JetBlue CEO Robin Hayes sees no loss in altitude for consumer demand heading into the back half of the year, despite swirling recession fears and disappointing financial results from the airline.
“Demand remains extremely strong,” Hayes said on Yahoo Finance Live Tuesday. “We continue to see extremely strong demand [into the fourth quarter.]”
The bullish take from Hayes comes as JetBlue shares fell 6% on Tuesday’s session after higher costs for labor and fuel weighed on second quarter profits.
To alleviate the cost pressures, Hayes revealed a new $150 million to $200 million cost savings target by 2024, mostly driven by the retirement of aging inefficient aircraft.
Here is how JetBlue performed compared to Wall Street estimates for the second quarter:
While Hayes is turning his attention to improving costs, he is also now in the mode of trying to get regulatory approval to buy Spirit Airlines after a bruising battle with Frontier Airlines.
Spirit terminated Frontier’s cash-and-stock deal to acquire the low-cost airline last week after failing to garner enough support from shareholders. JetBlue stepped in and said it would look to buy Spirit for a total equity value of $3.8 billion.
Hayes sought to tamp down concerns by regulators that JetBlue would have too much control over airfare prices given its larger size. Those concerns are especially prevalent as JetBlue stands to control 50% of the lucrative Fort Lauderdale market.
Hayes told Yahoo Finance Live he is open to shedding assets to get the deal done.
“JetBlue and Spirit aren’t going to dominate in any market,” Hayes said. “Even in Fort Lauderdale with 50% share, there are still over 20 airports where you have an airline with more market share than that.”
Brian Sozzi is an editor-at-large and anchor and Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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