JetBlue Smashed as Flight Cancellations Build

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A wicked cold spell in the United States has caused what now is reportedly more than 9,000 flight cancellations. Now we have word that JetBlue Airways Corp. (NASDAQ: JBLU) is suspending operations on Monday evening and into Tuesday in New York and Boston. The problem for JetBlue is that this means that almost all end-route and hub activities will grind to a stall. Depending upon how long this lasts and depending upon the company’s weather insurance status, this is one of those issues which could be enough to interfere with quarterly earnings and revenues.

When airlines are not flying, they are not making any money. If they are stuck paying for transfers, room credits and other items, then they lose even more money. The good news is that this is happening literally in the first week of the quarter. That should given them some time to make it up over the next 85 days or so. Another help is that most travelers are likely already back home or at least where they need to be now that most people are back at work after the holidays.

The question that will arise is how much this will bite into JetBlue’s financial figures during the March quarter. Thomson Reuters shows that revenue is expected to be $1.40 billion, up about 4.5% sequentially from last quarter and up over 7% from the first quarter a year ago. With possibly two days out of ninety days in a quarter, straight line math would put the risk at close to 2.2% of the company’s quarter. Still, this depends upon just how much the impact is on Monday and Tuesday. The other caveat, again, is what JetBlue’s insurance is.

JetBlue shares were down 4% at $8.69 on last look. Its 52-week range is $5.70 to $9.20, and the consensus price target from analysts is $8.63.

We have seen that flights are being wound down on Monday and will resume on Tuesday morning and into the afternoon. Of course, that is as of now and is subject to change.

A 4% drop in the stock is worth noting. This drop may sound like it is too much on the surface, but airline stocks had an incredible 2013. This stock also rose handily, from $8.54 on the last day of 2013 up to $9.05 by Friday’s close. We would also remind readers that JetBlue’s stock rose almost 50% in 2013.