JetBlue Profit Falls, Still Beats Expectations

JetBlue Airways Corp. (JBLU) on Thursday said profit fell by more than half in the first quarter, but its earnings still topped Wall Street estimates as the low-cost carrier fended off soaring fuel costs amid a bounceback in passenger traffic.

The company's profit report came as a relief to investors after legacy airlines Delta (DAL) and Northwest (NWAC) posted wider quarterly losses earlier in the day. Shares of JetBlue jumped $1.28, or 6.6 percent, to close at $20.75 on the Nasdaq.

Quarterly income plunged 54 percent to $7 million, or 6 cents per share, from $15.2 million, or 14 cents, in the year-ago period. Revenue totaled $374.2 million, up 30 percent from $289 million the year before.

The company's results came in well ahead of the average estimate for earnings of 3 cents per share and $366.2 million in revenue from analysts surveyed by Thomson Financial.

Passenger revenue surged 28 percent to reach $357.9 million for the period as overall traffic of 4.43 billion revenue passenger miles — one passenger flown a mile — improved 31.5 percent, the company said.

Last quarter, JetBlue expanded its total capacity by 22.5 percent, and planes were 85.8 percent full compared with 79.9 percent occupancy the year before. However, the amount JetBlue earned for each passenger mile, or yield, declined 2.7 percent to 8.07 cents.

Its average airfare remained flat at $105.26, JetBlue said.

Despite the upswing in passenger traffic, JetBlue's bottom line faced immense pressure from lofty aircraft fuel prices, which have plagued the industry over the past year and driven some carriers into deep financial troubles.

JetBlue spent $86.6 million on aircraft fuel last quarter, an increase of 76 percent from $49.2 million spent a year ago. The average fuel cost swelled 42.6 percent to $1.31 per gallon, JetBlue said.

Still, Chairman and Chief Executive David Neeleman (search) called JetBlue's quarterly performance "strong" and said that aside from fuel costs, "our operating margin actually improved slightly."

On a reported basis, operating margin shrank to 6.9 percent from 11.3 percent last year. Using comparable fuel rates, however, its operating margin would have grown to 12.7 percent, the company said.

Neeleman said in a statement that JetBlue is "seeing good strength in the second quarter," but he later warned analysts on a conference call that operating margin would be less than expected in 2005.