Tuesday, 28 July 2020

Second Quarter 2020 results for JetBlue shows pre-tax losses of $450 million

The New York hometown airline, JetBlue has released details of its second-quarter results for 2020 today, showing mounting losses due to the ongoing coronavirus COVID-19 pandemic that continues to afflict the aviation industry around the world.   

JetBlue says its GAAP pre-tax loss was $450 million, excluding one-time items, adjusted pre-tax loss of  $754 million in the second quarter of 2020.  The firm reports that revenue declined by 90% compared to 2019 and it had been forced to cut capacity by around 85% to try and stem the losses.  Because most of the carrier's aircraft were grounded and staff on furlough, the operating expenses decreased 66% year over year, excluding special items, adjusted operating expenses declined 50%.

JetBlue successfully reduced its second-quarter costs by over $900 million driven by variable cost reductions through capacity cuts and fixed cost reductions achieved by adjusting work schedules where possible and eliminating discretionary spend.


JetBlue ended the second quarter with approximately $2.9 billion in unrestricted cash, cash equivalents, and short-term investments, or 36% of 2019 revenue. Including the CARES Act PSP proceeds, our liquidity was $3.4 billion at the end of second-quarter 2020, or 42% of 2019 revenue.
JetBlue repaid $78 million in regularly scheduled debt and finance lease obligations during the second quarter of 2020.

JetBlue has taken the following measures in the second quarter to manage liquidity,  raised $750 million under a secured term loan, executed approximately $120 million under sale-leaseback transactions, and entered a binding agreement for three additional sale-leaseback transactions for upcoming deliveries. In addition, the company has entered into two other binding sale-leaseback agreements for aircraft already existing in our fleet. 

Resulting from the actions taken, JetBlue’s average daily cash burn in May was $9 million vs its prior expectations for just below $10 million. Average daily cash burn in the second quarter was $9.5 million vs its prior expectations for $11 million, and the daily cash burn at the end of June was just under $8 million. JetBlue continues to expect average daily cash burn in the third quarter for a range of $7 to $9 million.

Robin Hayes, JetBlue’s Chief Executive Officer details the airlines "Recovery Plan and Actions Taken to Position JetBlue for Future Success"

“For the past 20 years we have succeeded against the odds, and we firmly believe that we are laying the foundation and repositioning JetBlue to come out of this historic crisis as a stronger, global player in the years to come,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“In the past two months, we made progress in reducing our cash burn, and have been quick to resize our operations to the very dynamic demand environment. While demand has improved materially from the lows we saw in April, bookings remain choppy, and we remain focused on addressing changing trends as we progress through the summer.

As we move into recovery, we have laid out a three-step framework to set JetBlue up for success and emerge stronger. The first is to reduce our cash burn. The second step is to rebuild our margins. The third and last step is to repair our balance sheet.

We have been nimble and managed the short term with a sense of urgency, to reduce our cash burn and build liquidity. We are confident that our actions to protect the health and safety of our Customers and Crewmembers, our network changes, and focus on costs will help us rebuild our margins faster.”

Action Plan, Revenue and Capacity

“We are laser-focused on managing the current environment of low demand,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer. “In the short term, we have added tactical point-to-point flights, responding to unserved demand in leisure and VFR markets and supporting our cash generation efforts. In the long term, our actions help us solidify our network strategy to improve our position in our Focus Cities. We are taking advantage of unique opportunities presented by the pandemic to allow us to rebuild our margins when demand returns.

Volumes have increased since demand bottomed out in April, and during the second quarter our revenue broadly tracked to our L-shaped recovery forecast. We expect demand trends will continue to be volatile and recovery will not be linear. Given the choppiness in demand, we will continue to take a conservative approach in planning capacity and forecasting revenue.

As we see booking trends beginning to improve after bottoming out in April, we believe capacity will lead the way to demand and revenue recovery. That said, our guiding criteria is cash generation, and we will continue to be nimble in reacting to changes in demand trends.”

Cost Performance and Outlook

“We continue to manage through this fluid environment with a near-term focus on preserving liquidity. Just as importantly, we are positioning JetBlue to thrive as we emerge from the pandemic,” said Steve Priest, JetBlue’s Chief Financial Officer.

“Last month we raised approximately $750 million with a new term loan backed by JFK, LaGuardia and Washington Reagan slots, as well as by our JetBlue brand. We also entered into sale-leaseback transactions that raised nearly $120 million during the quarter. Our liquidity equated to $3.4 billion at the close of June, or 42% of our 2019 revenue.

Our daily cash burn improved every month since April, to under $8 million at the end of June. The improvement during the quarter came mainly from our efforts to manage capacity, reduce our cost base and manage payment terms. Improvements in revenue trends during the quarter also contributed to our progress in cash burn.

Looking into the third quarter, we continue to estimate our daily cash burn between $7 and $9 million, mainly driven by a continuation of our work to reduce our cost base, and capacity actions to respond to changes in demand. Where we fall within the range will depend on the revenue environment during the third quarter.”





-
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
 
2020

2019

Change

2020

2019

Change
OPERATING REVENUES 
Passenger 
$
170

$
2,031

(91.6
)
$
1,682

$
3,833

(56.1
)
Other 

45


74

(39.7
)

121


144

(15.2
)
Total operating revenues 

215


2,105

(89.8
)

1,803


3,977

(54.7
)
 
OPERATING EXPENSES 
Aircraft fuel and related taxes 

29


484

(94.0
)

394


921

(57.2
)
Salaries, wages and benefits 

477


576

(17.1
)

1,078


1,151

(6.3
)
Landing fees and other rents 

62


121

(48.8
)

174


237

(26.6
)
Depreciation and amortization 

140


127

10.2


279


251

11.1

Aircraft rent 

16


25

(36.7
)

37


50

(25.6
)
Sales and marketing 

8


75

(89.6
)

60


141

(57.1
)
Maintenance, materials and repairs 

73


168

(56.4
)

233


324

(27.9
)
Other operating expenses 

124


277

(55.3
)

394


563

(30.2
)
Special items 

(304
)

2

(13,121.7
)

(102
)

14

(831.0
)
Total operating expenses 

625


1,855

(66.3
)

2,547


3,652

(30.2
)
 
OPERATING (LOSS) INCOME 

(410
)

250

(264.3
)

(744
)

325

(328.6
)
 
Operating margin 

-190.8
%

11.9
%
(202.7
)
pts.

-41.3
%

8.2
%
(49.5
)
pts.
 
OTHER INCOME (EXPENSE) 
Interest expense 

(40
)

(19
)
110.7


(65
)

(38
)
67.6

Capitalized interest 

3


3

(1.6
)

7


6

8.6

Interest income and other 

(3
)

2

(247.1
)

(2
)

1

(203.3
)
Total other income (expense) 

(40
)

(14
)
(198.6
)

(60
)

(31
)
(90.6
)
 
(LOSS) INCOME BEFORE INCOME TAXES 

(450
)

236

(290.2
)

(804
)

294

(373.0
)
 
Pre-tax margin 

-209.2
%

11.2
%
(220.4
)
pts.

-44.6
%

7.4
%
(52.0
)
pts.
 
Income tax (benefit) expense 

(130
)

57

(326.8
)

(216
)

73

(393.6
)
 
NET (LOSS) INCOME 
$
(320
)
$
179

(278.6
)
$
(588
)
$
221

(366.2
)
 
(LOSS) EARNINGS PER COMMON SHARE: 
Basic 
$
(1.18
)
$
0.60

$
(2.14
)
$
0.73

Diluted 
$
(1.18
)
$
0.59

$
(2.14
)
$
0.73

 
WEIGHTED AVERAGE SHARES OUTSTANDING: 
Basic 

271.7


300.3


275.1


303.1

Diluted 

271.7


301.8


275.1


304.6

JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING STATISTICS
(unaudited)
 
 
 
Three Months Ended



Six Months Ended


 
June 30,

Percent

June 30,

Percent
 
2020

2019

Change

2020

2019

Change
Revenue passengers (thousands) 

616


11,026

(94.4
)

8,766


21,191

(58.6
)
Revenue passenger miles (millions) 

816


13,782

(94.1
)

11,208


26,516

(57.7
)
Available seat miles (ASMs) (millions) 

2,413


16,029

(84.9
)

17,304


31,466

(45.0
)
Load factor 

33.8
%

86.0
%
(52.2
)
pts.

64.8
%

84.3
%
(19.5
)
pts.
Aircraft utilization (hours per day) 

1.6


12.1

(86.8
)

6.1


11.9

(48.7
)
 
Average fare 
$
276.35

$
184.24

50.0

$
191.83

$
180.89

6.1

Yield per passenger mile (cents) 

20.86


14.74

41.5


15.00


14.46

3.8

Passenger revenue per ASM (cents) 

7.06


12.68

(44.3
)

9.72


12.18

(20.2
)
Revenue per ASM (cents) 

8.91


13.14

(32.2
)

10.42


12.64

(17.5
)
Operating expense per ASM (cents) 

25.90


11.58

123.7


14.72


11.60

26.9

Operating expense per ASM, excluding fuel (cents)(1) 

36.95


8.46

336.6


12.90


8.56

50.7

 
Departures 

12,896


93,040

(86.1
)

96,191


182,276

(47.2
)
Average stage length (miles) 

1,183


1,147

3.1


1,163


1,150

1.1

Average number of operating aircraft during period 

262.0


253.0

3.6


260.6


253.0

3.0

Average fuel cost per gallon, including fuel taxes 
$
0.96

$
2.16

(55.4
)
$
1.74

$
2.10

(17.4
)
Fuel gallons consumed (millions) 

30


224

(86.5
)

227


438

(48.2
)
Average number of full-time equivalent crewmembers 

16,759


18,454

(1) Refer to Note A at the end of our Earnings Release for more information on this non-GAAP financial measure. Operating expense per available seat mile, excluding fuel (“CASM Ex-Fuel”) excludes fuel and related taxes, other non-airline operating expenses, and special items.
JETBLUE AIRWAYS CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET DATA
(in millions)
  
  
 
June 30,

December 31,
 
2020

2019
 (unaudited)
Cash and cash equivalents 
$
2,561
$
959
Total investment securities 

343

372
Total assets 

14,027

11,918
Total debt 

4,776

2,334
Stockholders' equity 

4,094

4,799

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,
 
2020

2019

2020

2019
 
$

per ASM

$

per ASM

$

per ASM

$

per ASM
  
Total operating expenses 
$
625

$
25.90

$
1,855
$
11.58
$
2,547

$
14.72

$
3,652
$
11.60
Less: 
Aircraft fuel and related taxes 

29


1.21


484

3.02

394


2.28


921

2.93
Other non-airline expenses 

9


0.36


12

0.09

22


0.13


23

0.07
Special items 

(304
)

(12.62
)

2

0.01

(102
)

(0.59
)

14

0.04
Operating expenses, excluding fuel 
$
891

$
36.95

$
1,357
$
8.46
$
2,233

$
12.90

$
2,694
$
8.56
Operating Expense, Income before Taxes, Net Income and Earnings per Share, excluding special items
Our GAAP results in the applicable periods were impacted by charges that are deemed special items. We believe the impacts of these items make our results difficult to compare to prior periods as well as future periods and guidance. In 2020, special items include contra expenses recognized on the utilization of payroll support grants received under the CARES Act and the impairment charge of our Embraer E190 fleet. Special items for 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. We believe the impacts of these 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 these items.
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS
(in millions, except per share amounts)
(unaudited)
  
 
Three Months Ended

Six Months Ended
 
June 30,

June 30,
 
2020

2019

2020

2019
  
Total operating revenues 
$
215

$
2,105

$
1,803

$
3,977

  
Total operating expenses 
$
625

$
1,855

$
2,547

$
3,652

Less: Special items 

(304
)

2


(102
)

14

Total operating expenses excluding special items 
$
929

$
1,853

$
2,649

$
3,638

  
Operating (loss) income 
$
(410
)
$
250

$
(744
)
$
325

Add back: Special items 

(304
)

2


(102
)

14

Operating (loss) income excluding special items 
$
(714
)
$
252

$
(846
)
$
339

  
Operating margin excluding special items 

-332.6
%

12.0
%

-46.9
%

8.5
%
  
(Loss) income before income taxes 
$
(450
)
$
236

$
(804
)
$
294

Add back: Special items 

(304
)

2


(102
)

14

(Loss) income before income taxes excluding special items 
$
(754
)
$
238

$
(906
)
$
308

  
Pre-tax margin excluding special items 

-351.0
%

11.3
%

-50.2
%

7.8
%
  
Net (loss) income 
$
(320
)
$
179

$
(588
)
$
221

Add back: Special items 

(304
)

2


(102
)

14

Less: Income tax (expense) benefit related to special items 

(76
)

1


(26
)

3

Net (loss) income excluding special items 
$
(548
)
$
180

$
(664
)
$
232

  
(Loss) Earnings Per Common Share: 
Basic 
$
(1.18
)
$
0.60

$
(2.14
)
$
0.73

Add back: Special items, net of tax 

(0.84
)

-


(0.28
)

0.03

Basic excluding special items 
$
(2.02
)
$
0.60

$
(2.42
)
$
0.76

  
Diluted 
$
(1.18
)
$
0.59

$
(2.14
)
$
0.73

Add back: Special items, net of tax 

(0.84
)

0.01


(0.28
)

0.03

Diluted excluding special items 
$
(2.02
)
$
0.60

$
(2.42
)
$
0.76










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