JETBLUE AIRWAYS CORPORATION OVERVIEW
The COVID-19 pandemic continues to have a significant impact on our operating revenues and financial position. We began seeing signs of recovery inFebruary 2021 that continued to progress into the third quarter of 2021. The length and severity of the reduction in travel demand due to the COVID-19 pandemic are uncertain, but with increasing vaccination rates, reductions in infection rates related to new COVID-19 variants and easing of travel advisories and restrictions, we believe customer confidence will continue to grow. We expect widespread vaccinations to result in sustained demand improvement going forward, with recovery of domestic demand outpacing the recovery of international demand in most regions. Third Quarter 2021 Results Our third quarter 2020 results were adversely impacted by the COVID-19 pandemic. As a result, comparisons of our 2021 results to 2020 are inflated and are not necessarily indicative of future operating results. In certain cases, we have also provided comparisons of our third quarter 2021 results to our third quarter 2019 results which are more reflective of pre-pandemic operations. •Third quarter system capacity increased by 134.1% year-over-year and decreased by 0.8% versus the third quarter of 2019. •Revenue for the third quarter of 2021 increased by 300.8% year-over-year to$2.0 billion and decreased by 5.5% versus the third quarter of 2019. •Operating revenue per available seat mile (RASM) for the three months endedSeptember 30, 2021 increased by 71.2% to12.20 cents year-over-year and decreased by 4.7% versus the three months endedSeptember 30, 2019 . •Operating expense for the third quarter of 2021 increased by 77.1% year-over-year to$1.8 billion and decreased by 2.9% versus the third quarter of 2019. •Operating expense per available seat mile (CASM) for the three months endedSeptember 30, 2021 decreased by 24.3% year-over-year to11.04 cents and decreased by 2.1% versus the three months endedSeptember 30, 2019 . •Our operating expense for the third quarter of 2021 and 2020 included the effects of special items. In the third quarter of 2021, we recognized$186 million of contra-expense representing the amount of federal payroll support grants that were utilized during the period. Special items for the third quarter of 2020 included$332 million of payroll support grants under the CARES act recognized as a contra-expense on our consolidated statement of operations,$58 million of one-time costs associated with our voluntary crewmember separation program,$56 million of impairment charges on our Embraer E190 fleet, and losses of$106 million generated by certain aircraft sale-leaseback transactions. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense increased by 50.2% year-over-year to$1.5 billion for the third quarter of 2021 and 11.8% versus the third quarter of 2019. •Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile (CASM ex-fuel)(1) decreased by 35.9% year-over-year to9.39 cents for the third quarter of 2021 and increased by 12.7% versus the third quarter of 2019. •Our reported diluted earnings (loss) per share for the third quarter of 2021 and 2020 were$0.40 and$(1.44) , respectively. In addition to the special items described above, our results for the third quarter of 2021 also included$54 million of one-time gains on equity investments. Excluding these items, our adjusted loss per share(1) for the third quarter of 2021 and 2020 were$(0.12) and$(1.75) , respectively. SinceFebruary 2021 , we have seen a meaningful rebound in the demand for leisure travel. We are encouraged by the improving booking trends, and believe the ongoing acceleration in demand will continue, subject to the increase in vaccination rates, reductions in COVID-19 infection rates, including those associated with new variants, and easing of travel restrictions. We expect to adjust capacity in response to the level of demand. We have taken a number of steps to position ourselves for recovery when demand for air travel returns to pre-pandemic levels. Network InAugust 2021 , we launched our inaugural transatlantic service fromJohn F. Kennedy International Airport ("JFK") inNew York toLondon Heathrow Airport . We further expanded our presence in the transatlantic market with services from JFK toLondon Gatwick Airport , which began inSeptember 2021 . We expect to begin services toLondon fromBoston Logan International Airport in summer 2022. (1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure. 26 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In the third quarter of 2021, we also launched seasonal services from JFK toGlacier Park International Airport inKalispell, Montana , as well asBoise Airport inIdaho . Fleet We took delivery of three Airbus A220 aircraft and one Airbus A321neo aircraft in the third quarter of 2021, all of which were paid for with cash on hand. Sustainability We are committed to reducing our contribution to climate change and decarbonizing our operation. We have a clear plan to address our flight emissions, using the following six levers: (1) Aircraft Efficiency: Our investments in new aircraft increase fuel efficiency and drive down costs; (2) Fuel Optimization: We continuously monitor and adjust our operations to ensure adherence to fuel-savings procedures; (3)Sustainable Aviation Fuels : We use sustainable aviation fuels ("SAF") on our existing aircraft reducing lifecycle emissions by up to 80%; (4) Electric Ground Operations: We are converting our Ground Service Equipment to electric and maximizing electric ground power and air systems for our aircraft to minimize our fuel and emissions use on the ramp; (5) Technology Partnerships: Through our subsidiary,JetBlue Technology Ventures , we support and invest in alternative energy aircraft technologies, such as those developing electric- and hydrogen-fueled aircraft; and (6) Offsets: For unavoidable emissions, we purchase high-quality, verified carbon offsets. In 2020, we became the first majorU.S airline to achieve carbon neutrality for all domestic flights, which is achieved through large-scale carbon offsetting. Our target is to achieve net zero carbon emissions by 2040, ten years ahead of the Paris Climate Agreement. We view the adoption of SAF as the most promising means of rapidly and directly reducing emissions in the aviation industry. Enabled by our recent agreements with SG Preston, Neste, World Energy, and World Fuel Services, we are well ahead of pace to achieve our goal of converting 10% of our jet fuel usage to SAF by 2030. Commercial Partnerships We continue to develop our strategic relationship withAmerican Airlines, Inc. ("American") under theNortheast Alliance (the "NEA"). OnSeptember 21, 2021 , theUnited States Department of Justice ("DOJ"), along with the Attorneys General of six states and theDistrict of Columbia filed a lawsuit againstJetBlue and American concerning the previously implemented NEA. The lawsuit asserts and seeks an adjudication that the NEA violatesU.S. antitrust laws, and that we and American should be permanently enjoined from continuing and restrained from further implementing the NEA. Also onSeptember 21, 2021 , theUnited States Department of Transportation ("DOT") published a Clarification Notice relating to the agreement that had been reached between the DOT,JetBlue , and American inJanuary 2021 , at the conclusion of the DOT's review of the NEA ("DOT Agreement"). The DOT Clarification Notice stated, among other things, that the DOT Agreement remains in force during the pendency of the DOJ action against the NEA and, while the DOT retains independent statutory authority to prohibit unfair methods of competition in air transportation, the DOT intends to defer to DOJ to resolve the antitrust concerns that DOJ has identified with respect to the NEA. The DOT simultaneously published a Notice Staying Proceeding in relation to a complaint by Spirit Airlines, Inc. regarding the NEA, pending resolution of the DOJ action described above. The NEA was established to unlock capacity growth and customer benefits that could not have been achieved independently by either airline and to better compete in the Northeast market. We believe our partnership with American will create more capacity, seamless connectivity for travelers in the northeast, and offer more choices for customers across the networks of both airlines. The Company believes the DOJ lawsuit is without merit and, along with American, intends to defend this matter vigorously. (1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure. 27 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Outlook for 2021 As we continue to navigate through the pandemic, we are optimistic about the future. Based on our current planning assumptions, we expect capacity for the fourth quarter of 2021 to decline between 4% and 7% percent as compared to the same period in 2019. Revenue is expected to decline between 8% and 13% in the fourth quarter of 2021 as compared to the same period in 2019. We expect the demand acceleration which began inFebruary 2021 to continue as larger portions of theU.S. population become vaccinated against COVID-19 and travel advisories and restrictions begin to ease. We are closely monitoring the developments associated with the COVID variants and the potential impact that continued spread of these variants could have on the demand for air travel. We plan to continue managing our cost structure, while mitigating near term cost pressures from higher fuel prices, airport rents and landing fees, and labor costs as we return our operations to pre-pandemic levels. RESULTS OF OPERATIONS Three Months EndedSeptember 30, 2021 vs. 2020 Overview We reported a net income of$130 million , operating income of$186 million and an operating margin of 9.4% for the three months endedSeptember 30, 2021 . This compares to a net loss of$393 million , an operating loss of$516 million and an operating margin of (104.9)% for the three months endedSeptember 30, 2020 . Earnings per diluted share were$0.40 for the third quarter of 2021 and$(1.44) of loss per share for the same period in 2020. Our reported results for the third quarter of 2021 and 2020 included the effects of special items. In addition to special items, our third quarter 2021 results also included one-time gains on certain equity investments. Adjusting for these items(1), our operations broke even with an adjusted net loss of$39 million and an adjusted loss per share of$(0.12) for the third quarter of 2021. This compares to adjusted net loss of$477 million , adjusted operating loss of$628 million , adjusted operating margin of (127.6)%, and adjusted loss per share of$(1.75) for the third quarter of 2020. On-time performance, as defined by theDepartment of Transportation , or DOT, is arrival within 14 minutes of scheduled arrival time. In the third quarter of 2021, our system wide on-time performance was 63.5% compared to 88.9% for the same period in 2020. Our completion factor increased by 0.1 points to 97.7% in the third quarter of 2021 from 97.6% in the same period in 2020.
(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Operating Revenues
(Revenues in millions; percent Three Months Ended September 30, Year-over-Year Change
changes based on unrounded numbers) 2021 2020 $ %
Passenger revenue $ 1,856 $ 445 $ 1,411 317.3 %
Other revenue 116 47 69 145.6
Total operating revenues $ 1,972 $ 492 $ 1,480 300.8 %
Average Fare $ 204.50 $ 206.73 $ (2.23) (1.1) %
Yield per passenger mile (cents) 14.37 15.10 (0.73) (4.8)
Passenger revenue per ASM (cents) 11.48 6.44 5.04 78.2
Operating revenue per ASM (cents) 12.20 7.12 5.08 71.2
Average stage length (miles) 1,320 1,313 7 0.5
Revenue passengers (thousands) 9,075 2,151 6,924 321.8
Revenue passenger miles (millions) 12,913 2,945 9,968 338.5
Available Seat Miles (ASMs)
(millions) 16,168 6,905 9,263 134.1
Load Factor 79.9 % 42.6 % 37.3 pts.
Passenger revenue is our primary source of revenue, which includes seat revenue
and baggage fees, as well as revenue from our ancillary product offerings such
as Even More® Space. The increase in passenger revenue of $1.4 billion , or
317.3%, for the three months ended September 30, 2021 compared to the same
period in 2020, was primarily driven by the increase in demand for travel as we
gradually recover from the COVID-19 pandemic. Revenue passengers increased to
9.1 million for the three months ended September 30, 2021 from 2.2 million for
the same period in 2020.
Operating Expenses
In detail, our operating costs per available seat mile, or ASM, were as follows:
(in millions; per ASM data Three Months Ended
in cents; percent changes September 30, Year-over-Year Change Cents per ASM
based on unrounded numbers) 2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related
taxes $ 443 $ 102 $ 341 335.3 % 2.74 1.47 85.9 %
Salaries, wages and benefits 620 482 138 28.6 3.83 6.98 (45.1)
Landing fees and other rents 182 84 98 115.8 1.12 1.22 (7.8) Depreciation and amortization 140 127 13 9.6 0.86 1.84 (53.2) Aircraft rent 25 23 2 9.5 0.16 0.33 (53.2) Sales and marketing 60 24 36 154.4 0.37 0.34 8.6 Maintenance, materials and 205 111 94 85.5 1.27 1.60
(20.8)
repairs
Other operating expenses 297 167 130 78.1 1.84 2.43 (23.9) Special items (186) (112) (74) 67.1 (1.15) (1.61) (28.6) Total operating expenses$ 1,786 $ 1,008 $ 778 77.1 % 11.04 14.60
(24.3) %
Total operating expenses$ 1,972 $ 1,120 $ 852 76.1 % 12.19 16.21 (24.8) % excluding special items(1) Aircraft Fuel and Related Taxes Aircraft fuel and related taxes increased by$341 million , for the three months endedSeptember 30, 2021 compared to the same period in 2020. The average fuel price for the three months endedSeptember 30, 2021 increased by 69.7% to$2.08 per gallon. Our fuel consumption increased by 156.4%, or 130 million gallons, due to increased demand as we recover from the (1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure. 29 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COVID-19 pandemic. We expect the year-over-year increase in fuel consumption to continue as we add capacity back into the system. Salaries, Wages and Benefits Salaries, wages and benefits increased$138 million , or 28.6%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 primarily due to higher total hours worked by our crewmembers as we align our workforce with the increase in travel demand. Salaries, wages and benefits in 2020 were lower than usual as a result of various cost saving initiatives taken in response to the decreased demand for air travel due to the COVID-19 pandemic. Beginning inMarch 2020 , we instituted a company-wide hiring freeze, implemented salary and wage reductions of 20% to 50% for our officers, and reduced work hours for all other management workgroups. InJune 2020 , we announced voluntary separation programs to our crewmembers, with most departures having occurred in the third quarter of 2020. Landing Fees and Other Rents Landing fees and other rents increased$98 million , or 115.8%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 primarily due to increases in departures as well as increases in rates. We expect the increase in landing fees and other rents to continue into 2022 as we recover from the COVID-19 pandemic. Depreciation and Amortization Depreciation and amortization increased$13 million , or 9.6%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 primarily due a higher number of operating aircraft. We placed 15 new aircraft into service since the end of the third quarter of 2020. Aircraft Rent Aircraft rent increased$2 million , or 9.5%, for the three months endedSeptember 30, 2021 compared to the same period in 2020. We executed a number of aircraft sale-leaseback transactions in the second half of 2020, the majority of which qualified as sales for accounting purposes. The assets associated with these transactions, which qualified as sales, are recorded within operating lease assets for which rent expenses are recognized through the life of the related lease terms. Sales and Marketing Sales and marketing increased$36 million , or 154.4%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we recover from the pandemic. Revenue passengers increased to 9.1 million for the third quarter 2021 from 2.2 million for the same period in 2020. Maintenance Materials and Repairs Maintenance materials and repairs increased$94 million , or 85.5%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 primarily driven by an increase in maintenance events as we bring our parked aircraft back into service. We significantly reduced our flying in 2020 as a result of the COVID-19 pandemic and parked a portion of our fleet throughout the year. We expect the increase in expenses relating to maintenance, materials, and repairs to continue as we return our operations to pre-pandemic levels. Other Operating Expenses Other operating expenses consist of the following categories: outside services (including expenses related to fueling, ground handling, skycap, security, and janitorial services), insurance, personnel expenses, professional fees, onboard supplies, shop and office supplies, bad debts, communication costs, and taxes other than payroll and fuel taxes. Other operating expenses increased$130 million , or 78.1%, for the three months endedSeptember 30, 2021 compared to the same period in 2020 due to higher levels of operations in response to the increased demand for travel. Special Items (1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure. 30 -------------------------------------------------------------------------------- Table of Contents PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the three months endedSeptember 30, 2021 , special items included a contra-expense of$186 million which represents the amount of payroll support grants utilized during the period. For the three months endedSeptember 30, 2020 , special items included the following: •Contra-expense of$332 million , which represents the amount of CARES Act payroll support grants utilized during the period; •Impairment charges of$56 million on our Embraer E190 fleet; •Losses of$106 million related to aircraft sale-leaseback transactions; and. •One-time costs of$58 million , consisting of severance and health benefits, in connection with our voluntary separation programs. Nine Months EndedSeptember 30, 2021 vs. 2020 Overview We reported a net loss of$53 million , an operating income of$39 million and an operating margin of 0.9% for the nine months endedSeptember 30, 2021 . This compares to a net loss of$981 million , an operating loss of$1.3 billion and an operating margin of (54.9)% for the nine months endedSeptember 30, 2020 . Loss per share was$(0.17) for the nine months endedSeptember 30, 2021 compared to loss per share of$(3.58) for the same period in 2020. Our reported results for the nine months endedSeptember 30, 2021 and 2020 included the effects of special items. In addition to special items, we also recognized one-time gains on certain equity investments during 2021. Adjusting for these items(1), our adjusted net loss was$682 million , adjusted operating loss was$802 million , adjusted operating margin was (19.1)%, and adjusted loss per share was$(2.15) for the nine months endedSeptember 30, 2021 . This compares to adjusted net loss of$1.1 billion , adjusted operating loss of$1.5 billion , adjusted operating margin of (64.2)%, and adjusted loss per share of$(4.16) for the nine months endedSeptember 30, 2020 . Operating Revenues (Revenues in millions; percent Nine Months Ended September 30, Year-over-Year Change changes based on unrounded numbers) 2021 2020 $ % Passenger revenue $ 3,913$ 2,126 $ 1,787 84.0 % Other revenue 290 169 121 71.6 Total operating revenues $ 4,203$ 2,295 $ 1,908 83.1 % Average Fare$ 182.22 $ 194.77 $ (12.55) (6.4) % Yield per passenger mile (cents) 13.26 15.02 (1.76) (11.8) Passenger revenue per ASM (cents) 10.06 8.78 1.28 14.5 Operating revenue per ASM (cents) 10.80 9.48 1.32 14.0 Average stage length (miles) 1,293 1,201 92 7.7 Revenue passengers (thousands) 21,476 10,918 10,558 96.7 Revenue passenger miles (millions) 29,524 14,153 15,371 108.6 Available Seat Miles (ASMs) (millions) 38,902 24,209 14,693 60.7 Load Factor 75.9 % 58.5 % 17.4 pts. Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The increase in passenger revenue of$1.8 billion , or 84.0%, for the nine months endedSeptember 30, 2021 compared to the same period in 2020, was primarily driven by the increase in demand for travel as we gradually recover from COVID-19 pandemic which began in March of 2020. Revenue passengers increased by 96.7% to 21.5 million for the nine months endedSeptember 30, 2021 from 10.9 million for the same period in 2020.
(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Operating Expenses
In detail, our operating costs per available seat mile, or ASM, were as follows:
(in millions; per ASM data Nine Months Ended in cents; percent changes
September 30, Year-over-Year Change Cents per ASM
based on unrounded numbers) 2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related
taxes $ 973 $ 496 $ 477 96.1 % 2.50 2.05 22.0 %
Salaries, wages and benefits 1,718 1,560 158 10.1 4.42 6.44 (31.5)
Landing fees and other rents 470 258 212 82.6 1.21 1.06 13.6 Depreciation and amortization 398 407 (9) (2.2) 1.02 1.68 (39.2) Aircraft rent 76 60 16 25.7 0.19 0.25 (21.8) Sales and marketing 130 84 46 54.6 0.33 0.35 (3.8) Maintenance, materials and 472 344 128 37.5 1.22 1.42
(14.5)
repairs
Other operating expenses 768 560 208 37.1 1.97 2.32 (14.7) Special items (841) (214) (627) 293.8 (2.16) (0.88) 145.1
Total operating expenses
609 17.1 % 10.70 14.69 (27.1) %
Total operating expenses
1,236 32.8 % 12.86 15.57 (17.4) %
excluding special items(1)
Aircraft Fuel and Related Taxes
Aircraft fuel and related taxes increased by $477 million , or 96.1%, for the
nine months ended September 30, 2021 compared to the same period in 2020. The
average fuel price for the nine months ended September 30, 2021 increased by
21.3% to $1.94 per gallon. Our fuel consumption increased by 61.6%, or 191
million gallons, due to capacity increases as demand for travel grew. We expect
the year-over-year increase in fuel consumption to continue as we as add
capacity back into the system.
Salaries, Wages and Benefits
Salaries, wages and benefits increased by $158 million , or 10.1%, for the nine
months ended September 30, 2021 compared to the same period in 2020, driven
primarily by higher total hours worked by our crewmembers as we align our
workforce with the increase in travel demand.
Salaries, wages and benefits in 2020 were lower than usual as a result of
various cost saving initiatives taken in response to the decreased demand for
air travel due to the COVID-19 pandemic. Beginning in March 2020 , we instituted
a company-wide hiring freeze, implemented salary and wage reductions of 20% to
50% for our officers, and reduced work hours for all other management
workgroups. In June 2020 , we announced voluntary separation programs to our
crewmembers, with most departures having occurred in the third quarter of 2020.
As of September 30, 2021 , we have approximately 21,250 crewmembers compared to
approximately 20,500 crewmembers at September 30, 2020 .
Landing Fees and Other Rents
Landing fees and other rents increased by $212 million , or 82.6%, for the nine
months ended September 30, 2021 compared to the same period in 2020 due to
increases in departures as well as increases in rates. We expect the increase in
landing fees and other rents to continue into 2022 as we recover from the
COVID-19 pandemic.
Depreciation and Amortization
Depreciation and amortization decreased by $9 million , or 2.2%, for the nine
months ended September 30, 2021 compared to the same period in 2020. This
decrease was partially attributed to the impairment of our E190 fleet and
related spare parts in 2020. In addition, we also executed a number of aircraft
sale-leaseback transactions towards the second half of 2020, the majority of
which qualified as sales for accounting purposes. As a result of these sales, we
no longer record depreciation
(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures"
at the end of this section for more information on this non-GAAP measure.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
expense on the assets. The costs associated with leasing these assets back from
the purchaser are included in Aircraft Rent on our consolidated statements of
operations.
The decreases described above were partially offset by additional depreciation
expenses related to 15 new aircraft that have been placed into service since
September 30, 2020 . The average number of aircraft increased by 3.5% during the
nine months ended September 30, 2021 as compared to the same period in 2020.
Aircraft Rent
Aircraft rent increased $16 million , or 25.7%, for the nine months ended
September 30, 2021 compared to the same period in 2020. As discussed above, we
executed a number of aircraft sale-leaseback transactions towards the second
half of 2020, the majority of which qualified as sales for accounting purposes.
The assets associated with these transactions, which qualified as sales, are
recorded within operating lease assets for which rent expenses are recognized
throughout the life of the related lease terms.
Sales and Marketing
Sales and marketing increased $46 million , or 54.6%, for the nine months ended
September 30, 2021 compared to the same period in 2020 driven by higher credit
card fees and computer reservation system charges, which are directly related to
demand increases as we recover from the pandemic. Revenue passengers increased
to 21.5 million for the nine months ended September 30, 2021 from 10.9 million
for the same period in 2020.
Maintenance Materials and Repairs
Maintenance materials and repairs increased $128 million , or 37.5%, for the nine
months ended September 30, 2021 compared to the same period in 2020 primarily
driven by an increase in maintenance events as we bring our parked aircraft back
into service. We significantly reduced our flying in 2020 as a result of the
COVID-19 pandemic and parked a portion of our fleet throughout the year.
We expect the increase in expenses relating to maintenance, materials, and
repairs to continue as we return our operations to pre-pandemic levels.
Other Operating Expenses
Other operating expenses consist of the following categories: outside services
(including expenses related to fueling, ground handling, skycap, security, and
janitorial services), insurance, personnel expenses, professional fees, onboard
supplies, shop and office supplies, bad debts, communication costs, and taxes
other than payroll and fuel taxes.
Other operating expenses increased $208 million , or 37.1%, for the nine months
ended September 30, 2021 compared to the same period in 2020 due to higher
levels of operations in response to the increased demand for travel.
Special Items
Special items for the nine months ended September 30, 2021 included the
following:
•Contra-expense of $830 million , which represents the amount of federal payroll
support grants utilized during the period; and
•Contra-expense of $11 million related to the recognition of Employee Retention
Credits provided by the CARES Act.
For the nine months ended September 30, 2020 , special items include a
contra-expense of $636 million which represents the amount of CARES Act payroll
support grants utilized during the period, impairment charges of $258 million on
our Embraer E190 fleet, losses of $106 million related to certain aircraft
sale-leaseback transactions, and one-time costs of $58 million , consisting of
severance and health benefits, in connection with our voluntary separation
programs.
(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures"
at the end of this section for more information on this non-GAAP measure.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth our operating statistics for the three and nine
months ended September 30, 2021 and 2020:
Three Months Ended September
30, Year-over-Year Change Nine Months Ended September 30, Year-over-Year Change
(percent changes based on
unrounded numbers) 2021 2020 % 2021 2020 %
Operational Statistics
Revenue passengers (thousands) 9,075 2,151 321.8 21,476 10,918 96.7
Revenue passenger miles (RPMs) 12,913 2,945 338.5 29,524 14,153
108.6
(millions)
Available seat miles (ASMs) (millions) 16,168 6,905 134.1 38,902 24,209 60.7 Load factor 79.9 % 42.6 % 37.3 pts 75.9 % 58.5 % 17.4 pts Aircraft utilization (hours per day) 10.1 4.2 140.5 8.3 5.5 50.9 Average fare$ 204.50 $ 206.73 (1.1)$ 182.22 $ 194.77 (6.4) Yield per passenger mile (cents) 14.37 15.10 (4.8) 13.26 15.02
(11.8)
Passenger revenue per ASM (cents) 11.48 6.44 78.2 10.06 8.78
14.5
Operating revenue per ASM (cents) 12.20 7.12 71.2 10.80 9.48
14.0
Operating expense per ASM (cents) 11.04 14.60 (24.3) 10.70 14.69
(27.1)
Operating expense per ASM, 9.39 14.64 (35.9) 10.29 13.40 (23.2) excluding fuel(1) Departures 76,918 32,124 139.4 188,220 128,315 46.7 Average stage length (miles) 1,320 1,313 0.5 1,293 1,201
7.7
Average number of operating 275.9 262.9 4.9 270.4 261.3
3.5
aircraft during period Average fuel cost per gallon,$ 2.08 $ 1.23 69.7$ 1.94 $ 1.60 21.3 including fuel taxes Fuel gallons consumed (millions) 213 83 156.4 501 310 61.6 Average number of full-time 16,088 16,004 equivalent crewmembers Historical trends may not continue. The ongoing COVID-19 pandemic continues to cause disruptions in our operations during the nine months endedSeptember 30, 2021 . We expect our operating results to significantly fluctuate from quarter-to-quarter in the future due to the uncertainties surrounding the COVID-19 pandemic, its impact on the economy and consumer behavior, and various other factors which are outside of our control. Consequently, we believe quarter-to-quarter comparisons of our operating results may not necessarily be meaningful; you should not rely on our results for any one quarter as an indication of our future performance. (1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure. 34
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