While overall revenue may still be way down, the last month of the first quarter of 2021 saw New York-based JetBlue break cash even. Following a bigger than expected demand from mid-February onwards, the airline will now prioritize paying off high-cost debts as it makes its first steps back towards profitability.
Confident CEO after positive signs
Domestic air travel in the US continues its upward trajectory. While overall revenue understandably continued to lag significantly behind that of previous years, in its Q1 results released Tuesday, JetBlue said that it had managed to break even in operations for the month of March.
“Looking back to our work from 2020, I could not be more confident in our future. Our teams continue executing our comprehensive recovery plan, reducing our cash burn, rebuilding our margins, and repairing our balance sheet,” said Robin Hayes, JetBlue’s Chief Executive Officer, in a statement.
“We have seen positive cash from operations for March, and this milestone is our first step towards achieving positive EBITDA and returning to profitability,” he continued.
Demand grew more than expected for Q1
US airlines have been optimistic about domestic air travel demand following a relatively speedy rollout of COVID-19 vaccinations across the country. According to figures from the last couple of months, it would seem that their expectations may be met and even exceeded.
“While we initially anticipated trends improving during the quarter, we saw a bigger than expected step up in demand for leisure travel beginning in mid-February,” Joanna Geraghty, JetBlue’s President and Chief Operating Officer, said in a statement.
For the second quarter of 2021, the airline’s planning assumption for revenue is a decline of between 30% and 35% year over two. This would be the largest sequential improvement in revenue since the start of the pandemic. Furthermore, the COO said she expects unit revenue to significantly improve in the coming months.
Capacity as planned
This faster-than-expected recovery means that the decline of the airline’s 2021 first-quarter revenue was on the lower end of predictions, dropping 61% year over two. Capacity for the first three months of the year was down by 41% compared to 2019, which was in adherence to the carrier’s original planning assumptions.
Cost-saving measures, along with capacity cuts, mean that JetBlue’s operating expenses declined by 43% over two years, despite higher fuel prices. Steve Priest, JetBlue’s Chief Financial Officer, said that the airline would aim to prioritize paying down high-cost debt as it would generate positive cash from operations going forward.
JetBlue ended the quarter with $3.2 billion in liquidity, equalling 40% of 2019 revenue.
Have you planned a trip with JetBlue in the coming year? Do you think it is too soon to declare the recovery of domestic air traffic in the US? Tell us about it in the comment section below.