JetBlue Results

JetBlue Announces Second Quarter 2017 Results

JetBlue reported second quarter operating revenues of $1.8 billion. Revenue passenger miles for the second quarter increased 5.0% to 12.1 billion on a capacity increase of 4.8%, resulting in a second quarter load factor of 85.2%, a 0.2 point increase year over year.

JetBlue

JetBlue Airways Corporation (NASDAQ: JBLU) today reported its results for the second quarter 2017:

  • Operating income of $354 million, an increase of 13.0% from the second quarter of 2016.
  • Pre-tax income of $332 million, an increase of 14.9% from the second quarter of 2016.
  • Second quarter net income of $211 million, or $0.64 per diluted share. This compares to JetBlue’s second quarter 2016 net income of $181 million, or $0.53 per diluted share.

Financial Performance

JetBlue reported second quarter operating revenues of $1.8 billion. Revenue passenger miles for the second quarter increased 5.0% to 12.1 billion on a capacity increase of 4.8%, resulting in a second quarter load factor of 85.2%, a 0.2 point increase year over year.

Yield per passenger mile in the second quarter was 13.60 cents, up 5.7% compared to the second quarter of 2016. Passenger revenue per available seat mile (PRASM) for the second quarter of 2017 increased 5.9% year over year to 11.59 cents and operating revenue per available seat mile (RASM) increased 7.0% year over year to 12.93 cents.

Compared with last year, operating expenses for the quarter increased 11.9%, or $158 million. Interest expense for the quarter declined 15.3%, or $4 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the second quarter increased 6.8% year over year to 10.45 cents. Excluding fuel, second quarter CASM1 increased 5.1% to 8.16 cents.

“Our second quarter unit revenue exceeded our initial guidance as a result of our targeted revenue initiatives and a solid demand environment. We continue to execute on the commercial and cost initiatives we have underway to deliver above industry average margins and drive shareholder value. I’d like to thank our 21,000 Crewmembers for their hard work in the peak travel season and dedication to delivering a great product and service to our Customers that will translate into greater value for our shareholders,” said Robin Hayes, JetBlue’s President and CEO.

Fuel Expense and Hedging

In the second quarter of 2017 JetBlue had hedges in place for approximately 10% of its fuel consumption. The realized fuel price in the quarter was $1.61 per gallon, a 12.3% increase versus second quarter 2016 realized fuel price of $1.43.

JetBlue has hedged approximately 10% of its third and fourth quarter of 2017 fuel consumption using jet fuel swaps. Based on the fuel curve as of July 14th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.61 in the third quarter of 2017.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $1 billion in unrestricted cash and short term investments, or about 15% of trailing twelve month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.

During the second quarter, JetBlue repaid $35 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $53 million in regularly scheduled debt and capital lease obligations in the third quarter 2017 and approximately $194 million for the full year 2017.

“We are committed to driving improved margins and we are making good progress as we execute our structural cost program. We succeeded in controlling unit cost pressures during the quarter despite a lower completion factor and will continue to bring intensity and discipline to the effort,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.

Third Quarter and Full Year Outlook

Capacity is expected to increase between 6.5% and 7.5% year over year in the third quarter 2017. For the full year 2017, JetBlue expects capacity to increase between 5.5% and 6.5%.

RASM growth is expected to range between (0.5)% and 2.5% for the third quarter 2017 compared to the same period in 2016.

CASM excluding fuel is expected to grow between 1.5% and 3.5% for the third quarter of 2017. For the full year 2017, JetBlue expects year over year CASM excluding fuel to grow between 2.0% and 3.5%.

JetBlue will conduct a conference call to discuss its quarterly earnings today, July 25, 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.

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 38 million customers a year to 101 cities in the U.S., Caribbean, and Latin America with an average of 1,000 daily flights.

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
2017 2016 Change 2017 2016 Change
OPERATING REVENUES
Passenger $ 1,650 $ 1,487 11.0 $ 3,101 $ 2,965 4.6
Other   192     156   22.8   345     295   17.0
Total operating revenues 1,842 1,643 12.1 3,446 3,260 5.7
 
OPERATING EXPENSES
Aircraft fuel and related taxes 325 274 18.5 647 489 32.4
Salaries, wages and benefits 464 415 12.0 931 850 9.5
Landing fees and other rents 101 92 10.3 197 177 11.2
Depreciation and amortization 109 96 13.6 214 188 14.0
Aircraft rent 24 28 (12.1 ) 50 56 (10.1 )
Sales and marketing 68 72 (6.8 ) 127 137 (7.0 )
Maintenance, materials and repairs 166 140 18.4 318 274 15.9
Other operating expenses   231     213   8.4   461     427   8.0
Total operating expenses 1,488 1,330 11.9 2,945 2,598 13.4
 
OPERATING INCOME 354 313 13.0 501 662 (24.4 )
 
Operating margin 19.2 % 19.1 % 0.1 pts. 14.5 % 20.3 % (5.8 ) pts.
 
OTHER INCOME (EXPENSE)
Interest expense (24 ) (28 ) (15.3 ) (49 ) (57 ) (14.4 )
Capitalized interest 2 2 30.4 4 4 28.5
Interest income and other   -     2   (104.4 )   2     3   (45.6 )
Total other income (expense) (22 ) (24 ) (9.6 ) (43 ) (50 ) (15.7 )
 
INCOME BEFORE INCOME TAXES 332 289 14.9 458 612 (25.1 )
 
Pre-tax margin 18.0 % 17.6 % 0.4 pts. 13.3 % 18.8 % (5.5 ) pts.
 
Income tax expense   121     108   11.9   162     224   (27.7 )
 
 
NET INCOME $ 211   $ 181   16.7 $ 296   $ 388   (23.6 )
 
EARNINGS PER COMMON SHARE:
Basic $ 0.64   $ 0.56   $ 0.89   $ 1.20  
Diluted $ 0.64   $ 0.53   $ 0.88   $ 1.14  
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 330.1 323.2 333.1 322.4
Diluted 331.5 342.7 334.8 342.3

JETBLUE AIRWAYS CORPORATION

COMPARATIVE OPERATING STATISTICS
(unaudited)
             
Three Months Ended Six Months Ended
June 30, Percent June 30, Percent
2017 2016 Change 2017 2016 Change
Revenue passengers (thousands) 10,313 9,660 6.8 20,024 18,778 6.6
Revenue passenger miles (millions) 12,133 11,553 5.0 23,532 22,529 4.5
Available seat miles (ASMs) (millions) 14,246 13,597 4.8 27,826 26,626 4.5
Load factor 85.2 % 85.0 % 0.2 pts. 84.6 % 84.6 % - pts.
Aircraft utilization (hours per day) 12.1 12.3 (1.6 ) 12.0 12.2 (1.6 )
 
Average fare $ 160.03 $ 153.94 4.0 $ 154.88 $ 157.88 (1.9 )
Yield per passenger mile (cents) 13.60 12.87 5.7 13.18 13.16 0.1
Passenger revenue per ASM (cents) 11.59 10.94 5.9 11.15 11.13 0.1
Revenue per ASM (cents) 12.93 12.09 7.0 12.39 12.24 1.2
Operating expense per ASM (cents) 10.45 9.78 6.8 10.59 9.76 8.5
Operating expense per ASM, excluding fuel (cents)(1) 8.16 7.76 5.1 8.25 7.92 4.2
 
Departures 90,235 85,285 5.8 175,959 166,524 5.7
Average stage length (miles) 1,069 1,097 (2.6 ) 1,074 1,103 (2.6 )
Average number of operating aircraft during period 231.8 218.2 6.2 230.4 216.8 6.3
Average fuel cost per gallon, including fuel taxes $ 1.61 $ 1.43 12.3 $ 1.65 $ 1.31 26.3
Fuel gallons consumed (millions) 202 191 5.5 393 374 4.9
Average number of full-time equivalent crewmembers 16,841 15,297 10.1

JETBLUE AIRWAYS CORPORATION

SELECTED CONSOLIDATED BALANCE SHEET DATA

(in millions)

   
June 30, December 31,
2017 2016
Cash and cash equivalents $ 550 $ 433
Total investment securities 470 628
Total assets 9,644 9,323
Total debt 1,305 1,384
Stockholders' equity 4,080 4,013

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 (“GAAP”). JetBlue believes these metrics provide a meaningful comparison of our results to others in the airline industry and our prior year results. Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The table below shows a reconciliation of non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.

Consolidated operating cost per available seat mile, excluding fuel and related taxes, and operating expenses (“CASM Ex-Fuel”). CASM is a common metric used in the airline industry. We exclude aircraft fuel and related taxes and operating expenses related to other non-airline expenses, such as JetBlue Technology Ventures, from operating cost per available seat mile to determine CASM Ex-Fuel. We believe 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 expenses related to other non-airline expenses. We believe this measure is more indicative of our ability to manage 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,
2017 2016 2017 2016
$ per ASM $ per ASM $ per ASM $ per ASM
 
Total operating expenses $ 1,488 $ 10.45 $ 1,330 $ 9.78 $ 2,945 $ 10.59 $ 2,598 $ 9.76
Less:
Aircraft fuel and related taxes 325 2.28 274 2.02 647 2.33 489 1.84
Other non-airline expenses   1   0.01   1   -   2   0.01   1   -
Operating expenses, excluding fuel and related taxes $ 1,162 $ 8.16 $ 1,055 $ 7.76 $ 2,296 $ 8.25 $ 2,108 $ 7.92

Net Income and Pre-Tax Income, excluding special items. JetBlue excludes special items from net income and pre-tax income because management believes the exclusion of these items is helpful to investors to evaluate the company's recurring core operational performance in the periods shown. Therefore, we adjust for these amounts. Special items excluded in the tables below showing reconciliation of net income and pre-tax income include the gain on the sale of JetBlue's wholly-owned subsidiary LiveTV, LLC due to the non-recurring nature of this item.



Logos, product and company names mentioned are the property of their respective owners.