JetBlue raised its second-quarter fuel cost guidance on Monday after jet fuel prices climbed sharply, a move that sent its shares lower and added fresh pressure to an airline market already rattled by higher costs.
The carrier lifted its outlook to $4.26-$4.36 per gallon from $4.13-$4.28, according to a Securities and Exchange Commission filing. JetBlue shares were down more than 5.1% to $5.18 around 3:15 p.m. EDT, after falling as much as 9% earlier in the session. The stock move came as airline investors again focused on fuel, one of the industry's biggest expenses, with jet fuel prices rising to about $142 per barrel in May after running at $85-$90 per barrel before the U.S. and Israel began air strikes on Iran on Feb. 28.
Marty St. George, JetBlue's company executive, said demand remained "strong and consistent" and positive "across all cabins and geographies," with "overperformance" on routes once served by Spirit Airlines, which shut down in May. The company also said it expected to recapture 40% or more of its increased fuel costs in the second quarter. That support matters because JetBlue suspended full-year guidance in April and had already warned in that month it would slow hiring and raise airfare, steps that showed the carrier was trying to protect margins even before Monday's revision.
The friction is that strong demand is not protecting the stock. JetBlue was not alone in Monday's selloff: Delta Air Lines fell about 1.3%, American Airlines lost about 1.8%, United Airlines dropped 2.3% and Alaska Airlines fell about 3% around the same time, underscoring how quickly the fuel surge is being translated into weaker share prices across the group. JetBlue's own second quarter now becomes the test of how much of the higher fuel bill it can actually absorb after the expected recapture, and that gap is what investors will be watching next.
