By Dean Seal and Alison Sider

Shares of JetBlue Airways lost a quarter of their value after the company laid out tepid guidance for the first quarter, overshadowing solid results for the last three months of 2024.

JetBlue is in the midst of a turnaround plan after its efforts to grow by combining with other carriers were stymied by government lawsuits.

Analysts said the airline's narrower-than-expected fourth quarter loss showed the airline's efforts to drum up more revenue are paying off. But JetBlue's cost outlook, which projects that the cost to fly a seat a mile (excluding fuel) could rise 10% in the first quarter and 7% for the full year, raised concerns.

"On one hand, the carrier certainly seems to be making unit revenue gains," Citi Research analyst Stephen Trent wrote. "On the other, ex-fuel seat mile costs continue to increase faster than unit revenue."

JetBlue shares fell more than 25% to $6.02 Tuesday, on track for their largest-ever percent decrease.

While appetite for travel hit records last year, there has been a shakeout among smaller and budget-oriented carriers.

JetBlue has deferred plane deliveries and refocused flying within its core leisure network along the East Coast and in Puerto Rico, culling money-losing routes to slash stubbornly high costs. It is planning to install more first class seats and building lounges in an effort to lure more high-paying high flyers-a tactic that has been a winning strategy for some of its bigger rivals.

JetBlue executives on Tuesday said the airline cut $190 million in costs last year, at the high end of its target. Cost pressure is higher in the first quarter due to the timing of required maintenance work and a step up in pilot wages, but executives said that would dissipate throughout the year. The carrier has also been affected by an engine defect that it expects will keep more of its planes on the ground this year.

"I think frustratingly, we would love to have even faster ramp," Chief Executive Joanna Geraghty said. "But this is a multi-year strategy and it's not linear."

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January 28, 2025 11:49 ET (16:49 GMT)

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