JetBlue Airways Corporation (NASDAQ: JBLU) today reported its
results for the first quarter 2017:
- Operating income of $147 million, a
decline of 57.9% from the first quarter of 2016.
- Pre-tax income of $126 million, a
decrease of 60.9% from the first quarter of 2016.
- First quarter net income of $85
million, or $0.25 per diluted share. This compares to JetBlue’s
first quarter 2016 net income of $207 million, or $0.61 per diluted
share.
Financial Performance
JetBlue reported first quarter operating revenues of $1.6
billion. Revenue passenger miles for the first quarter increased
3.9% to 11.4 billion on a capacity increase of 4.2%, resulting in a
first quarter load factor of 83.9%, a 0.3 point decrease year over
year.
Yield per passenger mile in the first quarter was 12.73 cents,
down 5.5% compared to the first quarter of 2016. Passenger revenue
per available seat mile (PRASM) for the first quarter 2017
decreased 5.8% year over year to 10.68 cents and operating revenue
per available seat mile (RASM) decreased 4.8% year over year to
11.81 cents.
Compared with last year, operating expenses for the quarter
increased 15%, or $190 million. Interest expense for the quarter
declined 13.5%, or $4 million, as JetBlue continued to reduce its
debt. JetBlue’s operating expense per available seat mile (CASM)
for the first quarter increased 10.3% year over year to 10.73
cents. Excluding fuel, first quarter CASM1 increased 3.3% to 8.35
cents.
“We remain focused on executing the many initiatives we have
underway to improve returns and drive shareholder value. In the
near-term, we took quick actions in the first quarter to address
RASM trends that were below our expectations. We have been
encouraged by the initial results of those actions and expect to
see further improvement in the second quarter. I want to add a
special thanks to our over 20,000 crewmembers for their tireless
efforts in making JetBlue an outstanding company,” said Robin
Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the first quarter JetBlue had hedges in place for
approximately 10% of its fuel consumption. The realized fuel price
in the quarter was $1.69 per gallon, a 44.1% increase versus first
quarter 2016 realized fuel price of $1.17.
JetBlue has hedged approximately 10% of its second quarter and
subsequent quarterly periods of 2017 using jet fuel swaps. Based on
the fuel curve as of April 13th, JetBlue expects an average price
per gallon of fuel, including the impact of hedges and fuel taxes,
of $1.73 in the second quarter of 2017.
Liquidity and Cash Flow
JetBlue ended the quarter with approximately $1 billion in
unrestricted cash and short term investments, or about 16% of
trailing twelve month revenue. In addition, JetBlue maintains
approximately $625 million in undrawn lines of credit.
During the first quarter, JetBlue repaid $49 million in
regularly scheduled debt and capital lease obligations. JetBlue
anticipates paying approximately $35 million in regularly scheduled
debt and capital lease obligations in the second quarter 2017 and
approximately $194 million for the full year 2017.
“I’m honored to take on the role of JetBlue’s Chief Financial
Officer. JetBlue has a strong foundation and I’m excited by the
opportunities in front of us to build an even stronger company for
our customers, crewmembers and owners. My priority is helping to
achieve a cost structure that leverages the full benefit of our
scale and strong balance sheet,” said Steve Priest, JetBlue’s EVP
Chief Financial Officer.
Second Quarter and Full Year
Outlook
For further details see the Investor Update and the First
Quarter 2017 Earnings Presentation available via the internet at
http://investor.jetblue.com.
Capacity is expected to increase between 4% and 6% year over
year in the second quarter 2017. For the full year 2017, JetBlue
continues to expect capacity to increase between 5.5% and 7.5%.
RASM is expected to increase between 3% and 6% for the second
quarter 2017 compared to the same period in 2016.
CASM excluding fuel is expected to grow between 4.5% and 6.5%
for the second quarter of 2017. For the full year 2017, JetBlue
continues to expect year over year CASM excluding fuel to grow
between 1.5% and 3.5%.
JetBlue will conduct a conference call to discuss its quarterly
earnings today, April 25, at 10:00 a.m. Eastern Time. A live
broadcast of the conference call will also 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 38 million
customers a year to 101 cities in the U.S., Caribbean, and Latin
America with an average of 1,000 daily flights. For more
information please visit www.jetblue.com.
Notes
(1)
Consolidated operating cost per available
seat mile, excluding fuel and related taxes, and operating expenses
related to other non-airline expenses (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.
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 2016 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 March 31,
Percent 2017 2016 Change OPERATING
REVENUES Passenger $ 1,451 $ 1,478 (1.8 ) Other 153
138 10.4 Total operating revenues 1,604 1,616
(0.8 )
OPERATING EXPENSES Aircraft fuel and related
taxes 323 215 50.2 Salaries, wages and benefits 466 435 7.1 Landing
fees and other rents 95 85 12.1 Depreciation and amortization 105
91 14.4 Aircraft rent 26 28 (8.0 ) Sales and marketing 60 64 (7.1 )
Maintenance, materials and repairs 152 135 13.3 Other operating
expenses 230 214 7.7 Total operating
expenses 1,457 1,267 15.0
OPERATING INCOME 147 349
(57.9 )
Operating margin
9.2 % 21.6 % (12.4 ) pts.
OTHER INCOME (EXPENSE)
Interest expense (25 ) (29 ) (13.5 ) Capitalized interest 2 2 26.6
Interest income (expense) and other 2 1
181.0 Total other income (expense) (21 ) (26 ) (21.3 )
INCOME BEFORE INCOME TAXES
126 323 (60.9 ) Pre-tax margin 7.9 % 20.0 % (12.1 ) pts.
Income tax expense 41 116 (64.7
)
NET INCOME $ 85 $ 207 (58.8 )
EARNINGS PER COMMON SHARE: Basic $ 0.25 $ 0.64 Diluted $
0.25 $ 0.61
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 336.3 321.6 Diluted 338.2 341.7
JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING
STATISTICS
(unaudited)
Three Months Ended March
31, Percent 2017 2016 Change
Revenue passengers (thousands) 9,711 9,119 6.5 Revenue passenger
miles (millions) 11,399 10,976 3.9 Available seat miles (ASMs)
(millions) 13,580 13,029 4.2 Load factor 83.9 % 84.2 % (0.3 ) pts.
Aircraft utilization (hours per day) 11.9 12.1 (1.7 )
Average fare $ 149.41 $ 162.06 (7.8 ) Yield per passenger mile
(cents) 12.73 13.46 (5.5 ) Passenger revenue per ASM (cents) 10.68
11.35 (5.8 ) Revenue per ASM (cents) 11.81 12.41 (4.8 ) Operating
expense per ASM (cents) 10.73 9.73 10.3 Operating expense per ASM,
excluding fuel (cents)(1) 8.35 8.08 3.3 Departures 85,724
81,239 5.5 Average stage length (miles) 1,079 1,109 (2.7 ) Average
number of operating aircraft during period 228.9 215.4 6.3 Average
fuel cost per gallon, including fuel taxes $ 1.69 $ 1.17 44.1 Fuel
gallons consumed (millions) 191 183 4.2 Average number of full-time
equivalent employees 16,722 15,204 10.0
(1) Refer to Note A, Consolidated
operating cost per available seat mile, excluding fuel (CASM
Ex-Fuel) at the end of our Earnings Release for more information on
this non-GAAP measure. CASM Ex-Fuel excludes fuel and related
taxes, and operating expenses related to other non-airline
expenses.
JETBLUE AIRWAYS CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET
DATA
(in millions)
March 31, December 31, 2017
2016 Cash and cash equivalents $ 438 $ 433 Total investment
securities 608 628 Total assets 9,473 9,323 Total debt 1,337 1,384
Stockholders' equity 3,992 4,013
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 and related taxes, and operating expenses (“CASM
Ex-Fuel”). CASM is a common metric used in the airline
industry. We exclude aircraft fuel and related taxes and operating
expenses related to other non-airline expenses, such as JetBlue
Technology Ventures, from operating cost per available seat mile to
determine CASM Ex-Fuel. We believe CASM Ex-Fuel provides investors
the ability to measure financial performance excluding items beyond
our control such as fuel costs, which are subject to many economic
and political factors beyond our control or not related to the
generation of an available seat mile, such as operating expenses
related to other non-airline expenses. 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
(in millions, per ASM data in
cents)
(unaudited)
Three Months Ended March 31,
2017 2016 $ per ASM $ per
ASM Total operating expenses $ 1,457 $ 10.73 $ 1,267 $
9.73 Less: Aircraft fuel and related taxes 323 2.38 215 1.65 Other
non-airline expenses 1 - - - Operating
expenses, excluding fuel $ 1,133 $ 8.35 $ 1,052 $ 8.08
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