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<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "JetBlue was a darling of the industry in the following years Beginning in 2000, and the current leadership has a plan in place to find this status with investors. The company hopes to double its profits by 2020, reversing sharp declines in profits in 2017 and 2018. "data-reactid =" 12 "> JetBlue was a booming industry in the years following its start in 2000 and the current management has a plan in place to win it back.The company hopes to double its profits by 2020, reversing sharp declines in profits in 2017 and 2018.
A line of JetBlue tail fins.
JetBlue is looking to regain its cruising altitude. Source of image: JetBlue Airways.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The first quarter of the airline continued the negative trend with JetBlue announces a drop in its revenue and profit. But management has expressed confidence that his plan is on track and that he should start giving results in the second half of this year. "Data-reactid =" 34 "> The airline's first quarter continued its negative trend, with JetBlue reporting lower revenues and profits, but management has expressed confidence that its plan is on track and should begin to give results in the second half of this year.
Let's take a look at the airline's plan to return to a cruise altitude and consider if JetBlue shares are a buy today.
Fees down, fees up
JetBlue is in the final stages of a program announced in December 2016 to reduce costs by more than $ 300 million annually. Much of this work is done behind the scenes, in areas such as maintenance, personnel planning and airport crews, through the introduction of new software tools to better manage spare parts inventories. and optimize work hours.
The airline has also invested in technology to automate airport check-in and reduce staff costs. Overall, these additional cost savings are expected to increase earnings per share by $ 0.30 to $ 0.40 by next year.
JetBlue also follows industry trends aimed at increasing revenue. In 2020, the airline will roll out a basic no-frills economy ticket class for price-sensitive buyers, which will enable it to better cope with leisure routes and potentially add ancillary revenue through service fees. additional.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The airline already had & nbsp;increased his checked baggage fees& nbsp; in 2018. Some analysts have asked JetBlue to increase its revenues by charging the Internet in flight, but with Delta Airlines going towards eliminating its Wi-Fi feesit could be a difficult lever for JetBlue right now. "data-reactid =" 40 "> The airline had already increased its check-in fees for checked baggage in 2018. Some analysts insisted that JetBlue increase its revenues by charging for the cost of theft. rival Delta Airlines in order to eliminate its Wi-Fi fees, it could be a difficult lever for JetBlue right now.
A more concentrated route map
Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Part of JetBlue's plan to increase profitability is for The airline will try to increase its market share and profitability in New York without adding flights to the airport, very crowded, by exchanging its flights on the New York airport. 150 places Airbus& nbsp; A320 for A321 with 200 seats. "data-reactid =" 42 "> JetBlue's plan to increase profitability includes having the airline concentrate on three key airports: New York's John F. Kennedy Airport in Fort Lauderdale, Florida The airline tries to increase its market share and profitability in New York without adding flights to the crowded airport, trading 150 Airbus A320 for A321 with 200 seats.
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Boston has been JetBlue's greatest travel success corporate, but the airline is growing in an air fight against Delta for more lucrative business customers. JetBlue also increases jets in Boston to generate higher margins, and the city is the center of JetBlue's project to launch transatlantic flights in 2021. The airline said its corporate customers were requesting the JetBlue aircraft to Europe and that the addition of the London service could help it to get more travel contracts from anywhere in the world. business. "Data-reactid =" 43 "> Boston has been JetBlue's biggest success in business travel The airline is fighting more and more against Delta on behalf of more lucrative business customers. BetBlue is also increasing jets in Boston to generate higher margins, and the city is at the center of JetBlue's project to launch transatlantic flights in 2021. The airline company clients are calling for the possibility of taking JetBlue to Europe, and the addition of the London service could help it obtain more business travel contracts.
A JetBlue plane on the tarmac.
Source of image: JetBlue Airways.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Fort Lauderdale is primarily a leisure market, but JetBlue held up well despite competing with very low cost competitors, including & nbsp;Spirit Airlines & nbsp;and Frontier Airlines. JetBlue's routes in this region are likely to be boosted next year as it begins to offer basic rates in the economy: the company will try to compete with Spirit on rates while offering at least some of its services and more sophisticated amenities. "Data-reactid =" 69 "> Fort Lauderdale is primarily a leisure market, but JetBlue has held up well despite competition from very low-cost competitors, including Spirit Airlines and Frontier Airlines. JetBlue's routes in this region are likely to be revitalized next year, as soon as the company offers basic economy fares: the airline will attempt to align Spirit's fare tariff while offering at least a portion of its budget. service and equipment.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Meanwhile, JetBlue is & nbsp;narrowing its footprint in Long Beach, California.& nbsp; – its original hub on the west coast – and its closing stations, including Washington, D. Dulles Airport, Daytona Beach, Florida, and St. Croix, United States. By October, management estimated that its improved network would increase revenues by $ 100 million to $ 120 million by 2020. "data-reactid =" 70 "> Meanwhile, JetBlue is reducing its footprint in Long Beach, California – In October, management estimated that its refurbished network would increase revenues by $ 120 million to $ 120 million by 2020. Dulles Airports (Washington, DC), Daytona Beach (Florida) and St. Croix (USVI) will increase revenues.
So, is JetBlue a purchase?
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "JetBlue CEO Robin Hayes says in April, "We are maintaining our goal of achieving earnings per share of between $ 2.50 and $ 3.00 by 2020", adding that the airline hopes to generate an increase in margin from the end from 2019 up to 2020. This suggests a substantial upside potential compared to 2020 According to consensus, Robin Hayes, CEO of JetBlue, said in April: "We remain committed to our goal of generating earnings per share between $ 2.50 and $ 3.00 by 2020 ", adding that the airline expects to generate margin expansion from the end of 2019 and up to 2020. This suggests a substantial upside potential relative to the current consensus estimate of 2020 at $ 2.27 per share.
Alas, as any vacation planner knows, talking about arriving at a destination is much easier than getting there. One of the reasons why Wall Street's estimates for 2020 remain so stubbornly low is that JetBlue will need to dramatically increase its revenue per available seat by 2020 to approach the $ 2.50 expected per share.
The $ 2.50 JetBlue price will continue to increase margins in Boston, New York and Fort Lauderdale, and it is hoped that the new pricing options will generate increased revenues and market share. By 2020. It's a reasonable plan, but far from being acquired.
Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Meanwhile, JetBlue shares are far from being available. The company trades at a value of 7.9 times its EBITDA, slightly ahead of its values more efficient Delta. "Data-reactid =" 75 "> Meanwhile, JetBlue shares are far from being a boon.The company trades at a company value of 7.9 times EBITDA, slightly higher at that of Delta, more efficient.
Existing owners will probably be able to sit well and let the turnaround play out, but I do not see any reason to buy at the moment. JetBlue is a catch.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 77 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Lou Whiteman has no position in any of the actions mentioned. Motley Fool owns shares and recommends Delta Air Lines and Spirit Airlines. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy."data-reactid =" 85 ">Lou Whiteman has no position in any of the actions mentioned. Motley Fool owns shares and recommends Delta Air Lines and Spirit Airlines. The Motley Fool recommends JetBlue Airways. Motley Fool has a disclosure policy.
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