JetBlue Airways posted an adjusted loss, excluding one-time items, of $102 million in the second quarter compared to adjusted pre-tax income of $238 million in the second quarter of 2019.
JetBlue revenue increased 16.1% year over three, compared to guidance of an increase of 16% or above, year over three, thanks to “robust demand across the network”.
JetBlue has increase capacity by 2.3% year over three, compared to guidance for capacity to increase 2% to 3% year over three.
Operating expenses per available seat mile increased 34.7% year over three. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel) increased 14.5% year over three, compared to guidance of a 15% to 17% increase year over three.
As of June 30, 2022, JetBlue’s adjusted debt to capital ratio was 54%.
JetBlue ended the second quarter of 2022 with approximately $2.6 billion in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, or 32% of 2019 revenue. This excludes $550 million undrawn revolving credit facility.
JetBlue paid down approximately $106 million in regularly scheduled debt and finance lease obligations during the second quarter of 2022.
As of August 2, 2022, JetBlue has not entered into forward fuel derivative contracts to hedge its fuel consumption for the third quarter of 2022. Based on the forward curve as of July 22, 2022, JetBlue expects an average all-in price per gallon of fuel of $3.68 in the third quarter of 2022.
Commenting on the news from July 28, 2022, that JetBlue and Spirit Airlines have approved a definitive merger agreement under which JetBlue will acquire Spirit for $33.50 per share in cash, for an equity value of $3.8 billion and an adjusted enterprise value of $7.6 billion, JetBlue noted that it will find synergies and operating savings by the merger of the two companies.
“I’m very pleased we found a path forward with Spirit, and we can’t wait to welcome their incredible 10,000 Team Members to JetBlue as we create a true, national low-fare challenger to the dominant ‘Big Four’ airlines. Together we will expand our uniquely disruptive combination of award-winning service and competitive low fares to more customers across the country as we combine the best of both airlines,” said Robin Hayes, JetBlue’s Chief Executive Officer.
JetBlue has announced the acceleration of its E190 retirement schedule, pulling it forward by over a year to mid 2025 versus prior plans to exit the fleet by year-end 2026. By expediting the transition towards A220s, JetBlue hopes to reduce costs and save at least $75 million in maintenance expense.
A220s enable greater flexibility with efficiency across different range profiles, supporting our network
JetBlue is also investing in automation across the business, particularly in support of end-of-life maintenance planning as it begins to retire aircraft for the first time in its history. This is expected to deliver run-rate cost savings of approximately $150 million to $200 million by 2024, supporting the airline’s objective of a flattish CASM ex-Fuel trajectory over a multi-year period and margin expansion beyond pre-pandemic levels. The structural cost program and the accelerated E190 retirements is expected to drive a total of approximately $250 million of cost savings through 2024.
“We took decisive action last quarter to reduce our full-year capacity plan by 10 points and build greater resiliency into the operation, and we have seen good returns – we closed May and June with a completion factor above 98%, compared to approximately 90% during the first three weeks of April. In our congested geography where more than two-thirds of our flights touch the Northeast, we have completed more flights versus our peers in May and June,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.
“I’m very pleased with the team’s execution this quarter to position us to return to sustained profitability in the back half of the year. Despite the operational headwinds in April, the subsequent operational investments we made, and the sharp rise in fuel prices throughout the quarter, we exited Q2 with an adjusted pre-tax profit for the month of June, and we look forward to carrying this momentum into Q3 and beyond,” said Ursula Hurley, JetBlue’s Chief Financial Officer.
“For the third quarter, we are forecasting CASM ex-Fuel(4) to increase 15 to 17 percent. We’re also tightening our forecast for full-year 2022 CASM ex-Fuel(4) to increase in the range of 11 to 14 percent versus 2019. We expect the heightened level of operational investments to normalize once we get beyond the summer peak. As a result, we expect to see some productivity improvement into the fourth quarter and 2023.
We’re embarking on a new plan to keep our costs low, focused on cross-functional costs and applying best practices with respect to operational and planning efficiencies. Through the strong underlying momentum in the business and the continued execution of our various strategic initiatives – from the Northeast Alliance to the evolution of our Loyalty program to scaling JetBlue Travel Products, and now our new structural cost program as well – we are setting a foundation to structurally improve our long-term earnings potential.”