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JetBlue adapts to changes in the industry, reduces summer schedule to be more reliable, reports a GAAP pre-tax loss of $398 million in the first quarter of 2022

"Joel Peterson"

JetBlue Airways today announced a series of investments that will set up the airline to reliably deliver the JetBlue experience during what is expected to be a record-breaking summer. JetBlue’s broad and comprehensive plan includes a reduction of its summer schedule, focus on hiring and training, efforts to reduce customer support call volume and hold times, proactive aircraft maintenance efforts, and facilities/infrastructure readiness.

As the aviation industry has rebounded from the historic impact of COVID-19, airlines have faced ongoing challenges this year from the Omicron wave, staffing ramp up, attrition, weather events, and air traffic control delays. JetBlue’s plan builds more flexibility into its schedule and crew staffing to recover from these events, and ensures its facilities and technology are equipped to handle increased demand, especially in New York where the airline is growing nearly 50 percent as part of its Northeast Alliance (NEA) with American Airlines.

Reduced schedule offers more buffer and flexibility to recover from disruptions

Even though the industry continues to forecast robust demand, JetBlue is taking steps to reduce its flight schedule for increased reliability. A reduced schedule will add more buffer room throughout the day to make up for operational disruptions and put less stress on its crew resources.

JetBlue originally planned to grow capacity this year by 11 to 15 percent compared to 2019. Now, with its reduced schedule, JetBlue’s capacity will grow zero to five percent compared to 2019. Most importantly, JetBlue is reducing its summer schedule by more than 10 percent from its original plan, and scheduled aircraft utilization will be down 10 to 15 percent compared to 2019.

JetBlue’s capacity cuts take into account the impact of higher-priced fuel and are distributed throughout its network. Even with the reductions, JetBlue will grow significantly in New York’s three major airports as part of the NEA – from 200 flights a day in 2019 to nearly 300 flights a day. JetBlue has trimmed some of its growth at Newark to ease congestion and ensure the terminal facilities can accommodate its schedule until construction is completed on the new Terminal A.

Accelerating staffing and training to support the schedule

Like many businesses across a range of industries, staffing resources have pressured airlines as customers returned. Even though it’s pulling down some flying, JetBlue is moving forward with hiring efforts to staff up for the summer, including 5,000 new crewmembers in New York. The airline’s recently expanded training facility in Orlandois operating at maximum capacity.

In addition to general staffing, JetBlue is working through a backlog of pilot training and re-certification flights after delays from Omicron. Volatile pilot attrition is also creating a need for additional recruiting and training capacity. JetBlue has increased its pilot training team and simulator capacity to meet this demand.

Addressing customer call volume and hold times

Recent operational disruptions have led to a record number of calls into JetBlue’s customer support center and extended wait times. These disruptions, coupled with the greater number of customers taking advantage of ticket flexibility and calls regarding other COVID-related questions, have taxed customer service teams across the industry.

Since the fall, JetBlue has brought on board more than 1,100 new hires into customer support and continues to increase hiring and training while bringing on outside support to help manage call volume. By this summer, JetBlue expects to have its largest-ever customer support team ready to support customers as many embark on their first vacation or travel experience since the pandemic.

JetBlue is continuing to strengthen staffing for its suite of digital tools to help customers avoid waiting on hold, including online chat capabilities and support via iMessage. In addition, JetBlue is improving self-service capabilities on its website to offer customers additional options to make changes without calling.

JetBlue is also working to proactively cancel flights on days when bad weather is forecasted or if it anticipates air traffic control delays due to congestion or air traffic control center staffing shortages. The dynamic nature of spring and summer weather, including thunderstorms, sometimes prevents this, but the airline is working to provide cancellation well in advance of arriving to the airport so customers have time to adjust their plans.

Reducing disruptions due to maintenance

The reduced schedule frees up aircraft time to give the airline additional opportunities to get ahead of planned maintenance programs. JetBlue is investing in additional preventative maintenance as well as reserving more aircraft as spares this summer to reduce the impact of maintenance-related cancellations and delays.

With COVID-19 supply chain challenges continuing, JetBlue has pre-purchased long lead parts, tools, and equipment as well as added additional inventory of frequently used parts, to mitigate potential delays.

Handling a record summer at JFK

This summer, JetBlue will operate approximately 190 daily flights from New York’s John F. Kennedy International Airport (JFK) as it continues to expand its footprint as part of the NEA. With its heavy concentration in the Northeast and major operation at JFK, ensuring that JFK runs smoothly is essential for the entire network.

In addition to hiring across workgroups, JetBlue is making a number of investments at JFK’s Terminal 5:

  • Redeveloping a portion of the lobby to add more kiosks and open additional space for customer throughput.
  • Retiming flights for the busiest international markets to ensure enough lobby space is available for COVID documentation checks.
  • Smoothing out some of the peaks in the schedule to ease congestion in the lobby, TSA checkpoint, and gates.
  • Dedicating ground staffing crews at gates across Terminal 5 and adding ground equipment.

While summer reliability continues to be the focus, JetBlue will also see a significant improvement in its airport facilities across focus cities this fall, as new terminals and space become available to support the airline’s growth. JetBlue will be consolidating or opening new or renovated terminal spaces in LaGuardia, Newark, and Orlando.

On the financial side, JetBlue Airways Corporation today reported its results for the first quarter of 2022:

  • Reported GAAP loss per share of ($0.79) in the first quarter of 2022 compared to diluted earnings per share of $0.14 in the first quarter of 2019. Adjusted loss per share was ($0.80)(1) in the first quarter of 2022 versus adjusted diluted earnings per share of $0.16(1) in the first quarter of 2019.
  • GAAP pre-tax loss of ($398) million in the first quarter of 2022, compared to a pre-tax income of $58 million in the first quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($400) million(1) in the first quarter of 2022 versus adjusted pre-tax income of $70 million(1) in the first quarter of 2019.

Operational and Financial Highlights from the First Quarter

  • Capacity declined by 0.3% year over three, compared to our guidance for capacity to decline 1% year over three.
  • Revenue declined 7.2% year over three, compared to our guidance of a 6% to 9% decline year over three. This was approximately 6 percentage points ahead of the midpoint of our initial forecast of an 11% to 16% decline year over three, driven by pent-up demand that materialized beyond our expectations.
  • Operating expenses per available seat mile increased 17.5% year over three. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) (1) increased 13.9%(1) year over three, compared to our guidance of a 13% to 15% increase year over three.

Balance Sheet and Liquidity

  • As of March 31, 2022, JetBlue’s adjusted debt to capital ratio was 54%(1).
  • JetBlue ended the first quarter of 2022 with approximately $2.9 billion in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, or 36% of 2019 revenue. This excludes our $550 million undrawn revolving credit facility.
  • JetBlue paid down approximately $83 million in regularly scheduled debt and finance lease obligations during the first quarter of 2022.

Fuel Expense and Hedging

  • The realized fuel price in the first quarter 2022 was $2.90 per gallon, a 41% increase versus first quarter 2019 realized fuel price of $2.05.
  • As of April 26, 2022, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the second quarter of 2022. Based on the forward curve as of April 19, 2022, JetBlue expects an average all-in price per gallon of fuel of $3.79 in the second quarter of 2022.

Leveraging the Northeast Alliance to Deliver Value for All Stakeholders

  • JetBlue announced new benefits for TrueBlue Mosaic and AAdvantage status members traveling on either airline. The expanded list of new benefits include complimentary extra legroom seating based on availability at check-in; two complimentary checked bags; and same-day confirmed changes.
  • During the first quarter, JetBlue launched three new BlueCities: Puerto Vallarta, Kansas City, and Milwaukee. Later this quarter, we plan to launch service to Asheville as well as our inaugural Canadian BlueCity, Vancouver.
  • JetBlue remains on track to operate almost 300 daily departures from New York City airports.

Ensuring Our Long-Term Sustainability

  • JetBlue recently announced another deal for Sustainable Aviation Fuel (SAF) supply with Aemetis, committing to purchase 125 million blended gallons of the renewable fuel from their facility in California from 2025-2034.
  • JetBlue Technology Ventures announced recent investments in Electric Power Systems, a leading provider of aerospace battery systems; Air Company, focused on carbon capture and conversion technologies; and the TPG Rise Climate fund as a Limited Partner.
  • JetBlue Foundation – which supports aviation-related STEM programs – recently awarded grants to 10 charitable organizations to help increase advocacy for inclusion, gender and racial parity within STEM and aviation.

Resetting Plan to Build Back Margins

“Our first quarter results were characterized by a very strong demand acceleration, with revenue coming in more than six points ahead of our initial view in January. We delivered positive year-over-three revenue growth in the month of March as we exited the quarter with tremendous revenue momentum driven by very strong underlying travel demand across all of our core segments,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“To help restore our operational reliability, we are reducing our capacity growth further as we plan more conservatively for the summer and make investments to de-risk the operation. These actions will create more resiliency in the operation, and set us up for a better May, and an even better June and strong summer peak. As we strive to provide the high quality of service that our Customers have come to expect from us, we’re taking proactive measures to invest in and improve our operational performance.

Despite the current operating and fuel environment, we are seeing underlying momentum on our path to transforming JetBlue’s structural profitability. We are making great progress on many of our long-term initiatives in 2022, and these will be meaningful drivers of our earnings growth in the coming years.”

Revenue and Capacity

“For the full-year 2022, we are now planning to grow capacity between 0% and 5% versus 2019. Severe weather compounded by air traffic control challenges particularly across Florida and New York have had an outsized impact on our operation where 95% of our daily flights operate. Despite being well on track with our summer operational preparations, we have re-evaluated our capacity planning assumptions for the summer in light of these challenges. We believe our operational investments and capacity reductions will improve our operational performance in the coming months while we continue to fly a record number of customers,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“For the second quarter, we expect capacity to increase in a range between 0% and 3% year over three. We also expect revenue to increase between 11% and 16% year over three. This includes up to a four point revenue impact from the operational disruption in April. And despite the meaningful impact to the quarter and the year, we expect to generate our best quarterly revenue result in the second quarter, and are positioned to accelerate this momentum through the summer.”

Financial Performance and Outlook

“We are extremely pleased with the demand and revenue momentum, which accelerated throughout the quarter and resulted in first quarter revenue that was roughly six points ahead of our original January forecast; we also executed within the range of our original cost guidance despite abnormally elevated winter weather events. Looking ahead, we are reducing our full-year capacity growth as we work to restore operational reliability and catch up on a backlog of training events, and also as we remain mindful of elevated fuel prices,” said Ursula Hurley, JetBlue’s Chief Financial Officer.

“For the second quarter, we are forecasting CASM ex-Fuel(2) to increase 15% to 17% year over three, reflecting some inefficient, close-in capacity reductions in Q2, frontline premium and incentive pay to support the operation, ramp-up costs to maintain our hiring pace for the summer, and our recently signed deal with Air Line Pilots Association.

Our revenue performance for the second quarter is expected to be a record result. However, significantly higher fuel prices and investments in the operation are delaying our return to sustained pre-tax profitability. That said, we believe we are on a path to building back our margins and creating value for our owners through strong revenue growth, disciplined cost control, and a methodical approach to capacity decisions.”

Top Copyright Photo: JetBlue Airways Airbus A321-271NX WL N4022J (msn 10303) (Streamers) LGW (Robbie Shaw). Image: 955805.

JetBlue aircraft slide show:

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Wizz Air to launch three new routes from Katowice Airport

Delivered on October 18, 2021

Wizz Air has announced that it will launch three new regular routes at Katowice Wojciech Korfanty International Airport during this year’s summer.

On June 15, 2022, flights to Ibiza (Spain) will become available; they will be handled once a week: on Wednesdays. The next day – on June 16, 2022 – Wizz Air will fly for the first time from Katowice Airport to Tirana – flights to the capital of Albania will initially be available on Thursdays and Sundays; from  July 4, 2022, however, the route will be handled on Mondays and Fridays. On June 18, 2022 the air carrier will launch flights to Madiera (Portugal). Flights to this destination will be available on Tuesdays and Saturdays. It will be the only Wizz Air route connecting a Polish airport with Madeira.

Wizz Air is the leading airline at Katowice Airport when it comes to the number of regular routes available during “Summer 2022.” The air carrier will handle 37 routes to 19 countries, i.e. to Spain (Barcelona, Castellon, Fuerteventura, Ibiza, Palma De Mallorca, Malaga, Tenerife), Italy (Alghero, Catania, Milan-Bergamo, Naples, Rome-Fiumicino), the United Kingdom (Bristol, Doncaster-Sheffield, Liverpool, London-Luton), Norway (Bergen, Stavanger, Oslo-Torp), Greece (Athens, Corfu), Germany (Dortmund, Cologne-Bonn), Sweden (Malmo, Stockholm Skavsta), Albania (Tirana), Bulgaria (Burgas), Croatia (Split), Cyprus (Larnaca), Montenegro (Podgorica), Georgia (Kutaisi), the Netherlands (Eindhoven), Iceland (Reykjavik), Israel (Tel Aviv), Malta, Portugal (Madeira) and the United Arab Emirates (Abu Dhabi).

Since May 2004, Wizz Air has a base established at Katowice Airport. It is the first base airport in the airline’s history; it’s where the carrier based its first Airbus A320 and where it performed its first commercial flight (i.e. to London-Luton). In nearly 18 years, Wizz Air has handled 21.7 million travelers on routes to/from Katowice Airport; its fleet of Airbus A320 and A321 aircraft has performed over 147 thousand takeoffs and landings at the airport.

Top Copyright Photo: Wizz Air (Hungary) Airbus A321-271NX WL HA-LZD (msn 10659) NUE (Gunter Mayer). Image: 957308.

Wizz Air (Hungary) aircraft slide show:

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Aegean Airlines suspends flights to Beirut after plane damage

Delivered on December 17, 2020

From Reuters:

“Aegean Airlines said on Saturday it had suspended all flights to Beirut pending the results of an investigation into the cause of damage to one of its planes that flew to the Lebanese capital.

Ground crew at Beirut’s Rafik Hariri International Airport found external damage to the fuselage of a plane that flew from Athens on Jan. 10, prompting the airline a day later to suspend all flights to and from Beirut, a company statement said.”

Top Copyright Photo: Aegean Airlines Airbus A321-271NX WL SX-NAC (msn 10189) ZRH (Rolf Wallner). Image: 953925.

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Wizz Air acquires 15 daily slot pairs from Norwegian for London’s Gatwick Airport

Delivered on May 20, 2021

Wizz Air has announced it has acquired 15 daily slot pairs from Norwegian Air Shuttle.

Since bankruptcy Norwegian has basically given up on LGW.

This acquisition will allow Wizz Air to expand in the London area.

Previously Wizz Air launched a new base at LGW in October 2020. Wizz Air also operates from Luton Airport in the London area.

Meanwhile the carrier continues to expand with new routes from Milan to Prague, Naples to Nice, Palermo to Prague and Rome, from Sarajevo to London (Luton), from Lamezia to Turin, from Tirana to Nice, or from Warsaw to Nice.

In other news, Wizz Air has announced the following new routes from Bari to Dubai, from Cluj-Napoca to Nice, from Craiova to Barcelona, Paris and Brussels, from Rome to Marrakesh, from Kraków to Dubai, from Katowice to Naples, or from Kutaisi to Paris.

Additionally the carrier for next summer will add new routes from Belgrade to Nice, from Bari to Chania and Olbia, from Cluj-Napoca to Malta, from Catania to Mykonos, from Venice to Olbia, or from Naples to Corfu.

Top Copyright Photo: Wizz Air (UK) Airbus A321-271NX WL G-WUKO (msn 10479) PMI (Javier Rodriguez). Image: 954301.

Wizz Air (UK) aircraft slide show:

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AIr Transat to fly from Quebec City to London Gatwick

Air Transat Airbus A321-271NX WL C-GOIE (msn 8755) BSL (Paul Bannwarth). Image: 946809.

Air Transat has announced that it will offer an exclusive non-stop service between Quebec City and London. From May 11 to September 28, 2022, travelers from the province of Quebec’s Capitale-Nationale region will be able to benefit from weekly direct flights to London’s Gatwick airport, making it easier than ever to discover this must-see European destination. At the same time, British tourists will now have direct access to magnificent Quebec City.

Photo: From left to right: Joseph Adamo, Chief Sales and Marketing Officer, Transat; Stéphane Poirier, President and CEO of Québec City Jean Lesage International Airport (YQB); Geneviève Guilbault, Quebec Deputy Premier, Minister of Public Security and minister responsible for the Capitale-Nationale; Caroline Proulx, Minister of Tourism and minister responsible for the Lanaudière and Bas-Saint-Laurent regions; Robert Mercure, General Manager of Destination Québec cité (CNW Group/Transat A.T. Inc.)

London-bound passengers will travel on the new-generation Airbus A321neo LR aircraft, which are perfectly aligned with the company’s ongoing efforts in responsible tourism, including a commitment to achieve carbon neutrality by 2050. They consume 15% less fuel, and reduce both noise and NOx greenhouse gas emissions by half.

The route will operate on Wednesdays from Quebec City and Thursdays from LondonGatwick.

Enhanced service from Quebec City for summer 2022

Air Transat is continuing to expand its international service out of Quebec City by offering direct flights to six other destinations for the summer of 2022.

In addition to serving London, Air Transat also plans to restart its service between Quebec City and Paris, enabling travelers to enjoy exclusive service to two of Europe’s major metropolises. Sun-lovers are also sure to find something to their liking thanks to direct flights to Fort Lauderdale, now offered year-round, as well as connections to Cancún in Mexico and Punta Cana in the Dominican Republic.

Top Copyright Photo: Air Transat Airbus A321-271NX WL C-GOIE (msn 8755) BSL (Paul Bannwarth). Image: 946809.

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Swiss trials a new concept to reduce food waste on board

Swiss International Air Lines Airbus A321-271NX WL HB-JPB (msn 10115) ZRH (Rolf Wallner). Image: 955097.

Swiss International Air Lines is trialling the possibility of offering its customers unsold food items at reduced prices on its services from Geneva, in collaboration with its partner “Too Good To Go”.

Swiss International Air Lines (SWISS) has long put a firm emphasis on environmental issues within its corporate culture, and takes sustainable actions at various levels to ensure the optimum use of resources in its business and operations. To the same ends, the company is seeking to reduce the volumes of fresh food items which remain unsold on its flights and must therefore be thrown away. SWISS already uses historical sales data for each flight to tailor its fresh product uplifts as closely as possible to likely passenger demand. But the company is now taking a further step in this direction, by teaming up with its partner “Too Good To Go” to offer at reduced prices any fresh food items which remain unsold. To test customer acceptance, a trial of the new approach is being conducted in August and September on the last flights of the day from Geneva on SWISS’s European network.

A simple procedure

The new concept consists in offering any fresh food items that remain unsold on certain services at the end of the flight concerned. These items’ availability is communicated via an inflight announcement, and interested passengers are offered a bag containing one, two or three such fresh food items at one third of their usual price. The bag’s contents are not revealed in advance, and remain a surprise for the purchaser.

The new approach is being trialled in collaboration with “Too Good To Go”, the world’s biggest app platform for connecting companies with users to reduce food waste. “Managing waste on board is an important part of our commitment to greater sustainability, “ stresses SWISS CCO Tamur Goudarzi Pour. “We hope to significantly reduce unused food on board our aircrafts by introducing this service. Thinking about sustainability in all our products, services and processes is part of our SWISS DNA.”

“The first results from these trials have been promising,” adds SWISS’s Head of Western Switzerland Romain Vetter. “The new approach has been well received by our passengers on the flights concerned. We’re now awaiting a final analysis of the trials’ findings to decide if we should extend it to further routes.”

Top Copyright Photo: Swiss International Air Lines Airbus A321-271NX WL HB-JPB (msn 10115) ZRH (Rolf Wallner). Image: 955097.

Swiss aircraft slide show:

Transat A.T. Inc. reports its results for third quarter of 2021

Air Transat Airbus A321-271NX WL C-GOIF (msn 8876) LGW (Richard Vandervord). Image: 954944.

Transat A.T. Inc., one of the largest integrated tourism companies in the world and Canada’s holiday travel leader, announces its results for the third quarter ended July 31, 2021.

“We’re very pleased we were able to resume operations as scheduled on July 30 and move into the restart phase where our activities can gradually expand, and particularly as we look forward to a winter season that promises to be much busier than the last one. While we must continue to exercise caution given the evolving health situation, and although a full return to normal is still some time away, we’re very keen to get the crisis behind us,” stated Annick Guérard, President and Chief Executive Officer, Transat.

“Beyond resuming our operating activities, gradually recalling our employees and delivering training, we’ll be using this period to implement our strategic plan. We’ve announced two new destinations in the United States for the winter, we’re working on optimizing our capital structure, and we’re engaging in a number of discussions towards entering into airline partnership agreements. Our ambitions are high, but we’re on the right track,” Mrs. Guérard added.

The global air transportation and tourism industry has faced a collapse in traffic and demand. Travel restrictions, uncertainty about when borders will reopen fully, both in Canada and at certain destinations the Corporation flies to, the imposition of quarantine measures and vaccination and testing requirements both in Canada and other countries, as well as concerns related to the pandemic and its economic impacts are creating significant demand uncertainty, at least for fiscal 2021. For the first half of winter 2021, the Corporation rolled out a reduced winter program. On January 29, 2021, following the Canadian government’s request to not travel to Mexico and the Caribbean, and the introduction of new quarantine measures and COVID-19 testing requirements, the Corporation announced the complete suspension of all its regular flights and the repatriation of its clients to Canada.

Starting July 30, 2021, the Corporation partially resumed its operations and gradually rolled out a reduced summer program. The Corporation cannot predict all the impacts of COVID-19 on its operations and results, or precisely when the situation will improve. The Corporation has implemented a series of operational, commercial and financial measures, including new financing and cost reduction measures, aimed at preserving its cash. The Corporation is monitoring the situation daily to adjust these measures as it evolves. However, until the Corporation is able to resume operations at a sufficient level, the COVID-19 pandemic will have significant negative impacts on its revenues, cash flows from operations and operating results. While progress on vaccination and the lifting of certain restrictions have made it possible to resume operations at a certain level during 2021, the Corporation does not expect such level to reach the pre-pandemic level before 2023.

Preserving cash is a priority for the Corporation; with respect to the COVID-19 pandemic, the Corporation has taken the actions discussed in the Overview section of the MD&A included in our 2020 Annual Report. Other opportunities are being evaluated to achieve this objective and the following additional actions in response to the COVID-19 pandemic were taken during the nine-month period ended July 31, 2021:

  • The Corporation completed its efforts to obtain long-term financing. As described in the Financing section of the MD&A, the available financing therefore represents a maximum of $820.0 million, of which $585.1 million was drawn as at July 31, 2021. Of the drawn down amount, a total of $265.1 million was used to repay travelers who were scheduled to leave after February 1, 2020, for which a travel credit had been issued due to COVID-19 and who had requested to be reimbursed.
  • During the quarter ended January 31, 2021, two Airbus A330s and one Boeing 737-800 were returned to lessors early. These are in addition to the three Boeing 737-800s and one Airbus A330 that were returned in advance to their lessors during the fiscal year ended October 31, 2020.
  • The Corporation continuously adjusts its flight program as the situation evolves. Since the resumption of its airline operations on July 30, 2021, Transat offers once again a reduced program of international flights departing from Montréal and Toronto that it intends to enhance gradually.
  • The Corporation is negotiating with its suppliers, including aircraft lessors to benefit from cost reductions and changes in payment terms, and is continuing to implement measures to reduce expenses and investments.
  • The Corporation is continuing to make use of the Canada Emergency Wage Subsidy [“CEWS”] for its Canadian workforce, which enables it to finance part of the salaries of its staff still at work and, until August 28, 2021, to offer employees on temporary layoff to receive a portion of their salary equivalent to the amount of the grant received, with no work required.
  • As at July 31, 2021, cash and cash equivalents totaled $429.4 million.

Third-quarter highlights

Since mid-March of 2020, restrictions on international travel and government-imposed quarantine measures have made travel sales very difficult. Due to the global COVID-19 pandemic, the Corporation suspended its airline operations on January 29, 2021 for the second time since March 2020, until their partial resumption on July 30, 2021. These factors caused the fall in revenues. The Corporation recognized revenues of $12.5 million during the quarter, an increase of $3.0 million or 31.4% compared with 2020. In 2021, revenues were mainly driven by the activities of the Corporation’s incoming tour operator in sun destinations.

Operations generated an operating loss of $98.4 million compared with $132.0 million in 2020, an improvement of $33.6 million. Transat reported an adjusted operating loss1 of $50.9 million compared with $79.9 million in 2020, an improvement of $29.0 million. The decreases in operating loss and adjusted operating loss1 were due to the unfavorable settlement of fuel derivative contracts in the third quarter of 2020.

Net loss attributable to shareholders amounted to $138.1 million or $3.66 per share (diluted) compared with $45.1 million or $1.20 per share (diluted) for the corresponding quarter of last year. In 2020, the net loss attributable to shareholders was mitigated by a gain in the fair value of fuel-related derivatives and other derivatives of $67.7 million, related to the significant recovery of fuel prices during the quarter. The deterioration of the net loss attributable to shareholders was also accentuated by the $15.9 million foreign exchange loss recorded in the third quarter of 2021, mainly due to the unfavorable exchange effect on lease liabilities related to aircraft, following the weakening of the dollar against the U.S. dollar. During the third quarter of 2020, the Corporation recognized a $28.5 million foreign exchange gain, resulting mainly from the favorable exchange effect on lease liabilities related to aircraft. Excluding non-operating items, Transat reported an adjusted net loss1 of $115.6 million or $3.06 per share for the third quarter of 2021, compared with $139.8 million or $3.70 per share in 2020.

Nine-month period highlights

As a result of the above-mentioned factors, the Corporation recorded a decrease in its results for the nine-month period ended July 31. Moreover, for the first half of winter 2021, demand was very weak and the Corporation’s capacity represented a fraction of the 2020 level. For the nine-month period as a whole, the Corporation recognized revenues of $62.0 million, a decrease of $1.2 billion or 95.1% compared with 2020, and operations generated an operating loss of $282.9 million, compared with $186.6 million in 2020, a deterioration of $96.3 million. Transat reported an adjusted operating loss1 of $155.5 million compared with $31.4 million in 2020, a deterioration of $124.1 million.

Net loss attributable to shareholders amounted to $268.2 million or $7.11 per share (diluted) compared with $258.5 million or $6.85 per share (diluted) for the corresponding nine-month period of last year. Excluding non-operating items, Transat reported an adjusted net loss1 of $328.0 million or $8.69 per share for the nine-month period ended July 31, 2021, compared with $198.9 million or $5.27 per share in 2020.

Financial position

As at July 31, 2021, cash and cash equivalents amounted to $429.4 million, compared with $576.4 million on the same date in 2020. This decrease was mainly attributable to a significant decrease in business and to refunds of travel credits, partially offset by drawdowns on the credit facilities.

In total, the available financing represents a maximum of $820.0 million, of which $585.1 million was drawn down as at July 31, 2021. Of the drawn down amount, a total of $265.1 million was used to repay travelers who were scheduled to leave after February 1, 2020, for which a travel credit had been issued due to COVID-19 and who had requested to be reimbursed.

Deposits from customers for future travel amounted to $262.8 million, compared with $638.1 million as at July 31, 2020, a decrease of $375.3 million. This change was due to refunds of travel credits made during the third quarter of 2021.

The working capital ratio was 1.27, compared with 0.93 as at July 31, 2020. The improvement in working capital resulted from the travel credits refunded during the period and financed partly by the drawdowns on the unsecured credit facility to refund travelers and drawdowns on credit facilities.

Customer deposits as at July 31, 2021 included these travel credits issued for cancelled trips related to COVID-19 amounting to $159.3 million, compared with $504.6 million as at April 30, 2021. On April 29, 2021, the Corporation entered into an agreement with the Government of Canada that also allows it to borrow an amount of $310.0 million to issue refunds to certain travellers. Following this agreement, at the end of August 2021, the Corporation had received requests for about 80% of the amount of credits issued and made refunds for more than 90% of amounts claimed. Customers had until August 26, 2021 to submit their refund requests.

Off-balance-sheet agreements, excluding contracts with service providers, stood at $544.5 million as at July 31, 2021. This amount mainly consists in commitments to take delivery of the seven A321neoLRs undelivered as at that date.

Outlook

The current situation shows encouraging signs such as the level of bookings observed and the increase in the vaccination rate. However, it remains impossible for the moment to predict the impact of the COVID-19 pandemic on future bookings, the partial resumption of flight operations and financial results.

The Corporation has implemented a series of operational, commercial and financial measures, including cost reduction, aimed at preserving its cash. The Corporation continues to monitor the situation daily to adjust these measures as it evolves. Please see the Risks and Uncertainties section of the Corporation’s MD&A for the year ended October 31, 2020 for a more detailed discussion of the main risks and uncertainties facing the Corporation.

Consequently, for now the Corporation is not providing an outlook for summer 2021 or winter 2022.

Top Copyright Photo: Air Transat Airbus A321-271NX WL C-GOIF (msn 8876) LGW (Richard Vandervord). Image: 954944.

Air Transat aircraft slide show:

JetBlue reports GAAP pre-tax earnings of $57 million in the second quarter of 2021

"O Beautiful For Spacious Skies"

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.”

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) 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.

JetBlue Airways aircraft slide show:

Swiss reduces dismissals for operational reasons, will reduce its fleet by 15%

First A321neo, delivered September 18, 2020

Swiss International Air Lines has has made this announcement:

Swiss is currently faced with structural changes to its market, and expects to see a lasting 20-percent decline in customer demand in the medium term. Thanks to a constructive consultation procedure, however, the corresponding workforce reduction of 550 dismissals for operational reasons, including dismissals in the event of non-acceptance of changed employment terms, is smaller than was expected as recently as last month. In total, SWISS will have downsized its workforce by some 1,700 full-time equivalents by the end of 2021, with two thirds of this reduction achieved through voluntary measures and natural staff turnover. As projected, the SWISS aircraft fleet will also be reduced by 15 per cent. SWISS is living up to all its social responsibilities in all these actions, and is ensuring that these unavoidable dismissals for operational reasons pay maximum regard to all social considerations.

Against the background of the structural ramifications of the coronavirus crisis and what is expected to be a lasting 20-per-cent decline in customer demand in the medium term, Swiss International Air Lines (SWISS) initiated the consultation procedure which was required by law in view of its planned restructuring (see here for details) on 6 May. At the time, up to 780 SWISS employees among the company’s ground and flying personnel potentially faced dismissal for operational reasons (or dismissal in the event of their non-acceptance of changed employment terms) as a result of the projected 15-per-cent reduction in the size of the SWISS aircraft fleet.

After the conclusion of the consultation period which had subsequently been extended to a full three weeks, SWISS was able to reduce the number of such unavoidable dismissals for operational reasons to 550 together with its social partners. By the end of 2021, SWISS will thus have downsized its workforce by around 1,700 full-time equivalents or over 20 per cent, with two thirds of this reduction achieved through voluntary measures and natural staff turnover. The size of the SWISS fleet will be reduced by 15 per cent as previously envisaged. The rescaling and transformation of the company under its ‘reach’ strategic programme should result in savings of some CHF 500 million.

Fewer dismissals for operational reasons following consultation procedure

The consultation procedure conducted offered SWISS’s social partners, its employees and their representatives the opportunity to submit suggestions on how potential dismissals could be avoided or reduced in number and/or how their impact could be mitigated. Over 770 such suggestions were received from the company’s employees. As a result, SWISS has been able to lower the total number of dismissals for operational reasons required from 780 to 550, a reduction of around one third. The 550 dismissals include 58 employees who will simultaneously be offered revised employment terms such as a reduction in their degree of employment or a change to their function, who will thus have the option of remaining with the company under the new terms.

SWISS is therefore compelled to issue ordinary notice to terminate employment to 492 employees in and outside Switzerland. Of these, 334 are cabin personnel, 101 are ground personnel and 57 serve in SWISS Technics. No reductions are being made to the company’s cockpit corps numbers; but in consultation with the Aeropers pilots’ staff association, the present cockpit staffing surplus will be managed in particular through a prescribed corps-wide work hours reduction, subject to agreement thereto by Aeropers members.

“I am truly sorry for all our employees who are being served notice,” says SWISS CEO Dieter Vranckx. “And it is with the deepest of regret that we are having to take this radical action in response to the structural changes that our industry is experiencing. We are convinced, though, that this is the right course to take if we are to repay our bank loans, regain our ability to invest and retain our competitive credentials.”

SWISS will now aim to promptly conclude this phase of uncertainty and implement its rescaling and transformation with all possible speed. The dismissals required will be effected with full observance of all the stipulations made by the Swiss Confederation in connection with its guarantees for SWISS’s bank loan facilities, with full application of the relevant ‘Sozialplan’ severance benefits plans and with full regard to all further social considerations. All the employees concerned will also be offered the extensive services and support of a partner outplacement agency.

15 percent fleet reduction confirmed

The present SWISS fleet of more than 90 of its own aircraft and those operated on its behalf by Helvetic Airways under wet-lease arrangements will be reduced by 15 percent from its 2019 size as planned in response to the decline in demand. Which five Airbus long-haul aircraft (A330s or A340s) and which ten short-haul aircraft will be withdrawn to this end is yet to be decided. On the short- and medium-haul fleet front, the reduction in the number of Helvetic Airways aircraft operated on SWISS’s behalf will be proportionately higher than the number of SWISS’s own aircraft withdrawn. SWISS is also considering modifications to its route portfolio, reductions in frequencies and a delayed resumption of services to some long-haul destinations.

“In the future SWISS will be smaller. But it will also be more focused, more digital, more efficient and more sustainable,” says Vranckx. “The transformation planned will be conducted over the next three years through our ‘reach’ strategic program, with which we aim to realign our company to the changed market situation and achieve sustainable cost savings of some CHF 500 million.”

SWISS’s current production is still substantially below that of pre-pandemic times. In high summer, capacity is likely to be at around 50 to 55 percent of its 2019 levels. For 2021 as a whole, SWISS expects its total production to be about 40 percent of that of 2019.

In June and July SWISS will newly fly or resume services to 49 destinations from Zurich and Geneva, and will operate a total of 125 routes in high summer.

Top Copyright Photo: Swiss International Air Lines Airbus A321-271NX WL HB-JPA (msn 9417) ZRH (Rolf Wallner). Image: 951392.

Swiss aircraft slide show:

JetBlue announces JFK – LHR service to start on August 11

"Blue With A View"

JetBlue Airways today announced it will make its highly anticipated entrance into the transatlantic market with nonstop service between New York’s John F. Kennedy international Airport (JFK) and London Heathrow Airport (LHR) starting August 11, 2021. New York’s Hometown Airline® will further enhance its U.S. and U.K. schedules with nonstop service between New York-JFK and London Gatwick Airport (LGW) starting September 29, 2021. London service from Boston, where JetBlue is the leading airline, will start in Summer 2022.

Flights on both routes will operate daily on JetBlue’s new Airbus A321 Long Range (LR) aircraft with 24 redesigned Mint suites, 117 core seats and the sleek and spacious Airspace cabin interior (below).

JetBlue is set to take delivery of three A321LRs in 2021, all operating on the JFK routes. Additional A321LRs scheduled for 2022 will operate Boston service. The A321LR platform – offering the range of a wide-body but with the economics of a single-aisle aircraft – will allow JetBlue to effectively compete with the airline’s award-winning service and low fares on flights between the U.S. and London.

Seats on both Heathrow and Gatwick routes are on sale starting today with low fares for U.S.-based travelers starting at $599 roundtrip for the airline’s award-winning core experience and starting at $1,979 roundtrip for JetBlue’s premium Mint experience. U.K.-based travelers can enjoy special introductory roundtrip fares starting at £329for core and £999 for Mint.

Schedule between New York (JFK) and London Heathrow (LHR)
Daily Beginning August 11, 2021

JFK – LHR Flight #007

LHR – JFK Flight #20

10:10 p.m. – 10:10 a.m. (+1)

6:10 p.m. – 9:43 p.m.

Schedule between New York (JFK) and London Gatwick (LGW)
Daily Beginning September 29, 2021

JFK – LGW Flight #43

LGW – JFK Flight #44

7:50 p.m. – 7:55 a.m. (+1)

12:00 p.m. – 3:33 p.m.

Top Copyright Photo: JetBlue Airways Airbus A321-271NX WL N2029J (msn 9054) JFK (Fred Freketic). Image: 949317.

JetBlue aircraft slide show: