On Mar 1, 2013, we maintained our Neutral recommendation on
JetBlue Airways
(
JBLU
), owing to its favorable business model, superior in-flight
services, fuel hedging strategy, strong liquidity position and a
non-unionized workforce, partially offset by certain risk
factors. The passenger airline holds a Zacks Rank #3 (Hold).
Why Kept at Neutral?
We believe that JetBlue, via its strong branding and product
differentiation, 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 and disciplined
growth.
JetBlue - that operates with a fleet of 127 Airbus A320 aircraft
and 53 EMBRAER 190 aircraft - is concentrating on expanding its
network footprint in two major growth regions - Boston, and
Caribbean and Latin America. In the coming months, the company
aims to start services in Albuquerque, New Mexico; Philadelphia;
Pennsylvania and Medellin, Colombia. We believe that adding new
routes enhances JetBlue's growth and strengthens its network
against other group members.
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. We also appreciate the
carrier's initiatives to maximize the cost efficiency of its
fleet, leading to less maintenance expenses.
However, the company failed to impress us with its fourth quarter
results, missing both top and bottom-line projections. Further,
an unstable economic environment, fuel price volatility,
competitive pressures and regulatory issues remain an overhang on
the stock.
For the first and second quarters of 2013, the Zacks Consensus
Estimates for earnings are 9 cents and 20 cents per share,
respectively. This reflects a respective year-over-year growth of
4.04% and 26.25%.
Other Stocks
Other stocks operating within the airline sector that are worth
considering are
Ryanair Holdings Plc
(
RYAAY
),
SkyWest Inc.
(
SKYW
) and
Republic Airways Holdings Inc.
(
RJET
). All the 3 firms currently hold a Zacks Rank #1 (Strong
Buy).
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
Report
REPUBLIC AIRWAY (RJET): Free Stock Analysis
Report
RYANAIR HLDGS (RYAAY): Free Stock Analysis
Report
SKYWEST INC (SKYW): Free Stock Analysis
Report
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