JetBlue Airways (JBLU) Posts Q3 Loss Amid Coronavirus Woes

Zacks Equity Research
·5 min read

JetBlue Airways JBLU incurred a third-quarter 2020 loss (excluding 31 cents from non-recurring items) of $1.75 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $1.91. Results were hurt by the coronavirus-induced weakness in air-travel demand. However, sentiments were bullish in the year-ago period when the company delivered earnings of 59 cents per share owing to strong air-travel demand.

Moreover, operating revenues of $492 million plunged 76.4% year over year and lagged the Zacks Consensus Estimate of $504.8 million. This steep year-over-year fall was due to the 77.8% decrease in passenger revenues, which accounted for bulk (90.4%) of the top line. Revenues from other sources declined 42% to $47 million.

The lackluster earnings report naturally disappointed investors. Consequently, shares of the company declined 5.4% on Oct 27 to $11.88.

JetBlue Airways Corporation Price, Consensus and EPS Surprise

JetBlue Airways Corporation Price, Consensus and EPS Surprise
JetBlue Airways Corporation Price, Consensus and EPS Surprise

JetBlue Airways Corporation price-consensus-eps-surprise-chart | JetBlue Airways Corporation Quote

Other Details

Revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter dropped 44.4% to 7.12 cents. Passenger revenue per available seat mile (PRASM) fell 47.7% to 6.44 cents. Average fare at JetBlue during the quarter increased 14.1% to $206.7. Yield per passenger mile rose 4.9% year over year to 15.1 cents.

Capacity, measured in available seat miles, contracted 57.6% year over year. Meanwhile, traffic, measured in revenue passenger miles, plunged 78.9% due to softness in air-travel demand. Load factor (percentage of seats filled by passengers) slumped to 42.6% from 85.5% a year ago as traffic decline was more than the capacity reduction in the reported quarter.

In the third quarter, total operating expenses (on a reported basis) decreased 45.2% year over year, mainly owing to a 78.4% fall in aircraft fuel and related taxes. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 63.7% to 83 million.

Average fuel cost per gallon (including fuel taxes) declined 40.4% year over year to $1.23. JetBlue’s operating expenses per available seat mile (CASM) rose 29.3% to 14.60 cents due to capacity cuts. Excluding fuel, the metric escalated 75.7% to 14.64 cents.

JetBlue, currently carrying a Zacks Rank #3 (Hold), exited the third quarter with cash and cash equivalents of $2,453 million compared with $959 million at the end of 2019. Total debt at the end of the reported quarter was $4,839 million compared with $2,334 million at 2019-end.

JetBlue exited the September quarter with approximately $3.1 billion in unrestricted cash, cash equivalents, and short-term investments, and restricted cash for CARES Act Payroll Support Program. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Management stated that due to various measures undertaken to combat the current pandemic-related crisis, the company lowered its cash burn to $6.1 million per day, on average, during the third quarter compared to the expected range of $7-$9 million calculated in late July.

Outlook

Revenues for the fourth quarter are expected to decline approximately 65% year over year.  Capacity is anticipated to contract at least 45% year over year in the fourth quarter. JetBlue anticipates its average daily cash burn in the fourth quarter to range between $4 and $6 million. Average fuel cost per gallon in the December quarter is estimated to be $1.23.

Sectorial Snapshot

Apart from JetBlue , let’s take a look at some other Zacks Transportation sector’s third-quarter earnings like Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and  United Airlines Holdings, Inc. UAL.

Delta incurred a loss (excluding $5.17 from non-recurring items) of $3.30 per share in the September quarter, wider than the Zacks Consensus Estimate of a loss of $3.14. Meanwhile, Delta reported earnings of $2.32 per share (on an adjusted basis) in the year-ago quarter, driven by high passenger revenues as air-travel demand was buoyant at that time.

J.B. Hunt reported mixed third-quarter 2020 results, with earnings missing estimates and revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to disappointing performance of its intermodal (JBI) unit. Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.

United Airlines incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63. Results were hurt by the coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and also lagged the Zacks Consensus Estimate of $2,570.1 million. This year-over-year plunge was due to an 84.3% drop in passenger revenues to $1,649 million.

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