Strong management outlook
JetBlue management’s outlook for the second quarter of 2015 projects an increase in cost per available seat mile (or CASM) between 1%–3%. Also, Ex-CASM (or CASM excluding fuel and profit sharing), is forecast to grow between 0%–2% on a year-over-year basis, while its capacity is expected to increase between 7%–9%.
Analyst estimates for 2Q15
For the second quarter of 2015, analysts estimate JetBlue’s sales to grow by 7.56% to $1.606 billion, compared with $1.49 billion in 2Q14. The company’s operating profit is expected to grow by 106% to $290.75 million, while net income is expected to increase to $155.89 million, a growth of 155%.
Earnings per share (or EPS) for 2Q15 is expected to grow by 139% to $0.456, compared with $0.19 in 2Q14.
Operating profit has room to grow
JetBlue’s operating income grew to $253 million for the first quarter of 2015. While this represents enormous growth from last year’s Q1 numbers of $41 million, the company still has great deal of room for growth.
If the company continues to grow at the same pace, it could potentially reach an operating profit of nearly $1 billion by 2020.
Share performance review
JetBlue’s stock has done extremely well in 2014. It gave returns of more than 88%, compared with 11.8% offered by the SPDR S&P 500 ETF Trust (SPY). Its stock reacted positively to the earnings report and has since gained ~3%, while it has surged almost 36% since January 2015.
In comparison, all major airlines—with the exception of Alaska Airlines, which gained ~8%—have lost value. American Airlines (AAL) and United Continental (UAL) lost ~8%, Delta Air Lines (DAL) lost 6%, and Southwest Airlines (LUV) lost 0.46%.