Category Archives: JetBlue Airways Corporation

JetBlue Airways to acquire 12 slot pairs at Washington Reagan National Airport, reports fourth quarter and 2013 financial results

JetBlue Airways (New York) has been informed that its bid for 12 slot pairs at Ronald Reagan Washington National Airport (DCA) has been provisionally accepted. These assets became available as a result of divestitures mandated by the U.S. Department of Justice (DOJ) in the American Airlines-US Airways merger.

Once approved by DOJ, JetBlue expects to add 12 new roundtrip flights at Washington’s popular, close-in airport. The airline plans to introduce nonstop service to cities it does not currently serve from DCA, expanding the benefits of its award-winning service to more communities, as well as add more flights on some existing routes.

JetBlue first entered the Reagan National market in 2010 and today offers 18 daily roundtrip flights to Boston, Fort Lauderdale/Hollywood, Orlando, Tampa, as well as the airport’s only nonstop service to San Juan, Puerto Rico. With its new slots, JetBlue will operate up to 30 roundtrips per day at DCA.

On the financial side, JetBlue Airway Corporation issued its financial report for the fourth quarter and the entire year of 2013:

JetBlue Airways Corporation reported its results for the fourth quarter and full year 2013:

Operating income of $115 million in the fourth quarter. This compares to operating income of $44 million in the fourth quarter of 2012. For the full year 2013, JetBlue reported operating income of $428 million. This compares to operating income of $376 million for the full year 2012.

Pre-tax income of $77 million in the fourth quarter. This compares to pre-tax income of $1 million in the fourth quarter of 2012. For the full year 2013, JetBlue reported pre-tax income of $279 million. This compares to a pre-tax income of $209 million for the full year 2012.

Net income for the fourth quarter was $47 million, or $0.14 per diluted share. This compares to JetBlue’s fourth quarter 2012 net income of $1 million, or $0.00 per diluted share. For the full year 2013, JetBlue reported net income of $168 million, or $0.52per diluted share. This compares to net income of $128 million, or $0.40 per diluted share for the full year 2012.

Operational Performance

JetBlue reported record fourth quarter operating revenues of $1.4 billion. Revenue passenger miles for the fourth quarter increased 7.1% to 8.7 billion on a capacity increase of 8.3%, resulting in a fourth quarter load factor of 80.9%, a decrease of 1.0 point year over year.

Yield per passenger mile in the fourth quarter was 14.35 cents, up 6.5% compared to the fourth quarter of 2012. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2013 increased 5.3% year over year to 11.62 cents and operating revenue per available seat mile (RASM) increased 5.6% year over year to 12.77 cents.

Operating expenses for the quarter increased 8.7%, or $100 million, over the prior year period. Interest expense for the quarter declined 8.4%, or $5 million as a result of JetBlue’s debt reduction strategy. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter increased 0.4% year over year to 11.70 cents. Excluding fuel and profit sharing, CASM increased 0.6% to 7.30 cents.

Over the course of 2013, JetBlue improved its return on invested capital (ROIC) to 5.3%. “We remain committed to improving ROIC by one percentage point per year on average,” said Mark Powers, JetBlue’s Chief Financial Officer. “We recognize that while we have more work to do to improve returns, we believe we have a plan in place to achieve these goals in 2014.”

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, during the fourth quarterJetBlue hedged approximately 28% of its fuel consumption and managed approximately 12% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realized fuel price of $3.10 per gallon, a 3.1% decrease over fourth quarter 2012 realized fuel price of $3.20. JetBluerecorded $3 million in losses on fuel hedges that settled during the fourth quarter.

JetBlue has managed approximately 24% of its first quarter projected fuel requirements using a combination of FFPs, jet fuel swaps and caps. Based on the fuel curve as of January 23rd, JetBlueexpects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of$3.13 in the first quarter.

Liquidity and Cash Flow

JetBlue ended the year with approximately $627 million in unrestricted cash and short term investments. In addition, JetBlue maintains $550 million in undrawn lines of credit. For the full year 2013, JetBlue generated $758 million of operating cash flow and had capital expenditures of $637 million, including $453 million of aircraft investments. As a result, JetBlue generated $121 million in free cash flow in 2013.

During 2013, JetBlue repaid $510 million in debt and capital lease obligations, including approximately $248 million in the fourth quarter. In addition, JetBlue prepaid approximately $94 million of aircraft related debt in December. JetBlue recorded a $3 million loss in non-operating income during the quarter in connection with this prepayment. JetBlue expects this transaction will generate $25 million in interest expense savings over the next six years. JetBlue plans to repay approximately $470 million in debt and capital lease obligations in 2014, including approximately$235 million in the first quarter.

JetBlue has increased its pool of unencumbered aircraft from one to 23 and decreased its total debt balance by approximately $550 million since 2011, thereby decreasing the financial risk in the business. “We remain focused on continuing to strengthen our balance sheet as we expect to continue to generate free cash flow and purchase aircraft with cash in 2014,” said Mr. Powers.

First Quarter and Full Year Outlook

JetBlue expects first quarter results to be adversely impacted by severe weather in the Northeast during the beginning of January, which resulted in the cancellation of approximately 1,800 flights. The severe weather reduced JetBlue’s total revenue by an estimated $45 million and reduced operating income for the first quarter by approximately $30 million.

For the first quarter of 2014, CASM is expected to be increase between 0.0% and 2.0% versus the year-ago period. Excluding fuel and profit sharing, CASM in the first quarter is expected to increase between 3.0% and 5.0% 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 3.0% and 5.0% year over year.

Capacity is expected to increase between 2.5% and 4.5% in the first quarter. For the full year, capacity is expected to increase between 5.0% and 7.0%.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Embraer ERJ 190-100 IGW N316JB (msn 19000291) completes the River Approach into Reagan National Airport on the Virginia side of the Potomac River.

JetBlue Airways:

JetBlue adjusts its fleet plans to larger planes, reports a 3Q net profit of $71 million

JetBlue Airways Corporation (JetBlue Airways) (New York) today announced plans to optimize its fleet, including:

Deferral of 24 Embraer ERJ 190 aircraft from 2014-2018 to 2020-2022, reducing capital expenditures over the near term.
Conversion of 18 Airbus A320 positions to A321s, better matching capacity with growing network demand in key markets while reducing unit costs.
An incremental order for 15 A321ceo and 20 A321neo aircraft, providing increased fleet flexibility and offering up to 15 percent in fuel burn savings.
Sharklet retrofit of up to 110 Airbus A320s in current fleet beginning in 2015.

“We believe these fleet changes will provide increased ability to match capacity and demand throughout our network and reduce costs, leading to improved shareholder returns over the long term,” said JetBlue President and CEO Dave Barger.

As a result of the fleet adjustments noted above, JetBlue will optimize its Embraer ERJ 190 fleet to approximately 60 aircraft in the near term.

“While the E190 is critical to our continued success in Boston and San Juan, we are now at the point where our network growth calls for larger gauge aircraft,” Mr. Barger said. “In addition to allowing us to more cost-effectively serve certain high density markets, we believe our fleet restructuring plan will allow us to accelerate attractive growth opportunities at Fort Lauderdale/Hollywood International Airport.”

JetBlue has converted 18 A320s to A321s. The A321 is expected to have unit costs 10 to 15 percent lower than those of the A320 aircraft it will replace, driven in part by a 10 to 15 percent improvement in fuel consumption per seat. “With significant savings from increased fuel efficiency and better utilization of our airport slot portfolio in key markets, we believe these A321 aircraft will improve our company’s profitability,” Mr. Barger said.

The fleet changes announced today will enable JetBlue to add 15 incremental A321ceo aircraft to its fleet by 2017, while deferring 24 E190 aircraft. “With today’s announcement, we are reducing our capital commitments through the next three years, which is consistent with our free cash flow and return on invested capital goals,” said JetBlue Chief Financial Officer Mark Powers.

In addition, JetBlue has placed an order for 20 A321neo aircraft for delivery beginning in 2018. Fuel savings associated with the new engine option A320 family is forecast to be approximately 12 to 15 percent compared to the current engine option A320 family.

JetBlue expects to retrofit up to 110 Airbus A320s in its existing fleet with sharklets beginning in 2015. Sharklets are expected to reduce fuel consumption by up to three percent.

Estimated Aircraft Delivery Schedule (2013-2022):

	4Q13	14	15	16	17	18	19	20	21	22
A320ceo (former order)	–	–	–	3	8	–	–	–	–	–
A320ceo (current order)	–	–	–	3	–	–	–	–	–	–
A320ceo change	–	–	–	–	(8)	–	–	–	–	–

A320neo (former order)	–	–	–	–	–	10	10	10	10	–
A320neo (current order)	–	–	–	–	–	5	–	9	16	–
A320neo change	–	–	–	–	–	(5)	(10)	(1)	6	–

A321ceo (former order)	4	9	10	7	–	–	–	–	–	–
A321ceo (cur order)*	4	9	12	12	15	1	–	–	–	–
A321ceo change	–	–	2	5	15	1	–	–	–	–

A321neo (former order)	–	–	–	–	–	–	–	–	–	–
A321neo (cur order)**	–	–	–	–	–	9	15	6	–	–
A321neo change	–	–	–	–	–	9	15	6	–	–

E190 (former order)	1	1	7	8	5	3	–	–	–	–
E190 (current order)	1	–	–	–	–	–	–	10	7	7
E190 change	–	(1)	(7)	(8)	(5)	(3)	–	10	7	7

Total fleet change	–	(1)	(5)	(3)	2	2	5	15	13	7

* JetBlue converted 8 A320ceo positions to A321ceo positions including 7 in 2017 and 1 in 2018
** JetBlue converted 10 A320neo positions to A321neo positions including 5 in 2018 and 5 in 2019

On the financial side, the company issued this report:

JetBlue Airways Corporation today reported its results for the third quarter 2013:

Operating income for the quarter was $152 million, resulting in a 10.5% operating margin. This compares to operating income of $113 million and an 8.6% operating margin in the third quarter of 2012.
Pre-tax income for the quarter was $119 million. This compares to pre-tax income of $73 million in the third quarter of 2012.
Net income for the third quarter was $71 million, or $0.21 per diluted share. This compares to JetBlue’s third quarter 2012 net income of $45 million, or $0.14 per diluted share.

“We are pleased to report our highest ever quarterly earnings and our fourteenth consecutive quarter of profitability,” said Dave Barger, JetBlue’s CEO. “These results reflect the success of our network strategy in high value geography and our focus on offering customers a differentiated product while maintaining competitive costs. I would like to thank our 15,000 crewmembers for their hard work and continued dedication to serving our 30 million customers.”

Operational Performance

JetBlue reported record third quarter operating revenues of $1.4 billion. Revenue passenger miles for the third quarter increased 5.4% to 9.56 billion on a capacity increase of 5.1%, resulting in a third quarter load factor of 85.0%, an increase of 0.2 points year over year.

Yield per passenger mile in the third quarter was 13.83 cents, up 5.1% compared to the third quarter of 2012. Passenger revenue per available seat mile (PRASM) for the third quarter 2013 increased 5.4% year over year to 11.75 cents and operating revenue per available seat mile (RASM) increased 5.0% year over year to 12.82 cents.

“Our record revenue results demonstrate the strength of our network in our hometown of New York and throughout the rest of our core network,” said Robin Hayes, JetBlue’s Chief Commercial Officer. “We are also very pleased with the success of our focused growth strategy in Boston, Fort Lauderdale and the Caribbean & Latin America. The combination of our strong brand and unique JetBlue Experience once again allowed JetBlue to generate a revenue premium versus our competitors in many of our key markets.”

Operating expenses for the quarter increased 8.1%, or $95 million, over the prior year period. JetBlue’s operating expense per available seat mile (CASM) for the third quarter increased 2.8% year over year to 11.47 cents. Excluding fuel and profit sharing, CASM increased 4.9% to 6.95 cents.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. During the third quarter JetBlue hedged approximately 29% of its fuel consumption and managed approximately 14% of its fuel consumption using fixed forward price agreements (FFPs), resulting in a realized fuel price of $3.14 per gallon, a 1.1% decrease over third quarter 2012 realized fuel price of $3.17. JetBlue recorded $3 million in losses on fuel hedges that settled during the third quarter.

JetBlue has managed approximately 39% of its fourth quarter projected fuel requirements using a combination of FFPs, collars, swaps and call options. Based on the fuel curve as of October 24th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.03 in the fourth quarter.

Balance Sheet Update

JetBlue ended the third quarter with approximately $954 million in unrestricted cash and short term investments. In addition, JetBlue maintains a $200 million line of credit and a revolving credit facility for up to $350 million.

“We remain focused on strengthening the balance sheet,” said Mark Powers, JetBlue’s Chief Financial Officer. “We believe strong cash from operations will allow us to continue to grow sustainably as we increase our asset base and continue paying down debt, enhancing long term shareholder value.”

Fourth Quarter and Full Year Outlook

For the fourth quarter of 2013, CASM is expected to be between negative 1.0% and positive 1.0% compared to the year-ago period. Excluding fuel and profit sharing, CASM in the fourth quarter is expected to be between negative 0.5% and positive 1.5% year over year.

CASM for the full year is expected to increase between 1.0% and 3.0% over full year 2012. Excluding fuel and profit sharing, CASM in 2013 is expected to increase between 2.5% and 4.5% year over year.

Capacity is expected to increase between 7.0% and 9.0% in the fourth quarter and to increase between 5.5% and 7.5% for the full year.

Copyright Photo: Stephen Tornblom/AirlinersGallery.com. JetBlue is now capping its Embraer ERJ 190 at around 60 aircraft. ERJ 190-100 IGW N203JB (man 19000023) in the Bubbles tail motif climbs away from the runway at the New York (JFK) hub.

JetBlue Airways:

JetBlue reports second quarter net income of $36 million

JetBlue Airways Corporation (JetBlue Airways) (New York) today reported its results for the second quarter 2013:

Operating income for the quarter was $102 million, resulting in a 7.6% operating margin, compared to operating income of $130 million and a 10.2% operating margin in the second quarter of 2012.
Pre-tax income of $60 million in the second quarter. This compares to pre-tax income of $86 million in the second quarter of 2012.
Net income for the second quarter was $36 million, or $0.11 per diluted share. This compares to JetBlue’s second quarter 2012 net income of $52 million, or $0.16 per diluted share.

“Today, we reported our thirteenth consecutive quarter of profitability,” said Dave Barger, JetBlue’s President and Chief Executive Officer. “Although second quarter results were negatively impacted by a sluggish economic environment and continued maintenance cost pressures, our crewmembers remained focused on running a safe, reliable airline and delivering excellent service to our customers. We believe we are well positioned to expand margins in the second half of the year as we expect maintenance cost pressures to lessen and unit revenue performance to improve.”

Operational Performance

JetBlue reported record second quarter operating revenues of $1.3 billion. Revenue passenger miles for the second quarter increased 7.3% to 9.12 billion on a capacity increase of 7.8%, resulting in a second quarter load factor of 84.9%, a decrease of 0.4 points year over year.

Yield per passenger mile in the second quarter was 13.40 cents, down 2.8% compared to the second quarter of 2012. Passenger revenue per available seat mile (PRASM) for the second quarter 2013 decreased 3.3% year over year to 11.37 cents and operating revenue per available seat mile (RASM) decreased 3.1% year over year to 12.42 cents. The calendar shift of the Easter and Passover holidays in March this year compared to April last year negatively impacted second quarter year over year PRASM by approximately two points.

“While we are disappointed to report a decline in year over year unit revenue performance during the quarter, we are encouraged by recent revenue trends and the success of our initiatives to attract and retain high-value customers,” said Robin Hayes, JetBlue’s Chief Commercial Officer.

Operating expenses for the quarter increased 7.5%, or $86 million, over the prior year period. JetBlue’s operating expense per available seat mile (CASM) for the second quarter decreased 0.3% year over year to 11.48 cents. Excluding fuel and profit sharing, CASM increased 3.3% to 7.15 cents.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. During the second quarter JetBlue hedged approximately 17% of its fuel consumption and managed approximately 21% of its fuel consumption using fixed forward price agreements (FFPs), resulting in a realized fuel price of $3.06 per gallon, a 4.8% decrease over second quarter 2012 realized fuel price of $3.22. JetBlue recorded $4 million in losses on fuel hedges that settled during the second quarter. In addition, JetBlue recorded $2 million in non-cash fuel hedging ineffectiveness losses during the quarter, which is included in non-operating income/expense.

JetBlue has managed approximately 44% of its third quarter projected fuel requirements using a combination of FFPs, collars, swaps and call options. Based on the fuel curve as of July 26th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.10 in the third quarter.

Balance Sheet Update

JetBlue ended the second quarter with approximately $867 million in unrestricted cash and short term investments. In addition, JetBlue maintains a $200 million line of credit and a revolving credit facility for up to $350 million.

“We continue to maintain a strong balance sheet with healthy liquidity,” said Mark Powers, JetBlue’s Chief Financial Officer. “We expect to continue to use cash from operations to reduce debt, which we believe will help us achieve our return on invested capital goals and generate long-term returns for our shareholders.”

Third Quarter and Full Year Outlook

For the third quarter of 2013, CASM is expected to increase between 1.0% and 3.0% compared to the year-ago period. Excluding fuel and profit sharing, CASM in the third quarter is expected to increase between 3.0% and 5.0% year over year. JetBlue expects roughly half of this year over year increase to be driven by maintenance expense.

CASM for the full year is expected to increase between 0.5% and 2.5% over full year 2012. Excluding fuel and profit sharing, CASM in 2013 is expected to increase between 2.5% and 4.5% year over year.

Capacity is expected to increase between 3.5% and 5.5% in the third quarter and to increase between 5.5% and 7.5% for the full year.

In other news, JetBlue Airways and South African Airways (SAA) today announced a bilateral codeshare agreement to connect the carriers’ networks via New York’s John F. Kennedy International Airport (JFK) and Washington’s Dulles International Airport (IAD). The agreement is pending U.S. DOT regulatory approval and subject to receipt of foreign government operating authority.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A320-232 N605JB (msn 2368) in the special Boston Red Sox color scheme prepares to depart from focus city Long Beach, CA.

JetBlue Airways:

JetBlue Airways Corporation 1Q net income slips to $14 million due to Hurricane Sandy, will add Lima Peru

JetBlue Airways Corporation (JetBlue Airways) (New York) today reported its results for the first quarter 2013:

Operating income for the quarter was $59 million, resulting in a 4.5% operating margin, compared to operating income of $89 million and a 7.4% operating margin in the first quarter of 2012.
Pre-tax income of $23 million in the first quarter. This compares to pre-tax income of $49 million in the first quarter of 2012.
Net income for the first quarter was $14 million, or $0.05 per diluted share. This compares to JetBlue’s first quarter 2012 net income of $30 million, or $0.09 per diluted share.

“Thanks to the hard work of our dedicated crewmembers, we reported our twelfth consecutive quarter of profitability,” said Dave Barger, JetBlue’s President and Chief Executive Officer. “First quarter results were solid but below those of a year ago, primarily due to Hurricane Sandy-related demand weakness in the Northeast during the peak Presidents’ Day travel period and higher than expected maintenance costs during the quarter. While the first quarter was challenging, we remain focused on achieving sustainable, profitable growth and are optimistic about the rest of the year.”

Operational Performance

JetBlue reported record first quarter operating revenues of $1.3 billion despite the lingering impact of Hurricane Sandy, which reduced revenue during the Presidents’ Day travel period by an estimated $25 million. Revenue passenger miles for the first quarter increased 7.6% to 8.51 billion on a capacity increase of 6.3%, resulting in a first quarter load factor of 83.9%, an increase of 1.0 point year over year.

Yield per passenger mile in the first quarter was 13.95 cents, up 0.7% compared to the first quarter of 2012. Passenger revenue per available seat mile (PRASM) for the first quarter 2013 increased 1.8% year over year to 11.70 cents and operating revenue per available seat mile (RASM) increased 1.5% year over year to 12.81 cents.

“Successful execution of our network plan, particularly in Boston, and our continued focus on high-margin products and services contributed to the solid revenue results we announced today,” said Robin Hayes, JetBlue’s Chief Commercial Officer.

Operating expenses for the quarter increased 11.3%, or $126 million, over the prior year period. JetBlue’s operating expense per available seat mile (CASM) for the first quarter increased 4.6% year over year to 12.23 cents. Excluding fuel and profit sharing, CASM increased 6.6% to 7.62 cents, driven in part by approximately $20 million of higher than expected maintenance expense related to JetBlue’s EMBRAER 190 aircraft.

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. During the first quarter JetBlue hedged approximately 8% of its fuel consumption and managed approximately 10% of its fuel consumption using fixed forward price agreements (FFPs), resulting in a realized fuel price of $3.29 per gallon, a 1.3% increase over first quarter 2012 realized fuel price of $3.25.

JetBlue has managed approximately 37% of its second quarter projected fuel requirements using a combination of FFPs, collars, swaps and call options. Based on the fuel curve as of April 19th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.03 in the second quarter.

Balance Sheet Update

JetBlue ended the first quarter with approximately $849 million in unrestricted cash and short term investments. In addition, JetBlue maintains a $200 million line of credit with Morgan Stanley.

JetBlue announced today that it has obtained a new revolving credit facility for up to $350 million. “We continue to enhance and optimize our liquidity position through our growing unencumbered asset base and credit facilities, which we believe will be accretive to return on invested capital,” said Mark Powers, JetBlue’s Chief Financial Officer.

Second Quarter and Full Year Outlook

For the second quarter of 2013, CASM is expected to be between negative 1.5% and positive 0.5% compared to the year-ago period. Excluding fuel and profit sharing, CASM in the second quarter is expected to increase between 3.0% and 5.0% year over year. JetBlue expects nearly three quarters of this year over year increase to be driven by maintenance expense.

CASM for the full year is expected to increase between 1.5% and 3.5% over full year 2012. Excluding fuel and profit sharing, CASM in 2013 is expected to increase between 2.0% and 4.0% year over year.

Capacity is expected to increase between 6.5% and 8.5% in the second quarter and to increase between 6.0% and 8.0% for the full year.

In other news, Jetblue announced Lima will become the 81st Blue City beginning on November 21. The capital of Peru will become the fourth destination in South America with one daily flight from Fort Lauderdale/Hollywood, subject to government approval.

Copyright Photo: Tony Storck/AirlinersGallery.com. Airbus A320-232 N569JB (msn 2075) taxies to the runway at Fort Lauderdale-Hollywood International Airport in special 10th Anniversary livery.

JetBlue Airways: