JetBlue’s Q3 results driven by strong revenue performance

JetBlue Airways reported net income of $35 million in the third quarter. The airline continued to focus on revenue diversification during shoulder periods and aggressive cost management, helping it to mitigate the impact of escalating fuel prices.

Dave Barger, JetBlue’s president and CEO, said, “Despite challenging economic conditions and severe weather, we generated record revenues while reducing non-fuel unit costs. These results demonstrate that our business plan is working.”

Focus

The airline stated that an important objective of its strategy is to improve revenue performance during shoulder periods. Barger believes improving revenue performance during off-peak travel periods is essential to sustained revenue growth.

“As such, we’re very pleased with our year-over-year increase in PRASM of 13 percent in September, historically an off-peak travel period for JetBlue,” said Barger. “Our long-term goal is to consistently achieve a return on invested capital that exceeds our cost of capital. While we clearly have more work to do, we believe moving to an ROIC (Return On Invested Capital) metric is appropriate for us, and we anticipate measuring ourselves accordingly,” said Barger, as per the airline’s earnings call transcript available on SeekingAlpha.com.

“Our focus on improving revenue performance during shoulder periods by, among other actions, better accommodating business traffic in Boston drove solid unit revenue growth during the third quarter,” said Robin Hayes, JetBlue’s chief commercial officer.

Ancillary Revenues

During the third quarter, ancillary revenue for passenger was about $19, a year-over-year increase of 7%. This increase was driven primarily by the airline’s Even More Space product.

“Even More Space is on track to generate more than $100 million in 2011 revenue. In response to the strong customer demand for this offering, we recently added up to 6 seats to the Even More Space inventory on our aircraft,” said Mark Powers, JetBlue’s CFO.

“On a unit basis, third quarter total revenue did not grow as quickly as passenger revenue. Due to the lingering nature of Hurricane Irene, we voluntarily waived significant change fees for our customers, resulting in lower change fee ancillary revenue,” said Powers.

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