JetBlue Airways Started With Sell Rating at UBS

JetBlue Airways Started With Sell Rating at UBS March 20, 2024, 8:35 a.m., readers: 4

UBS analysts started coverage on JetBlue Airways Corporation (NASDAQ:JBLU) with a Sell rating, assigning a price target of $5 on the stock. The analysis highlighted concerns over the airline's continued pre-tax losses, negative free cash flow (FCF), and high leverage extending into 2025. Despite potential gains from improving domestic revenue per available seat mile (RASM) and easing cost pressures next year, JetBlue faces unique challenges. Notably, the airline's significant use of GTF engines is expected to ground 4-5% of its fleet in 2024, with issues lingering into 2025, potentially resulting in an EBIT loss of $120 to $170 million annually. Additionally, JetBlue's pilot contract is due for renegotiation in the first half of 2025, likely increasing future costs. The analysts suggest that these risks are not fully reflected in the airline's current valuation, which seems to anticipate approximately $1,025 million in EBITDAR for 2025, compared to UBS's estimate of about $935 million.

About NASDAQ: JBLU

J etBlue Airways Corporation provides air passenger transportation services. As of December 31, 2021, the company operated a fleet of 63 Airbus A321 aircraft, 8 Airbus A220 aircraft, 21 Airbus A321neo aircraft, 130 Airbus A320 aircraft, and 60 Embraer E190 aircraft. It also served 107 destinations in the 31 states in the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and 24 countries in the Caribbean and Latin America.

Price: 6.53
Market cap: 2.2 billion USD
Eps: -0.93
P/e ratio: -7.02
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