JetBlue (JBLU) Stock Up 5% On Q4 Earnings And Revenue Beat

JetBlue Airways Corporation (NASDAQ:JBLU) performed impressively in the fourth quarter of 2018, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate.

The company’s earnings (excluding 5 cents from non-recurring items) of 50 cents per share surpassed the Zacks Consensus Estimate by 8 cents and increased 56.3% year over year. The bottom line was driven by the company’s prudent non-fuel cost management.

Total revenues came in at $1,968 million, which edged past the Zacks Consensus Estimate of $1,965.4 million and increased 12% year over year. Passenger revenues, which accounted for bulk of the top line (96.1%), improved 12.1% in the quarter under review. Other revenues were up 8.8%.

JetBlue’s outperformance pleased investors. As a result, shares of this Zacks Rank #2 (Buy) company increased 5.1% on Jan 23, closing the trading session at $18.12. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Operating Statistics in Q4

Capacity, measured in available seat miles, expanded 9.3% year over year. Meanwhile, traffic, measured in revenue passenger miles, grew 8.6% in the reported quarter. However, load factor (percentage of seats filled by passengers) contracted 60 basis points year over year to 82.5% as traffic growth was outpaced by capacity expansion in the three-month period.

Average fare at JetBlue during the quarter increased 6.6% to $183.62. Yield per passenger mile improved 3.2% year over year to 15.1 cents. Passenger revenue per available seat mile (PRASM: a key measure of unit revenue) increased 2.5% to 12.46 cents and operating revenue per available seat mile (RASM) inched up 2.4% to 12.98 cents.

Expenses

In the fourth quarter, total operating expenses (on a reported basis) rose 11.4% year over year mainly due to higher costs pertaining to aircraft fuel and salaries, wages and benefits. Average fuel cost per gallon (including fuel taxes) escalated 18.5% year over year to $2.24.

Moreover, JetBlue’s operating expenses per available seat mile (CASM) grew 1.9% to 11.52 cents. Excluding fuel, the metric declined 3.6% to 8.27 cents, reflecting its effective cost control efforts.

Balance Sheet

JetBlue exited the year with cash and cash equivalents of $474 million compared with $303 million at the end of 2017. Total debt at the end of the fourth quarter was $1,670 million compared with $1,199 million at the end of 2017.

Outlook

For the first quarter of 2019, the carrier expects capacity to increase between 7.5% and 9.5%. The metric is anticipated to improve in the range of 5-7% for 2019.

Consolidated operating cost per available seat mile, excluding fuel, is expected to increase 1.5-3.5% in the first quarter. For the current year, the metric is still projected to either remain flat or increase up to 2%. The metric is anticipated to grow at a faster pace in the first half of 2019, mainly due to the pilot contract inked on Aug 1, 2018.

RASM is expected to either decline 2% or increase up to 1% in the first quarter of 2019. First-quarter fuel cost, net of hedges, is anticipated to be $2.01 per gallon. The company is well on track to achieve its 2020 EPS target, which is in the $2.5-$3 range.

Upcoming Releases

Investors interested in the Zacks Transportation sector are keenly awaiting fourth-quarter 2018 earnings reports from key players like ArcBest Corporation (NASDAQ:ARCB) , Allegiant Travel Company (NASDAQ:ALGT) and SkyWest (NASDAQ:SKYW) . While ArcBest and Allegiant are scheduled to report fourth-quarter earnings on Jan 30, SkyWest will release the same on Jan 31.

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