Today’s quarterly earnings conference call from JetBlue had a few interesting bits of information that was unveiled, giving insight into future developments that can be expected from the carrier. The company reported a profit for both Q4 2011 and the full year, but there are also some very real challenges that the company is facing in 2012. As one person said on the call, "The honeymoon we enjoyed prior to this period is over."
A lot of the news which I found most interesting was around the "Even More" products that the company sells. What started with Even More Legroom seats offering additional pitch in the cabin has expanded to Even More Space (offering pre-boarding to ensure overhead bin space) and Even More Speed for access to priority security lines in many airports. This service started in 15 airports and recently expanded to 9 more. And selling the service resulted in $120MM of incremental revenue for the company in 2011. That’s a huge number, more than 20% of the total incremental that the company saw in the year.
Given the high revenue realized from the offering, it is not surprising that the company is expanding the number of seats for which it can be purchased. Specifically, the company confirmed that they will be adding 8 more seats to their Embraer E90 planes in the Q2/Q3 timeframe this year. Full details aren’t yet available on the announcement (seems to be a bit of a pattern there lately) but a quick review of the seat map suggests that they can get away with sliding a couple rows behind the exit row around and not really have to change too much else around, so long as they’re willing to keep the 34" pitch that the E90 has. If they go for the 38" that the A320s have they could also do that behind the exit row with minimal impact to customers, changing the other seats in that section from 33" to 32" pitch. Either way, it looks to be a positive change for the company to make more EML seats available.
Beyond the Even More bits, the honeymoon comment piqued my curiosity. The company had a huge growth spurt a few years back, taking on a bunch of new airplanes in a very short timeframe. Those acquisitions are now hitting the magic point in the life of an airplane known as a "C-Check." The maintenance costs for the C-Check and engine restorations on the aircraft are significant and the number of planes the company has going through that process in the next couple years is quite high. The result is a spike in maintenance costs. JetBlue has worked with their maintenance suppliers to mitigate the costs somewhat, but it will still be a challenge for the company in the coming years. And that’s all with a fleet that is still only 6.1 years old on average with a maximum age of 12 years.
There was mention of the new Hawaiian Airlines partnership, but no additional details shared there. And it was suggested that 5-7 new partners will be coming online in 2012, with links at Boston and Orlando likely rather than just at New York City. I’m betting on JAL being a partner via Boston with their new service there starting soon, but who knows.
Other than those bits, not a whole lot of interest. Plenty of accounting mumbo jumbo but nothing that seems especially significant at this point. And there are still a number of open questions, like where the company stands on rolling out additional benefits for their most frequent customers or many of the partnership details with Hawaiian. I guess patience will have to suffice.
- A few first in the JetBlue/Hawaiian partnership
- JetBlue, Hawaiian team up for JFK service
- Peek at possible new features for JetBlue’s TrueBlue program
- JetBlue continues build-up of San Juan hub
- JetBlue now offering priority security access in 15 airports
- Even More Money for Even More Legroom
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