JetBlue Airways Corp. (JetBlue (JBLU)) shares climbed Tuesday after the airline reported second-quarter results that beat Wall Street's expectations. The story? Travelers kept booking flights even as ticket prices rose, giving the airline confidence that it can offset higher fuel costs through pricing power.

The numbers tell a clear story. Adjusted loss of 66 cents per share came in better than the 71-cent loss analysts expected. Revenue jumped 14.5% year over year to $2.697 billion, topping the $2.688 billion estimate. That's not bad for an airline that's been navigating higher fuel prices and a competitive landscape.

Earnings and Margins

On a GAAP basis, the diluted loss widened to 66 cents per share from 21 cents a year earlier, and the net loss increased to $247 million from $74 million. But the headline loss masks some underlying strength. Passenger revenue rose 14.1% to $2.487 billion, while other revenue climbed 18.6% to $210 million. The operating loss of $141 million compares with operating income of $6 million a year ago, and the operating margin fell to negative 5.2% from positive 0.3%.

Demand and Costs

Demand remained robust. Capacity increased 3.2%, revenue passenger miles rose 4.1%, and load factor improved 0.8 percentage point to 82.7%. Revenue per available seat mile (RASM) increased 10.9%, with premium RASM up about 13%, Main Cabin RASM rising 11%, and loyalty revenue growing 13%. That's double-digit growth across the board.

Costs, of course, are the other side of the equation. Cost per available seat mile (CASM) rose 17%, but CASM ex-fuel increased just 2.4% — 1.6 percentage points better than the revised guidance midpoint. Fuel price climbed 76.3% to $4.23 per gallon, a big headwind. But JetBlue recaptured nearly half of those higher fuel costs in the quarter and expects full recapture by early 2027. The airline also secured Pratt & Whitney credits tied to GTF settlements through 2025.

JetForward and Liquidity

JetBlue's restructuring plan, dubbed JetForward, is showing results. Fort Lauderdale RASM increased 11% despite nearly 40% capacity growth — a sign that the airline is gaining ground after Spirit Airlines' exit from the market. JetBlue expects more than 150 daily departures from the airport this winter.

JetForward generated $470 million of cumulative incremental EBIT through June. The company targets $850 million to $950 million annually by year-end 2027 and about $1.2 billion in 2028. The new BlueFirst premium product is expected to begin sales this fall, with most retrofits completed by year-end 2027. JetBlue expects BlueFirst to deliver about 5 percentage points of steady-state RASM improvement.

Liquidity remains solid. JetBlue ended the quarter with $1.656 billion in cash and $8.478 billion in debt. Capital expenditures totaled $234 million, and the company reported more than $6 billion of unencumbered assets.

Outlook

For 2026, JetBlue expects RASM growth of 10% to 12.5%, capacity growth of 1.5% to 3.5%, CASM ex-fuel growth of 2% to 4%, and an adjusted operating margin between negative 2% and negative 5%. Second-half operating margin is expected to improve about 3.5 percentage points year over year. The airline targets a positive operating margin in 2027 and EPS of at least $1 in 2028, assuming continued demand strength and an average fuel price of $3 per gallon.

Earnings Call Highlights

On the earnings call, management emphasized that travelers continued booking even as ticket prices increased, giving the airline confidence that pricing strength can offset elevated fuel costs. JetBlue recaptured nearly half of the fuel-cost increase during the second quarter and remains on track for full recapture by early 2027, reducing fuel's influence on its longer-term earnings outlook. Management said fuel prices alone do not determine JetBlue's earnings trajectory because the airline can respond through pricing, capacity adjustments, and fuel-efficiency initiatives.

JetBlue also highlighted Fort Lauderdale as a major growth opportunity following Spirit Airlines' exit, with RASM rising 11% despite nearly 40% capacity growth. The airline reinstated its 2026 outlook and said improving revenue, disciplined capacity, and cost execution should drive a meaningful profitability inflection in the second half.

Shares of JetBlue were trading up 2.30% at $5.56 at the time of publication Tuesday, according to market data.