JetBlue Defers Airbus Deliveries As Revenues Are Down 76%
US hybrid carrier JetBlue today revealed that it had deferred Airbus deliveries as it presented its Q3 results. The airline also told how its revenues are down by 76% year on year due to the continued global passenger downturn.
‘Tis the season. However, rather than being the season of giving, it is the season of results calls. All of the major US airlines are revealing their quarterly results for the period from July to September. Earlier this month, United Airlines announced a $1.8 billion net loss for the quarter. Meanwhile, American Airlines posted a sizeable $2.4 billion loss last week. Now it’s JetBlue’s turn.
Revenue down 76%
All airlines around the world are seeing their results impacted by the COVID-19 pandemic. The United States airlines are no exception to this rule. JetBlue is currently suffering from a severe lack of passengers. Of course, with fewer passengers traveling, fewer tickets are sold. This, in turn, means that less money is coming into the airline.
Indeed, JetBlue reported that is third-quarter revenue had fallen by 76% year on year. However, things could be worse. The airline had been planning for this reduction to reach 80%. The airline reported a pre-tax loss of $578 million for the quarter. This compares to a pre-tax profit of $254 last year.
Capacity remains down
The airline’s capacity has, understandably, been reduced as a result of the current situation. Indeed, JetBlue operated just 42% of the schedule that it had run in Q3 2019. However, running fewer flights did have one benefit. It means that the airline’s operating expenses were reduced. After all, you don’t need to pay to fuel an aircraft that’s not flying. In total, operating expenses declined 45% year over year.
The airline has been prompted to reassess its plans to cope with the current situation. It has refinanced a $1bn loan maturing in early 2021 and taken $114 million from the CARES loan facility.
One of the changes made concerns the delivery of Airbus aircraft. The airline reported that it had reached a second agreement with Airbus to delay deliveries of its aircraft. The majority of an aircraft’s cost is paid on delivery, meaning that this can save quite a bit of cash in the short term. The airline has so far reduced its capital expenditure by $2 billion by 2022. Later this year, JetBlue is expected to take delivery of its first Airbus A220.
Commenting on the future, Joanna Geraghty, JetBlue’s President and Chief Operating Officer, said,
“Our planning assumption for the fourth quarter is a revenue decline of approximately 65% year over year. Although there still quite a lot of uncertainty about the evolution of the coronavirus, we are starting to see the booking curve extend slightly into the upcoming Thanksgiving and December holiday travel period…”
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