Since peaking in late 2015, JetBlue Airways (NASDAQ:JBLU) stock has fallen out of favor with investors. For most of the past two years, the share price has been bouncing around near $20, roughly 25% below its all-time high. However, JetBlue stock has tons of upside, as the company works to improve its cost structure while boosting unit revenue through the growth of its upscale Mint premium service.

JetBlue's 2017 annual report, released last week, contained some new hints about the company's strategy and future opportunities. Here are three key highlights that investors should be aware of.

Paving the way for more growth in Boston

JetBlue Airways is the largest airline in Boston, and it has been growing rapidly there in recent years. During 2017, JetBlue surpassed 150 daily departures in Boston. In early 2018, it added a daily nonstop flight to Syracuse, and it will begin operating three daily departures to Minneapolis in May. Management has announced a goal of reaching 200 daily departures in Boston within the next few years.

A JetBlue Airways plane preparing to land

JetBlue is laying the groundwork for further growth in Boston. Image source: JetBlue Airways.

JetBlue's ambitions in Boston may be even greater. The carrier notes in its annual report that it amended its lease at Boston's Logan International Airport in December, allowing it to gradually lease an additional six gates there, on top of the 24 it already controlled.

Point-to-point carriers can operate up to 10 daily departures per gate at congested airports, so this lease amendment gives JetBlue room for additional growth. This may also be a sign that JetBlue is getting more serious about the possibility of flying from Boston to Europe using the Airbus A321LR. The additional gates would enable JetBlue to group more flights together, facilitating connections between domestic flights and flights to Europe.

Room in the budget for fleet renewal

For the past year, JetBlue has been studying options for replacing its fleet of 60 Embraer (NYSE:ERJ) E190 jets. Unit costs for the 100-seat E190s have been a lot higher than JetBlue expected when it ordered the planes more than a decade ago. The carrier may choose to keep most or all of its E190s, but it could also decide to replace them, most likely with Embraer's next-generation E2-series jets or the CSeries jets developed by Bombardier.

A JetBlue Airways E190 jet on the tarmac

JetBlue is considering retiring its Embraer E190 jets ahead of schedule. Image source: JetBlue Airways.

If JetBlue decides to replace its E190s, doing so wouldn't break the bank. The company's aircraft commitments average $1.2 billion annually for the next six years. That's right in line with its 2017 capital spending of $1.2 billion. (Non-aircraft capex could add another $150 million-$200 million of annual spending.) Furthermore, these commitments include the purchase of 24 more E190 aircraft from Embraer between 2020 and 2022.

JetBlue will probably either cancel those Embraer orders or convert them to the state-of-the-art E190-E2 and E195-E2 jets. Either way, it already has some money built into its capex budget to pay for replacing its aging Embraer E190s. Furthermore, as JetBlue grows during the next few years, it will be able to afford higher annual capex.

Tax reform will boost earnings and cash flow

As I noted late last year, JetBlue is poised to be a big winner from U.S. corporate tax reform. The carrier expects its effective tax rate to decline to a range of 24%-26% in 2018, compared to an average of about 38% previously. This will boost EPS by about 20%.

The tax bill will also increase JetBlue's cash flow. Due to its relatively high capital spending, JetBlue will benefit from a provision of the new law that allows companies to deduct capital expenditures immediately for tax purposes through the end of 2022. This could reduce its cash tax bill to close to zero for the next five years.

JetBlue's annual report reveals that it paid cash taxes of $139 million last year and $173 million in 2016. Thus, the potential savings here is significant. With a lower tax burden, JetBlue will have more cash available to fund its share repurchases. This is just one more piece of good news for shareholders.

Adam Levine-Weinberg owns shares of Embraer and JetBlue Airways and is long January 2019 $10 calls on JetBlue Airways. The Motley Fool recommends Embraer and JetBlue Airways. The Motley Fool has a disclosure policy.