April 25, 2013
Credit: Tony Hisgett
JetBlue Airways says it spent $20 million in the first quarter to accelerate “engine performance restorations” on General Electric CF34-10s that power its Embraer 190s.
CFO Mark Powers, during the company’s April 25 first quarter earnings call, said early restorations are being performed on its “higher flight hour” engines to improve their operational reliability and time on-wing, but was not more specific on the level of engine hours.
The airline also did not offer much detail about what needed to be fixed, with Powers only noting that the issues are related to “peripheral items,” not the engine’s core.
JetBlue says it conducted 12 of the restorations in the first quarter and expects to complete 30 this year, a significantly higher rate than the 20 engine restorations originally planned for 2013. The carrier is working with GE on a long-term maintenance agreement to smooth out future expenses, Powers adds.
CEO Dave Barger publicly discussed his disappointment with the E-190 maintenance costs in an April 23 address to the Harvard Business School’s Aerospace and Aviation Club in Boston that was exclusively reported by Aviation Week. In that address and the earnings call, the CEO said the E-190s still benefit the carrier, particularly in the important Boston market. “We’re committed to the 190,” he said during the April 25 call.
The carrier currently has 54 Embraer E-Jets in its fleet, with six more scheduled for delivery this year. A further 24 E-190s are scheduled for delivery over the next five years.
During the earnings call, Barger disclosed that South African Airways is on the “very short list” to be JetBlue’s first full codeshare partner. The airline also announced that it plans to start service from Fort Lauderdale-Hollywood International Airport in Florida to Jorge Chavez International Airport in Lima Nov. 21, pending government approvals. Lima would become the carrier’s southernmost destination.
JetBlue reported a $14 million profit and 4.5% operating margin for the first quarter, down from $30 million and 7.4%, respectively, for the same period in 2012.
The airline cited higher maintenance costs and Hurricane Sandy’s impact on demand as the primary reasons for the declines. Although the hurricane hit the East Coast in October 2012, attempts to make-up for lost school days during the Presidents’ Day vacation period in February cost the airline an estimated $25 million in revenue.