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JetBlue Airways (JBLU) Declines Despite Q4 Earnings Beat

Low-cost carrier, JetBlue Airways Corporation'sJBLU fourth-quarter 2016 earnings (excluding special items) of 50 cents per share beat the Zacks Consensus Estimate by a penny. Earnings declined substantially from the year-ago figure due to higher costs.

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Operating revenues came in at $1,641 million, in line with the Zacks Consensus Estimate. Revenues improved 2.9% from the year-ago figure. The top line was primarily benefitted by a 5.4% increase in other revenues. Passenger revenues climbed 2.7% in the fourth quarter of 2016 to $1,477 million.

Operating Statistics

Capacity, measured in available seat miles, expanded 4.5% year over year. Traffic, measured in revenue passenger miles, grew 6% in the fourth quarter. Load factor (percentage of seats filled by passengers) improved 110 basis points (bps) year over year to 84.7% in the reported quarter as traffic growth outpaced capacity expansion.

Yield per passenger mile fell 3.1% year over year to 13.20 cents in the reported quarter. While passenger revenue per available seat mile (PRASM) declined 1.7% to 11.19 cents, operating revenue per available seat mile (RASM) decreased 1.5% to 12.43 cents.

Operating Income and Expenses

In the fourth quarter, total operating expenses increased 6.5% year over year. Average fuel cost per gallon (realized) declined 7.3% to $1.56. JetBlue's operating cost per available seat mile (CASM) increased 1.9% to 10.19 cents in the reported quarter. Excluding fuel and profit sharing, the metric climbed 5.6% to 7.69 cents on the back of the rising labor costs.

JetBlue Airways Corporation Price, Consensus and EPS Surprise

JetBlue Airways Corporation Price, Consensus and EPS Surprise | JetBlue Airways Corporation Quote

Balance Sheet

JetBlue ended 2016 with cash and cash equivalents of $433 million compared with $318 million at the end of 2015. Total debt, at the end of 2016 was $1,384 million as against $1,827 million at the end of 2015. However, JetBlue is constantly working toward reducing its debt levels.

Outlook

For the first quarter of 2017, this Zacks Rank # 3 (Hold) carrier expects capacity to increase in the band of 4.5-6.5%. For full-year 2017 the metric is expected to increase in the range of 6.5-8.5%. Consolidated operating cost per available seat mile, excluding fuel, is expected to increase in the band of 3-5% in the first quarter of 2017. For full-year 2017, the metric is still expected to grow in the range of 1-3%. Nevertheless, the forecast for RASM in January seems disappointing. The metric has projected a decline in the band of 8-9% in January with winter storm Jonas hurting the metric significantly.

However, the metric is expected to be stable later in the first quarter. The January RASM forecast also disappointed investors. Consequently, the stock fell more than 3% to $21.10 on Jan 26, despite the earnings beat.

Other Important Releases Coming Up

Investors in the airline space keenly await the fourth-quarter earnings reports of SkyWest, Inc. SKYW , Spirit Airlines SAVE and Alaska Air Group ALK , slated for release on Feb 2, Feb 7 and Feb 8, respectively.

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JetBlue Airways Corporation (JBLU): Free Stock Analysis Report

SkyWest, Inc. (SKYW): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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