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Low-cost passenger airline JetBlue Airways (JBLU - Analyst Report) reported improved traffic for November 2012 from the year-ago month. The increase was primarily attributable to higher capacity.

The company’s airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – increased 5.7% year over year to 2.68 billion. Consolidated capacity (or available seat miles/ASMs) for the month was 3.29 billion, up 8.0% from November, last year.
The load factor or percentage of seats filled by passengers, however, dipped to 81.5% from 83.3% in the second last month of 2011. Passenger revenue per available seat mile (PRASM) also declined 5% year over year. The company expects December PRASM to go up by 1% to 2% over the comparable month prior year.

For the first eleven months of 2012, JetBlue Airways generated RPMs of 30.69 billion (up 9.6% year over year) and ASMs of 36.49 billion (up 7.8% year over year), while load factor was 84.1%, up 140 basis points.

Headquartered in Forest Hills, New York, JetBlue Airways has the youngest and most fuel-efficient fleet among other major U.S. airlines and provides high-quality customer service featuring all-leather seats and live satellite television in every seatback.

We maintain our long-term Neutral recommendation on the stock. JetBlue Airways currently retains a Zacks #3 Rank that implies a Hold rating for a period of 1–3 months.

We expect JetBlue Airways to benefit from rising travel demand, schedule optimization, cost control, optimization of unit revenues, managed capital expenditures and consistent growth. The company is also making continues progress in expanding its product and service offerings on board and on the ground to aid growth in ancillary revenues and enhance ticket pricing flexibility.

However, rising fuel price, competitive pressures from strong industry rivals — United Continental Holdings Inc. (UAL - Analyst Report) and Delta Air Lines Inc. (DAL - Analyst Report) — and economic uncertainty keep us cautious on the stock.

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