JetBlue Airways Corporation (JBLU) displayed better traffic across its network for the month of Oct 2013. The carrier reported airline traffic – measured in revenue passenger miles or RPMs – of 2.72 billion, up 7.1% year over year. Consolidated capacity (or available seat miles/ASMs) was also up 10.9% year over year at 3.34 billion.
The load factor or percentage of seats filled by passengers however, was 81.4%, down 290 basis points. Passenger revenue per available seat mile (PRASM) increased 4% year over year. The company registered a completion factor of 99.9%, with on-time performance of 87.0%.
For the first 10 months of 2013, JetBlue Airways generated RPMs of 29.90 (up 6.7% year over year) and ASMs of 35.47 billion (up 6.8% year over year), on a consolidated basis. Load factor was 84.3% in October, reflecting a decline of 10 basis points from the corresponding prior-year month.
We expect JetBlue to sustain traffic growth in the coming days based on increasing travel demand, network expansion, fleet re-designing, optimization of unit revenues, capital expenditure management and disciplined growth. The company’s growing presence in key markets and penetration into untapped arenas will support its momentum. The airline recently unveiled a premium service termed Mint at an attractive price, aimed at enhancing the luxury offering between New York and California.
However, increase in maintenance cost owing to higher costs associated with the use of older E190 fleet and CF34 engine will affect the company’s profitability. Further, competitive pressure could also weigh on the stock.
JetBlue Airways – which operates with the likes of Delta Air Lines Inc. (DAL), United-Continental Holdings Inc. (UAL) and U.S. Airways Group Inc. (LCC) – carries a Zacks Rank #2 (Buy).
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