JetBlue to trim 2017 capacity growth in bid for fare power
JetBlue Airways cut back on 2017 expansion plans, joining other US carriers in the effort to keep the number of seats and flights in check to gain more control over pricing. The New York-based carrier is trying to catch up with larger US airlines, which have been slowing growth to stanch bleeding in the closely watched measure of revenue from each seat flown a mile. The industry benchmark, also known as unit revenue, typically declines when capacity grows faster than demand and carriers are forced to cut fares to fill seats. JetBlue’s relative delay in cooling capacity growth prompted some investors to dump the shares, pushing them to the biggest decline this year on a Bloomberg index of 11 airline stocks. The carrier estimated last month that unit revenue would fall as much as 9% in January and said it would review expansion plans. On Monday the airline cut its target for capacity growth by 1 percentage point to a range of 5.5 to 7.5% above last year. Plans for this quarter remained unchanged, the carrier said. “The net impact, along with incremental revenue initiatives not discussed on the call, should positively impact earnings, particularly in second half 2017,” said Savanthi Syth, a Raymond James Financial analyst. “We believe investors will view favorably the quick response by JetBlue,” she said. The cuts are focused on April and May, which aren’t months of peak demand, and overnight transcontinental flights, Syth said. As a result of the capacity change, costs for each seat flown a mile excluding fuel will rise 1.5 to 3.5% this year from 2016, one-half percentage point more than originally expected, JetBlue said.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2017-02-07/unaligned/jetblue-to-trim-2017-capacity-growth-in-bid-for-fare-power
https://portal.staralliance.com/cms/logo.png
JetBlue to trim 2017 capacity growth in bid for fare power
JetBlue Airways cut back on 2017 expansion plans, joining other US carriers in the effort to keep the number of seats and flights in check to gain more control over pricing. The New York-based carrier is trying to catch up with larger US airlines, which have been slowing growth to stanch bleeding in the closely watched measure of revenue from each seat flown a mile. The industry benchmark, also known as unit revenue, typically declines when capacity grows faster than demand and carriers are forced to cut fares to fill seats. JetBlue’s relative delay in cooling capacity growth prompted some investors to dump the shares, pushing them to the biggest decline this year on a Bloomberg index of 11 airline stocks. The carrier estimated last month that unit revenue would fall as much as 9% in January and said it would review expansion plans. On Monday the airline cut its target for capacity growth by 1 percentage point to a range of 5.5 to 7.5% above last year. Plans for this quarter remained unchanged, the carrier said. “The net impact, along with incremental revenue initiatives not discussed on the call, should positively impact earnings, particularly in second half 2017,” said Savanthi Syth, a Raymond James Financial analyst. “We believe investors will view favorably the quick response by JetBlue,” she said. The cuts are focused on April and May, which aren’t months of peak demand, and overnight transcontinental flights, Syth said. As a result of the capacity change, costs for each seat flown a mile excluding fuel will rise 1.5 to 3.5% this year from 2016, one-half percentage point more than originally expected, JetBlue said.<br/>
