Category Archives: JetBlue Airways Corporation

JetBlue announces third quarter 2018 results

"Bluericua", a salute to Puerto Rico

JetBlue Airways Corporation today reported its results for the third quarter 2018:

  • Reported diluted earnings per share of $0.16, inclusive of $112 million in one-time costs related to the E190 fleet transition and the recently-signed pilot contract. Excluding these costs, adjusted diluted earnings per share of $0.43(1). This compares to JetBlue’s third quarter 2017 diluted earnings per share of $0.55.
  • GAAP pre-tax income of $68 million. Excluding the one-time costs, adjusted pre-tax income of $180 million(1), a decrease of 39.5% from the third quarter of 2017.
  • Pre-tax margin of 3.4%, inclusive of the one-time costs. Excluding these one-time costs, adjusted pre-tax margin of 9.0%(1), a 7.4 point decrease year over year.

Highlights from the Third Quarter 2018

  • Third quarter 2018 revenue per available seat mile (RASM) increased 1.7%, year over year, including 0.4 points of negative impact from severe weather during September.
  • Operating expenses per available seat mile, excluding fuel (CASM ex-fuel) growth of 3.2%, at the lower end of the updated guidance range of 3.0% to 5.0%. CASM ex-fuel for the third quarter includes a 2.0 point headwind related to recurrent costs of the pilot contract, effective as of August 1st.

Key Guidance for the Fourth Quarter and Full Year 2018:

  • Capacity is expected to increase between 7.5% and 9.5% year over year in the fourth quarter 2018. The fourth quarter guidance includes a previously-announced 2.0 point ASM reduction to mitigate the impact of higher fuel prices. For the full year 2018, JetBlue expects capacity to increase between 6.5% and 7.0%.
  • RASM growth is expected to range between 1.0% and 4.0% for the fourth quarter 2018 compared to the same period in 2017.
  • CASM ex-fuel is expected to decrease between (3.5)% and (1.5)% for the fourth quarter of 2018. CASM ex-fuel for the fourth quarter includes a 3.0 point headwind related to the pilot contract. For the full year 2018, JetBlue expects year over year CASM ex-fuel to be between 0.75% and 1.75%. The headwind from the pilot contract to CASM ex-fuel for the full year 2018 is expected to be equal to 1.3 points.

For further details see the latest Investor Update and the Third Quarter 2018 Earnings Presentation available via the internet at http://investor.jetblue.com.

JetBlue will conduct a conference call to discuss its quarterly earnings today, October 23, 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.

(1) Note A provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

Executing our Plan to Reach our EPS Commitments

“I’d like to thank our 22,000 Crewmembers, for all their hard work delivering the JetBlue experience to our Customers. Our financial performance was impacted by fuel prices that increased approximately 37% year over year. We are on track to hit our 2018 CASM ex-fuel guidance, despite pulling capacity in both the third and fourth quarters to adjust to higher fuel prices.

In the short term, we are focused on improving our earnings, particularly in the areas we can control, and have a plan to improve margins in 2019, and again in 2020. We are taking actions to recapture higher fuel costs through price – both with fare increases over recent months and through higher ancillary revenue initiatives. At our Investor Day in early October, we showed how our five building blocks will help us improve our margins and achieve our earnings target between $2.50 and $3.00 per share by 2020,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“Since 2014 we have a track record of executing our plans – and we have a path to continue improving our relative margins, starting in 2019. We have the culture, the brand and the geography we need to be successful,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

Revenue Performance and Outlook

Third quarter RASM increased 1.7%. Excluding the 0.4 point impact from severe weather during September, RASM was above the mid-point of our updated guidance of 1.0% to 3.0%. During the quarter we saw close-in demand trends improve across the network,” said Marty St. George, JetBlue’s EVP Commercial and Planning.

“We continued to grow our capacity on the lower end of our mid to high single digit range. For the fourth quarter, we expect capacity growth between 7.5 and 9.5 percent. Given the 2.9 points of lost capacity from hurricanes in the fourth quarter of 2017, our schedule-to-schedule capacity growth is approximately 6 percent for the fourth quarter of 2018. We expect to see some revenue benefits from the network changes and the ancillary revenue changes launched during the third quarter.”

Cost Performance, Outlook and Balance Sheet

Third quarter CASM ex-fuel was 3.2%, at the low end of the updated guidance of 3.0% to 5.0%, driven by improvements in unit maintenance costs. “We are on track to hit our 2018 plan despite the added pressure from reducing our capacity in the second half. We will continue to find opportunities to mitigate these pressures, in addition to the savings from the Structural Cost Program that build each quarter,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.

“We continue to see sequential improvement in our underlying non fuel costs, and reached an inflection point during the second half this year, as we execute our Structural Cost Program. We are confident we can deliver on our 2019 commitments made at Investor Day, and are on track to achieve our 0-1 CASM CAGR through 2020.”

Capital Allocation and Liquidity

JetBlue ended the quarter with approximately $937 million in unrestricted cash and short term investments, or about 12.6% of trailing twelve month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.

In its commitment to maintaining a balanced approach to capital allocation, JetBlue executed an additional $125 million in share repurchases during the quarter.

During the third quarter, JetBlue repaid $54 million in regularly scheduled debt and capital lease obligations, and raised $261 million in net proceeds in secured aircraft debt. JetBlue anticipates paying approximately $45 million in regularly scheduled debt and capital lease obligations in the fourth quarter and approximately $223 million for the full year 2018. JetBlue anticipates maintaining a 30-40% adjusted debt to cap range and liquidity between 10% and 12%.

Fuel Expense and Hedging

The realized fuel price in the quarter was $2.32 per gallon, a 36.6% increase versus third quarter 2017 realized fuel price of $1.69.

JetBlue entered into forward fuel derivative contracts to hedge approximately 7.7% of its fuel consumption during the fourth quarter of 2018. Based on the fuel curve as of October 15th, JetBlue expects an average price per gallon of fuel of $2.48 in the fourth quarter of 2018.

Notes

(1) Consolidated operating cost per available seat mile, excluding fuel and related taxes, and operating expenses related to other non-airline businesses (CASM Ex-Fuel) is a non-GAAP financial measure that we use to measure our core performance. Note A provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

Top Copyright Photo (all others by JetBlue): JetBlue Airways Airbus A320-232 N779JB (msn 3811) (Bluericua) LGB (Michael B. Ing). Image: 994011.

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JetBlue reports 3Q net income of $179 million

Special titles: JetBlue Airways' 200th Aircraft

JetBlue Airways Corporation on October 24, 2017 reported its results for the third quarter 2017:

  • Operating income of $310 million, a decrease of 12.4% from the third quarter of 2016.
  • Pre-tax income of $293 million, a decrease of 11.2% from the third quarter of 2016.
  • Third quarter net income of $179 million, or $0.55 per diluted share. This compares to JetBlue’s third quarter 2016 net income of $199 million, or $0.58 per diluted share.

Financial Performance

JetBlue reported third quarter operating revenues of $1.8 billion. Revenue passenger miles for the third quarter increased 2.3% to 12.2 billion on a capacity increase of 3.7%, resulting in a third quarter load factor of 85.1%, a 1.2 point decrease year over year.

Yield per passenger mile in the third quarter was 13.32 cents, up 1.0% compared to the third quarter of 2016. Passenger revenue per available seat mile (PRASM) for the third quarter of 2017 decreased 0.4% year over year to 11.34 cents and operating revenue per available seat mile (RASM) increased 0.9% year over year to 12.67 cents.

Compared with last year, operating expenses for the quarter increased 9.1%, or $125 million. Interest expense for the quarter declined 18.5%, or $5 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the third quarter increased 5.2% year over year to 10.50 cents. Excluding fuel, third quarter CASM1 increased 2.7% to 8.07 cents.

“Our third quarter results were impacted by two hurricanes that reduced our EPS by approximately 6 cents. We are confident that the adjustments we are making to our network will limit any ongoing financial impact in 2018. Despite the short-term challenges, we remain focused on our long-term margin commitments to our shareholders. I’d like to thank our 21,000 Crewmembers in our operation and support centers, who successfully managed the unprecedented challenge of over 30 consecutive days of irregular operations,” said Robin Hayes, JetBlue’s President and CEO.

Fuel Expense and Hedging

In the third quarter of 2017 JetBlue had hedges in place for approximately 10% of its fuel consumption. The realized fuel price in the quarter was $1.69 per gallon, a 14.6% increase versus third quarter 2016 realized fuel price of $1.48.

JetBlue has hedged approximately 10% of its fourth quarter of 2017 fuel consumption using jet fuel swaps. Based on the fuel curve as of October 13th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.83 in the fourth quarter of 2017.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $814 million in unrestricted cash and short term investments, or about 12% of trailing twelve month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.

During the third quarter, JetBlue repaid $53 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $57 million in regularly scheduled debt and capital lease obligations in the fourth quarter 2017 and approximately $194 million for the full year 2017. In the third quarter, JetBlue completed a $130 million accelerated share repurchase program and has completed $380 million in share repurchases to date in 2017.

“Despite unprecedented ATC challenges, repeated hurricane events, and a competitive industry pricing environment, we’ve been able to sustain solid margins, make progress towards our long-term margin commitments and return capital to our shareholders,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.

Fourth Quarter and Full Year Outlook

Capacity is expected to increase between 4.5% and 5.5% year over year in the fourth quarter 2017. For the full year 2017, JetBlue expects capacity to increase between 4.0% and 5.0%.

RASM growth is expected to range between (3.0%) and 0.0% for the fourth quarter 2017 compared to the same period in 2016.

CASM excluding fuel is expected to grow between 5.0% and 7.0% for the fourth quarter of 2017. For the full year 2017, JetBlue expects year over year CASM excluding fuel to grow between 4.0% and 5.0%.

Copyright Photo: JetBlue Airways Airbus A321-231 WL N942JB (msn 6279) (Prism – Our 200th Aircraft) JFK (Marcelo F. De Biasi). Image: 925119.

JetBlue reports net income of $198 million for the 3Q

JetBlue Airways Corporation (New York) today reported its results for the third quarter 2015:

Operating income of $351 million in the third quarter. This compares to operating income of $164 million in the third quarter of 2014.

Pre-tax income of $322 million in the third quarter. This compares to pre-tax income of $132 million in the third quarter of 2014.

Net income of $198 million, or $0.58 per diluted share. This compares to JetBlue’s third quarter 2014 net income of $79 million, or $0.24 per diluted share.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A320-232 N516JB (msn 1302) named “Royal Blue” prepares to depart from Long Beach.

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JetBlue Airways reports second quarter net income of $152 million

JetBlue Airways Corporation (New York) today reported its results for the second quarter 2015:

JetBlue Blueberries logo

 

  • Operating income of $282 million in the second quarter. This compares to operating income of $141 million in the second quarter of 2014.
  • Pre-tax income of $250 million in the second quarter. This compares to pre-tax income excluding special items1 of $103 million in the second quarter of 2014. On a GAAP basis, pre-tax income was $345 million in the second quarter of 2014, which included the gain on sale of JetBlue’s wholly-owned subsidiary LiveTV.
  • Net income of $152 million, or $0.44 per diluted share. This compares to JetBlue’s second quarter 2014 net income excluding special items1 of $61 million, or $0.19 per diluted share. On a GAAP basis, JetBlue’s second quarter 2014 net income was $230 million, or $0.68 per diluted share.
    Financial Performance

JetBlue reported record second quarter operating revenues of $1.6 billion. Revenue passenger miles for the second quarter increased 8.7% to 10.5 billion on a capacity increase of 7.5%, resulting in a second quarter load factor of 85.6%, an increase of 1.0 points year over year.

Yield per passenger mile in the second quarter was 14.28 cents, up 0.2% compared to the second quarter of 2014. Passenger revenue per available seat mile (PRASM) for the second quarter 2015 increased 1.4% year over year to 12.22 cents and operating revenue per available seat mile (RASM) increased 0.4% year over year to 13.17 cents.

Operating expenses for the quarter decreased 1.7%, or $22 million, over the prior year period. Interest expense for the quarter declined 15.8%, or $7 million, as JetBlue continues to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the second quarter decreased 8.6% year over year to 10.86 cents. Excluding fuel and profit sharing, second quarter CASM2 increased 0.6% to 7.56 cents.

Operational Performance

System on time departures, or D0, improved 1.7 points year-over-year in the second quarter. System arrival performance, or A14, also improved 3.3 points.

“We are very pleased to report strong second quarter results based on solid demand across our network, safe and efficient operations, and good cost control. I would like to thank our 17,000 crewmembers who continue to inspire humanity on a daily basis.” said Robin Hayes, JetBlue’s President and CEO.

Fuel Expense and Hedging

In the second quarter JetBlue had hedges in place for approximately 19% of its fuel consumption. This resulted in a realized fuel price of $2.13 per gallon, a 31% decrease versus second quarter 2014 realized fuel price of $3.09. JetBlue recorded $30 million in losses on fuel hedges settling during the second quarter.

JetBlue has hedged approximately 14% of its third quarter 2015 projected fuel requirements using a combination of jet fuel swaps and collars. Based on the fuel curve as of July 17th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.95 in the third quarter. For the fourth quarter, JetBlue has hedged approximately 15% of projected fuel consumption.

Liquidity and Cash Flow

JetBlue ended the quarter with $915 million in unrestricted cash and short term investments, or about 15% of trailing twelve month revenue. In addition, JetBlue maintains approximately $600 million in undrawn lines of credit.

During the second quarter, JetBlue repaid $39 million in regularly scheduled debt and capital lease obligations and prepaid $84 million in additional debt. JetBlue anticipates paying approximately $145 million in regularly scheduled debt and capital lease obligations during the remainder of 2015 and plans to continue to opportunistically prepay other debt. JetBlue expects to pay approximately $54 million in regularly scheduled debt and capital lease obligations in the third quarter of 2015.

In addition, on June 16 JetBlue entered into an Accelerated Share Repurchase program. JetBlue paid $150 million and received 6.1 million shares at the start of the program, with a subsequent adjustment upon close of the transaction. Ultimately, the total shares purchased by JetBlue will be based on the volume weighted average prices of JetBlue’s common stock during the term of the program.

“We posted another good quarter and continue to make progress strengthening our balance sheet.” said Mark Powers, JetBlue’s Chief Financial Officer. “Looking forward, the execution of the initiatives described at Investor Day last November will increase free cash flow and improve our return on invested capital.”

Third Quarter and Full Year Outlook

CASM excluding fuel and profit sharing is expected to increase between 1.0% and 3.0% in the third quarter 2015 and between zero and 1.5% percent for the full year. This represents a 0.5% reduction to the top end of our CASM excluding fuel and profit sharing guidance range.

Capacity is expected to increase between 8.5% and 10.5% in the third quarter 2015 and between 7.0% and 9.0% for the full year, consistent with prior guidance. At present, we anticipate ending the year at the higher end of our annual capacity guidance.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A321-231 N929JB (msn 6031), operating Mint service, arrives at Los Angeles International Airport (LAX).

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JetBlue Airways Corporation reports first quarter net income of $137 million

JetBlue Airways Corporation (New York) issued its first quarter financial report today:

JetBlue logo-2

JetBlue Airways Corporation today reported its results for the first quarter 2015:

Operating income of $253 million in the first quarter. This compares to operating income of $41 million in the first quarter of 2014

Pre-tax income of $222 million in the first quarter. This compares to pre-tax income of $6 million in the first quarter of 2014.

Net income of $137 million, or $0.40 per diluted share. This compares to JetBlue’s first quarter 2014 net income of $4 million, or $0.01 per diluted share.
Financial Performance

JetBlue reported record first quarter operating revenues of $1.5 billion. Revenue passenger miles for the first quarter increased 11.1% to 9.6 billion on a capacity increase of 9.6%, resulting in a first quarter load factor of 84.3%, an increase of 1.2 points year over year.

Yield per passenger mile in the first quarter was 14.64 cents, up 3.1% compared to the first quarter of 2014. Passenger revenue per available seat mile (PRASM) for the first quarter 2015 increased 4.5% year over year to 12.33 cents and operating revenue per available seat mile (RASM) increased 3.0% year over year to 13.34 cents.

Operating expenses for the quarter decreased 2.9%, or $38 million, over the prior year period. Interest expense for the quarter declined 8.9%, or $3 million, as JetBlue continues to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the first quarter decreased 11.3% year over year to 11.13 cents. Excluding fuel and profit sharing, first quarter CASM1decreased 1.9% to 7.95 cents.

Operational Performance

Despite a series of winter storms, which created operational challenges, system on time departures, or D0, improved 1.8 points year-over-year in the first quarter. System arrival performance, or A14, also improved 1.4 points.

“We posted strong first quarter results based on healthy demand across our network and a continued focus on cost control. Our 16,500 crewmembers delivered great customer service despite the challenges presented by winter storms. I’d like to thank all our Crewmembers for their hard work. They truly inspired humanity during this busy winter period.” said Robin Hayes, JetBlue’s President and CEO.

Fuel Expense and Hedging

In the first quarter JetBlue had hedges in place for approximately 21% of its fuel consumption. This resulted in a realized fuel price of $2.06 per gallon, a 34% decrease versus first quarter 2014 realized fuel price of $3.14. JetBlue recorded $35 million in losses on fuel hedges settling during the first quarter.

JetBlue has hedged approximately 20% of its second quarter 2015 projected fuel requirements using a combination of jet fuel swaps and collars. Based on the fuel curve as of April 20th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $2.11 in the second quarter. For the balance of the year beyond the second quarter, JetBlue has hedged approximately 14% of projected fuel consumption.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $1 billion in unrestricted cash and short term investments, or about 17% of trailing twelve month revenue. In addition, JetBlue maintains $600 million in undrawn lines of credit.

During the first quarter, JetBlue repaid approximately $55 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $216 million in regularly scheduled debt and capital lease obligations during the remainder of 2015 and plans to continue to opportunistically prepay other debt. JetBlue expects to pay approximately $43 million in regularly scheduled debt and capital lease obligations in the second quarter of 2015.

“JetBlue had a strong first quarter despite challenging winter weather conditions.” said Mark Powers, JetBlue’s Chief Financial Officer. “As we look forward, we expect to implement the return accretive initiatives we outlined at Investor Day and improve the balance sheet while continuing to reinvest in our business.”

Second Quarter and Full Year Outlook

For the second quarter of 2015, CASM excluding fuel and profit sharing is expected to increase between 1.0% and 3.0% versus the year-ago period. Excluding fuel and profit sharing, CASM for the full year 2015 is forecasted to grow between zero and two percent year over year.

Capacity is expected to increase between 5.5% and 7.5% in the second quarter 2015 and between 7.0% and 9.0% for the full year, in line with prior guidance.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A320-232 N793JB (msn 4647) in the Barcode tail design lands at the focus city of Long Beach.

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JetBlue reports record second quarter earnings

JetBlue Airways Corporation (JetBlue Airways) (New York) today reported its results for the second quarter 2014:

Pre-tax income excluding special items1 of $103 million in the second quarter. This compares to pre-tax income of $60 million in the second quarter of 2013.

Gain of $242 million from the sale of its wholly-owned subsidiary LiveTV.

On a GAAP basis, pre-tax income of $345 million in the second quarter.

Net income excluding special items for the second quarter was $61 million, or $0.19 per diluted share.

This compares to JetBlue’s second quarter 2013 net income of $36 million, or $0.11 per diluted share.

On a GAAP basis, net income for the second quarter was $230 million, or $0.68 per diluted share.

“Today, we are pleased to report record second quarter earnings and our seventeenth consecutive quarter of profitability,” said Dave Barger, JetBlue’s Chief Executive Officer. “We saw improved profitability across our network, reflecting the success of ongoing efforts to adapt our products and services to meet our customers’ ever-changing needs. I would like to thank our 15,500 crewmembers for their dedication to running a safe airline and delivering outstanding service to our customers.”

Operational Performance

JetBlue reported record second quarter operating revenues of $1.5 billion. Revenue passenger miles for the second quarter increased 5.7% to 9.6 billion on a capacity increase of 6.0%, resulting in a second quarter load factor of 84.6%, a decrease of 0.3 points year over year.

Yield per passenger mile in the second quarter was 14.25 cents, up 6.3% compared to the second quarter of 2013. Passenger revenue per available seat mile (PRASM) for the second quarter 2014 increased 6.0% year over year to 12.05 cents and operating revenue per available seat mile (RASM) increased 5.6% year over year to 13.12 cents. The shift of the Easter and Passover holidays from March last year to April this year positively impacted second quarter year over year PRASM by approximately two points.

Operating expenses for the quarter increased 9.8%, or $119 million, over the prior year period. Interest expense for the quarter declined 7.5%, or $3 million, due to JetBlue’s focus on debt reduction. JetBlue’s operating expense per available seat mile (CASM) for the second quarter increased 3.5% year over year to 11.88 cents. Excluding fuel and profit sharing, CASM2 increased 5.1% to 7.51 cents.

“We improved margin performance while expanding our network, demonstrating the core strength of our business,” said Robin Hayes, JetBlue’s President. “We remain focused on providing a differentiated product and culture in high-value geography while maintaining competitive costs. We believe this focus will drive improved returns for our shareholders.”

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, in the second quarter JetBlue had in place hedges for approximately 15% of its fuel consumption and managed approximately 7% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realized fuel price of $3.09 per gallon, a 0.9% increase over second quarter 2013 realized fuel price of $3.06. JetBlue recorded $2 million in losses on fuel hedges that settled during the second quarter.

JetBlue has managed approximately 30% of its third quarter projected fuel requirements using a combination of FFPs, jet fuel swaps and caps. Based on the fuel curve as of July 17th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.08 in the third quarter.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $797 million in unrestricted cash and short term investments. In addition, JetBlue maintains $550 million in lines of credit.

During the second quarter, JetBlue repaid approximately $44 million in regularly scheduled debt and capital lease obligations. In addition, JetBlue pre-paid approximately $300 million in debt with the proceeds from the sale of LiveTV. JetBlue plans to repay approximately $185 million in regularly scheduled debt and capital lease obligations in the remainder of 2014, including approximately $58 million in the third quarter.

“We continued to strengthen the balance sheet by paying down debt while enhancing access to liquidity by increasing the number of unencumbered aircraft,” said Mark Powers, JetBlue’s Chief Financial Officer. “We believe these actions will help us maintain a relatively flat invested capital base this year while growing assets, which we expect will help us meet our return on invested capital goal.”

Third Quarter and Full Year Outlook

For the third quarter of 2014, CASM is expected to increase between 0.5% and 2.5% versus the year-ago period. Excluding fuel and profit sharing, CASM in the third quarter is expected to increase between 1.0% and 3.0% year over year.

CASM for the full year is expected to increase between 1.0% and 3.0% over full year 2013. Excluding fuel and profit sharing, CASM in 2014 is expected to increase between 2.5% and 4.5% year over year. Relative to JetBlue’s previous cost outlook, this full year guidance reflects approximately a one point reduction in unit costs excluding fuel and profit sharing primarily due to a reduction of operating expenses in the second half of the year as a result of the sale of LiveTV.

Capacity is expected to increase between 3.0% and 5.0% in the third quarter. For the full year, capacity is expected to increase between 4.0% and 6.0%.

Bloomberg Businessweek: JetBlue considers charging for the first checked bag: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. Airbus A320-232 N709JB (msn 3488) in the special one-off “Binary Code” livery arrives in New York (JFK).

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JetBlue Airways Corporation reports first quarter net income of only $4 million

JetBlue Airways Corporation (JetBlue Airways) (New York) today reported its results for the first quarter 2014:

Operating income of $41 million in the first quarter. This compares to operating income of $59 million in the first quarter of 2013.

Pre-tax income of $6 million in the first quarter. This compares to pre-tax income of $23 million in the first quarter of 2013.

Net income for the first quarter was $4 million, or $0.01 per diluted share. This compares to JetBlue’s first quarter 2013 net income of $14 million, or $0.05 per diluted share.

“Today, we reported our sixteenth consecutive quarter of profitability,” said Dave Barger, JetBlue’s Chief Executive Officer. “While first quarter results were negatively impacted by severe winter weather in the Northeast, we believe our maturing network in high-value geography together with our differentiated product and service will help JetBlue expand margins and improve shareholder returns in 2014.”

Operational Performance

JetBlue reported record first quarter operating revenues of $1.3 billion despite severe winter weather in the Northeast. JetBlue cancelled 4,100 flights during the quarter, which reduced revenue by an estimated $50 million and reduced operating income by approximately $35 million. Revenue passenger miles for the first quarter increased 1.8% to 8.7 billion on a capacity increase of 2.7%, resulting in a first quarter load factor of 83.1%, a decrease of 0.8 points year over year.

Yield per passenger mile in the first quarter was 14.20 cents, up 1.8% compared to the first quarter of 2013. Passenger revenue per available seat mile (PRASM) for the first quarter 2014 increased 0.9% year over year to 11.80 cents and operating revenue per available seat mile (RASM) increased 1.1% year over year to 12.95 cents. The shift of the Easter and Passover holidays from March last year to April this year negatively impacted first quarter year over year PRASM by approximately three points.

“We achieved year over year improvements in yield and fare while growing capacity — demonstrating the core strength of our business,” said Robin Hayes, JetBlue’s President. “With a solid demand environment and continued focus on ancillary revenue initiatives, we expect year over year unit revenue growth to accelerate in the second quarter.”

Operating expenses for the quarter increased 5.5%, or $68 million, over the prior year period. Interest expense for the quarter declined 8.3%, or $4 million, due to JetBlue’s focus on debt reduction. JetBlue’s operating expense per available seat mile (CASM) for the first quarter increased 2.6% year over year to 12.55 cents. Excluding fuel and profit sharing, CASM increased 6.3% to 8.10 cents driven mainly by capacity reductions and higher non-fuel operating expenses associated with severe winter weather.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, during the first quarter JetBlue hedged approximately 16% of its fuel consumption and managed approximately 8% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realized fuel price of $3.14 per gallon, a 4.4% decrease over first quarter 2013 realized fuel price of $3.29. JetBlue recorded $1 million in losses on fuel hedges that settled during the first quarter.

JetBlue has managed approximately 22% of its second quarter projected fuel requirements using a combination of FFPs, jet fuel swaps and caps. Based on the fuel curve as of April 16th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.11 in the second quarter.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $771 million in unrestricted cash and short term investments. In addition, JetBlue maintains $550 million in lines of credit.

During the first quarter, JetBlue repaid $237 million in debt and capital lease obligations. JetBlue plans to repay approximately $481 million in debt and capital lease obligations in 2014, including approximately $48 million in the second quarter.

JetBlue remains committed to improving its return on invested capital (ROIC) by an average of one percentage point per year. “We remain focused on growing unit revenues while maintaining our cost advantage and strengthening the balance sheet,” said Mark Powers, JetBlue’s Chief Financial Officer. “To that end, we plan to use the net proceeds from the pending sale of our wholly-owned subsidiary LiveTV to prepay debt and for other ROIC-accretive actions.”

Second Quarter and Full Year Outlook

For the second quarter of 2014, CASM is expected to be increase between 3.5% and 5.5% versus the year-ago period. Excluding fuel and profit sharing, CASM in the second quarter is expected to increase between 4.5% and 6.5% year over year.

CASM for the full year is expected to increase between 2.0% and 4.0% over full year 2013. Excluding fuel and profit sharing, CASM in 2014 is expected to increase between 3.5% and 5.5% year over year.

JetBlue expects approximately 1.5 points of this year over year unit cost increase to be driven by capacity reductions resulting from (1) reallocation of aircraft from longer haul routes to support new service in Washington Reagan National Airport and (2) first quarter weather-related cancellations.

Capacity is expected to increase between 5.5% and 7.5% in the second quarter. For the full year, capacity is expected to increase between 4.0% and 6.0%.

Copyright Photo: Mark Durbin/AirlinersGallery.com. Airbus A320-232 N615JB (msn 2461) in the FDNY special livery taxies at San Francisco International Airport (SFO).

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