JetBlue Airways Q4 Pre-Tax Loss Widens; Guides FY09

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Thursday, JetBlue Airways Corp. (JBLU), reported a wider pre-tax net loss for the fourth quarter, hurt by higher fuel expenses, despite a 9.8% growth in operating revenues. The company's quarterly load factor rose, while traffic and capacity declined from the comparable prior-year quarter. The company also issued fiscal 2009 outlook.

The low-cost airline posted reported a pre-tax loss of $49 million in the fourth quarter, compared to a loss of $3 million in the year-ago quarter. Pre-tax loss for the quarter included a special non-cash charge of $53 million related to the valuation of JetBlue's auction rate securities.

Excluding the special charge, JetBlue reported a pre-tax income for the quarter of $4 million, compared to a pre-tax loss of $3 million in the year-ago period.

JetBlue said it is evaluating the tax deductibility of the special charge, but has not yet finalized the amount given the technical nature of the issue. As a result, JetBlue said it was only reporting its pre-tax results.

Total operating revenues for the fourth quarter totaled $811 million, representing a growth of 9.8% over operating revenues of $739 million in the fourth quarter of 2007. On average, eight analysts polled by First Call/Thomson financial expected the company generate revenues of $807.82 million for the fourth quarter.

Traffic for the fourth quarter decreased 5% to 5.90 billion revenue passenger miles or RPMs from 6.21 billion RPMs reported in the last year quarter. Capacity declined 7.4% to 7.51 billion available seat miles or ASMs from 8.11 billion ASMs in the prior-year quarter, resulting in a load factor of 78.6%, up 2.0 points from 76.6% reported in the prior year quarter.

Yield per passenger mile for the fourth quarter grew 12.3% to 12.23 cents, passenger revenue per available seat mile increased 15.3% to 9.62 cents, and operating revenue per available seat mile rose 18.6% year-over-year to 10.80 cents.

JetBlue's operating expense per available seat mile or CASM increased 16.1% to 10.14 cents. Excluding fuel, CASM increased 17.2% to 6.42 cents.

During the quarter, JetBlue hedged about 24% of its fuel consumption, resulting in a realized fuel price of $2.67 per gallon, an increase of 14% over $2.34 in the fourth quarter 2007.

Total operating expenses increased 7.5% to $762 million from $709 million last year.

Commenting on the results, JetBlue's Chief Executive Officer, Dave Barger said, "Against the backdrop of record fuel prices and unprecedented economic challenges, we effectively managed our capacity and strengthened our network. We also made significant progress in our efforts to further enhance the JetBlue experience for our customers. JetBlue's industry-leading unit revenue growth throughout the year reflects the outstanding work of our crewmembers."

For fiscal 2008, JetBlue reported a pre-tax net loss of $76 million, compared to a pre-tax net income of $41 million in the previous year.

Total operating revenues for the full year increased 19.2% to $3.39 billion from $2.84 billion in the preceding year period. Analysts had a revenue consensus of $3.43 billion for fiscal 2008.

JetBlue expects an average fuel price per gallon, including the impact of hedges, of $2.07 in the first quarter and $1.99 for the full year 2009. The company expects lower fuel prices will provide significant savings to JetBlue in 2009.

For the first quarter of 2009, JetBlue expects to report an operating margin between 6% and 8%. Pre-tax margin for the quarter is expected to be between 0 and 2%.

For the full year 2009, JetBlue expects to report an operating margin between 12% and 14%. Pre-tax margin for the full year is expected to be between 6% and 8%.

JBLU is currently trading at $6.67, up $0.11 or 1.68%.

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