JetBlue Airways Corporation — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. Amounts are in millions of dollars except per-share, operating, and other stated data. JetBlue provides air transportation in the U.S., Caribbean, Latin America, and between New York and London.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 | Change / context |
|---|---|---|---|
| Operating revenue | $1,736 | $733 | Up 137.0%; 7.2% below Q1 2019 |
| Operating expenses | $2,103 | $1,027 | Up 104.8%; 2021 included $289 of special-item credits |
| Operating loss / margin | $(367) / (21.1)% | $(294) / (40.2)% | Margin improved year over year |
| Net loss | $(255) | $(247) | Loss per diluted share: $(0.79) vs. $(0.78) |
| Operating cash flow | $247 | $177 | Free cash flow, a non-GAAP measure: $113 vs. $(40) |
| Cash and cash equivalents | $1,834 at March 31 | $2,018 at December 31, 2021 | Period-end cash, cash equivalents and restricted cash totaled $1,901 |
| Debt and finance lease obligations | $3,926 at March 31 | $4,006 at December 31, 2021 | JetBlue repaid $83 of principal during the quarter |
| Working capital | $(754) at March 31 | $(170) at December 31, 2021 | Deficit widened, principally as air traffic liabilities increased |
Operating revenue per available seat mile (RASM) was 11.29 cents, up 40.0% year over year. Operating expense per available seat mile (CASM) was 13.67 cents, up 21.0%. CASM ex-fuel, a non-GAAP measure, was 9.87 cents, down 19.4% year over year. Versus Q1 2019, capacity was down 0.3%, revenue down 7.2%, and operating expenses up 17.1%.
Material changes and operating trends
Passenger revenue increased 139.5% year over year to $1,603, reflecting recovering travel demand; revenue passengers rose 83.2% to 8.2 million, and load factor increased to 71.0% from 63.9%. Average fare rose 30.7% to $195.99. Other revenue increased 111.0% to $133, helped by TrueBlue marketing revenue and the co-branded credit card agreements effective in mid-2021.
Fuel expense increased 195.0% to $571. Average fuel cost rose 68.4% to $2.90 per gallon, while fuel consumption rose 75.2%. Salaries, wages and benefits increased 32.0% to $688 as staffing and flying increased. Q1 2021 results included $288 of federal payroll-support grant credits and $1 of employee retention credits; no special items were recorded in Q1 2022. Excluding 2021 special items, Q1 2022 operating loss narrowed from $583 to $367, but the company remained loss-making.
Systemwide on-time performance fell to 65.6% from 78.9%, and completion factor declined to 94.9% from 97.9%. Management cited operational challenges that continued into April, including staffing, weather, air traffic delays, and ramp-up demands.
Outlook, risks, and notable items
Management expected Q2 2022 revenue to be 11%–16% above Q2 2019 and capacity 0%–3% above Q2 2019. Full-year 2022 capacity guidance was reduced to growth of 0%–5% versus 2019, from the prior 11%–15% plan. Full-year CASM ex-fuel was expected to rise 10%–15% versus 2019; Q2 CASM ex-fuel was expected to rise 15%–17%. JetBlue expected to return to profitability in the second half of 2022. These forecasts excluded any Spirit transaction.
Management said it was moderating schedules, hiring and training, adding customer-support capacity, increasing preventative maintenance, and investing in airport facilities to address reliability. The company reported approximately $2.9 billion in cash, cash equivalents, and short- and long-term marketable securities, and stated it believed liquidity was sufficient for at least 12 months. It also cited a $754 million working-capital deficit and $16.3 billion in contractual obligations, including $8.4 billion of flight-equipment purchase obligations.
JetBlue had not hedged projected fuel requirements for the rest of 2022; a hypothetical 10% fuel-price increase was estimated to raise fuel expense by approximately $300 over the next 12 months. Airbus A220 delivery delays meant no more than nine A220 aircraft were expected in 2022. In February, JetBlue exercised an option for 30 additional A220s, with deliveries expected from 2022–2026. Aircraft financing availability, fuel volatility, COVID-19 effects, operational execution, labor costs, and the DOJ antitrust case concerning the Northeast Alliance with American Airlines remain relevant risks. The company said it could not estimate a reasonably possible loss, if any, from the DOJ case.
As a subsequent event, JetBlue announced on April 5, 2022 a proposal to acquire Spirit Airlines for $33 per share in cash, to be funded with cash on hand and debt financing. The proposal was subject to negotiation, definitive agreements, board and shareholder approvals, regulatory approvals, and other closing conditions. The filing also disclosed a pilot agreement ratified in April, including a $30 million payment expected to be expensed in Q2 and a 3% base-pay increase effective May 1.
Key facts for investors to verify
- Whether revenue momentum and the projected second-half return to profitability materialize amid rising fuel, labor, and operating costs.
- Whether the reduced capacity plan improves reliability, completion factor, and on-time performance without weakening revenue trends.
- Liquidity and funding needs against the working-capital deficit, substantial contractual commitments, aircraft deliveries, and any Spirit-related financing.
- Developments in the DOJ challenge to the Northeast Alliance and the regulatory, financing, and execution prospects of the Spirit proposal.
- Non-GAAP comparisons: Q1 2021 benefited from $289 of special-item credits; assess reported GAAP results alongside JetBlue’s adjusted measures.