(Reuters) - JetBlue Airways Corp’s (JBLU.O) quarterly earnings missed Wall Street estimates because of rising costs, and the airline said on Tuesday that it would delay Embraer (EMBR3.SA) jet deliveries over the next three years to cut expenses.
The airline, whose shares fell nearly 3 percent, also announced orders for 35 additional Airbus EAD.PA planes valued at about $3.9 billion. It said its plans to add flights in markets such as Fort Lauderdale, Florida, and the Caribbean called for bigger aircraft with more seats.
JetBlue, which has a major hub at New York’s John F. Kennedy International Airport, is looking to increase revenue by gaining more business passengers. Next year, the carrier plans to add first-class seats that fully recline on cross-country U.S. flights. It is also rolling out Wi-Fi, a favored amenity for business passengers, on its planes.
“As our network matures, we believe larger-gauge aircraft will allow us to better serve high-density markets and more effectively use our valuable airport slots portfolio in New York,” JetBlue Chief Executive Officer Dave Barger said during a conference call.
Cost pressures have been a major hurdle for New York-based JetBlue, which has 80 percent of its operations in the U.S. Northeast. In the third quarter, fuel costs increased 4 percent, salaries rose 8 percent, and expenses for plane maintenance and repairs spiked 28 percent.
Net income rose 58 percent to $71 million, or 21 cents a share, in the seasonally strong quarter from $45 million, or 14 cents a share, a year earlier, as JetBlue flew fuller planes.
Analysts on average expected a profit of 22 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 10 percent to $1.44 billion, while total costs increased 8 percent.
JetBlue said it would defer delivery of 24 Embraer aircraft from the 2014-2018 timeframe to 2020-2022, bringing those planes to about 60 in its fleet of 190 over the near term. The airline has cited rising maintenance costs tied to the E-190 plane engines made by General Electric Co in recent quarters.
The carrier said it would also order 35 Airbus planes, including 15 of the current A321 family, and 20 A321s that will be equipped with new, more fuel-efficient engines. JetBlue also said it converted orders for 18 A320s to A321 planes.
Shares of JetBlue were down 2.7 percent at $7.32 in afternoon trading. Embraer shares fell about 5 percent in Brazil, and Airbus parent EADS gained 1.2 percent in Paris.
Airbus said in a statement that JetBlue’s move marked its 10,000th order for its A320 jet family.
Reporting by Karen Jacobs in Atlanta; Editing by Jeffrey Benkoe, Chris Reese and Lisa Von Ahn