JetBlue Airways Corporation (JetBlue Airways) (New York) today reported its results for the fourth quarter and full year 2012:
- Operating income of $44 million in the fourth quarter. This compares to operating income of $83 million in the year-ago period. For the full year 2012, JetBlue reported operating income of $376 million. This compares to operating income of $322 million for the full year 2011.
- Pre-tax income of $1 million in the fourth quarter. This compares to pre-tax income of $40 million in the year-ago period. For the full year 2012, JetBlue reported pre-tax income of $209 million. This compares to a pre-tax income of $145 million for the full year 2011.
- Net income for the fourth quarter was $1 million, or $0.00 per diluted share. This compares to JetBlue’s fourth quarter 2011 net income of $23 million, or $0.08 per diluted share. For the full year 2012, JetBlue reported net income of $128 million, or $0.40 per diluted share. This compares to net income of $86 million, or $0.28 per diluted share.
“Although Hurricane Sandy negatively impacted fourth quarter results, 2012 was a very good year for JetBlue,” said Dave Barger, JetBlue’s President and Chief Executive Officer. “We further solidified our position as New York’s Hometown Airline™ while continuing to pursue profitable growth opportunities in Boston and the Caribbean & Latin America, resulting in record revenue performance. These results reflect the hard work and dedication of our 14,000 crewmembers who deliver exceptional service to our customers every day.”
JetBlue reported record fourth quarter operating revenues of $1.2 billion despite Hurricane Sandy, which reduced revenue by an estimated $45 million. Revenue passenger miles for the fourth quarter increased 4.3% to 8.1 billion on a capacity increase of 4.8%, resulting in a fourth quarter load factor of 81.9%, a decrease of 0.3 points year over year.
Yield per passenger mile in the fourth quarter was 13.47 cents, up 0.2% compared to the fourth quarter of 2011. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2012 decreased 0.2% year over year to 11.03 cents and operating revenue per available seat mile (RASM) decreased 0.5% year over year to 12.09 cents.
“While we saw a significant decline in demand for air travel following Hurricane Sandy, we are encouraged by more robust demand trends during the December holiday travel period,” said Robin Hayes, JetBlue’s Chief Commercial Officer. “We continue to be pleased with the strong performance of our Boston business-oriented markets – an area of significant focus for JetBlue.”
Operating expenses for the quarter increased 8.3%, or $87 million, over the prior year period. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter increased 3.3% year over year to 11.65 cents. Excluding fuel, CASM increased 4.8% to 7.17 cents.
Over the course of 2012, JetBlue improved its return on invested capital (ROIC) by approximately one percentage point to 4.8%. “We improved ROIC through a combination of margin expansion and prudent balance sheet management,” said Mark Powers, JetBlue’s Chief Financial Officer. “Nonetheless, we recognize there is still significant work to be done to continue improving shareholder returns. We remain committed to improving ROIC and believe we are on track to do so in 2013.”
Fuel Expense and Hedging
JetBlue continued to hedge fuel to manage price volatility. Specifically, during the fourth quarter JetBlue hedged approximately 27% of its fuel consumption and managed approximately 20% of its fuel consumption using fixed forward price agreements (FFPs), resulting in a realized fuel price of $3.20 per gallon, a 1% increase over fourth quarter 2011 realized fuel price of $3.15.
JetBlue has managed approximately 18% of its first quarter projected fuel requirements using a combination of FFPs and collars. Based on the fuel curve as of January 25th, JetBlue expects an average price per gallon of fuel, including the impact of hedges, FFPs and fuel taxes, of $3.23 in the first quarter.
Balance Sheet Update
JetBlue ended the fourth quarter with approximately $731 million in unrestricted cash and short term investments. During the quarter, JetBlue increased its line of credit with Morgan Stanley to $200 million. In addition, JetBlue maintains a $125 million corporate purchasing line with American Express for jet fuel purchases.
During the fourth quarter, JetBlue prepaid approximately $50 million of debt. JetBlue recorded a $3 million loss in non-operating income during the quarter in connection with this prepayment. In addition, JetBlue prepaid $200 million related to 2013 aircraft deliveries and pre-delivery deposits for future aircraft deliveries in exchange for favorable pricing terms.
Since December 31, 2011, JetBlue has increased the number of unencumbered Airbus A320 aircraft from one to 11 and decreased its total debt balance by approximately $285 million. “We continue to actively manage our total debt balance and seek to optimize the liquidity on our balance sheet, which we believe will help improve ROIC,” said Mr. Powers.
First Quarter and Full Year Outlook
For the first quarter of 2013, CASM is expected to increase between 1.0% and 3.0% over the year-ago period. Excluding fuel and profit sharing, CASM in the first quarter is expected to increase between 2.0% and 4.0% year over year.
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 1.0% and 3.0% year over year.
Capacity is expected to increase between 5.5% and 7.5% in the first quarter and for the full year.
Copyright Photo: Eddie Maloney. Airbus A320-232 N746JB (msn 3622) is dedicated to the hometown New York Jets of the National Football League. N746JB is pictured arriving at Las Vegas.