JetBlue Airways reported net income for second quarter of 2023 of $138 million or $0.41 per share, and $0.45 on a non-GAAP basis. Although the airline beat EPS forecasts, JetBlue dismayed analysts by lowering its full year adjusted EPS forecast to $0.05 to $0.40 from previous estimate of $0.70 to $1.00. JetBlue shares dipped 2.3% on the news.
Robin Hayes, chief executive officer, JetBlue celebrated the company's highest quarterly profit since 2019, helped by record quarterly revenues and strong operational performance but looking ahead could see building headwinds.
Chief Operating Officer Joanna Geraghty said in a statement: "Looking ahead, we are updating our full-year earnings outlook to reflect near-term headwinds related to the termination of the NEA, a challenging operating environment in the Northeast and a greater than expected shift of pent-up COVID demand to long-haul international markets which is pressuring demand for domestic travel during the peak summer travel period."
The termination of the Northeast Alliance (NEA) - its agreement with American Airlines to increase competition in the northwest US region that was ordered to be dissolved by an antitrust judge as uncompetitive - has hampered JetBlue's expansion plans and the airline seems to be regrouping heading into the next quarter. “While we remain on track to deliver a profitable year and record revenue performance, we are taking action, including redeploying capacity to mitigate these current challenges and improve margins,” Geraghty said.
JetBlue increased its capacity in the second quarter by 5.8% year-over-year and operating revenue rose by 6.7% to $2.6 billion for Q2 2023. The Group’s operating expenses per available seat mile (CASM) for second quarter decreased 12.2% year-over-year.
JetBlue said it had realised over half of the $75 million in expected savings from its fleet modernisation program as the airline transitioned from the Embraer E190 to Airbus A220s.
The Group reported $1.8 billion in liquidity excluding the $600 million undrawn revolving credit facility. JetBlue paid $200 million in debt and finance lease obligations during the second quarter. CFO Ursula Hurley confirmed that the team had been financing recent aircraft deliveries and have committed financing in place for approximately $550 million year-to-date of which approximately $300 million was raised in the first half of the year. JetBlue took delivery of four new aircrafts in the second quarter and one in July bringing the year-to-date total to seven new aircraft. The airline expects to take delivery of 12 additional aircrafts through the end of the year for a total of 19 new deliveries this year.
Also in the quarter, the airline also launched daily service between New York's John F. Kennedy International Airport and Paris Charles de Gaulle, expanding its transatlantic service with plans to launch service between Boston and Paris in 2024. The airline plans to continue with its expansion in the Caribbean with new routes in Puerto Rico and the announcement of service to Belize and St. Kitts and Nevis.
JetBlue also announced an agreement with Frontier to divest all of Spirit Airlines holdings at New York’s LaGuardia Airport conditioned upon closing of the JetBlue-Spirit transaction.
On the investor call, Geraghty also responded to a questions regarding the issues surrounding the GTF engine noting that JetBlue had two A321neos "on the ground for the last few months due to various engine issues". Adding that the airline has a "handful of engines that will be impacted and have to come off wing by mid September" and so expects the number of aircraft on the ground to double by the end of the year. This impact was not included in the revised guidance, Geraghty confirmed, "given that we're still assessing the longer-term impact with Pratt & Whitney". And in regards to the A220, she confirmed that the airline was still working through a potential, if any, impact on that GTF engine with Pratt & Whitney.