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Why JetBlue Airways' August Performance Worried Investors

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Part 7
Why JetBlue Airways' August Performance Worried Investors PART 7 OF 7

JetBlue Airways’ Load Factor Continues to Fall for 3rd Month in a Row

Utilizations

Since JetBlue Airways’ (JBLU) traffic growth has been lagging behind its capacity growth, utilizations have fallen for the third straight month. JetBlue’s utilization fell by 0.3 percent points to 87.1% for the month of August 2017. Year-to-date in August 2017, there was a slight decline of 0.1 percentage point in utilization to 85.3%.

JetBlue Airways&#8217; Load Factor Continues to Fall for 3rd Month in a Row

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This is in stark contrast to carriers Alaska Air (ALK), Southwest Airlines (LUV), Delta Air Lines (DAL), and American Airlines (AAL), which have seen growth in their August load factors. Other carriers like Spirit Airlines (SAVE) and United Continental (UAL) have seen a decline in utilization.

Load factor is the most commonly used measure of an airline’s capacity utilization. It’s calculated as revenue passenger miles divided by available seat miles. A higher load factor indicates better utilization of aircraft capacity.

Yields improve

For the first quarter of 2017, JetBlue’s yields have fallen 5.5% YoY to 12.7 cents. However, the 5.7% YoY growth in the second quarter more than made up for the first-quarter loss. Yields rose to 13.6 cents.

Unit revenues follow

JetBlue’s revenue per available seat mile (or RASM), commonly known as unit revenues, fell 4.8% YoY in the first quarter of 2017 following the decline in yields. In the second quarter, RASM improved by a strong 7.0% YoY to 12.9 cents, following the growth in yields.

Investors can gain exposure to JBLU by investing in the First Trust Value Line 100 ETF (FVL), which holds 0.9% of its portfolio in JBLU.

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