JetBlue Airways Corporation (JBLU), a top discount airline, reported first quarter earnings of a penny per share. The reported result was at par with the Zacks Consensus Estimate and a full 100% above the year-ago quarter.
Operating revenues increased 16.3% year over year to $1,012 million in the reported quarter, surpassing the Zacks Consensus Estimate of $991 million. Operating revenues in the first quarter grew primarily on strong revenue generation from the Boston and Caribbean networks.
In the first quarter, revenue passenger miles (RPM) climbed 7% year over year to $6.9 billion owing to capacity measured in available seat miles (ASM), which grew 1% year over year. Load factor improved 460 bps to 81.4%.
Yield per passenger mile grew 7.7% from the year-ago quarter. Passenger revenue per available seat mile (PRASM) and operating revenue per available seat mile (RASM) improved 14.1% and 15.1%, respectively.
Total operating expenses increased 16.8% year over year to $967 million primarily due to steep rises in fuel cost. JetBlue’s operating unit cost or cost per available seat mile (CASM) upped 15.6% year over year. Excluding fuel, CASM rose 6.1% from the year-ago quarter as an effect of flight cancellations due to adverse weather conditions in the first two months of the quarter.
Operating income in the reported quarter was $45 million compared with $43 million in the year-ago quarter. Operating margin decreased 50 bps year over year to 4.4%.
Liquidity
JetBlue ended the first quarter with cash and cash equivalents of $550 million compared to $465 million at the end of fiscal 2010.
Guidance
For the second quarter of 2011, the company expects CASM to increase 18% to 20% over the year-ago quarter. CASM (excluding fuel) is expected to increase 3% to 5%.
For fiscal 2011, CASM is expected to increase 15% to 17% over fiscal 2010. CASM (excluding fuel) is projected to range between 0% and 2%.
For the second quarter and fiscal 2011, ASM is estimated to increase in bands of 7% to 9% and 6% to 8%, respectively.
JetBlue expects an average fuel price per gallon of $3.37 for the second quarter of 2011 and $3.32 for the full year.
Our Analysis
We believe JetBlue remains focused on generating solid revenues overruling the adverse impacts of steeply rising fuel prices. The company’s strong balance sheet aids investments in infrastructural development that enables business expansion.
Additionally, the company’s growing presence in the Caribbean and Latin America, leading position in the Boston market, and unique position as the largest domestic carrier at John F. Kennedy International Airport auger well for future growth and top-line improvement.
However, fuel price volatility, higher dependence on the New York metropolitan market, competitive pressures from giant carriers like Delta Air Lines (DAL) and United Continental Holdings (UAL), and US Airways Group (LCC) keeps us on the sidelines. Further, the company does not pay any dividend to its shareholders.
We are currently maintaining our long-term Neutral rating on JetBlue supported by a Zacks #3 Rank (Hold).
DELTA AIR LINES (DAL): Free Stock Analysis Report
JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report
US AIRWAYS GRP (LCC): Free Stock Analysis Report
Be the first to comment