JetBlue Airways Corporation (NASDAQ:JBLU) today reported its
results for the third quarter 2016:
- Operating income of $354 million in the
third quarter, an increase of 1% over the third quarter of
2015.
- Pre-tax income of $330 million in the
third quarter, an increase of 2.6% over the third quarter of
2015.
- Net income of $199 million, or $0.58
per diluted share. This compares to JetBlue’s third quarter 2015
net income of $198 million, or $0.58 per diluted share.
Financial Performance
JetBlue reported third quarter operating revenues of $1.7
billion. Revenue passenger miles for the third quarter increased
7.6% to 11.9 billion on a capacity increase of 6.3%, resulting in a
third quarter load factor of 86.3%, a 1 point increase year over
year.
Yield per passenger mile in the third quarter was 13.20 cents,
down 5.9% compared to the third quarter of 2015. Passenger revenue
per available seat mile (PRASM) for the third quarter 2016
decreased 4.7% year over year to 11.39 cents and operating revenue
per available seat mile (RASM) decreased 3.5% year over year to
12.55 cents.
Compared with last year, operating expenses for the quarter
increased 3%, or $42 million. Interest expense for the quarter
declined 10.2%, or $4 million, as JetBlue continued to reduce its
debt. JetBlue’s operating expense per available seat mile (CASM)
for the third quarter decreased 3% year over year to 9.99 cents.
Excluding fuel and profit sharing, third quarter CASM1 increased
3.1% to 7.53 cents.
“I would like to thank our nearly 20,000 crewmembers for going
above and beyond expectations this quarter once again. They are
truly JetBlue’s greatest asset and what makes our unique model so
successful. I am particularly pleased with how they handled
Hurricane Matthew and helped our Customers travel safely to their
destination as fast as possible” said Robin Hayes, JetBlue’s
President and CEO.
Fuel Expense and Hedging
In the third quarter JetBlue had hedges in place for
approximately 24% of its fuel consumption. The realized fuel price
in the quarter was $1.48 per gallon, a 20% decrease versus third
quarter 2015 realized fuel price of $1.85.
JetBlue has hedged approximately 25% of its fourth quarter 2016
projected fuel consumption using jet fuel swaps. Based on the fuel
curve as of October 14th, JetBlue expects an average price per
gallon of fuel, including the impact of hedges and fuel taxes, of
$1.63 in the fourth quarter.
Liquidity and Cash Flow
JetBlue ended the quarter with $1.5 billion in unrestricted cash
and short term investments, or about 22% of trailing twelve month
revenue. In addition, JetBlue maintains approximately $600 million
in undrawn lines of credit.
During the third quarter, JetBlue repaid $61 million in
regularly scheduled debt and capital lease obligations. JetBlue
anticipates paying approximately $306 million in regularly
scheduled debt and capital lease obligations and plans to buy out
the leases on at least four A320 aircraft during the fourth
quarter.
“I am honored to have been part of the JetBlue family for over
10 years and proud to have worked alongside our crewmembers who are
among the best I’ve seen during my years in the airline industry.
JetBlue is financially strong, its leadership bench deep and its
future bright” said Mark Powers, JetBlue’s Chief Financial
Officer.
Fourth Quarter and Full Year
Outlook
For the fourth quarter of 2016, year over year CASM excluding
fuel and profit sharing is expected to grow between 4.5% and 6.5%,
including a negative impact from hurricane Matthew of approximately
half a point. For the full year 2016, JetBlue expects year over
year CASM excluding fuel and profit sharing to grow between 0.0%
and 1.5%, consistent with prior guidance.
In the fourth quarter 2016, capacity is expected to increase
between 3.0% and 5.0%, including a negative impact from hurricane
Matthew of approximately half a point. For the full year 2016,
JetBlue expects capacity to increase between 8.5% and 9.0%.
JetBlue will conduct a conference call to discuss its quarterly
earnings today, October 25, 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 97 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, 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
Nine Months Ended
September 30, Percent September 30,
Percent 2016 2015 Change
2016 2015 Change OPERATING
REVENUES Passenger $ 1,571 $ 1,551 1.3 $ 4,536 $ 4,455 1.8
Other 161 136 17.9 455
367 24.0 Total operating revenues 1,732 1,687 2.6
4,991 4,822 3.5
OPERATING EXPENSES Aircraft fuel and
related taxes 293 342 (14.4 ) 782 1,048 (25.4 ) Salaries, wages and
benefits 421 389 8.0 1,270 1,139 11.5 Landing fees and other rents
98 91 8.2 276 264 4.5 Depreciation and amortization 102 84 21.0 289
252 14.4 Aircraft rent 28 30 (8.5 ) 84 92 (9.3 ) Sales and
marketing 60 69 (12.1 ) 197 199 (0.9 ) Maintenance, materials and
repairs 153 132 15.9 427 371 15.1 Other operating expenses
223 199 11.7 650 571
14.0 Total operating expenses 1,378 1,336 3.0 3,975 3,936
1.0
OPERATING INCOME 354 351 1.0 1,016 886 14.7
Operating margin 20.5 % 20.8 % (0.3 ) pts. 20.4 % 18.4 % 2.0
pts.
OTHER INCOME (EXPENSE) Interest expense (28 )
(32 ) (10.2 ) (85 ) (98 ) (12.8 ) Capitalized interest 2 2 6.2 6 6
(6.4 ) Interest income (expense) and other 2 1
387.5 5 - (1,370.3 ) Total other
income (expense) (24 ) (29 ) (16.6 ) (74 ) (92 ) (19.0 )
INCOME BEFORE INCOME TAXES 330 322 2.6 942 794 18.6
Pre-tax margin 19.1 % 19.1 % - pts. 18.9 % 16.5 % 2.4 pts.
Income tax expense 131 124 6.1
363 307 18.4
NET INCOME $ 199
$ 198 0.4 $ 579 $ 487 18.8
EARNINGS PER COMMON SHARE: Basic $ 0.61 $ 0.63
$ 1.79 $ 1.55 Diluted $ 0.58 $ 0.58 $
1.70 $ 1.42
WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 323.7 313.8 322.8 313.6 Diluted 343.1 343.5
342.4 345.8
JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING STATISTICS (unaudited)
Three Months Ended Nine Months Ended September
30, Percent September 30, Percent
2016 2015 Change 2016 2015
Change Revenue passengers (thousands) 9,953 9,237 7.7 28,731
26,190 9.7 Revenue passenger miles (millions) 11,905 11,063 7.6
34,434 31,157 10.5 Available seat miles (ASMs) (millions) 13,796
12,976 6.3 40,421 36,632 10.3 Load factor 86.3 % 85.3 % 1.0 pts.
85.2 % 85.1 % 0.1 pts. Aircraft utilization (hours per day) 12.2
12.2 - 12.2 12.0 1.7 Average fare $ 157.87 $ 167.96 (6.0 ) $
157.88 $ 170.12 (7.2 ) Yield per passenger mile (cents) 13.20 14.02
(5.9 ) 13.17 14.30 (7.9 ) Passenger revenue per ASM (cents) 11.39
11.96 (4.7 ) 11.22 12.16 (7.7 ) Revenue per ASM (cents) 12.55 13.01
(3.5 ) 12.35 13.16 (6.2 ) Operating expense per ASM (cents) 9.99
10.30 (3.0 ) 9.83 10.75 (8.5 ) Operating expense per ASM, excluding
fuel and related taxes (cents) 7.86 7.67 2.5 7.89 7.88 0.2
Operating expense per ASM, excluding fuel, profit sharing and
related taxes (cents)(1) 7.53 7.31 3.1 7.55 7.59 (0.4 )
Departures 86,801 82,989 4.6 253,325 236,370 7.2 Average stage
length (miles) 1,091 1,094 (0.3 ) 1,099 1,092 0.6 Average number of
operating aircraft during period 219.6 209.0 5.1 217.8 206.3 5.6
Average fuel cost per gallon, including fuel taxes $ 1.48 $ 1.85
(20.0 ) $ 1.37 $ 2.01 (32.0 ) Fuel gallons consumed (millions) 198
185 7.0 573 522 9.8 Average number of full-time equivalent
crewmembers 15,521 14,418 7.7 (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 CORPORATION SELECTED CONSOLIDATED
BALANCE SHEET DATA (in millions)
September 30, December 31, 2016
2015 Cash and cash equivalents $ 873 $ 318 Total investment
securities 636 607 Total assets 9,579 8,644 Total debt 1,689 1,827
Stockholders' equity 3,846 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 MEASURE RECONCILIATION OF
OPERATING EXPENSE PER ASM, EXCLUDING FUEL, PROFIT SHARING AND
RELATED TAXES (in millions, per ASM data in cents)
(unaudited) Three Months Ended
Nine Months Ended September 30, September
30, 2016 2015 2016
2015 $ per ASM $ per
ASM $ per ASM $ per
ASM Total operating expenses $ 1,378 $ 9.99 $ 1,336 $
10.30 $ 3,975 $ 9.83 $ 3,936 $ 10.75 Less: Aircraft fuel and
related taxes 293 2.13 342 2.63
782 1.94 1,048 2.87 Operating expenses,
excluding fuel and related taxes 1,085 7.86 994 7.67 3,193 7.89
2,888 7.88 Less: Profit sharing and related taxes 46
0.33 47 0.36 137 0.34 107
0.29 Operating expense, excluding fuel, profit sharing and related
taxes $ 1,039 $ 7.53 $ 947 $ 7.31 $ 3,056 $ 7.55 $ 2,781 $ 7.59
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JetBlue Investor RelationsTel: +1 718 709
2202ir@jetblue.comorJetBlue Corporate CommunicationsTel: +1
718 709 3089corpcomm@jetblue.com
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