Attached files
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EX-99.2 - EXHIBIT 99.2 - JETBLUE AIRWAYS CORP | ex992-investorupdateq12017.htm |
EX-99.1 - EXHIBIT 99.1 - JETBLUE AIRWAYS CORP | ex991-earningsreleaseq12017.htm |
8-K - 8-K - JETBLUE AIRWAYS CORP | a8kearningsreleaseandinves.htm |
1
1Q 2017 EARNINGS PRESENTATION
APRIL 25, 2017
2
SAFE HARBOR
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, 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 financing or to raise funds through debt or equity issuances; volatility in fuel prices, maintenance costs and interest
rates; our ability to implement our growth strategy; our significant fixed obligations and substantial indebtedness; our ability to attract and retain qualified
personnel and maintain our culture as we grow; our reliance on high daily aircraft utilization; our dependence on the New York and Boston metropolitan
markets and the Northeast Corridor of the United States 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 and/or increased labor costs; our reliance on a limited number of
suppliers; 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 government regulation; changes in our
industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or economic downturns 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 and 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 2016 Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. In light of these risks and uncertainties, the forward-looking events discussed in this presentation might
not occur. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this
presentation.
The following presentation also includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934.
We refer you to the reconciliations made available in our Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K (available on our website at
jetblue.com and at sec.gov) and in our December 2016 fourth quarter earnings call, which reconcile the non-GAAP financial measures included in the
following presentation to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
1Q 2017 EARNINGS UPDATE
ROBIN HAYES
PRESIDENT & CEO
4
FOCUSED ON CREATING SHAREHOLDER VALUE THROUGH MARGIN
INITIATIVES AND ACCRETIVE GROWTH
• Working towards goal of superior margins
• Executing on a series of commercial and cost
initiatives through 2020
• Tactical capacity and revenue initiatives launched
in February are improving RASM performance
• Capacity full benefits in place during 2Q 2017
• Revenue initiatives ramping into summer
• Our Crewmembers provide the foundation for
sustained financial performance and long-term
shareholder value
PRE-TAX MARGINS JBLU VS PEERS
Average of peer set (AAL, ALK, DAL, LUV, SAVE, UAL)
7.9% 8.3%
18.3%
16.7%
15.4%
14.8%
1Q 2017
JBLU
1Q 2017
Peers
2016
JBLU
2016
Peers
TTM
JBLU
TTM
Peers
5
1Q 2017 OVERVIEW
Structural cost initiatives
Commercial initiatives
Targeted growth
ACHIEVEMENTS
• Revenue and capacity initiatives delivering results
• 2Q 2017 RASM showing sequential improvement beyond calendar benefit
• CFO selection highlights commitment to cost initiatives
• Have ~$100m of $250-$300m in savings as ‘work in progress’ currently
• Investments in Boston and Mint continue to show margin/return benefits
• Revenue premiums in Boston and Fort Lauderdale demonstrate strength of model
Commitment to delivering
above-average industry margins
• Balancing growth and returns with targeted expansion in existing focus cities
• Opportunities for further improvement in unit revenues and costs
COMMERCIAL UPDATE & OUTLOOK
MARTY ST. GEORGE
EVP COMMERCIAL AND PLANNING
7
CAPACITY: BALANCING GROWTH WITH RETURNS
• Summer capacity growth focused on Boston,
Fort Lauderdale and New York
• 15 new markets in 2Q17; 2 new markets in
Boston; 8 new markets in Fort Lauderdale
• Tactical capacity adjustments helping reverse
early 2017 RASM trends
• Reduced planned capacity in redeyes, off-peak
weekdays and months
• Optimizing growth in select markets
• Cuba, Newark
ASM YOY GROWTH
1Q 2017 2Q 2017E 2017E
4.0% - 6.0%
5.5% - 7.5%
4.2%
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NETWORK UPDATE: BOSTON AND MINT CONTINUE TO OUTPERFORM
New York
Fort Lauderdale
Boston
Other
Mint
FOCUS CITY / OTHER KEY DEVELOPMENTS
• Competitive environment in Newark/NYC to Florida
• Expect limited impact from competitive Transcon capacity in Newark
• Highest margin focus city; building breadth and depth of service
• Service to LGA exceeding expectations; initiated service to Atlanta
• RASM performance in line with system, ex-Newark/NYC
• 20 new non-stop destinations in last two years
• RASM and margin builder that continues to mature
• Initiated service in Fort Lauderdale; 3 more routes convert in 2H17
• Efforts to balance capacity with demand in Latam showing results
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UNIT REVENUE: ACTIONS DRIVING SEQUENTIAL IMPROVEMENT
• 1Q RASM negatively impacted by over 3 points
from calendar impacts
• 2.3 point negative impact to 1Q from Easter; 1
point negative impact to 1Q from January
calendar
• Weather events net to 0.25 points headwind
• Sequential improvement continues
• Double digit RASM growth expected in April;
expect positive RASM for balance of 2Q
• Revenue management review and initiatives
underway
RASM YOY GROWTH
-7.0%
-8.2%
-3.5%
-1.5%
-4.8%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017E
3% - 6%
FINANCIAL UPDATE & OUTLOOK
STEVE PRIEST
EVP CHIEF FINANCIAL OFFICER
11
1Q 2017 RESULTS
INCOME STATEMENT ($billion) PRE-TAX PROFIT MARGIN
Positive
calendar impact
in 1Q 2016
UNIT REVENUES AND COSTS ($ cents)
3
.1
%
1
6
.6
%
2
1
.6
%
9
.2
%
0
.5
%
1
4
.6
%
2
0
.0
%
7
.9
%
0
.3
%
9
.0
%
1
2
.8
%
5
.3
%
1Q 2014 1Q 2015 1Q 2016 1Q 2017
OM Pre-Tax Margin Net Margin
Operating Margin 9. % 2 .6%
Pre-Tax Margin 7.9 20.0
Net Margin 5.3% 12.8%
1Q 2017 1Q 2016 Variation
11.81 12.41 -4.8%
3.43 3.35 2.7%
2.38 1.65 44.1%
1.66 1.57 5.9%
1.12 1.03 8.7%
2.14 2.13 0.0%
1Q 2017 1Q 2016 Variation
Total Op Rev 1.60 1.62 -0.8%
SW&B, P/S 0.47 0.44 7.1%
Fuel 0.32 0.22 50.2%
Ownership 0.23 0.20 10.4%
MM&R 0.15 0.14 13.3%
Other 0.29 0.28 4.3%
OP INCOME 0.15 0.35 -57.9%
Other Inc (Exp) (0.02) (0.03) -21.3%
Inc Before Taxes 0 13 0.32 -60.9%
Inc Tax Exp 0.04 0.12 -64.7%
NET INCOME 0.09 0.21 -58.8%
12
UNIT COSTS: MANAGING NEAR TERM HEADWINDS
• 1Q CASM ex-fuel below mid-point of guidance,
despite weather impacts
• Weather impacted CASM-ex fuel by 0.5 points
• Inflationary pressures in maintenance and labor
• 2Q CASM ex-fuel expected to be peak of 2017
growth pressures
• No change to 2017 cost guidance
• Stage length, labor, and maintenance expense
timing drive YoY increase
• Expect CASM ex-fuel growth to moderate in
second half
QUARTERLY CASM EX-FUEL YOY GROWTH*
-1.4%
-0.8%
2.5%
4.6%
3.3%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017E 2017E
4.5% - 6.5%
1.5% - 3.5%
**Refer to Appendix A on Non-GAAP Financial Measures
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COST CONTROL: THE PATH FROM GOOD TO GREAT MARGINS
Tech Ops
Airports
Corporate
TOTAL
Distribution
STRUCTURAL COST SAVINGS
PLAN (2018-2020) ACHIEVEMENTS
$250-$300m
• 6 airport lobbies completed
• 12 expected by year-end
$100-$125m
$75-$90m
$55-$65m
~$20m
• Approximately 1/3 of cost
effort is ‘work in progress’
CASM EX-FUEL TRENDS*
3.6%
3.8%
1.3%
2014 2015 2016 2017E 2018E-2020E
0% - 1%
1.5% - 3.5%
**Refer to Appendix A on Non-GAAP Financial Measures
• NEO engine RFP
• Planning software
• 20 contracts in review
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FLEET: RETURN ACCRETIVE FLEET GROWTH
AIRBUS ORDER BOOK*FLEET DETAIL*
Mint
60
130
37
60
130
40
60
130
52
E190 A320 A321
2016 1Q 2017 2017E
19 3117
*As of 4/25/17
CEO: Current Engine Option
NEO: New Engine Option
Recent Changes:
• Deferring 8 aircraft from 2019 to 2023 and 5 aircraft from 2020 to 2024
• Swapped 2018 NEOs with CEOs
1
97 103**169
227 230
2011 2016 1Q 2017
Unencumbered Total
*As of 3/31/17
** 105 Unencumbered as 4/25/17
Year A320neo A321ceo A321neo Total
2018 - 11 - 11
2019 - - 13 13
2020 6 - 7 13
15
2Q 2017 2017E 2017-2020E
LEVERAGE AND CAPEX: BALANCED CAPITAL ALLOCATION
ADJUSTED DEBT / CAP RATIO CAPITAL EXPENDITURES
Aircraft Non-Aircraft
70%
62%
46%
35% 34%
2011 2013 2015 2016 1Q 2017
Adj Debt / Cap = On Balance Sheet Debt + 7x Aircraft Rent / Debt + Equity
$150m - $200m
$1.05bn - $1.2bn
$220m - $270m
$35m - $45m
Average of ~$1.1bn*
*Includes Aircraft and Non-Aircraft Capital Expenditures
16
2017 GUIDANCE SUMMARY
Metric 2Q 2017E 2017E
Capacity 4.0 - 6.0% 5.5 - 7.5%
RASM 3.0 – 6.0% N/A
CASM Excluding Fuel 4.5 - 6.5% 1.5 - 3.5%
All-in Fuel Price $1.73 N/A
Capex (aircraft) $220m – $270m $1.05bn – $1.2bn
Capex (non-aircraft) $35m – $45m $150m – $200m
Other Income/(Expense) ($20m - $25m) ($90m - $100m)
QUESTIONS
18
APPENDIX A: NOTE ON NON-GAAP FINANCIAL MEASURES
Consolidated operating cost per available seat mile, excludes fuel and related taxes, and operating expenses
related to other non-airline expenses (CASM Ex-Fuel) is a non-GAAP financial measure that we use to measure
our core performance. Note A within our quarterly earnings release provides a reconciliation of non-GAAP
financial measures used in this presentation and provides the reasons management uses those measures.