The FINANCIAL — JetBlue Airways Corporation on January 26 reported its results for the fourth quarter 2016 and the full year 2016:
Operating income of $296 million in the fourth quarter and $1.3 billion for the full year, a decline of 10.4% from the fourth quarter of 2015 and a full year increase of 7.9% over 2015.
Pre-tax income of $274 million in the fourth quarter and $1.2 billion for 2016, a decrease of 9.6% from the fourth quarter of 2015 and a full year increase of 10.8% over 2015.
Fourth quarter net income of $172 million, or $0.50 per diluted share. For the full year 2016, net income of $759 million or $2.22 per diluted share. This compares to JetBlue’s fourth quarter 2015 net income of $190 million, or $0.56 per diluted share and 2015 net income of $677 million or $1.98 per diluted share, according to JetBlue Airways.
JetBlue reported fourth quarter operating revenues of $1.6 billion. Revenue passenger miles for the fourth quarter increased 6% to 11.2 billion on a capacity increase of 4.5%, resulting in a fourth quarter load factor of 84.7%, a 1.1 point increase year over year.
Yield per passenger mile in the fourth quarter was 13.20 cents, down 3.1% compared to the fourth quarter of 2015. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2016 decreased 1.7% year over year to 11.19 cents and operating revenue per available seat mile (RASM) decreased 1.5% year over year to 12.43 cents.
Compared with last year, operating expenses for the quarter increased 6.5%, or $81 million. Interest expense for the quarter declined 13.2%, or $4 million, as JetBlue continued to reduce its debt. JetBlue’s operating expense per available seat mile (CASM) for the fourth quarter increased 1.9% year over year to 10.19 cents. Excluding fuel, profit sharing and related taxes, fourth quarter CASM1 increased 5.6% to 7.69 cents.
“I would like to thank our over 20,000 crewmembers for going above and beyond once again last year. They are truly JetBlue’s greatest asset and I want to congratulate each of them on an outstanding 2016. We are focused on achieving the operational and financial excellence that will give us the platform to grow our culture even further than the 100 destinations we serve today,” said Robin Hayes, JetBlue’s President and CEO.
Fuel Expense and Hedging
In the fourth quarter JetBlue had hedges in place for approximately 25% of its fuel consumption. The realized fuel price in the quarter was $1.56 per gallon, a 7.3% decrease versus fourth quarter 2015 realized fuel price of $1.68.
JetBlue has hedged approximately 10% of its first quarter and full year 2017 projected fuel consumption using jet fuel swaps. Based on the fuel curve as of January 13th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.73 in the first quarter of 2017.
Liquidity and Cash Flow
JetBlue ended the year with $971 million in unrestricted cash and short term investments, or about 15% of trailing twelve month revenue. In addition, JetBlue maintains approximately $600 million in undrawn lines of credit.
During the fourth quarter, JetBlue repaid $220 million in regularly scheduled debt and capital lease obligations. JetBlue anticipates paying approximately $50 million in regularly scheduled debt and capital lease obligations in the first quarter 2017 and approximately $195 million for the full year 2017.
“We ended 2016 with a debt to adjusted capitalization ratio of 35%, in the middle of our target range of 30% to 40%. Our efforts to de-risk the balance sheet in recent years allows JetBlue to evolve towards a more balanced approach to capital allocation, starting with our $120 million in share repurchases in fourth quarter 2016,” said Jim Leddy, JetBlue’s Interim Chief Financial Officer and Treasurer.
First Quarter and Full Year Outlook
For the first quarter of 2017, year over year CASM excluding fuel is expected to grow between 3% and 5%. For the full year 2017, JetBlue expects year over year CASM excluding fuel to grow between 1% and 3%, consistent with prior guidance.
In the first quarter 2017, capacity is expected to increase between 4.5% and 6.5%. For the full year 2017, JetBlue continues to expect capacity to increase between 6.5% and 8.5%.