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JetBlue's (JBLU) August Load Factor Declines, Stock Falls

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Shares of JetBlue Airways Corporation (JBLU - Free Report) declined 2.2% to close the trading session at $19.35 on Sep 13, following the release of its traffic report for the month of August.

Traffic — measured in revenue passenger miles (RPMs) — improved 5% year over year to 4.42 billion. Also, consolidated capacity (or available seat miles/ASMs) expanded 5.4% to 5.08 billion on a year-over-year basis.

On the contrary, load factor or percentage of seats decreased 30 basis points (bps) to 87.1% in August as capacity expansion outpaced traffic growth. This disappointed investors, thus leading to the stock price depreciation.

Moreover, the company registered a completion factor (system wide) of 97.8% in August with 68.1% flights on schedule. On a year-to-date basis, this Long Island City, NY-based carrier posted a 4.6% rise in RPMs while ASMs rose 4.8%,. However, load factor fell 10 bps year over year to 85.3%.

Meanwhile, JetBlue maintains its projection for revenue per available seat mile (RASM) in the third quarter of 2017 in the band of -1% to +1% (on a year-over-year basis). The view is not inclusive of the impact from Irma. The airline intends to provide an update on the impact of Irma on its operations shortly.

In fact, we fear that the impact of the natural calamity on the stock will be anything but minimal because it has significant exposure to Florida with two hubs in the state, Orlando and Fort Lauderdale. The company also has a hub in Puerto Rico. 

 Price Performance

JetBlue has been hurt by multiple headwinds like high costs apart from the recent natural calamities. Consequently, the stock has underperformed its industry on a year-to-date basis. The stock has declined 13.7%, as against its industry’s rally of 11.4% so far this year.

The decline in August load factor is a further setback for the stock.

Zacks Rank & Stocks to Consider

JetBlue carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include Ryanair Holdings (RYAAY - Free Report) , SkyWest Inc. (SKYW - Free Report) and GOL Linhas Aéreas Inteligentes S.A. , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Ryanair has seen the Zacks Consensus Estimate for current-year earnings being revised 3.2% upward over the last 60 days.

SkyWest has witnessed the Zacks Consensus Estimate for current-year earnings being revised 1.9% upward over the last 60 days.

GOL Linhas’ stock price has increased more than 50% over the last six months.

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