(JBLU) JetBlue Airways August Traffic Rises

The discounted U.S. airline JetBlue Airways Corporation (JBLU) reported a 5.8% year-over-year increase in August 2011 traffic. Airline traffic is measured in billions of revenue passenger miles, which implies one mile flown by one passenger.

On a year-over-year basis, capacity (or, available seat miles) grew 4.6% and load factor (percentage of seats filled with passengers) increased 90 basis points (bps) to 87.3% from 86.4%.

JetBlue saw strong traffic in August unlike its largest rivals Delta Air Lines (DAL) and United Continental Holdings Inc. (UAL). Delta’s traffic declined 0.3%, while United Continental traffic dropped 2.7%. However, the low-cost carrier Southwest Airlines Co. (LUV) recorded the largest year-over-year increase followed by Southwest Airlines’ 3.9% rise.

We believe JetBlue is poised to grow even in the rising fuel environment. The company has an average fleet age of only 5.7 years and has the most fuel efficient fleet among its peers. Further, through a low cost structure, JetBlue is able to counter rising fuel prices with increasing fares and fuel-hedging strategies.

However, the company remains affected by the recent Hurricane Irene in the Eastern U.S. As a result, all the airlines including JetBlue cancelled flights connecting to the eastern network and incurred losses. JetBlue, the first major carrier to cancel flights, dropped approximately 1,272 flights. The airline halted operations at its biggest base, JFK and Boston. However, to offset the losses, JetBlue increased fares, allowing customers to rebook their flights to travel in selected cities in the Mid-Atlantic and Northeast regions.

Hence, we are currently maintaining our long-term Neutral recommendation on JetBlue. However, the stock holds a short-term (1-3 months)  Zacks #4 (Sell) Rank.

DELTA AIR LINES (DAL): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

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