JetBlue Airways Faces Challenges to Profitability Despite Revenue Growth

Analyst Andrew Didora from Bank of America Securities reiterated a Sell rating on JetBlue Airways with a price target of $3.50. He cited unsustainable gains, cost challenges, and a concern that JetBlue's unit cost growth will outpace unit revenue growth throughout the year. The analyst also noted that the Blue Sky partnership with United Airlines will contribute to earnings, but the full benefits are not expected until 2028.

JetBlue Airways (JBLU) is facing a Sell rating from Bank of America Securities analyst Andrew Didora, who has increased the price target to $3.50 from $3.00. Didora's assessment is based on several factors impacting the airline's financial health and sustainability.

Didora highlighted that while JetBlue has seen an improvement in revenue driven by better close-in bookings, a significant portion of the positive earnings per share revisions are attributed to non-recurring gains from the sale of planes and engines. He considers these gains unsustainable and a concern for the airline's long-term profitability. Furthermore, Didora expressed concern that JetBlue's unit cost growth will continue to outpace unit revenue growth throughout the year, posing a challenge to the airline's profitability.

The analyst also noted that while JetBlue's unit costs showed some improvement, this was partly due to gains from asset sales. The true test of cost management will be in 2026 when fleet utilization normalizes. Additionally, the Blue Sky partnership with United Airlines is expected to contribute to earnings, but the full benefits are not anticipated until 2028.

Didora's Sell rating and price target reflect his cautious outlook on cost management and revenue sustainability. Despite these challenges, JetBlue has reported better-than-expected results for fiscal 2025 Q2, delivering a modest operating profit despite macroeconomic challenges. The airline reported an adjusted net loss of $58 million, or 16 cents per share, beating analyst estimates of a 34-cent loss [2].

JetBlue's CEO, Joanna Geraghty, expressed satisfaction with the company's performance in Q2 2025, noting "meaningful progress" with JetForward and achieving a modest operating profit despite a challenging macro environment. She highlighted strong customer satisfaction and the importance of the Blue Sky collaboration with United Airlines, which is expected to add $50 million in EBIT by 2027 and enhance customer loyalty programs.

The Blue Sky partnership, which has been approved by the U.S. Department of Transportation, will allow customers to earn and use miles across both JetBlue and United Airlines. The partnership is set to roll out in phases starting in the fall, with customers able to earn and use miles on each other's flights and enjoy benefits such as priority boarding and extra legroom seats [3].

In conclusion, while JetBlue Airways has faced challenges in terms of cost management and revenue sustainability, the company has shown resilience in the face of macroeconomic challenges. The Blue Sky partnership with United Airlines presents an opportunity for the airline to enhance its customer loyalty programs and improve its financial performance. However, the full benefits of the partnership are not expected until 2028, and investors should remain cautious given the current Sell rating and price target.

References:
[1] https://www.tipranks.com/news/ratings/jetblue-airways-sell-rating-due-to-unsustainable-gains-and-cost-challenges-ratings
[2] https://www.ainvest.com/news/jetblue-airways-2025-q2-earnings-modest-profit-revenue-decline-2507/
[3] https://www.wcnc.com/article/news/nation-world/jetblue-united-team-up-airline-miles/507-a5b9ae1c-5b09-46fe-bfb8-8689728b4273