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JetBlue (JBLU) Tops Q2 Earnings Estimates, Declines Y/Y

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JetBlue Airways Corporation’s (JBLU - Free Report) second-quarter 2018 earnings per share (excluding 76 cents from non-recurring items) of 38 cents surpassed the Zacks Consensus Estimate of 36 cents. However, the bottom line decreased significantly on a year-over-year basis primarily due to high fuel costs.

Total operating revenues of $1,928 million fell marginally short of the Zacks Consensus Estimate of $1,931.2 million. Nevertheless, the top line increased approximately 5% from the year-ago figure. Passenger revenues, which accounted for bulk of the top line (96.4%), were up 5.2% in the quarter under review. Other revenues were roughly flat year over year.

Operating Statistics

Capacity, measured in available seat miles, expanded 6.3% year over year. Traffic — measured in revenue passenger miles — grew 7.5% in the reported quarter. Load factor (percentage of seats filled by passengers) improved 100 basis points (bps) year over year to 86.2% as traffic growth outpaced capacity expansion in the three-month period.

Yield per passenger mile declined 2.2% year over year to 14.24 cents. The average fare at JetBlue declined 0.7% to $170.08.

Passenger revenue per available seat mile (PRASM: a key measure of unit revenue) decreased 1% to 12.27 cents. Moreover, operating revenue per available seat mile (RASM) was down 1.2% to 12.74 cents. The metric was negatively impacted by the shift in holiday travel into the first quarter.

Expenses

In the second quarter, total operating expenses (on a reported basis) increased 39.1% year over year mainly owing to high fuel costs. Average fuel cost per gallon (including fuel taxes) escalated 41.7% to $2.28. Moreover, JetBlue’s operating cost per available seat mile (CASM) was up 30.9% to 13.69 cents. Excluding fuel, the metric climbed 1.9% to 8.26 cents on account of a rise in labor costs.

Balance Sheet

JetBlue, carrying a Zacks Rank #3 (Hold), exited the quarter with cash and cash equivalents of $603 million compared with $303 million at the end of 2017. Total debt, at the end of the second quarter was $1,358 million than $1,199 million at the end of 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

JetBlue Airways Corporation Price, Consensus and EPS Surprise

 

JetBlue Airways Corporation Price, Consensus and EPS Surprise | JetBlue Airways Corporation Quote

Outlook

For the third quarter of 2018, the carrier expects capacity to increase between 7.5% and 9.5%. The metric is anticipated to increase in the range of 6.5-7.5% for 2018 (including a reduction of  2 points for fourth-quarter capacity growth).

Consolidated operating cost per available seat mile, excluding fuel, is expected to grow in the band of 1-3% in the third quarter. For the current year, the metric is still projected in the range of -1% to +1% (year over year).

RASM growth is anticipated to be between 0% and 3% in the third quarter. Third-quarter fuel cost, net of hedges, is envisioned to be $2.33 per gallon.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely Norfolk Southern Corporation (NSC - Free Report) , United Parcel Service, Inc. (UPS - Free Report) and Genesee & Wyoming Inc. . While Norfolk Southern and UPS will report second-quarter earnings on Jul 25, Genesee & Wyoming will do the same on Jul 27.

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