Come Fly With Me: JetBlue Expects Some Q4 Holiday Improvement
The unwavering need to get home for the holidays is one of the great American traditions. It’s also at the center of a new outlook unveiled on Tuesday (Oct. 27) by JetBlue, which is counting on a surge in travel for Thanksgiving and late December to give its sagging numbers a boost.
JetBlue CEO Robin Hayes told investors as part of the company’s third-quarter earnings release that he remains cautiously optimistic that the discount airline will see steady improvement in bookings heading into the holiday season.
“We have seen signs of pent-up demand from customers who want to visit their family and friends or go on vacation,” Hayes said. “We believe that we will remain extremely well-positioned to serve these customers as they return to air travel.”
Things Are Bad, But Better Than They Were
Like every other airline or business in the travel industry, JetBlue has been battered by COVID-19 and people’s reluctance to get on planes for fear of catching the virus in an aircraft’s cramped, enclosed interior.
For instance, the company’s headline Q3 earnings numbers on Tuesday showed a $578 million pre-tax loss as revenues fell 76 percent from a year ago.
And not surprisingly, airline said it expect its revenues to fall 65 percent year over year in Q4. But while that would normally be a terrible forecast, it’s better than the 76 percent drop that the carrier saw in Q3, and the 90 percent plunge in Q2.
Another positive is that the fast-approaching holiday travel season will see JetBlue put more capacity back into action this quarter. It only expects to reduce available seat miles (ASM) by 45 percent year over year in Q4 versus a 58 percent drop in Q3 and 85 percent in Q2.
“Although there is still quite a lot of uncertainty about the evolution of the coronavirus, we are starting to see the booking curve extend slightly into the upcoming Thanksgiving and December holiday travel period,” Joanna Geraghty, JetBlue’s president and COO, said on a post-earnings call with analysts. She attributed the improvement partly to a positive consumer response to promotional activity.
Airlines Are Surviving by Managing Capacity
American Airlines posted a similar outlook when it released its earnings last week, citing stabilizations in several areas of its business that, while still sharply lower, had rebounded over the past six months.
In the face of weak but improved demand, American Airlines Chairman and CEO Doug Parker assured business and leisure travelers that it was “safe to fly.” He referenced an industry study published last month by the International Air Transport Association (IATA) that showed only 44 cases of COVID-19 have been linked to flying so far this year, out of 1.2 billion passengers who have traveled by air.
However, until demand actually comes back, airlines have to walk a logistical tightrope that requires them to balance staff, airplanes and cash reserves in the face of unprecedented unpredictability.
Earlier this month, Delta Air Lines CEO Ed Bastian said on a call with analysts that the airline was “20 percent smaller than we were at the start of this year, having reduced our fleet, our headcount and our overhead.”
And on Tuesday (Oct. 27), JetBlue referenced the importance of managing capacity around peaks and troughs and monitoring “close-in” bookings that are less than three weeks away.
What’s Needed: COVID Tests and a Vaccine
To be sure, there’s only so much airlines can do to reassure passengers until a COVID-19 vaccine is widely available.
PYMNTS’ recent How We Shop report found that 58.7 percent of U.S. consumers surveyed said a COVID-19 vaccine’s availability is a prerequisite before they’ll return to pre-pandemic behaviors. By contrast, only 44.1 percent said they’d return to previous behaviors if the U.S. Centers for Disease Control and Prevention (CDC) declare travel safe.
Airlines also have to deal with the external challenges imposed upon them by ever-changing quarantine and travel restrictions adjusted by state and local health authorities seemingly weekly.
Even so, JetBlue has joined an industry chorus in calling for rapid pre-flight testing of passengers before they board planes.
JetBlue said it would expand its “Safety from the Ground Up” program, and would also work to form partnerships with authorities to implement policies that will facilitate air travel and help rebuild customer confidence this quarter.