Grim Memo: JetBlue Parks Planes & Cuts Routes To Reduce Losses

In recent months, we’ve seen demand for air travel dip a bit. If you ask executives at the major US airlines, they say that premium and international demand continues to be strong, while economy and domestic demand is down a bit.

This is partly being offset by lower fuel prices, but as you’d expect, this poses an especially big challenge for airlines that primarily fly domestically, and airlines that don’t have premium cabins on most of their planes. Along those lines, there’s a pretty grim update from JetBlue.

JetBlue looks to aggressively cut costs, reduce losses

JetBlue is an airline that has struggled with profitability in recent years, given how the industry has evolved. JetBlue’s current management team is doing the best it can, after years of (what I’d describe as) mismanagement, and a focus on the wrong things.

Executives have largely tried to improve the company’s financial situation through their JetForward program, primarily by focusing on reducing costs, rather than by focusing on ways to increase revenue (of course there have been some attempts, but the focus has primarily been on the cost side). So we’ve seen JetBlue defer new aircraft deliveries, offer pilots early retirement options, etc.

Along those lines, JetBlue has just issued an internal memo (shared with me by an employee), sharing an update on the carrier’s turnaround plan. Here’s how the memo starts, which all sounds pretty dark:

Over the past few months, we’ve discussed how economic uncertainty has shaken consumer confidence and softened travel demand — hurting our plans for the year. While most airlines are feeling the impact, it’s especially frustrating for us, as we had hoped to reach break-even operating margin this year, which now seems unlikely.

We’re hopeful demand and bookings will rebound, but even a recovery won’t fully offset the ground we’ve lost this year and our path back to profitability will take longer than we’d hoped. That means we’re still relying on borrowed cash to keep the airline running.

JetForward is making strong progress and remains the right long-term strategy. However, we must now take near-term steps to rein in spending and preserve cash.

Here are the changes that JetBlue is planning:

• JetBlue will continue to reduce capacity to match weaker demand, especially during trough periods, on Tuesdays and Wednesdays, and in markets with multiple frequencies
• JetBlue will continue to look for opportunities to wind down underperforming routes and shift flying to places with profit potential
• JetBlue will reduce cabin updates on its classic A320s, so four A320s that were initially supposed to be reconfigured in 2026 will no longer be reconfigured
• JetBlue will be assessing the size and scope of its leadership team, looking for opportunities to restructure roles
• JetBlue will update its travel and expensive policy, asking team members to closely scrutinize and reduce business travel spending

The memo finishes with a more optimistic tone:

We’re investing in JetBlue’s future. New aircraft are still on the way. Our first-ever domestic first class is in development. We continue to launch new BlueCities and routes. Our Blue Sky collaboration with United will unlock new benefits for our customers. Lounges are coming. These are the building blocks of a stronger JetBlue, and they remain in motion.

There’s a lot to be optimistic about and just a huge thank you to teams across JetBlue who are putting so much heart into our operation and our JetForward strategy to set us up for long-term success.

I really feel like JetBlue can be fixed pretty easily

I don’t want to play armchair CEO (or maybe I do?) and claim that something is much easier than it actually is, but in some ways, I think that JetBlue can be fixed relatively easily. If JetBlue remains independent, it should be like the Alaska Airlines of the East Coast, and be able to turn a profit, given its strong hubs.

I know JetBlue plans to introduce first class fleet wide, but this needs to be done ASAP, and the slow rollout is a serious problem. JetBlue’s plan for introducing first class is perfect — the airline will basically introduce first class without changing aircraft capacity, by reducing legroom in economy.

If you ask me, this will be a game changer for JetBlue. Not only will the airline be able to get more revenue from passengers, but it’ll make the TrueBlue program much more lucrative. I would imagine there’s hundreds of millions of dollars in upside per year here.

However, I don’t understand why it’s taking so long, and Frontier is even beating JetBlue to the punch with introducing first class seats. I think this premium pivot could single handedly turn the airline around.

Second, and this is always my more controversial take, I think consumers and the entire industry would benefit from JetBlue being acquired, assuming the profitability situation doesn’t change soon. People always respond “no, we need more competition, and consolidation is bad.” I agree we need more competition. What I disagree on is how that’s achieved.

Our airline tickets are subsidized by credit card companies. Even profitable airlines like Delta and United earn much of their profits from their loyalty programs, and don’t actually make much money flying passengers.

So we need to reframe how we view competition. To me, good competition means having as much capacity as possible flying for airlines that generate good margins with their co-brand credit card partners, because that requires scale.

The fact that our tickets are largely subsidized by credit cards means that airlines without lucrative credit card agreements can’t really compete. Want small airlines to remain independent? Well, with the current economic realities of the industry, they just keep shrinking until they become sort of irrelevant. I mean, just look at what has happened to Spirit.

Bottom line

JetBlue continues to struggle with profitability. While the airline was making good progress with reducing losses, unfortunately economic uncertainty has caused a dip in demand, and that’s not good for JetBlue. The airline is now looking for even more ways to reduce costs.

If you ask me, JetBlue needs to be focused on its premium pivot ASAP, especially with how efficiently the airline can reconfigure aircraft. There’s hundreds of millions of dollars in upside per year, but the airline is taking its sweet time.

What do you make of this JetBlue memo, and the carrier’s current situation?