JetBlue Airways Corp., which slowed growth plans after two consecutive quarterly losses, expects profits in the rest of this year, Chief Executive Officer David Neeleman said. The company's shares rose 5 percent.
"Nothing is assured until the books are closed, but we expect to make money in the second quarter and in the third and fourth quarters as well," Neeleman told shareholders Thursday at the airline's annual meeting. He didn't alter the company's forecast from last month of a full-year loss.
The results would stem from the New York-based airline's "return to profitability" plan, which aims for as much as $80 million in savings and increased revenue this year, and was announced last month. JetBlue plans to raise fares to take advantage of increased demand chasing fewer available seats as airlines reduce flights.
JetBlue's average one-way fare of $105 "needs to move up," Neeleman said Thursday. "It needs to be higher because we lost money."
The airline, which Neeleman called "a struggling company," lost money in the fourth quarter of 2005 and this year's first quarter after failing to respond quickly enough to rising fuel prices, expanding too fast and not managing its fare system well enough.
"They're moving in the right direction," James Corridore, a New York-based analyst with Standard & Poor's, said in an interview. "I'm happy to see they are slowing a bit of their growth and not looking to oversaturate the markets they enter the way they did in the past."
The airline is expected to have a profit of 2 cents this quarter and in the third quarter, the average estimate of analysts surveyed by Thomson Financial. It's expected to have a loss of 5 cents a share in the fourth quarter and a 15-cent loss for the full year, according to Thomson.
JetBlue shares rose 50 cents to close at $10.52 on the Nasdaq Stock Market. They have fallen 32 percent this year.
JetBlue wants to reduce the number of employees per aircraft to 80 from 90 as it expands its fleet, Neeleman said. Southwest Airlines Co., the largest low-cost airline, employed 70 workers per plane at the end of March. JetBlue, which has no unions, doesn't plan on firing workers, Neeleman said.
"We are going to add less people as we grow," Neeleman said in an interview after the meeting.
JetBlue will burn more than 400 million gallons of fuel this year, Neeleman said Thursday. Each 10 percent increase in the price of a gallon of jet fuel raises its costs by $40 million, he said.
"We came to the realization we can't run our business hoping fuel will come down again," he said. "We need to run our business to make money with fuel at over $2 a gallon."
Jet fuel for immediate delivery in New York Harbor has averaged $1.94 a gallon this year, up 30 percent from the same period in 2005.
JetBlue said earlier this year that it will sell five Airbus A320 jets, delay 12 aircraft deliveries, eliminate some longer flights and focus on higher return, short-haul markets. It plans to increase capacity this year by about 20 percent, less than its original plan of as much as 30 percent.
The plane sales "will allow us to take a little bit of debt off our balance sheet, generate a little cash and move off planes we don't have a use for," Neeleman said. "We'll attempt to sell our five oldest planes, which will help maintenance costs over time."
JetBlue has delayed 12 A320 deliveries to 2011 and 2012 from the original schedule of 2007 to 2009. The airline, which has more than quadrupled capacity since the first quarter of 2002, didn't change the delivery schedule for smaller Embraer 190 jets it began flying in November. It now operates 89 Airbus A320s and 11 190s, with pending orders for 98 Airbus and 84 Embraer planes.