JetBlue Airways is set to report its Q1 2024 results with expectations of a top line of $2.2 billion and a bottom line of $(0.50). Despite these positive expectations, the company’s stock is currently trading around $7, which some analysts believe is fully valued. JetBlue has seen a decline in its stock performance over the past few years, underperforming the S&P 500 in 2021, 2022, and 2023. This underperformance has been a trend for individual stocks in recent years, making it challenging to beat the broader market consistently. However, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500 over the same period.
The uncertain macroeconomic environment, including high oil prices and elevated interest rates, raises concerns about JetBlue’s potential performance in the next 12 months. Analysts believe that the company is appropriately priced at around $7, with a valuation estimate of a little over $6 per share. The company’s performance in the latest quarter may be impacted by issues related to Pratt and Whitney’s engines, which could result in some aircraft being out of service. Additionally, a recent federal judge decision blocking JetBlue from acquiring Spirit Airlines has led the company to cut some routes in order to return to profitability.
In Q4 2023, JetBlue reported a 4% y-o-y decline in revenue, with a decrease in passenger revenue per available seat mile outweighing the rise in available seat miles. The company’s operating margin contracted by 470 bps to -2.9% in Q4, primarily due to higher costs. Furthermore, the average fuel price per gallon declined by 17% y-o-y in the previous quarter, but is expected to rise sequentially in Q1 due to higher average fuel prices. This increase in fuel prices could weigh on the company’s operating margin in the upcoming quarter.
Despite these challenges, JetBlue Airways is expected to benefit from robust travel demand in the latest quarter. However, the company’s capacity may remain lower in 2024 due to ongoing engine inspections by Pratt & Whitney. JetBlue’s decision to exit some routes and cut costs following the failed acquisition of Spirit Airlines may impact its overall performance moving forward. The airline industry continues to face uncertainties amidst the evolving macroeconomic environment, and investors will be closely watching JetBlue’s Q1 2024 results to assess its future prospects in the market.
