JetBlue Airways Corp. (JBLU) on Thursday reported lower second-quarter earnings on increased competition and higher fuel prices, missing Wall Street estimates and triggering a drop in its share price.

JetBlue, a low-cost airline that has reported a profit each quarter since its public offering in April 2002, said net income fell to $21.5 million, or 19 cents a share, from $38 million, or 36 cents a share, a year earlier.

Wall Street analysts, on average, had expected 21 cents a share, according to Reuters Estimates.

"They still have a large exposure to oil," said Ray Neidl, analyst at Blaylock & Partners. "They are still 60 percent exposed in the second half of the year."

Jet fuel is the airline industry's second biggest operating expense after labor, making up between 12 and 14 percent of airlines' operating costs. Fuel costs have risen with the price of oil, which has soared on geopolitical uncertainty.

Industry fare wars, particularly on the transcontinental routes, are also squeezing the airline's profit margins, Neidl said.

Operating revenue at JetBlue rose 30.7 percent to $319.7 million.

Passenger traffic at the New York-based airline increased 40.8 percent, and capacity rose 42.2 percent. The airline ended the quarter with $549.7 million in cash and short-term investments.

JetBlue also said it extended Chief Executive David Neeleman's contract through August 2009.