JetBlue Airways Corporation (NASDAQ: JBLU) today reported its
results for the second quarter 2020:
- Reported GAAP loss per share of ($1.18) in the second quarter
of 2020 compared to a diluted earnings per share of $0.59 in the
second quarter of 2019. Adjusted loss per share was ($2.02)(1) in
the second quarter of 2020 versus adjusted diluted earnings per
share of $0.60(1) in the second 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 ($450) million in the second quarter of
2020, compared to a pre-tax income of $236 million in the second
quarter of 2019. Excluding one-time items, adjusted pre-tax loss of
($754) million(1) in the second quarter of 2020 versus adjusted
pre-tax income of $238 million(1) in the second quarter of
2019.
Operational Highlights from the Second
Quarter
- Second quarter 2020 revenue declined 90% year over year as a
result of the impact of COVID-19. Traffic volumes and yields
improved in May and June from an April trough.
- Reduced second quarter 2020 capacity by 85% year over year as a
result of aggressive action to mitigate cash burn.
- Operating expenses decreased 66% year over year. Excluding
special items, adjusted operating expenses(1) declined 50% year
over year. We successfully reduced our second quarter costs by over
$900 million driven by variable cost reductions through capacity
cuts and fixed cost reductions achieved by adjusting work schedules
where possible and eliminating discretionary spend.
Balance Sheet and Liquidity
- JetBlue ended the second quarter with approximately $2.9
billion in unrestricted cash, cash equivalents, and short-term
investments, or 36% of 2019 revenue. Including the CARES Act PSP
proceeds, our liquidity was $3.4 billion at the end of second
quarter 2020, or 42% of 2019 revenue.
- JetBlue repaid $78 million in regularly scheduled debt and
finance lease obligations during the second quarter of 2020.
- JetBlue has taken the following measures in the second quarter
to manage liquidity:
- Raised $750 million under a secured term loan.
- Executed approximately $120 million under sale-leaseback
transactions, and entered a binding agreement for three additional
sale-leaseback transactions for upcoming deliveries. In addition,
we have entered into two other binding sale-leaseback agreements
for aircraft already existing in our fleet.
- Achieved significant variable and fixed cost savings through
aggressive capacity reductions 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 May was $9 million vs its prior expectations for just below
$10 million. Average daily cash burn in the second quarter was $9.5
million vs its prior expectations for $11 million, and the daily
cash burn at the end of June was just under $8 million. JetBlue
continues to expect average daily cash burn in the third quarter
for a range of $7 to $9 million.
Fuel Expense and Hedging
The realized fuel price in the quarter was $0.96 per gallon, a
55% decline versus second quarter 2019 realized fuel price of
$2.16.
JetBlue has entered into forward fuel derivative contracts to
hedge its fuel consumption for the third and fourth quarter of
2020. Based on the forward curve as of July 17th, JetBlue expects
an average all-in price per gallon of fuel of $1.24 in the third
quarter of 2020.
Our Recovery Plan and Actions Taken to
Position JetBlue for Future Success
“For the past 20 years we have succeeded against the odds, and
we firmly believe that we are laying the foundation and
repositioning JetBlue to come out of this historic crisis as a
stronger, global player in the years to come,” said Robin Hayes,
JetBlue’s Chief Executive Officer.
“In the past two months, we made progress in reducing our cash
burn, and have been quick to resize our operations to the very
dynamic demand environment. While demand has improved materially
from the lows we saw in April, bookings remain choppy, and we
remain focused on addressing changing trends as we progress through
the summer.
As we move into recovery, we have laid out a three-step
framework to set JetBlue up for success and emerge stronger. The
first is to reduce our cash burn. The second step is to rebuild our
margins. The third and last step is to repair our balance
sheet.
We have been nimble and managed the short term with a sense of
urgency, to reduce our cash burn and build liquidity. We are
confident that our actions to protect the health and safety of our
Customers and Crewmembers, our network changes, and focus on costs
will help us rebuild our margins faster.”
Action Plan, Revenue and
Capacity
“We are laser-focused on managing the current environment of low
demand,” said Joanna Geraghty, JetBlue’s President and Chief
Operating Officer. “In the short term, we have added tactical
point-to-point flights, responding to unserved demand in leisure
and VFR markets and supporting our cash generation efforts. In the
long term, our actions help us solidify our network strategy to
improve our position in our Focus Cities. We are taking advantage
of unique opportunities presented by the pandemic to allow us to
rebuild our margins when demand returns.
Volumes have increased since demand bottomed out in April, and
during the second quarter our revenue broadly tracked to our
L-shaped recovery forecast. We expect demand trends will continue
to be volatile and recovery will not be linear. Given the
choppiness in demand, we will continue to take a conservative
approach in planning capacity and forecasting revenue.
As we see booking trends beginning to improve after bottoming
out in April, we believe capacity will lead the way to demand and
revenue recovery. That said, our guiding criteria is cash
generation, and we will continue to be nimble in reacting to
changes in demand trends.”
Cost Performance and Outlook
“We continue to manage through this fluid environment with a
near-term focus on preserving liquidity. Just as importantly, we
are positioning JetBlue to thrive as we emerge from the pandemic,”
said Steve Priest, JetBlue’s Chief Financial Officer.
“Last month we raised approximately $750 million with a new term
loan backed by JFK, LaGuardia and Washington Reagan slots, as well
as by our JetBlue brand. We also entered into sale-leaseback
transactions that raised nearly $120 million during the quarter.
Our liquidity equated to $3.4 billion at the close of June, or 42%
of our 2019 revenue.
Our daily cash burn improved every month since April, to under
$8 million at the end of June. The improvement during the quarter
came mainly from our efforts to manage capacity, reduce our cost
base and manage payment terms. Improvements in revenue trends
during the quarter also contributed to our progress in cash
burn.
Looking into the third quarter, we continue to estimate our
daily cash burn between $7 and $9 million, mainly driven by a
continuation of our work to reduce our cost base, and capacity
actions to respond to changes in demand. Where we fall within the
range will depend on the revenue environment during the third
quarter.”
Earnings Call Details
JetBlue will conduct a conference call to discuss its quarterly
earnings today, July 28, 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 Second 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
Six Months Ended
June 30,
Percent
June 30,
Percent
2020
2019
Change
2020
2019
Change
OPERATING REVENUES Passenger
$
170
$
2,031
(91.6
)
$
1,682
$
3,833
(56.1
)
Other
45
74
(39.7
)
121
144
(15.2
)
Total operating revenues
215
2,105
(89.8
)
1,803
3,977
(54.7
)
OPERATING EXPENSES Aircraft fuel and related
taxes
29
484
(94.0
)
394
921
(57.2
)
Salaries, wages and benefits
477
576
(17.1
)
1,078
1,151
(6.3
)
Landing fees and other rents
62
121
(48.8
)
174
237
(26.6
)
Depreciation and amortization
140
127
10.2
279
251
11.1
Aircraft rent
16
25
(36.7
)
37
50
(25.6
)
Sales and marketing
8
75
(89.6
)
60
141
(57.1
)
Maintenance, materials and repairs
73
168
(56.4
)
233
324
(27.9
)
Other operating expenses
124
277
(55.3
)
394
563
(30.2
)
Special items
(304
)
2
(13,121.7
)
(102
)
14
(831.0
)
Total operating expenses
625
1,855
(66.3
)
2,547
3,652
(30.2
)
OPERATING (LOSS) INCOME
(410
)
250
(264.3
)
(744
)
325
(328.6
)
Operating margin
-190.8
%
11.9
%
(202.7
)
pts.
-41.3
%
8.2
%
(49.5
)
pts.
OTHER INCOME (EXPENSE) Interest expense
(40
)
(19
)
110.7
(65
)
(38
)
67.6
Capitalized interest
3
3
(1.6
)
7
6
8.6
Interest income and other
(3
)
2
(247.1
)
(2
)
1
(203.3
)
Total other income (expense)
(40
)
(14
)
(198.6
)
(60
)
(31
)
(90.6
)
(LOSS) INCOME BEFORE INCOME TAXES
(450
)
236
(290.2
)
(804
)
294
(373.0
)
Pre-tax margin
-209.2
%
11.2
%
(220.4
)
pts.
-44.6
%
7.4
%
(52.0
)
pts. Income tax (benefit) expense
(130
)
57
(326.8
)
(216
)
73
(393.6
)
NET (LOSS) INCOME
$
(320
)
$
179
(278.6
)
$
(588
)
$
221
(366.2
)
(LOSS) EARNINGS PER COMMON SHARE: Basic
$
(1.18
)
$
0.60
$
(2.14
)
$
0.73
Diluted
$
(1.18
)
$
0.59
$
(2.14
)
$
0.73
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
271.7
300.3
275.1
303.1
Diluted
271.7
301.8
275.1
304.6
JETBLUE AIRWAYS CORPORATION COMPARATIVE OPERATING
STATISTICS (unaudited)
Three Months Ended
Six Months Ended
June 30,
Percent
June 30,
Percent
2020
2019
Change
2020
2019
Change
Revenue passengers (thousands)
616
11,026
(94.4
)
8,766
21,191
(58.6
)
Revenue passenger miles (millions)
816
13,782
(94.1
)
11,208
26,516
(57.7
)
Available seat miles (ASMs) (millions)
2,413
16,029
(84.9
)
17,304
31,466
(45.0
)
Load factor
33.8
%
86.0
%
(52.2
)
pts.
64.8
%
84.3
%
(19.5
)
pts. Aircraft utilization (hours per day)
1.6
12.1
(86.8
)
6.1
11.9
(48.7
)
Average fare
$
276.35
$
184.24
50.0
$
191.83
$
180.89
6.1
Yield per passenger mile (cents)
20.86
14.74
41.5
15.00
14.46
3.8
Passenger revenue per ASM (cents)
7.06
12.68
(44.3
)
9.72
12.18
(20.2
)
Revenue per ASM (cents)
8.91
13.14
(32.2
)
10.42
12.64
(17.5
)
Operating expense per ASM (cents)
25.90
11.58
123.7
14.72
11.60
26.9
Operating expense per ASM, excluding fuel (cents)(1)
36.95
8.46
336.6
12.90
8.56
50.7
Departures
12,896
93,040
(86.1
)
96,191
182,276
(47.2
)
Average stage length (miles)
1,183
1,147
3.1
1,163
1,150
1.1
Average number of operating aircraft during period
262.0
253.0
3.6
260.6
253.0
3.0
Average fuel cost per gallon, including fuel taxes
$
0.96
$
2.16
(55.4
)
$
1.74
$
2.10
(17.4
)
Fuel gallons consumed (millions)
30
224
(86.5
)
227
438
(48.2
)
Average number of full-time equivalent crewmembers
16,759
18,454
(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)
June 30,
December 31,
2020
2019
(unaudited) Cash and cash equivalents
$
2,561
$
959
Total investment securities
343
372
Total assets
14,027
11,918
Total debt
4,776
2,334
Stockholders' equity
4,094
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 and the
impairment charge of our Embraer E190 fleet. Special items for 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
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
$
per ASM
$
per ASM
$
per ASM
$
per ASM
Total operating expenses
$
625
$
25.90
$
1,855
$
11.58
$
2,547
$
14.72
$
3,652
$
11.60
Less: Aircraft fuel and related taxes
29
1.21
484
3.02
394
2.28
921
2.93
Other non-airline expenses
9
0.36
12
0.09
22
0.13
23
0.07
Special items
(304
)
(12.62
)
2
0.01
(102
)
(0.59
)
14
0.04
Operating expenses, excluding fuel
$
891
$
36.95
$
1,357
$
8.46
$
2,233
$
12.90
$
2,694
$
8.56
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. In 2020, special items
include contra expenses recognized on the utilization of payroll
support grants received under the CARES Act and the impairment
charge of our Embraer E190 fleet. Special items for 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
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Total operating revenues
$
215
$
2,105
$
1,803
$
3,977
Total operating expenses
$
625
$
1,855
$
2,547
$
3,652
Less: Special items
(304
)
2
(102
)
14
Total operating expenses excluding special items
$
929
$
1,853
$
2,649
$
3,638
Operating (loss) income
$
(410
)
$
250
$
(744
)
$
325
Add back: Special items
(304
)
2
(102
)
14
Operating (loss) income excluding special items
$
(714
)
$
252
$
(846
)
$
339
Operating margin excluding special items
-332.6
%
12.0
%
-46.9
%
8.5
%
(Loss) income before income taxes
$
(450
)
$
236
$
(804
)
$
294
Add back: Special items
(304
)
2
(102
)
14
(Loss) income before income taxes excluding special items
$
(754
)
$
238
$
(906
)
$
308
Pre-tax margin excluding special items
-351.0
%
11.3
%
-50.2
%
7.8
%
Net (loss) income
$
(320
)
$
179
$
(588
)
$
221
Add back: Special items
(304
)
2
(102
)
14
Less: Income tax (expense) benefit related to special items
(76
)
1
(26
)
3
Net (loss) income excluding special items
$
(548
)
$
180
$
(664
)
$
232
(Loss) Earnings Per Common Share:
Basic
$
(1.18
)
$
0.60
$
(2.14
)
$
0.73
Add back: Special items, net of tax
(0.84
)
-
(0.28
)
0.03
Basic excluding special items
$
(2.02
)
$
0.60
$
(2.42
)
$
0.76
Diluted
$
(1.18
)
$
0.59
$
(2.14
)
$
0.73
Add back: Special items, net of tax
(0.84
)
0.01
(0.28
)
0.03
Diluted excluding special items
$
(2.02
)
$
0.60
$
(2.42
)
$
0.76
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005311/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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