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.

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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.

Photo: Kochan Kleps/Airways

Cash Burn

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.

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