JetBlue Airways Corporation reported its results for the fourth quarter 2020 this week showing a GAAP pre-tax loss of ($512) million in the fourth quarter of 2020, compared to a pre-tax income of $220 million in the fourth quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($581) million(1) in the fourth quarter of 2020 versus adjusted pre-tax income of $221 million(1) in the fourth quarter of 2019.
Operational Highlights from the Fourth Quarter
Fourth quarter 2020 revenue declined 67% year over year as a result of the impact of COVID-19. The decline is better than our prior expectations for the quarter of a 70% decline, and represents a nine-point sequential improvement quarter over quarter, mainly driven by solid booking trends in October and improving volumes in the back half of December.
Reduced fourth quarter 2020 capacity by 47% year over year, in line with our planning assumption of a decrease between 45% and 50%, as a result of actions taken to manage cash burn and protect liquidity.
Operating expenses declined 38% year over year. Excluding special items, adjusted operating expenses(1) declined 34% year over year compared to our planning assumption of a decrease of at least 30%. The results were driven by capacity actions taken to reduce variable costs and fixed cost reductions achieved by adjusting work schedules and managing external spend.
Balance Sheet and Liquidity
JetBlue ended the fourth quarter of 2020 with approximately $3.1 billion in unrestricted cash, cash equivalents, and short-term investments, or 38% of 2019 revenue.
JetBlue repaid $100 million in regularly scheduled debt and finance lease obligations during the fourth quarter of 2020.
JetBlue has taken the following measures in the fourth quarter to manage liquidity:
Raised over $700 million with an equity offering and sale-leaseback transactions.
Continued to execute significant variable and fixed cost savings through aggressive capacity management and executing our cost reduction plan.
Redeployed assets to capture short-term, tactical cash generation opportunities.
Resulting from the actions taken, JetBlue’s average daily cash burn in the fourth quarter of 2020 was $6.7 million, towards the lower end of the $6 to $8 million range previously expected.
Starting this quarter, we will transition from reporting “all-in” cash burn to EBITDA. We believe that this metric brings better visibility to JetBlue’s underlying performance as we move towards recovery.
Fuel Expense and Hedging
The realized fuel price in the fourth quarter 2020 was $1.31 per gallon, a 37% decline versus fourth quarter 2019 realized fuel price of $2.07.
As of January 28th 2021, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the first quarter of 2021. Based on the forward curve as of January 15th, JetBlue expects an average all-in price per gallon of fuel of $1.61 in the first quarter of 2021.
Our Recovery Plan and Actions Taken to Position JetBlue for Future Success
“2020 was a year like no other, as the COVID-19 pandemic challenged our industry in ways we have never seen before. The very foundation of our business model - our culture, our passion for customer service, and our focus on safety – continue to guide us as we march towards recovery,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“Despite the financial results, I'm proud of what our crewmembers have accomplished in this extraordinary year. I could not be more confident in our future. Our team not only managed through the ongoing demand challenges, but made important progress on strategic initiatives – including revenue, capacity and cost actions.
As we moved through 2020, we meaningfully reduced our cash burn, and are starting to shift our focus to rebuilding our margins. We remain cautiously optimistic that demand trends will improve later this year. More importantly, this crisis has made us a more agile, creative and resilient airline, and we believe our initiatives will allow us to emerge with structurally better margins.”
Action Plan, Revenue and Capacity
“Delivering consistently on our Safety from the Ground Up Program remains one of the top reasons why customers are returning to air travel and choosing JetBlue. Our focus remains on cleanliness, reduced touchpoints and air quality, and we are also prioritizing efforts to educate our customers about the changing regulatory requirements associated with air travel, whether that is testing, quarantine, or documentation requirements. We know many customers want to travel, and we are trying to help them more easily navigate the changing requirements,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“Despite this progress in the fourth quarter, our geographic challenges persist, with increasing case counts and continued quarantine measures, particularly in the northeast and California. For the first quarter of 2021, our planning assumption for revenue is a decline of between (65) and (70)% year over two. We saw increased demand for Martin Luther King weekend, and are seeing a similar pattern for Presidents’ Day weekend, but we don’t anticipate traffic to reach the levels of late December.”
Financial Performance and Outlook
“Our average daily cash burn for the fourth quarter was $6.7 million, towards the lower end of the $6 to $8 million range we anticipated in early December. This was the result of variable cost savings achieved through a balanced approach to capacity, and our actions to minimize fixed costs across our business,” said Steve Priest, JetBlue’s Chief Financial Officer.
“We estimate our EBITDA in the first quarter will range between negative $525 and $625 million, reflecting similar revenue trends to the fourth quarter, but also manifesting recent cost pressure from rents and landing fees, as well as fuel prices.
We continue to take an aggressive approach to improve our cost structure and help rebuild our margins. Our 2021 plan reduces our total operating cost by over $1.2 billion, compared to 2019. We believe that executing our plan will put us on a path to emerge from the crisis, with better CASM ex-Fuel in 2022 than in 2019.”
JETBLUE AIRWAYS CORPORATION |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(in millions, except per share amounts) |
(unaudited) |
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | | Twelve Months Ended | | | |
| | December 31, | | Percent | | | December 31, | | Percent | |
| | 2020 | | 2019 | | Change | | | 2020 | | 2019 | | Change | |
| OPERATING REVENUES | | | | | | | | | | | | | | |
| Passenger | | $ | 606 | | | $ | 1,948 | | | (68.9 | ) | | | $ | 2,733 | | | $ | 7,786 | | | (64.9 | ) | |
| Other | | | 55 | | | | 83 | | | (33.8 | ) | | | | 224 | | | | 308 | | | (27.3 | ) | |
| Total operating revenues | | | 661 | | | | 2,031 | | | (67.4 | ) | | | | 2,957 | | | | 8,094 | | | (63.5 | ) | |
| | | | | | | | | | | | | | |
| OPERATING EXPENSES | | | | | | | | | | | | | | |
| Aircraft fuel and related taxes | | | 134 | | | | 455 | | | (70.5 | ) | | | | 631 | | | | 1,847 | | | (65.9 | ) | |
| Salaries, wages and benefits | | | 472 | | | | 589 | | | (20.0 | ) | | | | 2,032 | | | | 2,320 | | | (12.4 | ) | |
| Landing fees and other rents | | | 100 | | | | 112 | | | (10.5 | ) | | | | 358 | | | | 474 | | | (24.4 | ) | |
| Depreciation and amortization | | | 128 | | | | 140 | | | (8.3 | ) | | | | 535 | | | | 525 | | | 1.8 | | |
| Aircraft rent | | | 25 | | | | 23 | | | 7.7 | | | | | 85 | | | | 99 | | | (14.4 | ) | |
| Sales and marketing | | | 26 | | | | 75 | | | (64.8 | ) | | | | 110 | | | | 290 | | | (62.0 | ) | |
| Maintenance, materials and repairs | | | 97 | | | | 137 | | | (29.4 | ) | | | | 441 | | | | 619 | | | (28.8 | ) | |
| Other operating expenses | | | 202 | | | | 272 | | | (25.8 | ) | | | | 762 | | | | 1,106 | | | (31.0 | ) | |
| Special items | | | (69 | ) | | | 1 | | | (9,257.9 | ) | | | | (283 | ) | | | 14 | | | (2,073.5 | ) | |
| Total operating expenses | | | 1,115 | | | | 1,804 | | | (38.2 | ) | | | | 4,671 | | | | 7,294 | | | (36.0 | ) | |
| | | | | | | | | | | | | | |
| OPERATING (LOSS) INCOME | | | (454 | ) | | | 227 | | | (300.1 | ) | | | | (1,714 | ) | | | 800 | | | (314.4 | ) | |
| | | | | | | | | | | | | | |
| Operating margin | | | -68.7 | % | | | 11.2 | % | | (79.9 | ) | pts. | | | -58.0 | % | | | 9.9 | % | | (67.9 | ) | pts. |
| | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | |
| Interest expense | | | (59 | ) | | | (22 | ) | | 166.2 | | | | | (179 | ) | | | (79 | ) | | 127.2 | | |
| Capitalized interest | | | 3 | | | | 4 | | | (17.6 | ) | | | | 13 | | | | 14 | | | (6.5 | ) | |
| Gain on equity method investments | | | - | | | | - | | | - | | | | | - | | | | 15 | | | (100.0 | ) | |
| Interest income and other | | | (2 | ) | | | 11 | | | (122.1 | ) | | | | (13 | ) | | | 18 | | | (170.3 | ) | |
| Total other income (expense) | | | (58 | ) | | | (7 | ) | | 744.4 | | | | | (179 | ) | | | (32 | ) | | 464.7 | | |
| | | | | | | | | | | | | | |
| (LOSS) INCOME BEFORE INCOME TAXES | | | (512 | ) | | | 220 | | | (332.8 | ) | | | | (1,893 | ) | | | 768 | | | (346.6 | ) | |
| | | | | | | | | | | | | | |
| Pre-tax margin | | | -77.5 | % | | | 10.8 | % | | (88.3 | ) | pts. | | | -64.0 | % | | | 9.5 | % | | (73.5 | ) | pts. |
| | | | | | | | | | | | | | |
| Income tax (benefit) expense | | | (131 | ) | | | 59 | | | (324.3 | ) | | | | (531 | ) | | | 199 | | | (367.4 | ) | |
| | | | | | | | | | | | | | |
| NET (LOSS) INCOME | | $ | (381 | ) | | $ | 161 | | | (335.9 | ) | | | $ | (1,362 | ) | | $ | 569 | | | (339.3 | ) | |
| | | | | | | | | | | | | | |
| (LOSS) EARNINGS PER COMMON SHARE: | | | | | | | | | | | | | | |
| Basic | | $ | (1.34 | ) | | $ | 0.56 | | | | | | $ | (4.91 | ) | | $ | 1.92 | | | | |
| Diluted | | $ | (1.34 | ) | | $ | 0.56 | | | | | | $ | (4.91 | ) | | $ | 1.91 | | | | |
| | | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | | |
| Basic | | | 284.1 | | | | 285.8 | | | | | | | 277.5 | | | | 296.6 | | | | |
| Diluted | | | 284.1 | | | | 287.9 | | | | | | | 277.5 | | | | 298.4 | | | | |
JETBLUE AIRWAYS CORPORATION |
COMPARATIVE OPERATING STATISTICS |
(unaudited) |
| | | | | | | | |
| | | | | | | | |
| | Three Months Ended | | | | Twelve Months Ended | | |
| | December 31, | | Percent | | December 31, | | Percent |
| | 2020 | | 2019 | | Change | | 2020 | | 2019 | | Change |
| Revenue passengers (thousands) | | | 3,356 | | | | 10,476 | | | (68.0 | ) | | | 14,274 | | | | 42,728 | | | (66.6 | ) |
| Revenue passenger miles (millions) | | | 4,446 | | | | 13,171 | | | (66.2 | ) | | | 18,598 | | | | 53,617 | | | (65.3 | ) |
| Available seat miles (ASMs) (millions) | | | 8,480 | | | | 16,079 | | | (47.3 | ) | | | 32,689 | | | | 63,841 | | | (48.8 | ) |
| Load factor | | | 52.4 | % | | | 81.9 | % | | (29.5 | ) | pts. | | 56.9 | % | | | 84.0 | % | | (27.1 | ) |
| Aircraft utilization (hours per day) | | | 5.3 | | | | 11.6 | | | (54.3 | ) | | | 5.4 | | | | 11.9 | | | (54.6 | ) |
| | | | | | | | | | | | |
| Average fare | | $ | 180.54 | | | $ | 185.96 | | | (2.9 | ) | | $ | 191.42 | | | $ | 182.23 | | | 5.0 | |
| Yield per passenger mile (cents) | | | 13.63 | | | | 14.79 | | | (7.8 | ) | | | 14.69 | | | | 14.52 | | | 1.2 | |
| Passenger revenue per ASM (cents) | | | 7.15 | | | | 12.12 | | | (41.0 | ) | | | 8.36 | | | | 12.20 | | | (31.5 | ) |
| Revenue per ASM (cents) | | | 7.80 | | | | 12.63 | | | (38.3 | ) | | | 9.04 | | | | 12.68 | | | (28.7 | ) |
| Operating expense per ASM (cents) | | | 13.16 | | | | 11.22 | | | 17.2 | | | | 14.29 | | | | 11.43 | | | 25.1 | |
| Operating expense per ASM, excluding fuel (cents)(1) | | | 12.31 | | | | 8.31 | | | 48.2 | | | | 13.12 | | | | 8.44 | | | 55.4 | |
| | | | | | | | | | | | |
| Departures | | | 40,321 | | | | 91,888 | | | (56.1 | ) | | | 168,636 | | | | 368,355 | | | (54.2 | ) |
| Average stage length (miles) | | | 1,290 | | | | 1,142 | | | 13.0 | | | | 1,222 | | | | 1,140 | | | 7.2 | |
| Average number of operating aircraft during period | | | 264.9 | | | | 255.2 | | | 3.8 | | | | 262.2 | | | | 253.6 | | | 3.4 | |
| Average fuel cost per gallon, including fuel taxes | | $ | 1.31 | | | $ | 2.07 | | | (36.9 | ) | | $ | 1.53 | | | $ | 2.09 | | | (26.8 | ) |
| Fuel gallons consumed (millions) | | | 102 | | | | 219 | | | (53.2 | ) | | | 412 | | | | 885 | | | (53.4 | ) |
| Average number of full-time equivalent crewmembers | | | | | | | | | 15,450 | | | | 18,535 | | | |
| (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) |
| | | | |
| | | | |
| | December 31, | | December 31, |
| | 2020 | | 2019 |
| | (unaudited) | | |
| Cash and cash equivalents | | $ | 1,918 | | $ | 959 |
| Total investment securities | | | 1,137 | | | 372 |
| Total assets | | | 13,353 | | | 11,918 |
| Total debt | | | 4,863 | | | 2,334 |
| Stockholders' equity | | | 3,943 | | | 4,799 |
Note
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