JetBlue Airways Inc. confounded forecasts it would lose money in the fourth quarter and predicted Thursday it would stay in the black for all of 2005, riding out high fuel costs and cutthroat competition.
JetBlue, which has posted a profit every quarter since its initial public offering in April 2002, said fourth-quarter net income plunged to $2.4 million, or 2 cents a share, from $19.54 million, or 17 cents a share, a year earlier.
Wall Street analysts, on average, expected a loss of 4 cents a share.
Calming concern the low-cost carrier, which offers frills like individual satellite television and leather seats, would slip into the red in the first quarter, JetBlue’s chief executive told analysts its profit streak would continue.
“It will be another tough year but JetBlue was built for the really bad times,” said CEO David Neeleman. “We expect to be profitable in all four quarters in 2005.”
Shares of the airline were up 2 percent in late morning trading, trimming earlier gains of over 5 percent, but still outperforming the DJ U.S. Airlines index, which was down 0.3 percent.
“The market liked what they heard, saying they’re going to be consistently profitable,” said Ray Neidl, an analyst at Calyon Securities. “The first half is going to be harsh but they’ve proven their mettle. Low cost carriers with good service will win out.”
JetBlue shares have slid about 25 percent since the end of 2003, about in line with a hard-hit airline sector.
Automated kiosks planned
The airline will add 14 Airbus A320 jets to its existing fleet of 70 planes this year, along with 7 Embraer E190 regional jets, increasing available seats by 27 to 29 percent.
“Solid results for a tough quarter,” said JP Morgan analyst Jamie Baker in a research note, adding that the airline’s bottom line had been helped by lower-than-expected costs.
Neeleman said JetBlue will look for new ways to lower expenses this year, including greater use of automated kiosks to check in passengers and their baggage.
Revenue-boosting moves will include launching a co-branded credit card and packaging its air services together with hotels and car rental services.
Neeleman said he expected the airline’s operating profit margin to be 4 to 6 percent in the first quarter of 2005 and 7 to 9 percent for the full year.
JetBlue, which like other airlines has been struggling with record high fuel prices, said it had realized a $13.1 million benefit in the quarter from a fuel hedging program.
JetBlue, the second-largest U.S. airline by market value after low-cost carrier Southwest Airlines, said operating revenue rose 27 percent to $334 million.
The New York-based airline said it ended the quarter with $410.4 million in cash and cash equivalents, down from $570.7 million a year ago, but forecast its cash level would remain roughly stable this year.
The airline’s passenger load factor — a measure of how successfully it filled its planes — fell by 0.2 percentage points to 82.9 percent.
Passenger traffic surged 36 percent, about in line with the airline’s increase in capacity for the period.
