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Here's Why Investors Should Retain JetBlue Stock Currently
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JetBlue Airways (JBLU - Free Report) benefits from robust air travel demand and low fuel prices. However, elevated labor costs and a high debt load are hurting JBLU’s prospects.
Factors Favoring JBLU
Strong passenger volumes bode well for JBLU. Air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback. The resultant 4.9% increase in passenger revenues pushed JBLU’s top line up 5% in 2023. Despite the top line being hurt in 2024 due to flight disruptions related to thunderstorms and air traffic control worker shortages at major airports in the Northeast, coupled with elevated capacity in JBLU’s Latin America’s region, which represents a large portion of JetBlue’s network, robust holiday traffic has boosted the metric.
Owing to better-than-expected bookings for November and December after the U.S. Presidential election, JBLU gave an improved view of revenues for the fourth quarter and 2024. JetBlue now anticipates fourth-quarter revenues to decline in the range of 2-5% on a year-over-year basis. This marks an improvement from the previous guidance of a 3-7% decline. For 2024, total revenues are forecasted to decline in the range of 3.5-4.5% (prior view: down 4-5%).
JBLU’s customer-friendly approach is praiseworthy. In September, the company implemented changes to its Blue Basic (JetBlue's basic economy bundle) carry-on baggage policy. Following the changes, JetBlue customers will get a free carry-on bag regardless of what tier of ticket (including Blue Basic ticket) they purchased. Previously, JetBlue passengers had to buy a more expensive ticket bundle or pay an extra fee to carry on an overhead bin-sized bag with a Blue Basic ticket. On the third quarter conference call, management stated that the change was bearing fruit and performing above expectations to boost revenues.
Revenues not only beat expectations but also increased year over year in the third quarter of 2024. In a bid to return to profitability, JetBlue has decided to add first-class seats to domestic planes that aren't already equipped with Mint seats. JBLU’s mint (Business Class) service includes lie-flat seats, two free bags etc. The change will take effect from the beginning of 2026. From 2026, all JetBlue’s Airbus jets without Mint, will have two or three rows of domestic first-class seats (junior mint). The seats will be in a two-by-two configuration. The move is aimed at attracting high-paying customers by providing extra comfort.
Lower oil prices bode well for the bottom-line growth of airlines including JBLU. This is because fuel expenses are a significant input cost for the aviation segment. In the first nine months of 2024, expenses on aircraft fuel at JBLU decreased 12.9% year over year to $1.8 billion. The average fuel price per gallon decreased to $2.83 in the first nine months of 2024 from $3.11 in the first nine months of 2023.
Moderating fuel prices led to JBLU lowering its fuel price per gallon outlook in December. JetBlue now anticipates fourth-quarter 2024 average fuel cost per gallon in the range of $2.40-$2.50 (prior view: $2.50-$2.65). For 2024, JBLU now expects average fuel cost per gallon in the range of $2.73-$2.76 (prior view: $2.75 - $2.80).
Owing to such tailwinds, JBLU’s shares have rallied 33.5% in a year compared with its industry’s 30.4% growth.
One-Year Price Comparison
Image Source: Zacks Investment Research
JBLU: Key Risks to Watch
The northward movement in expenses on laboris hurting JBLU’s bottom line by pushing up operating costs. Operating expenses were up 3.5% in the first nine months of 2024. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, increased 5.2% in the first nine months of 2024. JBLU anticipates fourth-quarter 2024 CASM, excluding fuel and special items, to increase 12.5-14.5%. For 2024, the metric is predicted to increase in the 7-7.5% range.
JBLU’sleverage is elevated. The company's long-term debt burden was $22.3 billion at the end of third-quarter 2024. This translates into a debt-to-capitalization of 75%, well above the subindustry’s average of 53.8%. Stock prices of companies like JBLU are notoriously volatile. This is mainly because the health of the company is tied to the economy, which is undergoing a turbulent phase. The volatile nature of oil prices mainly contributes to the volatile stock prices of airline companies. JBLU’s beta of 1.92 means that it is more volatile than the overall market.
Greenbrierdesigns, manufactures and markets railroad freight car equipment in North America, Europe and South America. The company is headquartered in Lake Oswego, OR.
GBX presently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A. GBX has a market capitalization of $1.96 billion. The Zacks Consensus Estimate for GBX’s 2025 earnings has improved 11% in the past 90 days. GBX has an expected earnings growth rate of 6.7% for 2025.
SkyWest currently sports a Zacks Rank #1. SKYW has an expected earnings growth rate of 4.07% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.1%. Shares of SKYW have climbed 98% in the past year.
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Here's Why Investors Should Retain JetBlue Stock Currently
JetBlue Airways (JBLU - Free Report) benefits from robust air travel demand and low fuel prices. However, elevated labor costs and a high debt load are hurting JBLU’s prospects.
Factors Favoring JBLU
Strong passenger volumes bode well for JBLU. Air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback. The resultant 4.9% increase in passenger revenues pushed JBLU’s top line up 5% in 2023. Despite the top line being hurt in 2024 due to flight disruptions related to thunderstorms and air traffic control worker shortages at major airports in the Northeast, coupled with elevated capacity in JBLU’s Latin America’s region, which represents a large portion of JetBlue’s network, robust holiday traffic has boosted the metric.
Owing to better-than-expected bookings for November and December after the U.S. Presidential election, JBLU gave an improved view of revenues for the fourth quarter and 2024. JetBlue now anticipates fourth-quarter revenues to decline in the range of 2-5% on a year-over-year basis. This marks an improvement from the previous guidance of a 3-7% decline. For 2024, total revenues are forecasted to decline in the range of 3.5-4.5% (prior view: down 4-5%).
JBLU’s customer-friendly approach is praiseworthy. In September, the company implemented changes to its Blue Basic (JetBlue's basic economy bundle) carry-on baggage policy. Following the changes, JetBlue customers will get a free carry-on bag regardless of what tier of ticket (including Blue Basic ticket) they purchased. Previously, JetBlue passengers had to buy a more expensive ticket bundle or pay an extra fee to carry on an overhead bin-sized bag with a Blue Basic ticket. On the third quarter conference call, management stated that the change was bearing fruit and performing above expectations to boost revenues.
Revenues not only beat expectations but also increased year over year in the third quarter of 2024. In a bid to return to profitability, JetBlue has decided to add first-class seats to domestic planes that aren't already equipped with Mint seats. JBLU’s mint (Business Class) service includes lie-flat seats, two free bags etc. The change will take effect from the beginning of 2026. From 2026, all JetBlue’s Airbus jets without Mint, will have two or three rows of domestic first-class seats (junior mint). The seats will be in a two-by-two configuration. The move is aimed at attracting high-paying customers by providing extra comfort.
Lower oil prices bode well for the bottom-line growth of airlines including JBLU. This is because fuel expenses are a significant input cost for the aviation segment. In the first nine months of 2024, expenses on aircraft fuel at JBLU decreased 12.9% year over year to $1.8 billion. The average fuel price per gallon decreased to $2.83 in the first nine months of 2024 from $3.11 in the first nine months of 2023.
Moderating fuel prices led to JBLU lowering its fuel price per gallon outlook in December. JetBlue now anticipates fourth-quarter 2024 average fuel cost per gallon in the range of $2.40-$2.50 (prior view: $2.50-$2.65). For 2024, JBLU now expects average fuel cost per gallon in the range of $2.73-$2.76 (prior view: $2.75 - $2.80).
Owing to such tailwinds, JBLU’s shares have rallied 33.5% in a year compared with its industry’s 30.4% growth.
One-Year Price Comparison
JBLU: Key Risks to Watch
The northward movement in expenses on laboris hurting JBLU’s bottom line by pushing up operating costs. Operating expenses were up 3.5% in the first nine months of 2024. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, increased 5.2% in the first nine months of 2024. JBLU anticipates fourth-quarter 2024 CASM, excluding fuel and special items, to increase 12.5-14.5%. For 2024, the metric is predicted to increase in the 7-7.5% range.
JBLU’sleverage is elevated. The company's long-term debt burden was $22.3 billion at the end of third-quarter 2024. This translates into a debt-to-capitalization of 75%, well above the subindustry’s average of 53.8%. Stock prices of companies like JBLU are notoriously volatile. This is mainly because the health of the company is tied to the economy, which is undergoing a turbulent phase. The volatile nature of oil prices mainly contributes to the volatile stock prices of airline companies. JBLU’s beta of 1.92 means that it is more volatile than the overall market.
JBLU’s Zacks Rank
JBLU currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider The Greenbrier Companies (GBX - Free Report) and SkyWest (SKYW - Free Report) .
Greenbrierdesigns, manufactures and markets railroad freight car equipment in North America, Europe and South America. The company is headquartered in Lake Oswego, OR.
GBX presently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A. GBX has a market capitalization of $1.96 billion. The Zacks Consensus Estimate for GBX’s 2025 earnings has improved 11% in the past 90 days. GBX has an expected earnings growth rate of 6.7% for 2025.
SkyWest currently sports a Zacks Rank #1. SKYW has an expected earnings growth rate of 4.07% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.1%. Shares of SKYW have climbed 98% in the past year.