JetBlue (NASDAQ:JBLU), a company that is continuously preparing new route offerings and technological improvements, could serve as a viable investment for investors looking to capitalize on the recent success of the airline industry. Currently shares of JBLU trade around $6.59, representing a near 14% gain year to date.
JetBlue, a brand with an abundant following of loyal customers, has taken steps to attract other brand loyal customers. Recently JetBlue announced an agreement with the Boston Beer Company (NYSE:SAM) to offer a canned version of the company's Samuel Adams brand beer on JetBlue flights. JetBlue is currently the first airline to offer the Samuel Adams canned beer on flights. This move should be of importance to shareholders of JBLU as Samuel Adams is one of the largest and most popular brands amongst craft brew beer consumers. Furthermore Boston Beer Company has taken steps to revamp the beer brand as far back as 2012. In addition to the addition of SAM products to the beverage lineup, JetBlue has taken steps to reaffirm brand loyalty by removing expiration dates from the company's True Blue Loyalty program. While not a major move by any means, the change shows that the company is loyal to supporters that liked the program but wanted a larger horizon within which points could be used.
Aer Lingus Connection
In an earlier article I cited a potentially strengthened relationship between JetBlue and Aer Lingus that could prove beneficial to JBLU shareholders. The primary focus of the commentary was to highlight a shared terminal space at Kennedy airport in New York, as well as the potential for Aer Lingus to operate flights to JetBlue operating bases. Aer Lingus recently announced service between Ireland, and both San Francisco, and Toronto. While there is no Jet Blue presence in Toronto, JetBlue operates five routes from San Francisco International Airport. With an already established connection between the two airlines, it is reasonable for one to consider the possibility that JetBlue could benefit from international connections to San Francisco via Aer Lingus flights. While neither airline has stated that these routes are related to one another, investors should still consider the connection opportunities. Presently JetBlue and Aer Lingus both serve major markets including Boston, Orlando, New York, and San Francisco. Furthermore, Ryanair (NASDAQ:RYAAY) recently announced that the company may be willing to sell its minority stake in Aer Lingus. Reports state that Ryanair would sell the 29% stake in Aer Lingus to a European competitor. Ryanair has failed to purchase Aer Lingus on more than one occasion. However a willingness to sell amid competition concerns could serve as an advantage for JetBlue. It is reasonable for one to consider that new ownership could allow for new relationships to form and existing relationships to grow.
Reagan National Airport Slots
Following the merger between US Airways (NYSE:LUV) and American Airlines(AAMRQ), the new combined entity will control 68% of operating slots at Reagan National Airport in Washington, DC. This is significant to JBLU shareholders as JBLU could stand to gain operating slots at the airport. Reagan National is cited as being convenient and accessible due to a connection to the cities Metro Subway system. In this case, discussion of slots being ceded to other airlines can only be to the benefit of JetBlue. In a worst-case scenario, nothing about JetBlue operating practices at Reagan National would change. In a best-case scenario the airline would be granted the opportunity to add service to a lucrative and popular market.
In conclusion investors need to consider the value of adding a popular consumer brand to JetBlue flights. Boston Beer Company products could serve as an influencing factor to a customer who otherwise may be indifferent to what airline they use. Investors need to continue to examine the potential opportunities of overlapping services between JetBlue and Aer Lingus. Currently there is overlap in many of the major markets served by JetBlue. Finally, investors need to consider the positive effects of the US Airways and American Airlines merger. Government regulation over competition concerns could help JetBlue to gain increased access to a prominent market.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in JBLU over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: One should perform their own additional research before finalizing investment decisions. The thoughts represented here are ideas for further exploration and cannot on their own justify investment activity.