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JetBlue June Traffic Data Solid, Q2 Fuel Cost View Bleak

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JetBlue Airways Corporation (JBLU - Free Report) posted impressive traffic results for June. Traffic measured in revenue passenger miles (RPMs), increased 7.8% year over year to 4.4 billion. Consolidated capacity (or available seat miles/ASMs) also expanded 5.9% to 5.06 billion on a year-over-year basis.

Load factor or percentage of seats filled by passengers improved 150 basis points (bps) to 87% in the month as traffic growth outpaced capacity expansion.

The Long Island City, NY-based low-cost carrier registered a completion factor (system wide) of 99% with 73.8% flights on schedule.

In the first six months of 2018, the carrier posted a 5.8% rise in RPMs while ASMs grew 4.8%, both on a year-over-year basis. Also, load factor inched up 80 bps to 85.4%.


Revised Q2 Outlook

For the second quarter, the carrier expects revenue per available seat mile (RASM) to decline approximately 1.2%. Previous outlook had called for a decrease of 0.5-2.5%. This view includes a 2.5 point adversity from holiday placement and 1.25 point negativity from completion factor and co-brand incentive payments.

With crude oil prices trending up over the past few months, the company has increased fuel cost view for the quarter under consideration. It now anticipates fuel cost per gallon between $2.28 and $2.30, higher than $2.23 per gallon estimated earlier.

Expansion Update

JetBlue revealed that tickets to the previously announced services from New York City and Boston to Mexico City are currently on sale. The operation is scheduled to begin this Oct 25 with one-way fares from New York, starting at $150 while the tickets from Boston are priced at $153.

Flights on the route will operate on an Airbus A320 aircraft furnished with comfortable seating, super fast Wi-Fi and several other modern amenities.

Zacks Rank & Key Picks

JetBlue carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are GATX Corporation (GATX - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Atlas Air Worldwide Holdings (AAWW - Free Report) . While Atlas Air Worldwide sports a Zacks Rank #1 (Strong Buy), GATX and Expeditors carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of GATX and Atlas Air Worldwide have rallied more than 22% in a year while Expeditors gained more than 27%.

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