JetBlue Airways Corp. Thursday said fourth-quarter earnings jumped more than 28 percent, fueled by rapid expansion, but cautioned 2004 would be tougher as big carriers fight hard to make inroads into the low-fare market.
JetBlue shares, which have lost more than half their value since October, extended their sharp slide, falling nearly 6 percent to their lowest in more than seven months. Analysts said investors grown accustomed to blow-out earnings were displeased with results that merely matched Wall Street expecations.
The New York-based airline, which until three months ago had been the airline sector’s hottest stock, also said that this year would be challenging as it faces increased maintenance and fuel costs and larger carriers that are determined to punch back at an upstart that had cut deep into some of their busiest markets.
JetBlue has reported a profit each quarter since its public offering in April 2002 and it extended that streak in the fourth quarter. Its net income rose to $19.5 million, or 17 cents per share, from $15.2 million, or 15 cents cents a share, a year earlier.
The results were in line with Wall Street analysts’ average estimate of 17 cents per share, according to Reuters Research, a unit of Reuters Group Plc.
The numbers came one day after Goldman Sachs analyst Michael Gruetzmacher cut his JetBlue rating to “underperform” from “in-line” Wednesday, saying the drivers of the low-cost carrier business cycle “distinctly favor” hub carriers in 2004.
JetBlue recently begun facing increasingly severe competition from larger carriers, which are beginning to restore capacity after reducing seats due to weak demand over the last few years.
“The larger carriers are optimizing the utilization of their existing fleet and adding more seats on planes -- all low cost additions to capacity,” said Goldman Sachs’s Gruetzmacher.
JetBlue, which added 6 new aircraft in the fourth quarter and plans to add 16 to its fleet this year, might lose out to the larger airlines if the low cost carrier keeps expanding, Gruetzmacher said.
The four-year-old company, which carries more passengers through New York’s John F. Kennedy Airport than any other airline, last week filed with the U.S. Department of Transportation for 10 slots to begin service from New York’s LaGuardia airport in the spring. The airline looking to expand to more markets this year, company officials said in a conference call.
Passenger traffic rose 54 percent in the quarter, slightly faster than the airline’s 51.7 percent increase in capacity.
Operating revenue rose 40.4 percent, to $262.9 million, the company said in a statement.
Net income for full-year 2003 was $103.9 million, or 97 cents a share, compared with $54.9 million, or 56 cents a share, a year earlier.
Analysts, on average, were expecting 85 cents a share for the year.
In mid-afternoon Nasdaq trading, JetBlue shares were off $1.40 at $22.60. Earlier they had traded as low as $22.30, their lowest since early June.