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Do JetBlue’s Key Statistics Support Analyst Estimates?

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Oct. 11 2020, Updated 12:07 p.m. ET

Capacity growth

Like other airlines, JetBlue Airways Corporation has taken advantage of falling crude oil prices to expand its existing fleet. JetBlue’s double-digit revenue growth has been fueled by double-digit capacity growth. Historically, JBLU has seen the highest capacity growth among the seven major airlines. Spirit Airlines (SAVE) has seen the highest overall growth, flowed by Alaska (ALK) and JBLU. The three legacy carriers, United Airlines (UAL), American Airlines (AAL), and Delta Airlines (DAL), have seen lower single-digit growth. JBLU forms ~1% of the iShares S&P Mid-Cap 400 Growth ETF (IJK).

JBLU has recorded consistent capacity growth that has exceeded traffic growth considerably. Despite concerns of overcapacity in the airline industry, JetBlue has maintained its capacity growth of 7%–9% in 2015. But it will cut capacity across some unprofitable routes.

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Capacity utilization

Aggressive growth in capacity has affected JetBlue’s capacity utilization, as it fell in two of the three months of the third quarter. The company’s capacity utilization, as measured by load factor, fell by 1.3 basis points for both July and August and flattened in September.

The airline’s average load factor during the quarter fell from 85.8% last year to 85.3% last quarter. The coming months are expected to see better capacity utilization since the holiday season should help demand grow for the airline.

Traffic growth

JetBlue Airways Corporation’s (JBLU) traffic growth has been in line with the industry. The company has seen continuous growth in traffic. September was the strongest month with over 13% growth. However, despite strong traffic growth, JBLU’s unit revenues came in at the low end of previous guidance, signaling slower recovery. The passenger revenue per available seat mile or PRASM, a measure of unit revenues, saw small but positive growth across all three months of the quarter as a result of better demand. This contrasts to other airlines that are seeing a decline in PRASM.

JBLU’s increasing capacity should support revenue growth moving forward. However, a declining load factor is a huge concern.

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