First U.S. Commercial Airline Flight To Cuba Departs From Florida
JetBlue Flight 387 pushes back from the gate at Fort Lauderdale-Hollywood International Airport as it prepares for take off to become the first scheduled commercial flight to Cuba since 1961 on August 31, 2016 in Fort Lauderdale, Florida. J Joe Raedle—Getty Images

Cuba Flights Haven't Helped JetBlue's Bottom Line

Updated: Oct 25, 2016 2:03 PM UTC

JetBlue reported a lower-than-expected quarterly profit on Tuesday as aircraft maintenance and labor costs rose, and the U.S. budget carrier's average fare fell about 6 percent.

JetBlue shares were down 5.2 percent in early trading.

Revenue per available seat mile, a closely watched measure that compares sales to flight capacity, fell 3.5 percent in the third quarter ended Sept. 30.

JetBlue is expanding rapidly, adding new flights to Cuba and Florida and planning to enter Atlanta, long dominated by larger rival Delta Air Lines. The company hopes low fares, free snacks and extra legroom will help win over travelers.

However, it is not without challenges. With a U.S. ban on tourism to Cuba still in effect, JetBlue and other airlines have started service to gain a foothold on the communist-ruled island, but without demand to fill all planes profitably.

JetBlue's total operating expenses rose 3.1 percent to $1.38 billion as the airline spent more on maintenance and repair, and incurred higher costs related to wages and benefits.

However, the airline spent less on fuel, paying an average $1.48 per gallon of fuel in the quarter, compared with $1.85 a year earlier.

JetBlue said it expected fourth-quarter unit costs, excluding fuel and profit-sharing, to rise 4.5-6.5 percent. This includes a negative impact from Hurricane Matthew of about half a point.

Capacity is expected to grow 3-5 percent during the period.

The company's net income rose to $199 million from $198 million a year earlier, its smallest rise in the past four quarters, while earnings per share were flat at 58 cents.

Analysts had expected an adjusted profit of 60 cents per share, according to Thomson Reuters I/B/E/S.

Total operating revenue rose 2.6 percent to $1.73 billion.

The company bought a small stake in private jet company JetSuite Inc on Tuesday as it expands services on the west coast.

Up to Monday's close of $18.75, JetBlue shares had fallen 17.2 percent this year.