JetBlue (JBLU) Q3 Earnings Miss Estimates, Revenues Beat

Low-cost carrier, JetBlue Airways Corporation’s (NASDAQ:JBLU) third-quarter 2016 earnings (excluding special items) of 58 cents per share missed the Zacks Consensus Estimate of 60 cents.

Total operating revenue inched up 2.6% year over year to $1,732 million and also beat the Zacks Consensus Estimate of $1,718 million. The top line was benefitted by a 17.2% increase in other revenues. Passenger revenues in the quarter under review increased 1.3% year over year to $1,571 million.

Operating Statistics

Capacity, measured in available seat miles, expanded 6.3% year over year. Traffic, measured in revenue passenger miles, grew 7.6% in the third quarter. Load factor (percentage of seats filled by passengers) improved 100 basis points (bps) year over year to 86.3% in the reported quarter as traffic growth outpaced capacity expansion.

Yield per passenger mile fell 5.9% year over year to 13.20 cents in the reported quarter. Passenger revenue per available seat mile (PRASM) declined 4.7% to 11.39 cents. Operating revenue per available seat mile (RASM) decreased 3.5% to 12.55 cents.

This Zacks Rank #3 (Hold) carrier faces tough competition from peers like Spirit Airlines Inc. (NASDAQ:SAVE) , SkyWest Inc. (NASDAQ:SKYW) and Southwest Airlines Co. (NYSE:LUV) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Operating Income and Expenses

In the third quarter, total operating expenses increased 3% year over year. Average fuel cost per gallon, inclusive of fuel taxes, declined 20% to $1.48 per gallon. JetBlue’s operating cost per available seat mile (CASM) decreased 3% in the reported quarter to 9.9 cents. Excluding fuel and profit sharing, the metric inched up 3.1% to 7.53 cents.

Balance Sheet

JetBlue ended the third quarter with cash and cash equivalents of $873 million compared with $318 million at the end of 2015. Total debt, at the end of same quarter, was $1,689 million as against $1,827 million at the end of 2015.

JETBLUE AIRWAYS Price, Consensus and EPS Surprise

JETBLUE AIRWAYS Price, Consensus and EPS Surprise | JETBLUE AIRWAYS Quote

Guidance

For the fourth quarter, the carrier expects capacity to increase in the band of 3–5%, including approximately a negative half a point impact from Hurricane Matthew. For full-year 2016, the metric is now expected to increase in the range of 8.5–9% compared with 8–9.5% expected earlier. Consolidated operating cost per available seat mile, excluding fuel and profit sharing, is expected to grow in the band of 4.5–6.5% in the fourth quarter. For 2016, the metric is expected to remain flat to increase 1.5%.

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