JetBlue To Sell 11 of 12 E190s

JetBlue Airways has reached an agreement in principle to sell 11 of the 12 Embraer 190 aircraft it was scheduled to receive in 2013 and 2014 to a “third party” that the carrier would not identify.

JetBlue executives disclosed the agreement in a conference call July 26 on its second-quarter earnings. The New York-based low-cost carrier did not provide any other details about the deal.

Going forward, JetBlue expects to use lease returns, rather than sales, for its Airbus aircraft to “smooth out” its capacity growth in that aircraft type. CFO Ed Barnes says it plans to use sales of delivery positions to do the same with the Embraer 190 aircraft. JetBlue has 47 of the Embraer aircraft on firm order from 2012 through 2018.

JetBlue said in June that it plans to drop up to 25 of the Embraer 190s from its order backlog, but was adamant that it would not park aircraft to meet its 75-aircraft E-Jet fleet optimization goal. JetBlue also rescheduled its Airbus narrowbody deliveries and converted some A320 orders to the larger A321.

JetBlue currently operates 119 Airbus A320s and 46 Embraer 190s.

On second-quarter earnings, JetBlue reported a $25 million profit and 7.5% operating margin, which is lower than its $31 million profit and 10.2% margin in second quarter 2010.

The airline reported record second-quarter operating revenue of $1.2 billion on 8.7% more capacity and 7.9% more traffic, with increases of 13.9% in yield, 13.2% in passenger unit revenue and 12.6% in total unit revenue. Operating expenses, however, increased 26% year-over-year, or $220 million, largely because of a $160 million increase in the amount spent on fuel. That propelled unit costs to a 16% increase.

Also, leisure demand “unexpectedly and somewhat suddenly lost momentum” at the end of June, although forward bookings look good right now, Barnes says.

JetBlue executives say they remain confident in their strategy, which includes a focus on growth in the Boston and Latin American/Caribbean markets, a continued strengthening of its appeal to business travelers and additional interlining partnerships.

Meanwhile, other airlines are cutting their capacity by about 3% in the third quarter in Boston markets in which they compete with JetBlue, the carrier says.

JetBlue expects Latin American and Caribbean routes to account for about 25% of its capacity by year-end, and says competitive capacity will be down 13% in the third quarter in its Caribbean markets. The carrier’s Caribbean boost will come in part from plans to increase the number of seats by about 50% year-over-year into San Juan, where JetBlue recently overtook American Airlines in capacity because of JetBlue’s growth and American’s cutbacks.


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