Friday, 29 January 2021

Big loss for JetBlue in the 4th Quarter

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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