Today we reported our results for the third quarter 2010:
- Operating income for the quarter was $140 million, resulting in a 13.6% operating margin. This compares to operating income of $66 million and a 7.7% operating margin in the third quarter of 2009.
- Pre-tax income for the quarter was $97 million. This compares to pre-tax income of $23 million in the third quarter of 2009.
- Net income for the third quarter was $59 million, or $0.18 per diluted share. This compares to our third quarter 2009 net income of $15 million, or $0.05 per diluted share.
We reported third quarter revenue exceeded $1 billion for the first time, up 20.5 percent year-over-year. Revenue passenger miles for the third quarter increased 9.6% to 7.7 billion on an 8.5% increase in capacity, resulting in a third quarter load factor of 84.6%, an increase of 0.9 points year over year.
Yield per passenger mile in the third quarter was 12.10 cents, up 11.4% compared to the third quarter of 2009. Passenger revenue per available seat mile (PRASM) for the third quarter 2010 increased 12.5% year over year to 10.24 cents and operating revenue per available seat mile (RASM) increased 11.1% year-over-year to 11.32 cents.
Operating expenses for the quarter increased 12.9%, or $102 million, over the prior year period, including a non-cash impairment charge of approximately $6 million related to an asset held by LiveTV, our wholly owned subsidiary. Our operating expense per available seat mile (CASM) for the third quarter increased 4.1% year-over-year to 9.78 cents. Excluding fuel, CASM increased 3.4% to 6.57 cents.
Fuel Expense and Hedging
We continued to hedge fuel to help manage price volatility. Specifically, we hedged approximately 49% of our fuel consumption during the third quarter, resulting in a realized fuel price of $2.26 per gallon, a 5.6% increase over third quarter 2009 realized fuel price of $2.14. Our recorded $6 million in losses on fuel hedges that settled during the third quarter.
We have hedged approximately 43% of our fourth quarter projected fuel requirements with a combination of jet fuel swaps and heating oil collars. We expect an average price per gallon of fuel, including the impact of hedges and fuel taxes, of $2.42 in the fourth quarter and $2.30 for the full year 2010.
Balance Sheet Update
We ended the third quarter with approximately $1 billion in unrestricted cash and short term investments, one of the strongest liquidity positions in the U.S. airline industry relative to its size. “Our third quarter results and strong liquidity position demonstrate that we are making significant progress towards our goal of achieving sustainable growth supported by cash from operations,” said Ed Barnes, our CFO.
Fourth Quarter and Full Year Outlook
“Looking ahead, we are encouraged by strong revenue trends – particularly in our Boston and Caribbean markets. We expect this revenue momentum to continue into the fourth quarter,” said Barnes.
For the fourth quarter of 2010, PRASM is expected to increase between 12 and 15 percent year over year. RASM is expected to increase between 10 and 13 percent year over year. CASM is expected to increase between seven and nine percent over the year-ago period. Excluding fuel, CASM in the fourth quarter is expected to increase between two and four percent year over year.
PRASM for the full year is expected to increase between nine and 12 percent year over year. RASM is expected to increase between seven and ten percent year over year. CASM for the full year is expected to increase between seven and nine percent over full year 2009. Excluding fuel, CASM in 2010 is expected to increase between five and seven percent year over year.
Capacity is expected to increase between eight and ten percent in the fourth quarter and between six and eight percent for the full year.
Tune in to our quarterly earnings today, October 21, at 9:30 a.m. Eastern Time. A live broadcast of the conference call will be available via the internet at http://investor.jetblue.com.