General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Reuters
UPDATE - Shares of JetBlue, others drop sharply on warning
Friday December 5, 4:35 pm ET
(Recasts, adds detail, closing stock prices)
NEW YORK, Dec 5 (Reuters) - An uncharacteristic earnings warning from JetBlue Airways Corp. (NasdaqNM:JBLU - News) spooked investors on Friday, driving its stock down 18 percent and pulling share prices in the rest of the low-cost airline sector lower.
JetBlue's stock, a favored but pricey pick on Wall Street, posted its largest-ever one-day percentage loss during the session, and closed down $5.58 to $25.80 in active trade on the Nasdaq, where it was the net loss leader.
Nearly all lower-cost, regional carriers traded sharply lower on Friday, and shares of major U.S. airlines dropped as well, on new fears that fourth-quarter revenue will disappoint.
The low-cost sector losses were led by JetBlue and America West Holdings (NYSE:AWA - News), which was down 14 percent.
New York-based JetBlue said late on Thursday that lower air fares and the recent California wildfires would push its fourth-quarter operating margin down to between 13 percent and 14 percent, compared with the 15 percent to 17 percent it had previously projected.
In the third quarter, JetBlue's margins hit nearly 20 percent, a level almost unheard of in the struggling U.S. airline industry.
"We're faced with a challenging revenue environment due to capacity additions resulting in lower average fares, particularly in our western markets," Chief Executive David Neeleman said in a statement.
JP Morgan analyst Jamie Baker said in a research note that JetBlue's outlook could have consequences across the low-cost carrier segment.
Lehman Brothers analyst Gary Chase said the JetBlue announcement and signals of some weakness from low-cost pioneer Southwest Airlines (NYSE:LUV - News) caused him to cut estimates and stock price targets on most of the companies he follows.
"While we had hoped for significant strength in the holiday period, it now appears that the industry is less confident in current revenue trends," Chase said.
Shares of airlines across the board have plunged this week, in reaction to the drop in confidence and news that oil prices are likely to stay high.
Regional airlines America West (NYSE:AWA - News) fell 13.7 percent to close at $11.91, while AirTran Holdings (NYSE:AAI - News) dropped 10 percent to close at $12.05, both on the New York Stock Exchange (News - Websites) . Frontier Airlines (NasdaqNM:FRNT - News) dropped 8.7 percent to close at $13.81.
Southwest also fell, closing down $1.01 at $15.59 on the Big Board.
Lehman's Chase said he now expects JetBlue to earn 16 cents per share in the fourth quarter, down from his earlier forecast of 22 cents.
JP Morgan's Baker also cut his profit estimate for the quarter to 16 cents a share from 23 cents. He is lowering his earnings forecasts to 99 cents a share from $1.10 for 2004 and to $1.25 from $1.33 for 2005.
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. (Additional reporting by Kathy Fieweger)
Now you can also say that the Majors stock prices couldn't fall much lower, and it has been tough on everybody. But, the addition of new LCCs---like Song and TED---will add excess capacity and take away passengers from Jetblue etc because the passengers will get the same price for a ticket, but get other things like better frequent flyer programs, and better IFE. Let's face it---passengers these days want the lower fare and the extras. They get really mad when they look at their onboard meal and say, "What is this?" even though they only paid $59 for the ticket. Airlines have to go out there and offer more for less. But, if your business is only based on low cost domestic travel, you could be stuck. That is where the Majors will do better----there isn't as much competition on INTL routes. For example, Delta can charge whatever they want on some of their INTL routes--like ATL--Munich or ATL--Tokyo because there are businessmen who want convienence and will pay more for saving time. It is good to have more than one side to an airline business, not only a low cost domestic version. But, I don't see Jetblue or Southwest going away anytime soon, but they will have to fight each other, especially when Jetblue gets some of those EMB-190s. Where are they going to put them? On the East or West Coast? Then throw Song 757s in there with 199 seats flying in and out of the NE. How about Spirit? ATA? TED?This is going to get crazy, and the high priced INTL tickets may be the one savior for some of the Majors.....
Bye Bye--General Lee
![Wink ;) ;)](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
UPDATE - Shares of JetBlue, others drop sharply on warning
Friday December 5, 4:35 pm ET
(Recasts, adds detail, closing stock prices)
NEW YORK, Dec 5 (Reuters) - An uncharacteristic earnings warning from JetBlue Airways Corp. (NasdaqNM:JBLU - News) spooked investors on Friday, driving its stock down 18 percent and pulling share prices in the rest of the low-cost airline sector lower.
JetBlue's stock, a favored but pricey pick on Wall Street, posted its largest-ever one-day percentage loss during the session, and closed down $5.58 to $25.80 in active trade on the Nasdaq, where it was the net loss leader.
Nearly all lower-cost, regional carriers traded sharply lower on Friday, and shares of major U.S. airlines dropped as well, on new fears that fourth-quarter revenue will disappoint.
The low-cost sector losses were led by JetBlue and America West Holdings (NYSE:AWA - News), which was down 14 percent.
New York-based JetBlue said late on Thursday that lower air fares and the recent California wildfires would push its fourth-quarter operating margin down to between 13 percent and 14 percent, compared with the 15 percent to 17 percent it had previously projected.
In the third quarter, JetBlue's margins hit nearly 20 percent, a level almost unheard of in the struggling U.S. airline industry.
"We're faced with a challenging revenue environment due to capacity additions resulting in lower average fares, particularly in our western markets," Chief Executive David Neeleman said in a statement.
JP Morgan analyst Jamie Baker said in a research note that JetBlue's outlook could have consequences across the low-cost carrier segment.
Lehman Brothers analyst Gary Chase said the JetBlue announcement and signals of some weakness from low-cost pioneer Southwest Airlines (NYSE:LUV - News) caused him to cut estimates and stock price targets on most of the companies he follows.
"While we had hoped for significant strength in the holiday period, it now appears that the industry is less confident in current revenue trends," Chase said.
Shares of airlines across the board have plunged this week, in reaction to the drop in confidence and news that oil prices are likely to stay high.
Regional airlines America West (NYSE:AWA - News) fell 13.7 percent to close at $11.91, while AirTran Holdings (NYSE:AAI - News) dropped 10 percent to close at $12.05, both on the New York Stock Exchange (News - Websites) . Frontier Airlines (NasdaqNM:FRNT - News) dropped 8.7 percent to close at $13.81.
Southwest also fell, closing down $1.01 at $15.59 on the Big Board.
Lehman's Chase said he now expects JetBlue to earn 16 cents per share in the fourth quarter, down from his earlier forecast of 22 cents.
JP Morgan's Baker also cut his profit estimate for the quarter to 16 cents a share from 23 cents. He is lowering his earnings forecasts to 99 cents a share from $1.10 for 2004 and to $1.25 from $1.33 for 2005.
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. (Additional reporting by Kathy Fieweger)
Now you can also say that the Majors stock prices couldn't fall much lower, and it has been tough on everybody. But, the addition of new LCCs---like Song and TED---will add excess capacity and take away passengers from Jetblue etc because the passengers will get the same price for a ticket, but get other things like better frequent flyer programs, and better IFE. Let's face it---passengers these days want the lower fare and the extras. They get really mad when they look at their onboard meal and say, "What is this?" even though they only paid $59 for the ticket. Airlines have to go out there and offer more for less. But, if your business is only based on low cost domestic travel, you could be stuck. That is where the Majors will do better----there isn't as much competition on INTL routes. For example, Delta can charge whatever they want on some of their INTL routes--like ATL--Munich or ATL--Tokyo because there are businessmen who want convienence and will pay more for saving time. It is good to have more than one side to an airline business, not only a low cost domestic version. But, I don't see Jetblue or Southwest going away anytime soon, but they will have to fight each other, especially when Jetblue gets some of those EMB-190s. Where are they going to put them? On the East or West Coast? Then throw Song 757s in there with 199 seats flying in and out of the NE. How about Spirit? ATA? TED?This is going to get crazy, and the high priced INTL tickets may be the one savior for some of the Majors.....
Bye Bye--General Lee
Last edited: