JetBlue Airways Corp. has reportedly cut growth projections for 2007. (12/22/2006)
"The Forest Hills-based carrier, among the nation´s best-known low-cost airlines, said in an investor update that projections for growth were pared because the company plans, in a cost-cutting program, to remove six seats from each of its 96 Airbus planes, which now seat 156 passengers. The Airbus planes will seat 150 passengers when the seat-removal program is completed in March, the company said. With six fewer seats, JetBlue will be allowed by the Federal Aviation Administration to fly with only three flight attendants instead of four," reported newsday.com.
"In its investor update, JetBlue said it will fly 11 percent to 14 percent more in 2007 than it did in 2006. That is down from a previous forecast of 14 percent to 17 percent. The airline announced the seat-removal plan last week, but did not provide guidance related to growth projections for 2007."
Also, JetBlue said revenue for each paying passenger flown one mile will be 12 percent to 14 percent higher for 2006 than 2005, and as much as 24 percent higher this quarter. JetBlue reduced the number of low-priced tickets in an attempt to raise average fares.
But, according to newday.com report, one influential analyst said the airline´s latest plans paint a "more encouraging cost picture", and upgraded his earnings estimate for the fourth quarter.
In a note to clients, Jamie Baker, who follows the airline industry for JPMorgan Securities Inc., said, "Updated JetBlue guidance paints an even more encouraging cost picture than we imagined, leading us to increase our (fourth quarter) estimate" to 12 cents a share, up from an estimate of four cents earlier this week.
Earlier this month, Ray Neidl, an analyst for Calyon Securities, said the discount airline has slowed its growth engines and will return to profitability in early fiscal 2007. Calyon upgraded the airline to "add" from "neutral" and raised its target price to $15 from $12.
"The company was growing to too fast and losing control of cost increases and had dilution of ability to price as it tried to fill all of the added seats," he said. "With legacy carriers now becoming more competitive, JetBlue realises that it has to be more than low-cost. The company believes that it is offering a high value product, but yield management and cost control are now more important than ever."
