JetBlue Expects Ancillary Revenues to Increase in Double Digits

JetBlue Airways’ total ancillary revenue for the fourth quarter was about $20 per passenger. During 2009, airline’s ancillary revenues grew $60 million or 17 percent as compared to 2008.

Speaking during JetBlue’s Q4 2009 Earnings Call (posted on Seeking Alpha), its CFO and executive vice president, Edward A. Barnes, said, “While the positive pricing traction during peak travel periods has been encouraging, the off peak periods remain a challenge as aggressive pricing across the airline industry has had a significant impact on yields. We continue to be encouraged by the success of our ancillary revenue initiatives. When we combine all of our ancillary revenue reported in the passenger revenue line with those in the other revenue line, total ancillary revenue for the fourth quarter was about $20 per passenger.”

David Barger, CEO and president, shared that airline’s long term success depends in large part on having the appropriate technology platform to support airline’s future growth and revenue initiatives.

“In 2010, we expect our ancillary revenues to increase approximately 10% year-over-year. While it is difficult to make full year revenue projections given the uncertain economic environment, we currently expect full year RASM to be between 5% and 8% year-over-year,” said Barnes.

The airline spent approximately $45 million in non-aircraft Cap Ex during the fourth quarter, of which $9 million was related to the implementation of Sabre. The company estimates capital expenditures of about $395 million in 2010 of which $250 million relates to aircraft and $145 million to non-aircraft related expenditures.

Non-aircraft Cap Ex includes $95 million related to live TV and approximately $15 million related to the implementation of Sabre and future enhancements.

Fuel remains airline’s most significant cost, representing approximately 30 percent of its total operating expenses in the fourth quarter of 2009.