02:18 PM EDT, 07/30/2024 (MT Newswires) -- JetBlue Airways ( JBLU ) said Tuesday it's deferring about $3 billion of capital expenditures through 2029 to improve cash flow as the carrier posted a surprise second-quarter profit, sending its shares soaring.

Aircraft groundings related to Pratt & Whitney engines are "significantly impeding" JetBlue's ( JBLU ) growth rate and pressuring its profitability, JetBlue ( JBLU ) Chief Executive Joanna Geraghty said on an earnings conference call, according to a Capital IQ transcript. The airline is also facing industry-wide cost inflation and continued air traffic control issues.

JetBlue ( JBLU ) has reached a deal with Airbus to defer the delivery of 44 A321neo jets, which are the fleet most affected by the Pratt & Whitney GTF issues, Geraghty told analysts, adding that the move will help lower the company's upcoming capital expenditures by $3 billion. Pratt & Whitney is a unit of RTX (RTX).

Last year, RTX said that a rare condition in powder metal used to manufacture certain engine parts will require accelerated inspection of the PW1100G-JM, or GTF, engine fleet.

JetBlue's ( JBLU ) adjusted earnings fell to $0.08 a share for the quarter through June 30 from $0.45 a year earlier, while operating revenue dropped 6.9% to $2.43 billion. Wall Street was looking for a normalized loss of $0.10 on revenue of $2.4 billion.

"In addition to reliability, our second-quarter performance was aided by continued strength in our premium product offerings, with even more space unit revenue, up double digits year over year," Geraghty said on the call.

JetBlue ( JBLU ) shares were up 13% in Tuesday afternoon trade.

The Pratt & Whitney GTF engines continue to challenge JetBlue's ( JBLU ) ability to plan its long-term business, Geraghty said on the call, adding that aircraft on the ground are expected to "significantly" increase next year. "Our revenue growth has not been enough to outpace our cost challenges and we need to fix that, which is why the goal of our strategy is set a foundation to lead us back to generating positive operating margin in the near term and driving sustainable earnings over the long term."

For the third quarter, JetBlue ( JBLU ) expects revenue to fall by 1.5% to 5.5% year over year, while full-year revenue is seen dropping 4% to 6%. In April, the company projected a low-single-digit decline in 2024 revenue. "We are actively reinvesting in our core geographies in New York, New England, Florida and Puerto Rico, while exiting routes and BlueCities that don't meet our financial hurdle rate," President Marty St. George said in a Tuesday statement.

JetBlue ( JBLU ) expects to generate $800 million to $900 million of incremental earnings before interest and taxes from 2025 through 2027, Chief Financial Officer Ursula Hurley said in a statement.

"In addition to powder metal-related inspections, challenging our engine availability, we've experienced a number of other unscheduled engine maintenance visits that are resulting in GTF engines coming off wing much sooner than anticipated, some after just a year of flying," Hurley said on the call. A majority of the 11 average jets grounded this year are because of inspections outside of powder metal, Hurley added.

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