JetBlue’s shares gain 3% after Q4 results beat estimates

JetBlue Airways Corporation (JBLU) topped market estimates on revenue and earnings for the fourth quarter of 2018, sending shares up 3.5% during premarket hours on Thursday.

Total operating revenues grew 12% to $1.97 billion from the year-ago period. Reported net income dropped 74.1% to $169 million or $0.55 per share compared to the prior-year quarter. Last year’s fourth quarter earnings results included a one-time tax benefit. Adjusted EPS grew to $0.50 from $0.32 last year, helped by strong non-fuel cost control and revenue growth.

During the quarter, revenue per available seat mile (RASM) grew 2.4% year-over-year, driven by strong close-in demand trends across the network. RASM ended above the midpoint of the company’s guidance range of 1-4%, excluding a 0.3 point impact from strong completion factor.

CASM, ex-fuel dropped 3.6%, below the low-end of the guidance range of down 3.5% to down 1.5%. This drop includes a benefit of around 0.3 points from improved completion factor. Load factor dropped by 0.6 points to 82.5% year-over-year.

Also see: JetBlue Q4 2018 Earnings Conference Call Transcript

The realized fuel price in the fourth quarter was $2.24 per gallon, an increase of 18.5% from $1.89 in the prior-year quarter. JetBlue entered into forward fuel derivative contracts to hedge around 7% of its fuel consumption for the first half of 2019. The company currently expects the average price per gallon of fuel to be $2.01 in the first quarter of 2019.

Earnings Preview: Higher fuel costs might impact JetBlue’s Q4 earnings

For the first quarter of 2019, capacity is expected to increase between 7.5% and 9.5% year-over-year. RASM growth is expected to range between down 2% and plus 1%. CASM, ex-fuel, is expected to grow 1.5% to 3.5%.

For full-year 2019, capacity is expected to grow 5-7%. The company expects CASM, ex-fuel, to be between flat and 2% on a year-over-year basis. Looking ahead, JetBlue expressed confidence in its ability to achieve its EPS target of $2.50 to $3.00 in 2020.

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