JetBlue Beats Expectations, However Shares Commerce Decrease

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JetBlue exceeds expectations, but stocks trade lower

April 28, 2021 4 min read

This story originally appeared on MarketBeat

JetBlue Airways (NASDAQ: JBLU) was lower on Tuesday after a better-than-expected first-quarter report.

The stock closed at $ 20.12 on Tuesday, down $ 0.45, or 2.19%.

In its report, the New York-based airline offered promising insight into the current recovery in leisure travel, which could bode well for the rundown travel industry.

The company lost $ 1.48 per share, beating Wall Street’s consensus estimate of $ 1.68 per share. Revenue of $ 733 million was also above expectations.

The estimates were exceeded in three of the last four quarters.

JetBlue, like the rest of the travel industry, has been on the wall since Q1 2020 when pandemics began to close in March last year. The company had a number of profitable years that were abandoned last year.

JetBlue ended 2020 with a loss of $ 5.68 per share. As of now, analysts expect a loss of $ 2.61 per share for this year, with a return to profitability in 2022.

However, the company’s chief operating officer Joanna Geraghty told CNBC that vacation travel is leading the current boom, meaning the results could exceed Wall Street’s current expectations. She named trips to Florida and the Caribbean as particularly strong.

Breakeven in the third quarter?

The company anticipated a 30% to 35% decline in sales, but expects EBITDA to break even in the third quarter.

Revenue has declined year over year for the past five quarters, which should come as no surprise at all.

The airline is heavily involved in the northeastern United States, which was hit harder than other parts of the country by last year’s lockdowns.

Last week, JetBlue announced an alliance with American Airlines (NASDAQ: AAL) adding 24 routes to eight cities. JetBlue praised the deal as an affordable travel alternative for customers departing from northeastern airports like New York’s LaGuardia and being restricted due to the addition of new flights. Customers also receive mutual frequent flyer benefits from both airlines.

JetBlue also announced that it will start service in the UK in the third quarter.

“This approval is the first planned approval for foreign carriers that has been granted to a new operator since the UK left the European Union,” the UK airline regulator said in a statement.

JetBlue has not specified which UK airport it will use, but public information from UK airlines indicates that slots have been issued at London’s Heathrow Airport.

Airlines leading higher for 2021

As a group, airline stocks rebounded on Monday on news that the European Union would open travel to Covid-vaccinated Americans this summer. Hotels, cruise ships and other recreational stocks also rose.

Despite the dire situation for airlines last year, JetBlue’s share price was unfounded. It flew 158.74% last year, 41.47% since the beginning of the year and 38.52% in the last three months.

The stock attempted a rally earlier this month but failed to break price resistance between $ 21-22. It is working on the third week of a consolidation, so it is too early to call this pullback a suitable base, which will take at least five weeks to form.

Trading volume has been below average for the past four weeks, a good sign that the stock is consolidating or struggling to flee.

In the past few weeks, American Airlines, Southwest Airlines (NYSE: LUV), Alaska Air Group (NYSE: ALK), and Spirit Airlines (NYSE: SAVE) reported better-than-expected results and led to growth this year.

It is possible that it would take more than these reports to send industry stocks up noticeably as stocks got off the ground in hopes of clear skies.

A headwind could come from higher fuel prices, which can cause airlines to raise ticket prices, potentially making travel subdued. On the flip side, pent-up demand could mean consumers aren’t impressed with spending more money on travel. Persistent weakness in business travel can also weigh on sales.

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