JetBlue stock price has underperformed other American airline companies like United Airlines, Delta, and American Airlines. It has dropped by over 63% from its highest level in 2021, bringing its valuation to $2.8 billion.
JetBlue’s performance is in sync with that of other discount airline companies like Southwest and Spirit Airways. So, is the JBLU stock a good investment ahead of its earnings and as it implemenents cost cost cutting measures.
JBLU is facing major headwinds
JetBlue, one of the best-known airlines in the United States is facing major headwinds as competition and cost cutting continues. It is also facing substantial challenges as its debt load grows, affecting its profitability.
These headwinds accelerated last year when the Biden administration successfully blocked its planned merger with Spirit Airlines.
A closer look at Jetblue’s finances shows that its revenue tose from $6 billion in 2021 to over $9.6 billion in 2023.
However, its profitability remained elusive as its net loss jumped to $310 million. Its net loss in the trailing twelve months jumped to over $854 million.
Therefore, the company is working to lower its costs and boost its revenue. A union said that it offered some of its pilots an early retirement package as it continues slashing costs.
The most recent financial results showed that JetBlue’s net loss was $60 million, while its system capacity fell by 3.6%. Operating revenue rose slightly to $2.4 billion, while its operating expense improved to $2.4 billion.
The next important catalyst for the JetBlue stock price will be its upcoming earnings. The company’s guidance was a revenue drop of between 3% and 7% and interest expense of between $155 million and $165 milion.
Analysts expect its numbers to be a bit better than guidance. Its average revenue will be about $2.6 billion, down by 2.83% YoY. For the year, its revenue is expected to be $9.26 billion.
One JetBlue’s main challenges is that its balance sheet is not all that good. It ended the last quarter with over $2.5 billion in cash and equivalents against total debt of over $8.23 billion. Its debt load jumped from the previous $4.7 billion.
As such, it is having to spend substantial sums of money in interest payments, which is hitting its earnings.
The other challenge is that companies like United, Delta, and American have launched their low-cost alternatives in key routes.
Analysts are a bit pessimistic about JetBlue’s business, with Bank of America being the most recent one to downgrade it from neutral to underperform. The average JetBlue stock price forecast is $6.65, down from the current $8.07.
JetBlue stock price analysis
The weekly chart reveals that the JBLU stock price has recovered modestly in the past few months. It has risen ftom about $3.3 in December 2023 to above $8.
The stock has formed an ascending triangle pattern, a popular bullish continuation sign. It is now sitting above the upper side of this triangle, which also coincides with the 23.6% Fibonacci Retracement point.
JetBlue stock has moved above the 50-week moving average, while the MACD and the Relative Strength Index (RSI) have continued rising. Therefore, the JBLU stock will likely keep rising as bulls target the 50% retracement point at $12.63, up by 55% from the current level.
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