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JetBlue (JBLU) Stock Declines Following Q3 Earnings Miss

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JetBlue Airways’ (JBLU - Free Report) third-quarter 2022 earnings (excluding 3 cents from non-recurring items) of 21 cents per share fell short of the Zacks Consensus Estimate of 24 cents. Higher operating expenses hurt the bottom line. This earnings miss, despite strong demand for air travel, disappointed investors. Consequently, shares of JBLU declined 2.92% on Oct 25. Strength in air-travel demand, however, helped JBLU reap a quarterly profit for the first time since the onset of the pandemic.

In the year-ago quarter, JBLU incurred a loss of 12 cents per share. Operating revenues of $2,562 million climbed 29.9% year over year and beat the the Zacks Consensus Estimate of $2,559.7 million. The double-digit year-over-year jump reflects improving air-travel demand.

Passenger revenues, accounting for the bulk of the top line (94.3%), increased to $2,415 million in third-quarter 2022 from $1,856 million a year ago when the impact of coronavirus on air-travel demand was more severe. Other revenues rose 27.1% to $147 million.

Other Details

All comparisons are presented on a year-over-year basis. Revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter improved 29.6% to 15.80 cents. Passenger revenue per available seat mile (PRASM) rose 29.7% to 14.89 cents owing to better air-travel demand. Average fare at JetBlue during the September quarter increased 12.4% to $229.95. Yield per passenger mile shot up 20.4% year over year to 17.30 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) improved 8.1% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) inched up 0.3% to 16,217 million. Consolidated load factor (percentage of seats filled by passengers) increased 6.2 percentage points to 86.1% in the third quarter of 2022 as traffic growth outpaced capacity expansion.

In the third quarter, total operating expenses (on a reported basis) escalated 35.7% to $2,423 million, mainly due to an 86% rise in aircraft fuel expenses and related taxes. Average fuel price per gallon (including related taxes) climbed to $3.84 from $2.08 a year ago, as oil prices move north.

JetBlue’s operating expenses per available seat mile (CASM) increased 35.3% to 14.94 cents. Excluding fuel, the metric increased only 3.2% to 9.69 cents.

JetBlue, currently carrying a Zacks Rank #3 (Hold), exited the third quarter of 2022 with cash and cash equivalents of $1,401 million compared with $2,018 million at the end of 2021. Total debt at the end of the reported quarter was $3,759 million compared with $4,006 million at 2021 end. During the quarter, JBLU paid off $66 million of debt.

Outlook

While providing guidance for fourth-quarter 2022, management stated that all comparisons are made with respect to the fourth quarter of 2019. Capacity is anticipated to increase in the 1-4% range from fourth-quarter 2019 actuals. CASM, excluding fuel and special items, is predicted to rise 8.5-10.5%.

RASM is forecast to increase in the 15-19% range. Average fuel cost per gallon in the December quarter is estimated to be $3.65. Capital expenditures in the fourth quarter are anticipated to be roughly $420 million. Tax rate is anticipated to be 12%. Number of shares are expected to be roughly 329 million. JBLU expects to be profitable in the December quarter with a pretax margin in mid-single digits.

For 2022, capacity is expected to be flat or increase up to 2% from the 2019 levels. CASM, excluding fuel and special items, is predicted to rise 13-14% from the 2019 actuals. Capital expenditures for 2022 are anticipated to be roughly $1 billion. Current-year interest expenses are forecast in the $160-$170 million band. Tax rate is anticipated to be 14%. Number of shares are expected to be roughly 324 million.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta Air Lines’ (DAL - Free Report) third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by high air-travel demand, total revenues increased more than 52% on a year-over-year basis.

United Airlines’ (UAL - Free Report) third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. An uptick in air-travel demand aided results.

In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.

Operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.

J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate. JBHT’s quarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.

JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across Dedicated Contract Services, Intermodal, and Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.

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