JetBlue follows United, announces flight cuts because of coronavirus

JetBlue Airways will reduce capacity amid falling travel demand as fears rise of a widespread COVID-19 coronavirus outbreak in the U.S. With the move, JetBlue joins United Airlines and foreign peers in adjusting to the changing environment.

The New York-based carrier will cut system capacity by roughly 5% in the "near term," said JetBlue president Joanna Geraghty in an internal memo to employees on Wednesday viewed by TPG. She attributed the reduction due to a "fall in demand," and said the airline could reduce capacity further if required.

"We must also be flexible in this rapidly changing environment," said Geraghty. "We will make some tough decisions in the days ahead as we monitor the impact of coronavirus."

Sign up for the free daily TPG newsletter for more airline news

In addition, JetBlue is delaying or cancelling any upcoming company meetings and events; reducing hiring of frontline and support center staff; and limiting non-essential spending. The carrier is also considering offering employees voluntary time off.

Earlier on Wednesday, United unveiled a 20% cut to international schedules and a 10% cut to domestic schedules in April in response to falling demand. The Chicago-based carrier said similar cuts are likely in May.

U.S. carriers began suspending flights to China due to fears of the outbreak at the end of January. However, COVID-19 has continued to spread, with clusters emerging in Iran, Italy and South Korea in recent weeks, and in the U.S. in just the past few days.

Related: A guide to traveling during the coronavirus outbreak

As of noon on Wednesday, the Centers for Disease Control (CDC) reported 80 cases of COVID-19 and nine deaths in 13 states across the U.S.

Despite not having any flights to China -- or any of the impacted countries -- JetBlue was the first U.S. carrier to offer domestic travelers a blanket waiver to cancel or change flights due to fears of COVID-19.

The capacity cut comes as JetBlue was scrambling to meet its growth targets for 2020. In January, the airline leased four used Airbus A321s to make up for delays of new A321neo deliveries that it needed to grow capacity by 5.5-7.5% year-over-year this year.

Related: JetBlue picks up used jets as Airbus A321neo delays mount

Those additional A321s may not be needed if the reductions announced Wednesday remain in place for an extended period.

"We have a solid balance sheet (money in the bank) to help us weather this storm," said Geraghty in the memo in what was an added level of assurance to staff versus what United told employees on its cuts. "But in times when revenue falls quickly, having enough cash on hand to meet our financial obligations – from buying fuel to paying business partners to making payroll – becomes a priority."

Most in the industry expect other U.S. airlines to follow JetBlue and United's lead with domestic capacity cuts as fears of COVID-19 are increasingly halting all but essential travel.

Related: Could the coronavirus end the decade-long U.S. airline expansion?