.S. judge's order in May that cited competition concerns. The partnership allowed the two carriers to coordinate flights and pool revenue.

JetBlue is also dealing with the snag in Pratt & Whitney's engines that power Airbus' (AIR.PA) popular A320neo jets and could face the prospect of grounding planes and trimming flight capacity amid a busy summer travel season.

"While we remain on track to deliver a profitable year and record revenue performance, we are taking action, including redeploying capacity to mitigate these current challenges and improve margins," JetBlue Chief Operating Officer Joanna Geraghty said.

JetBlue, however, beat estimates for second-quarter profit, aided by strong travel demand amid a post-pandemic travel boom as flyers cut spending on goods to fund experiences.

"Overall leisure demand trends are healthy and we continue to see robust demand during peak periods," Geraghty said.

The company reported a profit of 45 cents per share for the quarter through ended June 30, compared with analysts' average estimate of 44 cents per share, as per Refinitiv data.

Its revenue increased by 6.7% to $2.61 billion, in line with expectations.

Reporting by Kannaki Deka in Bengaluru; Editing by Anil D'Silva

This article originally appeared on Reuters

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