Jetblue posts quarterly.........

[SKY HIGH]

JETBLUE POSTS SMALL QUARTERLY LOSS

JetBlue Airways on Tuesday posted a small third-quarter loss as the fast-growing discount carrier expanded to new markets and saw softer demand due in part to security-related concerns. The six-year-old airline, which is in the midst of a restructuring program, posted a net loss of $500,000, compared with a net profit of $2.7 million in the year-earlier quarter. JetBlue said operating revenue rose 39 percent as the company added flights and raised ticket prices at the expense of filling seats. JetBlue's load factor fell 6.2 points to 80.4 percent

 

[Borescope]

JETBLUE POSTS SMALL QUARTERLY LOSS

JetBlue Airways on Tuesday posted a small third-quarter loss as the fast-growing discount carrier expanded to new markets and saw softer demand due in part to security-related concerns. The six-year-old airline, which is in the midst of a restructuring program, posted a net loss of $500,000, compared with a net profit of $2.7 million in the year-earlier quarter. JetBlue said operating revenue rose 39 percent as the company added flights and raised ticket prices at the expense of filling seats. JetBlue's load factor fell 6.2 points to 80.4 percent

Not much of a loss. Look at AA..........they only made 15 mil. That is a joke. A company their size with the revenue they have and only 15mil. Whats the 4th qtr gonna look like?

 

[jimntx]

However, that $15 million was net profit after the company made a $230 million payment to the pension funds during the quarter and there was a $90 million write-down of the value of some hedging contracts.

 

[exnw]

However, that $15 million was net profit after the company made a $230 million payment to the pension funds during the quarter and there was a $90 million write-down of the value of some hedging contracts.

Pension fund payment is normal expense of doing business.
Unless of course if your employer is UAL, US AIR,
NW or DELTA.

 

[jimntx]

Pension fund payment is normal expense of doing business.
Unless of course if your employer is UAL, US AIR,
NW or DELTA.

My point exactly. The company chose to make the payment due and report a $15 million profit rather than skip the payment and report a $245 million profit--"to be adjusted at a later date" as they say in the accounting game.

 

[SoftLanding]

3rd qt not too bad...

The conf call was "uplifting"...2007 growth around 14-17%...They seem to have managed through the rough-spot...cash up to $600M+ by yearend...

Oil is a potential problem, as is the slowing economy...Just hoping for a "soft" landing

SoftLanding

 

[a320av8r]

JetBlue reports small third-quarter loss, pledges capacity reduction
Wednesday October 25, 2006
JetBlue Airways will cut its A320 and Embraer 190 fleets over the next three years and said it is on the verge of reaching one or more codeshare arrangements with international airlines as it strives to return to the black following its third loss-making quarter out of the past four.

The carrier yesterday announced a $500,000 loss in the three-month period ended Sept. 30 compared to a $2.7 million profit in the third quarter of 2005.

Capacity growth in 2007 will be 14%-17% rather than the 18%-20% announced previously. JetBlue did not offer details on the scope or timing of the fleet reduction but did report a $6 million gain from the sale of five A320s to Blue Wings (ATWOnline, Oct. 18).

"Results this quarter demonstrate our crewmembers' success in their ongoing focus on cost control as we work to maximize productivity and institutionalize low-cost-carrier spending habits throughout our airline," CEO David Neeleman said. "Unfortunately, the revenue environment during the quarter remained challenging as we continued our new market expansion and saw lower than expected overall demand due in part to security related concerns."

Third-quarter revenues rose 38.7% year-over-year to $628 million and expenses climbed 33.7% to $587 million, nearly tripling operating income to $41 million from $14 million in the year-ago quarter. Heavy interest expenses and nonoperating costs dragged the airline into the red.

Traffic rose 10.5% to 6.06 billion RPMs against a 19% surge in capacity to 7.54 billion ASMs, dropping load factor 6.2 points to 80.4%. JetBlue's efforts to cultivate higher yields resulted in a 23.5% increase to 9.72 cents as average fare climbed 8.2% to $123.41. Unit revenues (operating) were up 16.5% to 8.33 cents. Operating CASM increased 12.3% to 7.79 cents, or 4.7% to 4.98 cents excluding fuel.

For the nine-month period, the company was $18 million in the hole. It had earned a profit of $22 million at the same point last year. Revenues were up 37.8% to $1.73 billion while expenses climbed 41.7% to $1.67 billion, reducing operating profit 20.8% to $63 million.


by Brian Straus


80.4% load factor.
$500,000 loss including $6,000,000 gain from selling A320's.
This during the busy season. Can't wait to see the slow season. I know, shrink to profitability- been there.
Yeah, not too bad...

 

[jimntx]

To put it in perspective...

IIRC the loss is less than a penny per share. I don't think the High Sheriff is going to be posting a forced sale notice on the front stoop.

 

[FWAAA]

It's a small loss, to be sure - but it helps keep B6 squarely on target for its second consecutive full year loss. Too much expansion far too fast for ADD-Dave to competently handle.

Operating margin way up in the 3d quarter? BFD. So was interest expense: up 58% year over year, a far greater increase than revenue gains. Same with airplane rent and landing fees - both up at least 50% year over year - a far greater percentage increase than the increase in revenue.

It gets worse: Unlike at the legacies, where most employees are topped out, the relatively young workforce at B6 is looking forward to step increases each year. With its stock price in the toilet, B6 is loathe to tell the underpaid pilots, FAs, agents and ramp personnel that their pay is gonna be cut (or raises deferred). So look for that ex-fuel CASM to continue to increase much faster than at the legacies.

No doubt B6 has thousands of good employees. It's too bad their CEO is an idiot. Neeleman, like most other airline managers, let his people down. In a big way.

Think about it: B6 was profitable even in the dark days following September 11 when the legacies were bleeding billions. B6 continued to be profitable even three and four years after that horror as the legacies continued to bleed and most of them filed for Ch 11. Now, as the legacies have begun to turn the corner and show small profits, jetBlue's out of control growth has caused large losses in 2005 and an almost-certain loss for 2006.

 

[SoftLanding]

It's a small loss, to be sure - but it helps keep B6 squarely on target for its second consecutive full year loss. Too much expansion far too fast for ADD-Dave to competently handle.

Operating margin way up in the 3d quarter? BFD. So was interest expense: up 58% year over year, a far greater increase than revenue gains. Same with airplane rent and landing fees - both up at least 50% year over year - a far greater percentage increase than the increase in revenue.

It gets worse: Unlike at the legacies, where most employees are topped out, the relatively young workforce at B6 is looking forward to step increases each year. With its stock price in the toilet, B6 is loathe to tell the underpaid pilots, FAs, agents and ramp personnel that their pay is gonna be cut (or raises deferred). So look for that ex-fuel CASM to continue to increase much faster than at the legacies.

No doubt B6 has thousands of good employees. It's too bad their CEO is an idiot. Neeleman, like most other airline managers, let his people down. In a big way.

Think about it: B6 was profitable even in the dark days following September 11 when the legacies were bleeding billions. B6 continued to be profitable even three and four years after that horror as the legacies continued to bleed and most of them filed for Ch 11. Now, as the legacies have begun to turn the corner and show small profits, jetBlue's out of control growth has caused large losses in 2005 and an almost-certain loss for 2006.

Just want to comment on one item...

Underpaid pilots...compared to what other airline??? (Don't know about the other employees groups.) Except AMR & LUV, I don't see a huge discrepancy betwwen the pay of JBLU pilots and LCC/UAL/Delta & Northwest?! What am I missing...

Believe they get 150% on all flying above 70 hours...And flying on days off etc. etc.

Though it doesn't mean too much, JP Morgan and Credit Suisse upgraded earnings estimate for 2007.

Also, the short squeeze doesn't hurt, except for the shorts


SoftLanding

 

[TechBoy]

WTF is Jblue going to do if the US/DL merger goes through with a 10 percent pulldown mostly in the east. That's still an awful lot of capicity for JB to go up against.

Neeleman goes to bed every night dreaming about this. Removing a huge amount of capacity on the east coast will give him places to put all those new planes that he is still getting without destroying margins. A US/DL merger is exactly what B6 needs.

 

[Flufdriver]

Do you really think the pulldown in the east to satisfy the DOJ will create that big a window? I'm not sure?

BTW, I'm not trashing Jet Blue as I've never flown them. JFK is tough to get to from where I live so no go for me.

I just look at the financials and I get jittery. To me it just doesn't look good. To many trends going in the wrong direction.

This is the problem with the "Low Cost" airlines that have some of the lowest operating costs..."Where do they go to lower them even more...not much room there to hack away at"!! All the legacy carriers had all kinds of room to lower their costs!!

 

[PHX-F/A]

It's a small loss, to be sure - but it helps keep B6 squarely on target for its second consecutive full year loss. Too much expansion far too fast for ADD-Dave to competently handle.

Operating margin way up in the 3d quarter? BFD. So was interest expense: up 58% year over year, a far greater increase than revenue gains. Same with airplane rent and landing fees - both up at least 50% year over year - a far greater percentage increase than the increase in revenue.

It gets worse: Unlike at the legacies, where most employees are topped out, the relatively young workforce at B6 is looking forward to step increases each year. With its stock price in the toilet, B6 is loathe to tell the underpaid pilots, FAs, agents and ramp personnel that their pay is gonna be cut (or raises deferred). So look for that ex-fuel CASM to continue to increase much faster than at the legacies.

No doubt B6 has thousands of good employees. It's too bad their CEO is an idiot. Neeleman, like most other airline managers, let his people down. In a big way.

Think about it: B6 was profitable even in the dark days following September 11 when the legacies were bleeding billions. B6 continued to be profitable even three and four years after that horror as the legacies continued to bleed and most of them filed for Ch 11. Now, as the legacies have begun to turn the corner and show small profits, jetBlue's out of control growth has caused large losses in 2005 and an almost-certain loss for 2006.

Truth or Myth, JetBlue had a warranty that deferred maintenance costs until the company was 5 years old.

 

[B6Busdriver]

Truth or Myth, JetBlue had a warranty that deferred maintenance costs until the company was 5 years old.

Yes it's all true. Free airplanes, free mx,and free gas. Thats the only thing keeping this house of cards together.

 

[Busdrvr]

Truth or Myth, JetBlue had a warranty that deferred maintenance costs until the company was 5 years old.

Despite the sarcasm from other respondants...

All new jets come with a warranty. FWIW, I thought it was 3 years for the bus. Here's where Jblu has "used" accounting rules to their benefit. On LEASED jets, the leasor doesn't want the jet to come back rode hard and put away wet with no mx up to date, so they REQUIRE a certain amount to be set aside for future MX. Therefore, the cost of MX is reflected in the lease payments for those jets. On Owned jets, you can go two routes, you can charge expected future mx costs (ie if I flew 1000 hours on a jet this Q, and the jet requires a 5000 hour inspection at a cost of $50,000, then I'd charge the balance sheet $10,000), or you can count mx cost only when they happen. Blu chose the latter, which made the numbers look better in the early years than they really were.

Then again, what do I know, I've been saying Blu would struggle while the majors did much better for a few years now and have always said we'd all make the same pay one day, it was up to them to decide if it was UAL's C2K rate or theirs....