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Form 8-K JETBLUE AIRWAYS CORP For: Jul 26

July 26, 2016 7:44 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported): July 26, 2016
JETBLUE AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
000-49728
 
87-0617894
(State of Other Jurisdiction of
Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
27-01 Queens Plaza North, Long Island City, New York 11101
(Address of principal executive offices)             (Zip Code)
(718) 286-7900
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 7.01 Regulation FD Disclosure.
On July 26, 2016, we provided an update for investors presenting information relating to our financial outlook for the third quarter ending September 30, 2016 and full year 2016, and other information regarding our business. The update is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
 
 
 
 
Exhibit
Number
  
Description
 
 
99.1

  
Investor Update dated July 26, 2016 of JetBlue Airways Corporation.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JETBLUE AIRWAYS CORPORATION
 
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
Date:
July 26, 2016
 
 
By:
 
/s/     Alexander Chatkewitz
 
 
 
 
 
 
 
Vice President, Controller, and Chief Accounting Officer (Principal Accounting Officer)
 



EXHIBIT INDEX
 
 
 
 
Exhibit
Number
  
Exhibit
 
 
99.1
  
Investor Update dated July 26, 2016 of JetBlue Airways Corporation.



Investor Update

            
Investor Update: July 26, 2016

This investor update provides JetBlue’s investor guidance for the third quarter ending September 30, 2016 and full year 2016.

Recent Announcements

JetBlue has recently announced service between the following city pairs:
City Pair
Frequency
Start Date
Long Beach (LGB) - Reno (RNO)
1x Daily
August 15, 2016
New Orleans (MSY) - Fort Lauderdale (FLL)
1x Daily
September 29, 2016
Boston (BOS) - New York, LaGuardia (LGA)
6x Daily
October 31, 2016
Newark (EWR) - Barbados (BGI)
1x Weekly (Winter)
November 19, 2016
Fort Lauderdale (FLL) - Santa Clara, Cuba (SNU)
1x Daily (*)
TBD
Fort Lauderdale (FLL) - Camagüey, Cuba (CMW)
1x Daily (*)
TBD
Fort Lauderdale (FLL) - Holguín, Cuba (HOG)
1x Daily (*)
TBD
Fort Lauderdale (FLL) - Havana, Cuba (HAV)
2x Daily (*)
TBD
Orlando (MCO) - Havana, Cuba (HAV)
1x Daily (*)
TBD
New York (JFK) - Havana, Cuba (HAV)
1x Daily (*)
TBD

(*) subject to Government approval - Fort Lauderdale (FLL) - Havana (HAV) will only operate 1x Daily on Saturday

Capacity

Third quarter 2016 available seat miles (ASMs) are estimated to increase 5.5% to 7.5% year-over-year.  Full year 2016 ASMs are estimated to increase 8.0% to 9.5% year-over-year, in line with prior guidance.

JetBlue estimates the following distribution as a percentage of total ASMs by aircraft type:
Third Quarter 2016
Full Year 2016
A320
A321 All-Core
A321 Mint
E190
A320
A321 All-Core
A321 Mint
E190
69%
10%
9%
12%
68%
10%
9%
13%

Average stage length is projected to be in line with prior year in the third quarter 2016 and increase year-over-year by approximately 0.5% for the full year 2016.

Operational Outlook
 
 
 
Third Quarter
 
Full Year
 
2016
 
2016
Operating Expense Year-Over-Year Percentage Change
 
 
 
Unit Operating Expense Excluding Fuel and Profit Sharing
(CASM Ex-Fuel and Profit Sharing)(1)
1.0 - 3.0%
 
0.0 - 1.5%
Prior guidance issued April 26, 2016
N/A
 
0.0 - 1.5%
1 With respect to the JetBlue’s CASM Ex-Fuel and Profit Sharing 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 (i) fuel costs, which are subject to many economic and political factors beyond our control, and (ii) profit sharing, which is sensitive to volatility in earnings.


1
JetBlue Airways Investor Relations • (718) 709-2202 • [email protected]

Investor Update

 
 
 
 
 
Third Quarter
 
Full Year
 
 
2016
 
2016
 
Fuel Expense
 
 
 
 
Estimated Consumption (gallons)
197 million
 
756 million
 
Estimated Fuel Price per Gallon, Net of Hedges 1
$1.52
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 15, 2016, the forward Brent crude per barrel price was $48 and the crack spread averaged $13 per barrel for the third quarter of 2016

 

Fuel Hedges

As of July 15, 2016 JetBlue’s advanced fuel derivative contracts for 2016 are as follows:

 
 
 
 
 
 
 
 
 
Gallons
 
Estimated Percentage
of Consumption
 
Price
 
 
 
 
3Q16
 
47 million
 
24%
 
USGC jet fuel swaps at an average of $1.24/gal

4Q16
 
47 million
 
26%
 
USGC jet fuel swaps at an average of $1.28/gal


In addition, JetBlue has hedges in place for about 10% of its expected 2017 fuel consumption.

Other Income (Expense)
JetBlue estimates total Other Income (Expense) to be between ($20) and ($25) million in the third quarter and between ($95) and ($105) million for the full year.

Tax Rate
JetBlue expects an effective annual tax rate of approximately 39%. However, the actual tax rate in the third quarter and full year 2016 could differ due to a number of factors.

Capital Expenditures
(In millions)
Third Quarter 2016
 
Full Year 2016
Aircraft
Non-aircraft
Total
 
Aircraft
Non-aircraft
Total
$250
$55 - $65
$305 - $315
 
$670 - $720
$150 - $200
$820 - $920







2
JetBlue Airways Investor Relations • (718) 709-2202 • [email protected]

Investor Update

Aircraft Delivery Schedule

As of June 30, 2016, JetBlue’s fleet was comprised of 130 Airbus A320 aircraft, 15 Airbus A321 All-Core aircraft, 14 Airbus A321 Mint aircraft, and 60 EMBRAER 190 aircraft.
 
Airbus A320
 
Airbus A321
 
EMBRAER 190
 
Aircraft
Mortgage
Lease
 
Aircraft
Mortgage
Lease
 
Aircraft
Mortgage
Lease
 
 
 
 
 
 
 
 
 
 
 
 
1Q16
 
2
 
2Q16
 
2
 
3Q16
 
3
 
4Q16
 
5
2
 
Total at Year End 2016
130
45
24
 
37
8
2
 
60
30
30

Order Book

As of July 26, 2016 JetBlue's firm aircraft order book beyond 2016, including the incremental aircraft from its latest amendment, is the following:

Year
Airbus A320neo
Airbus A321
Airbus A321neo
EMBRAER 190
Total
2017
15
15
2018
5
6
11
2019
6
15
21
2020
6
12
10
28
2021
16
4
7
27
2022
3
17
7
27
2023
6
6
Total
25
26
60
24
135

JetBlue's amendment to its Purchasing Agreement with Airbus adds 30 incremental aircraft:

Year
Airbus A320neo
Airbus A321
Airbus A321neo
EMBRAER 190
Total
2017
5
5
2018
4
4
2019
6
6
2020
3
3
2021
4
4
2022
4
4
2023
4
4
Total
15
15
30

For more information on JetBlue's order book prior to its latest amendment, please refer to the Company's 2015 Annual Report on Form 10-K.






3
JetBlue Airways Investor Relations • (718) 709-2202 • [email protected]

Investor Update

Cabin Restyling Program

The program is expected to generate $100 million of annual incremental operating income upon completion.
Fleet Type
Seat Count per Aircraft
Number of Aircraft Impacted
Timeline
Current
After Restyling
Difference
A320
150
162
+ 12
~ 130 retrofits
Retrofit starting at the beginning of 2017 Completion expected in 2019
A321 All-Core
190
200
+ 10
15 retrofits 5 new deliveries in 2016 All future deliveries beyond
New Deliveries starting in July 2016 Retrofit starting in the third quarter of 2016 Completion expected by the end of 2016
A321 Mint
16 Mint 143 Core
16 Mint 143 Core
-
-
Not part of the program
E190
100
100
-
-
Not part of the program

Share Count

Share count estimates for calculating basic and diluted earnings per share are as follows:
 
 
Third Quarter 2016
 
 
Basic Share Count
 
Diluted Share Count
 
Interest Add-back
Net Income Range
 
(in millions)
 
(in millions)
 
(in millions)*
Zero - $14 million
 
323.7
 
325.5
 
$—
$14 million or greater
 
323.7
 
343.1
 
$1
 
 
 
 
 
 
 
 
 
Full Year 2016
 
 
Basic Share Count
 
Diluted Share Count
 
Interest Add-back
Net Income Range
 
(in millions)
 
(in millions)
 
(in millions)*
Zero - $42 million
 
327.4
 
329.3
 
$—
$42 million or greater
 
327.4
 
342.9
 
$2

* Net of taxes
These share count estimates assume that all of the holders of the 6.75% convertible debentures due 2039 (Series B) will be converted to shares during the fourth quarter of 2016.  These share count estimates do not include any share repurchases that may occur throughout 2016 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.


















4
JetBlue Airways Investor Relations • (718) 709-2202 • [email protected]

Investor Update

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,” “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; 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 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 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 terrorist attacks; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for domestic and business 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 2015 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.

    

5
JetBlue Airways Investor Relations • (718) 709-2202 • [email protected]


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