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JetBlue's (JBLU) Q3 Earnings Top, Fall Y/Y on High Costs

Low-cost carrier, JetBlue Airways Corporation’s JBLU third-quarter 2017 earnings of 55 cents per share beat the Zacks Consensus Estimate by 3 cents.  Quarterly earnings, however, declined 5.2% from the year ago figure due to higher costs. The recent hurricanes also hurt results.

Operating revenues came in at $1,813 million, just ahead of the Zacks Consensus Estimate of $1,809.3 million. Revenues increased 4.7% from the year-ago figure. Passenger revenues, which accounted for bulk of the top line (89.5%), improved 3.3% in the third quarter of 2017. Other revenues increased 18.2%.

Operating Statistics

Capacity, measured in available seat miles, expanded 3.7% year over year. Traffic, measured in revenue passenger miles, grew 2.3% in the third quarter. Load factor (percentage of seats filled by passengers) declined 120 basis points (bps) year over year to 85.1% in the reported quarter as traffic growth was outpaced capacity expansion.

Yield per passenger mile improved 1% year over year to 13.32 cents in the reported quarter. While passenger revenue per available seat mile (PRASM: a key measure of unit revenue) declined 0.4% to 11.34 cents, operating revenue per available seat mile (RASM) increased 0.9% to 12.67 cents.

Expenses

In the third quarter, total operating expenses (on a reported basis) increased 9.1% year over year. Average fuel cost per gallon (including fuel taxes) escalated 14.9% to $1.69. Moreover, JetBlue’s operating cost per available seat mile (CASM) increased 5.2% to 10.50 cents in the reported quarter. Excluding fuel, the metric also climbed 2.7% to 8.07 cents on the back of rise in labor costs.

JetBlue Airways Corporation Price, Consensus and EPS Surprise

 

JetBlue Airways Corporation Price, Consensus and EPS Surprise | JetBlue Airways Corporation Quote

Balance Sheet

JetBlue, carrying a Zacks Rank #5 (Strong Sell), exited the quarter with cash and cash equivalents of $394 million compared with $433 million at the end of 2016. Total debt, at the end of the quarter was $1,255 million than $1,384 million at the end of 2016. In fact, the company is constantly working toward reducing its debt levels.

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Outlook

For the fourth quarter of 2017, the carrier expects capacity to increase between 4.5% and 5.5%. For the full-year 2017 the metric is anticipated to increase in the range of 4% to 5%. Consolidated operating cost per available seat mile, excluding fuel, is expected to grow in the band of 5% to 7% in the final quarter of 2017.

For the full-year 2017 the metric is still projected to grow in the range of 4% to 5%. Operating revenue per available seat mile (RASM) is anticipated to grow in the range of (3%) to 0% on a year-over-year basis.

Other Important Releases Coming Up

Investors interested in the Zacks Airline industry keenly await the third-quarter earnings reports of American Airlines Group Inc. AAL, Alaska Air Group, Inc. ALK and Norfolk Southern Corp. NSC. While Alaska Air Group and Norfolk Southern will report third-quarter earnings on Oct 25, American Airlines will reveal the same on Oct 26.

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JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK): Free Stock Analysis Report
 
Norfolk Souther Corporation (NSC): Free Stock Analysis Report
 
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