By Doyinsola Oladipo and Nandan Mandayam
July 28 (Reuters) - JetBlue Airways on Tuesday reinstated its annual outlook, beat Street estimates and introduced a profit target for 2028 despite ongoing fuel
headwinds due to the Middle East war, sending shares of the low-cost carrier up nearly 10%.
The New York-based airline said its visibility into the back half of the year has improved as volatile fuel prices stemming from the war have moderated. Stronger demand and higher fares helped it recover close to half of its additional fuel costs in the second quarter, in line with its peers.
The carrier introduced a long-term profit target of at least $1 per share for 2028, adding that despite fuel costs, it remains on track to deliver $850 to $950 million in annual incremental EBIT by the end of 2027.
"Given strong customer demand and our ability to adjust capacity, we believe pricing will provide an offset if recent fuel price increases stick," Ursula Hurley, JetBlue's chief financial officer, said on an earnings call.
JetBlue recaptured 50% of its fuel costs during the second quarter, compared with previous expectations of 30% to 40%. Average airfare rose nearly 9%, boosting revenue per available seat mile, a proxy for pricing power, to 11%.
Jet fuel retreated from its spring highs following a peace deal signed by Washington and Tehran in June. However, fighting between the two nations resumed once more in July, pushing fuel prices higher.
The volatility in energy markets has added billions to U.S. airlines' quarterly bills, upending margin-recovery plans for smaller airlines. JetBlue said it expects a full-year operating margin of approximately -2% to -5%, an improvement from the -7% in the first half of the year but a widened range due to macroeconomic volatility.
During the quarter, JetBlue's fuel bill ballooned by nearly 81%, or roughly $407 million. It paid an average of $4.23 per gallon of fuel during that period. For the full year, JetBlue said it expects to pay $3.49 per gallon of jet fuel.
The carrier's net loss widened to $247 million during the second quarter, compared with $74 million during the same period in 2025.
Raymond James equity analyst Savanthi Syth called JetBlue's 2028 profit target "ambitious" given that it requires increasing pretax profit by more than $1.3 billion versus 2026, with only about $400 million of that gain coming from lower fuel costs. The carrier's earnings per share beat this quarter was helped by the timing of expenses, Syth added.
JetBlue reported an adjusted loss of 66 cents per share in the April-June quarter, while analysts expected a loss of 71 cents per share, according to data compiled by LSEG. Total revenue rose 14.5% to $2.69 billion during the quarter, compared with analyst expectations of $2.68 billion.
(Reporting by Nandan Mandayam in Bengaluru and Doyinsola Oladipo in New York; Editing by Devika Syamnath)
