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JetBlue Airways (JBLU) Robin Hayes on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 26, 2016 10:00 am ET

Executives

Kevin Crissey - Director-Investor Relations

Robin Hayes - President, Chief Executive Officer & Director

Martin J. St. George - Executive Vice President-Commercial & Planning

Mark D. Powers - Chief Financial Officer

Analysts

Joseph DeNardi - Stifel, Nicolaus & Co., Inc.

Savanthi N. Syth - Raymond James & Associates, Inc.

Duane Pfennigwerth - Evercore Group LLC

Mike J. Linenberg - Deutsche Bank Securities, Inc.

Hunter K. Keay - Wolfe Research LLC

David Fintzen - Barclays Capital, Inc.

Dan J. McKenzie - The Buckingham Research Group, Inc.

Jamie N. Baker - JPMorgan Securities LLC

Helane Becker - Cowen and Company

David Binney - UBS Investment Bank

Rajeev Lalwani - Morgan Stanley & Co. LLC

Operator

Good morning. My name is Therese and I would like to welcome everyone to the JetBlue Airways' First Quarter 2016 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode.

I would now like to turn the call over to JetBlue's Director of Investor Relations, Kevin Crissey. Please go ahead.

Kevin Crissey - Director-Investor Relations

Thanks, Therese. Good morning, everyone, and thanks for joining us for our first quarter 2016 earnings call. Joining me here in New York to discuss our results are Robin Hayes, our President and CEO; Marty St. George, EVP-Commercial & Planning; and Mark Powers, our CFO.

This morning's call includes forward-looking statements about future events. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, and therefore, investors should not place undue reliance on these statements. For additional information concerning factors that could cause results to differ from the forward-looking statements, please refer to our press release, 10-Q and other reports filed with the SEC.

Also, during the course of our call, we may discuss several non-GAAP financial measures. For a reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website.

And now, I'd like to turn the call over to Robin Hayes, JetBlue's President and CEO.

Robin Hayes - President, Chief Executive Officer & Director

Thanks, Kevin, and good morning, everyone, and thank you for joining us. Earlier today, we posted record first quarter results with higher margins and greater margin expansion than most of our competitors.

In the quarter, net income was $199 million, or $0.59 per diluted share. This represents year-over-year net income growth of $62 million, or 46%. This incredible achievement was made possible thanks to the fabulous efforts of our 18,000 crewmembers who continue to go above and beyond every day exceeding our customers' expectations.

I truly believe our unique culture drives our outstanding crewmember engagement, and this drives these great results. Total revenues grew 6% year-over-year on 14% capacity growth. Demand was solid as our load factor held stable, but lower closing yields pressured unit revenue, particularly in the Latin region.

Our cost performance was excellent this quarter. The lower fuel price environment certainly helped with our realized average fuel price down 43% year-over-year, but our controllable cost performance was also strong. CASM, excluding fuel and profit sharing year-over-year, was down 3.6%. First quarter operating margin improved by 5 percentage points to 21.6%, ranking us first of all the U.S. airlines for the reported earnings this quarter.

So while we're seeing some yield pressure, which is closely monitored monthly RASM, our bottom line results continue to improve. Our network plan is producing a higher-than-industry average profit margins, while we continue to grow faster than our competitors. All six of our focus cities are solidly profitable, with double-digit profit margins over the last 12 months.