NEW YORK, July 25 (Reuters) - Discount airline JetBlue Airways Corp. (JBLU.O: Quote, Profile, Research) on Tuesday reported nearly flat earnings per share that beat Wall Street expectations, but a disappointing outlook sent its shares tumbling 5 percent.
The New York-based airline said net profit for the second quarter was $14 million, or 8 cents a share, compared with $13 million, or 8 cents a share, in the same period last year. The figures were well ahead of Wall Street expectations of 4 cents a share, according to Reuters Estimates.
But JetBlue said it only expected to break even for the third quarter and the full year,
forecasting pretax profit margins of between a negative 1 and positive 1 percent.
The outlook, which is weaker than earlier comments,
indicated the company is still struggling with costs aside from fuel.
"JetBlue's 'core' -- nonfuel -- guidance has been diminished," said J.P. Morgan analyst Jamie Baker in a note.
"Fuel cannot be blamed and its valuation continues to stretch well beyond reasonable airline levels."
But Chief Executive David Neeleman said on a conference call that jet fuel prices were solely to blame for the softer guidance and the company's cost-cutting efforts were about 5 percent ahead of schedule.
JetBlue shares were down 61 cents at $11.63 at midday on Nasdaq. The fall erased about half of the gains since last week on the back of bullish expectations leading up to the earnings release. For the year, the stock is down about 20 percent.
After reporting its second consecutive quarterly loss in the first quarter, the 6-year-old airline embarked on a turnaround effort. Neeleman said the company is targeting savings and revenue enhancements of $70 million by the end of the year.
Part of the cost-cutting includes selling five aircraft and deferring delivery of others. Neeleman said two of the planes should be withdrawn from the company's fleet by September and the other three by October. He declined to comment on the proceeds from the sales.
The company is also shifting to shorter-haul flights because of fuel prices. JetBlue said it paid about $2.06 a gallon for jet fuel in the second quarter compared with $1.50 in the same period a year ago.
Its restructuring comes amid signs the airline industry is on the mend after years of losses. Southwest Airlines Inc. (LUV.N: Quote, Profile, Research), American Airlines parent AMR Corp. (AMR.N: Quote, Profile, Research) and United Airlines parent UAL Corp. (UAUA.O: Quote, Profile, Research) have all surprised investors with better-than-expected earnings.
Jet Blue said operating revenue rose 42 percent to $612 million as the company added flights and raised ticket prices at the expense of filling seats. JetBlue's load factor fell 5.5 points to 82.2 percent in the quarter.
Reuters