JetBlue Airways Corporation (NASDAQ: JBLU) today reported its results for the first quarter of 2022:
- Reported GAAP loss per share of ($0.79) in the first quarter of 2022 compared to diluted earnings per share of $0.14 in the first quarter of 2019. Adjusted loss per share was ($0.80)(1) in the first quarter of 2022 versus adjusted diluted earnings per share of $0.16(1) in the first quarter of 2019.
- GAAP pre-tax loss of ($398) million in the first quarter of 2022, compared to a pre-tax income of $58 million in the first quarter of 2019. Excluding one-time items, adjusted pre-tax loss of ($400) million(1) in the first quarter of 2022 versus adjusted pre-tax income of $70 million(1) in the first quarter of 2019.
Operational and Financial Highlights from the First Quarter
- Capacity declined by 0.3% year over three, compared to our guidance for capacity to decline 1% year over three.
- Revenue declined 7.2% year over three, compared to our guidance of a 6% to 9% decline year over three. This was approximately 6 percentage points ahead of the midpoint of our initial forecast of an 11% to 16% decline year over three, driven by pent-up demand that materialized beyond our expectations.
- Operating expenses per available seat mile increased 17.5% year over three. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) (1) increased 13.9%(1) year over three, compared to our guidance of a 13% to 15% increase year over three.
Balance Sheet and Liquidity
- As of March 31, 2022, JetBlue’s adjusted debt to capital ratio was 54%(1).
- JetBlue ended the first quarter of 2022 with approximately $2.9 billion in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, or 36% of 2019 revenue. This excludes our $550 million undrawn revolving credit facility.
- JetBlue paid down approximately $83 million in regularly scheduled debt and finance lease obligations during the first quarter of 2022.
Fuel Expense and Hedging
- The realized fuel price in the first quarter 2022 was $2.90 per gallon, a 41% increase versus first quarter 2019 realized fuel price of $2.05.
- As of April 26, 2022, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the second quarter of 2022. Based on the forward curve as of April 19, 2022, JetBlue expects an average all-in price per gallon of fuel of $3.79 in the second quarter of 2022.
Leveraging the Northeast Alliance to Deliver Value for All Stakeholders
- JetBlue announced new benefits for TrueBlue Mosaic and AAdvantage status members traveling on either airline. The expanded list of new benefits include complimentary extra legroom seating based on availability at check-in; two complimentary checked bags; and same-day confirmed changes.
- During the first quarter, JetBlue launched three new BlueCities: Puerto Vallarta, Kansas City, and Milwaukee. Later this quarter, we plan to launch service to Asheville as well as our inaugural Canadian BlueCity, Vancouver.
- JetBlue remains on track to operate almost 300 daily departures from New York City airports.
Ensuring Our Long-Term Sustainability
- JetBlue recently announced another deal for Sustainable Aviation Fuel (SAF) supply with Aemetis, committing to purchase 125 million blended gallons of the renewable fuel from their facility in California from 2025-2034.
- JetBlue Technology Ventures announced recent investments in Electric Power Systems, a leading provider of aerospace battery systems; Air Company, focused on carbon capture and conversion technologies; and the TPG Rise Climate fund as a Limited Partner.
- JetBlue Foundation – which supports aviation-related STEM programs – recently awarded grants to 10 charitable organizations to help increase advocacy for inclusion, gender and racial parity within STEM and aviation.
Resetting Plan to Build Back Margins
“Our first quarter results were characterized by a very strong demand acceleration, with revenue coming in more than six points ahead of our initial view in January. We delivered positive year-over-three revenue growth in the month of March as we exited the quarter with tremendous revenue momentum driven by very strong underlying travel demand across all of our core segments,” said Robin Hayes, JetBlue’s Chief Executive Officer.
“To help restore our operational reliability, we are reducing our capacity growth further as we plan more conservatively for the summer and make investments to de-risk the operation. These actions will create more resiliency in the operation, and set us up for a better May, and an even better June and strong summer peak. As we strive to provide the high quality of service that our Customers have come to expect from us, we’re taking proactive measures to invest in and improve our operational performance.
Despite the current operating and fuel environment, we are seeing underlying momentum on our path to transforming JetBlue’s structural profitability. We are making great progress on many of our long-term initiatives in 2022, and these will be meaningful drivers of our earnings growth in the coming years.”
Revenue and Capacity
“For the full-year 2022, we are now planning to grow capacity between 0% and 5% versus 2019. Severe weather compounded by air traffic control challenges particularly across Florida and New York have had an outsized impact on our operation where 95% of our daily flights operate. Despite being well on track with our summer operational preparations, we have re-evaluated our capacity planning assumptions for the summer in light of these challenges. We believe our operational investments and capacity reductions will improve our operational performance in the coming months while we continue to fly a record number of customers,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“For the second quarter, we expect capacity to increase in a range between 0% and 3% year over three. We also expect revenue to increase between 11% and 16% year over three. This includes up to a four point revenue impact from the operational disruption in April. And despite the meaningful impact to the quarter and the year, we expect to generate our best quarterly revenue result in the second quarter, and are positioned to accelerate this momentum through the summer.”
Financial Performance and Outlook
“We are extremely pleased with the demand and revenue momentum, which accelerated throughout the quarter and resulted in first quarter revenue that was roughly six points ahead of our original January forecast; we also executed within the range of our original cost guidance despite abnormally elevated winter weather events. Looking ahead, we are reducing our full-year capacity growth as we work to restore operational reliability and catch up on a backlog of training events, and also as we remain mindful of elevated fuel prices,” said Ursula Hurley, JetBlue’s Chief Financial Officer.
“For the second quarter, we are forecasting CASM ex-Fuel(2) to increase 15% to 17% year over three, reflecting some inefficient, close-in capacity reductions in Q2, frontline premium and incentive pay to support the operation, ramp-up costs to maintain our hiring pace for the summer, and our recently signed deal with Air Line Pilots Association.
Our revenue performance for the second quarter is expected to be a record result. However, significantly higher fuel prices and investments in the operation are delaying our return to sustained pre-tax profitability. That said, we believe we are on a path to building back our margins and creating value for our owners through strong revenue growth, disciplined cost control, and a methodical approach to capacity decisions.
