How JetBlue Hopes to Escape the COVID-19 Shock

By Paul Ausick Published Jul 28, 9:38AM EDT

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How JetBlue Hopes to Escape the COVID-19 Shock — © Christian Petersen / Getty Images News via Getty Images

JetBlue Airways Corp. (NASDAQ: JBLU) reported second-quarter 2020 results before markets opened Tuesday. The low-cost airline posted an adjusted diluted loss per share of $2.02 on revenues of $215 million. In the same period a year ago, the company reported earnings per share (EPS) of $0.60 and $2.15 billion in revenue. Second-quarter results also compare to the consensus estimates for a loss of $1.92 per share and revenues of $221.85 million.

The 90% decline in revenue was attributed to the COVID-19 pandemic and included an 85% decline in second-quarter capacity. These totals are in line with the airline industry overall, which has taken a severe beating due to the pandemic.

Excluding special items, operating costs fell by 50% year over year, and the airline said it had reduced costs by $900 million during the quarter.

JetBlue ended the quarter with about $2.9 billion in unrestricted cash and short-term investments. Included federal assistance, the company’s liquidity totaled $3.4 billion.

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Cash burn averaged $9.5 million a day in the quarter, and the airline expects third-quarter cash burn in a range of $7 million to $9 million daily.

CEO Robin Hayes noted that demand had improved “materially” since April lows but that bookings remain “choppy” and the company is positioning itself to address “changing trends” through the summer. Hayes also said the company has adopted a three-step framework to recover from the effects of the pandemic: reduce cash burn, rebuild margins and repair the balance sheet.

The company did not offer guidance, but analysts are forecasting a third-quarter loss per share of $1.22 on revenue of $721.14 million. For the full year, analysts are looking for a loss per share of $3.85 and revenue of $3.73 billion, a year-over-year decline of 54%.

Some 400,000 airline workers worldwide, including pilots and cabin crew, have lost their jobs as a result of the pandemic. Those that remain could face salary cuts. And for every job lost in aviation, an estimated 7.5 jobs are lost in the hotel and lodging sector.

JetBlue’s shares traded down about 0.7% Tuesday morning, at $10.15 in a 52-week range of $6.61 to $21.65. The consensus price target on the stock is $12.23.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.