First Quarter Results For JetBlue Beat Expectations On Improved Operations
JetBlue (NASDAQ:JBLU) JetBlue’s revenue and earnings beat for the quarter despite unit revenues struggling to grow. The first quarter for the airline saw fewer troughs, in terms of demand, which helped increase revenue. The airline has also been witnessing an uptake for its mainline long-range flights. With the introduction of the new A320 NEO, the airline throughout the quarter, and going forward, expects that it will see improved unit revenue, as a result of the revenue from the premium segment, making up a larger portion of total revenue.
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Key takeaways from results:
-RASM grew 2.5% for the quarter, this mainly as a result of a lower than expected completion factor.
-CASM came in slightly lower. This a result of lower fuel prices. Similarly, with improved operational efficiency CASM Ex-fuel fell by 2% for the quarter.
-Revenue grew 6% for the quarter, while earnings per share fell by 38% yoy.
-Net Income fell by 30% yoy.
-Pre-tax margins came in at 3%.
What can we expect going forward?
JetBlue has guided that it expects to continue growing capacity slowly during the second quarter, and throughout the second half. It further plans to improve its run-rate by reducing structural costs. Capital expenditure is expected to be in the range of $300 million for the second quarter and will be around $1.2-1.4 billion for the entire year. It also expects capacity to grow by 4-6% this year.
JetBlue’s management has taken significant steps in order to improve operational issues that plagued the airline previously. The airline expects to add routes on its European and South American operations during the year. In addition to adding route capacity on its mainline flights, it expects to improve its unit revenue by increasing its premium class segment.
With smoother operations, it expects to return to historical margins, and profit growth. Pre-tax margins expected to get back to around 6-8%, which are levels that it had realized historically. Overall, the airline is set to see significant improvement in its profitability, given the management is able to execute on their plan.
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