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JetBlue Sep Traffic Improves

Zacks Equity Research

JetBlue Airways Corporation (JBLU) displayed better traffic across its network for the month of Sep 2013. The carrier reported airline traffic – measured in revenue passenger miles or RPMs – of 2.55 billion, up 1.6% year over year. Consolidated capacity (or available seat miles/ASMs) was also up 0.6% year over year at 3.21 billion. Nevertheless, the news failed to delight shareholders as the stock has remained more or less flat in the last three trading sessions.

The load factor or percentage of seats filled by passengers was 79.5%, up 90 basis points. Passenger revenue per available seat mile (:PRASM) increased 9% year over year. The company registered a completion factor of 99.8%, with on-time performance of 83.1%.

For the first nine months of 2013, JetBlue Airways generated RPMs of 27.18 (up 6.7% year over year) and ASMs of 32.13 billion (up 6.4% year over year), on a consolidated basis. Load factor was 84.6% in September, reflecting an improvement of 20 basis points from the corresponding prior-year month.

We expect JetBlue to sustain traffic growth in the coming days based on increasing travel demand, network expansion, fleet re-designing and cost-saving moves. The company’s growing presence in key markets and penetration into untapped arenas will support its momentum. The airline recently unveiled a premium service termed as Mint at an attractive price, which is aimed at enhancing the luxury offering between New York and California.

However, the company remains vulnerable to the U.S. government’s partial shutdown as the country's passenger carriers are facing delayed delivery of aircraft from Europe due to the closure of Federal Aviation Administration. Further, competitive pressure and high aircraft maintenance expenses will also weigh on the stock.

JetBlue Airways – which operates with the likes of Delta Air Lines Inc. (DAL), United-Continental Holdings Inc. (UAL) and U.S. Airways Group Inc. (LCC) – carries a Zacks Rank #2 (Buy).

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