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JetBlue Loses $354 Million in First Quarter 2020

JetBlue Loses $354 Million in First Quarter 2020
Joe Cortez

JetBlue Airways is the latest air carrier to report a loss in the opening months of 2020. In their First Quarter 2020 financial announcement, the airline reported a pre-tax loss of $354 million, or a loss per share of $0.97.

Revenue drops 52 percent during March 2020

At the opening of the COVID-19 pandemic in the United States, the demand for flights immediately dropped overnight. JetBlue was affected by the situation, as its revenue declined by 52 percent during the month of March 2020.

Overall, the entire quarter revenue declined by 15.1 percent, compared to the same period last year. The airline was quick to attribute this to “…the impact of COVID-19, resulting in both lower demand volumes and a very challenging fare environment following a very solid start to the year.”

Equally challenging the airline was an increase in operating expenses. The airline experienced an increase of 7.1 percent year over year but was able to compensate through variable cost reductions totaling around $150 million. These came in the form of capacity cuts, adjusting work schedules, and eliminating some discretionary spending.

Moving forward, the airline is focusing on reducing their daily burn rate while focusing on customer safety and returning to flying. Currently, the airline is losing $10 million per day, and are looking to reduce that rate even further.

“As we move towards recovery, we have three priorities,” says JetBlue chief executive Robin Hayes. “The first is the immediate need to protect the safety of our Crewmembers and Customers. The second is to minimize cash burn. The third priority is to set JetBlue up for future success by restoring Customer confidence, by returning to cash generation, and by rebuilding our margins and balance sheet.”

JetBlue Accepts nearly $1 billion of support from the CARES Act

Like the other major airlines, JetBlue will accept nominal assistance from the U.S. Treasury, as allowed under the CARES Act. The airline will accept $936 million total through the Payroll Support Program, consisting of $685 million in grants and $251 million in an unsecured term loan. The New York-based carrier also put in an application for $1.14 billion additional liquidity through the CARES Act loan program.

The governmental support will also come with the same conditions that affect the other airlines. For the grant and loans, JetBlue is issuing 2.6 million stock warrants to the U.S. Department of Treasury. As with the other carriers, the government has not announced if they will take an equity share of the airline.

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