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JammyBritton27
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JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 12:08 pm

JetBlue Airways reported a loss for its second quarter of 2020, both on a GAAP and non-GAAP basis. Revenue plunged 90% annually to $215 million. Both revenue and the non-GAAP loss of $2.02 per share, failed to meet the market’s view.

EARNINGS INFOGRAPHIC: https://news.alphastreet.com/jetblue-ai ... n-q2-2020/

“As we move into recovery, we have laid out a three-step framework to set JetBlue up for success and emerge stronger. The first is to reduce our cash burn. The second step is to rebuild our margins. The third and last step is to repair our balance sheet,” said CEO Robin Hayes.

OFFICIAL PR: http://blueir.investproductions.com/inv ... 28-07-2020
 
zuckie13
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 12:57 pm

They were always going to be among the worst percentage wise. So much concentration in the Northeast (New York and Boston) where it got the worst during this quarter.
 
Cointrin330
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 3:11 pm

Not at all surprising, given the industry's trend and B6's extensive concentration in markets that really took a beating in Q2, notably JFK, LGA, EWR, BOS. The guidance on Q3 is telling. FLL and MCO will be hard hit by COVID19 and the quarantine requirements for those traveling from Florida, broadly. Rebuilding margins will be the biggest challenge for B6 given the hobbled pricing power all the airlines have, and B6 is no exception given its relatively modest corporate travel contracts.
 
tphuang
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 3:27 pm

From earninings call
- continue to expect $7 to 9 million cash burn/day in Q3. Was $7.7 million/day in June. $9.5 million/day in Q2
- Ended Q2 with $3.434 billion in cash. Eligible for $1.14 billion in CARES loan. Still have over $1 billion in unencumbered assets to get more financing and can do more sales + leaseback
- pre-COVID, 70% cost of variable. By Q4, 60% cost are variable. Looking to reduce fixed cost.
- About $130 million in debt/principal payments per quarter. 55% debt to cap ratio by end of Q2 (up from 34% at end of 2019)
- entered long term maintenance agreement with select 1 engine.
- 25% of crew members signed up for op out and medium/long term time off program
- Talks about needing to be flexible to adding back capacity. Saying vacation package from past 7 days sold as much as a year ago
- Expect Q3 revenue down 80% and capacity down at least 45%.
- Capacity for Q4 plans to be down 1/3. Evaded mentioning capacity about how much smaller they will be further out. Really evaded this multiple times.
- Raised $750 million in secured term loan and $118 million sales/lease back. Have $3.4 billion in liquidity at end of Q2. 42% of 2019 revenue
- Talks about tactical moves of building up NYC and LAX. Thanking LAWA to allow them to grow LAX. Looking to use this to come out of pandemic in better position.
- Said EWR will have 60 flights a day post recovery (not sure what the time frame for that is). FLL goal remains 140 flights a day (looking to improve connectivity there)
- Looking to currently only operate flights that cover variable costs. Variable break even load factor for flight is 25 to 30% under CARE acts environment.
- Talking about AA partnership allowing them to better compete in NYC and Boston. Talks about combined network with more destinations and more frequencies.
- Talk about allowing them to add markets out of BOS easier. Not sure if that means just getting there via 1-stop on AA or adding it themselves.
- Expects earn/redeem miles on both network. Reciprocal code sharing agreement. Looking to provide more value to TrueBlue program through this.
- Talk about getting LGA slots from AA removing 50 seaters.
- May/June booking was down 83% vs April booking down 93%
- Northeast to Florida and treason did well in second Half of Q2. Latin VFR very strong: especially PR & DR. Resumed service to 15 Latin destinations in July.
- Believes once case count gets under control, leisure demand will come very quickly.
- cost of blocking middle seat is relatively small, since only 10% of flight is hitting that middle seat capacity. 33% LF in Q2.
- LGB closure allows efficiency increase and cost saving in short term. Looking forward to international flights long term. Taking advantage of legacy reductions.

I think the cash burn was a lot higher than I expected even when factoring in the lower demand out of NYC/BOS. It's almost twice as well as AS for Q2 despite being about the same size. I'm a little surprised they couldn't get it down closer to $6 million/day in June. And for Q3, $8 million/day is also kind of high when compared to legacy expectations. I'd expect them to be about 1/5 of legacy burn rate based on the size differences.

Listening to the call, it just seems like they are taking more of a Southwest approach here. Not as scared about cash burns and refused to comment on how much smaller they will be past Q4. It just seems like they are more happily talking about coming out of this stronger vs cutting cash burn. Very strange for an airline as traditionally conservative as jetBlue. I'm not sure it's a good thing.
 
CobaltScar
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 3:34 pm

I think they are keeping way too much staff. Great for "culture" not great for cash burn.
 
Dieuwer
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 3:50 pm

Any idea how the revenue is split between TrueBlue and ticket sales?
 
MIflyer12
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 4:47 pm

tphuang wrote:
- Looking to currently only operate flights that cover variable costs. Variable break even load factor for flight is 25 to 30% under CARE acts environment.


Do you know the size of the E190 write-down? The CARES Act credit + E190 write-down was about 140% of operating revenues. That suggests variable breakeven load factor (under 2Q fare levels) of more than 60% when CARES Act funds are gone. There will be no 'margin rebuilding' at those traffic/fare levels.
 
tphuang
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 5:14 pm

MIflyer12 wrote:
tphuang wrote:
- Looking to currently only operate flights that cover variable costs. Variable break even load factor for flight is 25 to 30% under CARE acts environment.


Do you know the size of the E190 write-down? The CARES Act credit + E190 write-down was about 140% of operating revenues. That suggests variable breakeven load factor (under 2Q fare levels) of more than 60% when CARES Act funds are gone. There will be no 'margin rebuilding' at those traffic/fare levels.

I really don't know. It was unclear to me how much is variable cost and how much is fixed cost And also what's considered to be "variable cost".
 
KlimaBXsst
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 5:43 pm

Looks like my benign comment about JetBlue being hindered by the 14 day quarantines when coming to New York from other states.

Since this comment was “sanitized,” by Anet, either things are much worse in New York for the airlines it things are much worse for JetBlue.

Guess we will have to read between the lines until we discover the truth. Florida expansion?
Aesthetically the A 340 got it right!
 
KlimaBXsst
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 5:47 pm

KlimaBXsst wrote:
Looks like my benign comment about JetBlue being hindered by the 14 day quarantines when coming to New York from other states.

Since this comment was “sanitized,” by Anet, either things are much worse in New York for the airlines or things are much worse for JetBlue.

Guess we will have to read between the lines until we discover the truth. Florida expansion?


Anets “sanitization's” are not good for encouraging confidence in the New York’s focused airlines recoveries or even investment I might add.
Aesthetically the A 340 got it right!
 
ScottB
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 6:29 pm

tphuang wrote:
I think the cash burn was a lot higher than I expected even when factoring in the lower demand out of NYC/BOS. It's almost twice as well as AS for Q2 despite being about the same size. I'm a little surprised they couldn't get it down closer to $6 million/day in June. And for Q3, $8 million/day is also kind of high when compared to legacy expectations. I'd expect them to be about 1/5 of legacy burn rate based on the size differences.


It's a lot worse than WN factoring in the size difference, too. WN flew about 18B ASMs in Q2 vs. 2.4B at B6. But WN's cash burn for the quarter was $23MM per day vs. $9.5MM/day for B6. So basically 41% of WN's cash burn on 13% of their capacity. I'm a bit surprised it wasn't better for June, too, considering that there was significantly improved demand between the Northeast and Florida. With the Northeast states putting in quarantines it looks like they'll be getting hit from both sides for the coming months.
 
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jfklganyc
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 6:47 pm

CobaltScar wrote:
I think they are keeping way too much staff. Great for "culture" not great for cash burn.



This sticks out to me too
 
tphuang
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Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 7:05 pm

ScottB wrote:
tphuang wrote:
I think the cash burn was a lot higher than I expected even when factoring in the lower demand out of NYC/BOS. It's almost twice as well as AS for Q2 despite being about the same size. I'm a little surprised they couldn't get it down closer to $6 million/day in June. And for Q3, $8 million/day is also kind of high when compared to legacy expectations. I'd expect them to be about 1/5 of legacy burn rate based on the size differences.


It's a lot worse than WN factoring in the size difference, too. WN flew about 18B ASMs in Q2 vs. 2.4B at B6. But WN's cash burn for the quarter was $23MM per day vs. $9.5MM/day for B6. So basically 41% of WN's cash burn on 13% of their capacity. I'm a bit surprised it wasn't better for June, too, considering that there was significantly improved demand between the Northeast and Florida. With the Northeast states putting in quarantines it looks like they'll be getting hit from both sides for the coming months.


Not really. It doesn't really make sense to use a quarter where carriers had to cut a lot of flights to judge their relative size. Either revenue or cost from last year is a better measure. At the end of the day, I expect both airlines to get back to their pre-COVID capacity on a similar time frame.

In Q2 of 2019, JetBlue's cost was 1.855 billion and WN's cost was 4.941 billion. 37.54% of 23 is $8.6 million. So, WN did do a little better but B6 is closer in cash burn control to WN than it is to AS or UA.

jfklganyc wrote:
CobaltScar wrote:
I think they are keeping way too much staff. Great for "culture" not great for cash burn.


This sticks out to me too


I just didn't get the sense they are particularly worried about burning a little more cash right now. Looks like they are just waiting to capture demand when it comes back while their competitors cut back in NYC.
 
panamair
Posts: 4332
Joined: Fri Oct 12, 2001 2:24 am

Re: JetBlue Q2 2020 Earnings Thread

Tue Jul 28, 2020 7:19 pm

tphuang wrote:
Looks like they are just waiting to capture demand when it comes back while their competitors cut back in NYC.


But even JetBlue can't make non-existent demand appear. DL and UA chopped their schedules too much during the April/May timeframe which gave AA, WN and B6 an opening. But both DL and UA have since 'wised up' and added back decent amounts of capacity to their respective NYC airports in July and August (latter which was reduced again recently). For August, DL had originally ramped up to about 89 flights a day at JFK for August, and has since pared it down to about 75 (once the European stuff was cut and after cutting some more domestic). But that 75 for August is now still pretty close to B6 (after their reductions), even with declining demand out of the Northeast. And of course UA has also increased EWR quite a bit for July and August as well. Point is, going forward, I don't think it will be as easy for B6 to "walk all over" DL and UA in the NYC market as it was in Q2.
 
AAY224
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Re: JetBlue Q2 2020 Earnings Thread

Wed Jul 29, 2020 1:55 am

Their cash burn definitely seemed higher than I would have expected. June for instance, I believe Alaska was at around $4M, compared to $8M for Jetblue. Spirit was $1.5M, and was break even if not for a $50M aircraft deferral payment. Unfortunate for Jetblue that they are so heavy in the northeast which has been essentially off limits in Q1/Q2 due to the pandemic and now quarantines.
 
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jfklganyc
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Re: JetBlue Q2 2020 Earnings Thread

Wed Jul 29, 2020 6:18 pm

tphuang wrote:
ScottB wrote:
tphuang wrote:
I think the cash burn was a lot higher than I expected even when factoring in the lower demand out of NYC/BOS. It's almost twice as well as AS for Q2 despite being about the same size. I'm a little surprised they couldn't get it down closer to $6 million/day in June. And for Q3, $8 million/day is also kind of high when compared to legacy expectations. I'd expect them to be about 1/5 of legacy burn rate based on the size differences.


It's a lot worse than WN factoring in the size difference, too. WN flew about 18B ASMs in Q2 vs. 2.4B at B6. But WN's cash burn for the quarter was $23MM per day vs. $9.5MM/day for B6. So basically 41% of WN's cash burn on 13% of their capacity. I'm a bit surprised it wasn't better for June, too, considering that there was significantly improved demand between the Northeast and Florida. With the Northeast states putting in quarantines it looks like they'll be getting hit from both sides for the coming months.


Not really. It doesn't really make sense to use a quarter where carriers had to cut a lot of flights to judge their relative size. Either revenue or cost from last year is a better measure. At the end of the day, I expect both airlines to get back to their pre-COVID capacity on a similar time frame.

In Q2 of 2019, JetBlue's cost was 1.855 billion and WN's cost was 4.941 billion. 37.54% of 23 is $8.6 million. So, WN did do a little better but B6 is closer in cash burn control to WN than it is to AS or UA.

jfklganyc wrote:
CobaltScar wrote:
I think they are keeping way too much staff. Great for "culture" not great for cash burn.


This sticks out to me too


I just didn't get the sense they are particularly worried about burning a little more cash right now. Looks like they are just waiting to capture demand when it comes back while their competitors cut back in NYC.


That worries me. A lot.

They are banking on a late fall/early winter vaccine.
 
Blueballs
Posts: 59
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Re: JetBlue Q2 2020 Earnings Thread

Wed Jul 29, 2020 8:55 pm

jfklganyc wrote:
tphuang wrote:
ScottB wrote:

It's a lot worse than WN factoring in the size difference, too. WN flew about 18B ASMs in Q2 vs. 2.4B at B6. But WN's cash burn for the quarter was $23MM per day vs. $9.5MM/day for B6. So basically 41% of WN's cash burn on 13% of their capacity. I'm a bit surprised it wasn't better for June, too, considering that there was significantly improved demand between the Northeast and Florida. With the Northeast states putting in quarantines it looks like they'll be getting hit from both sides for the coming months.


Not really. It doesn't really make sense to use a quarter where carriers had to cut a lot of flights to judge their relative size. Either revenue or cost from last year is a better measure. At the end of the day, I expect both airlines to get back to their pre-COVID capacity on a similar time frame.

In Q2 of 2019, JetBlue's cost was 1.855 billion and WN's cost was 4.941 billion. 37.54% of 23 is $8.6 million. So, WN did do a little better but B6 is closer in cash burn control to WN than it is to AS or UA.

jfklganyc wrote:

This sticks out to me too


I just didn't get the sense they are particularly worried about burning a little more cash right now. Looks like they are just waiting to capture demand when it comes back while their competitors cut back in NYC.


That worries me. A lot.

They are banking on a late fall/early winter vaccine.

Shouldn’t be worrisome. It appears a vaccine will be ready by fall. They are being smart right now
 
tphuang
Posts: 5226
Joined: Tue Mar 14, 2017 2:04 pm

Re: JetBlue Q2 2020 Earnings Thread

Wed Jul 29, 2020 9:57 pm

Blueballs wrote:
jfklganyc wrote:
tphuang wrote:

Not really. It doesn't really make sense to use a quarter where carriers had to cut a lot of flights to judge their relative size. Either revenue or cost from last year is a better measure. At the end of the day, I expect both airlines to get back to their pre-COVID capacity on a similar time frame.

In Q2 of 2019, JetBlue's cost was 1.855 billion and WN's cost was 4.941 billion. 37.54% of 23 is $8.6 million. So, WN did do a little better but B6 is closer in cash burn control to WN than it is to AS or UA.



I just didn't get the sense they are particularly worried about burning a little more cash right now. Looks like they are just waiting to capture demand when it comes back while their competitors cut back in NYC.


That worries me. A lot.

They are banking on a late fall/early winter vaccine.

Shouldn’t be worrisome. It appears a vaccine will be ready by fall. They are being smart right now


It helps that they had the second least amount of debt coming into this. They will probably accumulate more debt coming out of this than some other carriers, but they have the ability to carry that. I see a lot of this as a price they are paying to get slots from AA. Maybe they should have more urgency in cost control, I don't know. But gaining additional slots/gates at constrained airport also provides a lot of value down the road.

If things still look really bad 2 months from now, they can take the CARES loan. I don't think they are in any danger of going under.

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