Jet Blue: Value Buy and Oil Hedge

"If capitalists had been present at Kitty Hawk when the Wright brothers' plane first took off, they should have shot it down." - Warren Buffett

Airlines --- the favorite punching bag of the market!

What other industry in America can claim 100 bankruptcies since 1978? What other industry that has managed to survive for over a century can claim to have never turned a net profit? What other industry has been so thoroughly propped up by the government, but still manages to fail every decade or so?

I would definitely not call myself a fan of the airline industry when it comes to investing. Most of the time, I’d rather be on the short side of airlines, but this isn’t one of those times. Airlines have been beaten down very thoroughly as oil prices have been rising over the past few months. This does not mean that I am in love with the industry by any stretch of the imagination. Nor does it mean that I would suggest buying airlines indiscriminately on a technical basis. However, I do believe a few air carriers could offer attractive value propositions at the current price levels. This might be especially attractive to those with bullish positions on oil, as this could give you a decent hedge on those positions.

On that note, let’s examine the case for mid-cap air carrier Jet Blue (JBLU) as a long candidate.

Overview

Jet Blue is the youngest of the major airlines, commencing service in 2000. It prides itself as a “value airline” with great customer services. The company also frequently harps on some of the minor luxuries available on their flights (e.g. free television, unlimited snacks). The basic business strategy seems to be cheap flights and good (but not costly) entertainment.

In its latest 10-K filing, Jet Blue claims to be the “most fuel efficient” of the airlines and serves 52 different markets in 19 states, Puerto Rico, Mexico, and a handful of Latin American and Caribbean nations. The majority of their operations have originated in New York City and they are the largest airline by number of passengers flying out of JFK International Airport. Jet Blue is also the largest carrier in Boston in terms of destinations served.

Jet Blue believes it has the lowest operating costs of all major airlines, calculating their “cost per available seat mile” at 5.94 cents. It only uses two types of aircraft: the Airbus A320 and the EMBRAER 190 and has an average aircraft age of 3-4 years. The frequent pitch is that Jet Blue is one of the best airlines from an investor perspective because its young fleet gives it greater fuel efficiency. Of course, this begs the question, what happens as JBLU’s fleet ages? I’ll leave you to determine the answer to that one. All the same, there still could be some value here.

With that, let’s move on to the financial aspects of JBLU that potentially make it attractive.

The Balance Sheet and Earnings

Comparatively speaking, Jet Blue has one of the strongest balance sheets amongst the major airlines. Only Southwest (LUV) seems to be in similar shape. The following chart lays out the Net Tangible Assets (NTA) of the major airlines and shows the ratio of Liabilities-over-NTA:

As you can see, most of the major airlines have a lot of leverage. Jet Blue and Southwest don’t appear to have anywhere near as much debt as the other carriers, which is a significant long-term advantage. Jet Blue also has a current ratio of 0.97, which compares favorably with many of their competitors.

As with most air carriers, earnings seem to shift back and forth for Jet Blue. Due to high depreciation and amortization charges, I would not peg “Net Income” as the most appropriate measure for a DCF valuation. The following chart lays out five different earnings-related measures over the past five years:

Please note that I translated all items to a per share basis based on 273 million shares outstanding (which assumes some slight dilution). For this reason, EPS figures are not necessarily going to match the figures on JBLU’s financial statements, but I do this more to create a steady state, while still speaking in per share terms.

The next chart lays out the 3-, 6-, and 9-year averages based on the above chart.

I also decided to chart out JBLU’s first Quarter ’09 figures:

If you need a quick guide to my abbreviations, here ya go:

CFOs = Cash Flows from Operations

FCFs = Free Cash Flows

NI (DEPS) = Net Income (Diluted Earnings Per Share)

NI + DA = Net Income plus Depreciation and Amortization

INCR in SE = Increase in Shareholders’ Equity

Overall, it would appear that JetBlue has been ever-so-slightly profitable over the long run --- which stands as a pretty big feat in the airline industry. Net Income Plus Depreciation & Amortization (NI + DA) would seem to be the most useful metric to use for my valuation since I calculate asset values separately. However, I could see the merits behind using Net Income, as well.

Other Considerations

My biggest concern from the above charts is Jet Blue’s highly negative free cash flows. That can be explained to some extent by the fact that they are a newer and growing airline. All the same, CapEx has dramatically exceeded Cash Flows from Operations in many years. In their most recent earnings call, CEO David Bargar stated that Jet Blue has taken steps to reduce capital expenditures in 2010 and wants to generate positive free cash flow.

The most recent quarter reflects this to a degree as operating cash flows were $124 million compared to CapEx of $149 million (which includes $58 million in flight equipment sales). That suggests that JBLU could be headed on the track towards positive FCFs.

Also from that earnings call (see call transcript), CEO David Bargar suggests that Jet Blue remains dedicated to not “nickel-and-dime... customers. While this might harm the bottom line in the short run, I believe this is more prudent for a long-term approach." One of the main reasons I like Jet Blue from an investment perspective is that they seem to have a more long-term view than their competitors.

One other area of interest is business travel. Jet Blue has not historically been the airline of corporate travelers, but as companies across the board look to lower their costs in the current environment, it stands to reason that JBLU may be a beneficiary due to their low-cost model.

Taking into account the financials and potential growth factors, let’s take a look at potential valuations for Jet Blue.

Valuation

I decided to run four quick DCF valuation scenarios. Jet Blue’s net tangible assets are worth roughly $4.80 per share. I decided to discount that to $4.50 in my first three scenarios for no particular reason, other than to be a little more on the safe side. Since JBLU is still growing and has significant CapEx that distorts its free cash flows, I’ve decided that Net Income Plus Depreciation/Amortization (NI + DA) is the best measure of “added value” for my valuation. However, this number is a bit more aggressive than Net Income/Earnings Per Share (EPS), so some of these scenarios veer closer to EPS.

For all of these scenarios, I used an 11% cost of capital. That might be a bit high given the stated interest rates I found for JBLU, but since I consider all airlines high-risk, I don’t think it’s a bad idea to play things on the conservative side.

For each scenario, I state an initial year “added value” figure (which represents a long-term average) and assume a 3% growth rate. Here’s a chart laying out the scenarios:

Analysis

Based on my valuation scenarios and all the data I have, I would value Jet Blue at $8. That would put my valuation closest between Scenarios #1 and #2 above. 35 cents per share in yearly “added value” seems to be a bit on the conservative side when compared to historical NI+DA figures that average closer to 50 – 60 cents per share on a yearly basis. However, given the risks involved with airlines, I believe it’s best to stay on the conservative side (without going overboard) and as I stated earlier, I can see legitimate reasons to believe that Net Income is a more accurate measure of real earnings.

My downside probable valuation is $6, which is a slight discount to Scenario #1. It would assume that Net Income is a better measure of added value and that GAAP earnings will drop a slight bit. My upside probable valuation is $11.

For downside risk --- I always warn people to assume it’s $0; but given JBLU’s assets and position, $2 might be more realistic. That figure implies that JBLU becomes slightly unprofitable over the long-term and that their net tangible assets are slightly overstated.

For upside potential, I’d suggest $13. I base this on their steady growth pattern (particularly in the NI + DA) figures.

Conclusion

While I like Jet Blue better than all the other major airlines (save perhaps Southwest), I wouldn’t go so far as to recommend it as a long-term investment (which I define as 2-10 years). I join Warren Buffett and other airline skeptics in that regard. Under $5, I think of it more as a medium-term value buy (6 months to 2 years). If I bought in at $4.60 and the stock hit $7 within the next 5 months, I would probably go ahead and sell it; especially considering the volatility of the airline stocks.

One reason I believe this might be a good buy right now is that the fundamentals don’t support oil at $60+/barrel at the current time. Inventory levels are too high, so if oil retreats a bit, the airlines will probably move upwards. But even if they don’t, I believe you have some margin of safety with JBLU based on their net tangible assets, fuel hedges, and past history of minor profitability. If you’re not completely convinced (don’t worry, I’m not either), it might be useful to think of it more as a potential hedge for bullish oil-related securities.

For my simulated $10 million portfolio, I have initiated a 0.9% position in JBLU at an average cost of $4.47 per share. I’ve also initiated a 0.7% position in Southwest (LUV) at $6.80 per share. As I suggested, this is more of a hedge play on my oil stocks (e.g. USO, USL, HERO, ATW), while giving me some potential to nab up some bargains. I will probably not consider adding this to my actual portfolio unless I see JBLU drop below $4 --- but it’s definitely worth keeping an eye on.

Disclosure: No position in JBLU or any airlines

Comments

[RiskReturnO...:]

If you like JBLU, consider GOL from Brazil and CPA from Colombia. Rebound in those economies tied to global trade will offer you better upside potential than JBLU. On side note, JBLU founder has been involved in Azul, new low cost airline in Brazil, but GOL remains the market favorite.

Jun 02 03:06 PM

[User 424350:]

I would very much like to hear this authors idea of what he means when he says that the airlines are "thoroughly propped up by the government". If by that he means the up to 75% taxation on airline tickets, the complete failure of government to provide a viable air traffic control system which costs the airlines billions in lost revenue, the refusal of the Bush administration to provide loan guarantees to the vast majority of airlines which were truly in need and those that did get the loan co-sign (note that there was no government money involved) actually provided a profit to the government, or perhaps he means the airlines that actually are being propped up by a government, like JetBlue and Virgin America. Unfortunately, it isn't the U.S. government that's propping them up, it's the French and German ones that are doing so by supporting Airbus in their continuing program of supplying start up U.S. airlines with below market cost new aircraft, thereby under cutting both Boeing and existing U.S. airlines. Little known fact, JetBlue paid nothing for their aircraft or maintenance for the first five years of their existence thanks to Airbus. Anybody could make a profit in that environment. Now that they are no longer in that position, they are being undercut by the new kid on the block Virgin America, and are no longer profitable. Airlines manage to "fail every decade or so" because of this type of unfair competition which keeps fares at the same level they were twenty years ago in un-adjusted dollars. If you want a healthy airline industry to invest in, accept the fact that your ticket prices must rise dramatically, and soon.

Jun 02 03:20 PM

[H.J. Huneycutt:]

User,

Nice little rant, but I'm not completely sure how you are disagreeing with me. In your rant, you admit that the French and German governments are propping up Airbus. You also imply at the end of your argument that the airlines are heavily subsidized by suggesting that ticket prices would 'have to rise dramatically' for a 'healthy airline sector.'

I'm also not sure how you ignore the fact that the major airlines (here in the US) were bailed out in 2001 and may need to be bailed out again. And the bailouts would probably have been more frequent if not for the regulation era pre-1978.

The US government still subsidizes air fares in certain markets, as well:
query.nytimes.com/gst/...

All in all, there has been a consistent pattern of government intervention in favor of the airlines and air travel throughout the past half-century. I would not complain one bit if the industry were required to survive fully on its own --- that would mean a significant increase in fare prices and a much greater interest in high-speed rail, which would be beneficial to Americans in the long-run.

Jun 02 03:37 PM

[User 283977:]

I would rather use a stop loss on my oil stocks than use an airline as a hedge. I don't think its necessary to be 100% invested at all times.

Jun 02 03:40 PM

[Astro9007:]

So, JBLU is a major airline? What planet do you live on? A "Major airline has something that any "major" player in an industry would have: lots and lots of Market Share. As a whole, JBLU has very little, hence they are not a "major" airline.

Now, let's talk about DEBT. Real, gut-bustin' debt. According to their 2008 Annual Report, they have Debt, Obligations, and Liabilities in excess of $4B. Consider the size of that debt as compared to, say, Delta (pre-merger) and obviously MUCH larger airline: their debt was on the order of 7.5B. Not quite twice as much debt for an airline that is at least an order of magnitude larger than JBLU.

I guess the author is just trying to paint a pretty picture.

I live on planet Earth, where the reality of the situation is more stark.

Jun 02 03:50 PM

[Astro9007:]

Um.... the airlines were not BAILED OUT in 2001. Can you please get your FACTS straight?

In 2001, the government offered LOANS to the airlines in order to help them out. Recall that UAL requested loan assistance and were DENIED. I believe all the airlines that took the loans repaid them.

Bailout? Hardly. Bailout: think Financial Industry. Now THAT'S a bailout!


On Jun 02 03:37 PM H.J. Huneycutt wrote:

> User,
>
> Nice little rant, but I'm not completely sure how you are disagreeing
> with me. In your rant, you admit that the French and German governments
> are propping up Airbus. You also imply at the end of your argument
> that the airlines are heavily subsidized by suggesting that ticket
> prices would 'have to rise dramatically' for a 'healthy airline sector.'
>
>
> I'm also not sure how you ignore the fact that the major airlines
> (here in the US) were bailed out in 2001 and may need to be bailed
> out again. And the bailouts would probably have been more frequent
> if not for the regulation era pre-1978.
>
> The US government still subsidizes air fares in certain markets,
> as well:
> query.nytimes.com/gst/...
>
>
> All in all, there has been a consistent pattern of government intervention
> in favor of the airlines and air travel throughout the past half-century.
> I would not complain one bit if the industry were required to survive
> fully on its own --- that would mean a significant increase in fare
> prices and a much greater interest in high-speed rail, which would
> be beneficial to Americans in the long-run.

Jun 02 03:52 PM

[bigdaddy:]

#1. I can explain why the fleet is the youngest in the business and why you wont have to worry about it aging. JBU leases thier aircraft, with a maintenance contract, and sheds them at the 5 year range.

#2. A major carrier is defined as having over $1B in market share. JBU has that. Recheck your facts Astro.

Jun 02 04:02 PM

[H.J. Huneycutt:]

Ha! Looks like I timed this article perfectly --- somehow. JBLU is plunging after-market. I like it much better in the $4 - $4.50 range than I do the $5 range.

If it dips below $4, I think it becomes particularly more attractive.

Jun 02 04:33 PM

[User 283977:]

It plunged because May traffic shrunk by 3.3% relative to last year, and they are making a secondary offering of 20M shares and $150M in convertible debentures. So they diluted their share value and they are taking on yet more debt. They must need cash... not a good sign in these times.

Jun 02 04:55 PM

[frogmatic:]

Re: the secondary offering, what's equally relevant to this article is that JBLU mgmt may well be signaling that they see a $5 share price as fairly valued... which puts a dent in the author's thesis for an $8 valuation.

Jun 02 05:26 PM

[H.J. Huneycutt:]

Frogmatic,

I have never heard of management for any company doing an offering solely because they thought the stock price was overvalued. Check through JBLU's history --- they've done this before. In fact, one of the reasons I didn't put much stock into the "INCR in SE" figure is precisely that reason --- it gets distorted by offerings.

Hey, I'm not going to sit here and argue that the airline sector is the prettiest one out there. I'm telling you right now, airlines have historically failed. I feel dirty even suggesting an airline as a potential buy. But based on asset values and current levels of profitability for JBLU, I believe they are undervalued. They are one of only two major US air carriers that I believe has any real value moving forward.

General rule of thumb --- buy on bad news when everyone is panicing. JBLU under $4.50 looks undervalued to me --- I wouldn't bet the farm on it or anything, but it's a good hedge if you have some bullish oil picks like me (now that oil has skyrocketed).

Jun 02 06:05 PM

[H.J. Huneycutt:]

Astro,

You can spin it as 'not a bailout', but I don't think most individuals would agree. Certainly, the media took it as a "bailout":

archives.cnn.com/2001/.../
www.businessweek.com/m...
www.nytimes.com/2001/0...

That CNN article is pretty good because it cuts to the heart of what I've been saying --- Ari Flescher said at the time of the bailout --- and I quote:

"A safe, viable and effective commercial air travel system is important to America's economy and to our way of life."


Yes, that's right --- air travel is essential to "our way of life". To me, that's total BS! We could do fairly well for ourselves with high-speed rail, more Cisco telepresence systems, and minimal air travel. I don't say that because I don't like air travel --- obviously, if I have to go from NYC to LA, I'd much rather fly. But I question whether flight on the scale we've utilized it is even remotely sustainable. Fares are going to be much higher in the future and flight will be limited to those that are better-off --- that's my belief.

The government has done everything possible to prop up this industry at unsustainable levels. I'd rather see some of these legacy carriers go BK, end subsidies for small markets, and expand our high-speed rail infrastructure. It's more economically viable in the long-run.

Jun 02 06:14 PM

[H.J. Huneycutt:]

User,

Stop losses are a terrible strategy if you ask me. It's a sure fire way to screw yourself and it's a rather nonsensical protection scheme.

Why would you buy a stock if you believed it was overvalued? And if you thought it was a good buy at $15, why would you suddenly think it's a good sell at $10? It would make sense to me that it would be a better buy at $10 --- but the logic behind a stop loss suggests that's not the case.

I will never use stop losses. It's a good way to destroy one's returns and offers no real protection. Hedging is much more effective if you play your cards right.

Jun 02 06:19 PM

[frogmatic:]

Appreciate your response (plus your well-reasoned analysis in the original article). I'm not suggesting they are doing the offering "solely" because the stock is overvalued. Although I haven't looked at their cash situation, User 283977 is probably correct in this regard: they're doing it because they need the money.

If that's the case, concerns over whether or not the stock is fairly priced tend to take a back seat. But valuation aside, I think the news of the secondary begs for some additional cashflow analysis. The stock may be worth $8 as you suggest, but if they're going to run out of cash before they realize their full potential, the point is moot: then the shares aren't worth any more than the $4.81 in tangible book you identified.

And some additional food for thought: If the company's willing to sell stock at $5, it's not impossible that they'd sell more at $6, $7, $8. If that's how it pans out, and the company is going to be selling into you thru additional offerings all the way up to that $8 target, that'll be a significant headwind to achieving your target price.

Jun 02 06:30 PM

[H.J. Huneycutt:]

Frogmatic,

I think the market consistently overreacts to secondary offerings. Nobody likes dilution, but here's the deal --- when I analyze a company like JBLU, I assume more dilution is coming. It does not mean the company is 'in trouble.' It does mean they would like to have more cash. JBLU would appear to have one of the larger cash cushions in the industry, but this move still might make some sense for them given their historical CapEx. But management has already expressed an intention to slowly cut their CapEx down by 2010.

I'm actually more skeptical of companies that do equity offerings when their stock is peaking --- because why would you need to do an offering if the market perceives that you're in terrific shape? That's news! At $4 - $5 per share, I think this sorta issue is already factored in with JBLU --- at least, all my figures were based on the premise that this was possible --- which is why I used a rather high cost of capital for them and assumed further dilution when calculating totals.

Jun 02 11:44 PM

[TurtleTrader72:]

If you are looking for an interesting airpline play (and have the risk tolerance for it) maybe you should check out GLUX (Great Lakes Aviation, Ltd.) This little niche micro cap may have the potential of yielding over 500% return from its current level in the right environment. However, you'll need a strong stomach and some patience

Here is some basis info on it:

It is a regional airline, operates as an independent freight transportation carrier in the United States. The company provides charter services to private individuals, corporations, and athletic teams, as well as carries freight and small packages on its scheduled flights. The company provides Essential Air Service program service in Burlington, Iowa; Marion, Quincy, and Decatur, Illinois; Kansas City, Cape Girardeau, St. Louis, and Ft. Leonard Wood, Missouri; Great Bend, Manhattan, and Salina, Kansas; Vernal and Moab, Utah; Ely, Nebraska; Merced and Visalia, California; Jackson, Tennessee; Owensboro, Kentucky; and Cincinnati, Ohio.

Current Valuations

Last Price: $1.60/share
Price/Earnings 11.9x
Price/Sales 0.2x
Price/Book 1.2x
Price/Cash Flow 2.9x
(not bad for a microcap)

Disclaimer: I do not own it but find it interesting as a niche (microcap) airline play..play at your own risk.

Jun 03 09:31 AM

[User 283977:]

HJ - Basic investment tools like stop loses have their uses. You say:

Why would you buy a stock if you believed it was overvalued? And if you thought it was a good buy at $15, why would you suddenly think it's a good sell at $10?

That is a straw man argument - an argument set up to be easily refuted. The most common use of a stop loss is to protect capital gains. You purchased at $4.60 and your investment goal is $7. So you would apparently set a limit order at $7. Of course the chance that the stock is going to peek at exactly $7 is small. That means there is a good chance of leaving money on the table. Another way is to set a stop loss, or a trailing stop at $7. Now you have protected your $7 position, but if the stock is still climbing, you can re-evaluate and sell at a higher position. The cost for this opportunity is zero.

The fact of the matter is you are already using the logic of a stop loss because in your example you identified your selling price. Something most investors would be wise to emulate. So in effect, you are using the logic of a stop loss but you are doing it manually. A lot of investors can't spend all of their time watching a stock, so they use automated stop loss / trailing stops.

In the case of the airline industry, it would probably be tempting fate to not have automatic stop losses in place due to the chance of the airline loosing a plane. In that situation, things will happen very fast, and you would be prudent to have an automated stop loss in place.

Stop loses / trailing stops and hedges are investment tools that have their uses under different circumstances.

Jun 03 11:39 AM

[zagrebzagreb:]

Agreed.... If any more evidence is needed that most institutional funds are managed by monkeys, just look at their love of airlines.

I could barely believe when I heard an endowment manager at the Carnigie Melon Foundation talking-up their investment in the then start-up company, Jet Blue. I kindly offered that airlines were a difficult industry, plagued by bad returns, risks, etc. All of this - of course - was dismissed as ignorance.

Well, the evidence is in on Jet Blue. Its a smart investment at a price that is roughly 1/3 of its IPO in 2002. Please, all of these so-called investment 'experts' that have lost other people's money on airlines, defend your positions.... right now, you look like utter fools.

Jun 03 01:52 PM

[crzydream:]

Good article!
I have some good points in there. I hope you're right and the stock will reach $5-6 rather than $2-3.
Let me know if you want to post it on my blog as well. I can allow you links to this post.
Thanks.

Jun 04 02:19 AM

[Robert Herbst:]

Mr. Huneycutt,

Respectfully I dispute some of your conclusions from the article above:

"LT Debt"-- Y/E 2008 was ~$2.9 billion as reported in the SEC 10K filing. As a ratio to operating revenue this is not only the highest in the industry (largest 10 airlines) but using this ratio, is nearly twice what any other airline carries. As a percentage of assets, JBLU's LT Debt is at or above the rest of the industry.

"Unrestricted cash" = $571 million. As a ratio to operating revenue, this is about average for the industry and was -propped up- by the infusion of $300 million from Lufthansa which, IMO, was their headway into "Open Skies II".

"CASM" (unit costs) -- Your article states it as 5.94 cents. It is actually 9.87 cents. (source: SEC 10K)

"Industry losses over history" -- While it's true "Net" profits are minimal. Since 1950 and a decade before the first commercial jets, there have been only 2 -relatively- short-term time periods of industry losses;
- 1990-1993 had a net loss of $12.8 billion.
- 2001-2005 had a net loss of $35.1 billion.
- In the last 59 years, 41 had net profits.
- In the last 59 years, 49 had positive operating income.

We (apparently) agree fares need to go up in order to make this very valuable industry stable and as safe as it needs to be.

Robert Herbst
AirlineFinancials.com
(disclosure: Myself and my family hold no equity position in JBLU at this time)

Jun 05 01:10 AM

[H.J. Huneycutt:]

Mr. Herbst,

Thanks for your thoughts.

Not sure where you are getting the 9.87 cents figure. The 10-K states "5.94 cents" excluding fuel costs on page 2 (or page 9 of the PDF document I linked to --- idc.api.edgar-online.c...). Not sure that I personally find this figure terribly relevant --- I just threw it in for the article. But it's directly from the 10-K --- maybe you're looking at it with fuel costs (I should have noted that my figure was excluding them).

As far as debt-to-assets, I'm not sure where you are getting your figures. Perhaps if you are including Goodwill and Intangibles in your calculations, then that is true, but it's certainly not true when you look at Net Tangible Assets. Delta's massive Goodwill account is not a real asset that can be used to cover debt in the event of default.

Good point on revenues-to-debt, though. Hadn't thought about looking at it from that perspective as I mostly analyze debt from a liquidation standpoint.

On Jun 05 01:10 AM Robert Herbst wrote:

> Mr. Huneycutt,
>
> Respectfully I dispute some of your conclusions from the article
> above:
>
> "LT Debt"-- Y/E 2008 was ~$2.9 billion as reported in the SEC 10K
> filing. As a ratio to operating revenue this is not only the highest
> in the industry (largest 10 airlines) but using this ratio, is nearly
> twice what any other airline carries. As a percentage of assets,
> JBLU's LT Debt is at or above the rest of the industry.
>
> "Unrestricted cash" = $571 million. As a ratio to operating revenue,
> this is about average for the industry and was -propped up- by the
> infusion of $300 million from Lufthansa which, IMO, was their headway
> into "Open Skies II".
>
> "CASM" (unit costs) -- Your article states it as 5.94 cents. It is
> actually 9.87 cents. (source: SEC 10K)
>
> "Industry losses over history" -- While it's true "Net" profits are
> minimal. Since 1950 and a decade before the first commercial jets,
> there have been only 2 -relatively- short-term time periods of industry
> losses;
> - 1990-1993 had a net loss of $12.8 billion.
> - 2001-2005 had a net loss of $35.1 billion.
> - In the last 59 years, 41 had net profits.
> - In the last 59 years, 49 had positive operating income.
>
> We (apparently) agree fares need to go up in order to make this very
> valuable industry stable and as safe as it needs to be.
>
> Robert Herbst
> AirlineFinancials.com
> (disclosure: Myself and my family hold no equity position in JBLU
> at this time)

Jun 05 02:16 AM

[Robert Herbst:]

"CASM" (cost per available seat mile) includes fuel expense. Fuel is an operating expense. The amount is provided in the operating items.

LT Debt is clearly identified in the balance sheet and further described/detailed in the "LT Debt" specifics. (LT Debt is not "Goodwill" and/or intangibles.).

Robert Herbst
AirlineFinancials.com

Jun 05 08:10 AM