JetBlue Airways Corporation today reported its results for the first quarter 2021:

• Reported GAAP loss per share of ($0.78) in the first quarter of 2021 compared to a diluted earnings per share of $0.14 in the first quarter of 2019. Adjusted loss per share was ($1.48)⁽¹⁾ in the first quarter of 2021 versus adjusted diluted earnings per share of $0.16⁽¹⁾ in the first quarter of 2019. Note A to this earnings release includes the GAAP to Non-GAAP reconciliation between reported and adjusted diluted earnings per share.
• GAAP pre-tax loss of ($347) million in the first quarter of 2021, compared to a pre-tax income of $58 million in the first quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($636) million⁽¹⁾ in the first quarter of 2021 versus adjusted pre-tax income of $70 million⁽¹⁾ in the first quarter of 2019.

Operational Highlights from the First Quarter

• First quarter 2021 revenue declined 61% year over two as a result of the impact of COVID-19. The decline is on the lower end of our prior expectations for the quarter of a 61 to 64% decline year over two, and represents a six-point sequential improvement quarter over quarter, mainly driven by sustained momentum in booking trends for leisure travel beginning in mid-February.
• Reduced first quarter 2021 capacity by 41% year over two, in line with our original planning assumption, as a result of actions taken to capture improving demand, manage cash burn and protect liquidity.
• Operating expenses declined 43% year over two. Excluding special items, adjusted operating expenses declined 26%⁽¹⁾ year over two, which is better than our planning assumption of a decrease of 25% year over two, despite higher fuel prices. The results were driven by capacity reductions and initiatives taken to reduce variable and fixed costs.
• Resulting primarily from the actions taken, JetBlue’s Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Special Items (Adjusted EBITDA) in the first quarter of 2021 was ($458) million⁽¹⁾, better than the ($490) to ($540) million range previously expected.

Balance Sheet and Liquidity

• JetBlue ended the first quarter of 2021 with approximately $3.2 billion in unrestricted cash, cash equivalents, and short-term investments, or 40% of 2019 revenue.
• JetBlue repaid $94 million in regularly scheduled debt and finance lease obligations and repaid the fully drawn $550 million revolving credit facility during the first quarter of 2021.
• JetBlue has taken the following measures in the first quarter to manage liquidity:
  • Raised approximately $750 million with a convertible debt offering transaction.
  • Continued to achieve significant savings through aggressive capacity management and executing actions to manage our fixed and variable cost structure.
  • Redeployed assets to capture short-term, tactical cash generation opportunities and make long term network investments in our focus cities.

Fuel Expense and Hedging

The realized fuel price in the first quarter 2021 was $1.72 per gallon, a 16% decline versus first quarter 2019 realized fuel price of $2.05.

As of April 27 2021, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the second quarter of 2021. Based on the forward curve as of April 16^th, JetBlue expects an average all-in price per gallon of fuel of $1.87 in the second quarter of 2021.

Our Recovery Plan and Actions Taken to Position JetBlue for Future Success

“Although our EPS remains in negative territory, we have seen meaningful progress in the demand recovery, and have started to gain momentum from the groundwork we have laid to emerge from the crisis as a stronger JetBlue,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“Looking back to our work from 2020, I could not be more confident in our future. Our teams continue executing our comprehensive recovery plan, reducing our cash burn, rebuilding our margins, and repairing our balance sheet. We have seen positive cash from operations for March, and this milestone is our first step towards achieving positive EBITDA and returning to profitability.”

Action Plan, Revenue and Capacity

“While we initially anticipated trends improving during the quarter, we saw a bigger than expected step up in demand for leisure travel beginning in mid-February,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“For the second quarter of 2021, our planning assumption for revenue is a decline of between (30%) and (35%) year over two, the largest sequential improvement in our revenue since the start of the pandemic. We expect unit revenue to significantly improve, driven by both increasing load factors and improving yields.

“During the pandemic we have been focused on balancing supply and demand, managing our capacity to maximize revenue and rebuild our margins. For the second quarter of 2021, our planning assumption is for capacity to decline approximately (15%) year over two, given the strong sequential improvement in demand.”

Financial Performance and Outlook

“In March we reached breakeven cash from operations and our first quarter Adjusted EBITDA⁽¹⁾ was ahead of the range we anticipated, a result of improving revenue trends and continuing to successfully manage our cost structure, despite increasing fuel prices,” said Steve Priest, JetBlue’s Chief Financial Officer.

“For the second quarter, we estimate EBITDA will range between ($100) and ($200) million⁽²⁾, reflecting an acceleration of demand, partly offset by cost pressures from fuel prices, and airport rents and landing fees. On an EBITDA basis, we believe we will reach breakeven in the third quarter, and expect to remain in positive territory through the end of the year.

“Since the start of the pandemic, we have gone deep on our cost structure with a focus on our fixed cost base, adding to the continued momentum from our Structural Cost Program. We expect to achieve better than 2019 CASM ex-fuel in 2022, providing a path to expand our EBITDA and ultimately, our pre-tax margins.

“Going forward, as we produce positive cash from operations, we plan to prioritize paying down high cost debt. We also intend to continue to take a strategic and measured approach to return to investment grade metrics and a debt to cap ratio between 30% and 40%.”

Top Copyright Photo: JetBlue Airways Airbus A320-232 N794JB (msn 4904) (Spotlight) JFK (Fred Freketic). Image: 949849.

JetBlue aircraft slide show:

JetBlue Airways Corporation today reported its results for the first quarter 2020:

• Reported GAAP loss per share of ($0.97) in the first quarter of 2020 compared to a diluted earnings per share of $0.14 in the first quarter of 2019. Adjusted loss per share was $0.42⁽¹⁾ in the first quarter of 2020 versus adjusted diluted earnings per share of $0.16⁽¹⁾ in the first quarter of 2019. Note A to this earnings release includes the GAAP to Non-GAAP reconciliation between reported and adjusted diluted earnings per share.
• GAAP pre-tax loss of ($354) million in the first quarter of 2020, compared to a pre-tax income of $58 million in the first quarter of 2019. Excluding the one-time items, adjusted pre-tax loss of ($152) million⁽¹⁾, versus adjusted pre-tax income of $70 million⁽¹⁾ in the first quarter of 2019.
• GAAP pre-tax margin of (22.3%) in the first quarter of 2020, down 25.4 percentage points from a pre-tax margin of 3.1% in the first quarter of 2019 due to the impact of COVID-19. Adjusted pre-tax margin of (9.5%)⁽¹⁾, a decline of 13.2 percentage points year over year from adjusted pre-tax margin of 3.7%⁽¹⁾, exclusive of the one-time costs.

Operational Highlights from the First Quarter

• First quarter 2020 revenue declined 15.1% year over year as a result of a 52% decline in March revenue due to the impact of COVID-19, resulting in both lower demand volumes and a very challenging fare environment following a very solid start to the year.
• Reduced March capacity by 19% year over year and took aggressive action to reduce second quarter 2020 schedules to mitigate cash burn. Our ability to adjust March schedules was limited to close-in cancellations.
• Operating expenses increased 7.1% year over year. Excluding special items, adjusted operating expenses⁽¹⁾declined 3.6% year over year. We successfully removed ~$150 million from our planned cost base in the first quarter driven by variable cost reductions, mainly through capacity cuts in March and fixed costs reductions achieved by adjusting work schedules where possible and eliminating some discretionary spend.
• Increased cash, cash equivalents and short-term investments from $1.3 billion at the end of 2019 to approximately $1.8 billion at end of first quarter of 2020. We further increased our liquidity to $3.1 billion as of April 30, 2020, resulting from additional financing transactions and full disbursement from the CARES Act Payroll Support Program of $936 million.

Balance Sheet and Liquidity

• JetBlue ended the first quarter with approximately $1.8 billion in unrestricted cash, cash equivalents, and short-term investments, or 22.2% of 2019 revenue.
• JetBlue repaid $102 million in regularly scheduled debt and finance lease obligations during the first quarter of 2020.
• JetBlue has taken the following measures to-date to bolster liquidity:
  • Raised $1.0 billion under a secured, 364-day term loan.
  • Drew down $550 million under the existing credit revolver.
  • Negotiated with business partners to extend payment terms and reduce expenses.
  • Revised order book with Airbus, resulting in a $1.1 billion reduction in aircraft capital expenditures through 2022.
  • Deferred plans to take delivery of four leased aircraft announced in January.
  • Paused A320 cabin restyling program, having completed over half of our fleet.
  • Suspended all non-essential projects across the organization.
  • Ceased share repurchases until further notice.
• Resulting from the actions taken, JetBlue expects to reduce its daily cash burn from an average of $18 million in the second half of March to just below $10 million in May, excluding the CARES Act support of approximately $5 million per day through the end of the third quarter.

CARES Act

• JetBlue reached an agreement with the Department of Treasury to receive $936 million under the Payroll Support Program of the CARES Act. The payment consists of $685 million in grants and $251 million in an unsecured term loan.
• In consideration for the payment, we issued approximately 2.6 million warrants to the Department of Treasury.
• In late April, JetBlue applied for the Loan Program of the CARES Act, which would provide up to $1.14 billion in additional liquidity, if needed.

Fuel Expense and Hedging

The realized fuel price in the quarter was $1.86 per gallon, a 9.3% decline versus first quarter 2019 realized fuel price of $2.05.

The decline in average fuel prices reduced the Company’s first quarter 2020 fuel expense by approximately $46 million versus our January 2020 guidance. The reduction in fuel consumption driven by capacity cuts reduced the Company’s first quarter 2020 fuel expense by approximately $40 million versus our January 2020 guidance.

JetBlue has entered into forward fuel derivative contracts to hedge its fuel consumption for the second, third, and fourth quarter of 2020. Based on the forward curve as of April 24^th, JetBlue expects an average all-in price per gallon of fuel of $0.76 in the second quarter of 2020.

Protecting our Stakeholders

“I could not be prouder of our JetBlue family – not just over the past two decades – but for their service to each other, our customers, and our communities as they provide an essential service during the coronavirus pandemic,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“We entered this crisis with the second strongest balance sheet among U.S. airlines. In the past two months, we have moved quickly to both protect and strengthen our liquidity position. Since the beginning of March, we have made decisive changes to our growth plan to minimize cash burn, including deep capacity cuts to our schedules. We have now reduced our CAPEX plan by $1.3 billion between now and the end of 2022, and by the end of May, we anticipate we will have lowered our operating expenses by approximately 50% year over year.

As we move towards recovery, we have three priorities. The first is the immediate need to protect the safety of our Crewmembers and Customers. The second is to minimize cash burn. The third priority is to set JetBlue up for future success by restoring Customer confidence, by returning to cash generation, and by rebuilding our margins and balance sheet.

We believe that, not only will we get through this crisis, but we will ultimately emerge as a stronger JetBlue. JetBlue has been a force for good for our industry, and we have been resilient through crises for over 20 years.”

Action Plan, Revenue and Capacity

“Our first priority since the onset of the pandemic has been to ensure the safety of our customers and crewmembers. We have responded quickly to changing conditions, and overseen the rapid evolution of policies and programs designed to address the threats to crewmember and customer safety posed by this virus,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“Although the overall number of bookings remained extremely limited, we believe that we reached the bottom in terms of demand around mid-April, and expect to have a better sense of third and the fourth quarter of 2020 by early summer.

Our March capacity declined 19% year over year, as a result of scheduled reductions and close-in cancellations. Our working assumption for the second quarter is for capacity to be down about 80% compared to our original plan.

While much of our team is focused on navigating the near-term challenges, we are focused on how the business will look for customers and crewmembers as we transition to recovery. We believe our inherent strengths as a trusted brand with an unparalleled culture and superior product will serve us well, as customers evaluate their air travel options. We plan to continue to be thoughtful as we adapt to changing customer needs.”

Cost Performance and Outlook

“Thanks to our continued focus in managing JetBlue to investment grade metrics, building a strong balance sheet, improving our cost structure and strengthening our margins, we believe we are in the best position of any time in our 20-year history to effectively weather this crisis and emerge even stronger,” said Steve Priest, JetBlue’s Chief Financial Officer.

“From a financial perspective, we are focusing our efforts over the coming months on three key areas: preserving our liquidity, reducing operating expenses, and managing our capital expenditures.

We started the year with $1.3 billion in cash, cash equivalents and short-term investments. By the close of April, our liquidity position reached $3.1 billion, or ~38% of our 2019 revenue, including the payroll support through the CARES act.

In addition to successfully raising liquidity in a short period, we have acted with urgency to minimize our cash burn, reducing our expenses and re-working our plan for capital expenditures. We lowered our cash burn from an average of $18 million per day during the second half of March, to just under $10 million per day by May, excluding proceeds from the Payroll Support Program. We are leaving no stone unturned to protect the financial security of JetBlue.”

Top Copyright Photo: JetBlue Airways Airbus A320-232 N794JB (msn 4904) (Spotlight) JFK (Fred Freketic). Image: 949849.

JetBlue Airways aircraft slide show: