Last month, JetBlue Airways (NASDAQ:JBLU) reported strong second-quarter earnings and offered a bullish forecast for the third quarter. Investors were pleased, sending JetBlue stock modestly higher, and most analysts raised their full-year earnings estimates for 2019 and 2020.

That said, even after these forecast revisions, the average analyst estimate for 2020 earnings per share stands at just $2.45. While that would be a huge improvement over JetBlue's 2018 adjusted EPS of $1.55, it still implies that the company will fall short of its 2020 EPS guidance range of $2.50 to $3.00. Furthermore, JetBlue stock trades for just eight times the average analyst estimate, suggesting that many investors have even gloomier outlooks.

However, JetBlue has several major earnings growth drivers set to ramp up over the next few quarters. This could allow the company to exceed analysts' expectations in 2020 -- and continue to deliver strong earnings growth in 2021 and beyond.

Revenue initiatives have barely gotten started

At its investor day last fall, JetBlue described a number of revenue and cost initiatives that it said would drive substantial earnings growth by 2020. Some of these earnings drivers are already helping -- as seen in the airline's Q2 performance -- but much of the expected benefit will come in 2020.

A JetBlue Airways plane preparing to land

JetBlue's earnings growth is already taking off. Image source: JetBlue Airways.

For example, last fall, JetBlue began reallocating capacity from underperforming routes to its best markets. It has continued these efforts in 2019. JetBlue expects a total annual revenue benefit of $100 million to $120 million, with at least half of that coming in 2020 rather than 2019.

JetBlue should see an even bigger benefit from introducing a version of "basic economy" fares as part of its next-generation fare options platform. The changes are set to launch in late 2019 and reach a steady-state annual revenue lift of $125 million to $175 million in late 2020 or early 2021. Thus, this key revenue initiative will have a negligible impact on JetBlue's 2019 results, with most of the benefit coming next year and the rest bleeding into 2021.

There are also several smaller revenue growth initiatives in the works at JetBlue that should provide some incremental revenue gains in 2020 compared to 2019.

Cost savings initiatives are still in the early innings, too

JetBlue's profit improvement plan also calls for substantial cost reductions. A structural cost program designed to reduce costs by $250 million to $300 million annually by the end of 2020 is one piece of the puzzle.

In conjunction with its Q2 earnings report, JetBlue CFO Steve Priest noted that the carrier had achieved 2020 run-rate savings of $257 million, up from $199 million two quarters earlier. However, it's important to note that this figure tracks savings locked in by contracts, not savings already flowing to the bottom line. Much of the cost savings locked in thus far will start hitting the bottom line within the next year.

The interior of a renovated JetBlue aircraft

JetBlue is working on numerous initiatives to reduce its unit costs. Image source: JetBlue Airways.

Other unit cost reductions will come from adding 12 additional seats of each of JetBlue's A320s and adding ultra-fuel-efficient 200-seat Airbus A321neos to the fleet. However, the A321neo deliveries have been delayed due to production problems. JetBlue has only received one so far -- and it isn't even in service yet -- with five more expected to arrive in the second half of 2019. Originally, JetBlue was supposed to add 13 A321neos to its fleet this year. The delays are set to continue into 2020.

Because of these delivery delays, JetBlue has had to slow the pace of A320 retrofits. It still hopes to finish the project by the end of 2020, but only 50 of its 130 A320s will be updated by the end of this year.

This means that JetBlue will get very little of the expected benefit from its fleet initiatives in 2019. Even in 2020, it will only get a portion of the expected fuel savings and productivity gains. Nevertheless, JetBlue expects its nonfuel unit costs to decline next year.

Massive room for earnings growth

JetBlue bears have pointed out that the carrier faces rising competition in some of its key growth markets, particularly Boston. However, the Boston air travel market is underserved right now, so the additional capacity coming in from Delta Air Lines may not hurt JetBlue as much as some of the skeptics fear.

Moreover, JetBlue's basic economy rollout, gains from its route network changes, and unit cost reductions should provide a combined earnings tailwind totaling hundreds of millions of dollars in 2020. That will more than offset the impact of increased competitive pressure in certain markets.

Barring a spike in oil prices or some other major macroeconomic shock, JetBlue appears to be well positioned to achieve its 2020 earnings target, with adjusted EPS of at least $2.50 (and probably higher). With the benefit from some of its initiatives bleeding into 2021, the carrier should be able to continue its strong earnings growth in that year.

Looking further ahead, additional A321neo deliveries and the retirement of JetBlue's E190s in favor of the ultra-efficient Airbus A220-300 provide plenty of earnings upside through 2025. That makes JetBlue stock look like a steal at its current price below $20.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.