Why JetBlue Airways Corporation Shares Took Off

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of JetBlue Airways Corporation (NASDAQ: JBLU  ) were flying higher today, gaining as much as 11% after the merger between American Airlines parent AMR and US Airways was approved with favorable terms for JetBlue.

So what: While JetBlue may not be a direct beneficiary of the merger, analysts see it gaining landing slots at Washington's Reagan airport as a result of the settlement. According to the deal, AMR-US Airways must sell 104 of their slots at Reagan airport, most of which should go to JetBlue. The discount airline also has its eye on some slots at LaGuardia Airport, many of which will go to Southwest Airlines, which jumped as much as 4% on the news.

Now what: It may seem counterintuitive that the settlement of the AMR-US Airways merger, which will create the world's biggest airline by traffic, benefits JetBlue, but the increase in availability of precious landing slots should help consolidate JetBlue's advantages on the East Coast, for those airports are major destinations. The carrier is already particularly strong in New York and Boston, so an additional foothold in Washington, D.C., should only increase its market power. Shares cooled off to a 5% gain after a spike following the news break, and it's hard to measure to the impact of the additional departures JetBlue will gain from the sale. Still, it seems safe to say that this is a positive development for the airline.

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