JetBlue joins the collection of US carriers slashing its schedule in response to a drop in demand. The carrier now intends to reduce fly by 40% in April and May, with an expectation of “substantial” cuts in June and July as well. In a letter released this morning the carrier called attention to the financial trouble it faces and how it is addressing some of them. Moreover, JetBlue executives do not believe that the recovery will be a quick one.
With safety our #1 value, we continue to take the measures necessary to protect your health. But as it relates to our business, we are not going to sugarcoat it. Demand continues to worsen, and the writing is on the wall that travel will not bounce back quickly.– An open letter to JetBlue crew members
The passengers (and revenue) simply are not there
How bad is the cash flow situation for JetBlue? On a typical day in March 2019 the carrier saw $22 million in revenue. So far in 2020 March averaged only $4 million in revenue. On top of that the carrier says it is issuing $20 million in credits to customers on a daily basis. The money needed to continue operations at the current levels.
JetBlue indicated it secured an additional $1bn credit facility to increase liquidity but also expects that some government intervention will be necessary to keep the operations running smoothly.
Schedule and Fleet Cuts at JetBlue
The most immediate move by the carrier is to trim its schedule. A week ago the plan was a 5% cut in capacity. Today that plan involves at least 40% cuts for the next two months. CEO Robin Hayes notes that some aircraft will be grounded as a result. Specific details on which routes and flights are to be cut will be released in a phased approach to ease the burden on support staff.
JetBlue is also reviewing its fleet plan. The carrier announced at the beginning of the year plans to lease four A321 aircraft to make up for delivery delays on new A321neo planes from Airbus. That lease is now deferred, even after the first plane made the trip from Europe to North America. Moreover, JetBlue is now working with Airbus to slow deliveries and reduce aircraft pre-delivery payments associated with the new planes as the airline seeks to preserve cash.
JetBlue also expected to take delivery of its first A220 aircraft this year as that fleet refresh begins and the E190s move towards retirement. Presumably delays on that front are also part of the conversations with Airbus, though neither party provided further details.
Cutting spending, slowing Fleet Upgrades
Not explicitly mentioned in the release is that a delay in deliveries also likely affects the carrier’s plans for a new Mint business class product. It could also affect the planned launch of service to London, previously anticipated for Q1 2021. Both of those efforts require the new aircraft deliveries with the new on-board product.
Without the new planes the new services will not happen. PaxEx.Aero understands that flight attendant training on the new Mint product is now delayed indefinitely.
The carrier was also slated to complete its A320 restyling project during the 2020 calendar year. In many cases the necessary hardware (ie seats, IFE systems) has already been purchased and is sitting in a warehouse waiting for installation. There was rumor some of it would be used for the leased A321s as the A320s were progressing more slowly through the process this year. Depending on which aircraft JetBlue chooses to ground during this time some could return to service with the new interior, though likely not too many given the cash costs of performing those retrofits. The company indicated it “paused or stopped more than 75% of these projects and will continue to stand down work wherever we can.”
More on COVID-19 and the airlines affected
- Alaska Airlines offers elite bonus earning in face of COVID-19 booking weakness
- Massive cuts, uncertain recovery timelines for aviation in the face of COVID-19
- Qantas cuts international 25% through September facing coronavirus-induced demand drop
- Spirit Airlines plans 5% growth reduction for April as COVID-19 hurts demand
- American Airlines slashes schedule, increases flexibility for customer rebookings
- US to block some European visitors
- Two key takeaways from American’s latest schedule cuts
- Regulators suspend slot rules, opening door to deeper airline cuts
- Beyond route cuts, airlines initiate extended suspension of operations
- Gogo looks to ride out coronavirus-related dip in demand
- Trans States Airlines: The first US airline victim of COVID-19
- JetBlue removes 40% of capacity, delays new deliveries as demand drops
- Airlines get a break on coronavirus EC261 comp, looking for more
- Airport lounges shutter as airlines slash capacity
- Will COVID-19 delay the opening of Berlin Brandenburg Airport?
- Qatar Airways plans 75% capacity cut in response to COVID-19
- Emirates, Turkish Airlines slash route networks, ground aircraft
- JetBlue plans additional draw down in service
- Is it time for US airports to start closing terminals??
- Converting to cargo: Putting passenger planes to use in the COVID-19 era