Photo Credit: Joris Wendt/AviationSource

JetBlue Reports Third-Quarter Profit

LONDON – JetBlue has today reported a third-quarter profit, as the airline continues to press on with the betterment of its financial position.

The carrier has reported a GAAP pre-tax income of $105 million this quarter, compared to a pre-tax income of $254 million in 3Q19, with such a drop expected due to the COVID-19 pandemic.

On top of the pandemic causing problems in reducing profitability, so are the rising fuel costs. The realized fuel price in 3Q22 was $3.84 per gallon, which is an 86% increase compared to 3Q19, where it was only $2.06 per gallon.

To combat this, the carrier has entered into forward fuel derivative contracts to hedge an estimated 27% of its fuel consumption for the fourth quarter of 2022.

Based on the forward curve as of October 14, 2022, JetBlue expects an average all-in price per gallon of fuel of $3.65 in the fourth quarter of 2022, including hedges.

Hayes’ Overview…


Commenting on the financial result was CEO Robin Hayes, who gave quite an overview of the carrier’s performance, from the long-term prospects of the business to revenue and capacity to the financial performance and outlook moving forward:

“For the third quarter, we reached an important milestone in our recovery as we generated our first quarterly adjusted profit since the start of the pandemic.”

“Looking ahead, we expect our profitability to carry through to another solid quarter of mid-single-digit pre-tax margins in the fourth quarter, and we’ll look to expand on that further in 2023 as we continue to restore our earnings power,”

“We continue to see a growing appetite for JetBlue’s unique customer value proposition of low fares and great service. With ample runway for growth ahead of us, we remain focused on execution and value creation for all our stakeholders.”

“I’m also pleased that last week Spirit shareholders overwhelmingly voted to approve our proposed acquisition.”

“Together, we’ll build a truly national low-fare challenger to the dominant Big Four airlines and expand our compelling combination of award-winning service and low fares to more Customers across more destinations.”

Also commenting on the performance was Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“I’m proud of our team for their dedication to delivering the JetBlue experience to our customers through a very challenging summer and the most recent hurricanes.”

“For the fourth quarter, we expect capacity to be up 1% to 4% year over three, a modest sequential step-up versus the third quarter”.

“Throughout the quarter, strong leisure and VFR demand trends carried through the peak summer and into the fall trough period. We see that continuing here in the fourth quarter, and we’re confident in the demand backdrop for the year-end holiday peaks. For the fourth quarter, we expect unit revenue to increase between 15% and 19% year over three.”

Finally, to tie it all up was Ursula Hurley, JetBlue’s Chief Financial Officer.

“I’m pleased with the team’s execution in delivering our first quarter of profitability since the pandemic, an important milestone for us.”

“We exceeded our original revenue guidance and maintained controllable costs in line with our initial outlook despite the impact from hurricanes, resulting in a solid pre-tax margin result”.

“The hurricanes negatively impacted CASM ex-Fuel by roughly one point to CASM-ex in the third quarter with no impact to the fourth quarter.”

“Given the continued fragile aviation ecosystem, we are taking a cautious approach to operational investments and more conservative planning assumptions that we put in place for the summer.”

“For the fourth quarter, we are forecasting CASM ex-Fuel(2) to increase 8.5% to 10.5% year over three. This represents a sequential improvement of approximately 7 points, driven by efficiencies as we scale capacity up as well as early progress on our recently announced structural cost program.”

“In the third quarter, we paid down $66 million dollars of debt, funded $260 million dollars in capital expenditures, and paid $25 million dollars related to the Spirit transaction.”

“The favorable Spirit shareholder vote on October 19 also triggered the prepayment of $272 million dollars in the fourth quarter under the terms of our merger agreement. Looking ahead, we remain focused on maintaining a healthy liquidity position.”

Overall…


It remains clear that JetBlue is still in a strong position but still has a lot of work to do if they wish to match pre-pandemic levels of profitability moving forward.

The merger with Spirit Airlines will, of course, open up new markets and revenue streams for them which should contribute to better profits going into the future.

For now, all eyes will be on the carrier to see how they perform, especially after the merger.

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