JetBlue To See A Substantial Improvement In The Fourth Quarter

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JetBlue Airways

JetBlue (NASDAQ:JBLU) is expected to announce its results on the 24th of January. With improved traffic flow during the quarter, JetBlue is expected to see revenues increase by 12% year on year, coming in at $1.97 billion. Revenue Per Available Seat Mile is expected to rise by 2.5% yoy. Earnings per share are expected to come in higher at 12%.

We currently have a price estimate of $20 per share, which is higher than the market price. You can use our interactive dashboard Q4 2018 JetBlue to modify key drivers and visualize the impact on JetBlue’s price estimate.

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JetBlue has spent the last year improving its routes, and has cut costs  This should result in cost per available seat mile falling by 1.5-2% during the quarter (ex. fuel).  The company is also expected to see its effective tax rate fall to 25%, coming down from the previous quarter, where the company’s effective tax rate was 40%.  While expectations are that costs may weigh on earnings, we believe fuel costs will not make any substantial difference to the company’s earnings.

 

During the quarter, JetBlue continued to add routes, while adding newer aircraft. The company implemented a series of network changes, this should also help JetBlue improve margins, and seat mile efficiency. The company also continued to ramp up its Mint program (which is JetBlue’s premium segment). The Mint program has helped earnings in the previous quarters, and with improved consumer confidence for the quarter, JetBlue expects the program to do very well.

With substantial improvements in revenue and earnings, we expect that JetBlue will beat expectations during the quarter, with earnings per share coming in at $0.40, which reflects a 25% growth yoy. With the improvements in earnings we do believe JetBlue could see some upside during the coming quarter,

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