JetBlue beats on 3Q EPS as revenue stays flat; capacity seen rising for 4Q

JetBlue Airways Corporation (NASDAQ:JBLU) reported on Tuesday a fractional beat in third-quarter earnings per share while revenue was flat as rising fuel costs affected the company’s bottom line.

The company said EPS came in at $0.43, against the expected $0.42, and below the year-ago level of $0.55. Revenue was $2.01 billion, up from the $1.81 billion in the same time-frame last year but flat compared with the consensus of $2.01 billion.

“Our financial performance was impacted by fuel prices that increased approximately 37% year over year,” said JetBlue CEO Robin Hayes.

The realized fuel price in the quarter was $2.32 per gallon, a 36.6% increase versus the third quarter of 2017 when the realized fuel price was at $1.69.

JetBlue entered into forward fuel derivative contracts to hedge approximately 7.7% of its fuel consumption during the fourth quarter of 2018. Based on the fuel curve as of October 15th, JetBlue expects an average price per gallon of fuel of $2.48 in the fourth quarter of 2018. 

Shares of JetBlue were down 2.5% to $16.15 around midsession on Tuesday. 

READ: JetBlue soars past Wall Street estimates on robust travel demand

“In the short term, we are focused on improving our earnings, particularly in the areas we can control, and have a plan to improve margins in 2019, and again in 2020,” Hayes explained.

“We are taking actions to recapture higher fuel costs through price – both with fare increases over recent months and through higher ancillary revenue initiatives,” he said, adding the company hopes to “improve our margins and achieve our earnings target between $2.50 and $3.00 per share by 2020.”

Capacity is expected to increase between 7.5% and 9.5% year over year in the fourth quarter 2018. For the full year 2018, JetBlue expects capacity to increase between 6.5% and 7.0%.

“We continue to see sequential improvement in our underlying nonfuel costs, and reached an inflection point during the second half this year, as we execute our Structural Cost Program. We are confident we can deliver on our 2019 commitments,” said Hayes.

JetBlue is a low-cost airline company that carries more than 40 million customers a year to 103 cities in the US, the Caribbean and Latin America.

The company is based in New York City.

Reporting by Rene Pastor, contactable on [email protected] 

Story by ProactiveInvestors