JetBlue Posts A Weak 3Q With Higher Crude Prices
JetBlue (NYSE:JBLU) reported earnings on 23rd October. Earnings came in line with consensus, showing a decline of 21% as headwind factors took effect. Revenues also came in line with expectations growing by 10.7%. As expected, fuel prices weighed down earnings, as fuel costs rose 37% y-o-y. The average seat miles rose by 8.7% during the quarter.
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The key takeaway from the earnings result was that the 1.7% increase in RASM (revenue per average seat mile), despite headwind factors such as hurricane Florence, and an increase in average seat miles. This bodes well for the carrier going forward, as non-fuel costs and ticket prices become steadier during the fourth quarter. Furthermore, the airline expects to make numerous changes to its network going forward. By creating a more efficient network, the carrier should be able to reduce costs.
Revenue from the Mint program, which aims to attract premium passengers, increased 14% y-o-y. This is one of the bright spots for the airline, as premium passengers are key to off-setting some of the rising crude prices. During the quarter, the management re-iterated its commitment to the Mint program, with plans to improve and increase the segment going forward.
The airline continued to incorporate the new A321 fleet, which is a key part of JetBlue’s strategy to improve its margins. Higher seat density, and fuel economy with the A321 aircraft should improve the carrier’s bottom-line going forward.
Overall, the quarter came in as expected. While fuel costs weighed on JetBlue’s earnings, its effects should subside in the fourth quarter. The airline continued to make incremental changes to get back to profitability during the quarter, and these changes should pay off going forward.
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