Document
false0001158463 0001158463 2020-05-07 2020-05-07
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 7, 2020
jetblue-logob91.jpg
JETBLUE AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
000-49728
87-0617894
(State or other jurisdiction of incorporation)
 (Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
 
27-01 Queens Plaza North
Long Island City
New York
11101
(Address of principal executive offices) 
 (Zip Code)
(718) 286-7900
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.01 par value
JBLU
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 Results of Operations and Financial Condition.
On May 7, 2020 we issued a press release announcing our financial results for the first quarter ended March 31, 2020. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference.
The information included under Item 2.02 of this report (including the exhibits) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 7.01 Regulation FD Disclosure.
On May 7, 2020 we provided a presentation for investors containing information relating to our financial outlook for the second quarter ending June 30, 2020 and full year 2020, and other information regarding our business. The presentation is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.
The information included under Item 7.01 of this report (including the exhibits) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
 
 
 
 
Exhibit
Number
  
Description
99.1
  
99.2
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
JETBLUE AIRWAYS CORPORATION
 
 
 
(Registrant)
 
 
 
 
Date:
May 7, 2020
By:
/s/ Alexander Chatkewitz
 
 
 
Vice President, Controller, and Chief Accounting Officer
(Principal Accounting Officer)



jetblue-logob91.jpg     Earnings Release




JETBLUE ANNOUNCES FIRST QUARTER 2020 RESULTS


NEW YORK (May 7, 2020) -- JetBlue Airways Corporation (NASDAQ: JBLU) today reported its results for the first quarter 2020:

•
Reported GAAP loss per share of ($0.97) in the first quarter of 2020 compared to a diluted earnings per share of $0.14 in the first quarter of 2019. Adjusted loss per share was $0.42(1) in the first quarter of 2020 versus adjusted diluted earnings per share of $0.16(1) in the first quarter of 2019.  Note A to this earnings release includes the GAAP to Non-GAAP reconciliation between reported and adjusted diluted earnings per share.

•
GAAP pre-tax loss of ($354) million in the first quarter of 2020, compared to a pre-tax income of $58 million in the first quarter of 2019. Excluding the one-time items, adjusted pre-tax loss of ($152) million(1), versus adjusted pre-tax income of $70 million(1) in the first quarter of 2019.

•
GAAP pre-tax margin of (22.3%) in the first quarter of 2020, down 25.4 percentage points from a pre-tax margin of 3.1% in the first quarter of 2019 due to the impact of COVID-19. Adjusted pre-tax margin of (9.5%)(1), a decline of 13.2 percentage points year over year from adjusted pre-tax margin of 3.7%(1), exclusive of the one-time costs.


Operational Highlights from the First Quarter

•
First quarter 2020 revenue declined 15.1% year over year as a result of a 52% decline in March revenue due to the impact of COVID-19, resulting in both lower demand volumes and a very challenging fare environment following a very solid start to the year.

•
Reduced March capacity by 19% year over year and took aggressive action to reduce second quarter 2020 schedules to mitigate cash burn. Our ability to adjust March schedules was limited to close-in cancellations.

•
Operating expenses increased 7.1% year over year. Excluding special items, adjusted operating expenses(1) declined 3.6% year over year. We successfully removed ~$150 million from our planned cost base in the first quarter driven by variable cost reductions, mainly through capacity cuts in March and fixed costs reductions achieved by adjusting work schedules where possible and eliminating some discretionary spend.

•
Increased cash, cash equivalents and short-term investments from $1.3 billion at the end of 2019 to approximately $1.8 billion at end of first quarter of 2020. We further increased our liquidity to $3.1 billion as of April 30, 2020, resulting from additional financing transactions and full disbursement from the CARES Act Payroll Support Program of $936 million.


Balance Sheet and Liquidity

•
JetBlue ended the first quarter with approximately $1.8 billion in unrestricted cash, cash equivalents, and short-term investments, or 22.2% of 2019 revenue.




- 1 -



•
JetBlue repaid $102 million in regularly scheduled debt and finance lease obligations during the first quarter of 2020.

•
JetBlue has taken the following measures to-date to bolster liquidity:

◦
Raised $1.0 billion under a secured, 364-day term loan.

◦
Drew down $550 million under the existing credit revolver.

◦
Negotiated with business partners to extend payment terms and reduce expenses.

◦
Revised order book with Airbus, resulting in a $1.1 billion reduction in aircraft capital expenditures through 2022.

◦
Deferred plans to take delivery of four leased aircraft announced in January.

◦
Paused A320 cabin restyling program, having completed over half of our fleet.

◦
Suspended all non-essential projects across the organization.

◦
Ceased share repurchases until further notice.

•
Resulting from the actions taken, JetBlue expects to reduce its daily cash burn from an average of $18 million in the second half of March to just below $10 million in May, excluding the CARES Act support of approximately $5 million per day through the end of the third quarter.


CARES Act

•
JetBlue reached an agreement with the Department of Treasury to receive $936 million under the Payroll Support Program of the CARES Act. The payment consists of $685 million in grants and $251 million in an unsecured term loan.

•
In consideration for the payment, we issued approximately 2.6 million warrants to the Department of Treasury.

•
In late April, JetBlue applied for the Loan Program of the CARES Act, which would provide up to $1.14 billion in additional liquidity, if needed.

Fuel Expense and Hedging

The realized fuel price in the quarter was $1.86 per gallon, a 9.3% decline versus first quarter 2019 realized fuel price of $2.05.

The decline in average fuel prices reduced the Company's first quarter 2020 fuel expense by approximately $46 million versus our January 2020 guidance. The reduction in fuel consumption driven by capacity cuts reduced the Company’s first quarter 2020 fuel expense by approximately $40 million versus our January 2020 guidance.

JetBlue has entered into forward fuel derivative contracts to hedge its fuel consumption for the second, third, and fourth quarter of 2020.  Based on the forward curve as of April 24th, JetBlue expects an average all-in price per gallon of fuel of $0.76 in the second quarter of 2020.

- 2 -




Protecting our Stakeholders

“I could not be prouder of our JetBlue family - not just over the past two decades - but for their service to each other, our customers, and our communities as they provide an essential service during the coronavirus pandemic,” said Robin Hayes, JetBlue’s Chief Executive Officer.

“We entered this crisis with the second strongest balance sheet among U.S. airlines. In the past two months, we have moved quickly to both protect and strengthen our liquidity position. Since the beginning of March, we have made decisive changes to our growth plan to minimize cash burn, including deep capacity cuts to our schedules. We have now reduced our CAPEX plan by $1.3 billion between now and the end of 2022, and by the end of May, we anticipate we will have lowered our operating expenses by approximately 50% year over year.

As we move towards recovery, we have three priorities. The first is the immediate need to protect the safety of our Crewmembers and Customers. The second is to minimize cash burn. The third priority is to set JetBlue up for future success by restoring Customer confidence, by returning to cash generation, and by rebuilding our margins and balance sheet.

We believe that, not only will we get through this crisis, but we will ultimately emerge as a stronger JetBlue. JetBlue has been a force for good for our industry, and we have been resilient through crises for over 20 years.”
 

Action Plan, Revenue and Capacity

“Our first priority since the onset of the pandemic has been to ensure the safety of our customers and crewmembers. We have responded quickly to changing conditions, and overseen the rapid evolution of policies and programs designed to address the threats to crewmember and customer safety posed by this virus,” said Joanna Geraghty, JetBlue’s President and Chief Operating Officer.

“Although the overall number of bookings remained extremely limited, we believe that we reached the bottom in terms of demand around mid-April, and expect to have a better sense of third and the fourth quarter of 2020 by early summer.

Our March capacity declined 19% year over year, as a result of scheduled reductions and close-in cancellations. Our working assumption for the second quarter is for capacity to be down about 80% compared to our original plan.

While much of our team is focused on navigating the near-term challenges, we are focused on how the business will look for customers and crewmembers as we transition to recovery. We believe our inherent strengths as a trusted brand with an unparalleled culture and superior product will serve us well, as customers evaluate their air travel options. We plan to continue to be thoughtful as we adapt to changing customer needs.”


Cost Performance and Outlook

“Thanks to our continued focus in managing JetBlue to investment grade metrics, building a strong balance sheet, improving our cost structure and strengthening our margins, we believe we are in the best position of any time in our 20-year history to effectively weather this crisis and emerge even stronger,” said Steve Priest, JetBlue’s Chief Financial Officer.


- 3 -



“From a financial perspective, we are focusing our efforts over the coming months on three key areas: preserving our liquidity, reducing operating expenses, and managing our capital expenditures.

We started the year with $1.3 billion in cash, cash equivalents and short-term investments. By the close of April, our liquidity position reached $3.1 billion, or ~38% of our 2019 revenue, including the payroll support through the CARES act.

In addition to successfully raising liquidity in a short period, we have acted with urgency to minimize our cash burn, reducing our expenses and re-working our plan for capital expenditures. We lowered our cash burn from an average of $18 million per day during the second half of March, to just under $10 million per day by May, excluding proceeds from the Payroll Support Program. We are leaving no stone unturned to protect the financial security of JetBlue.”


Earnings Call Details
JetBlue will conduct a conference call to discuss its quarterly earnings today, May 7, 2020 at 10:00 a.m. Eastern Time. A live broadcast of the conference call will also be available via the internet at http://investor.jetblue.com.

For further details see the First Quarter 2020 Earnings Presentation available via the internet at http://investor.jetblue.com.


About JetBlue
JetBlue is New York's Hometown Airline®, and a leading carrier in Boston, Fort Lauderdale-Hollywood, Los Angeles (Long Beach), Orlando, and San Juan. JetBlue carries more than 42 million customers a year to nearly 100 cities in the U.S., Caribbean, and Latin America with an average of more than 1,000 daily flights. For more information, please visit jetblue.com.

Notes
(1)
Note A provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.



Forward Looking Statements
Statements in this Earnings Release (or otherwise made by JetBlue or on JetBlue’s behalf) contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which represent our management’s beliefs and assumptions concerning future events. When used in this document and in documents incorporated herein by reference, the words “expects,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, our extremely competitive industry; volatility in financial and credit markets which could affect our ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances; our significant fixed obligations and substantial indebtedness; volatility in fuel prices, maintenance costs and interest rates; our reliance on high daily aircraft utilization; our ability to implement our growth strategy; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on a limited number of suppliers, including for aircraft, aircraft engines and parts and vulnerability to delays by those suppliers; our dependence on the New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology; our being subject to potential unionization, work stoppages,

- 4 -



slowdowns or increased labor costs; our presence in some international emerging markets that may experience political or economic instability or may subject us to legal risk; reputational and business risk from information security breaches or cyber-attacks; changes in or additional domestic or foreign government regulation, including new or increased tariffs; changes in our industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; the impact of infectious diseases that affects demand for air travel or travel behavior, such as the ongoing impact of the coronavirus (“COVID-19”); adverse weather conditions or natural disasters; and external geopolitical events and conditions. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change prior to the end of each quarter or year.

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Further information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to, the Company's 2019 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. In light of these risks and uncertainties, the forward-looking events discussed in this Earnings Release might not occur. Our forward-looking statements speak only as of the date of this Earnings Release. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

This Earnings Release also includes certain “non-GAAP financial measures” as defined under the Exchange Act and in accordance with Regulation G. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP within this release.



- 5 -



JETBLUE AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31,
 
Percent
 
 
2020
 
2019
 
Change
 
OPERATING REVENUES
 
 
 
 
 
 
Passenger
$
1,511

 
$
1,802

 
(16.1
)
 
Other
77

 
69

 
10.7

 
Total operating revenues
1,588

 
1,871

 
(15.1
)
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
Aircraft fuel and related taxes
365

 
437

 
(16.4
)
 
Salaries, wages and benefits
601

 
575

 
4.5

 
Landing fees and other rents
112

 
115

 
(3.3
)
 
Depreciation and amortization
139

 
124

 
12.0

 
Aircraft rent
21

 
25

 
(14.4
)
 
Sales and marketing
53

 
66

 
(20.2
)
 
Maintenance, materials and repairs
160

 
155

 
3.1

 
Other operating expenses
269

 
286

 
(5.8
)
 
Special items
202

 
12

 
1,642.9

 
Total operating expenses
1,922

 
1,795

 
7.1

 
 
 
 
 
 
 
 
OPERATING (LOSS) INCOME
(334
)
 
76

 
(540.2
)
 
 
 
 
 
 
 
 
Operating margin
(21.0
)%
 
4.1
%
 
(25.1
)
pts.
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
 
 
 
 
 
 
Interest expense
(25
)
 
(20
)
 
26.8

 
Capitalized interest
3

 
3

 
21.1

 
Interest income and other
2

 
(1
)
 
310.3

 
Total other income (expense)
(20
)
 
(18
)
 
10.9

 
 
 
 
 
 
 
 
(LOSS) INCOME BEFORE INCOME TAXES
(354
)
 
58

 
(710.8
)
 
 
 
 
 
 
 
 
Pre-tax margin
(22.3
)%
 
3.1
%
 
(25.4
)
pts.
 
 
 
 
 
 
 
Income tax (benefit) expense
(86
)
 
16

 
(625.6
)
 
 
 
 
 
 
 
 
NET (LOSS) INCOME
$
(268
)
 
$
42

 
(744.4
)
 
 
 
 
 
 
 
 
(LOSS) EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
Basic
$
(0.97
)
 
$
0.14

 
 
 
Diluted
$
(0.97
)
 
$
0.14

 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
Basic
277.2

 
305.3

 
 
 
Diluted
277.2

 
306.9

 
 
 


- 6 -




JETBLUE AIRWAYS CORPORATION
COMPARATIVE OPERATING STATISTICS
(unaudited)
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31,
 
Percent
 
 
2020
 
2019
 
Change
 
Revenue passengers (thousands)
8,150

 
10,165

 
(19.8
)
 
Revenue passenger miles (millions)
10,392

 
12,734

 
(18.4
)
 
Available seat miles (ASMs) (millions)
14,891

 
15,437

 
(3.5
)
 
Load factor
69.8
%
 
82.5
%
 
(12.7
)
pts.
Aircraft utilization (hours per day)
10.6

 
11.8

 
(10.2
)
 
 
 
 
 
 
 
 
Average fare
$
185.44

 
$
177.24

 
4.6

 
Yield per passenger mile (cents)
14.54

 
14.15

 
2.8

 
Passenger revenue per ASM (cents)
10.15

 
11.67

 
(13.0
)
 
Revenue per ASM (cents)
10.67

 
12.12

 
(12.0
)
 
Operating expense per ASM (cents)
12.91

 
11.63

 
11.0

 
Operating expense per ASM, excluding fuel (cents)(1)
9.01

 
8.66

 
4.0

 
 
 
 
 
 
 
 
Departures
83,295

 
89,236

 
(6.7
)
 
Average stage length (miles)
1,160

 
1,153

 
0.6

 
Average number of operating aircraft during period
259.1

 
252.9

 
2.5

 
Average fuel cost per gallon, including fuel taxes
$
1.86

 
$
2.05

 
(9.3
)
 
Fuel gallons consumed (millions)
197

 
213

 
(7.8
)
 
Average number of full-time equivalent crewmembers
18,698

 
18,292

 
 
 
 
 
 
 
 
 
 
(1) Refer to Note A at the end of our Earnings Release for more information on this non-GAAP financial measure. Operating expense per available seat mile, excluding fuel (“CASM Ex-Fuel”) excludes fuel and related taxes, other non-airline operating expenses, and special items.





- 7 -



JETBLUE AIRWAYS CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET DATA
(in millions)
 
March 31,
 
December 31,
 
2020
 
2019
 
(unaudited)
 
 
Cash and cash equivalents
$
1,618

 
$
959

Total investment securities
184

 
372

Total assets
12,340

 
11,918

Total debt
3,217

 
2,334

Stockholders' equity
4,366

 
4,799


- 8 -



Note A - Non-GAAP Financial Measures

JetBlue sometimes uses non-GAAP financial measures in this press release. Non-GAAP financial measures are financial measures that are derived from the consolidated financial statements, but that are not presented in accordance with generally accepted accounting principles in the United States, or GAAP. We believe these non-GAAP financial measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. The information below provides an explanation of each non-GAAP financial measure and shows a reconciliation of non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures.



- 9 -



Operating expense per available seat mile, excluding fuel and related taxes, other non-airline operating expenses, and special items (“CASM Ex-Fuel”)

Operating expenses per available seat mile, or CASM, is a common metric used in the airline industry. We exclude aircraft fuel and related taxes, operating expenses related to other non-airline businesses, such as JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure. For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. We believe that CASM ex-fuel is useful for investors because it provides investors the ability to measure financial performance excluding items beyond our control, such as fuel costs, which are subject to many economic and political factors, or not related to the generation of an available seat mile, such as operating expense related to certain non-airline businesses. We believe this non-GAAP measure is more indicative of our ability to manage airline costs and is more comparable to measures reported by other major airlines.

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
($ in millions, per ASM data in cents)
(unaudited)
 
 
 
 
 
 
 
 
 
 Three Months Ended
 
March 31,
 
2020
 
2019
 
$
 
per ASM
 
$
 
per ASM
 
 
 
 
 
 
 
 
Total operating expenses
$
1,922

 
$
12.91

 
$
1,795

 
$
11.63

Less:
 
 
 
 
 
 
 
Aircraft fuel and related taxes
365

 
2.45

 
437

 
2.83

Other non-airline expenses
14

 
0.09

 
9

 
0.06

Special items
202

 
1.36

 
12

 
0.08

Operating expenses, excluding fuel
$
1,341

 
$
9.01

 
$
1,337

 
$
8.66




- 10 -



Operating Expense, Income before Taxes, Net Income and Earnings per Share, excluding special items

Our GAAP results in the applicable periods were impacted by charges that are deemed special items. We believe the impacts of these items make our results difficult to compare to prior periods as well as future periods and guidance. For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. We believe the impacts of these items distort our overall trends and that our metrics and results are enhanced with the presentation of our results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the non-GAAP amounts excluding the impacts of these items.
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS
(in millions, except per share amounts)
(unaudited)
 
 
 
 
 
 Three Months Ended
 
March 31,
 
2020
 
2019
Total operating revenues
$
1,588

 
$
1,871

 
 
 
 
Total operating expenses
$
1,922

 
$
1,795

Less: Special items
202

 
12

Total operating expenses excluding special items
$
1,720

 
$
1,783

 
 
 
 
Operating (loss) income
$
(334
)
 
$
76

Add back: Special items
202

 
12

Operating (loss) income excluding special items
$
(132
)
 
$
88

 
 
 
 
Operating margin excluding special items
(8.3
)%
 
4.7
%
 
 
 
 
(Loss) income before income taxes
$
(354
)
 
$
58

Add back: Special items
202

 
12

(Loss) income before income taxes excluding special items
$
(152
)
 
$
70

 
 
 
 
Pre-tax margin excluding special items
(9.5
)%
 
3.7
%
 
 
 
 
Net (loss) income
$
(268
)
 
$
42

Add back: Special items
202

 
12

Less: Income tax benefit related to special items
50

 
3

Net (loss) income excluding special items
$
(116
)
 
$
51

 
 
 
 
(Loss) Earnings Per Common Share:
 
 
 
Basic
$
(0.97
)
 
$
0.14

Add back: Special items, net of tax
0.55

 
0.02

Basic excluding special items
$
(0.42
)
 
$
0.16

 
 
 
 
Diluted
$
(0.97
)
 
$
0.14

Add back: Special items, net of tax
0.55

 
0.02

Diluted excluding special items
$
(0.42
)
 
$
0.16






- 11 -






CONTACTS
JetBlue Investor Relations
Tel: +1 718 709 2202
[email protected]

JetBlue Corporate Communications
Tel: +1 718 709 3089
[email protected]

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1Q 2020 EARNINGS PRESENTATION MAY 7, 2020 1

 
SAFE HARBOR Statements in this presentation (or otherwise made by JetBlue or on JetBlue’s behalf) contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which represent our management’s beliefs and assumptions concerning future events. When used in this document and in documents incorporated herein by reference, the words “expects,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, our extremely competitive industry; volatility in financial and credit markets which could affect our ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances; our significant fixed obligations and substantial indebtedness; volatility in fuel prices, maintenance costs and interest rates; our reliance on high daily aircraft utilization; our ability to implement our growth strategy; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on a limited number of suppliers, including for aircraft, aircraft engines and parts and vulnerability to delays by those suppliers; our dependence on the New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology; our being subject to potential unionization, work stoppages, slowdowns or increased labor costs; our presence in some international emerging markets that may experience political or economic instability or may subject us to legal risk; reputational and business risk from information security breaches or cyber-attacks; changes in or additional domestic or foreign government regulation, including new or increased tariffs; changes in our industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; the impact of infectious diseases that affects demand for air travel or travel behavior, such as the ongoing impact of the coronavirus (“COVID-19”); adverse weather conditions or natural disasters; and external geopolitical events and conditions. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs and assumptions upon which we base our expectations may change prior to the end of each quarter or year. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Further information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to, the Company's 2019 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. In light of these risks and uncertainties, the forward-looking events discussed in this presentation might not occur. Our forward-looking statements speak only as of the date of this presentation. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise. This presentation also includes certain “non-GAAP financial measures” as defined under the Exchange Act and in accordance with Regulation G. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP within the Appendix A section of this presentation. 2

 
1Q 2020 EARNINGS UPDATE ROBIN HAYES CHIEF EXECUTIVE OFFICER 3

 
TAKING ACTIONS TO PROTECT OUR STAKEHOLDERS 1Q 2020 BALANCE SHEET 1Q 2020 EARNINGS • $1.8B of liquidity at 1Q close(1); added net ~$1.3B in April for • 1Q revenue down $283M YoY, a decline mitigated by close-in a total of ~$3.1B or 38% of 2019 revenue capacity cuts in March and a $150M reduction in OpEx vs plan • Estimate cash burn of below $10M/day(2) in May, down from • COVID-19 impact resulted in a GAAP loss per share of 97 ~$18M/day(2) average in the second half of March cents and non-GAAP loss per share of 42 cents (3) • Adjusted Debt to EBITDAR equal to 2.9x(1) (3); Adjusted Debt to Cap ratio at 44%(1) (3) 2Q 2020 PLANNING ASSUMPTIONS* OTHER LIQUIDITY ACTIONS • Expect 2Q 2020 YoY revenue down at least 90% • CARES Act Payroll Support Program payment received for $936M • Capacity cuts of at least 80% YoY and a reduction of May OpEx of ~50% YoY • Evaluating additional capital raises including secured debt and sale leasebacks • CAPEX for 2020-2022 now lower by $1.3B vs plan (1) As of March 31, 2020 *Current planning assumption as of May 7, 2020; does not (2) Excluding CARES Act Payroll Support Program payment constitute guidance (3) Refer to reconciliations of non-GAAP financial measures in Appendix A 4

 
COMMERCIAL UPDATE & OUTLOOK JOANNA GERAGHTY PRESIDENT & CHIEF OPERATING OFFICER 5

 
SIGNIFICANT REVENUE DECLINES CONTINUE INTO 2Q REVENUE YOY GROWTH Actual Estimate • Negative demand impact of COVID-19 Current planning assumption* − 1Q 2020 revenue decline, driven by significant impact of 6% 6% cancellations that outpaced new bookings during March • Early look at 2Q 2020 continues April trends -15% − Based on forward bookings and current planning assumptions, estimating revenue decline of at least -52% (90%) YoY -94% -90% Jan Feb March April 1Q 2Q* *Current planning assumption as of May 7, 2020; does not constitute guidance 6

 
TAKING CAPACITY ACTIONS IN RESPONSE TO DEMAND ASM YOY GROWTH Flown Planned • Adjusting schedules to mitigate cash losses and Current planning assumption* maintain essential travel 5% 6% − Reduced March and April schedules. Continuing to manage close-in cancels as appropriate -4% − Currently planning May and June capacity reductions of -19% at least (80%) YoY − Volatile demand trends may drive additional adjustments vs current planning assumptions, including close-in -80% cancels -85% Jan Feb March April 1Q 2Q* *Current planning assumption as of May 7, 2020; does not constitute guidance 7

 
FINANCIAL UPDATE & OUTLOOK STEVE PRIEST CHIEF FINANCIAL OFFICER 8

 
SUMMARY FINANCIALS 1Q 2020 Metric 1Q 2020 1Q 2019 Change YoY ASM (millions) 14,891 15,437 (3.5%) RASM (cents) 10.67 12.12 (12.0%) CASM (cents) 12.91 11.63 11.0% CASM ex-Fuel(1) (cents) 9.01 8.66 4.0% Fuel ($/gallon) 1.86 2.05 (9.3%) Earnings per Share (GAAP) (0.97) 0.14 Earnings per Share(1) (Non-GAAP) (0.42) 0.16 Pre-Tax Margin (GAAP) (22.3%) 3.1% (25.4 pp) Pre-Tax Margin(1) (Non-GAAP) (9.5%) 3.7% (13.2 pp) Cash Flow ($ millions) Operating 124 420 Investing (179) (169) Financing 714 (263) Cash at End of Period* 1,677 521 (1) Refer to reconciliations of non-GAAP financial measures in Appendix A *Cash, Cash Equivalents, and Restricted Cash 9

 
SUCCESSFUL LIQUIDITY PRESERVATION ACTIONS 3,070 936 550 1,328 150 118 387 983 372 YE 2019 Debt CAPEX Cash from 364 Term Barclays Credit Payroll Projected Liquidity(1) Payments Ops & Loan After Point Revolver Support Liquidity Other(2) Fees Sales Program(3) as of 4/30/20(1) (1) Cash, cash equivalents and short-term investments. April 30 estimate does not constitute guidance (2) Cash burn estimate through April 30, 2020. Cash burn includes net sales, operating cash outlays and working capital timing (Other includes a share repurchase transaction for $160M executed on February 24th prior to the COVID-19 crisis). (3) CARES Act Payroll Support Program payment received on April 23, 2020 10

 
REDUCING FIXED AND VARIABLE COST BASE YOY OPERATING EXPENSES MANAGING FIXED & VARIABLE COSTS Actual GAAP Actual Non-GAAP (1) Planned • Actions taken in 1Q 2020 16% ‒ Implemented aggressive close-in capacity Current planning assumption* 7% reductions for March and April 2% 2% 3%3% ‒ Eliminated all non-essential spend, rationalized business partner activities, adjusted maintenance -4% plan in line with reduced capacity, implemented -15% significant voluntary time-off programs and consolidated airport operations • Continuing actions in 2Q 2020 ‒ Planning OpEx reductions of ~($350M) (ex-fuel) -42% -44% and ~($810M) (all-in) YoY* Jan Feb March April 1Q 2Q* ‒ Protecting crewmembers through the CARES Act Payroll Support Program *Current planning assumption as of May 7, 2020; does not constitute guidance (1) Operating expenses excluding special items; refer to reconciliations of non-GAAP financial measures in Appendix A 11

 
REVISED ORDER BOOK TO MINIMIZE CAPITAL EXPENDITURES REVISED CAPEX FLEET* (US$ million) Actual Planned As of 12/31/2019 As of 12/31/2020* Plan as of 4Q 2019 Current Earnings Presentation Estimate* 1 1.35 – 1.55b 6 13 35 35 28 28 ~ 850 580 130 130 367 ~ 50 60 60 1Q 2Q 2020 2Q* 2020* 2019 2020* E190 A320 A321 HD A321 Mint A321neo HD A220 • Lowered CAPEX for 2020-2022 by $1.3B • Anticipate taking four A321NEOs and one A220 in 2H 2020 • Paused restyling program; deferred projects, suspended investments *Current planning assumption as of May 7, 2020; does not constitute guidance. Please refer to Appendix C for latest order book 12

 
MANAGING BALANCE SHEET TO PRESERVE LIQUIDITY LEVERAGE DEBTDEBT REPAYMENTS* REPAYMENTS* Actual Planned Adjusted Adjusted (US$ million) Debt to Cap (1) Debt to EBITDAR (1) 44% 2.9 x 34% 121 109 107 108 1.8 x Dec 31 2019 Mar 31 2020 Dec 31 2019 Mar 31 2020 1Q 2Q* 3Q* 4Q* • Raised $1B via 364-term loan in late March • Expect additional capital raises * Cash outflows related to debt repayment schedule (principal • Applied for Loan Program of the CARES Act for $1.14B as and interest) as of 3/31/2020; does not assume any future debt contingency raises and does not constitute guidance (1) Refer to reconciliations of non-GAAP financial measures in Appendix A 13

 
QUESTIONS? 14

 
APPENDIX A Non-GAAP Financial Measures JetBlue sometimes uses non-GAAP financial measures in this presentation. Non-GAAP financial measures are financial measures that are derived from the consolidated financial statements, but that are not presented in accordance with generally accepted accounting principles in the United States, or GAAP. We believe these non-GAAP financial measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. The information in Appendices A and B provides an explanation of each non- GAAP financial measure and shows a reconciliation of non-GAAP financial measures used in this presentation to the most directly comparable GAAP financial measures. 15

 
1Q 2020 FINANCIAL RESULTS US$ Millions 1Q 2020 1Q 2019 Var % Total Operating Revenues 1,588 1,871 (15.1) Aircraft fuel and related taxes 365 437 (16.4) Salaries, wages and benefits 601 575 4.5 Landing fees and other rents 112 115 (3.3) Depreciation and amortization 139 124 12.0 Aircraft rent 21 25 (14.4) Sales and marketing 53 66 (20.2) Maintenance, materials and repairs 160 155 3.1 Other operating expenses 269 286 (5.8) Special items 202 12 1,642.9 Operating (Loss) Income (334) 76 (540.2) Other Income (Expense) (20) (18) 10.9 (Loss) income before income taxes (354) 58 (710.8) Income tax (benefit) expense (86) 16 (625.6) * Refer to reconciliations of NET (LOSS) INCOME (268) 42 (744.4) non-GAAP Pre-Tax Margin (22.3%) 3.1% (25.4) pts financial (Loss) Earnings per Share (EPS) (GAAP) ($0.97) $0.14 measures in this Appendix A Adj. Pre-Tax Margin* (9.5%) 3.7% (13.2) pts Adj. (Loss) Earnings per Share (EPS)* (Non- GAAP) ($0.42) $0.16 16

 
Operating expense per available seat mile, excluding fuel and related taxes, other non-airline operating expenses, and special items (“CASM Ex-Fuel”) Operating expenses per available seat mile, or CASM, is a common metric used in the airline industry. We exclude aircraft fuel and related taxes, operating expenses related to other non-airline businesses, such as JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure. For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. We believe that CASM ex-fuel is useful for investors because it provides investors the ability to measure financial performance excluding items beyond our control, such as fuel costs, which are subject to many economic and political factors, or not related to the generation of an available seat mile, such as operating expense related to certain non-airline businesses. We believe this non-GAAPLOCATIONmeasure is more indicative of our ability to manage airline costs and is more comparable to measures reported by other major airlines. NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL ($ in millions, per ASM data in cents) (unaudited) Three Months Ended March 31, 2020 2019 $ per ASM $ per ASM Total operating expenses $ 1,922 $ 12.91 $ 1,795 $ 11.63 Less: Aircraft fuel and related taxes 365 2.45 437 2.83 Other non-airline expenses 14 0.09 9 0.06 Special items 202 1.36 12 0.08 Operating expenses, excluding fuel $ 1,341 $ 9.01 $ 1,337 $ 8.66 17

 
Operating Expense, Income before Taxes, Net Income and Earnings per Share, excluding special items Our GAAP results in the applicable periods were impacted by charges that are deemed special items. We believe the impacts of these items make our results difficult to compare to prior periods as well as future periods and guidance. For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. We believe the impacts of these items distort our overall trends and that our metrics and results are enhanced with the presentation of our results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the non-GAAP amounts excluding the impacts of these items. NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS (in millions, except per share amounts) (unaudited) Three Months Ended March 31, 2020 2019 Total operating revenues $ 1,588 $ 1,871 Total operating expenses $ 1,922 $ 1,795 Less: Special items 202 12 Total operating expenses excluding special items $ 1,720 $ 1,783 Operating (loss) income $ (334) $ 76 Add back: Special items 202 12 Operating (loss) income excluding special items $ (132) $ 88 Operating margin excluding special items -8.3% 4.7% (Loss) income before income taxes $ (354) $ 58 Add back: Special items 202 12 (Loss) income before income taxes excluding special items $ (152) $ 70 Pre-tax margin excluding special items -9.5% 3.7% Net (loss) income $ (268) $ 42 Add back: Special items 202 12 Less: Income tax benefit related to special items 50 3 Net (loss) income excluding special items $ (116) $ 51 (Loss) Earnings Per Common Share: Basic $ (0.97) $ 0.14 Add back: Special items, net of tax 0.55 0.02 Basic excluding special items $ (0.42) $ 0.16 Diluted $ (0.97) $ 0.14 Add back: Special items, net of tax 0.55 0.02 18 Diluted excluding special items $ (0.42) $ 0.16

 
Operating Expense, Income before Taxes, Net Income and Earnings per Share, excluding special items Our GAAP results in the applicable periods were impacted by charges that are deemed special items. We believe the impacts of these items make our results difficult to compare to prior periods as well as future periods and guidance. For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one- time costs related to the implementation of our pilots' collective bargaining agreement. We believe the impacts of these items distort our overall trends and that our metrics and results are enhanced with the presentation of our results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the non-GAAP amounts excluding the impacts of these items. NON-GAAP FINANCIAL MEASURE RECONCILIATION OF MONTHLY OPERATING EXPENSE EXCLUDING SPECIAL ITEMS (in millions) (unaudited) Month ended 2020 2019 January 31, February 29, March 31, January 31, February 28, March 31, Total operating expenses $ 619 $ 588 $ 715 $ 609 $ 570 $ 616 Less: Special items - - 202 1 1 10 Operating expenses, excluding special items $ 619 $ 588 $ 513 $ 608 $ 569 $ 606 19

 
APPENDIX B: CALCULATION OF LEVERAGE RATIOS Adjusted Debt to Capitalization Ratio Adjusted debt to capitalization ratio is a non-GAAP financial metric which we believe is helpful to investors in assessing the company's overall debt profile. Adjusted debt includes aircraft operating lease liabilities, in addition to total debt and finance leases, to present estimated financial obligations. Adjusted capitalization represents total equity plus adjusted debt. LOCATION NON-GAAP FINANCIAL MEASURE ADJUSTED DEBT TO CAPITALIZATION RATIO (in millions) (unaudited) March 31, 2020 December 31, 2019 Long-term debt and finance leases $ 1,908 $ 1,990 Current maturities of long-term debt and finance leases 326 344 Short-term borrowings 983 - Operating lease liabilities - aircraft 174 183 Adjusted debt 3,391 2,517 Long-term debt and finance leases 1,908 1,990 Current maturities of long-term debt and finance leases 326 344 Short-term borrowings 983 - Operating lease liabilities - aircraft 174 183 Stockholders' equity 4,366 4,799 Adjusted capitalization 7,757 7,316 Adjusted debt to capitalization ratio 44% 34% 20

 
Adjusted Debt to Earnings Before Interest, Taxes, Depreciation, Amortization and Rent ("EBITDAR") Ratio Adjusted debt to earnings before interest, taxes, depreciation, amortization and rent ratio, or EBITDAR, is a non-GAAP financial metric which we believe is helpful to investors in assessing the company's overall debt profile. Adjusted debt includes aircraft operating lease liabilities, in addition to total debt and finance leases, to present estimated financial obligations. EBITDAR is calculated by adjusting GAAP operating income (trailing twelve months) for depreciation and amortization, special items, and current aircraft operating lease liabilities. DOCUMENT LOCATION NON-GAAP FINANCIAL MEASURE ADJUSTED DEBT TO EBITDAR RATIO (in millions) (unaudited) Trailing Twelve Months Trailing Twelve Months March 31, 2020 December 31, 2019 Long-term debt and finance leases $ 1,908 $ 1,990 Current maturities of long-term debt and finance leases 326 344 Short-term borrowings 983 - Operating lease liabilities - aircraft 174 183 Adjusted debt 3,391 2,517 Operating income 390 800 Depreciation and amortization 540 525 Special items(1) 205 14 Current operating lease liabilities - aircraft 47 48 EBITDAR(1) 1,182 1,387 Adjusted debt to EBITDAR ratio(1) 2.9x 1.8x (1) For the first quarter of 2020, special items include the impairment charge of our Embraer E190 fleet resulting from the decline in demand caused by the coronavirus ("COVID-19") pandemic. Special items for the first quarter of 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement. 21

 
APPENDIX C: CONTRACTUAL ORDER BOOK A220 A321NEO A321NEO LR Total 2020* 1 7 8 2021 7 5 5 17 2022 8 7 15 Total 16 12 12 40 Delivery schedule, as of May 7, 2020 *Includes 3 deliveries received in 1Q 2020 22

 
APPENDIX D: RELEVANT JETBLUE MATERIALS www.investor.jetblue.com/investor-relations DOCUMENT LOCATION Investor Presentations http://blueir.investproductions.com/investor-relations/events-and-presentations/presentations Earnings Releases http://blueir.investproductions.com/investor-relations/financial-information/quarterly-results Annual Reports http://blueir.investproductions.com/investor-relations/financial-information/reports/annual-reports SEC Filings http://blueir.investproductions.com/investor-relations/financial-information/sec-filings Proxy Statements http://blueir.investproductions.com/investor-relations/financial-information/reports/proxy-statements Investor Updates http://blueir.investproductions.com/investor-relations/financial-information/investor-updates Traffic Reports http://blueir.investproductions.com/investor-relations/financial-information/traffic-releases ESG Reports* http://blueir.investproductions.com/investor-relations/financial-information/reports/sustainable-accounting-standards-board-reports * Environmental, Social, and Governance Reports 23