JetBlue Airways Corporation (NASDAQ: JBLU) today reported its results for the fourth quarter 2017:
Operating income of $189 million, a decrease of 36.0% from the fourth quarter of 2016, principally due to higher fuel prices.
Pre-tax income of $170 million, a decrease of 38.0% 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.
Financial Performance
JetBlue reported fourth quarter operating revenues of $1.8 billion. Revenue passenger miles for the fourth quarter increased 3.1% to 11.5 billion on a capacity increase of 5.1%, resulting in a fourth quarter load factor of 83.1%, a 1.6 point decrease year over year.
Yield per passenger mile in the fourth quarter was 13.57 cents, up 2.8% compared to the fourth quarter of 2016. Passenger revenue per available seat mile (PRASM) for the fourth quarter of 2017 increased 0.8% year over year to 11.28 cents and operating revenue per available seat mile (RASM) increased 1.8% year over year to 12.66 cents.
Compared with last year, operating expenses for the quarter increased 16.5%, or $222 million. Interest expense for the quarter declined 12.4%, 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% year over year to 11.29 cents. CASM Ex-Fuel1 for the fourth quarter increased 8.1% to 8.63 cents.
“I’d like to thank our 21,000 Crewmembers, who rose to each and every challenge during 2017. Our fourth quarter results were driven by solid demand across our network, our successful ancillary platform and recovery in the Caribbean that exceeded our expectations, following a historic hurricane season. We continue to make progress to achieve our margin commitments and to compete successfully as a low-cost carrier,” said Robin Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the fourth quarter of 2017 JetBlue had hedges in place for approximately 10% of its fuel consumption. The realized fuel price in the quarter was $1.89 per gallon, a 21.6% 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% over the realized fuel price in the first quarter of 2017.
Liquidity and Cash Flow
JetBlue ended the quarter with approximately $693 million in unrestricted cash and short term investments, or about 10% 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.
“In the fourth quarter and 2017 we took actions to navigate a complex external environment, while striving to protect and enhance our margins. These actions included capacity adjustments and redeployments following a challenging summer and to mitigate the impact of hurricanes. We continue to demonstrate our ability to make progress in our commitments to all our stakeholders and to lay the foundation that will ultimately achieve superior margins,” said Steve Priest, JetBlue’s EVP Chief Financial Officer.
First Quarter and Full Year 2018 Outlook
For further details see the Investor Update and the Fourth Quarter 2017 Earnings Presentation available via the internet at http://investor.jetblue.com.
Capacity is expected to increase between 3.5% and 5.5% year over year in the first quarter 2018. For the full year 2018, JetBlue expects capacity to increase between 6.5% and 8.5%.
RASM growth is expected to range between 2.5% and 5.5% for the first quarter 2018 compared to the same period in 2017.
CASM Ex-Fuel is expected to grow between 2.0% and 4.0% for the first quarter of 2018. For the full year 2018, JetBlue expects year over year CASM Ex-Fuel to be between (1.0)% and 1.0%.
JetBlue will conduct a conference call to discuss its quarterly earnings today, January 25, 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.