JetBlue Airways Corp., lagging the airline industry’s share returns for a third straight year, is stepping up efforts to boost revenue.
The New York-based carrier led U.S. airlines in raising fees for checked bags this summer. It’s cutting frills in a new fare class designed to keep up with similar offerings at larger rivals and smaller discounters. And its long flirtation with a plan to start trans-Atlantic flights is winning support from investors.
Driving it all is the pressure on Chief Executive Officer Robin Hayes and President Joanna Geraghty to shore up profit margins as rising costs erode earnings. Since its first flight 18 years ago, JetBlue has built a $6.1 billion market value by offering point-to-point flights to New York, Boston and a collection of other “focus cities.” Now the carrier needs to find new sources of growth.
“JetBlue in some ways is at a crossroads,’’ said Samuel Engel, head of the aviation group at consultant ICF. “The easy development of their original business model is leveling out.’’
The shares were down less than 1 percent Monday to $19.35 at 10:30 a.m. in New York. JetBlue dropped 13 percent this year through last week, the biggest decline among major U.S. carriers except for American Airlines Group Inc.’s 21 percent slide. JetBlue trailed a Standard & Poor’s index of U.S. airlines last year and in 2016.
JetBlue is poised to update analysts and investors at a conference in New York on Tuesday.
“Evolution and innovation to stay ahead of industry change is in our DNA,” said Doug McGraw, a JetBlue spokesman. The carrier’s original business model didn’t contemplate international service or a premium cabin -- both of which it later added.
One question on Wall Street’s mind is whether JetBlue will jump into the trans-Atlantic market, taking on established incumbents such as American and British Airways. JetBlue investors including Brent Wilsey are eager for the move.
“What they’ve done has worked pretty well, but it has come time for them to expand,” said Wilsey, president of Wilsey Asset Management, which owns JetBlue shares. “They’ve got the financial capabilities to do that. It’s a good time for them to grow in a different market.”
‘Obscene’ Fares