How Should Investors Approach JetBlue Post Bullish Q3 Outlook?

Early this month, JetBlue Airways Corporation’s JBLU management stated that booking trends were impressive throughout the peak summer season. As a result, the low-cost carrier gave an improved view for capacity growth and operating revenue per available seat mile (RASM) for the September quarter.

Given this backdrop, the question that naturally arises is: Should investors buy, hold, or sell JBLU stock now? A more in-depth analysis is needed to make that determination. Before diving into JBLU’s investment prospects, let’s take a glance at its financial numbers.

JBLU's Improved Q3 Outlook on Upbeat Air-Travel Demand

JetBlue now anticipates available seat miles (ASMs) for the third quarter to be flat to up 1% year over year compared with the prior guidance of down 1% to up 2%. Further, JBLU anticipates third-quarter operating revenue per ASM (RASM) to decline in the range of 1.5%-4% year over year, an improvement from the prior outlook of 2%-6% decrease.

Consistency in air travel demand continued from the summer season through August and the Labor Day holiday, all of which was reflected in the rising number of bookings within 14 days of travel. Strong operational performance during August, in addition to the carrier’s cost management actions, aided JBLU’s non-fuel unit costs. JBLU now expects third-quarter costs per available seat mile (excluding fuel and special items) to increase in the range of 3.5-5.5%, down from the prior expectation of a 4%-6% increase.

JBLU lowers its third-quarter 2025 average fuel cost per gallon guidance to the range of $2.45-$2.55 from the previously guided range of $2.50 to $2.65. Lower fuel costs should boost the company’s bottom line, as fuel expenses represent a key input cost for any airline company.

Impressive Valuation Picture for JBLU Stock

From a valuation perspective, JBLU is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio.

The stock has a forward 12-month P/S-F12M of 0.19X compared with 0.67X for the industry over the past five years. The company’s forward 12-month P/S-F12M ratio is also below the median level of 0.25X over the past five years. These factors indicate that the stock’s valuation is attractive.

JBLU P/S Ratio (Forward 12 Months) Vs. Industry

High Debt Weighs on JetBlue Stock

We are concerned about JBLU’s high debt levels. The low-cost carrier’s long-term debt level has increased to $7.7 billion at the end of second-quarter 2025 from $3.1 billion at 2022-end.

Long-Term Debt to Capitalization

JBLU’s Price Performance

Shares of JBLU have not had a good time on the bourses of late, declining in double-digits so far this year. The disappointing price performance resulted in JBLU underperforming the Zacks Airline industryin the said time frame. Moreover, JBLU’s price performance compares unfavorably with that of fellow U.S. airline operators Southwest Airlines Co. (LUV) and Delta Air Lines DAL in the same timeframe.

JBLU Stock YTD Price Comparison

To Conclude

It is understood that JBLU stock is attractively valued, and upbeat air travel demand is contributing to JBLU’s top line. JBLU's efforts to modernize its fleet look encouraging, too. Despite the positives, we advise investors not to buy JBLU stock now due to high labor costs, which are hurting the bottom line by pushing up operating costs. Additionally, high debt levels are concerning, too.

We advise investors to wait for a better entry point. For those who already own the stock, it will be prudent to stay invested. The stock’s Zacks Rank #3 (Hold) supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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