JetBlue shows small first quarter 2010 loss

JetBlue Airways has reported its results for the first quarter of 2010 (1Q10) including record first quarter revenues, a fall in operating income and a net loss of $1 million.

Operating income for the quarter was $42 million, resulting in a 4.8% operating margin, compared to the operating income of $73 million and a 9.3% operating margin in 1Q09.

The pre-tax loss for 1Q10 was $2 million, compared to pre-tax income of $20 million in the first quarter of 2009. This led to a 1Q10 net loss of $1 million, compared with JetBlue’s 1Q09 net income of $12 million.

"While we are disappointed to report a loss for the quarter, we are confident that we are taking the right steps to return to sustained profitability," remarked Dave Barger, JetBlue’s CEO. "During the quarter, we successfully implemented a new customer service and reservations system – a significant accomplishment given the complexity of such a transition – reflecting meticulous preparation and execution by our outstanding crewmembers. We believe this new system, along with our growing presence in Boston and our unique position as the largest domestic carrier at JFK Airport, allows us to continue to grow and develop revenue streams in the future."

JetBlue reported record first quarter revenues of $870 million despite severe winter storms in the northeast of the country, which reduced revenue by an estimated $15 million.

Yield per passenger mile for 1Q10 was 12.13 cents, up 3.8% compared to 1Q09. Passenger revenue per available seat mile (PRASM) for the first quarter 2010 increased 4.9% year over year to 9.32 cents and operating revenue per available seat mile (RASM) increased 3.4% year-over-year to 10.32 cents.

Operating expenses for the quarter increased 15.1%, or $108 million, over the prior year period, including approximately $15 million in one-time expenses related to the transition to Sabre, JetBlue’s new customer service and reservations system. JetBlue’s operating expense per available seat mile (CASM) for the first quarter increased 8.5% year-over-year to 9.83 cents. Excluding fuel, CASM increased 8.9% to 6.81 cents. These non-fuel unit costs were negatively impacted by storm related flight cancellations that occurred in February and March.

While fuel prices increased during the quarter, JetBlue continued to hedge fuel to help manage price volatility. Specifically, JetBlue hedged approximately 65% of its fuel consumption during the first quarter, resulting in a realised fuel price of $2.19 per gallon, a 7.5% increase over first quarter 2009 realised fuel price of $2.03. JetBlue recorded $2 million in gains on fuel hedges that settled during the first quarter.

JetBlue has hedged approximately 42% of its second quarter projected fuel requirements and 38% of its remaining 2010 projected fuel requirements with a combination of crude call options, jet fuel swaps and heating oil collars. JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $2.43 in the second quarter and $2.44 for the full year 2010.

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