JetBlue Airways Missed Estimates, Is It A Buying Opportunity?
MarketBeat.com | Nov 02, 2022 03:15AM ET
- JetBlue turned in its first profitable quarter in Q3 2022 since the pandemic but still missed analyst expectations.
- Its planned $3.8 billion merger with Spirit Airlines (NYSE:SAVE) would make it the fifth-largest airline in the U.S. as it awaits regulatory approval
- Shares still trade well below the $10.71 book value
The major airline carriers have finally gotten back into the black as the profits roll in for Delta Air Lines (NYSE:DAL), United Airlines Holdings Inc (NASDAQ:UAL), and American Airlines (NASDAQ:AAL). All the majors reported profits that exceeded analyst expectations indicating that the pandemic is in the rearview mirror.
Even regional airlines like Southwest Airlines (NYSE:LUV) have returned to profitability, but not all of them are blowing out analyst estimates. JetBlue Airways Corp (NASDAQ:JBLU) surprised investors with its first profitable quarter since the pandemic but still missed analyst estimates. The stock was recovering from its 52-week lows heading into earnings, fell on earnings, and quickly rebounded to retest the $7.60 resistance level. This could mark the capitulation for JBLU stock, as the volume has steadily risen for the past three weeks.
Strong demand spurred by leisure travel and visiting friends and relatives (VFR) led the Company into the black. They expect this backdrop to remain into the year-end holiday peak season as the airline expects capacity to rise 1% to 4% over year three and unit revenue to increase 15% to 19% year over three. How a recession would affect these expectations is frankly still a wildcard for airline investors.
h2 Here’s What the Charts Say /h2JBLU stock initially collapsed to a 52-week low at $6.21 heading into its Q3 2022 earnings report. It managed to slingshot back up on the weekly MSL trigger breakout through $7.20. It’s attempting to break through the tough $7.60 resistance area. The rising volume on the bounce off the 52-week lows indicates that buyers are patiently and steadily bidding up shares slowly after a sharp capitulation bottom.
The weekly 20-period exponential moving average (MA) resistance sits at $8.23, followed by the weekly 50-period MA at $11.11. The $9.29 remains a solid resistance level, followed by the $10.95 level. Investors watching for JBLU pullback should monitor the $7.20 weekly MSL trigger, $6.75 support, $6.21 swing low, and $5.51 sticky 5’s price levels.
Get The News You Want
On October 25, 2022, JetBlue released its fiscal third-quarter 2022 results for September 2022. The Company reported an earnings-per-share (EPS) profit of $0.21, excluding non-recurring items ,versus consensus analyst estimates for a profit of $0.24, a (-$0.03) beat. Revenues grew 29.9% year-over-year (YoY) to $2.56 billion, beating analyst estimates for $2.55 billion.
Revenue per available seat mile rose 23.4% year over three. Strong leisure and VFR trends drove the quarter. Hurricane Fiona and Ian had net neutral impacts on unit revenues in the quarter but negatively affected CASH ex-fuel by one point to CASM-ex in the quarter and had no impact in the fourth quarter.
The Company paid down $66 million of debt, funded $260 million in capex, and spent $25 million in Spirit Airline acquisition-related fees. Jet Blue ended the quarter with $2.3 billion in cash and investments. The realized fuel price was $3.84 per gallon compared to $2.06 in Q3 2019, up 86%. Jet Blue entered into a forward fuel derivatives contract to hedge 27% of its fuel consumption for the fourth quarter with an average all-in price of $3.65 per gallon in the fourth quarter.
h2 Merging with the "Most Hated Airline" in the U.S./h2JetBlue’s merger with arguably the country’s “most hated airline” Spirit Airlines (NYSE: SAVE) is expected to close before the first half of 2024. JetBlue beat out Frontier Airlines (NASDAQ: ULCC), to the relief of Frontier’s shareholders, in its bid to acquire Spirit for $33.50 per share in cash or $3.8 billion.
The Oct. 19 shareholder approval to acquire Spirit Airlines triggered the agreed-upon $272 million prepayment or $2.50 per share cash payment to Spirit shareholders. Incidentally, Spirit Airlines also reported a surprise profit in its most recent earnings. The combination of the two airlines will create the fifth largest airline in the U.S. Jet Blue expects to cover a larger demographic with its combination but faces integration challenges. They expect to fly under one banner by the first-half of 2025, but full integration may take up to five years afterward.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.