JetBlue Airways Corporation today reported its results for the third quarter of 2022:
- Reported GAAP diluted earnings per share of $0.18 in the third quarter of 2022 compared to diluted earnings per share of $0.63 in the third quarter of 2019. Adjusted diluted earnings per share was $0.21 in the third quarter of 2022 versus adjusted diluted earnings per share of $0.59 in the third quarter of 2019.
- GAAP pre-tax income of $105 million in the third quarter of 2022, compared to a pre-tax income of $254 million in the third quarter of 2019. Excluding one-time items, adjusted pre-tax income of $118 million in the third quarter of 2022 versus adjusted pre-tax income of $239 million in the third quarter of 2019.
Third Quarter Operational and Financial Highlights
- Capacity was (0.5%) year over three, compared to our guidance for capacity to be between (0.5%) to 0.5% year over three.
- Revenue per available seat mile increased 23.4% year over three, compared to our guidance of an increase of 22% to 24%, year over three. Revenue was above the high-end of our initial outlook as strong leisure and visiting friends and relatives (VFR) demand trends continued through the quarter. Hurricanes Fiona and Ian were a net neutral impact to our unit revenues in the third quarter, as revenue was offset by reduced capacity.
- Operating expenses per available seat mile increased 32.4% year over three. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) increased 16.3% year over three, compared to our guidance of a 15% to 17% increase year over three.
Balance Sheet and Liquidity
- As of September 30, 2022, JetBlue’s adjusted debt to capital ratio was 53%.
- JetBlue ended the third quarter of 2022 with approximately $2.3 billion in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, or 28% of 2019 revenue.
- On October 21, 2022, JetBlue amended its revolving credit facility to increase the lending commitments by $50 million to a total of $600 million and extended the maturity date to October 21, 2024.
Fuel Expense and Hedging
- The realized fuel price in the third quarter 2022 was $3.84 per gallon, an 86% increase versus third quarter 2019 realized fuel price of $2.06.
- As of October 25, 2022, JetBlue has entered into forward fuel derivative contracts to hedge an estimated 27% of its fuel consumption for the fourth quarter of 2022. Based on the forward curve as of October 14, 2022, JetBlue expects an average all-in price per gallon of fuel of $3.65 in the fourth quarter of 2022, including hedges.
Unlocking Immense Consumer Benefits Through the Northeast Alliance
- The Northeast Alliance (NEA) continues to unlock consumer benefits by providing customers with more choice as a true third-competitor in the Northeast.
- NEA growth is outpacing overall domestic and international industry capacity growth. Consumers continue to benefit as the NEA is launching new destinations, adding flights to others, enhancing schedules, and allowing our Loyalty customers the ability to benefit from two different programs.
- Consumers further benefit as the NEA has stimulated a clear competitive response. The dominant and entrenched carriers in the Northeast have responded by matching the NEA’s new destinations as well as expanding their own service, boosting competition in the region.
Making Further Progress as an ESG Leader
- We recently announced an agreement with Air Company, a JetBlue Ventures investment, to purchase 25 million gallons of its Airmade sustainable aviation fuel (SAF) over five years targeting delivery starting in 2027. This agreement is an important step in helping us reach our goal of converting 10% of our total jet fuel usage to SAF by 2030.
- We also announced the appointment of Nik Mittal to JetBlue’s board of directors, whose deep expertise in financial strategy and sustainability will bring even more focus on ESG matters at the highest level of company leadership.
Enhancing our Business for the Long-Term
“For the third quarter, we reached an important milestone in our recovery as we generated our first quarterly adjusted profit since the start of the pandemic,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“Looking ahead, we expect our profitability to carry through to another solid quarter of mid-single-digit pre-tax margins in the fourth quarter, and we’ll look to expand on that further in 2023 as we continue to restore our earnings power.
“We continue to see a growing appetite for JetBlue’s unique customer value proposition of low fares and great service. With ample runway for growth ahead of us, we remain focused on execution and value creation for all our stakeholders.
“I’m also pleased that last week Spirit shareholders overwhelmingly voted to approve our proposed acquisition.
“Together, we’ll build a truly national low-fare challenger to the dominant Big Four airlines and expand our compelling combination of award-winning service and low fares to more Customers across more destinations.”
Revenue and Capacity
“I’m proud of our team for their dedication in delivering the JetBlue experience to our customers through a very challenging summer and the most recent hurricanes,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“For the fourth quarter we expect capacity to be up 1% to 4% year over three, a modest sequential step-up versus the third quarter.
“Throughout the quarter, strong leisure and VFR demand trends carried through the peak summer and into the fall trough period.
“We see that continuing here in the fourth quarter, and we’re confident in the demand backdrop for the year-end holiday peaks. For the fourth quarter, we expect unit revenue to increase between 15% and 19% year over three.”
Financial Performance and Outlook
“I’m pleased with the team’s execution in delivering our first quarter of profitability since the pandemic, an important milestone for us,” said Ursula Hurley, JetBlue’s Chief Financial Officer.
“We exceeded our original revenue guidance, maintained controllable costs in-line with our initial outlook despite the impact from hurricanes, resulting in a solid pre-tax margin result.
“The hurricanes negatively impacted CASM ex-Fuel by roughly one point to CASM-ex in the third quarter with no impact to the fourth quarter. Given the continued fragile aviation ecosystem, we are taking a cautious approach to operational investments and more conservative planning assumptions that we put in place for the summer.
For the fourth quarter, we are forecasting CASM ex-Fuel to increase 8.5% to 10.5% year over three.
This represents a sequential improvement of approximately 7 points, driven by efficiencies as we scale capacity up as well as early progress on our recently announced structural cost program.
In the third quarter, we paid down $66 million dollars of debt, funded $260 million dollars in capital expenditures, and paid $25 million dollars related to the Spirit transaction.
The favorable Spirit shareholder vote on October 19 also triggered the prepayment of $272 million dollars in the fourth quarter under the terms of our merger agreement.
Looking ahead, we remain focused on maintaining a healthy liquidity position.”