What to Expect from JetBlue’s Revenue Growth

JetBlue Airways’ (JBLU) revenue fell almost 0.7% year-over-year (or YoY) in the first quarter, primarily due to its strong 1Q16 results, which benefitted from the Easter holiday.

Analysts are, however, expecting revenues to grow in the future. For 2Q17, revenues are expected to rise 10.3% YoY to $1.8 billion. For both 3Q17 and 4Q17, revenues are expected to rise 9.3% YoY each to $1.9 billion and $1.8 billion, respectively.

These estimates add up to full-year 2017 growth of 6.8% YoY and revenues of $7.1 billion. The company is expected to see revenue growth of 8.8% to $7.7 billion in 2018. In 2019, revenue growth is expected to slow down to 3.8% to $7.9 billion.

In 2016, JetBlue’s unit revenues fell 5% to 12.4 cents. Investors were hopeful that the trend would turn around in the first quarter. However, unit revenues fell by another 4.8% to 11.8 cents. Unit revenue is the revenue earned by an airline for flying one passenger for one mile.

Airlines have realized that they need to get back to positive unit revenue growth to stay afloat. Thus, most airlines have slowed down capacity growth. For 2Q17, JBLU is expecting a 4%–6% YoY increase in capacity, similar to its earlier guidance. For the full year 2017, capacity growth is expected to be in the range of 5.5%–7.5% YoY, again in line with the company’s earlier guidance.

In its 1Q earnings release, JetBlue had guided for 2Q17 unit revenue growth of 3%-6%. It has since upped the guidance to a growth of 4%–6% YoY.

Investors can gain exposure to JetBlue stock by investing in the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), which invests 1.9% of its portfolio in JetBlue (JBLU). It also invests 1.9% in American Airlines (AAL), Delta Air Lines (DAL), United Continental (UAL), Southwest Airlines (LUV), and Spirit Airlines (SAVE).