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JetBlue Capacity Growth Falls amid Declining Unit Revenue

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JetBlue Airways’ capacity growth

JetBlue Airways’ capacity rose 4.8% YoY in August 2018, which was similar to its average in the first seven months at 4.7% YoY. Capacity growth has slowed down in the past few months. JetBlue recorded its lowest capacity growth of 0.1% YoY in January 2018, while the highest capacity growth for the year was in May at 7.6%.

Year-to-date in August 2018, JBLU’s capacity rose 4.7% YoY. In 2017, JBLU’s capacity grew at 4.5% YoY, which was slower than the ~9.1% capacity growth seen in 2016 and the 9.5% growth in 2015.

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Peer analysis

Despite a capacity slowdown, JBLU’s capacity growth in 2018 remains higher than most peers. Low-cost carrier Southwest Airlines (LUV) increased its capacity by 2.6% YoY through August 2018. Legacy carriers Delta Air Lines (DAL) and United Continental (UAL) recorded capacity growth of 3.2% YoY and 4.4% YoY for the same period. Niche legacy carrier Alaska Air (ALK) has recorded the highest capacity growth of 7.1% YoY year-to-date in August 2018.

What to expect

The capacity slowdown is not expected to last. For Q3 2018, the airline is expecting to grow capacity by 7.5% to 9.5% YoY. For the fourth quarter, capacity growth is expected to be in the range of 6.5% to 7.5% YoY against the earlier expected growth of 8.5% to 9.5%. Investors can gain exposure to JBLU by investing in the First Trust Mid Cap Value AlphaDEX Fund (FNK), which holds 0.73% of its portfolio in JBLU.

Check out the August 2018 performances of other airline carriers like Delta Air Lines (DAL) and Southwest Airlines (AAL). Also, stay tuned for updates on United Continental (UAL) and Alaska Air (ALK).

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