JetBlue Airways loses money in the fourth quarter

JetBlue Airways Corporation today reported its results for the fourth quarter of 2021:

  • Reported GAAP loss per share of ($0.40) in the fourth quarter of 2021 compared to diluted earnings per share of $0.56 in the fourth quarter of 2019. Adjusted loss per share was ($0.36)(1) in the fourth quarter of 2021 versus adjusted diluted earnings per share of $0.56(1) in the fourth quarter of 2019.
  • GAAP pre-tax loss of ($163) million in the fourth quarter of 2021, compared to a pre-tax income of $220 million in the fourth quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($145) million(1) in the fourth quarter of 2021 versus adjusted pre-tax income of $221 million(1) in the fourth quarter of 2019.

Operational and Financial Highlights from the Fourth Quarter

  • Capacity declined by 5.4% year over two, in-line with our planning assumption of a 4% to 7% decline, year over two.
  • Revenue declined 9.7% year over two, compared to our planning assumption of an 8% to 13% decline year over two. This was within the range of our initial assumptions despite a late quarter impact from the Omicron wave, driven by strong holiday peaks.
  • Operating expenses per available seat mile increased 14.4% year over two. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) (1) increased 16.3%(1) year over two. Consistent with the industry, our cost performance was impacted by incremental incentives and premium pay tied to the Omicron surge in case counts and the resulting operational impact, worth approximately two points of CASM ex-fuel in the quarter.
  • Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Special Items (Adjusted EBITDA) in the fourth quarter of 2021 was $31 million(1), towards the better end of our planning assumption range of ($50) to $50 million.

Balance Sheet and Liquidity

  • As of December 31, 2021, JetBlue’s adjusted debt to capital ratio was 53%(1).
  • JetBlue ended the fourth quarter of 2021 with approximately $2.8 billion in unrestricted cash, cash equivalents, and short-term investments, or 35% of 2019 revenue. This excludes our $550 million undrawn revolving credit facility.
  • JetBlue paid down approximately $100 million in regularly scheduled debt and finance lease obligations, and prepaid approximately $20 million in bank loans.

Fuel Expense and Hedging

  • The realized fuel price in the fourth quarter 2021 was $2.37 per gallon, a 14.2% increase versus fourth quarter 2019 realized fuel price of $2.07.
  • As of January 27, 2022, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the first quarter of 2022. Based on the forward curve as of January 14, 2022, JetBlue expects an average all-in price per gallon of fuel of $2.59 in the first quarter of 2022.

Northeast Alliance Expected to Deliver Competition and Customer Choice

  • Since the Northeast Alliance with American (NEA) was implemented in February 2021, JetBlue and American have collectively grown more quickly than the two largest competitors across New York and Boston. The airlines have launched the first phase of reciprocal loyalty benefits, are investing in a seamless travel experience and are now codesharing on 185 routes. Additionally, JetBlue will be fully operating out of LaGuardia’s (LGA) Terminal B when completed in summer 2022, providing easy connections for customers traveling on the Northeast Alliance.
  • JetBlue plans to launch two new BlueCities this summer – Asheville (AVL) and Vancouver (YVR). As part of our 2022 growth plans, JetBlue and American plan to offer up to 300 daily departures at JFK Airport, 195 of those operated by JetBlue – more flights than ever before. At LGA, JetBlue plans to operate approximately 50 of nearly 200 daily departures with American, more than tripling our 2019 flight count.

Paving a Path Towards Value Creation

“While Omicron has temporarily weighed on demand in the very near-term, we expect sequential month-on-month improvement through the quarter, ultimately returning to sustained profitability in the spring and beyond. Furthermore, were it not for Omicron, we believe we would have generated higher revenue this quarter than in the first quarter of 2019,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“I firmly believe that 2022 will prove to be a transformational year for JetBlue’s structural profitability, as we look to restore our earnings power and create value for our stakeholders. And we plan to achieve this by pulling meaningful commercial levers, keeping our relentless focus on costs, and maintaining our measured approach to capital allocation.”

Revenue and Capacity

“The surge in case counts disproportionately impacted the Northeast, hitting New York particularly hard, driving increased Customer cancellations and bookings softness during the most significant revenue weeks of the quarter, and also led to some Crew-related cancellations. Despite all of these challenges, our underlying revenue performance was very strong, which keeps us optimistic about the future as we continue to ramp up hiring efforts towards a fully staffed operation,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“For the first quarter of 2022, we expect revenue to decrease between 11% and 16% year over three. This sequential slowdown reflects the large negative impact from Omicron on Q1 demand. However, trends have largely stabilized and are improving across all geographies. As quickly as the Omicron variant swept through the Northeast, we are seeing cases rapidly decline and we expect sequential month-on-month improvement leading to a profitable Q2 and a very strong summer peak.

For the first quarter of 2022, we expect capacity to range between (1%) and 2% year over three. For the full-year 2022, we are planning to grow capacity between 11% and 15% versus 2019 as we bring aircraft utilization back towards pre-pandemic levels, while retaining flexibility. We expect the demand recovery to regain steam following the temporary setback tied to the Omicron variant. We’ll continue to be nimble and react to the environment.”

Financial Performance and Outlook

“We’re confident that we’re on a path to sequential pre-tax margin improvement with sustained profitability in the spring and beyond. We expect to achieve greater operating leverage as we grow revenue while continuing to improve our unit cost performance,” said Ursula Hurley, JetBlue’s Chief Financial Officer.

“For the first quarter of 2022, we estimate CASM ex-fuel(2) will increase between 13% to 15% year over three. For the full-year 2022, we expect CASM ex-fuel(2) to increase in the range of 1% to 5% versus 2019. We expect elevated unit costs in the first half, followed by a meaningful improvement in the second half of the year as we plan for our network, operation, and aircraft utilization to settle into a ‘new normal’ with optimal staffing levels, along with the ramp of our planned cost initiatives.

For the full-year, we have repaid a total of approximately $1.9 billion of debt. Our balance sheet continues to be among the strongest in the industry, and we’ll continue our balanced approach to capital allocation to drive shareholder value.”

Earnings Call Details

JetBlue will conduct a conference call to discuss its quarterly earnings today, January 27, 2022 at 10:00 a.m. Eastern Time. A live broadcast of the conference call will also be available via the internet at http://investor.jetblue.com. The webcast replay and presentation materials will be archived on the company’s website.

For further details see the Fourth Quarter 2021 Earnings Presentation available via the internet at http://investor.jetblue.com.

About JetBlue

JetBlue is New York’s Hometown Airline®, and a leading carrier in Boston, Fort Lauderdale-Hollywood, Los Angeles, Orlando and San Juan. JetBlue carries customers across the U.S., Caribbean and Latin America, and between New York and London. For more information, visit jetblue.com.

Notes

(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)

With respect to JetBlue’s CASM ex-fuel guidance, JetBlue is unable to provide a reconciliation of the non-GAAP financial measure to GAAP because the excluded items have not yet occurred and cannot be reasonably predicted. The reconciling information that is unavailable would include a forward-looking range of financial performance measures beyond our control, such as fuel costs, which are subject to many economic and political factors. Accordingly, a reconciliation to CASM is not available without unreasonable effort.