JetBlue March Traffic Grows - Analyst Blog

JetBlue Airways Corporation JBLU displayed marginal traffic growth across its network for the month of March 2014. The carrier reported airline traffic – measured in revenue passenger miles or RPMs – of 3.24 million, up 0.9% year over year. Consolidated capacity (or available seat miles/ASMs) was also up 3.7% year over year at 3.82 billion.

The load factor or percentage of seats filled by passengers, however, was 84.8%, down 230 basis points owing to relatively slow traffic growth as compared to capacity. Passenger revenue per available seat mile (PRASM) decreased 8% year over year, due to the shift of Easter to April this year. The stock ended 3.23% down on Thursday trade on Nasdaq following the news. The company registered a completion factor of 98.0%, with on-time performance of 77.2%.

In the first three months this year, JetBlue generated RPMs of 8.66 billion (up 1.8% year over year) and ASMs of 10.42 billion (up 2.7% year over year). Load factor, moved south to 83.1% from the year-ago figure of 83.9%.

JetBlue is expected to benefit from product introductions, ancillary revenue opportunities and a matured network. The company's growing presence in key markets and penetration into untapped arenas will support its momentum.

The company plans to add service between Fort Lauderdale and different Central American destinations like Port of Spain, Montego Bay, and Punta Cana from May 2014. However, we believe rival Southwest Airline Co.'s LUV expected entry into the Caribbean Island from July 2014 could affect its market share.

Further, the company has won bids to purchase take-off and landing slots at Reagan National Airport DCA in Washington. The slot purchase is part of a mega merger deal between American Airlines and U.S. Airways Group that led to the formation of American Airlines Group Inc. AAL.

JetBlue plans to add 24 daily round trip departures from DCA to eight cities in 2014, thus bringing the total departures from the airport to 30. These additional flights will allow JetBlue to gain a significant portion of the Washington air service market if it can price fares attractively.

JetBlue Airways carries a Zacks Rank #3 (Hold). Another stock worth considering within this sector is Alaska Air Group Inc. ALK, which carries a Zacks Rank #1 (Strong Buy).