JetBlue Airways Corporation today reported its results for the third quarter of 2021:
- Reported GAAP diluted earnings per share of $0.40 in the third quarter of 2021 compared to diluted earnings per share of $0.63 in the third quarter of 2019. Adjusted loss per share was ($0.12)(1) in the third quarter of 2021 versus adjusted diluted earnings per share of $0.59(1) in the third quarter of 2019.
- GAAP pre-tax earnings of $190 million in the third quarter of 2021, compared to a pre-tax income of $254 million in the third quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($50) million(1) in the third quarter of 2021 versus adjusted pre-tax income of $239 million(1) in the third quarter of 2019.
Operational and Financial Highlights from the Third Quarter
- Capacity declined by 0.8% year over two, in-line with our planning assumption of a 1% decline, year over two.
- Revenue declined 5.5% year over two, which is better than our planning assumption of a 6% to 9% decline year over two. This was mainly the result of continued outperformance of our Fare Options initiative, as well as an uptick in demand as we closed out the quarter.
- Operating expenses per available seat mile decreased 2.1% year over two. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) (1) increased 12.7%(1) year over two, which is in-line with our planning assumption of an 11% to 13% increase year over two.
- Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Special Items (Adjusted EBITDA) in the third quarter of 2021 was $140 million(1), better than our planning assumption range of $75 to $125 million.
Balance Sheet and Liquidity
- As of September 30, 2021, JetBlue’s adjusted debt to capital was 53%(1).
- JetBlue ended the third quarter of 2021 with approximately $3.3 billion in unrestricted cash, cash equivalents, and short-term investments, or 41% of 2019 revenue. This excludes our $550 million undrawn revolving credit facility.
- JetBlue repaid $74 million in regularly scheduled debt and finance lease obligations, and prepaid the $115M CARES Act loan and $105M of bank loans.
Fuel Expense and Hedging
- The realized fuel price in the third quarter 2021 was $2.08 per gallon, a 1.2% increase versus third quarter 2019 realized fuel price of $2.06.
- As of October 26, 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 October 15, 2021, JetBlue expects an average all-in price per gallon of fuel of $2.49 in the fourth quarter of 2021.
Accelerating ESG Efforts and Doubling Down On Commitments
- At JetBlue, we firmly believe that robust ESG oversight generates value for shareholders. We’ve been transparently reporting on key ESG topics since 2007, with annual ESG reports aligned to SASB and TCFD reporting frameworks since 2017.
- JetBlue continues to lead the industry in ESG governance, as the first U.S. airline to tie executive compensation to ESG metrics, execute a sustainability-linked loan, and operate an ESG Subcommittee of our Board of Directors.
- Enabled by our recent deals with SG Preston, Neste, World Energy, and World Fuel Services, we are well ahead of pace to achieve our target of 10 percent SAF usage by 2030.
- Launched two new programs, Gateway College and Jet Ops to Support Pathway Program, aimed at investing in our crewmembers and provide better access to careers as pilots, in technical ops and support centers.
- We updated our uniform policy to be more inclusive, including changes to gendered uniforms, size options and hair-style policy.
- Following a devastating earthquake in Haiti, we transported over 14,000 pounds of supplies and over 150 volunteers from around our operation to support relief efforts.
- We distributed over 10,000 books to our communities through our JetBlue For Good program Soar with Reading.
- We logged over 6,400 hours of volunteering service during the third quarter.
The Northeast Alliance Supercharges Competition and Delivers Broader Benefits
- The Northeast Alliance has supercharged competition in the Northeast by providing more choices and better service for customers.
- Together with American, JetBlue launched 58 new routes out of the Northeast, added frequencies on more than 130 routes, and plans to expand to 18 new international destinations.
- The Northeast Alliance is estimated to generate more than $800 million in consumer benefits annually. JetBlue plans to hire 1,800 new crewmembers for the NEA – jobs that otherwise would not be created without this alliance.
Our Recovery Plan and Actions Taken to Position JetBlue for Future Success
“As we work through our annual planning process, our teams are setting solid goals for our network, commercial and cost initiatives, and capital allocation priorities. I could not be more proud of our team’s efforts, and I’m confident that we are setting JetBlue on a trajectory to restore our earnings power to beyond 2019 levels over the coming years, generating long-term value for all of our stakeholders,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“We believe that demand is once again poised to re-accelerate into the peak holiday periods and beyond as people continue to adjust to a new normal. We are marching towards a full recovery and a return to sustained profitability, with margin as our ‘north star’. I am a firm believer that our unique business model – low costs, low fares, and a superior product – positions JetBlue to thrive in the years ahead.”
Revenue and Capacity
“I am very pleased with our exceptionally strong revenue performance in the third quarter. September took the brunt of the bookings softness associated with rising case counts tied to the Delta variant. That said, trends have stabilized and are improving. We expect robust revenue acceleration throughout the quarter as the holidays approach and demand continues to meaningfully improve,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“For the fourth quarter, we are planning for revenue to decline between (8%) and (13%) year over two. We expect troughs to be challenging, exacerbated by a slower business travel recovery, but the holidays are performing meaningfully better, and we took tactical capacity actions to better align with the demand environment.
For the fourth quarter of 2021, our planning assumption is for capacity to decline between (4%) and (7%) year over two, given the seasonal pull-back in leisure demand and a corporate travel recovery that has been pushed back. As we move through the recovery, we’ll continue to be nimble in deploying capacity to areas of demand strength. Our network is one of our greatest assets, and we’ll continue to build relevance across our Focus Cities to serve our Customers and achieve long-term success.”
Financial Performance and Outlook
“Our third quarter revenue and Adjusted EBITDA(1) came in above the high-end of the ranges we expected in early-September. This was largely driven by stronger than expected performance of Fare Options and a mid-September pick-up in bookings, which drove a revenue result in the third quarter that we believe to be among the best in the industry,” said Ursula Hurley, JetBlue’s Chief Financial Officer.
“For the fourth quarter, we estimate our EBITDA(2) will range between negative ($50) million to positive $50 million dollars. This sequential decrease is due to the seasonal leisure demand pattern, pressure from the recent material spike in fuel prices, as well as ramp-up related labor costs.
Our teams continue to work diligently to improve our cost structure and mitigate the near-term pressures we are facing as we restore the business and invest for our long-term earnings power. We continue to expect CASM ex-Fuel to improve from a double-digit growth rate in the second half of 2021 to low-single-digit growth in 2022, versus 2019 levels.
We continue to make good progress in returning our balance sheet to investment grade credit metrics. Looking ahead, we plan to maintain a balanced approach to capital allocation to help achieve our financial targets, enabled by our relatively strong balance sheet which we believe ranks among the best in the industry.”
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.
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.