JetBlue's 2013 CASM to increase from unplanned engine work

Washington DC
Source:
This story is sourced from Pro
See more Pro news »

JetBlue Airways projects its cost per available seat mile (CASM) excluding fuel and profit sharing will jump 2.5% to 4.5% in 2013 due largely to higher than expected maintenance on the engines of its Embraer 190 aircraft.

If those projections made by JetBlue in its second quarter financial filing prove accurate, the carrier's 2013 CASM excluding fuel and profit sharing would climb to between 7.15 cents and 7.29 cents.

In 2012, JetBlue's CASM excluding fuel and profit sharing was 6.98 cents and its total CASM was 11.34 cents.

JetBlue executives said recently that they expect the carrier's maintenance costs to increase roughly 20% in 2013 above the $338 million the carrier reported in 2012.

The increase is largely due to overhauls of Embraer CF34-10E engines.

In April, JetBlue's chief executive David Barger told investors that the carriers was having "teething pains" with the engines and expected to complete 30 engine overhauls in 2013, 10 more than planned.

That contributed to JetBlue's maintenance expenses climbing more than 30% during the second quarter to $111 million, David Barger said during a 30 July earnings call.

The same unplanned work added $20 million to JetBlue's first quarter expenses.

The airline has since entered into a contract with GE Engine Services to maintain the engines, an agreement Barger says will help JetBlue "smooth out" and better predict maintenance costs.