JetBlue squeezes out small 1Q profit

AP News
Posted: Apr 21, 2011 5:32 PM
JetBlue squeezes out small 1Q profit

JetBlue hopes it can keep raising fares to offset the surging price of fuel.

The New York airline squeezed out a small profit in the first quarter as it flew more passengers at higher fares, offsetting the rising cost of fuel. It joined other U.S. airlines to raise fares about a dozen times since the start of the year.

"As of now we haven't seen any sign of demand being choked by these fare increases," Chief Compliance Officer Robin Hayes said Thursday in a conference call. "If there is any sign of weakness in the industry, we won't see that until the fall."

In addition to fare increases, JetBlue made more money through new fuel surcharges it tacked on to Caribbean flights earlier this year. It also raised the fee for a second checked bag and for seats with extra legroom by $5 each. Passengers paid an average of $21 apiece in fees to JetBlue between January and March, up 15 percent from a year ago.

To lure more travelers to buy the airline's "Even More Legroom" seats, JetBlue said Thursday it will offer a fast-track security option for those who buy the roomier seats. That benefit, which will let passengers jump to the front of the security line at certain airports, will begin in a few months. Other airlines including American and United Continental offer similar incentives for first and business class passengers and some coach passengers who pay extra. JetBlue doesn't have first or business class.

JetBlue, based in New York, earned $3 million or a penny per share in the first three months of the year, compared with a loss of $1 million in the same quarter a year earlier.

Revenue rose 16 percent to $1.01 billion from $871 million a year ago.

The results fell short of Wall Street's expectations. FactSet says analysts expected JetBlue to post a profit of 2 cents per share on revenue of $989.1 million.

Rival Southwest Airlines Co. also reported a profit of a penny per share in the first quarter. Competitors American and United-Continental lost money.

Fuel prices jumped much faster than JetBlue expected. The company paid 35 percent more for fuel in the first quarter than it did at the same time last year. Just three months ago, it predicted fuel would rise by 17 percent.

Overall, JetBlue Airways Corp. made about 8 percent more per passenger in the first quarter than it did a year ago, including fares and fees. Traffic rose 7 percent, but the airline increased the number of available seats by only 1 percent, making flights fuller. Keeping expansion in check while demand goes up allows airlines to save money on extra planes and fuel. It also allows them to raise fares because fewer seats are available.

JetBlue expects to expand its number of available seats by seven to nine percent in the second quarter and six to eight percent for the year. That's about 1 percent less than it forecast three months ago.

JetBlue shares fell 11 cents to close at $5.39.