JetBlue Airways Corporation today reported its results for the fourth quarter 2018:
- Reported diluted earnings per share of $0.55 in the fourth quarter of 2018 compared to $2.03 in the fourth quarter of 2017. Adjusted diluted earnings per share was $0.50 in the fourth quarter of 2018 versus $0.32 in the fourth quarter of 2017. Fourth quarter 2018 results benefited from solid non-fuel cost control and revenue performance through the quarter. Note A to this earnings release includes the GAAP to Non-GAAP reconciliation between reported and adjusted diluted earnings per share.
- GAAP pre-tax income of $200 million. Excluding the one-time costs, adjusted pre-tax income of $204 million(1), an increase of 19.9% from the fourth quarter of 2017.
- Pre-tax margin of 10.2%, inclusive of the one-time costs. Adjusted pre-tax margin of 10.4%(1), a 0.7 point increase year over year.
Highlights from the Fourth Quarter 2018
- Fourth quarter 2018 revenue per available seat mile (RASM) increased 2.4%, year over year, driven by strong close-in demand trends across the network. RASM for the quarter ended above the mid-point of our initial guidance range of 1.0% to 4.0% excluding a 0.3 point impact from strong completion factor during the quarter.
- Operating expenses per available seat mile, excluding fuel (CASM ex-fuel) (1) declined 3.6%, below the low end of our initial guidance range of down (3.5%) to down (1.5%). This decline includes a small benefit of approximately 0.3 points from improved completion factor.
Images: JetBlue. Cabin and entertainment refresh.
Key Guidance for the First Quarter and Full Year 2019:
- Capacity is expected to increase between 7.5% and 9.5% year over year in the first quarter 2019. For the full year 2019, JetBlue expects capacity to increase between 5.0% and 7.0%.
- RASM growth is expected to range between down (2.0%) and plus 1.0% for the first quarter 2019 compared to the same period in 2018. Our guidance includes two points of negative impact related to the calendar placement shift of Easter and Passover between the first and second quarters of 2019. In addition our guidance includes a net 0.75 point headwind related to a more active winter that impacted trough weeks during the first quarter of 2018.
- CASM ex-fuel is expected to increase between 1.5% and 3.5% for the first quarter of 2019, principally driven by engine maintenance timing and the year-over-year impact of the pilot contract effective on August 1st, 2018. For the full year 2019, JetBlue continues to expect year over year CASM ex-fuel to be between flat and 2.0%.
Executing our Plan to Reach our EPS Commitments
“I’d like to thank our 22,000 Crewmembers across our network for all their hard work throughout 2018. I’d also like to congratulate our Crewmembers for operating the airline at 100 percent completion from December 10 through January 11. This is an impressive achievement as we safely delivered our Customers to their destinations during one of the busiest times of the year,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“During 2018 we continued to work on our plan to strengthen the foundation of JetBlue and position the company to thrive. In bringing this very busy year to a close, I could not be prouder of our accomplishments. 2018 was a year of significant fuel volatility, and our team has remained relentlessly focused on executing our plan laid out in Investor Day. We are pleased with the progress we’ve made to-date on our building blocks. We are mindful of the external environment, but remain focused on executing on the initiatives we control, which we believe will create value and drive returns for our Owners.”
“We expect 2019 will be a stepping stone year to deliver on our 2020 goals, and to further improvements beyond 2020. We expect to see margin expansion resulting from our network reallocation, ancillary revenue initiatives, improvements to our fleet and our progress in better controlling our costs. We remain confident in our ability to execute on our building blocks and achieve our $2.50 to $3.00 EPS target in 2020,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
Revenue Performance and Outlook
Fourth quarter RASM increased 2.4%. Excluding the 0.3 point headwind from improved completion factor, RASM was above the mid-point of our original guidance range 1.0% to 4.0%. During the quarter we saw strong close-in demand across the network, with strong peaks and continued improvement in trough periods,” said Marty St. George, JetBlue’s EVP Commercial and Planning.
“We are broadly seeing fourth quarter demand trends carry into the first quarter. Our ‘clean’ RASM is expected to fall between 0.75 and 3.75 percent during the first quarter, which adds back the impact of the calendar shift and weather to our guidance.”
Cost Performance, Outlook and Balance Sheet
Fourth quarter CASM ex-fuel declined 3.6%, below the low end of the updated guidance of down (3.5%) to down (1.5%), driven by execution of our Structural Cost Program. “I am delighted to say we exceeded our plan, and reported underlying CASM ex-fuel growth below the mid-point of our full year guidance, despite the added pressure from lower capacity in three of four quarters,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.
“Excluding the 2018 impact from our pilot deal of 1.3 points, we achieved a small decline in underlying CASM ex-fuel for the year. This is an important accomplishment in improving our cost control as we have now achieved $199 million dollars in 2020 run rate savings from our $250 to 300 million dollar Structural Cost Program, and we are on track to execute on our cost commitments through 2020.
Looking into the first quarter, similar to our progression in 2018, we expect the quarter over quarter variations during 2019 to also include scheduled engine maintenance events that may shift between quarters as we remain on a time and material basis for our Airbus engines. For 2019 we continue to expect our ex-fuel unit costs growth to range between 0 and 2 percent. We anticipate CASM ex-fuel growth to be higher in the first half of this year, largely as a result of the pilot contract effective on August 1 of 2018. In the second half of 2019 we expect to see further benefits from the ramp of the Structural Cost Program and the greater impact of our A320 fleet restyling efforts.”
Capital Allocation and Liquidity
JetBlue ended the quarter with approximately $887 million in unrestricted cash and cash equivalents, and short term investments, or about 11.6% of trailing twelve month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.
JetBlue repaid $44 million in regularly scheduled debt and capital lease obligations for the fourth quarter and $222 million for the full year 2018, and raised $147 million in net proceeds in secured aircraft debt for the fourth quarter. 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 $2.24 per gallon, a 18.5% increase versus fourth quarter 2017 realized fuel price of $1.89.
JetBlue entered into forward fuel derivative contracts to hedge approximately 7% of its fuel consumption for the first half of 2019. Based on the fuel curve as of January 11th, JetBlue expects an average price per gallon of fuel of $2.01 in the first quarter of 2019.
|(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: JetBlue Airways Airbus A320-232 WL N809JB (msn 5349) (jetBlue for Good) FLL (Tony Storck). Image: 945291.
JetBlue aircraft slide show:
Since its arrival in Boston in 2004, JetBlue Airways has played an instrumental role in transforming air travel for the Commonwealth and customers traveling through Boston Logan International Airport. JetBlue, which today celebrates its 15th anniversary of operations at Logan, has significantly grown its footprint in the market, leading the way in number of nonstop destinations served, customers carried and total daily departures.
JetBlue’s Historic Growth in Boston
JetBlue first began service in Boston on January 7, 2004, with the airline operating about 4,500 flights from one gate in the first year. While every major U.S. airline had a sizable presence at the time, no single carrier was the clear market leader. With the ‘JetBlue effect’ in action, the airline shook up the market with its low-fare approach, driving down prices and introducing a slew of new destinations for Logan travelers. Fast forward 15 years, JetBlue has become the leading carrier in Boston, with nearly 70 nonstop destinations served, more than 150 daily flights and close to 55,000 annual departures, making up 30 percent of Logan’s overall traffic. JetBlue has also grown its roster of airline partners since entering Logan, offering up global destinations for customers on 20+ international carriers.
“When we first entered Boston, JetBlue was very young. Fifteen years later, it’s exciting to see how far we’ve come and where we’re heading,” said Marty St. George, executive vice president of commercial and planning, JetBlue. “Boston is our home, and we’re committed to providing the low fares, award-winning service and amenities that have made JetBlue the number one choice for travel at Logan.”
“Massport applauds JetBlue for their 15 years of offering exciting travel opportunities for the entire New England region,” said John Pranckevicius, acting CEO, Massport. “We look forward to continuing our strong partnership with JetBlue while providing our business and leisure customers with even more options for travel in the future.”
JetBlue in the Community
JetBlue prides itself on supporting the causes, teams and places its customers and crewmembers are most passionate about. Since 2011, JetBlue crewmembers have contributed more than 48,500 hours of service to a variety of causes and nonprofits throughout New England, such as KaBOOM!, Save the Harbor/Save the Bay, Wings for Autism® and Make-A-Wish® Massachusetts and Rhode Island, among many others.
JetBlue is also the proud official airline sponsor for all four major sports teams including the Boston Celtics, Boston Red Sox, Boston Bruins and New England Patriots, along with the annual Boston Marathon and venues including TD Garden, The Wang Theatre, The Shubert Theatre and the Isabella Stewart Gardner Museum.
JetBlue is on track to reach 200 daily departures in the coming years. Working closely with Massport, the airline continues to make investments to maintain its leadership position in its second-largest focus city. JetBlue plans to expand its footprint from 24 to 30 gates by 2021. Starting in 2020, JetBlue will also steadily replace its Embraer E190 fleet with the larger and more fuel-efficient Airbus A220, providing more seats in the market at a lower operating cost.
JetBlue Airways has firmed up an order for 60 Airbus A220-300 aircraft, the larger model of the new, industry-leading A220 series.
“As we approach our 20th anniversary, the impressive range and economics of the highly efficient A220, combined with the outstanding performance of our existing fleet of Airbus A321 and restyled A320 aircraft, will help ensure we deliver the best onboard experience to customers and meet our long-term financial targets as we continue disciplined growth into the future,” said Robin Hayes, Chief Executive Officer, JetBlue.
JetBlue’s existing Airbus fleet includes 193 A320 and A321ceo aircraft in operation, with an additional 85 A321neo aircraft on order.
The order was completed the last week of December. Airbus will produce the A220-300 aircraft at a new U.S. assembly facility in Mobile, Alabama. Construction of the plant, to be located adjacent to the existing Airbus A320 assembly facility, will begin later this month.
The A220 is the only aircraft purpose built for the 100-150 seat market; it delivers unbeatable fuel efficiency and true widebody comfort in a single-aisle aircraft. The A220 brings together state-of-the-art aerodynamics, advanced materials and Pratt & Whitney’s latest-generation PW1500G geared turbofan engines to offer at least 20 percent lower fuel burn per seat compared to previous generation aircraft. With a range of up to 3,200 nm (5,020 km), the A220 offers the performance of larger single-aisle aircraft.
With an order book of more than 500 aircraft to date, the A220 has all the credentials to win the lion’s share of the 100- to 150-seat aircraft market estimated to represent at least 7,000 aircraft over the next 20 years.
JetBlue Airways has announced the start of new service in Steamboat Springs, Colorado, with the arrival of inaugural flights from Fort Lauderdale-Hollywood International Airport (FLL), Boston Logan International Airport (BOS) and Long Beach Airport (LGB).
Service started on December 15.
JetBlue nonstop service to the Steamboat/Hayden Airport (HDN) is currently scheduled as follows:
The new routes connect the world-renowned ski destination with three key regions of JetBlue’s route map and operate on a winter seasonal schedule.
JetBlue becomes the only airline to offer nonstop service from both New England and South Florida to Steamboat Springs. And Long Beach service opens up a new and convenient airport choice for Southern California travelers. Twice-weekly Boston and Long Beach service operates Wednesdays and Saturdays, with Fort Lauderdale/Hollywood service operating weekly on Saturdays.
JetBlue flights serve Yampa Valley Regional Airport (HDN), just 30 minutes from downtown Steamboat Springs.
JetBlue will operate new Steamboat Springs flights using its Airbus A320 aircraft.
Top Copyright Photo (others by the airport): JetBlue Airways Airbus A320-232 N569JB (msn 2075) (10th Anniversary) LGB (Michael B. Ing). Image: 944819.
JetBlue aircraft slide show:
JetBlue Airways on December 13 announced the start of new service in Bozeman, Montana, with the arrival of the airline’s inaugural flight landing on schedule just before 2:30 p.m. local time (below).
Above Photo:. Bozeman Yellowstone International Airport.
Roundtrip flights between Bozeman Yellowstone International Airport (BZN) and Long Beach Airport (LGB) will operate twice weekly on Thursdays and Sundays on a summer and winter seasonal schedule.
Bozeman is JetBlue’s first destination in Montana.
JetBlue will operate new Bozeman flights using its Airbus A320 aircraft. The first flight was operated with the pictured N805JB.
Top Copyright Photo: JetBlue Airways Airbus A320-232 WL N805JB (msn 5148) (Barcode) LGB (Michael B. Ing). Image: 931273.
JetBlue aircraft slide show:
The new route:
Hawaiian Airlines and JetBlue today announced an expanded codeshare agreement that allows travelers from dozens of cities, most of them in the eastern U.S., to easily connect to the Hawaiian Islands via Boston’s Logan International Airport (BOS) starting in April.
Boston-area JetBlue customers can now purchase tickets on Hawaiian Airlines’ nonstop flight to Honolulu’s Daniel K. Inouye International Airport (HNL) with JetBlue’s ‘B6’ code and earn TrueBlue points when they fly.
Additionally, travelers originating in 26 cities – including Washington, DC (DCA), Pittsburgh (PIT), Philadelphia (PHL), Baltimore (BWI) and Cleveland (CLE), which currently cannot connect to Hawai’i through JetBlue in New York – can already purchase codeshare tickets that carry Hawaiian’s ‘HA’ code on their JetBlue flights that connect in Boston, and JetBlue’s ‘B6’ code on Hawaiian’s new nonstop flight between Logan and Honolulu. And they can use the ‘B6’ code on convenient Hawaiian flights that connect Honolulu to the entire island chain. Hawaiian and JetBlue’s guests also will continue to enjoy one-stop check-in and baggage transfers to their final destination, as well as the opportunity to earn and redeem loyalty rewards.
Hawaiian and JetBlue also offer their loyal members the opportunity to earn and redeem points or miles for travel on either carrier. HawaiianMiles members can earn miles on JetBlue-operated flights, while TrueBlue members can accrue points on Hawaiian-operated flights. Similarly, frequent fliers can redeem their points or miles for travel on either carrier’s network, creating a long list of destinations for each program’s loyal members.
JetBlue flights connecting to and from Boston that are covered by the codeshare agreement are available at the following airports: Atlanta (ATL), Baltimore, Buffalo (BUF), Charlotte (CLT), Charleston(CHS), Chicago (ORD), Cleveland, Detroit (DTW), Fort Lauderdale (FLL), Fort Myers (RSW), Jacksonville(JAX), Minneapolis (MSP), Nashville (BNA), New York (LGA and JFK), Newark (EWR), Orlando (MCO), Palm Beach (PBI), Philadelphia, Pittsburgh, Raleigh-Durham (RDU), Savannah (SAV), Syracuse (SYR), Tampa (TPA) and Washington, DC both (DCA) and (IAD).
Hawaiian Airlines will begin its five-day-a-week service to Boston on April 4, 2019. Boston is the largest U.S. market without nonstop service to Hawai’i with nearly 500 people flying between eastern New England and the Islands on any given day.
In commemoration of Hawaiian Airlines’ 90th year of operation, the flight to Boston will be numbered Flight HA90. Starting with the inaugural flight on April 4, HA90 will depart HNL every day but Tuesday and Wednesday at 1:45 p.m. and arrive at BOS the following morning at 6 a.m. Flight HA89 will depart BOS every day but Wednesday and Thursday at 8:55 a.m., except for Friday flights, which will depart at 8 a.m. The flights will arrive in Hawai’i the same day at 2:35 p.m. and the Friday flight will arrive at 1:40 p.m. Both HNL arrival times offer guests ample time to settle into their accommodations and unwind with a Hawaiian sunset, or connect to Kaua’i, Maui or the Island of Hawai’i via the airline’s convenient schedule of some 170 daily interisland flights, all of which will have the JetBlue codeshare.
At 5,095 miles, Hawaiian’s BOS-HNL route becomes the longest regularly scheduled route in the U.S. Guests traveling from the East Coast to Hawai’i will enjoy the roominess and superior comfort of Hawaiian’s 278-seat Airbus A330 widebody aircraft. Incorporating flowing curves evocative of the winds and the ocean, Hawaiian’s spacious first-class cabin features 18 lie-flat leather seats that transform into 180-degree beds at a roomy 20.5 inches wide and 76 inches long. Aligned in a 2-2-2 configuration, the seats are ideally tailored to leisure guests such as couples, families and honeymooners, while offering functionality to the business traveler. Hawaiian also recently expanded to 68 from 40 the number of Extra Comfort main cabin seats, which offer a generous 36-inch pitch for extra leg room and priority boarding. Guests can upgrade to Extra Comfort seats for $145 each way.
Hawaiian’s Executive Chef Lee Anne Wong, owner of Honolulu’s Koko Head Café, collaborates with Hawai’i’s top chefs to delight guests with two meals served in each direction.
In Boston, JetBlue will soon offer flights to more than 70 nonstop destinations – many more than any other airline – and is the leader in the number of customers carried and total daily departures. JetBlue also serves Boston with premium Mint flights to a half-dozen destinations. With Mint, JetBlue re-imagined “business class” service offered by legacy carriers with lie-flat seating, curated food and amenities, and hospitality-trained inflight crewmembers – offered at an affordable price. JetBlue is on track to reach 200 daily departures at Logan in the coming years.
Top Copyright Photo: Hawaiian Airlines Airbus A330-243 N390HA (msn 1389) JFK (Fred Freketic). Image: 944577.
Hawaiian aircraft slide show: