JetBlue Announces Second Quarter 2022 Results

[In The News]

DALLAS – JetBlue Airways Corporation (B6) today reported its results for the second quarter of 2022, showing record revenues, the launch of a new structural cost program for a more efficient network and operation, and a report on its merger with Spirit Airlines (NK).

• The airline reported a GAAP loss per share of US$0.58 in the second quarter of 2022 compared to diluted earnings per share of US$0.59 in the second quarter of 2019. The adjusted loss per share was US$0.47 in the second quarter of 2022 versus the adjusted diluted earnings per share of US$0.60 in the second quarter of 2019.
• GAAP pre-tax loss of $151m in the second quarter of 2022, compared to a pre-tax income of US$236m in the second quarter of 2019. Excluding one-time items, B6 estimates an adjusted pre-tax loss of US$102m in the second quarter of 2022 versus adjusted pre-tax income of US$238m in the second quarter of 2019.

N2027J, jetBlue Airways Airbus A321NEO. Photo: Michael Rodeback/Airways

Operational and Financial Highlights from the Second Quarter

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• Capacity increased by 2.3% year over three, compared to our guidance for capacity to increase 2% to 3% year over three.
• Revenue increased 16.1% year over three, compared to our guidance of an increase of 16% or above, year over three. As a result, revenue was better than the high-end of our initial outlook as a result of robust demand across the network with a record number of customers.
• Operating expenses per available seat mile increased 34.7% year over year. Operating expenses per available seat mile, excluding fuel and special items (CASM ex-fuel), increased 14.5% year over three, compared to our guidance of a 15% to 17% increase year over three.

JetBlue Airbus A220 cabin. Photo: Kochan Kleps/Airways

Balance Sheet and Liquidity

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• As of June 30, 2022, B6’s adjusted debt to capital ratio was 54%.
• JetBlue ended the second quarter of 2022 with approximately US$2.6bn in unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, or 32% of 2019 revenue. This excludes our US$550m undrawn revolving credit facility.
• JetBlue paid down approximately US$106m in regularly scheduled debt and financed lease obligations during the second quarter of 2022.

jetBlue N2048J Airbus A321-271NX. Photo: Andrew Henderson/Airways

Challenging the Dominant Big Four Airlines

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• On July 28, 2022, B6 and Spirit Airlines (NK) announced that their boards of directors approved a definitive merger agreement under which B6 will acquire NK for US$33.50 per share in cash, including a prepayment of US$2.50 per share in cash payable upon NK stockholders’ approval of the transaction and a ticking fee of US$0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of US$3.8bn and an adjusted enterprise value of US$7.6bn.
• JetBlue says this combination increases its relevance and offers consumers more choices by leveraging the airlines’ complementary networks and fleets. The airline will offer its combined 77 million customers more options and choices and will accelerate B6’s organic growth plan with 1,700+ daily flights to more than 125 destinations in 30 countries based on December 2022 schedules. The combined airline will have a fleet of 458 aircraft on a pro forma basis and an order book of over 300 Airbus aircraft.
• JetBlue expects to achieve US$600-700m in net annual synergies once integration is complete, driven in large part by expanded customer offerings resulting from the greater breadth and depth of the combined network. B6 expects the transaction to be significantly accretive to earnings per share in the first full year following closing. The company also expects to maintain balance sheet flexibility with post-transaction leverage of 3.0-3.5x, well inside historical levels, and to continue its deleveraging trajectory as it captures synergies.

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Featured image: N507JT, jetBlue Airways Airbus A320 @KSLC. Photo: Michael Rodeback/Airways

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