JetBlue Airways
Corporation (NASDAQ: JBLU) today reported its results for the third
quarter 2020:
- Reported GAAP loss per share of ($1.44) in the third quarter of
2020 compared to a diluted earnings per share of $0.63 in the third
quarter of 2019. Adjusted loss per share was ($1.75)(1) in the
third quarter of 2020 versus adjusted diluted earnings per share of
$0.59(1) in the third 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 ($578) million in the third quarter of
2020, compared to a pre-tax income of $254 million in the third
quarter of 2019. Excluding one-time items, adjusted pre-tax loss of
($690) million(1) in the third quarter of 2020 versus adjusted
pre-tax income of $239 million(1) in the third quarter of 2019.
Operational Highlights from the Third
Quarter
- Third quarter 2020 revenue declined 76% year over year as a
result of the impact of COVID-19. The decline is better than our
initial planning assumption for the quarter of 80%, as a result
improving leisure and visiting friends and relatives (“VFR”) travel
trends throughout the quarter.
- Reduced third quarter 2020 capacity by 58% year over year
compared to an initial planning assumption of a decrease of at
least 45%, as a result of actions taken to manage cash burn and
protect liquidity.
- Operating expenses declined 45% year over year. Excluding
special items, adjusted operating expenses(1) declined 39% year
over year. We successfully reduced our third quarter expenses by
taking capacity actions to reduce variable costs and reducing fixed
costs by adjusting work schedules and eliminating discretionary
spend.
Balance Sheet and Liquidity
- JetBlue ended the third quarter with approximately $3.1 billion
in unrestricted cash, cash equivalents, and short-term investments,
and restricted cash for CARES Act Payroll Support Program (“PSP”),
or 38% of 2019 revenue.
- JetBlue repaid $95 million in regularly scheduled debt and
finance lease obligations during the third quarter of 2020.
- In the third quarter the U.S. Treasury updated the amount of
the CARES Act Loan Program facility to $1.95 billion, and allocated
JetBlue an additional amount of $27 million related to the original
PSP allocation of $936 million.
- JetBlue has taken the following measures in the third quarter
to manage liquidity:
- Refinanced the $1 billion 364-day term loan maturing in early
2021 with EETC transactions.
- Executed over $300 million under sale-leaseback transactions
for new aircraft and existing aircraft in our fleet.
- Drew $114 million from the CARES Act Loan Program
facility.
- Continued to execute significant variable and fixed cost
savings through aggressive capacity management and adjusted work
schedules.
- Redeployed assets to capture short-term, tactical cash
generation opportunities.
- Resulting from the actions taken, JetBlue’s average daily cash
burn in the third quarter was $6.1 million, ahead of the $7 to $9
million range expected in late July. JetBlue expects average daily
cash burn in the fourth quarter to range between $4 and $6
million.
Fuel Expense and Hedging
The realized fuel price in the quarter was $1.23 per gallon, a
40% decline versus third quarter 2019 realized fuel price of
$2.06.
JetBlue has entered into forward fuel derivative contracts to
hedge its fuel consumption for the fourth quarter of 2020. Based on
the forward curve as of October 19th, JetBlue expects an average
all-in price per gallon of fuel of $1.23 in the fourth quarter of
2020.
Our Recovery Plan and Actions Taken to
Position JetBlue for Future Success
“Day in and day out, our crewmembers continue to deliver on our
mission - to Inspire Humanity. Their dedication and passion for
delivering outstanding service has been remarkable, especially as
we work to restore our customers’ confidence in air travel,” said
Robin Hayes, JetBlue’s Chief Executive Officer.
“Our efforts to raise liquidity, reshape our network, and reduce
costs, are bearing fruit, and have helped us navigate the immediate
crisis. We are confident that our low-cost, low fare leisure model,
with the best crewmembers in the industry, and a brand that
customers trust, will all help JetBlue emerge stronger from this
crisis.
In the near term, we continue to manage our daily flying and
take tactical actions to ensure we generate cash as demand
recovers. We are also executing revenue and cost initiatives,
redeploying our aircraft to new, cash accretive markets, and
setting JetBlue up for a strong rebound. Naturally, we aim to be
free cash flow positive, with the goal of repairing our balance
sheet over the coming years.”
Action Plan, Revenue and
Capacity
“In the third quarter, our revenue declined 76% year over year,
a welcome improvement compared to our initial expectation. We saw a
modest, sequential improvement in August and September demand as
new case counts decreased, and quarantine restrictions in some
states were eased. Our Northeast geography continues to be
disproportionately impacted, though we believe it will undoubtedly
rebound as it always has with past challenges,” said Joanna
Geraghty, JetBlue’s President and Chief Operating Officer.
“Our planning assumption for the fourth quarter is a revenue
decline of approximately 65% year over year. Although there still
quite a lot of uncertainty about the evolution of the coronavirus,
we are starting to see the booking curve extend slightly into the
upcoming Thanksgiving and December holiday travel period, and we
are encouraged by Customers responding positively to our
promotional activity including an early holiday sale in late
September. For the fourth quarter, our current planning assumption
is for capacity to decline approximately 45% year over year, given
our current expectations for improved bookings.”
Financial Performance and
Outlook
“Our average daily cash burn for the third quarter was $6.1
million dollars, ahead of the $7 to $9 million dollar range we
anticipated 3 months ago. This was the result of a modest
improvement in demand, beginning in August, variable cost savings
achieved through a balanced approach to capacity, and the many
actions we took to minimize fixed costs across our business. For
the fourth quarter, we estimate our daily cash burn to be between
$4 and $6 million dollars,” said Steve Priest, JetBlue’s Chief
Financial Officer.
“Earlier this month, we reached a second negotiated agreement
with Airbus to defer additional aircraft and associated capital
expenditure over the next few years. Since the beginning of the
crisis we have reduced aircraft and non-aircraft CAPEX by
approximately $2 billion dollars between 2020 and 2022.
At the end of September, our total liquidity was approximately
$3.1 billion dollars. During the quarter, we refinanced our $1
billion dollar 364-day term loan and continued our focus on
maintaining liquidity. We have approximately $1 billion dollars of
traditional unencumbered assets, excluding the value of our
TrueBlue loyalty program and our subsidiaries.
As we navigate the current environment with a steady hand, we
are shifting our work to rebuilding our margins. We are taking an
aggressive approach to improving our cost structure, better
aligning our fixed and variable cost base, to temporarily lower
revenue and capacity. We believe that our work will return JetBlue
to profitability with structurally better margins, and our ultimate
intention is to achieve superior pre-tax margins versus the
industry.”
Earnings Call Details
JetBlue will conduct a conference call to discuss its quarterly
earnings today, October 27, 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 Third 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, Orlando, and San
Juan. JetBlue carries customers across the U.S., Caribbean, and
Latin America. For more information, 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
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
Nine Months Ended
September 30,
Percent
September 30,
Percent
2020
2019
Change
2020
2019
Change
OPERATING REVENUES Passenger
$
445
$
2,005
(77.8
)
$
2,126
$
5,838
(63.6
)
Other
47
81
(42.0
)
169
225
(24.9
)
Total operating revenues
492
2,086
(76.4
)
2,295
6,063
(62.1
)
OPERATING EXPENSES Aircraft fuel and related taxes
102
471
(78.4
)
496
1,392
(64.4
)
Salaries, wages and benefits
482
580
(16.9
)
1,560
1,731
(9.9
)
Landing fees and other rents
84
125
(32.7
)
258
362
(28.7
)
Depreciation and amortization
127
134
(5.0
)
407
385
5.5
Aircraft rent
23
26
(12.5
)
60
76
(21.1
)
Sales and marketing
24
74
(68.3
)
84
215
(61.0
)
Maintenance, materials and repairs
111
158
(30.2
)
344
482
(28.6
)
Other operating expenses
167
271
(38.1
)
560
833
(32.7
)
Special items
(112
)
-
28,320.3
(214
)
14
(1,674.9
)
Total operating expenses
1,008
1,839
(45.2
)
3,555
5,490
(35.2
)
OPERATING (LOSS) INCOME
(516
)
247
(308.8
)
(1,260
)
573
(320.1
)
Operating margin
-104.9
%
11.8
%
(116.7
)
pts.
-54.9
%
9.4
%
(64.3
)
pts.
OTHER INCOME (EXPENSE) Interest expense
(56
)
(18
)
206.8
(121
)
(57
)
112.1
Capitalized interest
3
4
(20.5
)
10
10
(2.5
)
Gain on equity method investments
-
15
(100.0
)
-
15
(100.0
)
Interest income and other
(9
)
6
(267.9
)
(10
)
7
(255.2
)
Total other income (expense)
(62
)
7
1,068.5
(121
)
(25
)
(386.9
)
(LOSS) INCOME BEFORE INCOME TAXES
(578
)
254
(327.8
)
(1,381
)
548
(352.1
)
Pre-tax margin
-117.4
%
12.2
%
(129.6
)
pts.
-60.2
%
9.0
%
(69.2
)
pts. Income tax (benefit) expense
(185
)
67
(376.4
)
(400
)
140
(385.4
)
NET (LOSS) INCOME
$
(393
)
$
187
(310.4
)
$
(981
)
$
408
(340.7
)
(LOSS) EARNINGS PER COMMON SHARE: Basic
$
(1.44
)
$
0.63
$
(3.58
)
$
1.36
Diluted
$
(1.44
)
$
0.63
$
(3.58
)
$
1.35
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
272.4
294.0
274.3
300.1
Diluted
272.4
295.9
274.3
301.8
JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING STATISTICS (unaudited)
Three Months Ended
Nine Months Ended
September 30,
Percent
September 30,
Percent
2020
2019
Change
2020
2019
Change
Revenue passengers (thousands)
2,151
11,061
(80.6
)
10,918
32,252
(66.1
)
Revenue passenger miles (millions)
2,945
13,930
(78.9
)
14,153
40,446
(65.0
)
Available seat miles (ASMs) (millions)
6,905
16,296
(57.6
)
24,209
47,762
(49.3
)
Load factor
42.6
%
85.5
%
(42.9
)
pts.
58.5
%
84.7
%
(26.2
)
pts. Aircraft utilization (hours per day)
4.2
11.9
(64.7
)
5.5
11.9
(53.8
)
Average fare
$
206.73
$
181.26
14.1
$
194.77
$
181.01
7.6
Yield per passenger mile (cents)
15.10
14.39
4.9
15.02
14.43
4.1
Passenger revenue per ASM (cents)
6.44
12.30
(47.7
)
8.78
12.22
(28.1
)
Revenue per ASM (cents)
7.12
12.80
(44.4
)
9.48
12.69
(25.3
)
Operating expense per ASM (cents)
14.60
11.29
29.3
14.69
11.50
27.8
Operating expense per ASM, excluding fuel (cents)(1)
14.64
8.33
75.7
13.40
8.48
57.9
Departures
32,124
94,191
(65.9
)
128,315
276,467
(53.6
)
Average stage length (miles)
1,313
1,132
16.0
1,201
1,140
5.4
Average number of operating aircraft during period
262.9
253.2
3.8
261.3
253.1
3.2
Average fuel cost per gallon, including fuel taxes
$
1.23
$
2.06
(40.4
)
$
1.60
$
2.09
(23.3
)
Fuel gallons consumed (millions)
83
229
(63.7
)
310
666
(53.5
)
Average number of full-time equivalent crewmembers
16,004
18,528
(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)
September 30,
December 31,
2020
2019
(unaudited)
Cash and cash equivalents
$ 2,453
$ 959
Total investment securities
569
372
Total assets
13,433
11,918
Total debt
4,839
2,334
Stockholders' equity
3,717
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. In 2020,
special items include contra-expenses recognized on the utilization
of payroll support grants received under the CARES Act, impairment
charges of our Embraer E190 fleet, losses generated from
sale-leaseback transactions, and one-time costs associated with our
voluntary crewmember separation programs. Special items for 2019
include one-time costs related to the Embraer E190 fleet
transition, one-time costs related to the implementation of our
pilots' collective bargaining agreement, as well as a gain on an
equity method investment. 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
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
$
per ASM
$
per ASM
$
per ASM
$
per ASM
Total operating expenses
$
1,008
$
14.60
$
1,839
$
11.29
$
3,555
$
14.69
$
5,490
$
11.50
Less: Aircraft fuel and related taxes
102
1.47
471
2.89
496
2.05
1,392
2.92
Other non-airline expenses
7
0.10
10
0.07
29
0.12
32
0.07
Special items
(112
)
(1.61
)
-
-
(214
)
(0.88
)
14
0.03
Operating expenses, excluding fuel
$
1,011
$
14.64
$
1,358
$
8.33
$
3,244
$
13.40
$
4,052
$
8.48
Operating Expense, Income before Taxes, Net Income and
Earnings per Share, excluding special items and gain on equity
method investments
Our GAAP results in the applicable periods were impacted by
charges that are deemed special items, and gain on equity method
investments. We believe the impacts of these items make our results
difficult to compare to prior periods as well as future periods and
guidance. In 2020, special items include contra-expenses recognized
on the utilization of payroll support grants received under the
CARES Act, impairment charges of our Embraer E190 fleet, losses
generated from sale-leaseback transactions, and one-time costs
associated with our voluntary crewmember separation programs.
Special items for 2019 include one-time costs related to the
Embraer E190 fleet transition, one-time costs related to the
implementation of our pilots' collective bargaining agreement, as
well as a gain on an equity method investment. 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 AND
GAIN ON EQUITY METHOD INVESTMENTS
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Total operating revenues
$
492
$
2,086
$
2,295
$
6,063
Total operating expenses
$
1,008
$
1,839
$
3,555
$
5,490
Less: Special items
(112
)
-
(214
)
14
Total operating expenses excluding special items
$
1,120
$
1,839
$
3,769
$
5,476
Operating (loss) income
$
(516
)
$
247
$
(1,260
)
$
573
Add back: Special items
(112
)
-
(214
)
14
Operating (loss) income excluding special items
$
(628
)
$
247
$
(1,474
)
$
587
Operating margin excluding special items
-127.6
%
11.8
%
-64.2
%
9.7
%
(Loss) income before income taxes
$
(578
)
$
254
$
(1,381
)
$
548
Add back: Special items
(112
)
-
(214
)
14
Less: Gain on equity method investments
-
15
-
15
(Loss) income before income taxes excluding special items and
gain on equity method investments
$
(690
)
$
239
$
(1,595
)
$
547
Pre-tax margin excluding special items and gain on equity
method investments
-140.1
%
11.4
%
-69.5
%
9.0
%
Net (loss) income
$
(393
)
$
187
$
(981
)
$
408
Add back: Special items
(112
)
-
(214
)
14
Less: Income tax (expense) benefit related to special items
(28
)
-
(53
)
3
Less: Gain on equity method investments
-
15
-
15
Less: Income tax (expense) related to gain on equity method
investments
-
(4
)
-
(4
)
Net (loss) income excluding special items and gain on equity
method investments
$
(477
)
$
176
$
(1,142
)
$
408
(Loss) Earnings Per Common Share: Basic
$
(1.44
)
$
0.63
$
(3.58
)
$
1.36
Add back: Special items, net of tax
(0.31
)
-
(0.58
)
0.03
Less: Gain on equity method investments, net of tax
-
0.04
-
0.04
Basic excluding special items and gain on equity method
investments
$
(1.75
)
$
0.59
$
(4.16
)
$
1.35
Diluted
$
(1.44
)
$
0.63
$
(3.58
)
$
1.35
Add back: Special items, net of tax
(0.31
)
-
(0.58
)
0.03
Less: Gain on equity method investments, net of tax
-
0.04
-
0.03
Diluted excluding special items and gain on equity method
investments
$
(1.75
)
$
0.59
$
(4.16
)
$
1.35
Daily Cash Burn
We present cash burn because we believe this metric is helpful
to investors to evaluate our ability to maintain liquidity and
evaluate cash flows from our core operating performance. Our cash
burn is calculated as net cash used in operating activities, net
cash used in investing activities, and net cash provided by
financing activities adjusted for: (1) grant proceeds from the
Payroll Support Program (PSP) under the CARES Act, (2) cash
payments associated with our voluntary separation programs, (3) net
purchases of investment securities, (4) proceeds from the issuance
of long-term debt and finance lease obligations, (5) proceeds of
financing arrangements that are reported within investing
activities (such as certain sale-leaseback transactions), and (6)
the early repayment our 364-day term loan facility.
NON-GAAP FINANCIAL MEASURE DAILY CASH BURN (in
millions) (unaudited) Three Months Ended
September 30, 2020 Net cash (used in) operating activities
$
(446
)
Net cash (used in) investing activities
(180
)
Net cash provided by financing activities
60
(Decrease) in cash, cash equivalents and restricted cash
(566
)
Adjustments Proceeds from CARES Act PSP grant
(18
)
Voluntary separation programs
39
Net purchases of investments
226
Proceeds from issuance of long-term debt and finance lease
obligations
(1,024
)
Proceeds from sale-leaseback transactions reported within investing
activities
(209
)
Prepayment of short-term borrowings
997
Total adjustments
11
Adjusted (decrease) in cash
$
(555
)
Days in period
92
Daily Cash Burn
$
(6
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201027005441/en/
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