Vacation Plans Disrupted as JetBlue Cuts Summer Flights
In light of weak travel demand, budget airline JetBlue has announced plans to reduce its summer flight offerings. The company is implementing cost-saving measures in an effort to improve its financial standing, as they predict breaking even this year is unlikely. CEO Joanna Geraghty informed employees in a memo that the carrier will be winding down less popular routes and downsizing their leadership team.
While hoping for a rebound in demand and bookings, Geraghty acknowledges that even a recovery will not fully offset the losses incurred this year. She explains that the path back to profitability will take longer than anticipated. This decrease in travel demand is not unique to JetBlue, as other US airlines have been affected by President Trump’s trade policies and border restrictions, resulting in a significant decline in travel to the US.
United Airlines is also scaling back their capacity for the summer travel season, reducing four out of every 100 domestic flights. Geraghty expressed frustration as JetBlue had aimed to break even this year, but the current situation makes that goal unlikely. The airline is facing additional financial strain due to engine inspections, which have resulted in grounding several of their aircraft. In order to cut costs, JetBlue has decided to park six of their Airbus jets instead of retrofitting them as originally planned.
In April, JetBlue retracted their full-year forecast in order to adjust to the changing demand environment. They also announced a $3 billion savings plan by deferring the purchase of 44 new Airbus jets. As a result of these challenges, JetBlue’s shares have declined by over 44% this year. Similarly, United Airlines announced a reduction in flights due to a decrease in demand for US travel. CEO Scott Kirby revealed that the softer economic situation has led to a decrease in travel demand.
United Airlines has seen a 9% decline in flights coming out of Canada and a 6% decline in international demand coming into the US. This is partially due to a boycott of US travel by Canadians, as President Trump has threatened to make Canada the “51st state”. This boycott has resulted in a 13. 5% drop in air travel in March compared to the same time last year. Flair Airlines had to cancel their routes from Vancouver and Calgary to Phoenix, Arizona due to low demand. Popular tourist destinations, such as Buffalo, New York and Old Orchard Beach in Maine, have experienced a significant decrease in Canadian visitors.
In some cases, destinations have even put up signs pleading with Canadians not to boycott them. Palm Springs in California is one such destination, where signs have appeared asking Canadians to continue visiting despite the current political climate. With the decrease in travel demand and financial strain experienced by airlines, it is uncertain how long it will take for the industry to recover.