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| Photo JetBlue |
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.
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%.
| 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. |
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.
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