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JetBlue Shares Decline More Than 4% on Q3 RASM View Cut

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JetBlue Airways Corporation JBLU has provided a bearish forecast for third-quarter unit revenues, following which its shares declined more than 4% at the close of business on Sep 4. This marks the carrier’s biggest decline in the past five months.

In an 8-k filing, the carrier revised its guidance for third-quarter revenue per available seat mile (RASM). It now anticipates RASM to either slide up to 2% or remain flat year over year. Previously, the metric was estimated to increase in the 0.5-3.5% range. The downside is due to 1.25 points negativity from low bookings to Puerto Rico, 0.75 points adversity each from Hurricane Dorian and challenges in Punta Cana as well as a 1-point headwind from lower-than-expected demand across its system.

As JetBlue struggles with low demand trends, its fellow airline players seem quite optimistic about the overall outlook. Evidently, at the Cowen and Company 12th Annual Global Transportation Conference held on Sep 4, Delta Air Lines DAL and United Airlines UAL have furnished a positive outlook for the third quarter as well as the full year.

On the back of strong demand and rising revenues, Delta is hopeful about achieving its third-quarter earnings and revenue targets. Additionally, the carrier is confident about registering 6-7% top-line growth and a 25% surge in earnings per share in 2019, besides generating solid margins.

Meanwhile, United Airlines expects third-quarter passenger unit revenues to be near the mid-point of the guided range of an increase between 0.5% and 2.5% despite a 50-basis points’ negative impact from a soft demand scenario in China including Hong Kong. Additionally, the company maintains its expectations for current-quarter adjusted pre-tax margin in the 10-12% range.

Zacks Rank & Another Key Pick

JetBlue carries a Zacks Rank #2 (Buy). Another stock worth considering in the same space is Copa Holdings, S.A. (CPA - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Copa have surged more than 32% in a year’s time.

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