JetBlue Announces Fourth Quarter and Full Year Results

• Operating income of $169 million in the fourth quarter. This compares to operating income of $115 million in the fourth quarter of 2013. For the full year 2014, JetBlue reported operating income of $515 million. This compares to operating income of $428 million in 2013.
• Pre-tax income of $140 million in the fourth quarter. This compares to pre-tax income of $77 million in the fourth quarter of 2013. For the full year 2014, on a GAAP basis JetBlue reported pre-tax income of $623 million. Excluding special items1, pre-tax income in 2014 was $382 million; this compares to pre-tax income of $279 million for the full year 2013.
• On a GAAP basis, net income for the fourth quarter was $88 million. Excluding special items1, net income was $87 million, or $0.26 per diluted share. This compares to JetBlue's fourth quarter 2013 net income of $47 million, or $0.14 per diluted share. For the full year 2014, on a GAAP basis, JetBlue reported net income of $401 million. Excluding special items1, net income was $232 million, or $0.70 per diluted share; this compares to net income of $168 million, or $0.52 per diluted share for the full year 2013.

Financial Performance

JetBlue reported record fourth quarter operating revenues of $1.4 billion. Revenue passenger miles for the fourth quarter increased 8.5% to 9.4 billion on a capacity increase of 7.0%, resulting in a fourth quarter load factor of 82.1%, an increase of 1.2 points year over year.

Yield per passenger mile in the fourth quarter was 14.13 cents, down 1.5% compared to the fourth quarter of 2013. Passenger revenue per available seat mile (PRASM) for the fourth quarter 2014 decreased 0.1% year over year to 11.61 cents and operating revenue per available seat mile (RASM) decreased 1.0% year over year to 12.64 cents.

Operating expenses for the quarter increased 2.1%, or $27 million, over the prior year period. Interest expense for the quarter declined 9.3%, or $3 million, as JetBlue reduced its debt throughout the year. JetBlue's operating expense per available seat mile (CASM) for the fourth quarter decreased 4.5% year over year to 11.17 cents. Excluding fuel and profit sharing, fourth quarter CASM2 decreased 0.9% to 7.23 cents.

Operational Performance

JetBlue's operations improved throughout 2014. System on time departures, or D0, improved 2.7 points year-over-year while system arrival performance, or A14, improved 2.5 points. JetBlue had particularly strong operations in the fourth quarter. D0 and A14 each improved roughly four points year-over-year in the quarter.

"These results demonstrate the diversity and strength of JetBlue's network as well as our commitment to cost control. I would like to thank JetBlue's 16,000 crewmembers for all of their work in running a safe airline while delivering outstanding service to our customers. Crewmembers are the foundation of JetBlue's success," said Robin Hayes, JetBlue's President. "We are excited about the trajectory of our company. While fuel prices have fallen substantially, we are not changing our business plan and the actions we outlined at our Investor Day in November. We believe our differentiated model of serving underserved customers will enhance long term shareholder value."

Fuel Expense and Hedging

In the fourth quarter JetBlue had in place hedges for approximately 26% of its fuel consumption and managed approximately 7% of its fuel consumption using fixed forward price agreements (FFPs). This resulted in a realized fuel price of $2.70 per gallon, a 12.9% decrease versus fourth quarter 2013 realized fuel price of $3.10. JetBlue recorded $26 million in losses on fuel hedges settling during the fourth quarter.

JetBlue has hedged approximately 20% of its first quarter 2015 projected fuel requirements using a combination of jet fuel swaps and collars. Based on the fuel curve as of January 16th, JetBlue expects an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $1.97 in the first quarter. For the balance of the year beyond the first quarter, JetBlue has hedged approximately 16% of projected fuel consumption.

Liquidity and Cash Flow

JetBlue ended the quarter with approximately $708 million in unrestricted cash and short term investments, or 12% of trailing twelve month revenue. In addition, JetBlue maintains $600 million in undrawn lines of credit.

During the fourth quarter, JetBlue repaid approximately $130 million in regularly scheduled debt and capital lease obligations, bringing annual debt payments to $778 million. JetBlue anticipates paying approximately $265 million in regularly scheduled debt and capital lease obligations in 2015 and plans to continue to opportunistically prepay other debt. JetBlue expects to pay approximately $52 million in regularly scheduled debt and capital lease obligations in the first quarter of 2015.

"Today's results drive strong cash from operations allowing us to continue to strengthen our balance sheet while growing profitably," said Mark Powers, JetBlue's Chief Financial Officer. "This remains our focus and will help us generate ever increasing shareholder value."

First Quarter and Full Year Outlook

The following outlook does not include the impact of Winter Storm Juno, which caused flight cancellations this week.

For the first quarter of 2015, CASM excluding fuel and profit sharing is expected to decrease between (1.5)% and (3.5)% versus the year-ago period. Excluding fuel and profit sharing, CASM for the full year 2015 is forecasted to grow between zero and two percent year over year.

Capacity is expected to increase between 11% and 13% in the first quarter 2015 and between 7.0% and 9.0% for the full year, in line with guidance provided at JetBlue's Investor Day in November. Severe winter weather caused the cancellation of about 4,100 flights in the first quarter of 2014. This increases JetBlue's 2015 capacity growth rate compared to a scheduled versus scheduled basis by about 4% in the first quarter and 1% for the full year.

Refer to full documentation in attachments box, located at the top left, below the headline.