JetBlue’s September Traffic Increases, Load Factor Down

JetBlue Airways Corporation JBLU reported decent traffic figures for September 2018. Traffic (measured in revenue passenger miles or RPMs) improved 18.5% year over year to 3.9 billion. On a year-over-year basis, capacity (or available seat miles/ASMs) climbed 19.3% to 4.9 billion.

Owing to capacity expansion outpacing traffic growth, load factor (percentage of seats filled by passengers) contracted 50 basis points (bps) to 79.7%. During the month, the low-cost carrier registered a completion factor (system wide) of 98.9% with 77.5% flights on schedule.

At the end of the first nine months of 2018, JetBlue generated RPMs of 38.3 billion (up 7.2% year over year) and ASMs of 44.7 billion (up 6.1% year over year). Consequently, load factor registered a rise of 80 basis points year over year to 85.6%.

 

The Long Island City, NY-based carrier revised third-quarter guidance for revenue per available seat mile (RASM). Earlier, RASM was anticipated to grow in the range of 1-3% for the soon-to-be-reported quarter. Under the revised guidance, JetBlue expects RASM to decline around 0.4 points, primarily owing to turbulent weather conditions within its network in September. This has resulted in refunds to customers as well as reduced bookings to certain destinations on a temporary basis. The carrier is scheduled to report third-quarter earnings results on Oct 23.

It seems that the load factor decline in September and lowered RASM guidance dented investors’ optimism on the stock, as it shed 4.3% of its value on Oct 10, closing at $ 16.63.

Apart from the traffic report, JetBlue was also in the news recently for its expansion endeavor. To that end, JetBlue announced plans to enhance Palm Springs service with new non-stop flights to Boston. Additionally, the carrier will extend the duration of the current seasonal service to New York’s John F. Kennedy Airport.

Zacks Rank & Key Picks

JetBlue carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Transportation Sector are ArcBest Corporation ARCB, Norfolk Southern Corporation NSC and Matson, Inc. MATX. While Norfolk carries a Zacks Rank #2 (Buy), ArcBest and Matson sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of ArcBest, Norfolk and Matson have gained 23.4%, 28.9% and 32.3% in the past six months, respectively.

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JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
 
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