Yahoo Finance Here's Why Hold Strategy is Apt for JetBlue (JBLU) Right Now
JetBlue Airways JBLU is benefiting from the buoyant air travel demand scenario and fleet upgrade efforts. However, escalating fuel costs are concerning. JetBlue currently carries a Zacks Rank #3 (Hold).
Factors Favoring JBLU
Driven by upbeat air-travel demand, operating revenues at JetBlue increased 34.1% year over year to $2,328 million in first-quarter 2023, also beating the Zacks Consensus Estimate of $2,322.5 million. Passenger revenues, accounting for the bulk of the top line (93.7%), increased to $2,182 million in first-quarter 2023 from $1,603 million a year ago when air travel demand was not so robust.
With air travel demand expected to remain strong in the June quarter, management anticipates total revenues to increase 4.5-8.5% on a year-over-year basis. Total revenues for 2023 are forecast to increase year over year in the high-single to low-double-digit range.
We are also impressed by the company's efforts to modernize its fleet. In February 2022, JetBlue inked a firm order with Airbus, permitting it to add 30 more Airbus A220-300 aircraft to its order book. Debt reduction efforts at JBLU are commendable as well.
A Key Risk
Escalating fuel costs pose a threat to JetBlue’s bottom line. The oil price is moving north primarily because of supply concerns due to the ongoing Russia-Ukraine war. In first-quarter 2023, the average fuel price per gallon (including related taxes) climbed to $3.50 from $2.90 a year ago. The average fuel cost per gallon in the June quarter is estimated to be between $2.75 and $2.90.
Key Picks
Some better-ranked stocks for investors interested in the Zacks Airline industry are Alaska Air Group ALK and Allegiant Travel Company ALGT, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
On the back of upbeat air travel demand and favorable pricing, Alaska Air's top line increased 31% year over year in the March quarter. The company expects to boost its fleet and workforce in 2023 to meet the anticipated high demand.
ALK expects second-quarter 2023 total revenues to increase 2.5-5.5% from the second-quarter 2022 actuals. The Zacks Consensus Estimate for Alaska Air's current-year earnings has been revised upward by 9.95% in the past 60 days.
Allegiant is seeing a steady recovery in domestic and leisure air travel demand. Allegiant's operating revenues in first-quarter 2023 grew 29.9% on a year-over-year basis. Passenger revenues, which accounted for 93.7% of the top line, increased 31.3% on a year-over-year basis.
Allegiant's fleet modernization efforts are encouraging. The Zacks Consensus Estimate for ALGT's current-year earnings has been revised upward by 40.16% in the past 60 days.
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
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Allegiant Travel Company (ALGT) : Free Stock Analysis Report
