LONDON – On August 2, the U.S. carrier, JetBlue, announced its second quarter (Q2) 2022 financial standings.
JetBlue Q2 Position
Settings things off in a downside of results for the carrier, JetBlue has announced a reported GAAP pre-tax loss of $151 million, coupled with a loss per share of $0.58. Both of these figures are still down by quite a margin when compared to their Q2 results of 2019 (pre-pandemic) at a pre-tax income of $236 million with their earnings per share standing at $0.59.
The carrier’s adjusted pre-tax loss, excluding one-time items now stands at $102 million for Q2 2022, with an adjusted loss per share of $0.47, compared to Q2 2019’s adjusted pre-tax income, excluding one-time items of $238 million, with an adjusted earnings per share of $0.60.
Interestingly, compared to 2019, JetBlue’s capacity for Q2 2022 was up by 2.3%, this capacity increase helped the carriers’ operating revenues this years quarter, with an increase of 63.1% when compared to Q2 2019, this equated to a record-breaking operating revenue of $2,445 million, with 2019’s being $1,499 million.
However, due to high operational expenses that amounted to a total of $2,588 million for this quarter, JetBlue come out with a total operating loss of $113 million, compared to Q2 2019’s operating income of $147 million, a 176.7% difference.
JetBlue ended Q2 2022 with a liquidity position of approximately $2.6 billion in unrestricted cash, which is 32% of 2019’s liquidity position. The carrier also paid off $106 million in debt and finance lease obligations, taking their debt total down to $3,822 million, compared to $4,006 million that they had at the end of 2021.
As with the global price increase for fuel, JetBlue saw an increase of 97% to a realised fuel price of $4.24, compared to Q2 2019’s realised fuel price of $2.16. For their Q3 2022, the carrier is expecting the average fuel price to drop to $3.68 per gallon.
Another major thing to notice for JetBlue stock this quarter, is that on July 28, Spirit Airlines’ Board of Directors approved a definitive merger agreement for JetBlue to acquire the U.S. LCC for $33.50 per share in cash.
This includes a pre-payment of $2.50 per share in cash that is payable upon Spirit’s stockholders approval of the transaction, as well as a ticking fee of $0.10 per month starting from January 2023 until the agreements closure. This shows promise for JetBlue stock.
This agreement with Spirit has a fully diluted equity value of $3.8 billion with an adjusted enterprise value of $7.6 billion.
In terms of JetBlue’s fleet plans, they have decided to accelerate the retirement of their Embraer E190 fleet by one year from year-end 2026 to now mid-2025.
With this, they are expediting their plans to switch to the Airbus A220 aircraft, of which JetBlue has a total of 100 including both its current fleet as well as aircraft still on back-order with Airbus, following a revised agreement that was announced earlier in the year.
JetBlue management statement
Commenting on the carrier performance, JetBlue’s Chief Executive Officer, Robin Hayes, has said, “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.”
“We reported a record-breaking revenue result for the second quarter, and we’re on pace to top it again here in the third quarter and drive our first quarterly profit since the start of the pandemic.”
“I’m proud to say that our operational performance improved significantly through the quarter, and we capitalised on the strong demand environment to deliver revenue growth above the top-end of our original guidance range.”
“We’ve entered the third quarter with some solid momentum that we expect to carry through to a sustained profit inflection. While high fuel prices and our short-term operational investments are weighing on our margins this summer, we’re making steady underlying progress on our long-term initiatives to structurally improve our profitability and enhance our long-term earnings power.”
All in all, it is evident that JetBlue has high expectations for the remaining year ahead, which will hopefully result in the airline returning to profitability. However, high expense prices still loom over that expectation, but with any hope these prices will begin to drop.
It will be interesting to see Spirit’s shareholders feedback on the merger with JetBlue and if it does get the full approval from them, how the anti-trust measures are looked into as to whether the merger can go ahead or not.