JetBlue Reveals 4Q 2017 Business Outcomes

JetBlue Airways Corporation on January 25 reported its results for the fourth quarter 2017. Operating income of $189 million, a decrease of 36.0 percent from the fourth quarter of 2016, principally due to higher fuel prices. Pre-tax income of $170 million, a decrease of 38.0 percent from the fourth quarter of 2016.

Fourth quarter net income of $672 million, or $2.08 per diluted share. Adjusted earnings per share of $0.32, which excludes a benefit of $1.76 associated with the revaluation of our deferred tax liabilities to reflect the impact of the enactment of the Tax Cuts and Jobs Act of 2017. This compares to JetBlue’s fourth quarter 2016 net income of $172 million, or $0.50 per diluted share.

JetBlue reported fourth quarter operating revenues of $1.8 billion. Revenue passenger miles for the fourth quarter increased 3.1 percent to 11.5 billion on a capacity increase of 5.1 percent, resulting in a fourth quarter load factor of 83.1 percent, a 1.6-point decrease year over year.

Yield per passenger mile in the fourth quarter was 13.57 cents, up 2.8 percent compared to the fourth quarter of 2016. Passenger revenue per available seat mile (PRASM) for the fourth quarter of 2017 increased 0.8 percent year over year to 11.28 cents and operating revenue per available seat mile (RASM) increased 1.8 percent year over year to 12.66 cents.

Compared with last year, operating expenses for the quarter increased 16.5 percent, or $222 million. Interest expense for the quarter declined 12.4 percent, or $4 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter increased 10.8 percent year over year to 11.29 cents. CASM Ex-Fuel1 for the fourth quarter increased 8.1 percent to 8.63 cents, according to JetBlue Airways.

In the fourth quarter of 2017 JetBlue had hedges in place for approximately 10 percent of its fuel consumption. The realized fuel price in the quarter was $1.89 per gallon, a 21.6 percent increase versus fourth quarter 2016 realized fuel price of $1.56.

JetBlue does not presently have any forward fuel derivative contracts to hedge its fuel consumption. Based on the fuel curve as of January 12th, JetBlue expects an average price per gallon of fuel of $2.16 in the first quarter of 2018, an increase of approximately 28 percent over the realized fuel price in the first quarter of 2017.

JetBlue ended the quarter with approximately $693 million in unrestricted cash and short term investments, or about 10 percent of trailing twelve-month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.

During the fourth quarter, JetBlue repaid $57 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $59 million in regularly scheduled debt and capital lease obligations in the first quarter and approximately $202 million for the full year 2018.

Capacity is expected to increase between 3.5 percent and 5.5 percent year over year in the first quarter 2018. For the full year 2018, JetBlue expects capacity to increase between 6.5 percent and 8.5 percent.

RASM growth is expected to range between 2.5 percent and 5.5 percent for the first quarter 2018 compared to the same period in 2017.

CASM Ex-Fuel is expected to grow between 2.0 percent and 4.0 percent for the first quarter of 2018. For the full year 2018, JetBlue expects year over year CASM Ex-Fuel to be between (1.0) percent and 1.0 percent.

Source: The Financial