How Should Investors Approach JetBlue Post Bullish Q3 Outlook?

Core Insights - JetBlue Airways Corporation (JBLU) has reported impressive booking trends during the peak summer season, leading to an improved outlook for capacity growth and operating revenue per available seat mile (RASM) for the September quarter [1][3][8] Financial Performance - JBLU anticipates available seat miles (ASMs) for Q3 to be flat to up 1% year over year, an improvement from previous guidance of down 1% to up 2% [3] - The company expects RASM to decline by 1.5%-4% year over year, better than the prior outlook of a 2%-6% decrease [3] - Non-fuel unit costs are projected to increase by 3.5%-5.5%, down from the previous expectation of 4%-6% [4] - JBLU has lowered its average fuel cost per gallon guidance for Q3 to $2.45-$2.55 from $2.50-$2.65, which is expected to positively impact the bottom line [5] Valuation - JBLU is trading at a forward 12-month price-to-sales (P/S) ratio of 0.19X, significantly lower than the industry average of 0.67X and below the median level of 0.25X over the past five years, indicating an attractive valuation [6][8] Debt Concerns - The company's long-term debt has risen to $7.7 billion at the end of Q2 2025, up from $3.1 billion at the end of 2022, raising concerns about financial stability [9] Stock Performance - JBLU shares have declined in double digits this year, underperforming the Zacks Airline industry and peers like Southwest Airlines and Delta Air Lines [13] Conclusion - Despite attractive valuation and positive air travel demand, high labor costs and elevated debt levels are significant concerns for JBLU, suggesting that investors should wait for a better entry point [16][17]