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JetBlue Airways’ 3Q17 Performance: Outshines Peers

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3Q17 performance

For 3Q17, JetBlue Airways’ (JBLU) revenues grew 4.6% year-over-year to $1.8 billion, in line with analyst estimates for the quarter. Its operating income declined 12.4% YoY to $310.0 million, and its net income fell 10.1% to $179.0 million.

JetBlue’s earnings per share (or EPS) reached $0.55, which beat analysts’ estimates of $0.53 per share.

Key metrics

JetBlue Airways’ capacity for 3Q17 rose 3.7% YoY to ~12.2 billion miles. Its traffic growth lagged capacity with 2.3% YoY growth to ~10.2 billion miles.

In contrast to Alaska Air (ALK), Southwest Airlines (LUV), and Spirit Airlines (SAVE), JBLU’s average passenger fare for the quarter rose 0.5% YoY, leading to unit revenue growth of 0.9% YoY to ~12.7 cents.

JetBlue’s cost per available seat mile (or CASM ex-fuel) rose 2.7% YoY, leading to an increase in total operating expenses of 9.1% YoY to $1.5 billion. Due to rising crude oil prices, fuel costs rose 14.6% YoY to $1.69 per gallon.

Guidance

JetBlue was well on its way to profitability in the second quarter of 2017 when Hurricanes Irma and Maria derailed its progress. Despite this, JBLU has posted better results than most of its peers.

The negative impact of hurricanes is expected to extend into the fourth quarter, leading to a 1%–2% impact on unit revenues, which is expected to be in the range of -3% to flat.

JBLU’s capacity for 4Q17 is expected to grow 4.5%–5.5% YoY (-2.9% hurricane impact). Its unit cost is expected to rise 5.0%–7.0% YoY (-2.5% hurricane impact).

Its capacity for fiscal 2017 is expected to grow 4.0%–5.0% YoY (-1.4% hurricane impact). Its unit cost is also expected to rise 4.0%–5.0% YoY (-1.5% hurricane impact).

However, its cost growth is expected to fall to 0.0%–1.0% from 2018–2020. This could help JBLU maintain its margin lead over its peers.

You can get further exposure to JetBlue (JBLU) stock by investing in the First Trust NASDAQ Transportation ETF (FTXR), which invests 1.2% of its portfolio in the airline.

FTXR also invests 4.3% in American Airlines (AAL), 4.1% in Delta Air Lines (DAL), 3.9% in United Continental (UAL), 1.3% in Southwest Airlines (LUV), and 1.3% in Alaska Air (ALK).

In the next article, we’ll look at how Spirit Airlines performed in 3Q17.

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