Will The Momentum Continue In JetBlue Airways Stock?

[Updated 2021/12/29]

The shares of JetBlue Airways (NASDAQ: JBLU) have gained 7.5% in the past week despite flight cancellations due to travel restrictions and record high number of new infections in the country. As highlighted in our earlier article, passenger numbers at TSA checkpoints have not observed a sharp dip despite the ongoing pandemic situation. Notably, Trefis expects JetBlue’s domestic business to assist earnings and cash generation in the long term. Our machine learning engine’s analysis of trends in the stock price over the last ten years, estimates a 54% chance of a rise in the coming weeks by comparing the recent uptick with historical stock price movements. See our analysis, JetBlue Airways Stock Chance of Rise, for more details.

[Updated 2021/10/08] – JetBlue Stock: Should You Buy The Dip?

With new travel rules imposed in the U.S. and across the world due to the Omicron variant, international travel demand is expected to remain low for a couple of months. After reaching pre-Covid levels in the second quarter, the shares of JetBlue Airways (NASDAQ: JBLU) declined in July due to rising fuel prices and the fourth wave of the pandemic. Currently, the passenger numbers at TSA checkpoints remain just 10% below the levels observed in 2019 – indicating continued demand for air travel despite ongoing travel restrictions. Notably, JBLU stock has lost $2.2 billion in market capitalization since February 2020 despite burning just $683 million of operating cash over the period. Also, the domestic business contributes almost 70% of JetBlue’s revenues and is likely to support earnings amid the ongoing international travel restrictions. Considering the negative impact of the Omicron variant for a quarter, Trefis believes that there is a sizable upside in JetBlue Airways stock. We highlight the historical trends in revenues, earnings, and stock price in an interactive dashboard analysis on JetBlue Valuation.

How did JetBlue Airways perform in the third quarter?

In Q3 2021, JetBlue Airways reported just 5% contraction in net revenues and a 0.8% reduction in capacity (available seat miles) over Q3 2019 – highlighting the complete recovery in passenger demand. The company earned $130 million of net income and $1.7 billion of cash from operations – assisting $770 million of capital spending and $737 million of debt retirements. On the operational side, occupancy rate almost reached pre-Covid levels of 79.9%, propelled by domestic demand and efficient capacity utilization.

A quick look at JetBlue’s historical performance

JetBlue Airways’ revenues increased by 15% from $7 billion in 2017 to $8.1 billion in 2019, assisted by capacity growth and rising ticket prices. In 2020, the company’s top line observed a 64% (y-o-y) contraction as air traffic demand plummeted and cost control measures were implemented. Moreover, the company’s net margins deteriorated from higher fuel expenses and administrative costs. Thus, the EPS decreased by 45% from $3.47 in 2017 to $1.92 in 2019, and ($4.88) in 2020. (related: Will Domestic Travel Demand Assist United Airlines Stock?)

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[1] Month-to-date and year-to-date as of 12/29/2021
[2] Cumulative total returns since 2017

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