JetBlue Airways Corporation (NASDAQ: JBLU) today reported its
results for the second quarter 2019:
- Reported diluted earnings per share of $0.59 in the second
quarter of 2019 compared to a diluted loss per share of $0.39 in
the second quarter of 2018. Adjusted diluted earnings per share was
$0.60(1) in the second quarter of 2019 versus $0.37(1) in the
second quarter of 2018. Note A to this earnings release includes
the GAAP to Non-GAAP reconciliation between reported and adjusted
diluted earnings per share.
- GAAP pre-tax income of $236 million in the second quarter of
2019, compared to a pre-tax loss of $162 million in the second
quarter of 2018. Excluding the one-time costs, adjusted pre-tax
income of $238 million(1), an increase of 52% from the second
quarter of 2018.
- Pre-tax margin of 11.2%, inclusive of the one-time costs, up
from pre-tax margin of (8.4%) in the second quarter of 2018.
Adjusted pre-tax margin of 11.3%(1), a 3.2 percentage point
increase year over year.
Highlights from the Second Quarter
2019
- Second quarter 2019 revenue per available seat mile (RASM)
increased 3.1% year over year, driven by holiday calendar placement
and strong close-in trends. This increase is above the mid-point of
our original guidance range of 1.0% to 4.0%.
- Operating expenses per available seat mile, excluding fuel
(CASM ex-fuel) (1) increased 1.8%, better than the mid-point of our
initial guidance range of 1.5% to 3.5%. This increase is mainly
driven by pilot contract costs, offset by ramping benefits of the
Structural Cost Program and the favorable timing of expenses.
Key Guidance for the Third Quarter and
Full Year 2019:
- Capacity is expected to increase between 3.0% and 5.0% year
over year in the third quarter 2019. For the full year 2019,
JetBlue expects capacity to increase between 5.5% and 6.5%.
- RASM growth is expected to range between 0.5% and 3.5% for the
third quarter 2019 compared to the same period in 2018.
- CASM ex-fuel is expected to increase between 0.5% and 2.5% for
the third quarter of 2019, due to approximately 1.5 points related
to the timing of expenses moving from the first half, and lower
capacity during the period. For the full year 2019, JetBlue expects
year over year CASM ex-fuel to grow between 0.5% and 1.5%.
For further details see the latest Investor Update and the
Second Quarter 2019 Earnings Presentation available via the
internet at http://investor.jetblue.com.
JetBlue will conduct a conference call to discuss its quarterly
earnings today, July 23, 2019 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.
Executing our Plan to Reach our EPS
Commitments
“Thanks to the hard work of our crewmembers, JetBlue is
consistently recognized as one of the best airlines in the world.
We are excited with the progress we are making on our ‘building
blocks’ and towards our 2020 financial goals. As we look to the
second half of 2019, we expect a return to margin expansion and EPS
growth,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“Airbus has recently communicated additional A321neo delays that
will reduce our 2020 growth plans and naturally add pressure to our
CASM ex-fuel. Despite these delays, we remain confident that we can
execute both our unit cost commitments and achieve our $2.50 to
$3.00 earnings per share target for 2020.”
“We believe our work is positioning us for success into the next
decade. Next year we anticipate the first delivery of our
margin-accretive A220s, a game-changing aircraft to further help us
reduce our unit costs, improve our margins and increase our EPS. We
are thrilled that we recently converted 13 additional A321s in our
existing order book to A321 XLRs, and we expect to begin our
European service by adding London from Boston and New York starting
in 2021.”
Revenue Performance and Outlook
“During the second quarter our capacity grew 5.9 percent,
slightly over the mid-point of our guidance range of 4.5 to 6.5
percent. This was due to a solid completion factor in the quarter,
despite runway construction in Fort Lauderdale and JFK, and smaller
projects elsewhere in our network,” said Joanna Geraghty, JetBlue’s
President and Chief Operating Officer.
“We continue to adapt to an always changing industry
environment. This quarter we saw new challenges in the Caribbean,
in Punta Cana leisure markets. Leisure is an important part of our
business, but the majority of our traffic to the Dominican Republic
is VFR, or ‘visiting friends and relatives’ that has proven to be
more resilient.
Looking into the third quarter, we expect RASM growth between
0.5 and 3.5 percent year over year. The third quarter guidance
includes our expectation for continued close-in strength and a 0.75
percentage point headwind largely from Punta Cana. We expect the
benefits of our network reallocation efforts will continue to ramp,
and we are pleased with the ancillary changes we implemented last
year.”
Cost Performance, Outlook and Balance
Sheet
“Our second quarter CASM ex-fuel represents a unit cost increase
below the mid-point of our guidance range. For the third quarter,
we expect CASM ex-fuel growth to range between 0.5 and 2.5 percent.
Our guidance includes approximately 1.5 percentage points of
maintenance and marketing expenses that has shifted to the third
quarter from earlier in the year. Our capacity growth is unusually
low this quarter. Our lower capacity is driven both by NEO delivery
delays, and our decision earlier in the year to moderate off-peak
capacity to support our RASM and margins,” said Steve Priest,
JetBlue’s EVP Chief Financial Officer.
“We have made significant progress in our Structural Cost
Program over the past six months. We are pleased to report that we
have now achieved $257 million dollars in run rate savings by 2020.
We are pleased to have recently signed a long-term engine
maintenance agreement covering over half of our V2500 engines,
which serve our current Airbus fleet. We expect CASM ex-fuel growth
of 0.5 to 1.5 percent for 2019 despite A321neo delivery
delays.”
Capital Allocation and
Liquidity
JetBlue ended the quarter with approximately $909 million in
unrestricted cash, cash equivalents, and short term investments, or
11.4% of trailing twelve month revenue. In addition, at the end of
the quarter, JetBlue maintained approximately $625 million in
undrawn lines of credit. JetBlue repaid $49 million in regularly
scheduled debt and capital lease obligations for the second
quarter.
Fuel Expense and Hedging
The realized fuel price in the quarter was $2.16 per gallon, a
5.3% decline versus second quarter 2018 realized fuel price of
$2.28.
JetBlue has not entered into forward fuel derivative contracts
to hedge its fuel consumption for the third quarter of 2019. Based
on the forward curve as of July 12th, JetBlue expects an average
all-in price per gallon of fuel of $2.18 in the third quarter of
2019.
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 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
(1) 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; 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;
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; 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 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 2018 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
2019
2018(1)
Change
2019
2018(1)
Change
OPERATING REVENUES Passenger
$
2,031
$
1,858
9.3
$
3,833
$
3,549
8.0
Other
74
70
5.3
144
133
8.3
Total operating revenues
2,105
1,928
9.2
3,977
3,682
8.0
OPERATING EXPENSES Aircraft fuel and related taxes
484
491
(1.4)
921
908
1.5
Salaries, wages and benefits
576
486
18.5
1,151
985
16.8
Landing fees and other rents
121
122
(0.6)
237
230
2.6
Depreciation and amortization
127
114
11.3
251
226
11.4
Aircraft rent
25
24
4.8
50
48
3.1
Sales and marketing
75
75
(0.4)
141
142
(1.0)
Maintenance, materials and repairs
168
188
(10.1)
324
329
(1.8)
Other operating expenses
277
261
6.1
563
522
8.1
Special items
2
319
(99.3)
14
319
(95.6)
Total operating expenses
1,855
2,080
(10.8)
3,652
3,709
(1.6)
OPERATING INCOME (LOSS)
250
(152)
264.3
325
(27)
1,283.4
Operating margin
11.9%
-7.9%
19.8
pts.
8.2%
-0.7%
8.9
pts.
OTHER INCOME (EXPENSE) Interest expense
(19)
(16)
17.3
(38)
(32)
21.3
Capitalized interest
3
3
40.3
6
5
32.4
Interest income and other
2
3
(29.3)
1
5
(73.7)
Total other income (expense)
(14)
(10)
(25.5)
(31)
(22)
(39.6)
INCOME (LOSS) BEFORE INCOME TAXES
236
(162)
245.5
294
(49)
690.5
Pre-tax margin
11.2%
-8.4%
19.6
pts.
7.4%
-1.4%
8.8
pts. Income tax expense (benefit)
57
(41)
238.7
73
(18)
499.8
NET INCOME (LOSS)
$
179
$
(121)
247.8
$
221
$
(31)
801.2
EARNINGS PER COMMON SHARE: Basic
$
0.60
$
(0.39)
$
0.73
$
(0.10)
Diluted
$
0.59
$
(0.39)
$
0.73
$
(0.10)
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
300.3
315.0
303.1
318.0
Diluted
301.8
315.0
304.6
318.0
(1) Prior period results have been recast to reflect
the adoption of ASC 842 Leases.
JETBLUE AIRWAYS
CORPORATION COMPARATIVE OPERATING STATISTICS
(unaudited)
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2019
2018
Change
2019
2018
Change
Revenue passengers (thousands)
11,026
10,923
0.9
21,191
20,804
1.9
Revenue passenger miles (millions)
13,782
13,043
5.7
26,516
24,909
6.5
Available seat miles (ASMs) (millions)
16,029
15,138
5.9
31,466
29,162
7.9
Load factor
86.0%
86.2%
(0.2)
pts.
84.3%
85.4%
(1.1)
pts. Aircraft utilization (hours per day)
12.1
12.1
-
11.9
11.7
1.7
Average fare
$
184.24
$
170.08
8.3
$
180.89
$
170.61
6.0
Yield per passenger mile (cents)
14.74
14.24
3.5
14.46
14.25
1.5
Passenger revenue per ASM (cents)
12.68
12.27
3.3
12.18
12.17
0.1
Revenue per ASM (cents)
13.14
12.74
3.1
12.64
12.63
0.1
Operating expense per ASM (cents)(2)
11.58
13.74
(15.7)
11.60
12.72
(8.8)
Operating expense per ASM, excluding fuel (cents)(1)(2)
8.46
8.32
1.8
8.56
8.44
1.4
Departures
93,040
93,688
(0.7)
182,276
179,734
1.4
Average stage length (miles)
1,147
1,088
5.4
1,150
1,093
5.2
Average number of operating aircraft during period
253.0
245.5
3.1
253.0
244.7
3.4
Average fuel cost per gallon, including fuel taxes
$
2.16
$
2.28
(5.5)
$
2.10
$
2.19
(3.9)
Fuel gallons consumed (millions)
224
215
4.3
438
414
5.6
Average number of full-time equivalent crewmembers
18,454
17,677
(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, special items, and operating
expenses related to other non-airline businesses. (2) Recast
to reflect the adoption of ASC 842 Leases.
JETBLUE
AIRWAYS CORPORATION SELECTED CONSOLIDATED BALANCE SHEET
DATA (in millions)
June 30,
December 31,
2019
2018
(unaudited) Cash and cash equivalents
$
461
$
474
Total investment securities
452
416
Total assets(1)
11,236
10,959
Total debt
1,492
1,670
Stockholders' equity(1)
4,697
4,685
(1) Prior period results have been recast to reflect
the adoption of ASC 842 Leases.
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 in the
U.S., or GAAP. We believe these non-GAAP 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. We believe certain charges included in our operating
expenses on a GAAP basis make it difficult to compare our current
period results to prior periods as well as future periods and
guidance. The tables below show a reconciliation of non-GAAP
financial measures used in this press release to the most directly
comparable GAAP financial measures.
Consolidated operating cost per available seat mile,
excluding fuel and related taxes, and certain 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. During the periods presented below, special items
include one-time transition costs related to the Embraer E190 fleet
exit as well as one-time costs related to the implementation of our
pilots' collective bargaining agreement. We believe that 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 expense related to other 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
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
$
per ASM
$
per ASM
$
per ASM
$
per ASM
Total operating expenses(1)
$
1,855
$
11.58
$
2,080
$
13.74
$
3,652
$
11.60
$
3,709
$
12.72
Less: Aircraft fuel and related taxes
484
3.02
491
3.24
$
921
2.93
908
3.11
Other non-airline expenses(1)
12
0.09
11
0.07
23
0.07
20
0.07
Special items
2
0.01
319
2.11
14
0.04
319
1.10
Operating expenses, excluding fuel(1)
$
1,357
$
8.46
$
1,259
$
8.32
$
2,694
$
8.56
$
2,462
$
8.44
(1) Recast to reflect the adoption of ASC 842 Leases.
Operating Expense, Income before Taxes, Net Income and
Earnings per Share, excluding Special Items and Impact of Tax
Reform
Our GAAP results in the applicable periods include the impacts
of the 2017 tax reform and charges that are deemed special items
which we believe make our results difficult to compare to prior
periods as well as future periods and guidance. During the periods
presented below, special items include one-time transition costs
related to the Embraer E190 fleet exit as well as one-time costs
related to the implementation of our pilots' collective bargaining
agreement. We believe the impacts of the 2017 tax reform and
special 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 the 2017 tax reform and special items.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING
EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS AND IMPACT OF TAX REFORM
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018(1)
2019
2018(1)
Total operating expenses
$
1,855
$
2,080
$
3,652
$
3,709
Less: Special items
2
319
14
319
Total operating expenses excluding special items
$
1,853
$
1,761
$
3,638
$
3,390
Operating income (loss)
$
250
$
(152)
$
325
$
(27)
Add back: Special items
2
319
14
319
Operating income excluding special items
$
252
$
167
$
339
$
292
Income (loss) before income taxes
$
236
$
(162)
$
294
$
(49)
Add back: Special items
2
319
14
319
Income before income taxes excluding special items
$
238
$
157
$
308
$
270
Income before income taxes excluding special items
$
238
$
157
$
308
$
270
Less: Income tax expense (benefit)
57
(41)
73
(18)
Less: Income tax related to special items
1
79
3
79
Less: Tax reform impact
-
-
-
7
Net Income excluding special items and tax reform impact
$
180
$
119
$
232
$
202
Earnings Per Common Share: Basic
$
0.60
$
(0.39)
$
0.73
$
(0.10)
Add back: Special items, net of tax
-
0.77
0.03
0.75
Less: Tax reform impact
-
-
-
0.02
Basic excluding special items and tax reform impact
$
0.60
$
0.38
$
0.76
$
0.63
Diluted
$
0.59
$
(0.39)
$
0.73
$
(0.10)
Add back: Special items, net of tax
0.01
0.76
0.03
0.75
Less: Tax reform impact
-
-
-
0.02
Diluted excluding special items and tax reform impact
$
0.60
$
0.37
$
0.76
$
0.63
(1) Prior period results have been recast to reflect the
adoption of ASC 842 Leases.
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version on businesswire.com: https://www.businesswire.com/news/home/20190723005290/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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