JetBlue Airways Corporation (NASDAQ:JBLU) today reported its
results for the second quarter 2016:
- Operating income of $313 million in the
second quarter, an increase of 11.0% over the second quarter of
2015.
- Pre-tax income of $289 million in the
second quarter, an increase of 15.7% over the second quarter of
2015.
- Net income of $180 million, or $0.53
per diluted share. This compares to JetBlue’s second quarter 2015
net income of $152 million, or $0.44 per diluted share.
Financial Performance
JetBlue reported second quarter operating revenues of $1.6
billion. Revenue passenger miles for the second quarter increased
10.3% to 11.6 billion on a capacity increase of 11.1%, resulting in
a second quarter load factor of 85.0%, a 0.6 point decrease year
over year.
Yield per passenger mile in the second quarter was 12.87 cents,
down 9.9% compared to the second quarter of 2015. Passenger revenue
per available seat mile (PRASM) for the second quarter 2016
decreased 10.5% year over year to 10.94 cents and operating revenue
per available seat mile (RASM) decreased 8.2% year over year to
12.09 cents.
Compared with last year, operating expenses for the quarter were
essentially flat. Interest expense for the quarter declined 12.8%,
or $4 million, as JetBlue continued to reduce its debt. JetBlue’s
operating expense per available seat mile (CASM) for the second
quarter decreased 9.9% year over year to 9.78 cents. Excluding fuel
and profit sharing, second quarter CASM1 decreased 1.0% to 7.48
cents.
“I would like to thank our crewmembers for delivering another
great quarter. Looking ahead, we are excited about our growth
opportunity in the transcontinental market, where Mint has a
successful track record of delivering a great product, amazing
service, stimulating premium demand and meaningfully improving unit
revenue” said Robin Hayes, JetBlue’s President and CEO.
Mint
JetBlue announced today it intends to further expand its highly
successful Mint experience by amending its purchase agreement with
Airbus to bring 30 additional A321 aircraft into its fleet over
seven years. The additional aircraft will allow JetBlue to capture
an opportunity to position itself as the carrier of choice in
transcontinental markets with a targeted approach that leverages
its east coast strength. Specifically, Airbus is scheduled to
deliver 15 incremental A321ceos starting in 2017. Further, JetBlue
expects to also take delivery of 15 incremental A321neos starting
in 2020. Starting in 2019, JetBlue would have the option to take
all of its A321neo deliveries with the Long Range configuration,
the A321-LR.
Since Mint launched in 2014 it has boosted JetBlue’s
transcontinental franchise and become a driver for long-term
shareholder value. Since 2014 RASM on Mint routes has grown by over
20 percent.
Fuel Expense and Hedging
JetBlue had no fuel hedges in place covering second quarter 2016
consumption. The realized fuel price in the quarter was $1.43 per
gallon, a 32.8% decrease versus second quarter 2015 realized fuel
price of $2.13.
JetBlue has hedged approximately 24% of its third quarter 2016
projected fuel consumption using jet fuel swaps. Based on the fuel
curve as of July 15th, JetBlue expects an average price per gallon
of fuel, including the impact of hedges and fuel taxes, of $1.52 in
the third quarter. For the fourth quarter, JetBlue has hedged
approximately 26% of projected fuel consumption.
Liquidity and Cash Flow
JetBlue ended the quarter with $1.5 billion in unrestricted cash
and short term investments, or about 23% of trailing twelve month
revenue. In addition, JetBlue maintains approximately $600 million
in undrawn lines of credit.
During the second quarter, JetBlue repaid $36 million in
regularly scheduled debt and capital lease obligations. JetBlue
anticipates paying approximately $367 million in regularly
scheduled debt and capital lease obligations during the remainder
of 2016 and plans to continue to opportunistically prepay other
debt and leases. JetBlue expects to pay approximately $61 million
in regularly scheduled debt and capital lease obligations in the
third quarter of 2016. Given the strength of its cash from
operations, JetBlue anticipates it will pay cash for its remaining
six 2016 deliveries from Airbus.
“We posted strong second quarter results driven by a remarkable
cost performance. Our strong balance sheet and improved returns
provide the confidence to invest in RASM and EPS accretive
initiatives such as Mint to continue to drive long term shareholder
value” said Mark Powers, JetBlue’s Chief Financial Officer.
Third Quarter and Full Year
Outlook
For the third quarter of 2016, year over year CASM excluding
fuel and profit sharing is expected to grow between 1% and 3%. For
the full year 2016, JetBlue continues to expect year over year CASM
excluding fuel and profit sharing to grow between zero and
1.5%.
In the third quarter 2016, capacity is expected to increase
between 5.5% and 7.5%. For the full year 2016, JetBlue continues to
expect capacity to increase between 8.0% and 9.5%.
JetBlue will conduct a conference call to discuss its quarterly
earnings today, July 26, at 10:00 a.m. Eastern Time. A live
broadcast of the conference call will be available via the internet
at http://investor.jetblue.com.
About JetBlue
JetBlue is New York's Hometown Airline™, and a leading carrier
in Boston, Fort Lauderdale - Hollywood, Los Angeles (Long Beach),
Orlando, and San Juan. JetBlue carries more than 35 million
customers a year to 96 cities in the U.S., Caribbean, and Latin
America with an average of 925 daily flights. For more information
please visit JetBlue.com.
Notes
(1) Consolidated operating cost per available seat
mile, excluding fuel and profit sharing and related taxes (CASM
Ex-Fuel and Profit Sharing) 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.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
which represent our management's beliefs and assumptions concerning
future events. When used in this document and in documents
incorporated herein by reference, the words “expects,” “plans,”
“anticipates,” “indicates,” “believes,” “forecast,” “guidance,”
“outlook,” “may,” “will,” “should,” “seeks,” “targets” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements involve risks, uncertainties and
assumptions, and are based on information currently available to
us. Actual results may differ materially from those expressed in
the forward-looking statements due to many factors, including,
without limitation, our extremely competitive industry; volatility
in financial and credit markets which could affect our ability to
obtain debt and/or lease financing or to raise funds through debt
or equity issuances; volatility in fuel prices, maintenance costs
and interest rates; our ability to implement our growth strategy;
our significant fixed obligations and substantial indebtedness; our
ability to attract and retain qualified personnel and maintain our
culture as we grow; our reliance on high daily aircraft
utilization; our dependence on the New York and Boston metropolitan
markets and the effect of increased congestion in these markets;
our reliance on automated systems and technology; our being subject
to potential unionization, work stoppages, slowdowns or increased
labor costs; our reliance on a limited number of suppliers; our
presence in some international emerging markets that may experience
political or economic instability or may subject us to legal risk;
reputational and business risk from information security breaches
or cyber-attacks; changes in or additional government regulation;
changes in our industry due to other airlines' financial condition;
acts of war or terrorist attacks; global economic conditions or an
economic downturn leading to a continuing or accelerated decrease
in demand for domestic and business air travel; the spread of
infectious diseases; adverse weather conditions or natural
disasters; and external geopolitical events and conditions. It is
routine for our internal projections and expectations to change as
the year or each quarter in the year progresses, and therefore it
should be clearly understood that the internal projections, beliefs
and assumptions upon which we base our expectations may change
prior to the end of each quarter or year.
Given the risks and uncertainties surrounding forward-looking
statements, you should not place undue reliance on these
statements. You should understand that many important factors, in
addition to those discussed or incorporated by reference in this
press release, could cause our results to differ materially from
those expressed in the forward-looking statements. Potential
factors that could affect our results include, in addition to
others not described in this press release, those described in Item
1A of our 2015 Form 10-K under "Risks Related to JetBlue" and
"Risks Associated with the Airline Industry". In light of these
risks and uncertainties, the forward-looking events discussed in
this press release might not occur.
JETBLUE AIRWAYS CORPORATION CONSOLIDATED
STATEMENTS OF OPERATIONS (in millions, except per share
amounts) (unaudited)
Three
Months Ended Six Months Ended June 30,
Percent June 30, Percent 2016
2015 Change 2016 2015 Change
OPERATING REVENUES Passenger $ 1,487 $ 1,496 (0.6 ) $ 2,965
$ 2,904 2.1 Other 156 116 35.2
295 231 27.6 Total operating revenues 1,643
1,612 2.0 3,260 3,135 4.0
OPERATING EXPENSES Aircraft
fuel and related taxes 274 371 (26.1 ) 489 706 (30.7 ) Salaries,
wages and benefits 415 375 10.6 850 750 13.3 Landing fees and other
rents 92 90 3.2 177 173 2.6 Depreciation and amortization 96 81
18.2 188 168 11.2 Aircraft rent 28 31 (9.5 ) 56 62 (9.8 ) Sales and
marketing 72 70 3.7 137 130 5.0 Maintenance, materials and repairs
140 126 10.9 274 239 14.6 Other operating expenses 213
186 14.7 427 372
15.2 Total operating expenses 1,330 1,330 0.1 2,598 2,600 (0.1 )
OPERATING INCOME 313 282 11.0 662 535 23.7
Operating margin 19.1 % 17.5 % 1.6 pts. 20.3 % 17.1 % 3.2 pts.
OTHER INCOME (EXPENSE) Interest expense (28 ) (32 )
(12.8 ) (57 ) (66 ) (14.0 ) Capitalized interest 2 2 (13.8 ) 4 4
(12.3 ) Interest income (expense) and other 2
(2 ) (255.3 ) 3 (1 ) (512.9 ) Total other
income (expense) (24 ) (32 ) (24.9 ) (50 ) (63 ) (20.1 )
INCOME BEFORE INCOME TAXES 289 250 15.7 612 472 29.6
Pre-tax margin 17.6 % 15.5 % 2.1 pts. 18.8 % 15.1 % 3.7 pts.
Income tax expense 109 98 11.2
232 183 26.7
NET INCOME $ 180
$ 152 18.5 $ 380 $ 289 31.4
EARNINGS PER COMMON SHARE: Basic $ 0.56 $ 0.48
$ 1.18 $ 0.92 Diluted $ 0.53 $ 0.44 $
1.11 $ 0.84
WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 323.2 316.9 322.4 313.6 Diluted 342.6 347.6
342.1 347.0
JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING STATISTICS (unaudited)
Three Months Ended Six Months Ended June 30,
Percent June 30, Percent 2016
2015 Change 2016 2015 Change
Revenue passengers (thousands) 9,660 8,858 9.1 18,778 16,953 10.8
Revenue passenger miles (millions) 11,553 10,472 10.3 22,529 20,093
12.1 Available seat miles (ASMs) (millions) 13,597 12,237 11.1
26,626 23,656 12.6 Load factor 85.0 % 85.6 % (0.6 ) pts. 84.6 %
84.9 % (0.3 ) pts. Aircraft utilization (hours per day) 12.3 12.0
2.5 12.2 11.8 3.4 Average fare $ 153.94 $ 168.85 (8.8 ) $
157.88 $ 171.29 (7.8 ) Yield per passenger mile (cents) 12.87 14.28
(9.9 ) 13.16 14.45 (8.9 ) Passenger revenue per ASM (cents) 10.94
12.22 (10.5 ) 11.13 12.28 (9.3 ) Revenue per ASM (cents) 12.09
13.17 (8.2 ) 12.24 13.25 (7.6 ) Operating expense per ASM (cents)
9.78 10.86 (9.9 ) 9.76 10.99 (11.2 ) Operating expense per ASM,
excluding fuel and related taxes (cents) 7.76 7.83 (0.8 ) 7.92 8.00
(1.1 ) Operating expense per ASM, excluding fuel and profit sharing
and related taxes (cents)(1) 7.48 7.56 (1.0 ) 7.57 7.75 (2.3 )
Departures 85,285 79,558 7.2 166,524 153,381 8.6 Average
stage length (miles) 1,097 1,085 1.1 1,103 1,091 1.1 Average number
of operating aircraft during period 218.2 206.0 5.9 216.8 205.0 5.8
Average fuel cost per gallon, including fuel taxes $ 1.43 $ 2.13
(32.8 ) $ 1.31 $ 2.10 (37.8 ) Fuel gallons consumed (millions) 191
174 9.9 374 337 11.3 Average number of full-time equivalent
crewmembers 15,297 14,223 7.6 (1) Refer to Note A,
Consolidated operating cost per available seat mile, excluding
fuel, profit sharing and related taxes, at the end of our Earnings
Release for more information on this non-GAAP measure.
JETBLUE AIRWAYS
CORPORATIONSELECTED CONSOLIDATED BALANCE SHEET
DATA(in millions)
June 30, December
31, 2016 2015 Cash and cash equivalents $ 935 $
318 Total investment securities 605 607 Total assets 9,458 8,644
Total debt 1,746 1,827 Stockholders' equity 3,644 3,210
SOURCE: JetBlue Airways Corporation
Note A – Non-GAAP Financial Measures
JetBlue sometimes uses non-GAAP measures that are derived from
the Consolidated Financial Statements, but that are not presented
in accordance with generally accepted accounting principles
(“GAAP”). JetBlue believes these metrics provide a meaningful
comparison of our results to others in the airline industry and our
prior year results. Under the U.S. Securities and Exchange
Commission rules, non-GAAP financial measures may be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for or superior to GAAP results. The
table below shows a reconciliation of non-GAAP financial measures
used in this press release to the most directly comparable GAAP
financial measures. It should be noted as well that our non-GAAP
information may be different from the non-GAAP information provided
by other companies.
Consolidated operating cost per available seat mile,
excluding fuel, profit sharing and related taxes (“CASM Ex-Fuel and
Profit Sharing”). CASM is a common metric used in the airline
industry. We exclude aircraft fuel, profit sharing and related
taxes from operating cost per available seat mile to determine CASM
Ex-Fuel and Profit Sharing. We believe CASM Ex-Fuel and Profit
Sharing provides investors the ability to measure financial
performance excluding items beyond our control such as (i) fuel
costs, which are subject to many economic and political factors
beyond our control and (ii) profit sharing, which is sensitive to
volatility in earnings. We believe this measure is more indicative
of our ability to manage costs and is more comparable to measures
reported by other major airlines.
NON-GAAP FINANCIAL
MEASURERECONCILIATION OF OPERATING EXPENSE PER ASM,
EXCLUDING FUEL, PROFIT SHARING AND RELATED TAXES(in
millions, per ASM data in cents)(unaudited)
Three
Months Ended Six Months Ended June 30, June
30, 2016 2015 2016 2015 $
per ASM $ per ASM $ per ASM
$ per ASM Total operating expenses $ 1,330 $
9.78 $ 1,330 $ 10.86 $ 2,598 $ 9.76 $ 2,600 $ 10.99 Less: Aircraft
fuel and related taxes 274 2.02 371
3.03 489 1.84 706 2.99 Operating
expenses, excluding fuel and related taxes 1,056 7.76 959 7.83
2,109 7.92 1,894 8.00 Less: Profit sharing and related taxes
38 0.28 33 0.27 92 0.35
60 0.25 Operating expense, excluding fuel, profit sharing
and related taxes $ 1,018 $ 7.48 $ 926 $ 7.56 $ 2,017 $ 7.57 $
1,834 $ 7.75
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JetBlue Investor RelationsTel: +1 718 709
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