Flooder305
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flx757
I gotta have more cowbell
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JetBlue cuts 4th-qtr margin view; shares fall
Thursday December 4, 6:33 PM EST
By Jonathan Stempel
NEW YORK, Dec 4 (Reuters) - Low-cost carrier JetBlue Airways Corp. (JBLU) on Thursday cut its forecast for fourth-quarter operating margin, citing lower fares and the California wildfires, which depressed travel.
JetBlue shares tumbled 7.1 percent in after-hours trading after the carrier's announcement.
The New York-based airline projected a 13 percent to 14 percent margin, down from the 15 percent to 17 percent it previously forecast, spokesman Gareth Edmondson-Jones said.
JetBlue posted margins of 19.7 percent in the third quarter, and 16.8 percent in the fourth quarter of 2002.
"(As) JetBlue keeps adding supply, unless demand keeps pace to fill airplanes, they will have to reduce prices somewhat," said Richard Bittenbender, senior credit officer at Moody's Investors Service. "The wildfires have nothing to do with capacity but they have much to do with demand. The costs for an airline in the short-term are relatively fixed, so if revenue declines, your operating margin will decline."
Shares of JetBlue closed Thursday on the Nasdaq at $31.38, down $1.37, or 4.2 percent. They fell after-hours to $29.15.
JetBlue said its load factor, or percentage of seats filled on its planes, rose to 81.6 percent in November from 79.3 percent a year earlier. Available seat miles, or capacity, rose 53.2 percent to 1.21 billion, it said.
"We're faced with a challenging revenue environment due to capacity additions resulting in lower average fares, particularly in our western markets," said Chairman and Chief Executive David Neeleman in a statement. "This, coupled with the ongoing maturation of our newer markets and depressed traffic to southern California earlier this quarter ... has caused us to revise our margin guidance slightly downward."
Neeleman said he still anticipates JetBlue to post a "very solid" fourth quarter performance. The carrier serves Long Beach, San Diego and Ontario in Southern California.
JetBlue and other airlines were hurt in October when dense smoke shut down San Diego's airport, and Southern California airports were closed for more than 12 hours when a blaze threatened an air traffic control facility near the city.
Moody's has assigned JetBlue a "Ba3" credit rating, its third highest "junk" grade, with a stable outlook.
In the third quarter, JetBlue posted net income of $29 million, equal to 26 cents per share after accounting for a 3-for-2 stock split. Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average forecast per-share profit of 23 cents for the fourth quarter.
Thursday December 4, 6:33 PM EST
By Jonathan Stempel
NEW YORK, Dec 4 (Reuters) - Low-cost carrier JetBlue Airways Corp. (JBLU) on Thursday cut its forecast for fourth-quarter operating margin, citing lower fares and the California wildfires, which depressed travel.
JetBlue shares tumbled 7.1 percent in after-hours trading after the carrier's announcement.
The New York-based airline projected a 13 percent to 14 percent margin, down from the 15 percent to 17 percent it previously forecast, spokesman Gareth Edmondson-Jones said.
JetBlue posted margins of 19.7 percent in the third quarter, and 16.8 percent in the fourth quarter of 2002.
"(As) JetBlue keeps adding supply, unless demand keeps pace to fill airplanes, they will have to reduce prices somewhat," said Richard Bittenbender, senior credit officer at Moody's Investors Service. "The wildfires have nothing to do with capacity but they have much to do with demand. The costs for an airline in the short-term are relatively fixed, so if revenue declines, your operating margin will decline."
Shares of JetBlue closed Thursday on the Nasdaq at $31.38, down $1.37, or 4.2 percent. They fell after-hours to $29.15.
JetBlue said its load factor, or percentage of seats filled on its planes, rose to 81.6 percent in November from 79.3 percent a year earlier. Available seat miles, or capacity, rose 53.2 percent to 1.21 billion, it said.
"We're faced with a challenging revenue environment due to capacity additions resulting in lower average fares, particularly in our western markets," said Chairman and Chief Executive David Neeleman in a statement. "This, coupled with the ongoing maturation of our newer markets and depressed traffic to southern California earlier this quarter ... has caused us to revise our margin guidance slightly downward."
Neeleman said he still anticipates JetBlue to post a "very solid" fourth quarter performance. The carrier serves Long Beach, San Diego and Ontario in Southern California.
JetBlue and other airlines were hurt in October when dense smoke shut down San Diego's airport, and Southern California airports were closed for more than 12 hours when a blaze threatened an air traffic control facility near the city.
Moody's has assigned JetBlue a "Ba3" credit rating, its third highest "junk" grade, with a stable outlook.
In the third quarter, JetBlue posted net income of $29 million, equal to 26 cents per share after accounting for a 3-for-2 stock split. Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average forecast per-share profit of 23 cents for the fourth quarter.
B6Busdriver
pushbutton pusher
- Joined
- Mar 1, 2003
- Posts
- 902
General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Schwanker
Well-known member
- Joined
- Dec 17, 2001
- Posts
- 486
General Lee said:Jetblue is also starting to feel the effects of competition, not just from Song, but from other LCCs and the margins are just not going to get any better. Everybody knew that their stock price was inflated. Didn't Soros bail already?
Bye Bye--General Lee
General,
Not only Soros, insiders have been agressively selling this stock. Insider sells have been outpacing insider buying by over 100 to one. Other insiders on the sale side of this stock include:
David Neelemen - CEO and director
John Owen - CFO, Executive VP
Thomas Kelly - Executive VP
Thomas Anderson - Senior VP
James Hnat - VP
Timothy Claydon - Senior VP
George Soros - Beneficial Owner
Holly Nelson - Controller
Can the pilots sell their stock / options, or are they required to hold it? Just curious as this was a major incentive for those to join the company early on.
Skank said:
Just not as heavily invested as before.
Jusrt ribbing you JBLU boys. For the record, JBLU is still profitable, just not as profitable and they probably won't ever be as profitable again as they continue to add capacity to markets that they acknowledge have excess capacity and their airline matures and costs inevitably rise. Profit margins will eventually drop and as they grow their fleet it will become increasingly difficult to find "cream puff" routes to exploit. It's just the natural cycle of the industry for start ups. Some survive and thrive, some just barely hang on and most fade away after time. It will be an open question if JBLU will survive the transition from a point to point carrier to a network carrier as they add additional aircraft to their fleet and the E190s. But for the time being, they are profitable.
TonyC
Frederick's Happy Face
- Joined
- Oct 21, 2002
- Posts
- 3,050
FDJ2 said:
Thankfully, though, JetBlue management will never look upon the pilot force as a cost center -- an expenditure that they seek to reduce. They'll never attempt to increase productivity by unilaterally changing work rules, or pay rates, or schedules.
On the contrary, they will always continue to enjoy a harmonious relationship with the pilots, and will schedule future stock splits around new hire class dates as they have in the past.
TonyC
Frederick's Happy Face
- Joined
- Oct 21, 2002
- Posts
- 3,050
And the Motley Fool says...
JetBlue It
By Rick Aristotle Munarriz (TMF Edible)
If you trust the visibility report from the cockpit, you probably saw this coming. Wall Street darling JetBlue (Nasdaq: JBLU) is starting to show signs of mortality. Engaged in a sharp descent since peaking in October, it's becoming clear that even in the stodgy airline sector, there is no company nimble enough to avoid being copied.
Discounted carriers running light in terms of overhead cargo are starting to clog the formerly friendly skies, and while that's great news for you as a traveler, it's not a welcome event for JetBlue. The edgy airline is blaming the California wildfires, in part, for a dip in operating margins, but we all know that it's the popularity of discounting rivals that's really heating up.
As unfortunate as the Southern California blazes were, they actually didn't make much of a dent as the company's load factor last month rose to 81.6% from a 79.3% showing a year ago. Yes, the fires were pretty much a late October event, under control as the month started, but if you still see smoke it, just might be the company trying to throw off the damaging impact of its fellow low-cost carriers.
Just as Southwest (NYSE: LUV) flew circles around the competition with its familiar fleet of 737s and frills-free flying, JetBlue upped the ante with perks like leather seats and live satellite television. Because it was essentially starting from scratch, it was able to avoid the costly infrastructure of the major carriers.
But succeeding, with profitability in a sector grounded with deficits, proved to be the beacons that lit up the landing strip for the competition. Delta (NYSE: DAL) launched its hip Song upstart, and others like Spirit and AirTran (NYSE: AAI) have been quick to offer bargain fares to thrifty travelers.
AirTran's penchant for a flexible multitasking workforce produced labor costs that ran just 29% of the carrier's operating expenses last year. Southwest, on the other hand, was at 39%.
That doesn't mean JetBlue is doomed. Far from it. The company's capacity, as measured by available seat miles, has grown by 53% over the past year. However, it does mean that the competition can no longer be ignored. Everyone knows that the key to making a business model fly in the airline sector these days is to offer low fares on a low-cost structure. It's not rocket science.
Well, actually, I guess it is.
Quote of Note
"Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable." -- Sydney J. Harris
JetBlue It
By Rick Aristotle Munarriz (TMF Edible)
If you trust the visibility report from the cockpit, you probably saw this coming. Wall Street darling JetBlue (Nasdaq: JBLU) is starting to show signs of mortality. Engaged in a sharp descent since peaking in October, it's becoming clear that even in the stodgy airline sector, there is no company nimble enough to avoid being copied.
Discounted carriers running light in terms of overhead cargo are starting to clog the formerly friendly skies, and while that's great news for you as a traveler, it's not a welcome event for JetBlue. The edgy airline is blaming the California wildfires, in part, for a dip in operating margins, but we all know that it's the popularity of discounting rivals that's really heating up.
As unfortunate as the Southern California blazes were, they actually didn't make much of a dent as the company's load factor last month rose to 81.6% from a 79.3% showing a year ago. Yes, the fires were pretty much a late October event, under control as the month started, but if you still see smoke it, just might be the company trying to throw off the damaging impact of its fellow low-cost carriers.
Just as Southwest (NYSE: LUV) flew circles around the competition with its familiar fleet of 737s and frills-free flying, JetBlue upped the ante with perks like leather seats and live satellite television. Because it was essentially starting from scratch, it was able to avoid the costly infrastructure of the major carriers.
But succeeding, with profitability in a sector grounded with deficits, proved to be the beacons that lit up the landing strip for the competition. Delta (NYSE: DAL) launched its hip Song upstart, and others like Spirit and AirTran (NYSE: AAI) have been quick to offer bargain fares to thrifty travelers.
AirTran's penchant for a flexible multitasking workforce produced labor costs that ran just 29% of the carrier's operating expenses last year. Southwest, on the other hand, was at 39%.
That doesn't mean JetBlue is doomed. Far from it. The company's capacity, as measured by available seat miles, has grown by 53% over the past year. However, it does mean that the competition can no longer be ignored. Everyone knows that the key to making a business model fly in the airline sector these days is to offer low fares on a low-cost structure. It's not rocket science.
Well, actually, I guess it is.
Quote of Note
"Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable." -- Sydney J. Harris
Dow Jones Business News
High Costs Prompt JetBlue, Southwest 4Q Warnings
Friday December 5, 4:40 pm ET
By Elizabeth Souder
NEW YORK -- Low-cost airlines JetBlue Airways Corp.
(NasdaqNM:JBLU - News) and Southwest Airlines Co. (NYSE:LUV -
News) issued warnings about the fourth quarter as higher fuel prices
and capacity increases drive up costs.
The announcements are particularly worrying because they come on
the back of a disappointing Thanksgiving travel weekend from two
airlines that have remained profitable through the industry downturn.
The announcements could mark a turn in fortune in the airline
industry: Growth for low-cost airlines is getting more difficult as
major carriers recover enough strength to compete for market share.
New York carrier JetBlue said late Thursday its operating margin in
the fourth quarter would be in the range of 13% to 14%, lower than
the previous range of 15% to 17%, because the airline's extra capacity
is bumping up costs and weighing on air fares.
Also on Thursday, Dallas carrier Southwest said higher fuel prices
will cause the airline's total costs to rise 4% in the fourth quarter.
"As big airlines restore supply, revenue momentum is fading at low-
fare carriers," said Goldman Sachs & Co. analyst Glenn Engel in a
research note. Goldman seeks investment-banking business with
airlines.
Both JetBlue and Southwest, like most U.S. airlines, said they flew
more passengers in November than a year earlier, thanks in part to
the Sunday after Thanksgiving falling in November this year; last year
it was in December. But analysts worry airlines aren't flying those
passengers as profitably as expected.
That's a problem for airlines both large and small. Houston carrier
Continental Airlines Inc. (NYSE:CAL - News) said its revenue per
available seat mile rose by about 4.5% to 5.5%, lower than analysts
had expected. Continental is the only airline that reports monthly
RASM, closely watched by analysts as an indicator of industry
profitability.
Analysts have said the capacity cuts by major airlines contributed to
higher load factors and higher fares. So as major airlines begin adding
capacity next year, which nearly all have said they will do, analysts
worry load factors and fares will fall, cutting into profits.
The effect will be different for low-cost carriers and major airlines.
Goldman analyst Mr. Engel, who doesn't own shares of the companies
he covers, said as hub airlines restore supply, they gain market share
and lower their average unit costs.
Low-cost airlines, on the other hand, by definition already have very
low unit costs. So they must rely on higher fares and more passengers
to lift margins, which is particularly difficult as big airlines beef up
capacity and fuel costs rise.
In the fourth quarter, major airlines have continued cutting capacity.
But next year, American Airlines plans to add between 5% and 6%
more capacity. Delta Air Lines Inc. (NYSEAL - News) will add as
much as 10% more capacity -- in part via its low-cost unit Song,
which is designed to compete head-on with JetBlue.
JetBlue will add about 35% to 37% more capacity next year, slowing
its growth. The airline's capacity in November was up 53% compared
with a year earlier, as JetBlue added frequency across its system.
Last year, the airline nearly doubled capacity -- and operating
revenue, showing an operating margin of 16.5%. That's higher than
the projected fourth- quarter operating margin of 13% to 14%.
Lehman Bros. said in a research note the operating margin drop
appears to be driven by competition in the hotly-contested New York
to California routes. America West Holdings Corp. (NYSE:AWA - News)
added service on those routes, prompted fare competition from some
major airlines, Lehman said. Lehman seeks investment- banking
business with airlines.
Take the Los Angeles/New York path. According to Deutsche Bank's
weekly fare review, AMR Corp. (NYSE:AMR - News)'s American
Airlines cut leisure fares on the route by 29% last week, and nearly
halved business fares. That price drop comes amid an overall 6% rise
in leisure fares, and a 5% decrease in business fares, Deutsche Bank
said. The bank seeks business with airlines.
Capacity increases may be more expensive for low-cost airlines than
major carriers, because many low-cost airlines are currently flying all
their planes as frequently as they can. Adding capacity for many of
the low-cost players means adding more planes.
But for major carriers, after cutting capacity for the last couple of
years, adding it back means simply flying the same planes on the
same routes more often each day. Bringing back parked planes to the
fleet would be the next step before the airlines must take the more
expensive step of buying fresh jets.
American Airlines, the world's largest airline, plans to add capacity
next year while reducing its fleet by increasing frequency on existing
routes.
In addition to the looming capacity increases, airlines across the
board face higher fuel prices. Southwest Airlines' fuel-hedging
program is considering the best in the industry by some oil experts.
In an interview with Dow Jones Newswires last week, Southwest Chief
Financial Officer Gary Kelly blamed terrorism fears and turmoil in the
Middle East for the high oil prices, imposing "a significant premium."
Southwest has hedged 87% of its fuel purchases for the second half
of 2003, compared with 100% for the first half. For 2004, the
company has hedged 85% of its fuel needs, Mr. Kelly said.
Airline shares dropped nearly across the board Friday, lead by a
decline in JetBlue shares. In 4 p.m. EST trading on the Nasdaq Stock
Market (News - Websites) , JetBlue was down $5.52, or 18%, at
$25.86. Low-cost airlines with big growth plans fell more strongly
than most major carriers, with America West down $1.88, or 14%, at $
11.91 on the New York Stock Exchange (News - Websites) . AirTran
Holdings Inc. (NYSE:AAI - News) was down $ 1.32, or 9.9%, at
$12.05, also on the NYSE. Southwest, with a more modest capacity
growth plan, was down $1.01, or 6.1%, at $15.59 on the NYSE.
-By Elizabeth Souder, Dow Jones Newswires; 201-938-4148;
[email protected]
(Leah Goodman contributed to this report.)
High Costs Prompt JetBlue, Southwest 4Q Warnings
Friday December 5, 4:40 pm ET
By Elizabeth Souder
NEW YORK -- Low-cost airlines JetBlue Airways Corp.
(NasdaqNM:JBLU - News) and Southwest Airlines Co. (NYSE:LUV -
News) issued warnings about the fourth quarter as higher fuel prices
and capacity increases drive up costs.
The announcements are particularly worrying because they come on
the back of a disappointing Thanksgiving travel weekend from two
airlines that have remained profitable through the industry downturn.
The announcements could mark a turn in fortune in the airline
industry: Growth for low-cost airlines is getting more difficult as
major carriers recover enough strength to compete for market share.
New York carrier JetBlue said late Thursday its operating margin in
the fourth quarter would be in the range of 13% to 14%, lower than
the previous range of 15% to 17%, because the airline's extra capacity
is bumping up costs and weighing on air fares.
Also on Thursday, Dallas carrier Southwest said higher fuel prices
will cause the airline's total costs to rise 4% in the fourth quarter.
"As big airlines restore supply, revenue momentum is fading at low-
fare carriers," said Goldman Sachs & Co. analyst Glenn Engel in a
research note. Goldman seeks investment-banking business with
airlines.
Both JetBlue and Southwest, like most U.S. airlines, said they flew
more passengers in November than a year earlier, thanks in part to
the Sunday after Thanksgiving falling in November this year; last year
it was in December. But analysts worry airlines aren't flying those
passengers as profitably as expected.
That's a problem for airlines both large and small. Houston carrier
Continental Airlines Inc. (NYSE:CAL - News) said its revenue per
available seat mile rose by about 4.5% to 5.5%, lower than analysts
had expected. Continental is the only airline that reports monthly
RASM, closely watched by analysts as an indicator of industry
profitability.
Analysts have said the capacity cuts by major airlines contributed to
higher load factors and higher fares. So as major airlines begin adding
capacity next year, which nearly all have said they will do, analysts
worry load factors and fares will fall, cutting into profits.
The effect will be different for low-cost carriers and major airlines.
Goldman analyst Mr. Engel, who doesn't own shares of the companies
he covers, said as hub airlines restore supply, they gain market share
and lower their average unit costs.
Low-cost airlines, on the other hand, by definition already have very
low unit costs. So they must rely on higher fares and more passengers
to lift margins, which is particularly difficult as big airlines beef up
capacity and fuel costs rise.
In the fourth quarter, major airlines have continued cutting capacity.
But next year, American Airlines plans to add between 5% and 6%
more capacity. Delta Air Lines Inc. (NYSE
AL - News) will add as much as 10% more capacity -- in part via its low-cost unit Song,
which is designed to compete head-on with JetBlue.
JetBlue will add about 35% to 37% more capacity next year, slowing
its growth. The airline's capacity in November was up 53% compared
with a year earlier, as JetBlue added frequency across its system.
Last year, the airline nearly doubled capacity -- and operating
revenue, showing an operating margin of 16.5%. That's higher than
the projected fourth- quarter operating margin of 13% to 14%.
Lehman Bros. said in a research note the operating margin drop
appears to be driven by competition in the hotly-contested New York
to California routes. America West Holdings Corp. (NYSE:AWA - News)
added service on those routes, prompted fare competition from some
major airlines, Lehman said. Lehman seeks investment- banking
business with airlines.
Take the Los Angeles/New York path. According to Deutsche Bank's
weekly fare review, AMR Corp. (NYSE:AMR - News)'s American
Airlines cut leisure fares on the route by 29% last week, and nearly
halved business fares. That price drop comes amid an overall 6% rise
in leisure fares, and a 5% decrease in business fares, Deutsche Bank
said. The bank seeks business with airlines.
Capacity increases may be more expensive for low-cost airlines than
major carriers, because many low-cost airlines are currently flying all
their planes as frequently as they can. Adding capacity for many of
the low-cost players means adding more planes.
But for major carriers, after cutting capacity for the last couple of
years, adding it back means simply flying the same planes on the
same routes more often each day. Bringing back parked planes to the
fleet would be the next step before the airlines must take the more
expensive step of buying fresh jets.
American Airlines, the world's largest airline, plans to add capacity
next year while reducing its fleet by increasing frequency on existing
routes.
In addition to the looming capacity increases, airlines across the
board face higher fuel prices. Southwest Airlines' fuel-hedging
program is considering the best in the industry by some oil experts.
In an interview with Dow Jones Newswires last week, Southwest Chief
Financial Officer Gary Kelly blamed terrorism fears and turmoil in the
Middle East for the high oil prices, imposing "a significant premium."
Southwest has hedged 87% of its fuel purchases for the second half
of 2003, compared with 100% for the first half. For 2004, the
company has hedged 85% of its fuel needs, Mr. Kelly said.
Airline shares dropped nearly across the board Friday, lead by a
decline in JetBlue shares. In 4 p.m. EST trading on the Nasdaq Stock
Market (News - Websites) , JetBlue was down $5.52, or 18%, at
$25.86. Low-cost airlines with big growth plans fell more strongly
than most major carriers, with America West down $1.88, or 14%, at $
11.91 on the New York Stock Exchange (News - Websites) . AirTran
Holdings Inc. (NYSE:AAI - News) was down $ 1.32, or 9.9%, at
$12.05, also on the NYSE. Southwest, with a more modest capacity
growth plan, was down $1.01, or 6.1%, at $15.59 on the NYSE.
-By Elizabeth Souder, Dow Jones Newswires; 201-938-4148;
[email protected]
(Leah Goodman contributed to this report.)
#1 Windmilling
Well-known member
- Joined
- Apr 9, 2002
- Posts
- 91
Let's see, take the stock split out of the equation and JB's stock price would be about 38 and change. The all-time high was reached at just over 70 bucks. So, the stock has gone from just over 70 to just over 38 bucks (no split). Last I checked, Soros sold 25% of his stake in JB in Oct. The sky is not falling and I would venture a guess that the losses in ATL are to blame for the decrease in margins. This is pure speculation....but I have a hard time believing the wildfires are the sole reason....continue......
-#1W on NTS
-#1W on NTS
Schwanker said:
Yes they can sell their stock / options. More importantly, any crewmember (employee) enrolled in the stock purchase program is eligible to sell their stock after it is purchased. Options have avesting schedule like most other options plans, but once vested the shares are not required to be held.
Quick thought, if I owned stock and I saw the price was trading at all time highs, I probably would sell some stock also. Last time I checked stock isn't worht the paper it is printed on until you sell it and make a profit. So what's the big deal that initial investors are taking a profit from their hard work starting a new company?
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