SOURCE: Five Star Equities

Five Star Equities

May 28, 2012 08:20 ET

US Airways and JetBlue Airways Look to Benefit From Dropping Fuel Costs

Five Star Equities Provides Stock Research on US Airways and JetBlue Airways

NEW YORK, NY--(Marketwire - May 28, 2012) - Airline stocks posted some impressive gains recently. The Bloomberg U.S. Airlines Index (BUSAIRL) of 10 carriers on Thursday jumped as high 6 percent, the largest gain since Jan. 25. During the first quarter, historically the slowest of the year, collectively the top seven U.S. airlines have posted an operating profit of $247 million compared with a moderate loss a year ago according to data collected by the Deutsche Bank. Five Star Equities examines the outlook for companies in the Airlines Industry and provides equity research on US Airways Group, Inc. (NYSE: LCC) and JetBlue Airways Corporation (NASDAQ: JBLU).

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The high price of fuel has always been one of the biggest costs for airline companies. The commodities market has provided a timely windfall for the industry as they are just about to enter their peak summer travel season. Jamie Baker, JPMorgan Chase airline analyst, has recently stated that since February fuel costs have dropped by $0.40 per gallon, amounting to a $5.5 billion savings for the industry. Airlines for America's predict a record number of passengers to fly internationally this summer. Total passengers on international flights are forecasted to total 26.8 million, beating last summer's record of 26.3 million according to the group.

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US Airways last month reported a first quarter net loss excluding net special credits of $22 million. This compares favorably to a first quarter 2011 net loss excluding net special charges of $110 million. Strong passenger demand and record passenger yields led to improved revenue performance. Total revenues in the first quarter were a record $3.3 billion, up 10.3 percent versus the first quarter 2011 on a 3.0 percent increase in total available seat miles (ASMs).

JetBlue ended the first quarter with approximately $1.2 billion in unrestricted cash and short term investments. "With our strong cash position, we plan to purchase several aircraft deliveries this year with cash, which we believe will be accretive to return on invested capital - an important metric for JetBlue," said Mark Powers, JetBlue's CFO.

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