JetBlue's (JBLU) Q4 Earnings Surpass Estimates, Increase Y/Y

JetBlue Airways’ (NASDAQ:JBLU) fourth-quarter 2019 earnings per share came in at 56 cents per share, which surpassed the Zacks Consensus Estimate by a penny. Moreover, quarterly earnings increased 12% on a year-over-year basis, mainly due to low fuel costs.

Operating revenues totaled $2,031 million, narrowly beating the Zacks Consensus Estimate. Moreover, it increased 3.2% from the year-ago number. Passenger revenues, which accounted for bulk of the top line (95.9%), improved 3% year over year in the quarter under review. Other revenues were also up 6.3%.

However, revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter dipped 2.7% to 12.63 cents. Passenger revenue per available seat mile (PRASM) slid 2.8% to 12.12 cents. Average fare at JetBlue during the quarter inched up 1.3% to $185.96. Yield per passenger mile slipped 2.1% year over year to 14.79 cents.

Capacity, measured in available seat miles, expanded 6% year over year. Meanwhile, traffic, measured in revenue passenger miles, grew 5.2% in the final quarter of 2019. Consolidated load factor (percentage of seats filled by passengers) contracted 60 basis points year over year to 81.9% as traffic growth was outpaced by capacity expansion in the reported quarter.

In the fourth quarter, total operating expenses (on a reported basis) increased 3% year over year partly due to higher costs pertaining to salaries, wages and benefits. Average fuel cost per gallon (including fuel taxes) decreased 7.6% year over year to $2.07. JetBlue’s operating expenses per available seat mile (CASM) declined 2.9% to 11.22 cents. Excluding fuel, the metric was flat at 8.31 cents.

JetBlue, carrying a Zacks Rank #3 (Hold), exited 2019 with cash and cash equivalents of $929 million compared with $474 million at the end of 2018. Total debt at the end of 2019 was $2,334 million compared with $1, 670 million at 2018 end.

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Outlook

For the first quarter of 2020, JetBlue expects RASM to either remain flat or increase up to 3% from the year-ago reported figure. For the same time frame, the carrier anticipates capacity to increase between 1.5% and 3.5%. The metric is projected to improve in the 5.5-7.5% range for 2020.

Consolidated operating cost per available seat mile excluding fuel is expected to increase between 1.5% and 3.5%in the first quarter. For 2020, the metric is expected to either remain flat or decrease up to 2%. The company expects effective tax rate of around 26% for the full year.

First-quarter fuel cost, net of hedges, is estimated to be $2.09 per gallon. The company expects first-quarter 2020 earnings between 10 cents and 20 cents. The Zacks Consensus Estimate for first-quarter 2020 earnings is currently pegged at 23 cents.JetBlueexpects 2020 earnings per share between $2.5 and $3. The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.37.

Total capital expenditures for the first quarter are expected between $325 million and $425 million. While the metric is forecast in the range of $1.35-$1.55 billion for the ongoing year.

Upcoming Releases

Investors interested in the Zacks Transportation sector are keenly awaiting fourth-quarter earnings reports from key players like United Parcel Service (NYSE:UPS) , SkyWest (NASDAQ:SKYW) and Old Dominion Freight Line (NASDAQ:ODFL) . While UPS and SkyWest will report fourth-quarter earnings numbers on Jan 30, Old Dominion will release the same on Feb 6.

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