Posted on: 26 October 2011 by Ross McSweeny
JetBlue Airways has reported its results for the third quarter 2011 including net income of $35 million.
Operating income for the quarter was $108 million, resulting in a 9.0% operating margin, compared with an operating income of $140 million and a 13.6% operating margin in 3Q10.
Pre-tax income was $56 million in 3Q11, which includes a one-time loss related to the early extinguishment of portions of JetBlue’s convertible debt. Excluding this one-time item, JetBlue’s pre-tax income for 3Q11 was $61 million, compared with pre-tax income of $97 million in 3Q10.
As mentioned, the net income for 3Q11 was $35 million. Excluding the one-time item, JetBlue reported net income of $38 million. This compares to JetBlue’s 3Q10 net income of $59 million.
"We are pleased to report another profitable quarter, particularly in light of a $162 million year-over-year increase in fuel expense," declared Dave Barger, JetBlue’s president and chief executive officer. "Despite challenging economic conditions and severe weather, we generated record revenues while reducing non-fuel unit costs. These results demonstrate that our business plan is working and are a testament to the outstanding efforts of our crewmembers."
JetBlue says its 3Q11 operations were negatively impacted by Hurricane Irene, which resulted in approximately 1,400 flight cancellations and reduced JetBlue’s third quarter operating income by approximately $8 million.
The carrier reported record third quarter operating revenues of $1.2 billion, an increase of 16.0% versus 3Q10.
Yield per passenger mile in 3Q11 was 13.04 cents, up 7.7% compared with 3Q10. Passenger revenue per available seat mile (PRASM) for the third quarter 2011 increased by 7.7% year-over-year to 11.03 cents and operating revenue per available seat mile (RASM) increased by 7.1% year-over-year to 12.12 cents.
"Our focus on improving revenue performance during shoulder periods by, among other actions better accommodating business traffic in Boston, drove solid unit revenue growth during the third quarter," explained Robin Hayes, JetBlue’s chief commercial officer.
Operating expenses for the quarter increased by 22.1%, or $197 million, over the prior year period driven primarily by $162 million in additional fuel expense. JetBlue’s operating expense per available seat mile (CASM) for 3Q11 increased 12.8% year-over-year to 11.03 cents. Excluding fuel, CASM decreased 2.2% to 6.43 cents.
JetBlue continued to hedge fuel to manage price volatility. Specifically, JetBlue hedged around 48% of its fuel consumption during the 3Q11, resulting in a realised fuel price of $3.25 per gallon, a 43% increase over 3Q10 realised fuel price of $2.26. JetBlue’s fuel expense reflects $4 million in losses on fuel hedges that settled during the third quarter. In addition, the airline recorded $3 million in non-cash fuel hedging ineffectiveness losses during the quarter, which were included in non-operating income/expense.
JetBlue has hedged approximately 45% of its 4Q11 projected fuel requirements and 21% of its 2012 projected fuel requirements using a combination of collars, crude call options, and jet fuel swaps. Based on the fuel curve as of 21 October 2011, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $3.23 in 4Q11 and $3.19 for the full year 2011.