FILE PHOTO: A JetBlue Airlines commercial aircraft flies over Washington as it approaches to land at Dulles International Airport, as seen from Washington, U.S., August 5, 2024. REUTERS/Umit Bektas/File Photo

(Corrects last paragraph to show JetBlue's end-2027 EBIT target is $850 million to $950 million, not $800 million to $900 million)

(Reuters) -U.S. carrier JetBlue Airways reported a smaller-than-expected quarterly loss on Tuesday, as steady demand for premium travel and cost-control efforts helped cushion margins.

High-margin premium services have remained resilient, with affluent travelers continuing to pay extra for added comfort, while carriers have trimmed capacity on domestic routes to cut costs.

JetBlue joins larger rivals United, American and Delta in highlighting resilient premium demand that has helped offset a slowdown in the U.S. domestic market amid economic uncertainty from President Donald Trump's sweeping policy changes.

"We are optimistic the demand environment will continue to improve through the end of the year," said Marty St. George, JetBlue's president.

However, JetBlue, which had earlier aimed to achieve breakeven operating margins this year but had to later scale back those expectations, has been squeezed by high operating costs and aircraft groundings linked to RTX's Pratt & Whitney engines.

Rising costs have forced the carrier to tighten spending by exiting unprofitable routes, deferring aircraft deliveries and pausing cabin upgrade plans.

The New York-based airline said it expects fourth-quarter unit revenue, a key measure of pricing power, to be flat to down as much as 4% from a year earlier, when strong demand had driven fares higher.

JetBlue, which operates an all-Airbus fleet, narrowed the range of its 2025 forecast for unit costs excluding fuel to 5%-6%, from a 5%-7% rise earlier.

It reported an adjusted loss of 40 cents per share in the quarter through September, a tad smaller than Wall Street's expectations of 44 cents according to data compiled by LSEG.

The airline's quarterly total operating revenue was $2.32 billion, in line with analysts' expectations.

By end-2027, the airline expects to report an earnings before interest and taxes, or operating profit, of $850 million to $950 million.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Krishna Chandra Eluri)