JetBlue first quarter net income down

JetBlue Airways has reported its results for the first quarter 2014 featuring a net income of $4 million, down from the first quarter of 2013’s net income of $14 million.

Operating income in 1Q14 was $41 million, compared with operating income of $59 million in 1Q13. Pre-tax income in 1Q14 was $6 million, down from pre-tax income of $23 million in 1Q13.

“[This is] our sixteenth consecutive quarter of profitability,” noted Dave Barger, JetBlue's chief executive officer. “While first quarter results were negatively impacted by severe winter weather in the Northeast, we believe our maturing network in high-value geography together with our differentiated product and service will help JetBlue expand margins and improve shareholder returns in 2014.”

JetBlue reported record first quarter operating revenues of $1.3 billion despite severe winter weather in the Northeast. JetBlue cancelled 4,100 flights during the quarter, which reduced revenue by an estimated $50 million and reduced operating income by approximately $35 million.

Yield per passenger mile in the first quarter was 14.20 cents, up 1.8% compared with the first quarter of 2013. Passenger revenue per available seat mile (PRASM) for 1Q14 increased 0.9% year over year to 11.80 cents and operating revenue per available seat mile (RASM) increased 1.1% year over year to 12.95 cents. The shift of the Easter and Passover holidays from March last year to April this year negatively impacted first quarter year-over-year PRASM by approximately three points.

Operating expenses for the quarter increased 5.5%, or $68 million, over the prior year period. Interest expense for the quarter declined 8.3%, or $4 million, due to JetBlue’s focus on debt reduction. JetBlue’s operating expense per available seat mile (CASM) for 1Q14 increased 2.6% year over year to 12.55 cents. Excluding fuel and profit sharing, CASM increased 6.3% to 8.10 cents driven mainly by capacity reductions and higher non-fuel operating expenses associated with severe winter weather.

JetBlue continued to hedge fuel to manage price volatility. Specifically, during the first quarter JetBlue hedged approximately 16% of its fuel consumption and managed approximately 8% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realised fuel price of $3.14 per gallon, a 4.4% decrease over 1Q13 realised fuel price of $3.29. JetBlue recorded $1 million in losses on fuel hedges that settled during the first quarter.

JetBlue ended the quarter with approximately $771 million in unrestricted cash and short term investments. In addition, JetBlue maintains $550 million in lines of credit. During 1Q14, JetBlue repaid $237 million in debt and capital lease obligations. The company plans to repay approximately $481 million in debt and capital lease obligations in 2014, including approximately $48 million in 2Q14.

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