Takeoff or Turbulence Ahead for JetBlue?

With shares of JetBlue Airway Corporation (NASDAQ:JBLU) trading at around $6.12, is JBLU an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Before we get to some facts that make JetBlue special in an extremely challenging industry, let’s first take a look at some January 2013 numbers for the company:

  • Load Factor: 87 percent, up 1 percent year-over-year.
  • Traffic: up 11 percent year-over-year.
  • Capacity: up 9.9 percent year-over-year.
  • Preliminary Completion Factor: 99.7 percent.
  • One-Time Performance: 78.3 percent.
  • Preliminary Passenger Revenue Per Available Seat Mile (PRASM): flat year-over-year.
  • PRASM Expectation for February: flat.

JetBlue offers 750 daily flights to 75 cities. The airline is best known for free television, low rates, and great service. This has allowed JetBlue to retain a healthy portion of its passengers. There are also benefits to JetBlue that not everyone knows about. This includes no overbooking, no in-flight products to pay for, and the first checked bag is free. JetBlue doesn’t nickel-and-dime like some other airlines, which is part of the reason JetBlue has been the highest ranked major airline for customer service since 2005. Another reason for this coveted status is that JetBlue plans carefully so canceled and delayed flights are uncommon.

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Fuel costs play a major role in the industry. JetBlue has taken a strategic approach to combating these fuel costs. JetBlue is ahead of the industry in this regard thanks to fuel efficiency innovation. In order to stay ahead of the competition, JetBlue uses lighter TV platforms, the latest technology engines, and all engines are actively water-washed, which saves a lot on fuel. Wingtips from Airbus that reduce drag and save 3 percent to 4 percent on fuel are also a current project. JetBlue will continue to find ways to limit fuel costs, which will lead to overall reduced costs and larger profits.

Let’s take a look at some important numbers prior to forming an opinion on the stock…