JetBlue Recaptures 87% of Higher Fuel Costs

The Tip Desk · October 27, 2026 · 4 min read

Operating revenue per available seat mile rose 18.4% year-over-year in the third quarter as the airline recaptured about 87% of higher fuel costs.

JetBlue Airways Corporation (JBLU) recaptured approximately 87% of higher fuel costs in the third quarter of 2026, up from nearly 50% in the second quarter, as revenue growth accelerated and the airline said it delivered year-over-year adjusted operating margin improvement.

Operating revenue rose 21.1% year-over-year to $2.8 billion, faster than 14.5% growth in the second quarter and 4.7% in the first quarter. Operating revenue per available seat mile increased 18.4%, materially exceeding initial expectations and in line with revised guidance, after 10.9% growth in the second quarter and 6.5% in the first.

Chief executive Joanna Geraghty said resilient demand and strong yields drove revenue well ahead of initial expectations, allowing the airline to recapture more of the increase in fuel costs than it had initially expected. The company said higher yields, supported by improved revenue management technology, drove the majority of the outperformance, with both premium and Main achieving double-digit RASM growth.

System capacity increased 2.3% year-over-year, within a revised guidance range of 1.5% to 3.5%. Average fuel price was $3.91 per gallon, 57% higher than a year earlier. Operating expense per available seat mile rose 19.4%, largely driven by higher fuel prices. CASM excluding fuel, other non-airline operating expenses, and special items increased 7.0%, consistent with revised guidance.

The GAAP operating loss widened to $144 million from $100 million a year earlier, and operating margin compressed to -5.1% from -4.3%. Net loss was $257 million, or $0.68 a share, compared with $143 million, or $0.39 a share, a year earlier. Special items of $33 million included an adjustment to litigation reserves.

Fort Lauderdale remained a network growth engine. RASM at the Florida hub increased nearly 15% on more than 65% capacity growth, after 11% RASM growth on nearly 40% capacity growth in the second quarter and 5% RASM growth on 23% capacity growth in the first quarter. The airline added 15 new destinations and increased frequencies. Peak daily departures are planned to exceed 150 this winter, up 39% year-over-year. Fourth-quarter seat share is expected to reach approximately 37%, up 14 points year-over-year. Co-brand credit card acquisitions in Broward County increased 55% year-over-year in the third quarter.

Loyalty revenue grew 20% year-over-year, with more than eightfold growth in Premier Card acquisitions following the card refresh. Sales opened for BlueFirst, JetBlue’s new domestic first-class experience, across more than 30 routes, with initial service planned to begin December 8 between Boston and Fort Lauderdale.

Underlying unit cost performance excluding fuel remained within initial expectations, excluding approximately four points of disruption-related pressure in the third quarter. The company said it expects a meaningful step-down in fourth-quarter unit-cost growth excluding fuel, alongside continued revenue strength, to support further margin expansion heading into 2027.

JetBlue ended the third quarter with $2.2 billion of liquidity, including a $600 million undrawn credit facility, with an additional $250 million of aircraft-backed financing expected to fund in the fourth quarter subject to customary funding mechanics. The unencumbered asset base expanded to about $7 billion, including $2.8 billion in aircraft and engines following updated fleet appraisals and aircraft deliveries paid with cash.

For the fourth quarter, the airline expects 1 to 2 points of year-over-year operating margin expansion, RASM up 18.0% to 22.0%, CASM ex-fuel down 1.0% to up 1.0%, and fuel at $4.64 per gallon, 85% higher than in the same period last year. Available seat miles are estimated to rise 3.0% to 4.0%. Full-year 2026 RASM is estimated up 13.5% to 14.5%, with adjusted operating margin of -4.5% to -6.5%.

Chief financial officer Ursula Hurley said the company expects further margin expansion in the fourth quarter despite the fuel forecast and believes it has the liquidity and financing options to create a strong bridge to at least $1 EPS and positive free cash flow in 2028, a target first introduced with second-quarter results.