On Aug 23, we maintained our Neutral recommendation on
JetBlue Airways Corporation
). The company is favorably positioned for growth thanks to its
distinctive business model, superior in-flight services, foray
into new locations, strong liquidity positions and a
non-unionized workforce. However, the company's near-term
performance might be impacted by certain headwinds.
We believe that with its product differentiation, JetBlue offers
customers a unique flying experience. In the coming months, the
company will benefit from growing travel demand, schedule
redesigning, cost control measures, optimization of unit
revenues, capital expenditure management, strong branding and
JetBlue is making continued progress in expanding its product and
service offerings on board and on the ground to aid growth in
ancillary revenues along with enhanced ticket pricing
flexibility. Being a low cost carrier, the company also continues
to successfully expand its network footprint in two major growth
regions - Boston, and Caribbean and Latin America.
Additionally, JetBlue remains focused on growing partnerships
(codeshare, interline and baggage handling agreements) with both
legacy and international carriers to enhance its services and
take advantage of travel benefits. The airline has also taken
several steps to maximize the cost efficiency of its fleet in
order to lower maintenance expense to a certain extent.
However, rising fuel price, competitive pressures, and an
uncertain economic situation remain an overhang on the stock.
Further, JetBlue's no-dividend payment strategy is not likely to
be appreciated by the investors.
For the third quarter and full year 2013, the respective Zacks
Consensus Estimates for earnings are 19 cents and 43 cents per
share. This reflects year-over-year growth of 33.9% and 8.4%,
Companies operating within the sector and worth taking note of
US Airways Group Inc.
) with a Zacks Rank #1 (Strong Buy) as well as
GOL Linhas A
Republic Airways Holdings Inc.
) with Zacks Rank #2 (Buy).
GOL LINHAS-ADR (GOL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
US AIRWAYS GRP (LCC): Free Stock Analysis
REPUBLIC AIRWAY (RJET): Free Stock Analysis
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