JetBlue Shares Are Cheap. Is Timing Still Bad?
JetBlue (NASDAQ: JBLU) is a low-cost airline that serves passengers in North and South America with more than 1,000 daily flights on average. The airline stock has been range-bound for the past year and a half, moving between $19 and $15.50.
Investors are bullish about the company's optimistic profit forecasts for next year, and initiatives to improve revenue and earnings with route reallocation, cost restructuring, load optimization, and purchases of more efficient new planes. The company also has an advantage over competitors that are dealing with grounded Boeing 737 MAX airplanes while regulators investigate the safety of those planes. JetBlue's fleet is almost entirely composed of Airbus (OTC: EADSY) airplanes, so it has an operational edge in the short term.
JetBlue's passenger load factor, a measure of the extent to which flights are filled, was 84.7% through Q3 2019, which compares poorly to peers. Delta (NYSE: DAL) is among the industry leaders on this metric, and it is 180 basis points higher. The disparity in load factor and average ticket pricing also lead JetBlue to lower revenue per available seat mile (RASM), an important metric tracked by airlines to measure how efficiently they generate revenue with their services. JetBlue's $0.1222 RASM was 28% lower than Delta's.
Source Fool.com
