20 Sep

Will JetBlue Airways’ Capacity Growth Remain High?

WRITTEN BY Ally Schmidt FEATURED IN Company News, Insights, & Analysis

JetBlue Airways’ capacity growth

JetBlue Airways’ capacity rose 5.4% year-over-year (or YoY) in August 2017. The growth is higher than the growth seen in the past seven months of 2017. JBLU’s average growth in that period was ~4.7%.

Will JetBlue Airways’ Capacity Growth Remain High?

Year-to-date (or YTD) August 2017, JBLU’s capacity has risen 4.8% YoY. For 2016, JBLU’s capacity rose at ~9.1% while in 2015, capacity rose 9.5%. JBLU’s capacity growth remains higher than low-cost carrier Southwest Airlines (LUV) and similar to that of Alaska Air (ALK).

What to expect

The growth in JetBlue Airways’ capacity has come from the expansion of its premium Mint service. The service saw immense success on its transpacific routes, which led JetBlue to launch the Mint service on transatlantic routes. JetBlue is set to launch this service on another five transcontinental routes by April 2018.

JetBlue plans to compete with rival Alaska through organic capacity expansion. Alaska Air’s (ALK) acquisition of Virgin America (VA) helped double its capacity and gave it a strong presence on the West Coast.

For 3Q17, JBLU is expecting a 6.5% to 7.5% YoY increase in capacity. For the full-year 2017, capacity growth is expected to be in the range of 5.5% to 6.5% YoY as against the earlier expected growth of 5.5% to 7.5%.

Capacity growth helps the airlines only if complemented by traffic growth, which is what we’ll look at in our next article. Investors can gain exposure to JBLU by investing in the First Trust Value Line 100 Exchange-Traded Fund (FVL), which holds 0.9% of its portfolio in JBLU.

You can also see the August 2017 performance of other airline carriers like Delta Air Lines (DAL), American Airlines (AAL), and United Continental (UAL), or visit the Market Realist Airlines page.

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