Investor Update
Investor Update: July 24, 2018
This update provides JetBlue’s investor guidance for the third quarter ending September 30, 2018 and full year 2018.
Recent Announcements
JetBlue has announced service between the following city pairs:
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| | |
| City Pair | Frequency | Start Date |
| New York (JFK) - Ontario (ONT) | 1x Daily | September 5, 2018 |
| Boston (BOS) - Burbank (BUR) | 1x Daily | September 5, 2018 |
| New York (JFK) - Mexico City (MEX) | 1x Daily | October 25, 2018 |
| Boston (BOS) - Mexico City (MEX) | 1x Daily | October 25, 2018 |
| Boston (BOS) - Havana (HAV) | 1x Weekly | November 10, 2018 |
| Long Beach (LGB) - Bozeman (BZN) | 2x Weekly Seasonal | December 13, 2018 |
| Boston (BOS) - Steamboat Springs (HDN) | 2x Weekly Seasonal | December 15, 2018 |
| Fort Lauderdale (FLL) - Steamboat Springs (HDN) | 1x Weekly Seasonal | December 15, 2018 |
| Long Beach (LGB) - Steamboat Springs (HDN) | 2x Weekly Seasonal | December 15, 2018 |
Capacity
Third quarter 2018 available seat miles (ASMs) are estimated to increase 7.5% to 9.5% year-over-year. Full year 2018 ASMs are estimated to increase 6.5% to 7.5% year-over-year.
JetBlue estimates the following distribution as a percentage of total ASMs by aircraft type:
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| | | | | | | |
| Third Quarter 2018 | Full Year 2018 |
| A320 | A321 All-Core | A321 Mint | E190 | A320 | A321 All-Core | A321 Mint | E190 |
| 55% | 15% | 19% | 11% | 55% | 15% | 19% | 11% |
Average stage length is projected to increase year-over-year by approximately 1.8% for the third quarter 2018 and increase by approximately 2.1% for the full year 2018.
Operational Outlook
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| | | |
| | |
| | Third Quarter | | Full Year |
| | 2018 | | 2018 |
| Operating Expense Year-Over-Year Percentage Change | | | |
Unit Operating Expense Excluding Fuel (CASM Ex-Fuel)(1) | 1.0 - 3.0% | | (1.0) - 1.0% |
Operating Expenses Related to other Non-Airline Businesses(2) (in millions) | $9 - $14 | | $35 - $45% |
1 CASM Ex-Fuel excludes fuel and related taxes, special items and operating expenses related to other non-airline expenses. With respect to JetBlue’s CASM Ex-Fuel and guidance, JetBlue is not able to provide a reconciliation of the non-GAAP financial measure to GAAP because the excluded items have not yet occurred and cannot be reasonably predicted. The reconciling information that is unavailable would include a forward-looking range of financial performance measures beyond our control, such as fuel costs, which are subject to many economic and political factors beyond our control. Beginning with the first quarter of 2018, Operating Expenses Related to other Non-Airline businesses include JetBlue Travel Products and equivalent prior period costs. Full year 2018 CASM Ex-Fuel excludes the non-cash impairment charge related to the Embraer E190 Fleet review as we believe this special item distorts our overall trends.
1
JetBlue Airways Investor Relations • (718) 709-2202 • ir@jetblue.com
Investor Update
2 Operating Expenses Related to other Non-Airline businesses will be excluded from prior periods. As a result, this change has minimal impact on the projected growth rate.
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| | | | |
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| | | |
| | Third Quarter | | Full Year | |
| | 2018 | | 2018 | |
| Fuel Expense | | | | |
| Estimated Consumption (gallons) | 217 million | | 845 million | |
Estimated Fuel Price per Gallon, Net of Hedges 1 | $2.33 | 2 | | |
| | | | | |
| ¹Includes fuel taxes. | |
²JetBlue utilizes the forward Brent crude curve and the forward Brent crude to heating oil crack spread to calculate the unhedged portion of its prompt quarter. As of July 13, 2018, the forward Brent crude per barrel price was $76 and the crack spread averaged $15 per barrel for the third quarter of 2018.
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Fuel Hedges
As of July 13, 2018 JetBlue’s advanced fuel derivative contracts are as follows:
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| | | | | | |
| | | | | | | |
| | | Gallons | | Estimated Percentage of Consumption | | Price |
| | | | |
| 3Q18 | | 16 million | | 7.4% | | ● 7.4% in USGC Jet bull call spreads at an average strike price of $2.25/gal x $2.45/gal |
| 4Q18 | | 16 million | | 7.5% | | ● 7.45% in USGC Jet bull call spreads at an average strike price of $2.25/gal x $2.45/gal |
Other Income (Expense)
JetBlue estimates total Other Income (Expense) to be between ($16) and ($23) million in the third quarter 2018 and between ($65) and ($75) million for the full year 2018.
Tax Rate
JetBlue expects an effective annual tax rate between 25% and 26%. However, the actual tax rate in the third quarter and full year 2018 could differ due to a number of factors.
Capital Expenditures
(In millions)
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| | | | | | |
| Third Quarter 2018 | | Full Year 2018 |
| Aircraft | Non-aircraft | Total | | Aircraft | Non-aircraft | Total |
| $275 - $310 | $35 - $50 | $310 - $360 | | $850 - $1,000 | $150 - $200 | $1,000 - $1,200 |
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JetBlue Airways Investor Relations • (718) 709-2202 • ir@jetblue.com
Investor Update
Aircraft Delivery Schedule
As of June 30, 2018 JetBlue’s fleet was comprised of 130 Airbus A320 aircraft, 23 Airbus A321 All-Core aircraft, 34 Airbus A321 Mint aircraft, and 60 EMBRAER 190 aircraft, for a total of 247 aircraft.
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| | | | | | | | | | | |
| | Airbus A320 | | Airbus A321 | | EMBRAER 190 |
| | Aircraft | Mortgage | Lease | | Aircraft | Mortgage | Lease | | Aircraft | Mortgage | Lease |
| | | | | | | | | | | | |
| 3Q18 | — | — | — | | 2 | — | — | | — | — | — |
| 4Q18 | — | — | — | | 4 | — | — | | — | — | — |
| Total at Year End 2018 | 130 | 36 | 11 | | 63 | 8 | 1 | | 60 | 29 | 30 |
Airbus Order Book
As of July 24, 2018 JetBlue's firm Airbus order book:
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| | | |
| Year | Airbus A220 | Airbus A321neo | Total |
| 2018 | — | 6* | 6* |
| 2019 | — | 13 | 13 |
| 2020 | 5 | 15 | 20 |
| 2021 | 4 | 16 | 20 |
| 2022 | 8 | 15 | 23 |
| 2023 | 19 | 14 | 33 |
| 2024 | 22 | 12 | 34 |
| 2025 | 2 | — | 2 |
| Total | 60 | 91 | 151 |
*6 remaining A321ceo deliveries in 2018
Share Count
Share count estimates for calculating basic and diluted earnings per share are as follows:
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| | | | | |
| | | Third Quarter | | Full Year | |
| | | 2018 | | 2018 | |
| Basic Share Count | | 312.8 million | | 316.0 million | |
| | | | | | |
| Diluted Share Count | | 314.5 million | | 317.6 million | |
These share count estimates do not include any future share repurchases that may occur throughout 2018 under JetBlue's share buyback program. The number of shares used in JetBlue’s actual earnings per share will likely be different than those stated above.
This Investor Update contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 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,”
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JetBlue Airways Investor Relations • (718) 709-2202 • ir@jetblue.com
Investor Update
“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; 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; 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 spread of infectious diseases; 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. You should understand that many important factors, in addition to those discussed or incorporated by reference in this Investor Update, could cause our results to differ materially from those expressed in the forward-looking statements. Potential factors that could affect our results include, in addition to others not described in this Investor Update, those described in Item 1A of our 2017 Form 10-K under "Risks Related to JetBlue" and "Risks Associated with the Airline Industry". In light of these risks and uncertainties, the forward-looking events discussed in this Investor Update might not occur.
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JetBlue Airways Investor Relations • (718) 709-2202 • ir@jetblue.com
