Ney York based airline
JetBlue Airways Corporation
) reported first-quarter 2014 adjusted earnings of 1 cent, widely
missing the Zacks Consensus Estimate of 7 cents and deteriorating
from the year-ago reported earnings of 5 cents.
Total operating revenue climbed 3.8% year over year to $1.35
billion but was lower than the Zacks Consensus Estimate of $1.39
billion. JetBlue cancelled 4,100 flights owing to harsh winter
weather in Northeast, which affected the revenue to the tune of
$50 million and operating income by $35 million.
Airline traffic, measured in revenue passenger miles,
increased 1.8% year over year in the reported quarter along with
2.8% growth in capacity leading to a load factor
(percentage of seats filled with passengers) decline of 80 basis
points (bps) year over year to 83.1%.
Yield per passenger mile moved up 1.8% year over year in the
first quarter. Passenger revenue per available seat mile moved up
0.9% while operating revenue per available seat mile increased
Operating Income and Expenses
In the quarter under review, total operating expenses
increased 5.5% year over year to $1.31 billion, primarily due to
higher salaries and wages (up 17.7%). Other operating expenses
rose 14.7%, depreciation and amortization was up 13.8% and sales
and marketing expenses moved up 8.8%. JetBlue's operating unit
cost or cost per available seat mile (CASM) grew 2.6% year over
year while excluding fuel and profit sharing, CASM increased 6.3%
from the year-ago quarter.
Operating income came in at $41.0 million, up 30.5% year over
year. Operating margin decreased 140 bps year over year to
JetBlue ended the first quarter with unrestricted cash and
short-term investments of $771.0 million. Total debt at the end
of the quarter was $2,639 million compared with $2,585 million at
the end of 2013.
Owing to solid demand and continued focus on ancillary revenue
initiatives the carrier expects unit revenue growth to accelerate
in the second quarter.
The company expects CASM to increase 3.5-5.5% and CASM,
excluding fuel and profit sharing, to range between 4.5% and 6.5%
in the second quarter.
CASM for full-year 2014 is expected to increase 2.0-4.0%.
Excluding fuel and profit sharing, CASM is expected to increase
in the range of 3.5-5.5%. Increase in full-year unit cost will be
due to reallocation of fleet from longer haul routes to support
new services in Reagan National Airport and weather-related
disruptions in the first quarter.
Capacity is expected to increase in the range of 5.5-7.5% in
the second quarter and for 2014 it is expected to increase
JetBlue plans to repay debt and capital lease obligations to
the tune of $48 million in the second quarter and $481 million in
JetBlue expects average fuel price per gallon, including
hedges and fuel taxes, of $3.11 in the second quarter. The
company has hedged approximately 22% of its projected fuel
requirements for the ongoing quarter.
Delta Air Lines Inc.
) reported first-quarter 2014 adjusted earnings of 33 cents,
beating the Zacks Consensus Estimate of 29 cents, while
Southwest Airline Co.
) earnings of 18 cents were also ahead of our estimate of 16
United Continental Holdings Inc.
) posted a loss of $1.33 narrower than the Zacks Consensus
Estimate of a loss of $1.38.
We believe JetBlue will continue to benefit from increasing
travel demand, network expansion, fleet re-designing,
optimization of unit revenues, capital expenditure management and
disciplined growth. Additionally, emphasis on expanding in major
growth regions like Boston and Fort Lauderdale along with various
Caribbean and Latin American markets will support future growth.
Winning of slot pairs at Washington's Reagan Airport, is also
expected to boost its performance. However, increase in pilot
compensation, depreciation cost and stiff competition from
ultra-low fare carriers could pull the margins down going
JetBlue currently carries a Zacks Rank #3 (Hold).
DELTA AIR LINES (DAL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
To read this article on Zacks.com click here.