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JetBlue Airways Posts Fourth-Quarter Loss

Posted on: Wednesday, 1 February 2006, 18:00 CST

By LAUREN VILLAGRAN

NEW YORK - JetBlue Airways Corp. posted a wider fourth-quarter loss than Wall Street expected, as increased revenue could not offset the impact of sharply higher fuel costs. The airline also forecast losses for the first quarter and full year 2006.

The weak results and outlook sent shares tumbling. Its shares shed $1.86, or 14.3 percent, to close at $11.18 on the Nasdaq Stock Market. Earlier in the day, the stock fell to a new 52-week low of $11.10.

JetBlue's fourth-quarter losses totaled $42.4 million, or 25 cents per share, reversing a year-ago profit of $1.5 million, or a penny per share.

The results include $6.9 million in stock-compensation costs and a $6.1 million charge for development costs related to a discarded maintenance and inventory tracking system.

Excluding those items, losses would have been $32 million, or 19 cents per share. Analysts were predicting a slimmer quarterly loss of 14 cents per share, according to Thomson Financial. Wall Street estimates typically exclude one-time items.

Revenue jumped 34 percent to $446 million from $332.8 million a year ago.

"We are very disappointed in our performance this quarter as we continued to feel the effects of record-high fuel prices and a tough revenue environment, compounded by the impact of Hurricane Wilma and the residual effects of hurricanes Katrina and Rita," said David Neeleman, chairman and chief executive in a statement.

The company paid 50 percent more for jet fuel during the quarter - an average price of $1.87 per gallon versus $1.24 per gallon a year ago.

Earlier this month, low-cost rival Southwest Airlines Co. reported its fourth-quarter profit surged 54 percent to $86 million, or 10 cents per share.

Southwest reaped the benefits of a bet it made several years ago to hedge against fuel prices. Southwest bought options that locked in prices on most of its jet fuel needs through 2009, softening the blow of higher fuel costs.

As a result of this hedging, Southwest paid about $1.20 per gallon instead of the full price, about $2 per gallon, for fuel in the fourth quarter - far less than JetBlue spent.

Fuel costs also pushed AirTran Holdings Inc. to a fourth-quarter loss of $400,000, or break-even on a per-share basis. However, capacity and revenue growth partially offset higher energy costs and led the airline to beat Wall Street projections. AirTran's fuel costs surged roughly 97 percent year over year.

"It would be nice to have hedges like Southwest," said Neeleman in a conference call Wednesday. "But frankly, we don't. So we need to see what we can do to get fares up a little bit."

Neeleman suggested the company needs to increase its average fare between $5 and $10 to help recoup higher fuel costs and return the airline to profitability.

"How do you make up for that additional $80 million in fuel costs? You need to get more money from tickets," he said.

JetBlue said revenue passenger miles - equal to one paying passenger flown one mile - jumped 22 percent year over year to 5.2 billion during the quarter. Available seat miles, an industry measure of capacity, grew 25 percent to 6.4 billion. Load factor, or the percentage of seats filled with passengers, declined 1.8 percentage points to 81 percent.

Full-year losses totaled $20.3 million, or 13 cents per share, compared with earnings of $46.2 million, or 28 cents per share, in 2004. Annual revenue rose 34 percent to $1.70 billion from $1.26 billion in 2004.

JetBlue forecast a negative operating margin between 3 percent and 5 percent in the first quarter of 2006, assuming an aircraft fuel cost of $1.92 per gallon. The company expects to post losses for the first quarter and full year.

Analysts were looking for earnings of 3 cents per share in the first quarter and 15 cents per share for the year.

Source: Associated Press/AP Online

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