Superstorm Sandy and higher maintenance costs offset growth from
higher passenger traffic for
), which weighed on its profits in the fourth quarter. The
carrier's profits declined to $1 million from $23 million in the
For full year 2012, profits increased 49% y-o-y to $128 million
on higher flying capacity which drove growth in passenger
See our complete analysis of JetBlue here
Higher passenger traffic
In the fourth quarter, JetBlue continued to raise its flying
capacity with an emphasis on routes connecting Boston and
destinations in Latin America and the Caribbean. In all, its flying
capacity increased 4.8% y-o-y in the fourth quarter. Driven by
higher flying capacity, passenger traffic for the carrier increased
4.3% y-o-y. Higher passenger traffic coupled with steady passenger
fares increased passenger revenues by $48 million or 4.6% y-o-y to
$1.1 billion in the fourth quarter.
Superstorm Sandy and higher maintenance costs
However, higher passenger revenues were offset by the negative
impact from Superstorm Sandy and higher maintenance costs and, as a
result, profits declined in the fourth quarter.
Superstorm Sandy struck the northeast United States in the last
week of October and first week of November. The storm severely
impacted flight operations at several cities, including New York,
which is a hub city for JetBlue. As a result, the carrier had to
cancel approximately 1,700 flights. This impacted its operating
income by around $25 million in the fourth quarter.
In addition, maintenance and repair costs for JetBlue increased
by $18 million or 27% y-o-y to $80 million in the fourth quarter.
With aging aircraft, the overall fleet maintenance and repair costs
have been increasing. At the end of 2012, the oldest aircraft in
JetBlue's fleet was 13 years old and the average age of its fleet
was around 6.9 years, up from around 6.1 years at the end of
Outlook for 2013
For 2013, JetBlue plans to increase its flying capacity by
5.5%-7.5% on a year-over-year basis. The carrier will start service
on several new routes, including New York-Albuquerque, San
Juan-Punta Cana, San Juan-Santiago, Seattle-Anchorage,
Boston-Philadelphia, Fort Lauderdale-Medellin and Fort
Lauderdale-San Jose to achieve this expansion.
JetBlue will also take delivery of 16 new Airbus and Embraer
aircraft in 2013, which will help it achieve this capacity
expansion in 2013.
We currently have
a stock price estimate of $5.79 for JetBlue
, approximately in-line with its current market price. We are in
the process of incorporating fourth quarter earnings and will
update our analysis shortly.
How a Company's Products Impact its Stock Price at Trefis