JetBlue Airways Corporation (JBLU): A Bear Case Theory

We came across a bearish thesis on JetBlue Airways Corporation on GHGInvest’s Substack by Anh Hoang. In this article, we will summarize the bears’ thesis on JBLU. JetBlue Airways Corporation’s share was trading at $4.8700 as of January 30th. JBLU’s trailing and forward P/E were 13.78 and 56.18 respectively according to Yahoo Finance.

JetBlue’s late-December operational collapse was widely attributed to Winter Storm Devin, but that explanation materially understates the problem. Weather was merely the catalyst; the real issue was a structurally fragile operating system that failed under stress.

While peers such as United and American canceled roughly 5% or fewer flights under identical Northeast conditions, JetBlue canceled about 22% of its schedule, making it a clear outlier. This divergence signals idiosyncratic failure rather than systematic weather disruption, pointing to internal weaknesses in network design, fleet availability, and recovery capacity.

JetBlue’s network is heavily concentrated in the Northeast, with JFK and Boston serving as primary hubs. When these airports were simultaneously disrupted, the airline lacked geographically diversified “dry hubs” to reposition aircraft and crews, triggering nonlinear cancellation cascades. The situation was compounded by the fact that JetBlue entered the storm with a significant portion of its recovery capacity already impaired.

Regulatory-mandated software updates following an October A320 incident had sidelined or restricted roughly 50 aircraft, leaving the airline with minimal spare capacity precisely when resilience mattered most. Unlike larger peers, JetBlue had no alternative fleet types to deploy.

Crew scheduling systems also broke down once disruption thresholds were breached, leading to timed-out crews, stranded aircraft, and secondary cancellation waves even after weather conditions improved. Labor dynamics further slowed recovery, as strained relations with pilots and flight attendants limited discretionary flexibility during the crisis. The customer-facing impact was severe, with app failures, overwhelmed call centers, and large-scale refunds, vouchers, and rebooking costs.

Financially, the disruption likely displaced 65,000–70,000 passengers, erasing an estimated $60–80 million from Q4 results and potentially another $40+ million in Q1 from reputational drag and softer pricing. With the stock pricing in rapid normalization, the market appears to be underestimating the depth and persistence of these structural issues, leaving further downside risk unaccounted for.

Previously, we covered a bullish thesis on Delta Air Lines, Inc. (DAL) by jaunty_quant in October 2024, which highlighted Delta’s undervaluation, strong technical indicators, premium brand positioning, and resilient cash flows. DAL’s stock price has appreciated by approximately 29.73% since our coverage due to improving margins and renewed investor confidence. Anh Hoang shares a contrarian view but emphasizes structural fragility, operational breakdowns, and downside risk at JetBlue.

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Disclosure: None.