It was not a good day to be discount airline JetBlue (JBLU). Not only did news come out about some new fines from the Department of Transportation (DOT), but it also landed some disturbing new allegations from customers complaining about treatment that seems downright inhumane. None of this added up to good news for JetBlue, and shares were down modestly in Friday afternoon’s trading.
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JetBlue landed $2 million in fines for “chronically delayed flights.” This is actually the first time in the DOT’s history, noted a report from CNBC, that such a fine was levied. But given that JetBlue had a combined total of “…at least 145 times” over the course of June 2022 to November 2023 in just four routes, it seems like some kind of fine was called for. Or at least some refunds to customers.
In a move that is surprisingly cogent for Transportation Secretary Pete Buttigieg, the department announced that “…today’s action puts the entire airline industry on notice that we expect their flight schedules to reflect reality.” Worse, the DOT noted that JetBlue was actually responsible for the delays in more than 70% of cases on those routes, and JetBlue failed to adjust flight times accordingly. The result was that it failed to “…avoid illegal unrealistic scheduling.”
“Kicked to the Street Like Dogs”
Things did not get better for JetBlue, noted a New York Post report, on a flight from the Turks and Caicos airport. While set to depart the country on a return trip to Boston, another delay hit JetBlue, and the passengers on board said flight were “kicked to the street like dogs in a foreign country.”
This would be rough enough normally, but then, JetBlue noted that the passengers in question would not be allowed to remain in the airport to wait for their departure, and they were forced to dig up their own last-minute accommodations. The results were, as some described it, “sketchy.” One displaced passenger described a cab being chased by wild dogs, and having to pay $1,000 for a last-minute Airbnb site big enough to accommodate the family. But JetBlue apologized, and offered $200 in travel credit for future flights, where hopefully they will not be thrown out at the last minute again.
Is JetBlue a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on JBLU stock based on one Buy, seven Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 38.91% rally in its share price over the past year, the average JBLU price target of $6.51 per share implies 11.91% downside risk.
