JetBlue has code share agreements with both Emirates and Etihad now so the future, as with American Airlines, is bright for additional traffic. Investing in the likes of JetBlue could well be a very good play right now as this winter period looks weak on 2012/13 by some margin as the airline has had to cancel some 34% of flights due to poor weather this week just a few weeks after the disastrous holiday weather which closed all of its main east coast routes.
This latest weather front and the subsequent cancellations come just after JetBlue suffered from a shortage of adequately rested pilots, which under FAA regulations that came into effect on Jan 1, forced JetBlue to ground its operations at four airports on Jan. 6 and 7.
So it is likely that JetBlue is running through a period of depressed prices that will no doubt take a hammering when figures are released, but that is a blessing for those getting in at that point. But we have to ask – Is JetBlue exposed more than most to adverse weather swings? The answer is in part yes, if those swings focus on the North East of the USA, which they have of late, that is a matter of bad luck more than anything else. But where JetBlue is exposed is in that they have no regional or partner carrier to lay off the cancellation figures on. It carries the cancellation figures on its statistics in full on each set of results. Thus things look a great deal worse than they actually are. Right now JetBlue is looking like one of the better bets of 2014 and it is fast becoming one of the top airlines to look out for.
Meanwhile United Continental Holdings, Alaska Air Group and Southwest all reported within expectations for Q4; with Southwest Airlines showing good revenue growth above expectations.
Indeed airlines should take note of the message from the US market this week at the Airline Economics Growth Frontiers conference in Dublin: US fleet managers all agree that new aircraft economics cannot match that of old aircraft so long as oil prices continue on their present stable outlook. The highly profitable Delta, American Airlines and Allegiant know full well that a refurbished interior is all that is needed in most cases. Obviously an MD88, 90 or 717 cannot compete with a new aircraft on fuel burn or maintenance costs but factor in the lease rates or purchase costs and the economics are rock solidly on the side of the older aircraft in the short term. But these airlines remain open to over-exposure in the event of an oil price spike at any point for any unforeseen reason. It is the chance they take and of course the additional profits gained should cover any oil spike in any event – this is the never ending balancing act.
The gulf in thinking from many top fleet managers the world over with regard to running new and old aircraft is what keeps the various layers of our market ticking over. There are winners and losers at every turn no matter the forecast and that indicates that the aircraft market is stable and strong in depth. The 757 remains for all fleet managers operating the same their favourite type. If only some APAC markets were able to operate older aircraft, they might have much repaired balance sheets.