JetBlue Airways shares fell 5.4% even as the company reported better-than-feared results for the third quarter. Shares of major airlines tanked on Tuesday on indications of rising COVID-19 cases. The pandemic has crushed travel demand and caused losses of billions of dollars for the airlines sector.
Meanwhile, JetBlue’s (JBLU) 3Q revenue declined 76.4% Y/Y to $492 million but exceeded analysts’ estimate of $466 million. The company stated that the 3Q revenue decline was better than its initial estimate of an 80% fall due to improving leisure and “visiting friends and relatives” or VFR travel trends throughout the quarter.
The pandemic-led slump saw JetBlue post adjusted loss per share of $1.75 in 3Q20 compared to adjusted EPS of $0.59 in 3Q19. However, the company fared better than analysts’ forecast of a loss per share of $1.96.
Looking forward, JetBlue expects 4Q revenue to decline about 65% Y/Y taking into account the holiday season demand. The company expects daily cash burn in 4Q between $4 million and $6 million compared to $6.1 million in 3Q. It ended 3Q with $3.1 billion in liquidity. (See JBLU stock analysis on TipRanks)
Speaking about the outlook, JetBlue’s President and COO Joanna Geraghty stated, “Although there still quite a lot of uncertainty about the evolution of the coronavirus, we are starting to see the booking curve extend slightly into the upcoming Thanksgiving and December holiday travel period, and we are encouraged by Customers responding positively to our promotional activity including an early holiday sale in late September.”
“For the fourth quarter, our current planning assumption is for capacity to decline approximately 45% year over year, given our current expectations for improved bookings.”
Commenting on the results, Cowen analyst Helane Becker said, “Overall, the company is seeing steadily improving demand and bookings, driven by momentum in leisure and VFR [visiting friends and relatives] traffic, despite rising Covid case counts.” Becker has a Hold rating for JetBlue with a price target of $13 (upside potential of 9.4%).
Currently, the Street is cautiously optimistic about Jet Blue, with a Moderate Buy analyst consensus based on 3 Buys, 5 Holds and no Sells. With shares plunging 36.5% year-to-date, the $13.83 average analyst price target suggests an upside potential of 16.4% lies ahead.
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