2022 will be a “transitional year” for US low-cost carrier JetBlue. It plans to pull “meaningful levers” to restore its earnings and improve on costs after reporting a $182 million net loss for 2021, including a $129 million loss in the fourth quarter on January 27. JetBlue to get into higher gear in Northeast market.
JetBlue’s market in the US Northeast, notably New York, has been significantly impacted by rising Omicron infections since the fourth quarter, resulting in cancelations from customers and soft forward bookings. It was also confronted with flight cancelations from a staff shortage. This translated into the $129 million net loss for Q4, which compares to $-373 million in 2020. The operating loss was $163 million (2020: $-512 million), while revenues almost tripled to $1.8 billion from $661 million.
As such, Chief Operating Officer, Joanna Geraghty, is happy about the underlying revenue performance. But the Q4 net result reflects less favorable against the profitable second and third quarters when JetBlue reported a $64 and $130 million profit respectively.
The $182 million full-year loss compares to $-1.354 billion in 2020, which is a significant improvement. The operating loss was $263 million versus $-1.893 billion the previous year, while total revenues improved by 104.2 percent to $6.037 billion. Operating expenses were 31 percent up to $6.1 billion, notably fuel by 127.7 percent to $1.436 billion. JetBlue ended 2021 with $2.8 billion in liquidity. During 2021, it reduced its adjusted debt from $5.1 to $4.3 billion, of which $120 million in the fourth quarter.
As with all airlines, Omicron is the big spoiler on the way back to sustained profitability. Without it, JetBlue would have had a stronger first quarter than it had in 2019, but it now expects revenues to be down between eleven and sixteen percent of the pre-Covid year. The rapid decline of the virus should result in pent-up demand for Q2 and a very strong summer peak, the carrier hopes. JetBlue’s Q1 capacity should move between -1 and +2 percent compared to 2019, but from Q2 is set to grow by eleven to fifteen percent again. This should bring sustainable profitability and a sequential improvement of pre-tax profit margins.
75 percent of 2022 growth to come from the Northeast
JetBlue plans to capitalize on its Northeast Alliance with American Airlines, which was launched in February last year. Both airlines are now codesharing on 185 routes and plan to offer 300 daily departures at New York JFK and 250 at LaGuardia. 75 Percent of JetBlue’s 2022 growth is to come from the Northeast. Its transatlantic routes to London won’t have a meaningful share in this.
JetBlue started London services last August. It said in December that it will extend services from JFK to Heathrow until October and will continue to operate between JFK and London Gatwick. It remains committed to launching Boston to London this summer. Demand for its Mint premium products has been high. “London will take its place in the hall of fame”, said CEO Robin Hayes. Head of revenue and planning, Dave Clark, said that the focus this year will be on further developing the UK market but JetBlue will continue to look to go into other markets as well. Geraghty said back in 2019 that Germany, The Netherlands, and France are also on the airline’s list.
Costs excluding fuel are expected to be up by thirteen to fifteen percent in Q1, before slowing down to one to five percent up from 2019. Fuel costs are a moving target this year. They impacted JetBlue’s costs already in Q4, but in line with many competitors, the low-cost airline has opted no longer to hedge fuel for the current quarter. It expects an average fuel price of $2.59 per gallon in Q1, which is higher than the $2.25-2.35 that Southwest is counting on. To make sure that it is adequately staffed, JetBlue plans to hire 5.000 new employees this year.
JetBlue expects to take delivery of twelve aircraft this year, nine Airbus A220-300s and three A321LRs. In 2023, eighteen A220s, six A321neo’s, and five -LRs, or 29 in total, will join the fleet, while four A320ceo’s and six leased Embraer E190s will be retired. Speaking about the Embraer’s, Robin Hayes said that JetBlue isn’t “entirely out of the woods” as far as 5G-issues are concerned. The radio altimeters on the E190s are more sensitive to the 5G C-band frequencies, restricting their operationality to some airports.
