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Earnings preview: Costs to hurt JetBlue Airways Q1 results

JetBlue Airways Corporation (JBLU) is scheduled to report its earnings results for the first quarter of 2019 on Tuesday before the market opens. The results will be hurt by margin pressures as well as higher costs and expenses. However, the moderation of oil prices could benefit the bottom line.

The results will be hurt by the prolonged shutdown of the government and the trade war between the US and China. The company has been taking measures to lower costs and this is going take huge time for execution. However, the top line growth will be benefited by higher passenger revenue and increases in baggage and other fees.

JetBlue A320 Airbus for takeoff
Image Courtesy: JetBlue Airways

Analysts expect JetBlue’s earnings to plunge by 55.60% to $0.12 per share while revenue will increase by 6.40% to $1.87 billion for the first quarter. In comparison, during the previous year quarter, the company reported a profit of $0.27 per share on revenue of $1.75 billion. The company has a history of beating analysts’ expectations in the last four consecutive quarters.

However, the analysts remained on the sidelines and recommended a “hold” rating while expecting the stock to reach $19.03 per share in the next 52 weeks. The company’s business position has remained as an attractive long-term growth investment opportunity for the investors.

It is expected that the company’s results will struggle during the first quarter due to rising costs and lower passenger fare rates. This is in addition to the cancellations of 737 jets. On March 5, the company confirmed that low fares for last-minute bookings and weak demand in off-peak periods have prompted JetBlue to lower its unit revenue guidance.

Also read: United Airlines earnings preview

For the fourth quarter, JetBlue topped market estimates on revenue and earnings. Net income plunged by 74.1% from the last year, which included a one-time tax benefit. Adjusted EPS increased by 56% helped by strong non-fuel cost control and revenue growth.

For the first quarter, the company had expected capacity to increase between 7.5% and 9.5% year-over-year. Revenue per available seat mile (RASM) was predicted to be in the range of down 3.5% to down 1.5%. Looking ahead into 2020, JetBlue had expressed confidence in its ability to achieve its EPS target of $2.50 to $3.00.

Shares of JetBlue ended Thursday’s regular session down 0.12% at $16.96 on the Nasdaq. The stock has fallen over 15% in the past year and over 3% in the past three months.

 

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