Jetblue Airways Corporation · NASDAQ:JBLU
Jetblue Airways — Q4 2017 Earnings Presentation
22 slides from Jetblue Airways's earnings presentation, Jan 25, 2018
Slide 1: 4Q 2017 Earnings Presentation
1 4Q 2017 EARNINGS PRESENTATION JANUARY 25, 2018
Slide 2: Safe Harbor
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 Exc
Slide 3: 4Q 2017 Earnings Update
4Q 2017 EARNINGS UPDATE ROBIN HAYES PRESIDENT & CEO 3
Slide 4: Pre-Tax Margins: JBLU vs Peers
4 PRE-TAX MARGINS JBLU VS PEERS Average of peer set (AAL, ALK, DAL, LUV, SAVE, UAL), consensus, guidance and reported results 9.7% 9.4% 13.1% 12.7% 4Q 2017 JBLU 4Q 2017 Peers FY 2017 JBLU FY 2017 Peers WORKING TOWARDS LONG TERM SHAREHOLDER VALUE THROUGH ONGOING MARGIN INITIATIVES *The Pre-Tax Margin
Slide 5: 2018 Initiatives
5 2018 INITIATIVES Commercial initiatives Commercial initiatives Commercial initiatives Targeted growth • NYC & Boston continue to produce superior margins; growing business segment in Boston • Investing in operation to mitigate challenges in Northeast operating environment Commercial initiatives St
Slide 6: Commercial Update & Outlook
COMMERCIAL UPDATE & OUTLOOK MARTY ST. GEORGE EVP COMMERCIAL AND PLANNING 6
Slide 7: Capacity: Targeted Growth Continues
7 ASM YOY GROWTH 5.1% 4.5% 4Q 2017 2017 1Q 2018E 2018E ASM YOY GRO TH* CAPACITY: TARGETED GROWTH CONTINUES *Flown capacity 3.5% - 5.5% 6.5% - 8.5% • Targeted growth continues in Boston, Fort Lauderdale and Transcon markets − Up-gauging Boston with high-density aircraft − Fort Lauderdale driving stre
Slide 8: Network Update: Boston and Mint Continue to Outperform
8 NETWORK UPDATE: BOSTON AND MINT CONTINUE TO OUTPERFORM LATEST KEY DEVELOPMENTS BOSTON Driving superior margins; supporting low fares in leisure markets through up-gauging Business markets continue to perform in line with expectations; growing relevance with Minneapolis service FORT LAUDERDALE
Slide 9: Unit Revenue: Growing Trends into 1Q 2018
9 RASM YOY GROWTH 1.8% 1.3% 4Q 2017 2017 1Q 2018E UNIT REVENUE: GROWING TRENDS INTO 1Q 2018 2.5% – 5.5% • 4Q RASM growth exceeded expectations − RASM growth above range of (0.5)% to +1.5% − Widespread network strength, including Caribbean and Fort Lauderdale − Final hurricane impact was lower than i
Slide 10: Financial Update & Outlook
FINANCIAL UPDATE & OUTLOOK STEVE PRIEST EVP CHIEF FINANCIAL OFFICER 10
Slide 11: 4Q 2017 Results
11 4Q 2017 RESULTS INCOME STATEMENT ($ billion) PRE-TAX PROFIT MARGIN UNIT REVENUES AND COSTS ($ cents) 4Q 2017 4Q 2016 Variation Total Op Rev 12.66 12.43 1.8% SW&B, P/S 3.53 3.24 9.0% Fuel 2.65 2.21 20.2% Ownership 1.73 1.60 7.9% MM&R 1.12 1.03 8.7% Other 2.27 2.11 6.9% Total Op Costs 11.30 10.19 1
Slide 12: Unit Costs: Managing Near Term Headwinds
12 QUARTERLY CASM EX-FUEL YOY GROWTH* 8.1% 4.8% 4Q 2017 2017 1Q 2018E 2018E UNIT COSTS: MANAGING NEAR TERM HEADWINDS **Refer to Appendix A on Non-GAAP Financial Measures (1.0%) – 1.0% • 2017 CASM ex-fuel at top end of initial guidance − Reduced capacity three times during course of 2017 − Excludes h
Slide 13: Structural Cost Program Savings Opportunity
13 CATEGORY SAVINGS OPPORTUNITY COMPLETED + WORK IN PROGRESS ADDITIONAL DETAILS Tech Ops $100 – $125M Ongoing RFPs for V2500 heavy maintenance and NEO engines Optimizing heavy maintenance planning and spare parts inventory via new technology Corporate $75 – $90M Achieved $20M in 2020 projected run r
Slide 14: CASM ex-Fuel Growth Slowing
14 CASM EX-FUEL YOY GROWTH 4.10% 5.30% 1H 2017 2H 2017 1H 2018 2H 2018 CASM EX-FUEL GROWTH SLOWING • CASM ex-fuel growth negative by 2H18 − Expected to decline 2.0% or more, including impact of storms in 2017 and one-time Crewmember bonus • 2H 2018 CASM trends lower as Structural Cost benefits ramp
Slide 15: Fleet: Accretive Fleet Growth
15 FLEET: ACCRETIVE FLEET GROWTH AIRBUS ORDER BOOKFLEET DETAIL CEO: Current Engine Option; NEO: New Engine Option • Flexibility in order book allows for selecting most margin- accretive configuration - Expect a mix of Mint/All-Core-seat deliveries in 2018 Year A320neo A321ceo A321neo Total 2018 - 10
Slide 16: Leverage and Capex: Balanced Capital Allocation
16 1Q 2018E 2018E 2017-2020E LEVERAGE AND CAPEX: BALANCED CAPITAL ALLOCATION ADJUSTED DEBT / CAP RATIO Aircraft Non-Aircraft Average of ~$1.1bn* *Includes Aircraft and Non-Aircraft Capital Expenditures $150m - $200m $750m - $900m $190m - $225m $35m - $50m CAPITAL EXPENDITURES Adj Debt / Cap = On Bal
Slide 17: 2018 Guidance Summary
17 2018 GUIDANCE SUMMARY 1Q 2018 2018 Capacity 3.5% - 5.5% 6.5% - 8.5% RASM 2.5% to 5.5% N/A CASM ex-Fuel 2.0% - 4.0% (1.0%) – 1.0% All-In Fuel Price $2.16 N/A CAPEX (Aircraft) $190 - $225 million $750 - $900 million CAPEX (Non-Aircraft) $35 - $50 million $150 - $200 million Other Income / (Expense)
Slide 18: Questions
QUESTIONS 18
Slide 19: Appendix A: Impact Summary of Hurricanes Irma and Maria
19 FINANCIAL IMPACT APPENDIX A: IMPACT SUMMARY OF HURRICANES IRMA AND MARIA OPERATIONAL IMPACT • 2,500+ flights cancelled, net of 550+ extra flights dispatched • Operational disruption for over 30 consecutive days • Revenue impact 3Q: $46.1 million; 4Q: $63.9 million • Operating income impact 3Q: $3
Slide 20: Appendix B: Other Non-Airline Operating Expenses
20 $8 $9 $9 $9 $36 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018E 2017 2018E APPENDIX B: OTHER NON-AIRLINE OPERATING EXPENSES (JBTP/JTV EXPENSES, $m) $7 - $12 $35 - $45
Slide 21: Appendix C: Revenue Recognition Expected Timeline and Directional Impact
21 APPENDIX C: REVENUE RECOGNITION EXPECTED TIMELINE AND DIRECTIONAL IMPACT* Directional Impact 2018 RASM Lower RASM Growth Not significant PRASM Higher CASM ex-Fuel Not significant Pre-Tax Margin Lower EPS Slightly lower • 4Q 2017 Earnings Call (January 2018) − 4Q 2017 and 2017 results under ASC 60
Slide 22: Appendix D: Note on Non-GAAP Financial Measures
22 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 re