PREVIEW
The COVID-19 pandemic continued to negatively impact our business and operating results in the first quarter of 2022. We saw continued improvements in our business during the first quarter, and we expect these to continue. will continue throughout 2022.
First quarter 2022 results
Our operating results in the first quarter of 2021 and 2020 were adversely impacted by the COVID-19 pandemic. As a result, comparisons of our year-over-year performance are inflated and would not necessarily be indicative of our future operating results. In certain cases, we have also provided comparisons of our first quarter 2022 results to our first quarter 2019 results, which are more reflective of pre-pandemic operations, allowing for a better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery.
• System capacity in the first quarter increased 69.2% year over year and decreased 0.3% compared to the first quarter of 2019.
•Revenue for the first quarter of 2022 increased by 137.0%, or$1.0 billion year-over-year, to$1.7 billion . Compared to the first quarter of 2019, revenue decreased by 7.2%, or$135 million .
• Operating revenue per available seat mile (“RASM”) for the first quarter of 2022 increased 40.0% year-over-year to reach
• Operating expenses for the first quarter of 2022 increased 104.8% year-over-year to reach
• Operating expenses per available seat mile (“CASM”) for the first quarter of 2022 increased 21.0% year-over-year to reach
•Our operating expense for the first quarter of 2021 and 2019 included the effects of special items. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense(1) increased by 36.3% to$1.5 billion year-over-year. This compares to an increase of 13.5% from the first quarter of 2019. Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for details of the special items. •Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile ("CASM ex-fuel")(1) decreased by 19.4% year-over-year to9.87 cents for the first quarter of 2022. This compares to an increase of 13.9% from the first quarter of 2019. •Our reported (loss) earnings per share for the first quarter of 2022, 2021, and 2019 were$(0.79) ,$(0.78) , and$0.14 , respectively. Excluding mark-to-market and certain gains and losses on our investments, our adjusted loss per share(1) for the first quarter of 2022 was$(0.80) . Excluding special items, our adjusted (loss) earnings per share(1) for the first quarter of 2021 and 2019 were$(1.48) and$0.16 , respectively. Network
Thanks to our NEA with American, we added three new destinations to our network in the first quarter of 2022.
Destination Service Commenced
Puerto Vallarta, Mexico February 19, 2022
Kansas City, Missouri March 27, 2022
Milwaukee, Wisconsin March 27, 2022
We plan to continue to diversify our network as we recover from the pandemic. We previously announced services to the following new destinations:
Destination Service Expected to Commence
Vancouver, Canada June 9, 2022
Asheville, North Carolina June 16, 2022
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
22 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Following the success of our inaugural transatlantic service betweenNew York's John F. Kennedy International Airport andLondon , which began inAugust 2021 , we have announced plans to begin service toLondon fromBoston Logan International Airport this summer. Fleet InFebruary 2022 , we exercised our option to purchase 30 additional Airbus A220-300 aircraft under our existing agreement withAirbus Canada Limited Partnership . The 30 additional A220-300 aircraft are expected to be delivered from 2022 to 2026. Options for 20 additional A220-300 aircraft remain available to us. Properties Reaffirming our commitment toNew York , inFebruary 2022 , we executed a new lease for our primary corporate offices that will extend our stay in the present Long Island City location until 2039. This new lease contributed$59 million to our total operating lease assets and liabilities balances atMarch 31, 2022 .
Environment, Social and Governance (“ESG”)
We remain focused on maintaining our leadership in ESG initiatives. Our efforts include:
•InMarch 2022 , theJetBlue Foundation awarded 10 charitable organizations with grants to support and advance their education and mentorship programs. These grants are expected to further the Foundation's mission of increased advocacy for inclusion, gender and racial parity within science, technology, engineering and math education, and aviation.
•We have expanded our
• We have invested in
•In
•In
Outlook for 2022
We are pleased with the momentum in demand and revenue trends which accelerated
throughout the first quarter. We expect revenue for the second quarter of 2022
to increase between 11% to 16 % compared to the same period in 2019, sustained
by the underlying momentum.
To alleviate the recent operational challenges, we are further moderating our
capacity growth for the remainder of the year. For the second quarter of 2022,
we expect capacity to increase between 0% to 3% compared to the same period in
2019. Full year 2022 capacity is expected to increase between 0% to 5% compared
to 2019. Our original expectation for full year 2022 capacity was an increase of
between 11% to 15% versus 2019. We believe our operational investments and
capacity reductions will improve our operational performance in the coming
months while we expect to fly a record number of customers. Given our reduced
capacity outlook, we are also exploring the potential to accelerate the
retirement of some of our older aircraft.
Operating expenses per available seat mile, excluding fuel and related taxes,
other non-airline operating expenses, and special items ("CASM Ex-Fuel")(1) for
the second quarter of 2022 is expected to increase between 15% to 17%. This
increase is primarily attributed to the following factors: certain inefficient,
close-in capacity reductions; premium and incentive pay to our frontline
crewmembers to support the operation; ramp-up costs to maintain our hiring pace
for the summer; and recent changes
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
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to the collective agreement with our group of pilots. We expect a 10-15% increase in CASM Ex-Fuel for the full year of 2022 compared to 2019.
Despite the temporary cost challenges expected in the near term, we expect the Company to return to profitability in the second half of 2022.
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
24 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS
Three months completed
Insight
We reported a net loss of$255 million , an operating loss of$367 million and an operating margin of (21.1)% for the three months endedMarch 31, 2022 . This compares to a net loss of$247 million , an operating loss of$294 million and an operating margin of (40.2)% for the three months endedMarch 31, 2021 . Loss per share was$(0.79) for the three months endedMarch 31, 2022 compared to$(0.78) for the same period in 2021. Our reported results for the three months endedMarch 31, 2022 included mark-to-market and certain gains and losses on our investments. Adjusting for these items, our adjusted net loss(1) was$256 million , and adjusted loss per share(1) was$(0.80) for the three months endedMarch 31, 2022 . Our reported results for the three months endedMarch 31, 2021 included the effects of special items. Adjusting for these special items(1), our adjusted net loss(1) was$467 million , adjusted operating loss(1) was$583 million , adjusted operating margin(1) was (79.6)%, and adjusted loss per share(1) was$(1.48) for the three months endedMarch 31, 2021 . On-time performance, as defined by theDepartment of Transportation ("DOT"), is arrival within 14 minutes of scheduled arrival time. In the first quarter of 2022, our system wide on-time performance was 65.6% compared to 78.9% for the same period in 2021. Our completion factor decreased by 3.0 points to 94.9% in the first quarter of 2022 from 97.9% for the same period in 2021. We experienced operational challenges in the first quarter of 2022 which continued into April.
operating income
(Revenues in millions; percent Three Months Ended March 31, Year-over-Year Change changes based on unrounded numbers) 2022 2021 $ % Passenger revenue$ 1,603 $ 670 $ 933 139.5 % Other revenue 133 63 70 111.0 Total operating revenues$ 1,736 $ 733 $ 1,003 137.0 % Average Fare$ 195.99 $ 149.97 $ 46.02 30.7 % Yield per passenger mile (cents) 14.67 11.52 3.15 27.3 Passenger revenue per ASM (cents) 10.42 7.36 3.06 41.5 Operating revenue per ASM (cents) 11.29 8.06 3.23 40.0 Average stage length (miles) 1,231 1,277 (46) (3.6) Revenue passengers (thousands) 8,177 4,463 3,714 83.2 Revenue passenger miles (millions) 10,927 5,808 5,119 88.1 Available Seat Miles (ASMs) (millions) 15,383 9,090 6,293 69.2 Load Factor 71.0 % 63.9 % 7.1 pts. Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The increase in passenger revenue of$933 million , or 139.5%, for the three months endedMarch 31, 2022 compared to the same period in 2021, was primarily driven by the return in demand for travel as we continue to recover from the COVID-19 pandemic. Revenue passengers increased by 83.2% to 8.2 million for the three months endedMarch 31, 2022 from 4.5 million for the same period in 2021. Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, ground handling fees received from other airlines, and rental income. The increase in other revenue of$70 million , or 111.0%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend along with improved metrics from our new co-branded credit card agreements, which became effective in mid-2021.
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
25 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our first quarter 2022 results were characterized by a very strong demand acceleration, with revenue coming in more than six points ahead of our original forecast of a decline between 11% and 16% compared to the same period in 2019. Load factors improved meaningfully from an average of 62% in January to 80% in March. We delivered positive year-over-three revenue growth in the month of March as we exited the quarter with tremendous revenue momentum driven by very strong underlying travel demand across our business.
Functionnary costs
In detail, our operating costs per available seat mile, or ASM, were as follows:
(in millions; per ASM data Three Months Ended March 31, Year-over-Year Change Cents per ASM in cents; percent changes based on unrounded numbers) 2022 2021 $ % 2022 2021 % Change Aircraft fuel and related taxes$ 571 $ 193 $ 378 195.0 % 3.71 2.13 74.3 % Salaries, wages and benefits 688 521 167 32.0 4.47 5.74
(22.0)
Landing fees and other rents 132 115 17 14.8 0.86 1.26 (32.2) Depreciation and amortization 143 125 18 15.1 0.93 1.37 (32.0) Aircraft rent 26 25 1 4.2 0.17 0.27 (38.4) Sales and marketing 57 23 34 152.9 0.37 0.25 49.4 Maintenance, materials and repairs 152 104 48 45.8 0.99 1.15
(13.8)
Other operating expenses 334 210 124 59.2 2.17 2.31 (5.9) Special items - (289) 289 (100.0) - (3.18) (100.0)
Total operating expenses
1,076 104.8 % 13.67 11.30
21.0%
Total operating expenses excluding special items(1)$ 2,103 $ 1,316 $ 787 59.8 % 13.67 14.48
(5.6)%
Aviation fuel and related taxes
Aircraft fuel and related taxes increased by$378 million , or 195.0%, for the three months endedMarch 31, 2022 compared to the same period in 2021. The average fuel price for the three months endedMarch 31, 2022 increased by 68.4% to$2.90 per gallon. Our fuel consumption increased by 75.2%, or 85 million gallons, due to the increase in capacity as demand for travel returned. Scheduled departures increased to 78,393 flights, or 78.0%, for the three months endedMarch 31, 2022 . Given the significant rise in fuel costs, we moderated our capacity growth for the first quarter of 2022.
Salaries, wages and benefits
Salaries, wages and benefits increased by$167 million , or 32.0%, for the three months endedMarch 31, 2022 compared to the same period in 2021. The increase was driven primarily by higher total hours worked by our crewmembers as we align our workforce with the increased demand for travel. As ofMarch 31, 2022 , we have approximately 23,500 crewmembers compared to approximately 20,000 crewmembers atMarch 31, 2021 . The average number of full-time equivalent crewmembers increased by 33.2% compared to the same period in 2021. We expect near-term pressures on salaries, wages and benefits driven by premium and incentive pay to our frontline crewmembers to support the operation, ramp-up costs to maintain our hiring pace for the summer, and recent changes to the collective bargaining agreement with our pilots group.
Landing fees and other rents
Landing fees and other rents increased by$17 million , or 14.8%, for the three months endedMarch 31, 2022 compared to the same period in 2021 primarily due to increases in departures.
Depreciation and amortization
Depreciation and amortization increased by$18 million , or 15.1%, for the three months endedMarch 31, 2022 compared to the same period in 2021 primarily driven by the addition of 16 new aircraft that were placed into service sinceMarch 31, 2021 . The average number of our operating aircraft increased by 6.0% during the three months endedMarch 31, 2022 as compared to the same period in 2021.
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
26 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales and Marketing Sales and marketing increased$34 million , or 152.9%, for the three months endedMarch 31, 2022 compared to the same period in 2021 principally driven by higher credit card fees and computer reservation system charges, which are directly related to return in demand as we continue to recover from the pandemic. Revenue passengers increased by 4 million, or 83.2%, year-over-year.
Materials and repairs
Upkeep materials and repairs increased
Other operating expenses
Other operating expenses consist of the following categories: outside services (including expenses related to fueling, ground handling, skycap, security, and janitorial services), insurance, personnel expenses, professional fees, onboard supplies, shop and office supplies, bad debts, communication costs, and taxes other than payroll and fuel taxes. Other operating expenses increased$124 million , or 59.2%, for the three months endedMarch 31, 2022 compared to the same period in 2021 as we ramped up the level of our operations in response to the return in demand for air travel.
Special items
Special items for the three months ended
• Costs of
• Costs of
There were no special items for the three months ended
Operational statistics
The following table presents our operating statistics for the three months ended
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Three Months Ended March 31, Year-over-Year Change
(percent changes based on unrounded numbers) 2022 2021 %
Operational Statistics
Revenue passengers (thousands) 8,177 4,463 83.2
Revenue passenger miles (RPMs) (millions) 10,927 5,808 88.1
Available seat miles (ASMs) (millions) 15,383 9,090 69.2
Load factor 71.0 % 63.9 % 7.1 pts
Aircraft utilization (hours per day) 9.9 5.9 67.8
Average fare $ 195.99 $ 149.97 30.7
Yield per passenger mile (cents) 14.67 11.52 27.3
Passenger revenue per ASM (cents) 10.42 7.36 41.5
Operating revenue per ASM (cents) 11.29 8.06 40.0
Operating expense per ASM (cents) 13.67 11.30 21.0
Operating expense per ASM, excluding fuel(1) 9.87 12.25 (19.4)
Departures 78,393 44,049 78.0
Average stage length (miles) 1,231 1,277 (3.6)
Average number of operating aircraft during 282.0 266.0 6.0
period
Average fuel cost per gallon, including fuel$ 2.90 $ 1.72 68.4
taxes
Fuel gallons consumed (millions) 197 112 75.2 Average number of full-time equivalent 19,304 14,493 crewmembers 33.2 Historical trends may not continue. The ongoing COVID-19 pandemic continues to cause disruptions in our operations. We expect our operating results to significantly fluctuate from quarter-to-quarter in the future due to the uncertainties surrounding the COVID-19 pandemic, its impact on the economy and consumer behavior, and various other factors which are outside of our control. Consequently, we believe quarter-to-quarter comparisons of our operating results may not necessarily be meaningful; you should not rely on our results for any one quarter as an indication of our future performance. As the aviation industry continues to recover from the impacts of the COVID-19 pandemic, airlines including us, have faced ongoing challenges ranging from the spread of the Omicron variant, staffing ramp up, workforce attrition, weather events, and air traffic delays. To address these challenges, we have announced a series of investments aimed at restoring crewmember and customer confidence for the upcoming summer travel season. These investments are centered around five initiatives: Schedule reduction A reduced schedule will offer more buffer and flexibility to recover from operational disruptions and put less stress on crew resources. We originally planned to grow our 2022 capacity by 11% to 15% compared to 2019. With a reduced schedule, we now plan to grow our 2022 capacity by 0% to 5% compared to 2019. Most importantly, we are reducing our summer schedule by more than 10% from our original plan, and scheduled aircraft utilization will be down by 10% to 15% compared to 2019. Even with the reductions, we expect to grow significantly inNew York's three major airports as part of the NEA, from 200 flights per day in 2019 to nearly 300 flights per day.
Hiring and training
Despite reductions in capacity growth, we will proceed with hiring efforts to increase staffing for the summer, including 5,000 new crewmembers inNew York . We have also increased our pilot training team and simulator capacity to meet the increase in demand resulting from pilot attrition.
Respond to customer call volume and wait times
Recent operational disruptions have led to a record number of calls into our customer support center and extended wait times. These disruptions, coupled with a greater number of customers taking advantage of ticket flexibility and calls regarding other COVID-related questions, have taxed customer service teams across the industry. Since last fall, we have onboarded more than 1,100 new hires into customer support and we continue to increase hiring and training while also bringing on outside
(1) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
28 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
support to help manage call volume. By this summer, we plan to have our largest customer support team ready to help customers as many embark on their first vacation or travel experience since the pandemic.
We are continuing to strengthen staffing for our suite of digital tools to help customers avoid waiting on hold, including online chat capabilities and support via iMessage. In addition, we are also improving self-service capabilities on our website to offer customers additional options to make changes without calling. Furthermore, we are also working to proactively cancel flights on days when bad weather is forecasted or if we anticipate air traffic control delays due to congestion or air traffic control center staffing shortages. Cancellations well in advance of scheduled departures will allow customers more time to adjust their plans.
Proactive aircraft maintenance efforts
The reduced schedule frees up aircraft time to give us additional opportunities to get ahead of planned maintenance programs. We are investing in additional preventative maintenance as well as reserving more aircraft as spares this summer to reduce the impact of maintenance-related cancellations and delays.
As the supply chain challenges of COVID-19 continue, we have pre-purchased long-lead parts, tools and equipment, as well as additional inventory of frequently used parts, in order to mitigate potential delays.
Preparation of facilities/infrastructure
This summer, we expect to operate approximately 190 daily flights from JFK as we continue to expand our footprint enabled by the NEA. With our heavy concentration in the Northeast and major operation at JFK, ensuring that JFK runs smoothly is essential for the entire network. In addition to hiring across workgroups, we are making a number of investments atJFK's Terminal 5 , which include:
•Redesign part of the lobby to add more kiosks and open up additional space for customer throughput.
• Rescheduling of flights for the busiest international markets to ensure sufficient lobby space is available for COVID documentation checks.
• Smooth out some of the peaks in the schedule to reduce congestion in the lobby,
• Assignment of ground crews to Terminal 5 gates and addition of ground equipment.
While summer reliability continues to be the focus, we expect to also see a significant improvement in our airport facilities across focus cities this fall, as new terminals and space become available to support our growth. We plan to consolidate or open new or renovated terminal spaces in LaGuardia,Newark , andOrlando .
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