JetBlue shares fall most since Jun-2009 following disappointing 1Q2010 loss

JetBlue Airways’ shares fell the most in more than ten months yesterday (slumping 11.5%), after posting a disappointing and unexpected USD1 million net loss in the three months ended Mar-2010.

The loss ends four consecutive quarters of net profitability for the New York-based LCC, which reported a USD12 million net profit in 1Q2009. The carrier’s operating profit slumped 44% in 1Q2010 to USD42 million, for a 4.8% operating margin.

See related report: JetBlue's surprise first quarter loss. Focusing on strengthening network for new partnerships

JetBlue reported record first quarter revenues of USD870 million, an 11.2% year-on-year increase, despite severe winter storms in the Northeast, which reduced revenue by an estimated USD15 million. However costs grew faster than revenues, with operating expenses surging 15.1% in the quarter. 

On a unit level, JetBlue's operating expense per available seat mile (CASM) increased 8.5% year-on-year, with CASM ex fuel increasing 8.9% (these non-fuel unit costs were negatively impacted by storm-related flight cancellations that occurred in Feb/Mar-2010). For 2Q2010, JetBlue is expecting a CASM increase of 12-14%, with ex-CASM anticipated to be up in the 9-11% range. For FY2010, CASM is expected to increase in the 8-10% range (or by 3-5% excluding fuel).

The carrier added that it is “encouraged” by the recent revenue trends in the economic environment. Passenger revenue per available seat mile (PRASM) increased 4.9% year-on-year in the first quarter, with RASM rising 3.4% year-on-year and yield increasing 3.8%. For 2Q2010 and FY2010, the carrier is expecting PRASM and RASM growth of between 6-9%. 

Capacity (ASKs), which increased 6.1% in 1Q2010, is expected to increase by 4-6% in 2Q2010 and by 6-8% in FY2010.  

Elsewhere, GOL closed up 3.9% yesterday (regaining some of Tuesday's falls), while Southwest and AirTran were up marginally, by 0.4% and 0.2%, respectively.

Selected LCCs daily share price movements (% change): 28-Apr-2010