UPDATE: Bank of America Downgrades JetBlue Airways to Neutral Following Weaker 1Q13 Results

In a report published Friday, Bank of America analyst Glenn D. Engel downgraded the rating on JetBlue Airways Corporation JBLU from Buy to Neutral, and slightly lowered the price target from $8.00 to $7.00. In the report, Engel noted, “JBLU reported 1Q13 of $0.05 vs $0.09 a year ago, below our $0.10 on higher than expected E190 engine costs. We are reducing our 2013E to $0.48 (Street $0.58) from $0.60 and our 2014E to $0.60 from $0.70 despite lower fuel price assumptions because of a tougher yield environment and higher maintenance costs. We downgrade our JBLU rating to Neutral from Buy. Despite declining margins over the past year, JBLU has accelerated capex, indicating management still more focused on growth than ROIC. JBLU is expanding capacity (6%-8%) much faster than the industry, yet its non-fuel cost inflation (2%-4%, up 1pt from prior guidance), is outpacing the sector.” JetBlue Airways Corporation closed on Friday at $6.92.