Fuel costs are supposed to be the story. JetBlue Airways Corp. (NASDAQ:JBLU) recently pulled its full-year guidance after jet fuel prices came in higher than expected, highlighting one of the biggest risks facing airline investors today. Rising energy costs can quickly squeeze margins, pressure earnings and derail turnaround plans.
Yet JetBlue stock appears to be telling a different story.
Chart created using Benzinga Pro
Shares have quietly climbed more than 20% from their May lows and are now approaching a closely watched Golden Cross, suggesting traders may be looking beyond near-term fuel volatility and focusing instead on signs that the airline’s turnaround efforts are beginning to gain traction.
The Spirit Opportunity
One reason for the improving sentiment is the changing competitive landscape.
While JetBlue’s attempt to acquire Spirit Airlines ultimately failed, Spirit’s subsequent collapse has created an unexpected opportunity. The disappearance of a major ultra-low-cost competitor could ease pricing pressure across several leisure-focused routes where JetBlue competes.
For investors, that means the company may be able to capture additional passengers and market share without engaging in the aggressive fare wars that have weighed on airline profitability in recent years.
At the same time, JetBlue’s JetForward turnaround strategy continues to focus on network optimization, premium offerings and operational improvements designed to improve profitability over time.
Recent revenue trends suggest parts of that strategy may already be working.
The Chart Is Starting To Agree
The technical picture has become increasingly difficult to ignore.
JetBlue’s 50-day moving average is on the verge of crossing above its 200-day moving average, creating a potential golden cross. Many traders view the pattern as a signal that long-term momentum is shifting in favor of buyers.
The stock is also trading comfortably above both moving averages, a sign that the recent rally has broad support.
Momentum indicators are strengthening as well. The MACD (moving average convergence/divergence) has crossed into positive territory and continues to trend higher, while the Relative Strength Index, or RSI, sits near 62. That suggests bullish momentum is building without yet reaching the overbought levels that often trigger profit-taking.
Perhaps most importantly, JetBlue stock has been making a series of higher highs and higher lows since its May bottom, a classic characteristic of an emerging uptrend.
None of this eliminates the fuel-cost risk. If energy prices continue climbing, airline stocks could face renewed pressure.
But the chart suggests investors may be betting that fuel is a temporary headwind, while JetBlue’s improving competitive position and turnaround strategy have the potential to be much longer-lasting tailwinds.
Photo by Coby Wayne via Shutterstock
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