Tags: JetBlue | Airways | JBLU | fuel | airlines

JetBlue: Higher Fuel Prices? So What?

Monday, 09 May 2011 01:16 PM

Higher fuel prices aren't stopping JetBlue Airways (JBLU) from boosting its business.

The airline's total operating revenue during the first quarter of this year hit $1 billion, up 16.3 percent from the same period in 2010 thanks to strong business in the Caribbean and parts of the northeastern United States.

The carrier reported operating income of $45 million, up 6 percent from the first quarter of 2010. Net profit hit $3 million during the quarter compared to a $1 million loss a year earlier.

"Despite significantly higher fuel prices, we are pleased to report a profit in the first quarter," says Dave Barger, JetBlue's president and chief executive officer.

"Our first-quarter results demonstrate the success of our Boston and Caribbean network, which continue to deliver strong revenue performance and the focus brought by our 13,000 crewmembers to deliver a great JetBlue Experience."

A big challenge all airlines face is managing fuel prices, a difficult task for anyone in pretty much any industry, but JetBlue's financial-management strategies appear to be working, allowing the airline not only to boost the top line during the quarter but the bottom line as well even when costs rise.

During the first quarter of this year, airline fuel and related taxes jumped 39 percent on year to $353 million. Expenses in the form of maintenance materials and repairs rose 36 percent to $52 million. Total operating expenses rose 17 percent to $967 million.

Caution on fuel costs

Still, watch out for fuel prices, analysts say. Argus reiterated a hold recommendation for JetBlue stocks while research firm Dahlman Rose says it's time to sell the stock.

Zacks Investment Research is holding on to a neutral rating for the company, saying that while high fuel prices remain a concern and while the carrier remains heavily dependent on the New York City market for its revenue streams, demand from Caribbean and Latin American routes as well as from Boston routes will keep revenue solid.

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Higher fuel prices aren't stopping JetBlue Airways (JBLU) from boosting its business. The airline's total operating revenue during the first quarter of this year hit $1 billion, up 16.3 percent from the same period in 2010 thanks to strong business in the Caribbean and...
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2011-16-09
Monday, 09 May 2011 01:16 PM
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