TLDR
- JetBlue (JBLU) jumped as much as 10.9% Friday after news broke that Spirit Airlines is preparing to shut down operations.
- Frontier Airlines (ULCC) also rose 8.8%, with both carriers seen as potential beneficiaries of Spirit’s collapse.
- A Wall Street Journal report said Spirit’s government rescue deal has collapsed and bondholders did not support the plan.
- Susquehanna raised its price target on JBLU from $4.00 to $5.00, though kept its rating at “neutral.”
- JetBlue’s most recent quarterly earnings missed estimates, with EPS of -$0.87 versus the -$0.72 consensus.
JetBlue posted a sharp gain Friday after a Wall Street Journal report said Spirit Airlines is preparing to cease operations. The stock traded as high as $5.17, up roughly 10.9% on the day, against a previous close of $4.66.
JetBlue Airways Corporation, JBLU
Frontier Airlines climbed 8.8% on the same news, as traders moved into carriers that could pick up market share if Spirit exits.
The Journal reported that a planned U.S. government rescue deal for Spirit has collapsed. Bondholders did not back the proposed plan, leaving the ultra-low-cost carrier with few visible options.
Spirit had been struggling well before this point. The airline had already gone through a failed merger attempt with JetBlue, which was blocked by regulators, and had been dealing with mounting debt and weak demand at the low end of the market.
For JetBlue, the timing of the news landed on a day it was already getting some analyst attention. Susquehanna raised its price target on JBLU from $4.00 to $5.00 while keeping a “neutral” rating on the stock.
That said, analyst sentiment overall remains cautious. Seaport Research upgraded JBLU to “Buy” with an $8.00 target in April, while Goldman Sachs and UBS both rate the stock “Sell” with targets of $3.50. The average analyst price target sits at $4.88, with the consensus rating at “Reduce.”
JetBlue’s Financial Picture Remains Difficult
JetBlue’s latest earnings report, released April 28, showed the airline is still losing money. The company posted an EPS loss of $0.87 for the quarter, missing the consensus estimate of -$0.72 by $0.15.
Revenue came in at $2.24 billion, in line with estimates and up 4.7% year over year. But the airline carries a debt-to-equity ratio of 4.25 and a negative return on equity of 32.76%.
Analysts currently expect JetBlue to post a full-year EPS of -$2.37. The stock has a market cap of roughly $1.95 billion and a beta of 1.75, meaning it tends to move more than the broader market.
Spirit’s Collapse Could Shift Competitive Dynamics
Spirit has been a disruptive force in budget air travel for years, often forcing legacy and hybrid carriers to respond on price. Its exit, if confirmed, would remove a major source of low-fare competition on many domestic routes.
JetBlue and Frontier overlap with Spirit on a number of routes, particularly in Florida, the Northeast, and major Sun Belt markets.
Volume on JBLU on Friday was around 4.75 million — about 80% below its average daily volume of 24.3 million, suggesting this was not a broadly driven surge but a reaction concentrated in a shorter trading window.
The stock’s 50-day simple moving average stands at $4.85 and the 200-day at $4.86. Friday’s high of $5.17 pushed it above both of those levels for the first time in recent sessions.
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