Ney York-based airline
JetBlue Airways Corporation
) reported second-quarter 2014 adjusted earnings of 19 cents per
share, in line with the Zacks Consensus Estimate. Earnings,
however, comfortably exceeded the year-ago adjusted earnings of 11
cents. The company's consistent efforts to upgrade its products and
services to cater to customers' needs resulted in the
Jetblue Airways Corporation - Earnings Surprise
Total operating revenue climbed 11.8% year over year to $1.493
billion, almost in line with the Zacks Consensus Estimate of $1.499
billion. However, the stock got a mixed reaction from investors as
it declined nearly 2% on Thursday trade on Nasdaq, but managed to
recover the loss during after-market trade.
Notably, the carrier gained $242 million from the sale of its
wholly owned subsidiary LiveTV.
Airline traffic, measured in revenue passenger miles, increased
5.7% year over year in the reported quarter along with 6.0% growth
in capacity. However, load factor (percentage of seats filled with
passengers) declined 30 basis points (bps) year over year to
Yield per passenger mile moved up 6.3% year over year in the
second quarter. Passenger revenue per available seat mile (PRASM)
moved up 6.0% while operating revenue per available seat mile
increased 5.6%. The shift of Easter from March to April impacted
second quarter PRASM to the tune of 2%.
Operating Income and Expenses
In the quarter under review, total operating expenses increased
9.8% year over year to $1.35 billion, primarily due to higher
marketing expenses (up 27.3%), salaries and wages (up 13.2%), other
operating expenses (up 25.2%), and depreciation and amortization
(up 9.8%). JetBlue's operating unit cost or cost per available seat
mile (CASM) rose 3.5% year over year while excluding fuel and
profit sharing, CASM increased 5.1% from the year-ago quarter.
Operating income came in at $141.0 million, up 38.2% year over
year. Operating margin decreased 180 bps year over year to
JetBlue ended the second quarter with unrestricted cash and
short-term investments of $797.0 million. Total debt at the end of
the quarter was $2,386 million compared with $2,585 million at the
end of 2013.
The company expects CASM to increase 0.5-2.5% and CASM,
excluding fuel and profit sharing, to range between 1.0% and 3.0%
in the second quarter.
Likewise, CASM for full-year 2014 is expected to increase in the
band of 1.0-3.0%. Excluding fuel and profit sharing, CASM is
estimated to rise in the range of 2.5-4.5%. Decrease in full-year
unit cost excluding fuel and profit sharing from previous guidance
is due to reduction of operating expenses in the second half of the
year as a result of the divestment of LiveTV.
Capacity is expected to increase in the range of 3.0-5.0% in the
third quarter while for 2014, it is expected to augment
JetBlue plans to repay debt and capital lease obligations to the
tune of $58 million in the third quarter and $185 million in the
rest of 2014.
Further, JetBlue expects average fuel price per gallon,
including hedges and fuel taxes, of $3.08 in the third quarter. The
company has hedged approximately 30% of its projected fuel
requirements for the ongoing quarter.
Delta Air Lines Inc. (
) reported second-quarter 2014 adjusted earnings of $1.04 per
share, beating the Zacks Consensus Estimate of $1.03, while
Southwest Airline Co.'s (
) earnings of 70 cents also steered ahead of our estimate of 61
cents. United Continental Holdings Inc. (
) posted a profit of $2.34 per share, much higher than the Zacks
Consensus Estimate of $2.22.
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
along with various Caribbean and Latin American markets will likely
support future growth. In addition, winning of slot pairs at
Washington's Reagan Airport is also expected to boost the carrier's
JetBlue currently carries a Zacks Rank #2 (Buy).
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