MiAMI – In a recent 8-K filing with the SEC, JetBlue Airways (B6) announced it expects its flown capacity for Q4 2020 to decrease between 45-50% year-over-year. This compares to the company’s previous planning assumption of a decrease of approximately 45% year-over-year.
JetBlue plans to continue to manage capacity and align with demand on a rolling basis. Booking trends remain volatile and B6 continues to believe demand and revenue recovery will be non-linear through the fourth quarter and beyond. Like all airlines, JetBlue cannot predict recovery and operational changes due to additional COVID-19 related disruptions or other issues.
Changes in Planning Assumptions
For the fourth quarter, B6 now expects revenue to decrease approximately 70% year-over-year. Previously, the assumption was a decrease of approximately 65% year-over-year. Based on information presently available, the company’s planning assumption for operating expenses for the fourth quarter of 2020 is a decrease of at least 30% year-over-year.
In the filing, JetBlue says that its planning assumption for operating expenses will continue to fluctuate based on flown capacity for the quarter.
Given the recent booking trends and the delay in receipt of cash tax refunds of approximately $70 million originally anticipated during the fourth quarter, B6 now expects its average daily cash burn in the fourth quarter to be in a range of $6 million and $8 million. The previous expectation was of a range between $4 million and $6 million.
As of November 27, 2020, JetBlue had cash and short-term investments of approximately $2.8 billion.
Daily cash burn is defined as net revenues in cash (passenger and ancillary), less operational cash expenditures, debt service (principal and interest) and capital expenditures net of certain sale-leaseback transactions. Cash burn includes salaries, wages, and benefits expenses paid with Payroll Support Program funds received from the U.S. Government.
Featured image: Luca Flores/Airways