April 28 (Reuters) – JetBlue Airways said Tuesday it plans to slow hiring, cut capacity and hike fares to soften the blow from soaring jet fuel costs after it reported a bigger first-quarter loss that threatens to derail the carrier’s turnaround efforts.
The U.S.-Israeli attack on Iran has closed the critical Strait of Hormuz, disrupting nearly a fifth of global oil and gas supplies and triggering the aviation industry’s biggest shock since the COVID-19 pandemic.
“While the macro environment, particularly fuel, has become more volatile, we are taking decisive actions to manage what is within our control, including adjusting capacity, optimizing revenue, and maintaining disciplined cost control,” CEO Joanna Geraghty said on Tuesday.
The airline plans to recoup 30% to 40% of the increased fuel costs in the second quarter, with expectations to recover all of it by early 2027.
Jet fuel prices have nearly doubled since the conflict erupted at the end of February, squeezing carriers between spiraling costs and tickets already sold at prices they cannot adjust.
The New York-based carrier expects an average fuel price per gallon of $4.13 to $4.28 in the second quarter, compared with $2.40 per gallon during the same period last year.
Fuel prices during the first quarter rose about 15% year-over-year.
Willie Walsh, general director of the International Air Transport Association, said on Tuesday that there is no way airlines can absorb the massive increase and will have to pass the added costs on to consumers.
Rising fuel costs heighten the pressure on smaller carriers like JetBlue, which have limited financial flexibility and greater exposure to uncertainty. Industry executives warn the Middle East conflict could reshape airline industry dynamics.
JetBlue entered 2026 aiming to regain stability and start reaping the benefits of a turnaround effort launched in 2024, focusing on tight cost controls, route optimization and deferring aircraft deliveries. But high fuel costs threaten to derail that plan.
CEO Joanna Geraghty told employees last week that JetBlue was not considering bankruptcy, according to a memo seen by Reuters, adding the carrier had ample liquidity and access to additional capital.
The New York-based carrier recently secured a $500 million debt financing commitment backed by up to 22 aircraft, with an option to raise an additional $250 million using more planes as collateral.
Operating revenue during the first quarter rose 4.7% year-over-year to $2.24 billion and revenue per available seat mile, an industry metric commonly known as a proxy for pricing power, increased 6.5% in the same period.
The New York-based carrier reported an adjusted loss of $319 million, or 86 cents per share compared to analyst expectations of a loss of 71 cents.
(Reporting by Shivansh Tiwary in Bengaluru and Doyinsola Oladipo in New York; Editing by Leroy Leo)
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