Imperial Capital Lowers JetBlue Price Target

Bob McAdoo reiterated an Overweight rating on JetBlue Airways Corporation JBLU on Friday with a price target lowered to $16 from a previous $20. “New initiatives introduced at the recent JetBlue Investor Day suggest the new management team will be taking a more profit-driven approach to managing the business,” McAddo wrote. The initiatives McAdoo refers to includes new initiatives at expanding operating margins, such as a $450 million run rate pre-tax income improvement through the introduction of charges for checked bags, more seats on Airbus A320 aircraft and a cabin refresh in 2016, Fly-Fi and other partnerships. McAdoo said that the initiatives “seem appropriate” but does note the “full benefit” of these initiatives won't be seen until 2018. Finally, McAddo adds that investors shouldn't be concerned over the airliner, assuming deliveries of too many aircraft that may be used in un-profitable markets. The analyst notes that the company has already deferred delivery of 18 Airbus aircraft from 2016, 2017 and 2018 to 2022 and 2023. By doing so, the company will reduce capital expenditures by around $900 million through 2018.