Industry Woes Will Clip JetBlue Earnings

The low-cost carrier is expected to report a profit Thursday but it won't be a hefty one.
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JetBlue Airways

(JBLU) - Get Report

is expected to offer airline investors a breather from the recent flurry of industry losses when it reports its third-quarter results before the opening bell Thursday.

The New York-based airline, which has a history of profitability, is expected to earn $14 million, or 10 cents a share, on revenue of $333.5 million, based on the consensus estimate of Thomson First Call. The company recorded earnings of $29 million, or 39 cents a share, on revenue of $273.6 million in the third quarter of 2003.

The analyst consensus already accounts, at least to some degree, for the grim quarter U.S. airlines had. Network and low-cost carriers alike watched fuel costs soar, capacity surge and price competition erode revenue. Still, given how other airlines have missed estimates, JetBlue may disappoint.

"I wouldn't be surprised if they missed the Wall Street consensus," said Jim Corridore, equity analyst at Standard & Poor's, who has a 12-cent EPS estimate for the airline's third quarter. (Standard & Poor's does not do or seek to do business with the companies its equity analysts cover.)

Corridore noted JetBlue was exposed to the hurricanes that ravaged Florida and parts of the Southeast, and also saw "brutal" price competition on its Florida and transcontinental routes, factors that might have had a bigger impact on JetBlue than originally thought.

In early September, the company issued a profit warning. "The third quarter has proven challenging as a result of a weak yield environment in late August and September; the effects of two hurricanes in Florida; higher-than-expected fuel prices; and weak near-term bookings due to both adverse conditions in Florida and current concerns of a possible new hurricane," David Neeleman, JetBlue's CEO, said in a statement. "While we continue to expect to report a solidly profitable third quarter, we now anticipate that earnings will be significantly lower than our previous estimates."

JetBlue did not provide any specific numbers for its revised guidance, but it's worth noting that the consensus estimate at the time was for a profit of 19 cents a share.

Other low-cost airlines turned in disappointing third-quarter results Wednesday.

America West


swung to a loss of $47.1 million, or $1.30 a share, from a profit of $32.9 million, or 60 cents a share, a year earlier. Excluding special items, losses came to $1.22 a share, well wide of the Wall Street consensus for a loss of 63 cents a share. The airline's chief executive blamed fuel prices and excess capacity for the loss.


AirTran Holdings


weighed in with a loss of $9.8 million, or 11 cents a share, wider than the analyst forecast for a loss of 7 cents a share.

Corridore noted that JetBlue differs from America West by having lower costs and significant hedges to control the cost of fuel.

Still, JetBlue hasn't been as aggressive as low-cost leader

Southwest Airlines

(LUV) - Get Report

, which has said it hedged more than 80% of its fuel needs for this year and next and 60% of its 2006 requirements. Southwest kicked off the industry's earnings season by reporting a profit of 15 cents a share, beating last year's performance and analysts' estimates.