JetBlue Reports Loss as Fuel Costs Outweigh Fare Increases

07 November 2008 12:08am

JetBlue reported that operating revenues for the third quarter totaled $902 million, representing growth of 17.9 percent over operating revenues of $765 million in the third quarter of 2007, but high fuel prices continued to present a challenge and the airline reported a net loss for the quarter of $4 million.

That compared to third quarter 2007 net income of $23 million, or $0.12 per diluted share. For the third quarter, revenue passenger miles remained flat at 6.8 billion on a capacity decrease of 2.4 percent, resulting in a third quarter load factor of 84.0 percent, an increase of 2.0 points year-over-year. Yield per passenger mile in the third quarter was 11.78 cents, up 13.2 percent compared to the third quarter of 2007.

Passenger revenue per available seat mile (PRASM) for the third quarter 2008 increased 16.0 percent year-over-year to 9.89 cents and operating revenue per available seat mile (RASM) increased 20.8 percent year-over-year to 11.07 cents.

JetBlue’s operating expense per available seat mile (CASM) for the third quarter increased 31.5 percent year-over-year to 10.80 cents. Excluding fuel, CASM increased 13.8 percent to 5.96 cents.

During the quarter, JetBlue hedged approximately 45 percent of its fuel consumption resulting in a realized fuel price of $3.42 per gallon, a 60.8 percent increase over third quarter 2007 realized fuel price of $2.13. JetBlue realized $26 million in fuel hedging gains during the third quarter.

Of this total, $1 million are unrealized gains which relate to fuel hedges for the fourth quarter 2008 and beyond which were required to be recognized in the third quarter and $3 million are related to other settlements in the third quarter.

JetBlue ended the third quarter with approximately $565 million in cash and cash equivalents and $305 million of auction rate securities. JetBlue has an additional $110 million available under its line of credit with Citigroup, which is secured by a portion of JetBlue’s auction rate securities.

During the quarter, JetBlue repurchased $53 million of its $250 million 3.75 percent convertible notes due in 2035 (which have a put date of March 2010) for $40 million. JetBlue repurchased an additional $20 million principal amount of these notes for $14 million in October.