JetBlue second quarter net income rises

JetBlue Airways has reported its results for the second quarter of 2014 (2Q14) including net income (excluding special items) of $61 million, compared with JetBlue's 2Q13 net income of $36 million.

Pre-tax income excluding special items in 2Q14 was $103 million, compared with pre-tax income of $60 million in 2Q13. The company also gained $242 million from the sale of its LiveTV subsidiary.

“We are pleased to report record second quarter earnings and our seventeenth consecutive quarter of profitability,” declared Dave Barger, JetBlue's chief executive officer. “We saw improved profitability across our network, reflecting the success of ongoing efforts to adapt our products and services to meet our customers’ ever-changing needs. I would like to thank our 15,500 crewmembers for their dedication to running a safe airline and delivering outstanding service to our customers.”

JetBlue reported record second quarter operating revenues of $1.5 billion. Yield per passenger mile in 2Q14 was 14.25 cents, up 6.3% compared with 2Q13. Passenger revenue per available seat mile (PRASM) for 2Q14 increased 6.0% year over year to 12.05 cents and operating revenue per available seat mile (RASM) increased 5.6% year over year to 13.12 cents. The shift of the Easter and Passover holidays from March last year to April this year positively impacted second quarter year-over-year PRASM by approximately two points.

Operating expenses for 2Q14 increased 9.8%, or $119 million, over the prior year period. Interest expense for the quarter declined 7.5%, or $3 million, due to JetBlue's focus on debt reduction. The airline’s operating expense per available seat mile (CASM) for the second quarter increased 3.5% year over year to 11.88 cents. Excluding fuel and profit sharing, CASM increased 5.1% to 7.51 cents.

“We improved margin performance while expanding our network, demonstrating the core strength of our business,” commented Robin Hayes, JetBlue's president. “We remain focused on providing a differentiated product and culture in high-value geography while maintaining competitive costs. We believe this focus will drive improved returns for our shareholders."

JetBlue continued to hedge fuel to manage price volatility. Specifically, in 2Q14 JetBlue had in place hedges for approximately 15% of its fuel consumption and managed approximately 7% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realised fuel price of $3.09 per gallon, a 0.9% increase over 2Q13 realised fuel price of $3.06. JetBlue recorded $2 million in losses on fuel hedges that settled during the second quarter.

During 2Q!$, JetBlue repaid approximately $44 million in regularly scheduled debt and capital lease obligations. In addition, JetBlue pre-paid approximately $300 million in debt with the proceeds from the sale of LiveTV. JetBlue plans to repay approximately $185 million in regularly scheduled debt and capital lease obligations in the remainder of 2014, including approximately $58 million in the third quarter.

“We continued to strengthen the balance sheet by paying down debt while enhancing access to liquidity by increasing the number of unencumbered aircraft,” said Mark Powers, JetBlue's chief financial officer. “We believe these actions will help us maintain a relatively flat invested capital base this year while growing assets, which we expect will help us meet our return on invested capital goal.”

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