* Q2 net income 7 cts/share; EPS ex-items 5 cts
* Operating revenue lower, costs also fall
* Ends quarter with $880 million in liquidity
WASHINGTON, July 23 (Reuters) - JetBlue Airways (JBLU.O) reported a second-quarter profit on Thursday despite headwinds on demand and lower revenue.
The low-cost airline posted net income of $20 million, or 7 cents per share, compared with a year-earlier loss of $9 million, or 4 cents per share.
Excluding an accounting gain from the valuation of some of its auction rate securities, profit would have been 5 cents per share.
Operating revenue fell 6 percent to $807 million on lower demand the industry blames on recession. Operating expenses fell 17.7 percent, or $107 million. Seat-mile revenue was off 4.4 percent at 9.8 cents, while seat-mile costs, excluding fuel expenses, fell 11.2 percent to 8.8 cents.
JetBlue ended the quarter with about $880 million in cash and cash equivalents. The carrier hedged about 9 percent of its fuel consumption and said it had realized “significant cash savings” from lower prices. (Reporting by John Crawley; Editing by Lisa Von Ahn)