JetBlue Reports Lower Third Quarter Net Income of $35 Million

JetBlue Reports Lower Third Quarter Net Income of $35 Million
By Kate Rice

JetBlue Airways Corporation reported net income for the third quarter was $35 million, or $0.11 per diluted share. Excluding a one-time item, JetBlue reported net income of $38 million, or $0.12 per diluted share, compared to JetBlue's third quarter 2010 net income of $59 million, or $0.18 per diluted share.

The airline said its third quarter operations were negatively impacted by Hurricane Irene, which resulted in approximately 1,400 flight cancellations and reduced JetBlue's third quarter operating income by approximately $8 million. The airline also was affected by higher fuel expenses.

On the other hand, JetBlue reported record third quarter operating revenues of $1.2 billion, an increase of 16 percent versus last year. Revenue passenger miles for the third quarter increased 8.2 percent to 8.33 billion on a capacity increase of 8.3 percent, resulting in a third quarter load factor of 84.5 percent, a decrease of 0.1 points year over year.

JetBlue said its operating income for the third quarter was $108 million, resulting in a 9 percent operating margin, compared to operating income of $140 million and a 13.6 percent operating margin in the third quarter of 2010.

The airline also reported pre-tax income of $56 million in the third quarter, which includes a one-time loss related to the early extinguishment of portions of JetBlue's convertible debt. Excluding this one-time item, JetBlue's pre-tax income for the quarter was $61 million. This compares to pre-tax income of $97 million in the third quarter of 2010.

Yield per passenger mile in the third quarter was 13.04 cents, up 7.7 percent compared to the third quarter of 2010. Passenger revenue per available seat mile (PRASM) for the third quarter 2011 increased 7.7 percent year over year to 11.03 cents and operating revenue per available seat mile (RASM) increased 7.1 percent year over year to 12.12 cents.

Operating expenses for the quarter increased 22.1 percent, or $197 million, over the prior year period driven primarily by $162 million in additional fuel expense. JetBlue's operating expense per available seat mile (CASM) for the third quarter increased 12.8 percent year-over-year to 11.03 cents. Excluding fuel, CASM decreased 2.2 percent to 6.43 cents.  

JetBlue continued to hedge fuel to manage price volatility. The airline hedged approximately 48 percent of its fuel consumption during the third quarter, resulting in a realized fuel price of $3.25 per gallon, a 43 percent increase over third quarter 2010 realized fuel price of $2.26.  JetBlue's fuel expense reflects $4 million in losses on fuel hedges that settled during the third quarter.