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%.
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.
For 3Q17, JetBlue is expecting unit costs (also known as cost per available seat mile or CASM-ex) to rise in the range of 1.5% to 3.5%.
Freeport-McMoRan (FCX) is scheduled to release its first-quarter earnings on April 25.
Ford has risen 8.2% in April so far as compared to 2.6% gains in the S&P 500 Index.
On April 22, natural gas prices settled at $2.52 per MMBtu—1.4% above the lowest closing level for active natural gas futures since June 8, 2016.
Kimberly-Clark (KMB) stock rose 5.4% on April 22 after the company released stronger-than-expected first-quarter results.
Alaska Air Group (ALK) plans to report its first-quarter earnings results on April 25.
Recently, Bank of America Merrill Lynch initiated coverage on Cronos Group (CRON) with an "underperform" rating.