JetBlue Announces Second Quarter Results

JetBlue Airways Corporation (Nasdaq: JBLU) today reported its results for the second quarter 2011:

Operating income for the quarter was $86 million, resulting in a 7.5% operating margin, compared to operating income of $95 million and a 10.2% operating margin in the second quarter of 2010.
Pre-tax income of $43 million in the second quarter. This compares to pre-tax income of $52 million in the second quarter of 2010.
Net income for the second quarter was $25 million, or $0.08 per diluted share. This compares to JetBlue’s second quarter 2010 net income of $31 million, or $0.10 per diluted share.
“Thanks to the hard work of our outstanding crewmembers, we reported another profitable quarter with record revenues,” said Dave Barger, JetBlue’s President and Chief Executive Officer. “Our targeted growth strategy in Boston and the Caribbean continues to pay off and help mitigate the significant pressure from high fuel costs.”

Operational Performance

JetBlue reported record second quarter operating revenues of $1.2 billion. Revenue passenger miles for the second quarter increased 7.9% to 7.69 billion on a capacity increase of 8.7%, resulting in a second quarter load factor of 81.5%, a decrease of 0.5 points year over year.

Yield per passenger mile in the second quarter was 13.60 cents, up 13.9% compared to the second quarter of 2010. Passenger revenue per available seat mile (PRASM) for the second quarter 2011 increased 13.2% year-over-year to 11.08 cents and operating revenue per available seat mile (RASM) increased 12.6% year-over-year to 12.19 cents.

Operating expenses for the quarter increased 26%, or $220 million, over the prior year period driven primarily by $160 million in additional fuel expense. JetBlue’s operating expense per available seat mile (CASM) for the second quarter increased 16% year-over-year to 11.28 cents. Excluding fuel, CASM increased 1.7% to 6.62 cents.

“JetBlue crewmembers did a very good job of controlling costs while running a great operation,” said Ed Barnes, JetBlue’s Chief Financial Officer. “We remain focused on continuing to improve our operational efficiency and lowering non-fuel unit costs, which is especially important in this high fuel price environment.”

Fuel Expense and Hedging

JetBlue continued to hedge fuel to manage price volatility. Specifically, JetBlue hedged approximately 43% of its fuel consumption during the second quarter, resulting in a realized fuel price of $3.31 per gallon, a 44% increase over second quarter 2010 realized fuel price of $2.30. JetBlue recorded $5 million in gains on fuel hedges that settled during the second quarter.

JetBlue has hedged approximately 48% of its third quarter projected fuel requirements and 43% of its remaining 2011 projected fuel requirements using a combination of crude call options and collars, jet fuel swaps and heating oil collars. Based on the fuel curve as of July 21, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $3.33 in the third quarter and $3.24 for the full year 2011.

Balance Sheet Update

JetBlue ended the second quarter with approximately $1.2 billion in unrestricted cash and short term investments.

“With manageable debt maturities and capital commitments in the near term, we believe we are well positioned to maintain strong liquidity and successfully navigate this challenging environment,” said Barnes. “At the same time, our strong cash position gives us the flexibility to make smart strategic decisions and continue to seize opportunities in the competitive landscape, particularly in Boston and the Caribbean.”

Third Quarter and Full Year Outlook

For the third quarter of 2011, CASM is expected to increase between 13 and 15 percent over the year-ago period. Excluding fuel, CASM in the third quarter is expected to decrease between two and four percent year over year.

CASM for the full year is expected to increase between 14 and 16 percent over full year 2010. Excluding fuel, CASM in 2011 is expected to range from zero to positive two percent year over year.

Capacity is expected to increase between nine and 11 percent in the third quarter and to increase between six and eight percent for the full year.

JetBlue will conduct a conference call to discuss its quarterly earnings today, July 26, at 10:00 a.m. Eastern Time. A live broadcast of the conference call will be available via the internet at http://investor.jetblue.com.