On Friday, US carrier JetBlue updated its operational guidance for the third quarter of 2022, marginally increasing its capacity forecasts.

The upgraded forecasts are in JetBlue Airways Corporation's (JetBlue) United States Securities and Exchange Commission (SEC) Form 8-K filing. The airline now expects flown capacity for the third quarter of 2022 to be approximately flat compared to the third quarter of 2019 (year over three). In its second-quarter results presentation in August, JetBlue had forecasted capacity to be flat to negative 3% year over three.

Strong demand is driving capacity and revenue growth

In its August presentation, JetBlue highlighted three key metrics; two focused on revenue and one on cost. On the revenue side, it measures Available Seats Miles (ASMs) and Revenue per Available Seat Mile (RASM), while on the cost side, it measures operating expenses per available seat mile excluding fuel (CASM Ex-Fuel). JetBlue said it excludes fuel costs because "it provides investors the ability to measure financial performance excluding items beyond our control, such as fuel costs, which are subject to many economic and political factors or not related to the generation of an available seat mile."

JetBlue had forecast RASM for Q3 to increase between 19% - 23% year over three, but in the SEC filing, it has lifted that to 22% - 24%. The airline said:

"JetBlue continues to see the strong demand environment extend well beyond the summer peak, with robust demand for travel in September and beyond. Ancillary revenue also continues to perform well, aided by record co-brand spend."

Fleet renewal is key to future profits

In terms of ramping up capacity, JetBlue is currently operating around 93% of its fleet, with data from ch-aviation.com showing that 268 of 287 aircraft are in service. The carrier says that accelerating the retirement of its 51 Embraer ERJ E190s will contribute to around $250 million of cost savings through 2024. It also has 130 Airbus A320-200s, which makeup 45% of its fleet, with an average age of 17 years and nearing retirement age. JetBlue is going all-in on Airbus aircraft for its fleet renewal, with orders in place for A220s, and A321neos, including LR and XLR variants.

JetBlue expanded its transatlantic offerings in August by launching routes from Boston Logan International Airport (BOS) to London Gatwick Airport (LGW), using the Airbus A321LR. Next Tuesday, it is scheduled to begin a Boston to London Heathrow Airport (LHR) route and, on October 29, an additional New York - Gatwick service.

Commenting on costs ex-fuel, the airline has not changed its guidance and expects CASM Ex-Fuel to increase between 15% - 17% year over three. While fuel costs are excluded from CASM, it expects "an average all-in price per gallon of fuel of $3.86 in the third quarter of 2022," compared to the $3.68 previously estimated. JetBlue adds that as of September 9, it has not entered into forward fuel derivative contracts to hedge its fuel consumption for the third quarter of 2022.

Still some way to go

In the first half of 2022, JetBlue earned total revenues of $4.18 billion (€4.17b), up 5% on the $3.98 billion in 1H 2019. However, it made an operating loss in 2H 2022 of $480 million and a net loss of $443 million, compared to an operating profit of $325 million and a net profit of $221 million in 1H 2019.