JetBlue Cuts Operating Margin Forecast, But Shares Rise

JetBlue Airways expects to post an operating loss for the first quarter, due to higher fuel prices and the lingering effects of service interruptions from a Feb. 14 ice storm in the New York area.

JetBlue said Wednesday it expects first-quarter operating margin of negative 4% to negative 2%, based on assumed fuel costs of $1.89 per gallon.

The company previously forecast a quarterly operating margin of 2% to 4% on assumed fuel costs of $1.91.

JetBlue did not disclose a forecast for per-share earnings. Despite the new operating margin guidance, shares of the company gained on the Nasdaq Stock Market.


Operating margin measures operating income as a percentage of operating revenues. A negative operating margin indicates that the company's operating costs are rising faster than projected sales.

Analysts polled by Thomson Financial forecast a first-quarter loss of 9 cents a share on revenue of $652 million before the company lowered its guidance on operating margins on Wednesday.

JetBlue also now estimates that it will report an operating margin in the full year of between 8% and 10%, based on assumed fuel costs of $1.94 per gallon. The company previously forecast a full-year operating margin of between 10% and 12% on assumed fuel costs of $1.93.

JetBlue's operating margin was 5.4% in 2006 and it posted a loss of $1 million on operating income of $127 million and revenue of $2.36 billion.

The company anticipates pretax margin of between 3% and 5% for the year. JetBlue previously forecast a pretax margin of between 5% and 7%.

JetBlue has been criticized for the way it handled its operations in the foul weather. The storm stranded passengers on airplanes for hours and resulted in snarled traffic and flight cancellations for five days following the storm.

In an effort to restore its image, JetBlue unveiled a "Customer Bill of Rights" on Tuesday.