JetBlue Airways Corporation (NASDAQ:JBLU) today reported its results for the fourth quarter and full year 2015:
- Operating income of $330 million in the fourth quarter. This compares to operating income of $169 million in the fourth quarter of 2014. For the full year 2015, JetBlue reported operating income of $1.2 billion. This compares to operating income of $515 million in 2014.
- Pre-tax income of $303 million in the fourth quarter. This compares to pre-tax income of $140 million in the fourth quarter of 2014. For the full year 2015, JetBlue reported pre-tax income of $1.1 billion. This compares to pre-tax income excluding special items1 of $382 million in 2014. On a GAAP basis, pre-tax income was $623 million in 2014, which included the gain on sale of JetBlue’s wholly-owned subsidiary LiveTV.
- Net income of $190 million, or $0.56 per diluted share, in the fourth quarter. This compares to JetBlue’s fourth quarter 2014 net income excluding special items1 of $87 million, or $0.26 per diluted share. On a GAAP basis, net income was $88 million in the fourth quarter 2014, or $0.26 per diluted share, which included income tax relating to the gain on sale of JetBlue’s wholly-owned subsidiary LiveTV. For the full year 2015, JetBlue reported net income of $677 million, or $1.98 per diluted share. This compares to JetBlue’s 2014 net income excluding special items1 of $232 million, or $0.70 per diluted share. On a GAAP basis, net income was $401 million in 2014, or $1.19 per diluted share, which included the gain on sale of JetBlue’s wholly-owned subsidiary LiveTV.
Financial Performance
JetBlue reported record fourth quarter operating revenues of $1.6 billion. Revenue passenger miles for the fourth quarter increased 12.4% to 10.6 billion on a capacity increase of 10.4%, resulting in a fourth quarter load factor of 83.6%, an increase of 1.5 points year over year.
Yield per passenger mile in the fourth quarter was 13.62 cents, down 3.6% compared to the fourth quarter of 2014. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2015 decreased 1.9% year over year to 11.39 cents and operating revenue per available seat mile (RASM) decreased 0.2% year over year to 12.62 cents.
Operating expenses for the quarter decreased 1.1%, or $13 million, from the prior year period. Interest expense for the quarter declined 14.7%, or $5 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter decreased 10.4% year over year to 10.01 cents. Excluding fuel and profit sharing, fourth quarter CASM2 increased 0.7% to 7.29 cents.
Operational Performance
In 2015, system arrival performance, or A14, improved 0.4 points. Completion factor improved 0.8 points. In the fourth quarter, completion factor improved 0.1 points.
“We posted another strong quarter, producing above industry average revenue performance and running a safe and reliable operation. I want to thank all our 18,000 crewmembers for their terrific efforts throughout the year,” said Robin Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the fourth quarter JetBlue had hedges in place for approximately 14% of its fuel consumption. This resulted in a realized fuel price of $1.68 per gallon, a 37.8% decrease versus fourth quarter 2014 realized fuel price of $2.70. JetBlue recorded $33 million in losses on fuel hedges settling during the fourth quarter.
JetBlue continues to have no hedges in place for the first and second quarters of 2016. Based on the fuel curve as of January 15th, JetBlue expects an average price per gallon of fuel, including the impact of fuel taxes, of $1.12 in the first quarter. Beyond the second quarter, JetBlue has hedged about 10% of its expected second half of the year 2016 fuel consumption.
Liquidity and Cash Flow
JetBlue ended the quarter with $876 million in unrestricted cash and short term investments, or about 14% of trailing twelve month revenue. In addition, JetBlue maintains approximately $600 million in undrawn lines of credit.
During the fourth quarter, JetBlue repaid $90 million in regularly scheduled debt and capital lease obligations, bringing total annual debt payments to $390 million. In addition, JetBlue bought out the leases on six A320 aircraft for a total of $110 million. JetBlue anticipates paying approximately $454 million in regularly scheduled debt and capital lease obligations in 2016 and plans to continue to opportunistically prepay other debt. JetBlue expects to pay approximately $51 million in regularly scheduled debt and capital obligations in the first quarter of 2016.
As part of its previously announced 2012 share buyback, JetBlue purchased 3 million shares from October 30, 2015 through December 31, 2015 at a weighted average share price of $25.71. For the full year 2015, JetBlue purchased 9.8 million shares for approximately $227 million.
“We continue to generate healthy free cash flow and de-risk our business,” said Mark Powers, JetBlue’s Chief Financial Officer. “Looking forward, we will continue to focus on strengthening our balance sheet and prioritizing ROIC accretive initiatives, including structural cost programs.”
First Quarter and Full Year Outlook
The following outlook does not include the impact of Winter Storm Jonas, which caused over 900 flight cancellations within the last week.
For the first quarter of 2016, change in CASM excluding fuel and profit sharing is expected to be between 0.0% and negative 2.0% versus the year-ago period. Excluding fuel and profit sharing, CASM for the full year 2016 is forecasted to grow between zero and two percent year over year.
Capacity is expected to increase between 14% and 16% in the first quarter 2016 and between 8.5% and 10.5% for the full year. Severe winter weather caused a significant number of flight cancellations in the first quarter of 2015. This increases JetBlue’s 2016 capacity growth rate compared to a scheduled versus scheduled basis by about 2.5% in the first quarter and 0.5% for the full year.
