Jetblue Airways Scaling Back on Growth After 3rd Quarter Loss

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Higher fuel costs not only hurt the legacy carriers but the low cost carriers are feeling the pain too. Jetblue Airways (JBLU) posted a loss of just $500,000 dollars but the costly loss is still forcing the airline to scale back growth plans for the second time in six months.

The main reason for the loss at Jetblue the heightened security related to the foiled terror plot in the UK and the rising fuel costs. At Jetblue the cost of fuel rose 54 percent to $212 million from $138 million and was the airline's biggest expense.

"It's revenge of the legacy carriers. The willingness of the larger airlines to cut some fares in competitive markets kept JetBlue and other discounters from boosting prices," said Ray Neidl, a Calyon Securities Inc. analyst in New York.

Jetblue Airways said it will reduce its growth rate over the next three years by cutting its fleet of Airbus A320 and Embraer 190 planes. They have already announced plans to sell some aircraft and defer deliveries as it shifts more capacity to short-haul flying from longer transcontinental markets.

Bloomberg.com

perhaps with the oil price easing off a bit from $70 we will see a reduction in fuel costs.

Maybe arilines should look to alternative fuel like rapeseed and then they could lower their costs.

otherwise they will go broke and a lot of us will lose jobs!

Posted by: Sam | October 26, 2006 2:22 AM | Permalink to Comment

I think the airlines really should start looking into alternative fuel sources like you say Sam. But as oil slids a bit, a lot of the carriers were late to the fuel hedging game and hedged their fuel at higher levels than what we are seeing now.

Hopefully with fuel coming down from all time highs we will see fuel costs dropping for the airlines but they need to start investing in the future and looking ahead instead of waiting around and hoping for the best.

Posted by: Rob | October 26, 2006 7:37 AM | Permalink to Comment

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