JetBlue Airways Corporation today reported its results for the second quarter of 2021:
- Reported GAAP diluted earnings per share of $0.20 in the second quarter of 2021 compared to diluted earnings per share of $0.59 in the second quarter of 2019. Adjusted loss per share was ($0.65)(1) in the second quarter of 2021 versus adjusted diluted earnings per share of $0.60(1) in the second quarter of 2019.
- GAAP pre-tax earnings of $57 million in the second quarter of 2021, compared to a pre-tax income of $236 million in the second quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($309) million(1) in the second quarter of 2021 versus adjusted pre-tax income of $238 million(1) in the second quarter of 2019.
Operational and Financial Highlights from the Second Quarter
- Reduced second quarter 2021 capacity by 15% year over two, which is in-line with our planning assumption.
- Second quarter 2021 revenue declined 29% year over two. Adjusted for a 1.5 point benefit from a renewed co-branded credit card agreement, the result is at the better end of our prior expectations of a 30 to 33% decline year over two. This was driven primarily by continued momentum in leisure demand throughout the quarter
- Operating expenses declined 27% year over two. Excluding special items, adjusted operating expenses declined 7%(1) year over two, which is in-line with our prior planning assumption. CASM ex-Fuel declined meaningfully from a 41% increase year over two in the first quarter, to a 19% increase in the second quarter.
- JetBlue’s Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Special Items (Adjusted EBITDA) in the second quarter of 2021 was ($86) million(1), better than the ($115) to ($165) million range previously expected. This was mainly the result of improving underlying revenue trends, the contribution from our co-branded agreement, and our discipline in controlling costs.
Balance Sheet and Liquidity
- During the quarter, JetBlue significantly reduced net debt(1) by $1.2 billion to $0.9 billion, which is now below pre-pandemic levels. As of June 30, 2021, JetBlue’s adjusted debt to capital was 55%(1).
- JetBlue ended the second quarter of 2021 with approximately $3.7 billion in unrestricted cash, cash equivalents, and short-term investments, or 46% of 2019 revenue.
- JetBlue repaid $89 million in regularly scheduled debt and finance lease obligations and fully repaid a term loan of $722 million during the second quarter of 2021.
Fuel Expense and Hedging
The realized fuel price in the second quarter 2021 was $1.91 per gallon, a 12% decline versus second quarter 2019 realized fuel price of $2.16.
As of July 27, 2021, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the third quarter of 2021. Based on the forward curve as of July 19, 2021, JetBlue expects an average all-in price per gallon of fuel of $2.09 in the third quarter of 2021.
JetBlue, Barclays, and Mastercard Renew Long-Term Partnership Agreement
Yesterday, JetBlue announced a multi-year extension of their co-branded credit card agreements with both Barclays and Mastercard. The partnership renewal will extend and expand JetBlue’s consumer credit card portfolio. The agreements will center on the continued delivery of innovative, digital-centric card offerings that meet consumer’s evolving needs and foster engagement and loyalty.
JetBlue currently estimates that the impact from the renewed agreement will deliver approximately an incremental one point to our annualized revenue and margin.
Our Recovery Plan and Actions Taken to Position JetBlue for Future Success
“In the second quarter, we saw strong signs that consumer confidence and travel demand is returning, with second quarter revenue doubling compared to the first quarter driven by pent-up demand,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“As we turn to recovery, we continued to generate positive cash from operations in the second quarter, and we expect continued improvement in our operating performance as we progress towards a full recovery. We are creating a path to restore our earnings power to beyond 2019 levels and generate long-term value for our owners in the years ahead. Our attention is now squarely on rebuilding our margins and repairing our balance sheet.”
Revenue and Capacity
“We are pleased to see further month-on-month improvement into the peak summer months, with demand momentum across all of our geographies. We ended the quarter with load factors in the mid-80s with June capacity largely back to pre-pandemic levels, compared to an average load factor in the mid-60s in the first quarter,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“For the third quarter of 2021, our planning assumption for revenue is a decline of between (4%) and (9%) year over two, another quarter of strong sequential improvement of approximately 20 points. We expect unit revenue to continue to improve on top of increasing capacity, with load factors in the mid-to-high 80s this summer. We have seen days with average load factors in the 90s.
For the third quarter of 2021, our planning assumption is for capacity to be between flat to down (3%) year over two, given the strong sequential improvement in demand. Throughout the pandemic, we have been nimble in adjusting our capacity deployment to the prevailing demand environment. We’ll maintain this approach given the continued uncertainty on the course of the pandemic caused by variants.”
Financial Performance and Outlook
“Our second quarter Adjusted EBITDA(1) came in better than the range we anticipated in early-June. This was mainly the result of improving underlying revenue trends, the benefit from our renewed co-branded agreement, and our discipline in controlling costs,” said Ursula Hurley, JetBlue’s Acting Chief Financial Officer.
“For the third quarter, we estimate our EBITDA will range between $75 and $175 million dollars, reflecting continued sequential improvement in demand partially offset by continued cost pressures from fuel prices, and airport rents and landing fees. We expect to remain in positive EBITDA territory through the end of the year, and expect to generate pre-tax profits in July and August.
We are committed to generating better than pre-pandemic earnings in the next few years by growing revenue and controlling costs, and we are confident that we are on the right path to expand margins in a sustainable way.
We are now squarely focused on repairing our balance sheet, lowering our total cost of debt, and growing our unencumbered asset base. We reduced our net debt by over 50% to under $1 billion dollars at the end of June. Both our net debt and weighted average cost of debt now sit below pre-pandemic levels.”
(1) Non-GAAP financial measure; Note A provides a reconciliation of non-GAAP financial measures used in this release and explains the reasons management believes that presentation of these non-GAAP financial measure provides useful information to investors regarding JetBlue’s financial condition and results of operations.
(2) The Company has not reconciled its Adjusted EBITDA planning assumptions to net income because net income (loss) is not accessible on a forward-looking basis. Items that impact net income (loss) are out of the Company’s control and/or cannot be reasonably predicted. Accordingly, a reconciliation to net income (loss) is not available without unreasonable effort.
Top Copyright Photo: JetBlue Airways Airbus A321-271NX WL N2086J (msn 10032) FLL (Andy Cripps). Image: 952648.
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