JetBlue Airways Corporation (NASDAQ: JBLU) 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 24th,
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.”
Earnings Call Details
JetBlue will conduct a conference call to discuss its quarterly
earnings today, May 7, 2020 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.
For further details see the First Quarter 2020 Earnings
Presentation 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 42 million
customers a year to nearly 100 cities in the U.S., Caribbean, and
Latin America with an average of more than 1,000 daily flights. For
more information, please visit jetblue.com.
Notes
- 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
Statements in this Earnings Release (or otherwise made by
JetBlue or on JetBlue’s behalf) contain various forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, or the Securities Act, and Section 21E of the
Securities Exchange Act of 1934, as amended, or the Exchange Act,
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; our significant fixed obligations and
substantial indebtedness; volatility in fuel prices, maintenance
costs and interest rates; our reliance on high daily aircraft
utilization; our ability to implement our growth strategy; our
ability to attract and retain qualified personnel and maintain our
culture as we grow; our reliance on a limited number of suppliers,
including for aircraft, aircraft engines and parts and
vulnerability to delays by those suppliers; 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 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
domestic or foreign government regulation, including new or
increased tariffs; changes in our industry due to other airlines'
financial condition; acts of war or terrorism; global economic
conditions or an economic downturn leading to a continuing or
accelerated decrease in demand for air travel; the impact of
infectious diseases that affects demand for air travel or travel
behavior, such as the ongoing impact of the coronavirus
(“COVID-19”); 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. Further information concerning these and other factors
is contained in the Company's Securities and Exchange Commission
filings, including but not limited to, the Company's 2019 Annual
Report on Form 10-K and its Quarterly Reports on Form 10-Q. In
light of these risks and uncertainties, the forward-looking events
discussed in this Earnings Release might not occur. Our
forward-looking statements speak only as of the date of this
Earnings Release. Other than as required by law, we undertake no
obligation to update or revise forward-looking statements, whether
as a result of new information, future events, or otherwise.
This Earnings Release also includes certain “non-GAAP financial
measures” as defined under the Exchange Act and in accordance with
Regulation G. We have included reconciliations of these non-GAAP
financial measures to the most directly comparable financial
measures calculated and provided in accordance with U.S. GAAP
within this release.
JETBLUE AIRWAYS CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (in millions, except per share amounts)
(unaudited)
Three Months Ended
March 31,
Percent
2020
2019
Change
OPERATING REVENUES Passenger
$
1,511
$
1,802
(16.1
)
Other
77
69
10.7
Total operating revenues
1,588
1,871
(15.1
)
OPERATING EXPENSES Aircraft fuel and related taxes
365
437
(16.4
)
Salaries, wages and benefits
601
575
4.5
Landing fees and other rents
112
115
(3.3
)
Depreciation and amortization
139
124
12.0
Aircraft rent
21
25
(14.4
)
Sales and marketing
53
66
(20.2
)
Maintenance, materials and repairs
160
155
3.1
Other operating expenses
269
286
(5.8
)
Special items
202
12
1,642.9
Total operating expenses
1,922
1,795
7.1
OPERATING (LOSS) INCOME
(334
)
76
(540.2
)
Operating margin
-21.0
%
4.1
%
(25.1
)
pts.
OTHER INCOME (EXPENSE) Interest expense
(25
)
(20
)
26.8
Capitalized interest
3
3
21.1
Interest income and other
2
(1
)
310.3
Total other income (expense)
(20
)
(18
)
10.9
(LOSS) INCOME BEFORE INCOME TAXES
(354
)
58
(710.8
)
Pre-tax margin
-22.3
%
3.1
%
(25.4
)
pts. Income tax (benefit) expense
(86
)
16
(625.6
)
NET (LOSS) INCOME
$
(268
)
$
42
(744.4
)
(LOSS) EARNINGS PER COMMON SHARE: Basic
$
(0.97
)
$
0.14
Diluted
$
(0.97
)
$
0.14
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
277.2
305.3
Diluted
277.2
306.9
JETBLUE AIRWAYS CORPORATION COMPARATIVE OPERATING
STATISTICS (unaudited)
Three Months Ended
March 31,
Percent
2020
2019
Change
Revenue passengers (thousands)
8,150
10,165
(19.8
)
Revenue passenger miles (millions)
10,392
12,734
(18.4
)
Available seat miles (ASMs) (millions)
14,891
15,437
(3.5
)
Load factor
69.8
%
82.5
%
(12.7
)
pts. Aircraft utilization (hours per day)
10.6
11.8
(10.2
)
Average fare
$
185.44
$
177.24
4.6
Yield per passenger mile (cents)
14.54
14.15
2.8
Passenger revenue per ASM (cents)
10.15
11.67
(13.0
)
Revenue per ASM (cents)
10.67
12.12
(12.0
)
Operating expense per ASM (cents)
12.91
11.63
11.0
Operating expense per ASM, excluding fuel (cents)(1)
9.01
8.66
4.0
Departures
83,295
89,236
(6.7
)
Average stage length (miles)
1,160
1,153
0.6
Average number of operating aircraft during period
259.1
252.9
2.5
Average fuel cost per gallon, including fuel taxes
$
1.86
$
2.05
(9.3
)
Fuel gallons consumed (millions)
197
213
(7.8
)
Average number of full-time equivalent crewmembers
18,698
18,292
(1) Refer to Note A at the end of our Earnings Release for more
information on this non-GAAP financial measure. Operating expense
per available seat mile, excluding fuel (“CASM Ex-Fuel”) excludes
fuel and related taxes, other non-airline operating expenses, and
special items.
JETBLUE AIRWAYS CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET DATA (in
millions)
March 31,
December 31,
2020
2019
(unaudited) Cash and cash equivalents
$
1,618
$
959
Total investment securities
184
372
Total assets
12,340
11,918
Total debt
3,217
2,334
Stockholders' equity
4,366
4,799
Note A – Non-GAAP Financial Measures
JetBlue sometimes uses non-GAAP financial measures in this press
release. Non-GAAP financial measures are financial measures that
are derived from the consolidated financial statements, but that
are not presented in accordance with generally accepted accounting
principles in the United States, or GAAP. We believe these non-GAAP
financial measures provide a meaningful comparison of our results
to others in the airline industry and our prior year results.
Investors should consider these non-GAAP financial measures in
addition to, and not as a substitute for, our financial performance
measures prepared in accordance with GAAP. Further, our non-GAAP
information may be different from the non-GAAP information provided
by other companies. The information below provides an explanation
of each non-GAAP financial measure and shows a reconciliation of
non-GAAP financial measures used in this press release to the most
directly comparable GAAP financial measures.
Operating expense per available seat mile, excluding fuel and
related taxes, other non-airline operating expenses, and special
items (“CASM Ex-Fuel”)
Operating expenses per available seat mile, or CASM, is a common
metric used in the airline industry. We exclude aircraft fuel and
related taxes, operating expenses related to other non-airline
businesses, such as JetBlue Technology Ventures and JetBlue Travel
Products, and special items from operating expenses to determine
CASM ex-fuel, which is a non-GAAP financial measure. For the first
quarter of 2020, special items include the impairment charge of our
Embraer E190 fleet resulting from the decline in demand caused by
the coronavirus ("COVID-19") pandemic. Special items for the first
quarter of 2019 include one-time costs related to the Embraer E190
fleet transition as well as one-time costs related to the
implementation of our pilots' collective bargaining agreement. We
believe that CASM ex-fuel is useful for investors because it
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, or not related to
the generation of an available seat mile, such as operating expense
related to certain non-airline businesses. We believe this non-GAAP
measure is more indicative of our ability to manage airline 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,
2020
2019
$
per ASM
$
per ASM
Total operating expenses
$
1,922
$
12.91
$
1,795
$
11.63
Less: Aircraft fuel and related taxes
365
2.45
437
2.83
Other non-airline expenses
14
0.09
9
0.06
Special items
202
1.36
12
0.08
Operating expenses, excluding fuel
$
1,341
$
9.01
$
1,337
$
8.66
Operating Expense, Income before Taxes, Net Income and
Earnings per Share, excluding special items
Our GAAP results in the applicable periods were impacted by
charges that are deemed special items. We believe the impacts of
these items make our results difficult to compare to prior periods
as well as future periods and guidance. For the first quarter of
2020, special items include the impairment charge of our Embraer
E190 fleet resulting from the decline in demand caused by the
coronavirus ("COVID-19") pandemic. Special items for the first
quarter of 2019 include one-time costs related to the Embraer E190
fleet transition as well as one-time costs related to the
implementation of our pilots' collective bargaining agreement. We
believe the impacts of these items distort our overall trends and
that our metrics and results are enhanced with the presentation of
our results excluding the impact of these items. The table below
provides a reconciliation of our GAAP reported amounts to the
non-GAAP amounts excluding the impacts of these items.
NON-GAAP FINANCIAL
MEASURE
RECONCILIATION OF OPERATING
EXPENSE, INCOME BEFORE TAXES, NET
INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2020
2019
Total operating revenues
$
1,588
$
1,871
Total operating expenses
$
1,922
$
1,795
Less: Special items
202
12
Total operating expenses excluding special items
$
1,720
$
1,783
Operating (loss) income
$
(334
)
$
76
Add back: Special items
202
12
Operating (loss) income excluding special items
$
(132
)
$
88
Operating margin excluding special items
-8.3
%
4.7
%
(Loss) income before income taxes
$
(354
)
$
58
Add back: Special items
202
12
(Loss) income before income taxes excluding special items
$
(152
)
$
70
Pre-tax margin excluding special items
-9.5
%
3.7
%
Net (loss) income
$
(268
)
$
42
Add back: Special items
202
12
Less: Income tax benefit related to special items
50
3
Net (loss) income excluding special items
$
(116
)
$
51
(Loss) Earnings Per Common Share: Basic
$
(0.97
)
$
0.14
Add back: Special items, net of tax
0.55
0.02
Basic excluding special items
$
(0.42
)
$
0.16
Diluted
$
(0.97
)
$
0.14
Add back: Special items, net of tax
0.55
0.02
Diluted excluding special items
$
(0.42
)
$
0.16
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005337/en/
JetBlue Investor Relations Tel: +1 718 709 2202
ir@jetblue.com
JetBlue Corporate Communications Tel: +1 718 709 3089
corpcomm@jetblue.com
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