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JetBlue (JBLU) Shares Down 14% YTD: What's Troubling it?

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Shares of JetBlue Airways CorporationJBLU have declined 14.8% so far this year, underperforming the industry 's decrease of 13.1%.

Let's delve into the factors causing this downside.

The rise in fuel costs has been plaguing the entire airline industry of late and JetBlue has not been spared the blow either. Notably, the metric rose 23% in the first quarter at JetBlue. With fuel costs persistently on an uptrend of late due to various reasons like geopolitical tensions in the Middle East, the company's second-quarter results are also anticipated to be hurt for the same reason. In fact, fuel cost is projected to be $2.23 per gallon in the second quarter of 2018, much higher than $1.61 a year ago.

Apart from fuel costs, high labor costs will affect the company's results in the second quarter. JetBlue recently reached an agreement in principle with its pilots after a long-standing negotiation for a fair deal. The contract is yet to be ratified. The company currently expects non-fuel unit costs between 2% and 4% in the period under consideration. The estimate is likely to be raised following ratification of the new contract.

Further, the company's forecast for unit revenues in the second quarter is worrisome. It predicts revenues per available seat mile (RASM) in the range of a decline of 3% to flat year over year. This downside is due to adverse effects pertaining to holiday placement, completion factor as well as co-brand incentive payments.

Additionally, natural calamities weighed on airlines significantly in the recent past. The back-to-back weather-related disasters have disrupted operations and caused a huge revenue loss for the company. This year, JetBlue had to cancel multiple flights due to the winter storm Grayson in January and the successive nor'easters in March.

No wonder, the Zacks Consensus Estimate for second-quarter earnings has been revised 22.2% downward in the last 60 days. For the full-year too, the consensus mark has been moved 6.2% south over the same time frame. The company's unimpressive Momentum Score of F further highlights its short-term unattractiveness.

Zacks Rank & Key Picks

JetBlue carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. SKYW , Expeditors International of Washington, Inc. EXPD and GATX Corporation GATX . While Expeditors sports a Zacks Rank #1 (Strong Buy), SkyWest and GATX carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Shares of SkyWest, Expeditors and GATX have rallied more than 67%, 36% and 23%, respectively, in a year.

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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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