JetBlue Airways Corporation (JBLU - Analyst Report) displayed weak traffic across its network for the month of Jan 2014. The carrier reported airline traffic – measured in revenue passenger miles or RPMs – of 2.78 million, down 0.1% year over year. Consolidated capacity (or available seat miles/ASMs) was also down 1.4% year over year at 3.36 billion.
The load factor or percentage of seats filled by passengers, however, was 82.8%, up 110 basis points. Passenger revenue per available seat mile (PRASM) increased 6% year over year, despite the negative impact of harsh winter storms of January. The company registered a completion factor of 89.3%, with on-time performance of 56.9%.
We expect JetBlue to sustain traffic growth in the coming days based on increasing travel demand, network expansion, fleet re-designing, optimization of unit revenues, capital expenditure management and disciplined growth. The company’s growing presence in key markets and penetration into untapped arenas will support its momentum.
Further, the company has won bids to purchase take-off and landing slots at Reagan National Airport (DCA) in Washington. The slot purchase is part of a mega merger deal between American Airlines and U.S. Airways Group that led to the formation of American Airlines Group Inc. (AAL - Snapshot Report).
JetBlue could take over 12 such slot pairs and obtain 8 additional pairs in DCA subject to the final approval of the U.S. justice department. The slot wins will allow JetBlue to gain a significant portion of the Washington air service market if it can price its shares attractively. Thus despite the decline in Jan traffic we remain bullish on the company’s prospects.
JetBlue Airways carries a Zacks Rank #2 (Buy). Other stocks worth considering within this sector are Southwest Airlines Co. (LUV - Analyst Report) and United Continental Holdings Inc. (UAL - Analyst Report). Both Southwest and United carry a Zacks Rank #1 (Strong Buy).