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tphuang
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JetBlue Q1 2020 earnings report

Thu May 07, 2020 12:19 pm

Release is here
http://otp.investis.com/clients/us/jetb ... wsid=68710
you can see 8-k here
http://otp.investis.com/generic/sec/sec ... 3&Type=PDF

adjusted pre-tax margin of -9.5%. That's about the same as NK, worse than DL/WN /AS, better than UA/AA.

Cash position was at $1.8 billion at end of Q1 and $3.1 billion at end of April.

Cash burn was $18 million a day in second half of March and under $10 million a day right now.

From end of last year to end of april.

Started with $1.328 billion in cash
-$118 million in debt payment
-$387 in capex
-$372 from opex (including cash refund and such)
+$983 in new year long loan
+$550 in credit revolver
+$150 from points sale with Barclays
+$936 from PSP
to $3.07 billion in cash

At end of Q1
$3.2 B in debt vs $2.3 B at end of last year
$1.8 B in cash vs $1.33B at end of last year

If we add $250 million debt from PSP and some unknown number from credit revolver, they are at maybe $3.4 to $3.9 billion in debt. Which is not that bad compared to their revenue in Q4 of last year. They should have room to add more debt going forward.

Compare this to their comparable airline, which is ALK (ALK is a little larger). Both airlines have pretty solid balance sheet.
$2.1 billion in cash at end of Q1
$2.9 billion in cash on May 4.
cash burn of $260 million/month in April and aiming for $200 million/month in June.
End of Q1 had cash of $2.1 billion and debt of $3.7 billion

From these numbers compared to ALK:
- jetblue's cash burn right now looks higher than it should be
- debt situation looks better
- cash position looks a little better

I'm curious to see how much lower they can bring down the cash burn. Their cash burn was a lot higher than ALK up until now. I'm not sure if that's due to the higher capex (from their cabin restyling and A321NEI deliveries) or something else. They have now stopped cabin restyling program and slowed down delivery, so maybe they can get their cash burn from let's say $9 million in May to closer to where ALK is at for June.


Interesting part on the delivery

updated delivery schedule has 1 A220 delivery this year, 7 next year and 8 the year after. So they actually sped up A220 delivery rather than deferred them.

On the other hand, A321NEO delivery went from 11 this year to 7 (already received 3, so 4 more) + 10 (5 LRs) in 2021 and 7 (all LRs) in 2022. Was supposed to take 17 in 2021 and 15 in 2022.

So basically, only 1 LR got deferred from 2021. They are still getting 12 LRs in 2021/2022. There seems to be minimal slowdown to their TATL plans.

Makes sense they are taking fewer all-core A321NEO given the lower demand environment. I'm surprised they are still taking this many aircraft in the current environment. They must be planning to long term park/return a lot of E90s and A320s for the next couple of years, because they don't have any retirement coming up.
 
tphuang
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 1:42 pm

A couple of more things on that.

They mentioned the Q2 fuel cost to be $0.76 per gallon and Q1 fuel cost is $1.85 per gallon. Compare that to Southwest's number of $1 to $1.1 per gallon in Q2 and $1.9 in Q1, one can see when prices goes down, not hedging fuel really helps. That's a small advantage airlines like AA/UA/B6/NK has against airlines that do a lot more fuel hedging like WN/AS/DL.

Also, I was wrong earlier. Their pre-tax margin ex-special items was about the same as AS also. B6/AS/NK are all in the -9.5% range.

JBLU is taking another impairment on the value of E90s and cost of transitioning.

Capacity cuts will be a little lower in June compared to May.

SAVE mentioned in their call about opportunities in constrained market. I'm guessing JBLU is looking at the same thing here in LGA and possibly DCA.
 
N757ST
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 1:44 pm

Or instead of retiring the fleet they are looking to reinforce and add to their positions in BOS and JFK where there is opportunity. Only speculation.
 
SoCalFlyer
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 2:18 pm

Is it safe to say, that they can’t wait to get rid of the E190? They added one extra A220 to take next year, I saw.
 
CaptCoolHand
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 2:54 pm

From the call they are in "talks with the lessors on the 190".
socal, I'd say that's a safe bet.
 
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NWAESC
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 3:03 pm

tphuang wrote:
That's a small advantage airlines like AA/UA/B6/NK has against airlines that do a lot more fuel hedging like WN/AS/DL.



Small point of order: I don't believe DL does any fuel hedging currently.
"Nothing ever happens here, " I said. "I just wait."
 
tphuang
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 3:15 pm

from the call
- believes they had second best balance sheet entering this (i assume after WN)
- reduced open 50% YoY by May
- capex to be be $1.3 billion lower in 2020-2022 vs original plan.
- also applied to federal loan program and eligible for $1.1 billion. Will decide later if this is needed
- end of April liquidity of $3.1 billion is 38% of their 2019 revenues
- Preferred to rely on private market through either bond sale or sales & lease-back. Looking to raise $750 million through this.
- unencumbered assets - 70 unencumbered aircraft + engine spares. Most recently updated estimates is about $2 billion in unencumbered assets (not including loyalty program)
- Getting valuation done on loyalty program
- Looking to have $3.25 billion in cash by end of Q2.
- They don’t want to raise too much debt, since that still needs to be paid off
- Cash burn from $18 million a day in 2nd half of March to $12 million a day in April, to under $10 million a day right now to $7 to 9 million in Q3.
- They said cash burn estimation is based on very conservative revenue estimate
- lower Q3 cash burn due to reduced capex, lower labor cost from (voluntary time off and others)
- emphasized that they have great balance sheet before this started. A lot of emphasis here about being able to come out stronger
- also emphasized new opportunities opening up that were not available before this
- Currently operating 100 flight a day, vs 1000 a day previously.
- LF in April was 10 to 15%. Reached low in demand in mid April. Small improvement in booking since then.
- LF picking up in Northeast to Florida. improvement in no-show rate also.
- Q2 capacity expected to be down 80%, so June capacity probably closer to down 70%
- Ground 170 aircraft (out of total 264 aircraft), expect to be smaller in 2021. Don’t expect all the parked aircraft to come back
- Won’t resume cabin restyling until demand comes back
- opportunity for offense
- For TATL, expect to be a little later, but still happening. Noted the news that slots release for BOS-LHR from this morning.
- Customer segment: they believe leisure will come back before business. They believe VFR recovers before pure leisure. They believe domestic before leisure.
- expecting L shaped recovery, with demand starting to come back in Q3.
- no restriction with point sale to barclays
- Nothing changes with their view on A220 or delivery. Taking A220 with view on future. Talking about using A220 for BOS-DCA with lower frequency than now. I’m surprised here.
- With reduced flying, fuel hedges will be on 50% of fuel need.
 
phxa340
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 3:24 pm

I know you like to compare but B6 to AS but .... according to Wall Street AS is in a much better financial position than B6 due to what you alluded to ... cash burn. AS is brilliant at controlling costs , I can’t speak to B6. Another thing you didn’t bring up is how B6 is much more exposed internationally than AS, this is going to cause more pain for B6 because domestic travel is coming back first.
 
Nicknuzzii
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 3:36 pm

B6 seems to be doing very well with cash burn...

This has nothing to do with B6’s current status but I was wonder what their TATL service will look like?
Will BOS be their largest market than JFK? Will they try FLL? (I’m not so sure the range) Anything for EWR?
 
MIflyer12
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 4:06 pm

phxa340 wrote:
I know you like to compare but B6 to AS but .... according to Wall Street AS is in a much better financial position than B6 due to what you alluded to ... cash burn.


This is ALK's statement on cash burn from an SEC filing on Tuesday:

Reduced cash burn from $400 million per month in March to $260 million in April, with the goal of reaching $200 million in June.

That's comparable to B6's objectives.
 
tphuang
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 4:51 pm

phxa340 wrote:
I know you like to compare but B6 to AS but .... according to Wall Street AS is in a much better financial position than B6 due to what you alluded to ... cash burn. AS is brilliant at controlling costs , I can’t speak to B6. Another thing you didn’t bring up is how B6 is much more exposed internationally than AS, this is going to cause more pain for B6 because domestic travel is coming back first.


Actually, you totally got it wrong. I listed AS as a compliment for the airline. As I said in the ALK earning thread, what AS has done with cutting their cash burn is quite impressive. I consider them to be the golden standard among US airlines based on the earnings results we've seen. AS is also a good comp for B6 because it's the closest in size.

So I think AS is a good example of how low an airline like B6 can lower their cash burn in a 10% revenue environment. AS is ahead of B6 in cash burn based on the numbers provided. I'm not sure if that's because B6 was still spending money on NEO deliveries and cabin refresh earlier or something else. Looks like $7 million a day is the lowest B6 can lower their burn rate until demand comes back or possible furloughs after Sep 30.

Based on the current burn rate (let's say $9 million a day for May/June), $7 million a day on the low end for Q3 and expected cash at end of Q2 ($3.25 billion) and their debt load, they are in a pretty good position. That's why you are seeing the stock prices go up today whereas SAVE is down sharply (due to $4 million a day cash burn on the low end, higher debt load and lower cash position).

They are going to come out of this in comparable position to WN/AS in terms of debt load. That's a good position to be.
 
hiflyeras
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 4:58 pm

tphuang wrote:
They are going to come out of this in comparable position to WN/AS in terms of debt load. That's a good position to be.


AS, B6 and WN are the survivors...merge forces and take over the US airline industry! Wouldn't that be something? ;).
 
Pi7472000
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 5:54 pm

hiflyeras wrote:
tphuang wrote:
They are going to come out of this in comparable position to WN/AS in terms of debt load. That's a good position to be.


AS, B6 and WN are the survivors...merge forces and take over the US airline industry! Wouldn't that be something? ;).



That would be awful for customer service and consumer!!
 
ScottB
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 6:35 pm

Pi7472000 wrote:
That would be awful for customer service and consumer!!


It wouldn't be good from a price/competition standpoint, but WN, AS, and B6 generally rank quite well for customer service, actually.
 
winginit
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 9:18 pm

tphuang wrote:
That's a small advantage airlines like AA/UA/B6/NK has against airlines that do a lot more fuel hedging like WN/AS/DL.


DL does not engage in any fuel hedging at present.
 
hiflyeras
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Re: JetBlue Q1 2020 earnings report

Thu May 07, 2020 9:24 pm

Pi7472000 wrote:
That would be awful for customer service and consumer!!


It was said in jest...hoping it never happens. Pretty much every airline (except maybe poor AZ) has their fans. People on a.net seem to always be rooting for consolidation but that'd be the worst thing that could happen for consumers.
 
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PacoMartin
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 10:58 am

hiflyeras wrote:
AS, B6 and WN are the survivors...merge forces and take over the US airline industry! Wouldn't that be something? ;).


In a world where flying is reduced by a third, the most likely scenario is that AA goes out of business since it consistently reports the weakest financial performance. Without AA, UA would be free to build ORD into a rival to ATL.

Alaska would probably make a bid to be dominant in Phoenix and JetBlue would make a bid for Miami. With it's A321XLR it could serve all of Latin America.

DFW is only 224 miles from IAH so it is unlikely that UAL would try to expand there.
DFW - ATL/SLC/DTW 731/989/986 miles so it is an open question if Delta would make a bid to become dominant airline.

I have no idea what would happen to CLT.

By passengers
23.4% American Airlines
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17.7% Southwest Airlines
17.7% United Airlines
5.1% Alaska Airlines
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1.6% Allegiant Air
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100%
 
flyby519
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 11:58 am

AA go out of business?!?! No way that’s happening. Bankruptcy maybe
 
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Polot
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 12:35 pm

PacoMartin wrote:
Without AA, UA would be free to build ORD into a rival to ATL.

Huh? Have you looked at a map and seen where ORD and ATL are? They target completely different traffic flows.

If AA was gone (not going to happen, but playing along) you will see a mad dash from airlines towards CLT and DFW (DL would love to have DFW).
 
CobaltScar
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 2:45 pm

PacoMartin wrote:
hiflyeras wrote:
AS, B6 and WN are the survivors...merge forces and take over the US airline industry! Wouldn't that be something? ;).


JetBlue would make a bid for Miami. With it's A321XLR it could serve all of Latin America.

100%


If we are talking fantasy scenarios, its United that would drop everything and send everything it could to Miami to finally secure a proper SE hub.

B6 would instead rush to fill the void AA leaves in BOS and JFK.
 
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STT757
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 3:16 pm

AA is not going anywhere, even if they declare bankruptcy it doesn't mean they're going anywhere. United was in bankruptcy for four years before exiting in 2006. I do expect them to look different, don't believe the no hub closure comments. CLT, MIA, DFW, DCA and PHL are safe. Anything else will have to earn it's keep, local state incentives etc..
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lightsaber
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 4:01 pm

JetBlue is doing well. I just wish they were better positioned to do LGB or LAX to TPA, what will be my most common flight for the next few years.

CaptCoolHand wrote:
From the call they are in "talks with the lessors on the 190".
socal, I'd say that's a safe bet.

OMG. I'm surprised it isn't "here you go!"

I'm surprised A320s haven't been returned.

Lightsaber
Winter is coming.
 
fcogafa
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 4:18 pm

There will be a 'Timing Impact' to the London flights

https://www.flightglobal.com/airlines/j ... 89.article
 
JoseSalazar
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 5:02 pm

fcogafa wrote:
There will be a 'Timing Impact' to the London flights

https://www.flightglobal.com/airlines/j ... 89.article

I think it was already discussed in this thread or another, but I think the real story is they are still taking delivery of 5 A321LRs next year. So the previously anticipated launch timeline was April-May 2021...if they are still getting 5 LRs next year, it seems it will be at most a 5-6 month delay.
 
santi319
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 5:04 pm

So London is not imminent anymore?
 
N757ST
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 5:10 pm

santi319 wrote:
So London is not imminent anymore?


It sounds like sometime in 2021.
 
tphuang
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 5:41 pm

santi319 wrote:
So London is not imminent anymore?

what does it tell you that they deferred 13 A321NEO from 2021 to 2022, but only 1 LR? If anything, London is getting higher prioritiy from this.

JetBlue is getting opportunity of its life time to go into london with weakened legacies, slots available and consumers looking for low fare alternatives.

Have fun at spirit. Half the daily cash burn of JetBlue and 1/3 the available cash flow.

fcogafa wrote:
There will be a 'Timing Impact' to the London flights

https://www.flightglobal.com/airlines/j ... 89.article

originally, they were probably planning April? That's assuming they get the first LR early in the year. Now, even if they moved all the LR deliveries to back half the year, they should still be able to launch by Q4. Frankly, no reason to launch any earlier than that given where the TATL demand is likely to be.

lightsaber wrote:
JetBlue is doing well. I just wish they were better positioned to do LGB or LAX to TPA, what will be my most common flight for the next few years.

CaptCoolHand wrote:
From the call they are in "talks with the lessors on the 190".
socal, I'd say that's a safe bet.

OMG. I'm surprised it isn't "here you go!"

I'm surprised A320s haven't been returned.

Lightsaber


who knows, maybe lessors will lower leasing terms to practically nothing and they keep 190 around until they have enough A220. Will demand where they are, E90 on the short haul stuff gives the lowest trip cost.

I still think they need something with fewer seats than 140.
 
OB1504
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 6:07 pm

ScottB wrote:
Pi7472000 wrote:
That would be awful for customer service and consumer!!


It wouldn't be good from a price/competition standpoint, but WN, AS, and B6 generally rank quite well for customer service, actually.


WN has an extensive enough network to survive as a standalone but I suppose that if airlines absolutely had to start merging again, AS and B6 have the most complimentary networks, albeit ones with a gaping hole in the middle of the country.

flyby519 wrote:
AA go out of business?!?! No way that’s happening. Bankruptcy maybe


That's what people said in 1990 about Eastern and Pan Am.

That being said, I do agree it's unlikely. The current government seemingly prioritizes the economy above everything else so I doubt they would let the world's biggest airline and a major employer go out of business.

PacoMartin wrote:
Alaska would probably make a bid to be dominant in Phoenix and JetBlue would make a bid for Miami. With it's A321XLR it could serve all of Latin America.


They could also start nonstop service to Chapter 11 if they tried that. Why would they abruptly want to go up directly against AA at MIA when they have a good thing going at FLL? FLL is only 20 miles north of MIA so an A321XLR can pretty much serve any city from FLL that it can from MIA.
 
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STT757
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 6:19 pm

OB1504 wrote:
ScottB wrote:
Pi7472000 wrote:
That would be awful for customer service and consumer!!


It wouldn't be good from a price/competition standpoint, but WN, AS, and B6 generally rank quite well for customer service, actually.


WN has an extensive enough network to survive as a standalone but I suppose that if airlines absolutely had to start merging again, AS and B6 have the most complimentary networks, albeit ones with a gaping hole in the middle of the country.

flyby519 wrote:
AA go out of business?!?! No way that’s happening. Bankruptcy maybe


That's what people said in 1990 about Eastern and Pan Am.

That being said, I do agree it's unlikely. The current government seemingly prioritizes the economy above everything else so I doubt they would let the world's biggest airline and a major employer go out of business.

PacoMartin wrote:
Alaska would probably make a bid to be dominant in Phoenix and JetBlue would make a bid for Miami. With it's A321XLR it could serve all of Latin America.


They could also start nonstop service to Chapter 11 if they tried that. Why would they abruptly want to go up directly against AA at MIA when they have a good thing going at FLL? FLL is only 20 miles north of MIA so an A321XLR can pretty much serve any city from FLL that it can from MIA.


You cannot use Eastern and Pan Am as examples, much different circumstances. Eastern had been pushed into bankruptcy by a strike by their machinists, pilots and flight attendants. The airline literally was shut down in March 1989 because they had no employees to operate their flights. They had to rebuilt their operations with new employees which took until June of 1989. Later on during their bankruptcy the company was separated from Texas Air at which Eastern's unions dropped the strike but it was too late to save the company. They shut down as hostilities began with Desert Storm in January 1991, people stopped flying due to fear terrorism. They were already in bankruptcy before the crisis hit.

Pan Am was a zombie company since the 1970s, by the Mid-'80s they were selling off assets to try to prolong their survival. Pacific operation to United, Heathrow to United, Kennedy trans-Atlantic, Frankfurt and Shuttle to Delta. They succumbed to their recession that followed the Gulf War, a recession so severe it swept President George H.W. Bush who had a 89% approval rating in 1991 out of office in the election of 1992.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
F9Animal
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Re: JetBlue Q1 2020 earnings report

Fri May 08, 2020 10:48 pm

B6 survived 9/11, and I honestly thought they had zero chance since they were still just born at that point. Now their main hub is pretty much ground zero for the virus. I do think B6 will pull through this. Hoping for brighter days soon for the entire industry.
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