Updated from 7:49 a.m. EDTJetBlue Airways ( JBLU) reported earnings that were flat in the second quarter, making it the first carrier to report unexceptional results, but the company said its turnaround plan is on track. The New York-based low-fare airline made $14 million, or 8 cents a share, in the quarter ended June 30, compared with $13 million, or 8 cents a share, a year ago. Revenue rose 42% from last year to $612 million. Analysts surveyed by Thomson Financial were looking for a 4-cent profit on revenue of $602 million. JetBlue's shares closed down 6.4% to $11.46. JetBlue's results offered a contrast to the results from five other carriers who earlier reported strong second-quarter earnings improvements. JetBlue also forecast that for the third quarter and for the full year, it again expects to report flat earnings, with pretax profit margins of between negative 1% and positive 1%. Profit margins will be below earlier estimates as a result of higher-than-anticipated fuel costs. Additionally, while most carriers are reporting record high passenger occupancy, JetBlue's load factor declined by 5.5 percentage points in the second quarter to 79.5%, a result of rapid expansion and increased pricing. "If you charge higher fares, people travel less often," CEO David Neeleman said during a conference call. JetBlue reported rapid growth, with capacity rising by 23.2% over the same quarter a year earlier. The airline will add a total of 14 new cities in 2006, most served by its new Embraer 190 regional jets. Five Airbus A320s will be sold. Full-year capacity growth is expected to be about 20%. Neeleman said JetBlue is making strides on a recovery program initiated after it lost money in the two preceding quarters. He said the carrier is ahead of its goal for achieving a $70 million improvement in reduced costs and increased revenue.
"This is a first step in a very long process," he said. "We can do better on our revenue,
and we can do better on costs. In the pack of the industry, there's no reason we can't return to industry-leading margins." JetBlue plans yet another change soon, saying it will end its avoidance of global distribution systems. It's negotiating with several of them and will make an announcement shortly. "The economics work for us now. They didn't work for us in the past," Neeleman said. "We're the only airline that hasn't participated in some form of distribution system , and we think that will add some good incremental business." In the second quarter, yield per passenger mile was 9.77 cents, up 21.7% compared with the same quarter a year earlier, as the average cost of a JetBlue ticket rose 14.9% to $127.87. Operating revenue per available seat mile increased 15.6% year-over-year to 8.48 cents, partially as a result of increased use of the 190s. Excluding the impact of fuel-cost increases, JetBlue's cost per available seat mile rose 9.3% to 7.26 cents, due to shorter flights. Reduced trans-continental flying and the addition of shorter routes meant the average stage length declined 8.4%. During the quarter, JetBlue's realized fuel price was $2.06 a gallon, a 37.8% increase over the second quarter of 2005 price of $1.50. JetBlue ended the second quarter with $468 million in cash and investment securities.