What happened
Shares of JetBlue Airways (JBLU -3.12%) rallied as much as 5.5% on Thursday following the airline's fourth-quarter earnings release. JetBlue isn't yet making money again, but investors were excited about the company's forecast for 2022.
So what
JetBlue, like all airlines, was hard-hit by the pandemic, and it will likely be at least another year before things are completely back to normal. But investors knew that, coming into earnings season, and were more focused on progress toward recovery than they were on the headline numbers themselves.
Image source: JetBlue Airways.
As expected, JetBlue lost money in Q4. But the airline lost less than analysts had expected. JetBlue reported a loss of $0.36 per share on revenue of $1.83 billion, besting the $0.39 per share loss on $1.82 billion in revenue consensus.
The airline reported strong holiday demand in November and December but said that demand fell off some around year's end due to the omicron variant. CEO Robin Hayes said in a statement:
While Omicron has temporarily weighed on demand in the very near-term, we expect sequential month-on-month improvement through the quarter, ultimately returning to sustained profitability in the spring and beyond.
Hayes added: "I firmly believe that 2022 will prove to be a transformational year for JetBlue's structural profitability, as we look to restore our earnings power and create value for our stakeholders."
Now what
JetBlue expects first-quarter capacity to be down 1% to 2% compared to the same three months of 2019 prior to the pandemic. Revenue is likely to be down 11% to 16% compared to 2019, a lack of pricing power observed by other airlines as well. Management expects demand to pick up late in the quarter, in time for spring break, and remain strong for the rest of the summer. Assuming that happens, JetBlue should be able to return to profitability this year.
As we've seen over the last few years, a new twist to the pandemic could foil those plans. But JetBlue ended the year with $2.8 billion in unrestricted cash, meaning the company has the reserves needed to handle the unexpected.
The airline hasn't reached its profitability destination yet, but all signs indicate JetBlue is headed in the right direction. Investors were in a buying mood on Thursday as a result.
