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The Bearish Case for JetBlue

Published 08/04/2021, 11:22 AM
Updated 08/04/2021, 12:30 PM
© Reuters.  The Bearish Case for JetBlue

© Reuters. The Bearish Case for JetBlue

New York's hometown Airline JetBlue’s (JBLU) stellar revenue growth in the second quarter and its plans to strengthen its presence in New York have attracted investors. However, we think the company’s continuing cost pressures and uncertain growth prospects could keep its business recovery earthbound for a while yet. So, let’s discuss.Leading low-cost carrier Long Island City, N.Y.-based JetBlue Airways Corporation (NASDAQ:JBLU) offers air passenger transportation services across the United States, the Caribbean, and Latin America. As consumer confidence and travel demand return gradually from their pandemic-induced lows, JBLU’s second-quarter revenue improved significantly from the first quarter of 2021. But the company reduced its capacity by 15% in its last reported quarter.

Although improving travel demand amid widespread COVID-19 vaccinations has helped JBLU gain 46.2% over the past year, the stock is down 13.6% over the past month. In addition, the stock is trading 32.7% below its 52-week high of $21.96, which it hit on June 4. Also, JBLU is currently trading lower than its 50-day and 200-day moving averages of $17.21 and $16.91, respectively, which indicates a downtrend.

While its long-term strategic partnerships and expanded presence in New York should bode well for the stock, its continuing unit cost pressures from fuel prices and a slower-than-expected recovery could be concerning.

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