JetBlue(JBLU) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements JetBlue's unaudited condensed consolidated financial statements for the period ended June 30, 2024, including balance sheets, income, cash flows, and detailed notes, are presented Consolidated Balance Sheets Total assets slightly increased, liabilities rose due to debt, and stockholders' equity decreased, reflecting the net loss as of June 30, 2024 Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $13,993 | $13,853 | | Cash and cash equivalents | $1,312 | $1,166 | | Total property and equipment, net | $10,296 | $9,675 | | Total Liabilities | $11,296 | $10,516 | | Air traffic liability | $2,354 | $2,203 | | Long-term debt and finance lease obligations | $5,016 | $4,409 | | Total Stockholders' Equity | $2,697 | $3,337 | Consolidated Statements of Operations Q2 2024 net income significantly decreased, while the six-month period saw a widened net loss primarily due to Spirit merger termination charges Q2 Operating Results (in millions, except EPS) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total operating revenues | $2,428 | $2,610 | -6.9% | | Operating income | $57 | $235 | -75.7% | | Net income | $25 | $138 | -81.9% | | Diluted EPS | $0.07 | $0.41 | -82.9% | Six-Month Operating Results (in millions, except EPS) | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Total operating revenues | $4,637 | $4,937 | -6.1% | | Operating loss | $(663) | $(7) | N/A | | Net loss | $(691) | $(54) | N/A | | Diluted EPS | $(2.02) | $(0.16) | N/A | - Special items significantly impacted results, totaling $563 million for the first six months of 2024 compared to $136 million in the same period of 2023[17] Condensed Consolidated Statements of Cash Flows Net cash from operations sharply declined, investing activities increased, and financing activities provided significant cash for the six months ended June 30, 2024 Six-Month Cash Flow Summary (in millions) | Cash Flow Activity | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $190 | $663 | | Net cash used in investing activities | $(668) | $(375) | | Net cash provided by financing activities | $607 | $134 | | Increase (decrease) in cash | $129 | $422 | Notes to Condensed Consolidated Financial Statements Notes detail revenue, liabilities, debt, and significant commitments, including substantial costs from the terminated Spirit merger - As of June 30, 2024, contract liabilities, primarily from ticket sales and loyalty points, totaled $2.77 billion[40][41] - The company has firm commitments for 117 new aircraft, including 68 Airbus A220s and 49 A321neos, with total committed expenditures of $6.5 billion[61][62][63] Special Items for Six Months Ended June 30, 2024 (in millions) | Item | Amount | | :--- | :--- | | Spirit-related costs | $532 | | Voluntary opt-out costs | $16 | | Embraer E190 fleet transition costs | $15 | | Total Special Items | $563 | - The termination of the Spirit merger resulted in a $69 million breakup fee payment and the write-off of $425 million in prepayments to Spirit shareholders, which were recorded as special items[102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2024 financial results, strategic framework, network adjustments, and operational challenges, including liquidity and non-GAAP measures Overview and Recent Developments JetBlue achieved Q2 net income despite capacity decrease, launched 'JetForward' strategy, adjusted its network, and faced ongoing Pratt & Whitney engine issues - Announced the 'JetForward' strategic framework focused on four priorities: reliable service, building the best east coast leisure network, valuable products, and a secure financial future[106] - Agreed with Airbus to defer 44 A321neo aircraft deliveries from 2025-2029 to 2030 and beyond, pursuing capital-light growth by extending the lives of approximately 30 A320 aircraft[110] - Pratt & Whitney engine issues have led to an average of 11 aircraft grounded through H1 2024, with this number expected to remain consistent for the rest of the year and rise to the mid-to-high teens in 2025[111] Results of Operations Q2 operating revenue decreased with flat expenses, while H1 saw a significant operating loss due to merger termination costs, impacting CASM ex-fuel Q2 2024 vs Q2 2023 Key Metrics | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Operating revenue per ASM (cents) | 14.38 | 15.04 | -4.4% | | Operating expense per ASM (cents) | 14.04 | 13.68 | +2.6% | | Available seat miles (ASMs) (millions) | 16,887 | 17,353 | -2.7% | | Load factor | 84.0% | 85.3% | -1.3 pts | H1 2024 vs H1 2023 Key Metrics | Metric | H1 2024 | H1 2023 | % Change | | :--- | :--- | :--- | :--- | | Operating revenue per ASM (cents) | 13.97 | 14.47 | -3.5% | | Operating expense per ASM (cents) | 15.96 | 14.49 | +10.2% | | Available seat miles (ASMs) (millions) | 33,200 | 34,122 | -2.7% | | Load factor | 81.9% | 82.6% | -0.7 pts | Liquidity and Capital Resources JetBlue maintains $1.6 billion in cash, but operating cash flow decreased, and the working capital deficit increased, with significant future cash requirements - The company had $1.6 billion in unrestricted cash, cash equivalents, and marketable securities at June 30, 2024[143] - Operating cash flow decreased to $190 million for the first six months of 2024, compared to $663 million for the same period in 2023, driven by changes in working capital and the Spirit merger termination[144] - The working capital deficit increased from $1.5 billion at year-end 2023 to $1.8 billion at June 30, 2024[149] Item 3. Quantitative and Qualitative Disclosures About Market Risk JetBlue faces market risks from fuel price volatility and interest rate changes, with a 10% fuel increase impacting annual expense by $234 million - A hypothetical 10% increase in the cost per gallon of fuel would increase annual aircraft fuel expense by approximately $234 million[179] - A 100 basis point increase in interest rates would increase annual interest expense by approximately $7 million due to the company's variable-rate debt[180] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[181] - No changes occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[182] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings and claims in the ordinary course of business, with details in Note 6 of the financial statements - The company is party to various legal proceedings incidental to its business operations, with further details provided in Note 6 to the financial statements[184] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the 2023 Form 10-K have occurred - No material changes have occurred in the company's risk factors since the filing of the 2023 Form 10-K[185] Item 5. Other Information The company amended its credit facility on July 29, 2024, extending its maturity to 2029 and modifying key terms - On July 29, 2024, the company amended its credit facility, extending its maturity to 2029 and modifying several key terms, including liquidity requirements and eligible collateral[187]