JetBlue Airways Corporation — FY 2023 Form 10-K
Reporting period: Year ended December 31, 2023. This filing reports full-year results; it does not provide a clear standalone Q4 income statement summary. JetBlue is a U.S. airline serving 115 destinations across the United States, the Caribbean and Latin America, Canada, and Europe.
Financial and operating performance
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Operating revenue | $9.615 billion | $9.158 billion |
| Operating loss / margin | $230 million / (2.4)% | $298 million / (3.3)% |
| Net loss | $310 million | $362 million |
| Loss per share | $0.93 | $1.12 |
| Operating cash flow | $400 million | $379 million |
| Operating expenses | $9.845 billion | $9.456 billion |
| Operating expense per available seat mile (CASM) | 14.37 cents | 14.67 cents |
| Adjusted CASM ex-fuel | 10.02 cents | 9.59 cents |
Revenue increased 5.0%, supported by 7.5% more revenue passengers and 6.2% higher capacity. Load factor rose to 82.6% from 81.5%, but average fare fell 2.4% and operating revenue per available seat mile declined 1.2% to 14.04 cents. Fuel expense decreased 12.4% to $2.720 billion as the average fuel price fell 17.9% to $3.03 per gallon, despite 6.5% higher consumption. Salaries, wages and benefits rose 11.2% to $3.055 billion; landing fees and rents rose 20.7% to $657 million.
Excluding special items, adjusted operating loss was $33 million and adjusted operating margin was (0.3)%, compared with a $185 million adjusted operating loss and (2.0)% margin in 2022. Adjusted net loss was $151 million, or $0.45 per share, versus $260 million, or $0.80 per share. These are non-GAAP measures; 2023 special items totaled $197 million, including $105 million of union contract costs and $92 million of Spirit-related costs.
Liquidity, debt and commitments
- Unrestricted cash, cash equivalents, short-term investments and long-term marketable securities totaled $1.7 billion at year-end; cash and cash equivalents alone were $1.166 billion.
- Working capital was negative $1.5 billion, an improvement from a $1.8 billion deficit in 2022. Management stated liquidity was sufficient for at least the next 12 months.
- Debt and finance lease obligations were $4.740 billion at year-end, excluding operating leases. Contractual debt and finance lease payments including interest totaled approximately $5.999 billion. Adjusted debt to capitalization, a non-GAAP measure that includes aircraft operating lease liabilities, was 59%, up from 52%.
- Operating cash flow was $400 million; investing activities used $1.378 billion and financing activities provided $1.107 billion. Financing included $1.331 billion of sale-leaseback proceeds.
- Aircraft purchase commitments were $7.205 billion for 131 aircraft through 2029, following a January 2024 delivery-schedule deferral. Total disclosed contractual obligations were $16.472 billion.
Material changes and developments
- Net loss narrowed by $52 million year over year, while revenue increased; however, higher labor, airport, maintenance and other costs continued to pressure profitability. Adjusted CASM ex-fuel increased 4.5%.
- JetBlue received seven A321neo aircraft and ten A220 aircraft in 2023. In January 2024, it agreed with Airbus to defer 41 deliveries originally scheduled for 2024–2027 to later dates through 2029.
- The Northeast Alliance with American Airlines was permanently enjoined and its wind-down was substantially complete. Remaining impacts and related class-action litigation could still create costs or other exposure.
- In January 2024, a federal court permanently enjoined the proposed Spirit acquisition. JetBlue and Spirit appealed; the merger remained subject to appeal and other closing conditions as described in the filing.
Outlook, management commentary and key risks
Management cited air traffic control delays, weather disruptions, industry cost pressures, supply-chain constraints and engine reliability issues as challenges in 2023. It expects Northeast ATC shortages to continue in the near term, expenses to rise with fleet growth, fleet aging and market expansion, and results to fluctuate materially between quarters. The filing does not provide a clear numerical full-year 2024 earnings or revenue outlook in the supplied text.
- Engine inspections: At December 31, 2023, six aircraft and 12 engines were grounded following Pratt & Whitney inspection requirements related to contaminated powdered metal. JetBlue expected the number of out-of-service aircraft to reach 13–15 by the end of 2024, with removed engines potentially taking up to 360 days for shop visits. A confidential settlement addressed certain 2023 damages; further compensation discussions were expected.
- Merger uncertainty: The merger injunction and appeal create uncertainty around transaction completion, anticipated benefits and potential costs. JetBlue disclosed $403 million in shareholder prepayments and $25 million reimbursing Spirit’s Frontier transaction costs as of year-end. Certain termination circumstances could trigger substantial break-up payments, subject to the agreement’s terms.
- Fuel and liquidity exposure: Fuel prices are volatile; a hypothetical 10% increase in year-end fuel price would raise projected 2024 fuel expense by about $244 million. JetBlue had hedged 30% of projected first-quarter 2024 fuel needs. Credit-card processor reserve requirements could also materially affect liquidity if imposed.
- Other major risks: Intense fare competition, dependence on the New York market, congestion and weather disruptions, labor costs and negotiations, maintenance costs as the fleet ages, cybersecurity and operational-system disruption, and climate-related regulation and weather impacts.
Most important facts for investors to verify
- Whether the Spirit merger appeal succeeds, whether the transaction can close, and the resulting costs, financing needs or termination payments.
- The pace and duration of Pratt & Whitney engine groundings, compensation received, and effects on capacity, revenue and costs.
- Whether liquidity and cash generation can support aircraft commitments, debt service and operating needs, particularly given the working-capital deficit and sale-leaseback financing.
- Whether revenue and unit-cost trends improve: fares and RASM declined, while adjusted CASM ex-fuel increased despite lower reported CASM.
- The assumptions and sensitivity underlying the $1.1 billion TrueBlue loyalty air-transportation liability; the auditor identified loyalty-point breakage estimates as a critical audit matter.