Shares of JetBlue Airways (JBLU) rose 7.2% yesterday after the air carrier lifted its revenue forecast for the third quarter. JetBlue said it benefited from the disruption caused at other carriers by the outage at CrowdStrike (CRWD), which drove passengers to alternate carriers. Additionally, JetBlue witnessed strong summer demand, leading to higher bookings. The carrier added that its efforts to streamline operations have started showing results.
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JetBlue now projects its Q3 FY24 revenue growth in the range of (2.5%) to 1%, better than the previous outlook of (5.5%) to (1.5%) compared to the prior-year quarter. Moreover, the American air carrier expects the ongoing quarter’s unit costs (excluding fuel) to rise between 5% and 7%, lower than the prior forecast of a 6% to 8% increase.
JetBlue’s Cost Optimization Efforts
JetBlue undertook strategic steps to fortress its performance after its proposed $3.8 billion merger with ultra-low-cost carrier Spirit Airlines (SAVE) was terminated in March this year. The carrier implemented cost-control measures and canceled flights to less profitable routes in a bid to improve its operational performance.
Also, JetBlue is seeing solid growth in its bookings in Latin America. This favorable trend, coupled with its $300 million revenue initiatives, helped it to lift its revenue expectations.
Furthermore, JetBlue stated that it strengthened its finances by issuing $2 billion in senior secured notes and entering into a $765 million term loan agreement in August. This will lead to marginally higher annual interest expenses than guided earlier. The carrier has also deferred the purchase of 44 new jets from Airbus (EADSF), which has helped in reducing capital expenditures by roughly $3 billion between 2025 and 2029.
Insights from TipRanks’ Bulls Say, Bears Say Tool
Analysts have mixed opinions on JetBlue’s revenue initiatives and liquidity measures. According to TipRanks’ Bulls Say, Bears Say tool, Bears are concerned about intense competition and credit rating downgrades following the liquidity/debt raise.
On the other hand, some analysts believe that the capital raise will help JetBlue to maintain liquidity. Also, Bulls are optimistic about the air carrier’s JetForward plan to improve its profitability.
Is JetBlue Stock a Buy Right Now?
Amid the ongoing performance improvement initiatives, analysts remain sidelined on JetBlue stock. On TipRanks, JBLU has a Hold consensus rating based on one Buy, three Holds, and two Sell recommendations. The average JetBlue Airways price target of $5.63 implies 4.5% upside potential from current levels. JBLU shares are down 2.9% year-to-date.
