JetBlue Airways JBLU reported better-than-expected earnings and revenues in the second quarter of 2019. The company’s bottom line (excluding 1 cent from non-recurring items) came in at 60 cents per share, which outpaced the Zacks Consensus Estimate of 57 cents. Moreover, quarterly earnings increased 57.9% on a year-over-year basis due to its prudent cost management.
Operating revenues totaled $2,105 million, which surpassed the Zacks Consensus Estimate of $2,100.3 million. Moreover, it compared favorably with the year-ago number. Passenger revenues, which accounted for bulk of the top line (96.5%), improved 9.3% in the quarter under review. Other revenues were up 5.3%.
Additionally, this low-cost carrier issued performed well with respect to revenue per available seat mile (RASM: a key measure of unit revenue) in the reported quarter. RASM increased 3.1% in the reported quarter to 13.14 cents. RASM was aided by the holiday calendar placement apart from strong close-in trends.
Capacity, measured in available seat miles, expanded 5.9% year over year. Meanwhile, traffic, measured in revenue passenger miles, grew 5.7% in the reported quarter. Consolidated load factor (percentage of seats filled by passengers) contracted 20 basis points year over year to 86% as traffic growth was outpaced by capacity expansion in the three-month period.
Average fare at JetBlue during the quarter increased 8.3% to $184.24. Yield per passenger mile increased 3.5% year over year to 14.74 cents. Passenger revenue per available seat mile (PRASM) increased 3.3% to 12.68 cents.
In the second quarter, total operating expenses (on a reported basis) declined 10.8% year over year despite higher costs pertaining to salaries, wages and benefits. Average fuel cost per gallon (including fuel taxes) decreased 5.5% year over year to $2.16.
JetBlue’s operating expenses per available seat mile (CASM) declined 15.7% to 11.58 cents. Excluding fuel, the metric increased 1.8% to 8.46 cents mainly due to pilot contract costs
JetBlue, sporting a Zacks Rank #1 (Strong Buy), exited the quarter with cash and cash equivalents of $461 million compared with $474 million at the end of 2018. Total debt at the end of the second quarter was $1,492 million compared with $1, 670 million at the end of 2018.
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JetBlue Airways Corporation Price, Consensus and EPS Surprise
JetBlue Airways Corporation price-consensus-eps-surprise-chart | JetBlue Airways Corporation Quote
For the third quarter of 2019, JetBlue expects RASM to grow between 0.5% and 3.5% year over year. For the third quarter, the carrier expects capacity to increase between 3% and 5%. The metric is anticipated to improve in the range of 5.5-6.5% for full-year 2019.
Consolidated operating cost per available seat mile, excluding fuel, is expected to increase 0.5-2.5% in the third quarter. For the current year, the metric is projected to increase between 0.5% and 1.5%. The company expects effective tax rate of 26% for full-year 2019.
Third-quarter fuel cost, net of hedges, is anticipated to be $2.18 per gallon. The company is well on track to achieve its 2020 EPS target, which is in the $2.5-$3 range. The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.32.
Total capital expenditures for the third quarter are expected between $285 million and $350 million. The metric is anticipated in the range of $1200-$1,350 million for full-year 2019.
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter 2019 earnings reports from key players like Southwest Airlines LUV, Alaska Air Group ALK and American Airlines AAL. All three carriers are scheduled to report on Jul 25.
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