JetBlue Airways Corporation (NASDAQ:JBLU) today reported its results for the third quarter 2017:
- Operating income of $310 million, a decrease of 12.4% from the third quarter of 2016.
- Pre-tax income of $293 million, a decrease of 11.2% from the third quarter of 2016.
- Third quarter net income of $179 million, or $0.55 per diluted share. This compares to JetBlue’s third quarter 2016 net income of $199 million, or $0.58 per diluted share.
JetBlue reported third quarter operating revenues of $1.8 billion. Revenue passenger miles for the third quarter increased 2.3% to 12.2 billion on a capacity increase of 3.7%, resulting in a third quarter load factor of 85.1%, a 1.2 point decrease year over year.
Yield per passenger mile in the third quarter was 13.32 cents, up 1.0% compared to the third quarter of 2016. Passenger revenue per available seat mile (PRASM) for the third quarter of 2017 decreased 0.4% year over year to 11.34 cents and operating revenue per available seat mile (RASM) increased 0.9% year over year to 12.67 cents.
Compared with last year, operating expenses for the quarter increased 9.1%, or $125 million. Interest expense for the quarter declined 18.5%, or $5 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the third quarter increased 5.2% year over year to 10.50 cents. Excluding fuel, third quarter CASM1 increased 2.7% to 8.07 cents.
“Our third quarter results were impacted by two hurricanes that reduced our EPS by approximately 6 cents. We are confident that the adjustments we are making to our network will limit any ongoing financial impact in 2018. Despite the short-term challenges, we remain focused on our long-term margin commitments to our shareholders. I’d like to thank our 21,000 Crewmembers in our operation and support centers, who successfully managed the unprecedented challenge of over 30 consecutive days of irregular operations,” said Robin Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the third quarter of 2017 JetBlue had hedges in place for approximately 10% of its fuel consumption. The realized fuel price in the quarter was $1.69 per gallon, a 14.6% increase versus third quarter 2016 realized fuel price of $1.48.
JetBlue has hedged approximately 10% of its fourth quarter of 2017 fuel consumption using jet fuel swaps. Based on the fuel curve as of October 13th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.83 in the fourth quarter of 2017.
Liquidity and Cash Flow
JetBlue ended the quarter with approximately $814 million in unrestricted cash and short term investments, or about 12% of trailing twelve month revenue. In addition, JetBlue maintains approximately $625 million in undrawn lines of credit.
During the third quarter, JetBlue repaid $53 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $57 million in regularly scheduled debt and capital lease obligations in the fourth quarter 2017 and approximately $194 million for the full year 2017. In the third quarter, JetBlue completed a $130 million accelerated share repurchase program and has completed $380 million in share repurchases to date in 2017.
“Despite unprecedented ATC challenges, repeated hurricane events, and a competitive industry pricing environment, we’ve been able to sustain solid margins, make progress towards our long-term margin commitments and return capital to our shareholders,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.
Fourth Quarter and Full Year Outlook
For further details see the Investor Update and the Third Quarter 2017 Earnings Presentation available via the internet at http://investor.jetblue.com.
Capacity is expected to increase between 4.5% and 5.5% year over year in the fourth quarter 2017. For the full year 2017, JetBlue expects capacity to increase between 4.0% and 5.0%.
RASM growth is expected to range between (3.0%) and 0.0% for the fourth quarter 2017 compared to the same period in 2016.
CASM excluding fuel is expected to grow between 5.0% and 7.0% for the fourth quarter of 2017. For the full year 2017, JetBlue expects year over year CASM excluding fuel to grow between 4.0% and 5.0%.
JetBlue will conduct a conference call to discuss its quarterly earnings today, October 24, at 10:00 a.m. Eastern Time. A live broadcast of the conference call will also be available via the internet at http://investor.jetblue.com.