Grim View at JetBlue

Updated from 7:45 a.m. EST

Fast-growing air carrier JetBlue (JBLU Quote) reported Wednesday that it lost $42 million in the fourth quarter and expects to lose money in 2006, largely because of high fuel costs.

CEO David Neeleman said the solution to the airline's problems is to raise ticket prices and to reduce capacity in select markets. Yet JetBlue seems to be locked into an expansion mode. The company will take delivery of 17 Airbus A320s and 18 Embraer E190s this year, and it's building a new terminal at Kennedy International Airport in New York.

Under accounting rules, it must begin making $3 million quarterly payments for the new terminal this year, even though the facility won't be occupied until 2008 at the earliest. ...