JetBlue Airways’ JBLU proactive cost-cutting initiatives are boosting operational efficiency. Efforts to modernize its fleet are also encouraging. However, the company’s struggle on the top-line front is concerning.

Factors Favoring JBLU

In the third quarter of 2024, total operating expenses were down by 4.2% year over year. JBLU’s structural cost program has also progressed well over the year, achieving $24 million in savings in the third quarter and year-to-date savings of $169 million.

Moreover, JBLU’s JetForward strategy, which focuses on improving service, expanding the Northeast leisure network and managing costs to offer more value, is boosting its prospects. The program is expected to drive an $800-$900 million EBIT uplift by 2027.

The company’s fleet modernization efforts are commendable, having received six A220 aircraft in the third quarter of 2024, with seven more expected in the fourth quarter of 2024, bringing the total to 27 for the year. The fleet upgrade program, which was increased from $75 million to $100 million, has saved $95 million by avoiding engine maintenance on the older E190 fleet. These savings will continue until the full retirement of the E190s in 2025. JBLU plans to spend around $450 million in the fourth and $1.6 billion for the year, reflecting strong investment in fleet expansion and modernization.

Owing to such tailwinds, JBLU shares have risen 25.6% year over year compared with the industry’s growth of 17.9% in the same period.

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JBLU: Key Risks to Watch

JetBlue's top line is suffering due to a 2% decline in consolidated traffic (measured in revenue passenger miles) to 14.49 billion in the third quarter of 2024. Capacity (measured in available seat miles) declined 3.6% to 16.74 billion.

In the third quarter of 2024, interest expenses rose 89% year over year. The company’s high debt levels are concerning.

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JBLU’s Zacks Rank

JBLU currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Westinghouse Air Brake Technologies WAB and SkyWest SKYW.

Westinghouse Air Brake Technologies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  WAB has an expected earnings growth rate of 2.01% for the current year.

The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 9.46%. Shares of WAB have risen 70.6% in the past year.

SkyWest currently sports a Zacks Rank #1 and has an expected earnings growth rate of 4.07% for the current year.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.12%. Shares of SKYW have climbed 140.9% in the past year.

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