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JetBlue (JBLU) Rides on Low Fuel Costs Amid Pandemic Woes

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We recently issued an updated report on JetBlue Airways Corporation (JBLU - Free Report) .

Like many other transportation companies, JetBlue is also hurting from the coronavirus pandemic.

With air travel demand declining at an unprecedented level, capacity contracted 45% year over year in the first six months of 2020. With traffic declining at a faster rate than capacity, consolidated load factor (percentage of seats filled by passengers) slumped to 64.8% from 84.3% in the first six months of 2020. The spike in coronavirus cases in some parts of the United States and new quarantine rules have worsened the already-weak demand scenario.

During the first-half of 2020, operating expenses per available seat mile (CASM) increased more than 26% to 14.72 cents due to capacity cuts. Excluding fuel, the metric escalated more than 50% to 12.9 cents. With capacity at a low level, CASM is likely to be high in the third quarter too, thereby denting the bottom line.

Nevertheless, low fuel prices are helping JetBlue partly offset the adversities. Notably, average fuel cost per gallon, including fuel taxes, declined 17.4% year over year to $1.74 during the first six months of 2020. Additionally, the airline’s stringent cost-cutting measures support the bottom line.

Zacks Rank & Stocks to Consider

JetBlue currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings (KNX - Free Report) , Canadian Pacific Railway Limited (CP - Free Report) and Werner Enterprises (WERN - Free Report) . Knight-Swift sports a Zacks Rank #1(Strong Buy), while Canadian Pacific and Werner carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, Canadian Pacific and Werner is pegged at 15%, 8% and 8.5%, respectively.

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