JetBlue Airways Corporation (NASDAQ:JBLU) today reported its
results for the first quarter 2019:
- Reported diluted earnings per share of
$0.14 in the first quarter of 2019 compared to $0.28 in the first
quarter of 2018. Adjusted diluted earnings per share was $0.16 in
the first quarter of 2019 versus $0.26 in the first 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 $58 million, a
decline of 48.5% from $113 million in the first quarter of 2018.
Excluding the one-time costs, adjusted pre-tax income of $70
million(1), a decline of 38.2% from the first quarter of 2018.
- Pre-tax margin of 3.1%, inclusive of
the one-time costs, a 3.3 point decline from the first quarter of
2018. Adjusted pre-tax margin of 3.7%(1), a 2.7 percentage point
decline year over year.
Highlights from the First Quarter
2019
- First quarter 2019 revenue per
available seat mile (RASM) declined 3.1%, year over year, driven by
holiday calendar placement, improved completion factor and certain
areas of softness observed in the trough period. Excluding the 0.75
point impact from high completion factor, RASM declined 2.4% year
over year, slightly better than the mid-point of our guidance range
of down (3.5%) to down (1.5%).
- Operating expenses per available seat
mile, excluding fuel (CASM ex-fuel) (1) increased 0.9%, below the
low end of our initial guidance range of 1.5% to 3.5%. This
increase includes a benefit of approximately 0.75 points from
improved completion factor.
Key Guidance for the Second Quarter and
Full Year 2019:
- Capacity is expected to increase
between 4.5% and 6.5% year over year in the second quarter 2019.
For the full year 2019, JetBlue expects capacity to increase
between 4.5% and 6.5%.
- RASM growth is expected to range
between 1.0% and 4.0% for the second quarter 2019 compared to the
same period in 2018. Our guidance includes a benefit of 2.25 points
of impact related to the calendar placement shift of Easter and
Passover between the first and second quarters of 2019.
- CASM ex-fuel is expected to increase
between 1.5% and 3.5% for the second quarter of 2019, principally
driven by engine maintenance timing and the year-over-year impact
of the pilot contract effective on August 1st, 2018. For the full
year 2019, JetBlue continues to expect year over year CASM ex-fuel
to be between flat and 2.0%.
For further details see the latest Investor Update and the First
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, April 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
“We are very proud of our team and the work they do every day to
deliver the JetBlue experience. This quarter our financial
performance was mainly impacted by the calendar placement of Easter
and Passover holidays and, as disclosed in March, a softer revenue
environment than initially expected,” said Robin Hayes, JetBlue’s
Chief Executive Officer.
“In recent years we have repeatedly demonstrated our ability to
adapt to the changing environment around us to achieve our margin
commitments - and 2019 is proving to be no different. We believe we
will successfully execute our five ‘building blocks’ introduced at
our 2018 Investor Day, and we remain committed to our goal of
delivering earnings per share between $2.50 and $3 dollars by 2020.
We also continue to expect margin expansion in 2019, and to further
expand our margins in 2020.”
“We believe our work will position 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 A321s in our order book
to A321 LRs, and we expect to begin our European service by adding
London from Boston and New York starting in 2021,” said Joanna
Geraghty, JetBlue’s President and Chief Operating Officer.
Revenue Performance and Outlook
First quarter RASM declined 3.1% year over year. Excluding the
0.75 point headwind from improved completion factor, RASM was
slightly better than the mid-point of our guidance range of down
(3.5%) to down (1.5%). “Our RASM was negatively impacted by three
drivers: this year’s holiday calendar placement, improved
completion factor, and certain areas of softness we observed in the
trough period,” said Marty St. George, JetBlue’s EVP Commercial and
Planning.
“Looking into the second quarter, we expect RASM growth between
1.0% and 4.0% year over year. Our guidance includes an anticipated
2.25 point positive impact of Easter/Passover holiday placement
shift into April. March RASM showed clear signs of a weaker trough,
which extended into the first half of April. The April peak,
however, is showing the strength we had expected, and very early
look at May and June points to sequential RASM acceleration.”
Cost Performance, Outlook and Balance
Sheet
“Our first quarter CASM ex-fuel represents a unit cost increase
below the mid-point of our guidance range. For the second quarter,
we expect CASM ex-fuel growth to range between 1.5% and 3.5%. As a
reminder, both our first quarter and second quarter guidance
include an approximately three-point impact from our pilot contract
signed last August,” said Steve Priest, JetBlue’s EVP Chief
Financial Officer.
“We could not be prouder of the hard work across JetBlue to
deliver on our commitments to hit our goals. We are encouraged by
the CASM ex-fuel progress we made in the first quarter, and the
progression we anticipate for the rest of the year. In the first
half we will continue to digest our first pilot contract, and
despite our capacity reduction from early March, our guidance range
remains between 0 and 2 percent.”
Capital Allocation and
Liquidity
JetBlue ended the quarter with approximately $876 million in
unrestricted cash, cash equivalents, and short term investments, or
about 11.3% 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 $133 million in
regularly scheduled debt and capital lease obligations for the
first quarter.
Fuel Expense and Hedging
The realized fuel price in the quarter was $2.05 per gallon, a
2.0% decline versus first quarter 2018 realized fuel price of
$2.09.
JetBlue entered into forward fuel derivative contracts to hedge
approximately 7% of its fuel consumption for the second quarter of
2019. Based on the fuel curve as of April 12th, JetBlue expects an
average all-in price per gallon of fuel of $2.21 in the second
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 March 31,
Percent 2019 2018(1) Change
OPERATING REVENUES Passenger $ 1,802 $ 1,692 6.5 Other
69 62 11.8 Total operating revenues 1,871 1,754 6.7
OPERATING EXPENSES Aircraft fuel and related taxes
437 417 4.9 Salaries, wages and benefits 575 499 15.2 Landing fees
and other rents 115 109 6.2 Depreciation and amortization 124 111
11.5 Aircraft rent 25 25 1.5 Sales and marketing 66 67 (1.8)
Maintenance, materials and repairs 155 142 9.3 Other operating
expenses 286 259 10.1 Special items 12 - - Total
operating expenses 1,795 1,629 10.2
OPERATING INCOME
76 125 (39.0) Operating margin 4.1% 7.1% (3.0) pts.
OTHER INCOME (EXPENSE) Interest expense (20) (16) 25.3
Capitalized interest 3 2 24.0 Interest income and other (1)
2 (149.5) Total other income (expense) (18) (12) (52.3)
INCOME BEFORE INCOME TAXES 58 113 (48.5)
Pre-tax margin 3.1% 6.4% (3.3) pts. Income tax expense
16 23 (27.7)
NET INCOME $ 42 $
90 (53.8)
EARNINGS PER COMMON SHARE: Basic $ 0.14 $
0.28 Diluted $ 0.14 $ 0.28
WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 305.3 320.6 Diluted 306.9 322.3 (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 March 31, Percent 2019
2018 Change Revenue passengers (thousands) 10,165
9,881 2.9 Revenue passenger miles (millions) 12,734 11,866 7.3
Available seat miles (ASMs) (millions) 15,437 14,025 10.1 Load
factor 82.5% 84.6% (2.1) pts. Aircraft utilization (hours per day)
11.8 11.4 0.4 Average fare $ 177.24 $ 171.19 3.5 Yield per
passenger mile (cents) 14.15 14.26 (0.7) Passenger revenue per ASM
(cents) 11.67 12.06 (3.2) Revenue per ASM (cents) 12.12 12.50 (3.1)
Operating expense per ASM (cents)
(2) 11.63 11.62 0.1
Operating expense per ASM, excluding fuel (cents)
(1)(2) 8.66
8.58 0.9 Departures 89,236 86,046 3.7 Average stage length
(miles) 1,153 1,098 5.0 Average number of operating aircraft during
period 252.9 243.9 3.7 Average fuel cost per gallon, including fuel
taxes $ 2.05 $ 2.09 (2.0) Fuel gallons consumed (millions) 213 199
7.0 Average number of full-time equivalent crewmembers 18,292
17,530 (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)
March 31, December
31, 2019 2018 Cash and cash equivalents $ 464 $
474 Total investment securities 415 416 Total assets(1) 11,115
10,959 Total debt 1,539 1,670 Stockholders' equity
(1) 4,607
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
March 31, 2019 2018 $ per ASM
$ per ASM Total operating expenses(1) $ 1,795
$ 11.63 $ 1,629 $ 11.62 Less: Aircraft fuel and related taxes 437
2.83 417 2.97 Other non-airline expenses(1) 9 0.06 9 0.07 Special
items 12 0.08 - - Operating expenses,
excluding fuel(1) $ 1,337 $ 8.66 $ 1,203 $ 8.58 (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
March 31, 2019 2018(1) Total
operating expenses $ 1,795 $ 1,629
Less: Special items 12 -
Total operating expenses
excluding special items $ 1,783 $
1,629 Operating income $ 76
$ 125 Add back: Special items 12 -
Operating income excluding special items $ 88
$ 125 Income before income taxes
$ 58 $ 113 Add back: Special items
12 -
Income before income taxes excluding special
items $ 70 $ 113 Income
before income taxes excluding special items $ 70
$ 113 Less: Income tax expense 16 23 Less: Income tax
related to special items 3 - Less: Tax reform impact -
7
Net Income excluding special items and tax reform
impact $ 51 $ 83 Earnings
Per Common Share: Basic $ 0.14 $
0.28 Add back: Special items, net of tax 0.02 - Less: Tax
reform impact - 0.02
Basic excluding special items
and tax reform impact $ 0.16 $ 0.26
Diluted $ 0.14 $ 0.28 Add
back: Special items, net of tax 0.02 - Less: Tax reform impact
- 0.02
Diluted excluding special items and tax
reform impact $ 0.16 $ 0.26
(1) Prior period results have been recast
to reflect the adoption of ASC 842 Leases.
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JetBlue Investor RelationsTel: +1 718 709
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JetBlue Corporate CommunicationsTel: +1 718 709
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