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
For further details see the Investor Update and the Second
Quarter 2017 Earnings Presentation available via the internet at
http://investor.jetblue.com.
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. For more
information please visit www.jetblue.com.
Notes
(1)
Consolidated operating cost per available
seat mile, excluding fuel and related taxes, and operating expenses
related to other non-airline expenses (CASM Ex-Fuel) is a non-GAAP
financial measure that we use to measure our core performance. 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; volatility in fuel prices, maintenance costs
and interest rates; our ability to implement our growth strategy;
our significant fixed obligations and substantial indebtedness; our
ability to attract and retain qualified personnel and maintain our
culture as we grow; our reliance on high daily aircraft
utilization; 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 reliance on a limited number of suppliers; 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 2016 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 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
(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, and
operating expenses related to other non-airline expenses.
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.
NON-GAAP FINANCIAL MEASURE RECONCILIATION OF NET INCOME
AND INCOME BEFORE INCOME TAXES EXCLUDING SPECIAL ITEMS (in
millions, except per share amounts) (unaudited)
Three Months
Ended June 30, 2017 2016 2015
2014 $ Margin $ Margin $
Margin $ Margin Income before income
taxes $ 332 18.0 % $ 289 17.6 % $ 250 15.5 % $ 345 23.1 % Less:
Gain on sale of subsidiary - - - 242
Income before income taxes excluding special items 332 18.0 % 289
17.6 % 250 15.5 % 103 6.9 % Less: Income tax expense 121 108 98 115
Add back: Income tax relating to gain on sale of subsidiary (a)
- - - 73 Net Income excluding special
items $ 211 11.4 % $ 181 11.0 % $ 152 9.4 % $ 61 4.1 % (a)
The capital gain generated from the sale of LiveTV allowed JetBlue
to utilize a capital loss carryforward which resulted in the
release of a valuation allowance related to the capital loss
deferred tax asset of $19 million.
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