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JetBlue Maturing as Airline

Stocks in this article: JBL LUV CAL

JetBlue (JBLU) has learned discipline as it approaches its 10th anniversary.

Consider a few recent facts. Capacity shrank in the third and fourth quarters, the first shrinkage in JetBlue's history, and will fall by 5% to 7% in the current quarter. Meanwhile, in December, JetBlue's average fare was $151, the highest in its history.

In the fourth quarter, JetBlue led all carriers with 15% growth in passenger revenue per available seat mile. And this year, for the first time in its history, the carrier will have positive free cash flow, or cash from operations minus capital expenditures.

Jet Blue goes with the flow.

CEO Dave Barger summed up the airline's situation, and the industry's, during a fourth-quarter earnings call, saying: "What's most significant is just the amount of capacity (removed), the discipline, the restraint that's taking place as a result of the economy." Last year, JetBlue opened just two cities, Puerto Plata and St. Marten, a far cry from the 16 it opened in 2006.

To briefly recall its history, JetBlue spurted out of the gate in 2000, defining rapid growth, and for a time lived on the edge of the airline industry. Its share price soared -- reaching a high of $30, adjusted for splits, in 2003 -- then sputtered, trading today around $5.78.

It repeatedly shifted strategy, starting with a list of scattered cities served from New York's Kennedy Airport with a fleet of Airbus A320s, then focused on transcontinental routes, then moved to serving midsized cities with a smaller aircraft.

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