JetBlue Airways Is My Top Stock Pick for 2017: Here’s Why

With unit revenue comparisons about to get a lot easier and plenty of profit growth initiatives in the works, JetBlue could be a great stock to own in 2017.

After spending many years out of favor with investors, JetBlue Airways (NASDAQ:JBLU)became a market darling again a few years ago. Between the beginning of 2014 and September 2015, JetBlue stock more than tripled. However, it has lost some of its luster since then.

JBLU Chart


A sharp slowdown in JetBlue’s unit revenue performance held its stock back throughout 2016. However, JetBlue is poised for a return to unit revenue growth in early 2017. Moreover, it will benefit from several long-term earnings growth drivers over the next few years. As a result, JetBlue stock could soar to new heights in 2017.

Unit revenue momentum is turning

During 2015, JetBlue outperformed its rivals in terms of unit revenue. For the full year, revenue per available seat mile (RASM) increased 0.8% at JetBlue. Even in Q4, the carrier posted just a modest 0.2% RASM decline.

However, JetBlue’s unit revenue trajectory quickly went south in 2016 as the carrier added too much capacity and demand for many of its routes to Latin America sank. During the first half of 2016, RASM plunged 7.6% year over year.

Since then, JetBlue has reduced its capacity growth, particularly in weaker markets. JetBlue plans to continue that capacity discipline in 2017, growing its available seat miles 6.5%-8.5% year over year, compared to 12.6% growth in the first half of last year.


Slower capacity growth is already leading to better unit revenue results. RASM was roughly flat year over year in November and declined by about 1.5% in December.

JetBlue’s year-over-year unit revenue comparisons are about to get a lot easier as the company laps the big declines experienced during the first half of 2016. Furthermore, demand is starting to improve in Latin America. As a result, RASM could return to strong growth this year. Right now, analysts are only expecting 1%-2% RASM growth at JetBlue for the full year. If JetBlue blows past these estimates, the stock could gain ground in a hurry.

Mint expansion is in the works

Looking a little further ahead, the expansion of JetBlue’s premium “Mint” service should drive additional unit revenue growth over the next few years. Whereas most JetBlue planes are set up in an all-coach configuration, Mint-equipped planes have a premium cabin with 16 lie-flat seats. Customers in the Mint cabin also get a variety of other perks and higher-touch service.

Business travelers and well-heeled leisure travelers have been willing to pay high fares for JetBlue’s Mint product on transcontinental routes. As a result, the company decided last year to upgrade a slew of routes to Mint service in the near future.

In 2017 alone, JetBlue will nearly double the size of the Mint fleet, from 17 planes to 31 planes. However, most of those planes will come in the second half of the year. As a result, JetBlue’s Mint expansion will really take off in the fourth quarter. The rollout of new Mint service should drive an increase in the average fare on those routes, boosting RASM in late 2017 and into 2018.

Airline Jetblue Airways Jblu Airbus A


Becoming more efficient

While the expansion of Mint should drive unit revenue growth beyond 2017, JetBlue is also focused on holding down unit costs. At its investor day last month, the company described a variety of initiatives designed to improve productivity and reduce structural costs. JetBlue expects its total annual savings to reach $250 million-$300 million by 2020.

JetBlue will also add 12 seats to each of its more than 100 A320 aircraft starting later this year. This will reduce the cost per seat of operating each plane.

Lastly, JetBlue is scheduled to add dozens of fuel-efficient A321neo airplanes to its fleet beginning in late 2018. Some of these planes may be converted to a long-range variant and used to begin service to Europe. But others will be taken in a 200 seat all-coach configuration, which would drive a significant reduction in JetBlue’s unit costs.

JetBlue stock is too cheap

JetBlue Airways is a dynamic growth company with a high profit margin and massive long-term potential. The carrier has plenty of room left for growth in the U.S. along with big international growth opportunities.

Nevertheless, JetBlue stock trades for just 10 times the company’s 2016 earnings. Once JetBlue’s unit revenue performance gets back on track — which will probably be very soon — the stock could start to rally again.

History reveals potential Trump gold mine for 2017
We aren’t politicos here at The Motley Fool. But we know a great investing opportunity when we see one.

Our analysts spotted what could be a $1.6 trillion opportunity lurking in Donald Trump’s infrastructure plans. And given this team’s superb track record (more than tripling the market over the past decade*), you don’t want to miss what they found.

They’ve picked 11 stocks poised to profit from Trump’s first 100 days as president. History has shown that getting in early on a good idea can often pay big bucks – so don’t miss out on this moment.

Click here to get access to the full list!

*Stock Advisor returns as of January 3, 2017

Adam Levine-Weinberg owns shares of JetBlue Airways and is long January 2017 $17 calls on JetBlue Airways. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.


You May Also Like

NAIOP South Florida Appoints Officers, Executive Board and Board of Directors for 2022

NAIOP South Florida, a Commercial Real Estate Development Association offering advocacy, education and business opportunities to its members, has announced the following officers for the 2022 Board of Directors: President:

Pride Week Festival Begins With Tribute to Pulse Nightclub Survivor

Miami Beach Pride’s week-long festivities will commence with a special tribute to the LGBTQ+ community honoring the victims of the tragic shooting at Pulse Nightclub in Orlando. A ceremonial “flip

Surfside luxury condo sees notable sales

Arte at Surfside is making waves. There’s, of course, the news that Ivanka Trump and Jared Kushner are renting at the 16-resident luxury condominium. And there’s the December penthouse sale

Up in the Air: A Discussion

In a dynamic region where residents are typically on the move, everyone is wondering about the health of the airline industry and the safety of airports and airplanes. Everyone is

Other Posts

South Florida Yachting Legend Passes

Robert “Bob” Roscioli, an icon in the South Florida marine industry, has passed away. Many recognize the name Roscioli from the widely-successful and world-renowned Roscioli Yachting Center, a full service

Four key steps

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] What a crazy time we are all experiencing. Right now, getting back to basics is most important. It is not and

Pandemic adds to worries about hurricane season

An above-normal 2020 Atlantic hurricane season is expected, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service. The outlook predicts a 60% chance of

The difference between leading and managing

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Leadership and management are often misunderstood as one in the same. They are not. Certainly, a good leader should be able

Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.