JetBlue Airways Corporation (JBLU) reported its preliminary traffic results for February 2011. The company’s traffic for the month climbed 9% to 2.08 billion from 1.91 billion as of February 2010. The surge in traffic was a result of 1.4% increase in capacity.

In February 2011, JetBlue Airways’ available seat miles were approximately 2.6 billion, up 1.4% from the year-ago period. Load factor was up 560 bps at 80.1% versus 74.5% in the comparable month of 2010.

Revenue passengers upped 10.5% to 1.8 billion from 1.6 billion in February 2010 while departures grew 4.6% to 17.2 million from 16.5 million in year-ago period. However, average stage length declined slightly by 2.5% to 1,076 from 1,103 in February 2010.

JetBlue’s preliminary passenger revenue per available seat mile (PRASM) for February increased 18% from the year-ago period owing to severe weather in the Northeast at the beginning of the month. As a result, flights were cancelled and passengers were reshuffled during the rest of the month, filling in more seats. Further, the company expects, PRASM to increase between 14% and 16% year over year in first quarter 2011.

United Continental Holdings Inc. (UAL), the largest airline in the U.S. and one of the company’s peers, reported a decline of 1.1% in February traffic compared to the year-ago period. The decrease was a result of depressed domestic traffic, which offset the growth in overseas traffic. Yet another competitor Delta Air Lines (DAL), the second U.S. largest airline, reported a 1.4% year-over-year traffic increase in February on 6.1% capacity growth.

For full fiscal 2010, JetBlue reported an 8% year-over-year increase in revenue passenger miles on a 6.7% increase in capacity. Load factor (percentage of seats filled with passengers) rose 170 basis points year over year to 81.4%. The severe snowstorm in December in Northeast affected Jetblue, reducing its fourth quarter operating income by $25 million.

Equipped with a low cost structure, strong brand name, superior inflight services and a non-union workforce, we believe JetBlue is ideally positioned for growth over the long term. Also, the company’s growing presence in the Caribbean and Latin America, dominance in the Boston market, and unique position as the largest domestic carrier at the John F. Kennedy International Airport bode well for top-line growth.

However, fuel price volatility, capacity cuts, competitive pricing pressure, higher dependence on New York metropolitan market, and automated technology keep us on the sidelines.

Currently, we maintain our long-term Neutral recommendation on JetBlue with the Zacks #4 Rank (Sell).

 
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