What To Expect From JetBlue’s Q3 Earnings

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JetBlue Airways

JetBlue Corporation (NYSE:JBLU) is all set to report earnings for the third quarter of FY 2017 on October 24. JetBlue managed to pull off incredible results in the last quarter, buoyed by the favorable timing of the Easter weekend. The company reported double-digit growth in revenue and earnings in Q2, while remaining optimistic that the rest of 2017 will produce similar results. However, things could not have gotten any worse for the airline in Q3. Two major hurricanes heavily disrupted the airline’s operations rendering this optimism moot. Consequently, many of the company’s key metrics have suffered in the quarter.

Impact On Key Metrics:

  • As mentioned above, the company’s operations were hurt significantly on two major hurricanes that swept through the East coast. The carrier expects these disruptions to account for nearly $44 million in revenue loss. Additionally, it is likely that operating income will be hurt in the range of $30-$35 million, while having an adverse impact of around 6 to 7 cents on EPS.
  • In the previous quarter, JetBlue had mentioned that it expects capacity to grow in Q3 to the tune of nearly 3.7%. However, due to the adverse weather conditions that prevailed through the quarter, the company has trimmed this key metric down by about 2.7 percentage points.
  • Ex-fuel costs at the airline had already been seeing a rise over the last two quarters on ratified labor agreements, and increasing maintenance costs. In Q2, the company mentioned that it expects ex-fuel CASM to grow by a modest 1.5-3.5% in Q3. However, ex-fuel costs are now expected to come in higher by 2.75 percentage points.
  • While every other key metric suffers at the hand of adverse weather, RASM is expected to see a jump of about 0.3 percentage points, thanks to the hurricanes. RASM is expected to come in around 0.9% in Q3 on the back of tougher year-over-year comparisons and less favorable timing of holidays.

 

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