Leading passenger airline JetBlue Airways Corporation (JBLU) will offer lie-flat seats on flights between New York and California. Additionally, JetBlue will be the first passenger carrier within the said route to offer single seat cabins with closed doors.
Notably, JetBlue will add 16 such seats in New York-to-Los Angeles and San Francisco flights. The seats will be available on JetBlue’s new Airbus A321 fleets from the second quarter of 2014. The seats will have features like air cushions with adjustable firmness, a 15 inch widescreen television and massage function. Additionally, it will offer a ‘wake-me-for-service’ function, if passengers choose to take a nap.
Airbus A321 will include 4 cabin seats with sliding doors and will be promoted as ‘private suites,’ targeting the business customers. Apart from the premium seats, there will be 143 seats. However, the low-cost carrier did not mention any change in the 34 inches legroom in its jets.
The New York-California route is one of the hottest among the profitable transcontinental routes in the U.S. Larger rivals like Delta Airlines Inc. (DAL), United-Continental Holdings Inc. (UAL) and American Airlines plan to add lie-flat premium seats on these routes.
Long Island City, NY-based JetBlue plans to charge a reasonable rate for these luxury seats, which in turn will fuel the demand for luxury air travel. We believe move is believed to be a strategic one to meet the growing demand for luxury air travel in the U.S. However, JetBlue’s growth in New York will be limited by the restrictions on landing and take-off space imposed by the government.
Recently, JetBlue announced weak financial results for the second quarter of 2013, where earnings and revenues failed to beat the Zacks Consensus Estimate. Load factor (percentage of seats filled with passengers) decreased 40 bps to 84.9% from 85.3% a year earlier. Furthermore, average one way fare dipped 1.3% on an annualized basis to $157.51 from $159.58 in the previous-year quarter.
JetBlue currently carries a Zacks Rank #4 (Sell). A stock that is worth considering within the same industry is U.S. Airways Group Inc. (LCC) with a Zacks Rank #1 (Strong Buy).
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