JBLU - Embedded Expectations Analysis - 2021 08 31
JetBlue Airways Corporation (JBLU:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.9x Uniform P/B, implying expectations for profitability to remain muted. Although management may be concerned about near-term cost headwinds, air traffic recovery, and their Northeast alliance partnership, market expectations are still too bearish, and long-term equity upside remains likely.Specifically, management may be overstating the potential growth opportunities through their Northeast alliance partnership, as well as the beneficial impact of JetBlue Travel Products on margins. Additionally, they may have concerns about the sustainability of the recovery in air traffic and business travel, near-term cost headwinds, and the flexibility of their airplane seat configuration. Moreover, management may lack confidence in their ability to complete their Extended-range Twin-engine Operational Performance Standards (ETOPS) certification and maintain fixed costs reductions. Finally, they may have concerns about plans to delay the retirement schedule for the E190 fleet, long-term opportunities for global partnerships, and the sustainability of increased spending from existing JetBlue Plus
card members.
Although management may management may be concerned about near-term cost headwinds, air traffic recovery, and their Northeast alliance partnership, market expectations are still too bearish given the firm's smart international expansion strategy, and long-term equity upside remains likely.
JetBlue Airways provides air transportation services. The company also provides Fare Options pricing model, at one of three branded fares: Blue, Blue Plus, and Blue Flex. Each fare includes different offerings such as checked bags, reduced change fees, and additional TrueBlue? points, with all fares including the company's primary offering of in-flight entertainment, snacks and non-alcoholic beverages. TrueBlue? is the company's customer loyalty program designed to reward and recognize loyal customers. The company operates Airbus A321, Airbus A320 and Embraer E190 aircraft types. The company also sells vacation packages through JetBlue Vacations?, a vacation service for self-directed packaged travel planning.
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