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What to Expect from JetBlue Airways' Upcoming 3Q16 Earnings

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What to Expect from JetBlue Airways' Upcoming 3Q16 Earnings PART 1 OF 6

From Biggest Loser to Sole Gainer: What’s Changed at JetBlue?

Positive returns in 3Q16

In 2Q16, JetBlue Airways (JBLU) was the airline stock that fell the most, tumbling 21.6%. All other regional airlines, including Southwest Airlines (LUV), Spirit Airlines (SAVE), and Allegiant Travel (ALGT), were also in the red. 

While all other airlines have remained in the red in 3Q16, JetBlue has managed to move into the green zone.

From Biggest Loser to Sole Gainer: What&#8217;s Changed at JetBlue?

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Among regional players, Allegiant Air Travel (ALGT) has been the biggest loser with a 13% fall, followed by Spirit Airlines (SAVE) with a fall of 5% in the same period. JetBlue Airways has risen 4% in 3Q16.

One of the reasons for this outperformance was the company’s better-than-expected 2Q16 earnings. JBLU reported earnings per share (or EPS) of $0.53, higher than analysts’ consensus expectation of $0.48. Another reason for JBLU’s outperformance was its improved unit revenue guidance, which we’ll discuss in detail later.

The broader market tracked by the SPDR S&P 500 ETF (SPY) rose ~3% during 3Q16. As spending on airline services is discretionary and airlines compete for consumers’ money, it makes more sense to compare airlines’ performances with the consumer discretionary sector. The Consumer Discretionary SPDR ETF (XLY) rose 4% during the quarter.

YTD still negative

Year-to-date (or YTD), JBLU’s stock continues to be one of the biggest losers, falling almost 21%. ALGT is next, with an 11% fall. Southwest has fallen 4.5%, and Spirit Airlines has risen ~6% YTD.

Series overview

JetBlue Airways is expected to release its 3Q16 earnings on October 25, 2016. In the following articles, we’ll take a look at why investors are now optimistic about JetBlue, what key indicators to watch for, and what to expect for the company in 2016. We’ll also discuss short-term risks for airlines.

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