JetBlue Announces Q3 2016 Results

Oct 25, 2016

NEW YORK--(BUSINESS WIRE)-- JetBlue Airways Corporation (NASDAQ:JBLU) today reported its results for the third quarter 2016:

  • Operating income of $354 million in the third quarter, an increase of 1% over the third quarter of 2015.
  • Pre-tax income of $330 million in the third quarter, an increase of 2.6% over the third quarter of 2015.
  • Net income of $199 million, or $0.58 per diluted share. This compares to JetBlue’s third quarter 2015 net income of $198 million, or $0.58 per diluted share.

Financial Performance

JetBlue reported third quarter operating revenues of $1.7 billion. Revenue passenger miles for the third quarter increased 7.6% to 11.9 billion on a capacity increase of 6.3%, resulting in a third quarter load factor of 86.3%, a 1 point increase year over year.

Yield per passenger mile in the third quarter was 13.20 cents, down 5.9% compared to the third quarter of 2015. Passenger revenue per available seat mile (PRASM) for the third quarter 2016 decreased 4.7% year over year to 11.39 cents and operating revenue per available seat mile (RASM) decreased 3.5% year over year to 12.55 cents.

Compared with last year, operating expenses for the quarter increased 3%, or $42 million. Interest expense for the quarter declined 10.2%, or $4 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the third quarter decreased 3% year over year to 9.99 cents. Excluding fuel and profit sharing, third quarter CASM See CASM footnote 1 increased 3.1% to 7.53 cents.

“I would like to thank our nearly 20,000 crewmembers for going above and beyond expectations this quarter once again. They are truly JetBlue’s greatest asset and what makes our unique model so successful. I am particularly pleased with how they handled Hurricane Matthew and helped our Customers travel safely to their destination as fast as possible” said Robin Hayes, JetBlue’s President and CEO.

Fuel Expense and Hedging

In the third quarter JetBlue had hedges in place for approximately 24% of its fuel consumption. The realized fuel price in the quarter was $1.48 per gallon, a 20% decrease versus third quarter 2015 realized fuel price of $1.85.

JetBlue has hedged approximately 25% of its fourth quarter 2016 projected fuel consumption using jet fuel swaps. Based on the fuel curve as of October 14th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.63 in the fourth quarter.

Liquidity and Cash Flow

JetBlue ended the quarter with $1.5 billion in unrestricted cash and short term investments, or about 22% of trailing twelve month revenue. In addition, JetBlue maintains approximately $600 million in undrawn lines of credit.

During the third quarter, JetBlue repaid $61 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $306 million in regularly scheduled debt and capital lease obligations and plans to buy out the leases on at least four A320 aircraft during the fourth quarter.

“I am honored to have been part of the JetBlue family for over 10 years and proud to have worked alongside our crewmembers who are among the best I’ve seen during my years in the airline industry. JetBlue is financially strong, its leadership bench deep and its future bright” said Mark Powers, JetBlue’s Chief Financial Officer.

Fourth Quarter and Full Year Outlook

For the fourth quarter of 2016, year over year CASM excluding fuel and profit sharing is expected to grow between 4.5% and 6.5%, including a negative impact from hurricane Matthew of approximately half a point. For the full year 2016, JetBlue expects year over year CASM excluding fuel and profit sharing to grow between 0.0% and 1.5%, consistent with prior guidance.

In the fourth quarter 2016, capacity is expected to increase between 3.0% and 5.0%, including a negative impact from hurricane Matthew of approximately half a point. For the full year 2016, JetBlue expects capacity to increase between 8.5% and 9.0%.

JetBlue will conduct a conference call to discuss its quarterly earnings today, October 25, at 10:00 a.m. Eastern Time. A live broadcast of the conference call will 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 35 million customers a year to 97 cities in the U.S., Caribbean, and Latin America with an average of 925 daily flights. For more information please visit JetBlue.com.

 

Notes

 
(1)   Consolidated operating cost per available seat mile, excluding fuel, profit sharing and related taxes (CASM Ex-Fuel and Profit Sharing) 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. Back to Financial Performance
 

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 government regulation; changes in our industry due to other airlines' financial condition; acts of war or terrorist attacks; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for domestic and business 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 2015 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

OPERATING REVENUES: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Passenger $ 1,571 $ 1,551 1.3 $ 4,536 $ 4,455 1.8
Other 161   136   17.9   455   367   24.0
Total operating revenues 1,732 1,687 2.6 4,991 4,822 3.5
OPERATING EXPENSES: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Aircraft fuel and related taxes 293 342 Negative (14.4) 782 1,048 Negative (25.4)
Salaries, wages and benefits 421 389 8.0 1,270 1,139 11.5
Landing fees and other rents 98 91 8.2 276 264 4.5
Depreciation and amortization 102 84 21.0 289 252 14.4
Aircraft rent 28 30 Negative(8.5) 84 92 Negative(9.3)
Sales and marketing 60 69 Negative(12.1) 197 199 Negative(0.9)
Maintenance, materials and repairs 153 132 15.9 427 371 15.1
Other operating expenses 223   199   11.7   650   571   14.0
Total operating expenses 1,378 1,336 3.0 3,975 3,936 1.0
OPERATING INCOME: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
354 351 1.0 1,016 886 14.7
Operating margin 20.5 % 20.8 % Negative(0.3) pts. 20.4 % 18.4 % 2.0 pts.
OTHER INCOME (EXPENSE): listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Interest expense Negative(28) Negative(32) Negative(10.2) Negative(85) Negative(98) Negative(12.8)
Capitalized interest 2 2 6.2 6 6 (6.4)
Interest income (expense) and other 2   1   387.5   5   -   Negative(1,370.3)
Total other income (expense) Negative(24) Negative(29) Negative(16.6) Negative(74) Negative(92) Negative(19.0)
INCOME BEFORE INCOME TAXES: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
INCOME BEFORE INCOME TAXES 330 322 2.6 942 794 18.6
Pre-tax margin 19.1 % 19.1 % - pts. 18.9 % 16.5 % 2.4 pts.
Income tax expense 131   124   6.1 363   307   18.4
INCOME BEFORE INCOME TAXES: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
NET INCOME $199   $198   0.4 $579   $487   18.8
EARNINGS PER COMMON SHARE: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Basic $0.61   $0.63       $1.79   $1.55  
Diluted $0.58   $0.58       $1.70   $1.42  
WEIGHTED AVERAGE SHARES OUTSTANDING: listed in millions, except per share amounts, unaudited
Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Basic 323.7 313.8 322.8 313.6
Diluted 343.1 343.5 342.4 345.8

JETBLUE AIRWAYS CORPORATION COMPARATIVE OPERATING STATISTICS (unaudited)

Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Percent Change Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2016 Percent Change
Revenue passengers (thousands) 9,953 9,237 7.7 28,731 26,190 9.7
Revenue passenger miles (millions) 11,905 11,063 7.6 34,434 31,157 10.5
Available seat miles (ASMs) (millions) 13,796 12,976 6.3 40,421 36,632 10.3
Load factor 86.3 % 85.3 % 1.0 pts. 85.2 % 85.1 % 0.1 pts.
Aircraft utilization (hours per day) 12.2 12.2 - 12.2 12.0 1.7
Average fare $157.87 $167.96 Negative(6.0) $157.88 $170.12 Negative(7.2)
Yield per passenger mile (cents) 13.20 14.02 Negative(5.9) 13.17 14.30 Negative(7.9)
Passenger revenue per ASM (cents) 11.39 11.96 Negative(4.7) 11.22 12.16 Negative(7.7)
Revenue per ASM (cents) 12.55 13.01 Negative(3.5) 12.35 13.16 Negative(6.2)
Operating expense per ASM (cents) 9.99 10.30 Negative(3.0) 9.83 10.75 Negative(8.5)
Operating expense per ASM, excluding fuel and related taxes (cents) 7.86 7.67 2.5 7.89 7.88 0.2
Operating expense per ASM, excluding fuel, profit sharing and related taxes (cents) See Non-GAAP Financial Measures footnote 2 7.53 7.31 3.1 7.55 7.59 Negative(0.4)
Departures 86,801 82,989 4.6 253,325 236,370 7.2
Average stage length (miles) 1,091 1,094 Negative(0.3) 1,099 1,092 0.6
Average number of operating aircraft during period 219.6 209.0 5.1 217.8 206.3 5.6
Average fuel cost per gallon, including fuel taxes $1.48 $1.85 Negative(20.0) $1.37 $2.01 Negative(32.0)
Fuel gallons consumed (millions) 198 185 7.0 573 522 9.8
Average number of full-time equivalent crewmembers 15,521 14,418 7.7

JETBLUE AIRWAYS CORPORATION SELECTED CONSOLIDATED BALANCE SHEET DATA (in millions)

September 30, 2016 December 31, 2015
Cash and cash equivalents $873 $318
Total investment securities 636 607
Total assets 9,579 8,644
Total debt 1,689 1,827
Stockholders' equity 3,846 3,210
SOURCE: JetBlue Airways Corporation

(2) 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, profit sharing and related taxes (“CASM Ex-Fuel and Profit Sharing”). CASM is a common metric used in the airline industry. We exclude aircraft fuel, profit sharing and related taxes from operating cost per available seat mile to determine CASM Ex-Fuel and Profit Sharing. We believe CASM Ex-Fuel and Profit Sharing provides investors the ability to measure financial performance excluding items beyond our control such as (i) fuel costs, which are subject to many economic and political factors beyond our control and (ii) profit sharing, which is sensitive to volatility in earnings. We believe this measure is more indicative of our ability to manage costs and is more comparable to measures reported by other major airlines. Back to CONSOLIDATED STATEMENTS OF OPERATIONS

NON-GAAP FINANCIAL MEASURE

RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL, PROFIT SHARING AND RELATED TAXES (in millions, per ASM data in cents)
Three Months Ended September 30, 2016 $ Three Months Ended September 30, 2016 per ASM Three Months Ended September 30, 2015 $ Three Months Ended September 30, 2015 per ASM Nine Months Ended September 30, 2016 $ Nine Months Ended September 30, 2016 per ASM Nine Months Ended September 30, 2015 $ Nine Months Ended September 30, 2015 per ASM
                 
Total operating expenses $1,378 $9.99 $1,336 $10.30 $3,975 $9.83 $3,936 $10.75
Less: Aircraft fuel and related taxes 293 2.13 342 2.63 782 1.94 1,048 2.87
Operating expenses, excluding fuel and related taxes 1,085 7.86 994 7.67 3,193 7.89 2,888 7.88
Less: Profit sharing and related taxes 46 0.33 47 0.36 137 0.34 107 0.29
Operating expense, excluding fuel, profit sharing and related taxes $1,039 $7.53 $947 $7.31 $3,056 $7.55 $2,781 $7.59
 

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Source: JetBlue Airways Corporation

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