Vacations in turmoil as JetBlue slashes flights
Vacations have been thrown into turmoil after JetBlue announced plans to slash summer flights. The budget airline is launching new cost-saving measures after weak travel demand is threatening its bottom line.
JetBlue admitted that its chances of breaking even this year are 'unlikely', in a memo seen by Reuters. As a result the carrier is planning to wind down less popular routes and cutting its leadership team, CEO Joanna Geraghty told employees in the note.
'We're hopeful demand and bookings will rebound, but even a recovery won't fully offset the ground we've lost this year and our path back to profitability will take longer than we'd hoped,' Geraghty said. US airlines have taken a hit after President Trump's aggressive trade policies and border crackdowns have seen a significant pullback in travel to the US.
JetBlue is not alone in scaling back capacity ahead of the summer travel season, with United also cutting four in every 100 of its domestic flights . 'While most airlines are feeling the impact, it's especially frustrating for us, as we had hoped to reach break-even operating margin this year, which now seems unlikely,' Geraghty explained.
JetBlue is under additional financial strain as it us undergoing inspections of some of its engines, which has grounded a number of its aircraft. In other efforts to cut costs the airline is planning to park six of its Airbus jets instead of retrofitting them as initially planned. It comes after JetBlue previously pulled its full year forecast in April to readjust to the new demand environment.
The company also previously announced its plans to make a $3 billion saving by deferring buying 44 new Airbus jets. JetBlue's shares are down more than 44 percent so far this year. Earlier this year United announced it would be axing flights due to a dip in demand for US travel.
'The softer economic situation is creating softer demand for travel,' CEO Scott Kirby told investors on the airline's first quarter earnings call in April. United said it also saw flights coming out of Canada see a 9 percent dip, with the rest of international demand coming in to the US down 6 percent. Canadians have been boycotting US travel after Trump threatened to make America's northern neighbor the '51st state.'
As a result air travel dropped 13.5 percent in March compared to the same time last year. Flair Airlines was forced to abandoned its routes from Vancouver and Calgary to Phoenix, Arizona as a result of such low demand. Tourist hotspots that rely heavily on Canadian visitors, such as Buffalo, New York and Old Orchard Beach in Maine have seen dramatic drop-offs in visits. Some hotspots such as Palm Springs in California have even hung signs begging Canadians not to boycott them .
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