Transcript Slide 1
Airline Productivity and Cost Analysis Evan Demick JetBlue Background Founded in February 1998 as a low cost carrier. Home base airport at John F. Kennedy International Airport in New York, New York. Large hubs located at Logan International Airport (Boston), Long Beach Airport (California) and Orlando International Airport (Florida). Operates a fleet type consisting of two different aircraft. Embraer 190 Airbus A320 (New Orders for A320NEO and A321) Terminology RPM (Revenue Passenger Miles): How many of an airlines seats are actually sold on a given flight. ASM (Available Seat Miles): How many seats are actually available for purchase on a given flight. RASM (Revenue per Available Seat Mile – Operating Income/ASM). CASM (Cost per Available Seat Mile – Operating Expenses/ASM). Yield (Passenger Revenue/RPM): Average fare paid per mile, per passenger. PRASM (Passenger Revenue/ASM): Measure of passenger unit revenue. Fuel Consumed: Amount of fuel consumed by an airlines fleet. Fuel Cost per ASM (Total Fuel Costs/ASM). Non Fuel Costs per ASM (Operating Expenses/ASM). JetBlue RPMs, ASMs, and Load Factor RPM, ASM, and Load Factor 3.5E+09 1 0.9 3E+09 RPM and ASM 2.5E+09 0.7 0.6 2E+09 0.5 1.5E+09 0.4 0.3 1E+09 Load Factor (%) 0.8 0.2 500000000 0.1 0 0 Year + ( 3rd Quarter) RPM ASM LF Large fluctuations depict how summer holiday travel impacts JetBlue. JetBlue does cater to more family “play” travelers who take summer vacations. Note the drop in all categories at the end of Q3 each year (September). JetBlue Operating Revenue, Operating Expenses, and Income (Pre-Taxed) Operating Revenue, Operating Expenses, and Income (PreTaxed) $1,200,000.00 Operating Revenue $1,000,000.00 $800,000.00 $600,000.00 $400,000.00 $200,000.00 $$(200,000.00) Year + (3rd Quarter) Operating Revenue Operating Expenses Income Pre - Tax Pre-taxed income fluctuates between positive and negative, but is generally positive. Operating revenue and expenses mirror each other. JetBlue RASM, CASM, PRASM, and Yield per RPM RASM, CASM, PRASM, and Yield per RPM RASM,CASM,PRASM,Yield per RPM (Cents) $0.00060000 $0.00050000 $0.00040000 $0.00030000 $0.00020000 $0.00010000 $2006 2007 2008 2009 2010 2011 2012 Year RASM CASM Yield per RPM PRASM Yield has been consistently higher than RASM and CASM since 2006. All data seems to be fairly consistent. JetBlue Fuel Costs, Operational Costs, and Fuel Consumption Fuel Costs, Operating Costs, and Fuel Consumption $180,000,000.00 60000000 50000000 $140,000,000.00 Fuel Costs $120,000,000.00 40000000 $100,000,000.00 30000000 $80,000,000.00 $60,000,000.00 20000000 $40,000,000.00 10000000 Fuel Consumption (Gallons) $160,000,000.00 $20,000,000.00 $- 0 Year + (3rd Quarter) Fuel Costs Operating Costs Fuel Consumption Spike in fuel pries between 07’ and 08’. Operating costs seem to follow fuel costs and consumption. JetBlue Operating Costs per ASM, Fuel Expenses per ASM, and Jet Fuel Prices Jet Fuel Prices, Operating Costs per ASM, Fuel Expenses per ASM 4.0 $0.06000 $0.05000 3.0 $0.04000 2.5 2.0 $0.03000 1.5 $0.02000 ASM (Cents) Fuel Costs ($/Gallon) 3.5 1.0 $0.01000 0.5 0.0 $2006 2007 2008 2009 2010 2011 2012 Year Jet Fuel Prices Fuel Expenses per ASM Operating Costs per ASM Little differentiation in Operating costs per ASM. Fuel expenses per ASM rises and falls as fuel prices do the same. Analysis Expenses in relation to fuel costs: Fuel costs provide the greatest variation in expenses for JetBlue. Data showed a severe spike in fuel costs between 2007 and 2008 which caused a rise in fuel related expenses. Airline Finance: While fuel costs have rises (most notably in 2007), JetBlue’s income has remained quite stable overall. There have been times when income has gone into the red, but in general, income has been positive. Airline Network Structure: RPM, ASM, and Load Factor all fluctuate with the changing of the travel season. Chart 1 is based around quarter 3 (July, August, and September). Data shows that September is a month with a large drop in RPM, ASM, and Load Factor.