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JetBlue Misses Estimates Amid Fuel Prices, Storms

By Reuters
Published | Updated

NEW YORK – JetBlue Airways Corp. (JBLU) on Thursday said third-quarter earnings plunged 71 percent, missing analysts' lowered estimates, as it struggled with skyrocketing fuel prices, storm disruptions and competition.

But JetBlue shares, which have lost more than half of their value after hitting an all-time high of $47.15 about a year ago, rose more than 6 percent in morning trading.

The low-cost carrier said net income fell to $8.4 million, or 8 cents per share, from $29 million, or 26 cents per share, a year earlier.

"The difference between the Street estimate and what they reported was entirely hurricane-effects," Calyon Securities analyst Ray Neidl said in an interview.

Last month, JetBlue warned that third-quarter earnings would not match previous estimates, saying it was being hurt by fuel prices, the spate of hurricanes that struck the Southeast and weak ticket prices.

Wall Street analysts responded by slashing their own estimates, bringing the mean expectation down to 10 cents a share from the previous average of 19 cents a share, according to Reuters Estimates. The revised views ranged from 8 cents to 12 cents per share.

JetBlue's third-quarter report marks the second consecutive quarter it has missed Wall Street's estimates after a run during which it had beaten estimates every quarter since its debut as a public company in April 2002.

"They are under lot of pressure with high fuel prices," Neidl said. "They are also dealing with weak pricing, especially on transcontinental routes."

But that pressure should ease in the next few quarters as larger airlines cut capacity on those routes, Neidl said. American Airlines (AMR), the world's largest carrier, recently said it would cut capacity on some New York-California routes. Neidl said JetBlue would benefit from that move.

Revenue rose 18.1 percent to $323.2 million, but was shy of analysts' average forecast of $330.3 million.

"The combination of a continued weak pricing environment, record-high fuel prices and the impact of four major hurricanes in many of our southern markets made for a very challenging quarter," JetBlue Chairman and Chief Executive David Neeleman (search) said.

JetBlue shares were up $1.11, or 5 percent, at $23.55, on the Nasdaq.