NEW YORK, Dec 13 (Reuters) - JetBlue Airways Corp on Tuesday said it was earning more from checked bag fees and higher-priced fares than expected and plans to double the money it will return to shareholders via stock buybacks.
The New York-based airline said that new fares and fees for add-ons it rolled out last year, including a $20 checked bag charge for its lowest-fare customers, generated an expected $260 million in 2016, versus a prior forecast of $200 million.
As part of the windfall, the carrier is expanding its share repurchase program to $500 million from $250 million through 2019.
JetBlue shares jumped 5 percent in early Tuesday trade as unit revenue guidance released during after-market hours on Monday was better than investors had expected.
JetBlue also said it would generate up to $300 million in annual cost savings by 2020 through several initiatives, including up to $65 million from evaluating suppliers and spending at airports and automating more of the customer experience from check-in to boarding.
Staff, once constrained to stay behind a counter, will be free to approach customers who need help most, interim Chief Financial Officer Jim Leddy said in an interview.
The change is not about headcount and will “not necessarily” result in fewer hours or lower pay for employees, he said.
Cost savings also include about $20 million per year from reviewing agreements with online travel agencies, JetBlue said.
“We’re very frustrated there’s just no way to get across the real value of a JetBlue experience versus flying any of our competitors,” Marty St. George, JetBlue’s executive vice president of commercial and planning, said during the same interview. “Frankly, I think that getting back towards a direct model is probably a better solution for us.”
For months, airlines have tried to draw passengers away from low-price comparison sites and back to their own home pages. They see customizing travel packages with airport lounge access, extra legroom or hotel stays as the area where revenue has the most room to grow.
The airlines’ efforts have put them at odds with some online travel agencies that do not allow for upselling beyond the base airfare. It also has drawn ire from consumer advocates who say airlines are attempting to hamper comparison shopping and boost prices. (Reporting By Jeffrey Dastin and Alana Wise in New York; Editing by Alan Crosby)