JetBlue Airways Corporation (New York) today reported its results for the second quarter 2015:
Operating income of $282 million in the second quarter. This compares to operating income of $141 million in the second quarter of 2014.
Pre-tax income of $250 million in the second quarter. This compares to pre-tax income excluding special items1 of $103 million in the second quarter of 2014. On a GAAP basis, pre-tax income was $345 million in the second quarter of 2014, which included the gain on sale of JetBlue’s wholly-owned subsidiary LiveTV.
Net income of $152 million, or $0.44 per diluted share. This compares to JetBlue’s second quarter 2014 net income excluding special items1 of $61 million, or $0.19 per diluted share. On a GAAP basis, JetBlue’s second quarter 2014 net income was $230 million, or $0.68 per diluted share.
Financial Performance
JetBlue reported record second quarter operating revenues of $1.6 billion. Revenue passenger miles for the second quarter increased 8.7% to 10.5 billion on a capacity increase of 7.5%, resulting in a second quarter load factor of 85.6%, an increase of 1.0 points year over year.
Yield per passenger mile in the second quarter was 14.28 cents, up 0.2% compared to the second quarter of 2014. Passenger revenue per available seat mile (PRASM) for the second quarter 2015 increased 1.4% year over year to 12.22 cents and operating revenue per available seat mile (RASM) increased 0.4% year over year to 13.17 cents.
Operating expenses for the quarter decreased 1.7%, or $22 million, over the prior year period. Interest expense for the quarter declined 15.8%, or $7 million, as JetBlue continues to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the second quarter decreased 8.6% year over year to 10.86 cents. Excluding fuel and profit sharing, second quarter CASM2 increased 0.6% to 7.56 cents.
Operational Performance
System on time departures, or D0, improved 1.7 points year-over-year in the second quarter. System arrival performance, or A14, also improved 3.3 points.
“We are very pleased to report strong second quarter results based on solid demand across our network, safe and efficient operations, and good cost control. I would like to thank our 17,000 crewmembers who continue to inspire humanity on a daily basis.” said Robin Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the second quarter JetBlue had hedges in place for approximately 19% of its fuel consumption. This resulted in a realized fuel price of $2.13 per gallon, a 31% decrease versus second quarter 2014 realized fuel price of $3.09. JetBlue recorded $30 million in losses on fuel hedges settling during the second quarter.
JetBlue has hedged approximately 14% of its third quarter 2015 projected fuel requirements using a combination of jet fuel swaps and collars. Based on the fuel curve as of July 17th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.95 in the third quarter. For the fourth quarter, JetBlue has hedged approximately 15% of projected fuel consumption.
Liquidity and Cash Flow
JetBlue ended the quarter with $915 million in unrestricted cash and short term investments, or about 15% of trailing twelve month revenue. In addition, JetBlue maintains approximately $600 million in undrawn lines of credit.
During the second quarter, JetBlue repaid $39 million in regularly scheduled debt and capital lease obligations and prepaid $84 million in additional debt. JetBlue anticipates paying approximately $145 million in regularly scheduled debt and capital lease obligations during the remainder of 2015 and plans to continue to opportunistically prepay other debt. JetBlue expects to pay approximately $54 million in regularly scheduled debt and capital lease obligations in the third quarter of 2015.
In addition, on June 16 JetBlue entered into an Accelerated Share Repurchase program. JetBlue paid $150 million and received 6.1 million shares at the start of the program, with a subsequent adjustment upon close of the transaction. Ultimately, the total shares purchased by JetBlue will be based on the volume weighted average prices of JetBlue’s common stock during the term of the program.
“We posted another good quarter and continue to make progress strengthening our balance sheet.” said Mark Powers, JetBlue’s Chief Financial Officer. “Looking forward, the execution of the initiatives described at Investor Day last November will increase free cash flow and improve our return on invested capital.”
Third Quarter and Full Year Outlook
CASM excluding fuel and profit sharing is expected to increase between 1.0% and 3.0% in the third quarter 2015 and between zero and 1.5% percent for the full year. This represents a 0.5% reduction to the top end of our CASM excluding fuel and profit sharing guidance range.
Capacity is expected to increase between 8.5% and 10.5% in the third quarter 2015 and between 7.0% and 9.0% for the full year, consistent with prior guidance. At present, we anticipate ending the year at the higher end of our annual capacity guidance.
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