JBLU - Earnings call transcript Q2 2018 | JetBlue Airways Corporation

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Operator

Good morning. My name is Jay. I would like to welcome everyone to JetBlue Airways Second Quarter 2018 Earnings Conference Call.

As a reminder, today’s call is being recorded. At this time all participants are in a listen-only mode. turn Fintzen. over to Investors JetBlue’s like David Relation, would the to call Director, I ahead. go Please

David Fintzen

Thanks, Jay. morning investor.jetblue.com website everyone. a All quarter with earnings Good those morning, filed our and presentation XXXX our us release, SEC. available during the earnings has second that for documents we’ll been call. this update are at This investor we reference our Thanks issued and for call. joining our on

morning’s not are New Chief differ CFO. York many on Planning; due This Actual our to to St. Joining Robin statements me those place results Geraghty, and Hayes, events. these Priest, and Executive our statements. President George, forward-looking future here results Operating materially investors Joanna therefore undue statements Officer; includes factors, may reliance EVP, in and should call expressed Steve forward-looking and Chief discuss about Marty EVP, our Commercial from in the Officer;

results please For differ other additional information call, to Also XX-Q with to press reports several forward-looking refer during the filed and of discuss financial the non-GAAP from release, concerning we course our factors SEC. measures. our that could the cause may statements,

President these turn the the reconciliation of call over of to non-GAAP JetBlue’s GAAP a Robin refer available to -- on JetBlue’s to CEO. is which of For earnings release, please now, And tables like I’d measures, end the copy at measures our a our Hayes, website. to

Robin Hayes

you has and of XX,XXX to earnings leading outstanding years team us. our the over be members welcome four morning start team with leadership of our crewmembers for adjusted changes by Joanna second been aimed Joanna to margins. the improving since XXXX. led presentation. will also I’ll our do further at promotion and and from advancing JetBlue XX,XXX oversee I’d of Officer. the This Chief earnings there her like you income and to since She the start for to her experience experience XXXX. everyone. recent customers. now us also share President to operations customer JetBlue been first Operating morning and call operation commercial our I’d results an Geraghty the to to our in deliver The slide crew adjusted Hi, second the we operating are quarter reported team for our four has past journey morning everything we superior per you full the thank This Good for like to thank of leading of of joining day-to-day margin adjusted million, on and X.X% reported on $X.XX. quarter pretax $XXX Marty. with

calendar, ex-fuel third quarter financial I our fuel CASM guidance a happy range. percent more performance to our was Controlling particularly is increasing more our critical accessible importantly, over by higher margins. even the focused RASM mitigating in oil order of but end was prices. environment. impacted growth improve fuel in Our We on modest slowing increased in believe year-over-year. that our is team is come growth XX% by stabilize rising The even impacts prices our and amongst see to in below fuel holiday costs of not

fourth capacity adjustments quarter years oil the coming of planning are X have ancillary two We’ve as for past over the over We revenues months. our we and further series slowing capacity growth to effect capacity moved a by prices points. higher slowed take to both growth the are and steadily

medium-term. mid-to-high the targeted hurricanes end Excluding underlying over is lower growth year, at our we’ve single-digit the of roughly last impact year-over-year the X.X% range of

industry many under things conditions, building executing can our to put margins we years to where the returns is to into factoring should not higher changing only blocks in have as superior those success Long-term in on talked believe tandem. into talk returns but At margins XXXX. the about control. should plan but Investor JetBlue for for capacity absolute our our currently preliminary adjusting blocks on we fuel an will returns. always margins the come. on are about our way for we to The us we has, building and We fluctuate our backdrop higher improve early and translate path requires margins. it improve We efforts Fleet example prices to are Day improving planning we October, executing relative

the in fleet the an a of Airbus We’re EXXX as review next AXXX-XXX. assets. productive and the it delighted our invested the be capital portion believe it our with decade, of outcome We selection will returned more with of accretive EPS replaces

confident This fleet. AXXXs We’re AXXXs Airbus and gauging aircraft our up economics the drive our growing for the from and in the momentum next in AXXX decade. adds new ability to from the expect higher margin benefits our in we restarting the early earnings to

initiatives today, at several how have either we we fleet strengthening our operate aimed lowering or revenue our Beyond improving costs.

about of and in cities. includes we our building One mature blocks and to our October focus planned network we how in the talk changes evolve can

about between believe revenue. ultimately reallocation million in rate opportunities see For $XX run markets earnings. also million have example, our Transcon that grow of to have recent intra-west talk will add to we about we our will the ultimately incremental further to planned -- to flying We’ll add $XX ancillary

the phase and series a options underway, fair segmentation, co-brand loyalty, and next of products. have travel of We initiatives longer-term and encompassing

the ATC in see nearly a last to to result CASM. as These challenges pleased and operation, efforts for in we AXX to in yielded our of a have in operation, visible to been our our and have present seen from May the compared initiatives have on-time XX We’ve improved performance benefits made year same We investments point RASM which DOT Northeast. improvements mitigate period. improvement reduced the

progress quarter Structural detailed our We’re a in good Steve, program, this Cost provide making and will update.

way. two unit of our inflection cost important existing fleet that op begins and in the cost effective which support tech operation half reliable with second maintenance the deals signed to in year. for a a safe We’re We in the looking more this

to our across are and review I’m we reshape cost Last enabling multi-year support organizational effect week, us resulting in sheet will size that rate through support of sorry, structure, organizational last organization. an balance an our completed summer. Our completed review take the year, centers, savings centers we run our our of

to to the us ambitious future things costs. our to an up they have accomplish are our of our We vital important These never JetBlue. controlling structure are setting easy vision protect we and a and are plan commitment and meet but help all

like crew for our you. operation during the pass and in Marty, members Before to thank over I centers to Marty, support the call both hard I’d work their again quarter. to the

Marty St. George

six. Thank you, with Robin. the capacity outlook on I’ll start slide

to our target growth adjust mid-to-high a to continue rate. single-digit We capacity

As to moved actions have prices. higher of said, oil number to lower Robin the end towards of we a adjust taking range the are and

capacity XXXX including upcoming our those reduction to updating through in our that are reductions schedules growth anticipate We will over throughout guidance days. X-point be that the fourth quarter run We the a network. the flying our will off-peak

from through we Effective Focus in higher strength reviewing coast-to-coast network. our addressing underperforming fuel markets. transcontinental fine our to addition and we with are Cities play in our will to redeployments fall, travel prices, this constantly based L.A. In

the poorly of of areas to low where better above with has quarter closed margin Northeast. see at team frequencies in and starting This the we to capacity for us, of last improved our performing off-peak by to our an flying was the close driven look by mandate operation challenges completion benefits the than helped routes, favorable the year. can expected range. We opportunities. the second half investments adjust higher flown With X.X%, a and midpoint shift are mitigate Our weather ATC summer slightly to behind XXXX and flying, factor from about of we our

hurricanes noise move recognize a impact of into last we the the As XXXX, half second year. of there’s from lot of we

inform our light Our scheduled scheduled higher prices. of rationale fuel capacity to in growth helps

the last quarter, X.X%. loss guidance to expect capacity growth For X.X% hurricanes This approximately and due to flown between to we considering year. scheduled X.X% ASMs of translates the third scheduled of

hurricanes to Caribbean the continues have For show and as Haiti this the island impact outperform a of by is This again, first capacity fifth we consecutive financial July. RASM approximately a by But that the VFR frequencies in accounts our lot to is To small than expected to and Latin going context they two from to weeks expect following markets. impact less bookings unrest. and were We the in franchise see the civil some outbreak strength clarity, RASM, down X we the appendix quarter X% rebinding a be which of summarizing provide region, the our our quarter. year-over-year of destinations. point points. negative quarter the XX% and we both of will outperformance by included the presentation. of to X.XX for Bookings approximately is headwind a recover and already leisure during table grow that network

Mint differentiate to competitors. Our legacy which believe ourselves both is Fort value broad We us to well. at proposition, from performing low-cost that allows caters service our of our extremely range and customers, Lauderdale a

performing book Transcon our Lastly, and well franchise is in also Mint markets. non-Mint

flying meaningful benefits we its into XXXX. drive and network market improvement network. way aircraft between mentioned, out of of estimate Every with of million first must intra-west $XX starting and the Robin $XX reallocations will that every million As our earnings quarter in earn the

margin our we especially how primary relatively deploy expect fuel network commitments to capacity One two in prices across We cities. the underdeveloped increase. as have optimizing advantage to support to continue network is a we continue focused

lot the to Lauderdale relevance RASM keep Clearly, and leisure and and Our Fort in a our Turn market revenue Boston margins. growing respectively. have and here seven XX%, promoting room customers, business is XX% of outlook. and our slide to growth we we for believe approximately

in than solid had We came June. close quarter at expected Second to a better negative slightly X.X%.

quarter quarter the X.XX the As from we points from holiday X.X quarter, shifted a also a the factor that’s left negative benefit in incentive from that second second in Last second quarter occurred payments. RASM completion first. travel point reminder, impact of ‘XX included co-brand of to

increase during XXXX, we of grow. ability equal which to was X.X% Our revenues the as half RASM our first demonstrates year-over-year, to unit

July. into expect driven to growth Looking we flat to strength be quarter, by throughout be and bookings RASM between RASM year-over-year X%. continues third we’ve and plus seen close-end the

from Our trends the ticketing quarter. over to second quarter the carrying are third revenue and

and quarter. Transcon Caribbean well in to At the balance, in the We continue third from New a half level, regions. markets, strength to as trend any Latin to see focus significant and seeing we’re the not York first in changes as on Florida

we in is We a approximately to have been the and capacity into and new third that headwind of made X a vacation than change. of RASM deceleration seen a address impact, coming point to as a At adjustments details softening already forward is of we the third other well ancillary San to in we the are have transition our seeing modest are provide on has has long-term Investor recent early independent around we our for The October, Juan in customer an This mitigate anticipated the update adjustments have slowing projects XXXX. Day in other the platform our the The trend. platform cascaded into trends. challenging under series result ancillary we are plan quarter. with planning as quarter moving in-flight and To way, initiatives. for will capacity more summer

turn I their crew of add to our over would my I like all it work. hard to Steve, thanks Before for members to

on I in create believe We’re network. you. our Steve, about in value we’re and our low investments that the cost a making and model and our will for long-term proposition customers owners. our to over excited our take value our product

Steve Priest

holiday you billion, the you, quarter. revenues points diluted nine Thank $X.XX Marty. Revenue slide second on pre-tax shifted some start fuel thank of prices morning $X.X the into margin the us. a joining X.X%, quarter for per with Good down highlights X% from due percentage of the X.X calendar effect and first Adjusted quarter. year-over-year. from second is Adjusted to year from share. last quarter higher the was and I’ll was EPS placements second

was tax rate this effective quarter Our XX%.

to XX% including rate a XXXX. We non-cash a EPS the range and fleet. loss, impairment effective $XXX We tax our of $X.XX EXXX GAAP between full year million expect charge the on to XX% reported

we for EXXX is AXXX, per As result very the manageable $X.X our expense of have million of and to depreciation now a cost a the impairments and plan guidance. the transition year accelerated will

executing focused we as As Robin higher long-term are adjust oil on we to plan prices. mentioned, our

margins. on our as to include is are ultimately aim capacity we well Our stabilize improve as taking and our adjustments. CASM is slowing growth. The There an actions from ancillary, impact

unit working the track and second original the we our half XX% negative of inflection for is an team fixed Our mitigate trends rule our to variable. in and of is X%. of X The on and thumb CASM guidance is XXXX in ex-fuel pressure rest the ex-fuel is cost to achieve CASM roughly track cost are XXXX on to

are leadership zero our X We a as through fully to XXXX. to team CASM/CAGR committed goal

quarter Moving and reduced for XX, the CASM resulting improved second operational the increased guidance. the expenses factor beating timing quarter third better second the an to performance than slide of drivers year-over-year our in The to completion and ex-fuel main expected from ATC delays. X.X%

operation from Looking our and our quarter carried some which CASM from second the improvement expect into reductions between shift range into not quarter we the impacted second quarter but capacity ex-fuel trends to in third and third is X%. XXXX, CASM all guidance. that the of X% expenses the growth, ex-fuel quarter The to growth progression by previous of of

we’ve far to track capacity to guidance of for our is XX, with ex-fuel growth. original the pleased was to X.X%, thus of guidance. CASM performance slower XXXX X% even first near our on lower minus X half Turning of XXXX slide end cost growth and our been with in plus the

six CASM expect of reflect growth structure the of with during this put ramp to months up. -- year to in place ex-fuel cost initiatives, half benefit the XX continue plus second We over

are year-over-year at we year, by the challenges simple of inflection Tax and and way our comparisons Reform. of side left-hand XX how of the A results last the bonus impacted one-time half see slide paid shows over yearend cost we fourth the the trend Second to and our expect quarter, ATC to crewmembers year The third to look XXXX. growth. the improving in cost again, on in of that in two-year is trends quarter hurricanes

half, being as flat the the quarter. for of guide. CASM expenses underlying XXXX in drivers particularly ex-fuel now of half, CASM prior between the growth this from second higher X.X slower year. half the to as to third second main X% half, range second X.X, into and range the for slightly the ex-fuel to a the to we negative For second anticipate growth timing first slow half to of in We the decline negative expect the than The well capacity of

X% Our to full-year CASM ex-fuel remains guide minus X%. unchanged plus of

slide our to Moving XX on report Structural Cost program. and progress

two $XX We have we quarters now XXXX, million in rate up million run called $XXX achieved ago. from savings by out

to in in half costs Our continued XXXX. our second and our hitting through commitments progress of restructuring pivotal is CASM the ex-fuel XXXX

continue will expect our efforts run between million We result in to savings $XXX three-year million. rate and $XXX

through our progressing costs, front. support partner network week, corporate past airports support the significant us is customer work review allowing our Starting a center work drove we operations our will maintaining business that on are on the cost effectiveness, move identifying The reduce better every In pillar, completed that our plans. their across across across the efforts. by we how while we improve making further footprint spend partners comprehensive year will outstanding airports. organization, teams pillar. and restructuring of changes critical sourcing conducted Last business service. streamline savings, Our are with We review opportunities and to deliver our strategic our we and also

our underway complete We pillar, on several projects are lobbies reinforcing year customers to the the as distribution track customers grow we to also In our using as benefits our airports. support the we website our customer well aircraft self-service centers. self-serve app, number the in XX by have of can of end, transform as updating to ensure and

investor and partnered JetBlue tool us through a to making to through help support most Tech our recently in customers new Gladly more Gladly be cost, communications with to an all subsidiary. channel, support centers technology. appropriate our shifting reaches customers’ the We’ve customer We transform our consolidate lowest Venture and channel. into try new We’re distribution one progress to We’ve efficient. make costs way reduce implemented allowing the to customer in technology to

in system, a functionality fit through RFP our needs technology, on larger complex also to latest made our progress the and incorporate We scalability our more to and have PSS airline. generation as order

agreement XX-year heavy Finally, maintenance Ops deal We our our and Pratt savings for of that savings reset achieve with we largest a &Whitney as for signed continue engines. fleet select to partner pillar, fleet. our the in our -- to we the of maintenance the review term engine believe the decade, significant Tech to costs working EXXX long this an help to additional into is us completed, recent for also LLP our contract With we our business contract next coverage maintenance we enhanced signed in similar drive AXXXs vXXXX fleet.

XXXX constituted to our reshape returns. the base we of asset through improving EXXX weeks and the aircraft restarting our majority unit announced fleet. see to including XX signed Turning made our number Two with for growth continue XXXX. benefit a critical XXXX. our transition of MOU further purchase program ago, starting the outcome as our restart We’ve through XX, and fleet AXXX review in We we to the expect a plan, and progress increases cost of aircraft slide of of AXXX to cabin

quarter, core we AXXX aircrafts. cash for aircrafts, fleet two are have all XX XXX AXXX all total purchased builders JetBlue. We of margin also great This core which additional Mint for and now XX with

million for how cost margins. composed to is the aircraft and further CapEx support $XXX order AXXX recent additional PDP. very guidance The of our up CapEx incremental network and that between non-aircraft will million out $X.X included spend. improve billion unchanged and for XXXX added the we $X our aircraft strategy, and base CapEx to Our added is billion, in believe $XXX remainder manageable We set

in Board. our $XXX additional executed grade quarter, returning Earlier to million investment from share and be total metrics repurchase this we with capital projects the sheet balance an share amount to owners. strong our $XXX million to authorized XX, allow in invest continue repurchase with opportunistic excess the remaining slide and to value-accretive Turning us by

Our believe margin AXXX invest priorities our and highest capital. projects. EXXX return-accretive in and We best of uses the restarting program are remain and to transition our among plan fleet

$XXX we raised ratio in nearly our to repaid XX.X% We debt debt in XX This of approximately cash an with adjusted months quarter XX.X%. million were And of aircraft trailing quarter million $XX cap and in revenue. secured investments the debt. closed

Lastly, of environment. help hedging opportunistic current given our policy to we margins continued our protect the

of hedging our of all one in the continued profitable. with quarter, you for our X.X% with to make of I’ll close positions. This hard support we prior last over consumption thank and hedges executed expected work fuel second line XXXX, members approximately crew and of half more stronger to JetBlue their

from adjusting momentum higher oil revenue We’re to the and great across see cost organization. initiatives our and

We are the value our that years. for next confident create efforts stakeholders over our few will

will questions. take your We now

David Fintzen

Thanks, the analysts. the the everyone. ready session question-and-answer we’re with Please ahead Jay, go for with instructions.

Operator

Rajeev you. from question Lalwani from first [Operator Our the Stanley. Thank Instructions] of Morgan line comes

Your line is open.

Rajeev Lalwani

morning, Hi. gentlemen. Good

Robin Hayes

Good morning.

Rajeev Lalwani

Just think, of high-single the a Marty, and question I you’re also mid talking a growth. you going side, digits reaffirming about on were bit higher making the to capacity because oil adjustments, forward

you’re So, how next about can digits like year? seems you going high-single that forward? It thinking mid reconcile that into just you coming to revisit might

Marty St. George

the for question. Thanks Hi.

right let’s and We’ve high-single taking cost mid that think last for years to our is into I the current size, account structure, the tactically. said several talk strategically for et cetera. us, range digits

rate reduce its our growth we’ve prices XXXX, oil pretty at go to have oil gone you continuing back hit think, as to when to actually bottom. if XXXX been go I Since up. -- back aggressive

bottom that the to think look our we of expect With a range we’re end as that to XXXX, that to I saying be. we’re you single-digits that you bracketing effect, and high growth data mid of sort of where given for in is the pretty the at close should we’ve rest

Rajeev Lalwani

And the RASM thoughts that? Just To of, been see environments markets? is highlighting. great. would helpful. it then Marty, Very you in do is there accelerating, accelerating fuel some that or you’ve What be it do terms attribute demand particular you, you tax

Marty St. George

we respect in I what Well, mean, seeing for seeing absolutely to are with pretty well on strength, revenue the bookings. we’re closing front, close

have discussion far last been some in the you and But, if hear of impacted fare easy how seeing non-ULCC last have as environment summer. for markets. there’s been much in both as by -- ULCC think this I frankly, comps we may we’re ULCC,

Rajeev Lalwani

you. Thank

Operator

Our the Syth next of question Savi comes Raymond James. from from line

line Your open. is

Savi Syth

account there’s CASM you I’m that wondering like guys. Hey. on ex expecting little appreciate structural explain from is because it help know pretty swings I’m a like bit. just to of swing you points XQ, you’re up kind shifted program shore trends something I of XQ from a and of items these. and wonder from a XQ, the in like you swing? all Good Could tax that bonuses. morning, me that a if to show The They what one probably missing to that the sequential really remaining XQ. seems at have. kind of couple the XQ there. it point walk first that if can I the has I helping -- of XQ, I just is that know looking got up could through big from all detail is in the or am you half the And that doesn’t I

Steve Priest

to but only and as pleased we underlying I’ll ex going forward, I’m not Hi, in performance, think Savi. one. Very you. Steve delivered with in CASM It’s we here. of half to what the speak nice say QX terms

to some flavor, called you and maintenance a QX give QX marketing point that to from your cost point in spend X.X to we and QX. we reminder, QX question CASM, out a shifted as from transferred on X.X back and have Just QX sales QX to of of

capacity of second for XXXX year. $XXX inflection evolution the is announced the seeing and that for of mind capacity Another X.X this just keep the QX million towards morning got that of to program subsequent our the in announced even polled thing guide, CASM continual the X.X half reduction in that we is drive we The we’ve Cost points we’re as the and QX. from full you’ve maintaining points ramp year the Structural we

pleased remarks, only the as in So, prepared comps, the year, very, as of the of year. underlying you’re might you to not part we’ve progress grow in early you’re we the made half to there’s an very I’m declines going the second CASM out the but see continued in the with called right, but

Savi Syth

Steve. Hey,

Sorry.

-- a good Just to. That more seems XQ. the so? improvement from to a about I the I like clarify, those I from structural quite and can I know was rest program, was the kind showing coming in Is XQ up to just swing considering three XQ that point of are there’s

Steve Priest

That’s correct.

Savi Syth

Okay.

Steve Priest

We -- as you really saw point. that increase some been of the Structural that for. driving inflection Cost with initiatives that That’s we’ve helping

Savi Syth

And I not the you been if little bit if on of platform the changes just have it. I on follow-up Could ancillary Great. Okay. that elaborate ancillary conversion, weeks? can can, and a coming maybe may in that the aware you

Marty St. George

Hi. that Yeah. Thanks, take Marty. one. I’ll Savi. It’s

the if subsidiary. back earlier the announcement JetBlue we Products you up go year of Travel think in I to setting made as a

product products I being us. highly think accretive have line we the travel it excitement for sign about was the as of

effectively we platform the these was not early we identified to to on historical and wanted with do let One Label everything merchandising to things respect going our of was White all very products. selling that do us

were In like with on rental cetera. to not products hotels, et itself, cross-sell cars, our addition, we satisfied jetblue.com ability

some teething We they So, more went expected to. to middle than we forecast we new second quarter, I’d did fully a with the the integrated say, jetblue.com. platform in pains. of longer went that’s it

a some very to is important source us paths going I are we fixes will talk our and and we be. and forward for But Investor going accretion of along to expectations we’re a we the very that. to high well of for our more of about that the have Day have issues think We where this be at about way wanted think punch and list long

Savi Syth

Thank All you. right.

Operator

next question comes from from the of Deutsche Bank. Michael Linenberg Our line

open. is line Your

Michael Linenberg

obviously, new of Yeah. improvement Is that foregone be not Two to so you profitability questions Transcon. flying, the are the to that? that would the that’s include one tied here, that, out of million underlying the intra-west actually, would of and moving then does that the just sort you’re XA. presumably losses, stuff to losses the $XX if obviously, XB -- profit the what intra-west include doing of, the be driver $XX million didn’t well, number

Marty St. George

I’m understand not sure I Okay. second the question.

Let take is first one. number. the that me a net Yes,

Michael Linenberg

Okay.

Marty St. George

benefit benefit those the not intra-west market includes is loss destination net it’s the avoidance the into and upside aircraft soft. the industry the and that think market But it’s putting the us for news unusually I from the of going both So September from again the to the first intra-west and net change benefit as the said, as because far make little and ends flying going the kicks they’re being where ramp really that We bit. up that new a forward. quarter the and in in most in

Michael Linenberg

Yeah. answer kind second piece. that of Okay. Marty, the does

year, planes part I the the Sorry know there. I And would of for moving it going for the Steve gap deposits. have that, CapEx, still are probably it’s confusing It’s gap. guide between that difference what’s million. it’s bid is your way the it’s more just I gap as the you to XX% by we’re that -- but the to And asked. would through I know the then on of year, timing still a ask sooner of $XXX is What pre-delivery a wide of bit or now. the pretty timing little base. narrowed figure a take about

Steve Priest

So, Mike, when $XXX midpoint We try CapEx of the in announced sort increased by orders. the answer million we the question. guide and our again I’ll fleet

XX, we the PDP associated we with ordered. So XX, XXs have that

order then, obviously, fleet that. also this guide have guide existing additional year we book, pretty our And The obviously underlying with non- was other the the changed have vast the non-aircraft our is much Obviously, just back-ended. CapEx not CapEx. but associated of majority to aircraft aspect but associated we with CapEx, applicable which our is for the guide

sort CapEx and as I’m level of clear fleet guide for fully question, not non-fleet increase back-ended $XXX that by because it’s million, schedule. answers your it’s So and a if delivery but macro

Michael Linenberg

what And people range. their was what’s kind harder getting I going from the maybe I hence it’s with fact that’s that and on. year down Okay. at of OEMs. the CapEx it to the wide Maybe guess of -- aircraft to the because for nail delays what I be been deliveries for actually the is know going

Steve Priest

OEMs candid, No. haven’t this very for to our aircraft had schedule sort And and we of delivery year. and be good deliveries we’ve delays timing seen to any

was is So the where much it than pretty AXXX. other the range

to perspective really for the nothing year. see CapEx our guide from So this

Michael Linenberg

Okay.

Appreciate Steve. Thanks, it. Okay.

Steve Priest

Thanks, Thanks. Michael.

Operator

from comes question the of JPMorgan. from next line Jamie Baker Our

Your line is open.

Jamie Baker

morning, everybody. Good Hey.

Robin Hayes

Good morning, Jamie.

Jamie Baker

out current levels. get Robin, since that on it suppose. this? to on backed of started backbone one a margins weeks is investors. margin fairly from any particularly to that feedback margin investor of few actually Have away the most I your the the that has it efforts you emphasis putting the greater But to that somewhat found me I time. just And frankly convey emphasis, work Personally, for They’ve relative that I easy it’s employees story with expanding I’ve a particularly one clear it favorable. United’s message relative for best turnaround been was ago, one at from didn’t and point given received it’s thought recent that refreshing on the that of Delta, well them. not

Robin Hayes

a couple about think that Jamie. go our performance. if Yeah. I when of margin talking I years and Thanks, sort we back And of were just

we below Our first the fact quarter here industry absolute to that’s we get oil is average to that an using that to that, what was that prices as It because disappointing margins I years in very the higher of of latest as we’ve don’t is team excuse. last and on. and about think really fallen priority result a focus, be should actually me couple there had and an and the focusing

relative you’ll then on commitment relative investing superior about of is which see now, obviously It’s and and the the Because focused about it’s are we’ll margins, we’ve some the where very which at to. have goal our program. want noticed we come very some Structural at how day, are. execute which It’s a guiding to end looking -- Cost coming an is over execute something targets. have of we and that still moved a the up are So we to airlines get on that show EPS continuing that’s setting we of an that. back measure guide want our to how we to Day. number we drive is superior because others ourselves That investable Investor when and on Right that catalysts, new sector. our we we to within are -- and margins some investable the compare to are to when of to business our an great make sure we’ll we that absolute And company we both delivering that’s months about make of margins

Jamie Baker

again same by it’s a a place? explain and But On the about last seems you too can up to the how the simply And I like less three The in mean, earn. it to you down wanted is growth ever ingrained even years, still growth of the about the income what’s contemplated level, any you over phase. up growth in pre-tax more continued annual is down level of it the way. Robin, I the you it outcome I first in high by point? you totally understand Capacity just and thank look at thing. I is justify point mean, your Thanks. stock start-up have the would follow that, this if at DNA I or XX%. you grow, you if were third.

Robin Hayes

think, Jamie. prepared and focused the industry four, down. grew very first and payback out that Thanks, I very, and adjust quarter hesitated growth to the we what less has No. we that. half to of need say, No. we’ve to pass we do of it year, In haven’t I points X taken been where mean, been this we’ve I

we’ve projects and understand well, strength business extremely we’re terms two Boston them network last sake for random are years our growth for are though of Fort growing yet share Lauderdale. been point got and source so where not relatively the we capacity. of you out wedded been where the and capacity underweighted getting of the our we’re returns. two the on and over that have point So a I for S markets they actually diminished we What and They’ve not in curve us to has

our that’s focus, so, And --we as accretive. very growth very view

under-delivered I program, our the costs well I’ll terms because on just Cost focus made what we just we of revenue think actually the have Structural our with over that agree and say we years and we’ve say couldn’t growth more. but to I unit comment, performance rate, in would that’s I with that done are myself

Jamie Baker

Appreciate for the All right. it. color. Thanks

Operator

comes question next Our from ISI. the Duane line Evercore Pfennigwerth from of

line Your is open.

Duane Pfennigwerth

Hey. Thanks.

One, You of that I’m cited, which tailwinds and you could offset may you to the quantification CASM progress, couple from the up, points of expect. ‘XX if not could tailwind fleet that two, a Cost just specifically, add wondering the we year? be refresh, in of remind next those if a from you’ve be guide position Structural but us to or

Steve Priest

I will Duane. you’re here. capacity. two how think on think fit about to adjust you’re to Hi, approaching we’ve our morning. a as XXXX biggest XXXX as making XXXX, to at when which making program, year further beyond continue color with progress with we this right, and are that And Number across into cautious talked that well. we But required. we’ve to, significant stretch we’ll October one good do that we tailwinds the strides we in shown this Investor expect It’s alluded XXXX commitments. and our Day give with We are Robin as Hope is suppose Steve about have. and I CASM

on second The fleet the is the one fleet. restarting AXXX

XXX As AXXXs. we a reminder, have

We’re going effort. through restarting the

very standpoint the where so and an a economic making to with the the from good ready happy mob we’re MPS line. We’re we’re been results up point The and both ramp getting have from standpoint. customer far we’re to progress

of with will Cost great and continue complete also along us to remain the that Structural ramp for another by program. the end So, be that program XXXX we tailwind and confident will

Duane Pfennigwerth

you to Thanks And a that then, lack accomplish you What taking can economic what mentioned, the PSS system with for just Okay. Thanks. do or functionality What’s today? opportunity few questions. respect the to expand you there? the hope with that? you on

Steve Priest

all right, It’s Duane. No.

supply number through as gone license. go we’ve process very, we’re getting one, keen are RFP cover market, Number a is economics ready the an best-in-class the to Cost Structural think the that test of make I very RFP program. to to we as sure the Structure through program, Cost

drive right our to we members customer then, about to again support and with Secondly, the flow, supporting satisfaction, revenue systems to customer lives regards about going thirdly, think what’s support and efficiencies our thinking think crew customers opportunities when and again service and forward. we the that. easier also need our the to of about making they’re systems as customer to best-in-class self-service And

the we make flexibility external process, have a to efficiently platforms environment the approach this it as drive and economic so forward. changes can that end systems So best-in-class economics, of best-in-class expeditiously holistic the to it’s we these sure with and grow and changing

stage we through So, guys forward. latter further we’re going you we’ll as obviously we reach updates process be the excited that, give this very to and go of as

Duane Pfennigwerth

Okay. you. Thank

Operator

line comes Our the Brandon next from Oglenski Barclays. question of from

is line Your open.

Brandon Oglenski

morning, Good you. Thank Yeah. everyone.

EXXXs. from the So, think two I wanted to zero through as highlighted AXXX week it Steve, I an have pilot outlook CASM that I as or also cost guys on If I right, well to you a mistaken, in a that the X% it the think, ago? think just And depreciation you I’m excludes excludes CAGR accelerated the that reconcile XXXX. impact of not transition deal, new

a because question, years XXXX to So, we that’s just looking to look see of be we come CAGR of when I the mean above and point of network. never CASM now, that costs two be really this going I back are don’t out range from but itemswe a these guess, at

Steve Priest

Brandon. question, great So,

Let base. me fleet CAGR the a includes on on ALPA this. XXXX give some XXXX to zero real but The deal deal. with covers to just X the XXXX excludes clarity That period

is with got got headwinds, of ALPA but So AXXXs, all zero restyling the associated got when been to talked to for we’ve headwinds earlier about about X as we’ve the zero the we Structural the we included XX the That explicitly tailwind tailwinds the the of X. and obviously The we months, Cost deal, last talking fleets Program, we’ve CAGR. in deal. from EXXX excluded

guide minimis we Now, in points. of bringing is on with pretty the and is impact the accelerated reported are associated changing our de The two the terms the XX that. update was the call we EXXXs and close an basis in transition one, -- AXXXs that in of our are, EXXX fleet, as about ago about associated what we impairment today, on to weeks not earnings we depreciation the took with number costs talked which associated anyway the fleets with into cash so

basis all of look regards transition. excluded some XX for clarity from thing Hopefully, our is gives cost economics you and cash explicitly the question. your guide at the that is zero associated AXXX when the So at the X with commitments, to you to that only the look the points Brandon with you

Brandon Oglenski

the to in that still definitely the And side few thinking expected taking your contract because, being driver just savings savings It maintenance you or the I called we be largest time place. as be carriers such, benchmark, consulting of engine new the to then speak probably get in existing years? to to should the fleet you that’s more to of does. but because does initially headwind the And Can seem cost appears on a years. mean, it couple get contract next you be is difficult it pretty AXXX the out last maintenance we also cost sizeable when

Steve Priest

want that These resetting significant partners. in think whole I are with to investment the for that that and cost significant to we JetBlue JetBlue I medium the the for understands long-term. are margin structure make community the and sure negotiations is deals we doing are assumptions business

much another well thought this. into sure pillar best and tech that of the about how vXXXX associated LLP replacement the into into and and thought engine to just JetBlue ops just for that can’t And think is done very working this NEO I as work deal is hard and have EXXX through. six and that played the the the with that. to is again, long how that reiterate EXXX existing making initiatives work with going if we’re strategic at We’ve looking about aircraft, our So that the deals best owners. the that months looked play to very regards the deals you the also sure for we XX The implication make how engine deals NEO mix make also last for we got the we we over fleet cost

initiatives being are how how other. how they and about thoughtful So linked they each we work these are through measured and very, very very and we impact

And to the program overall cost deal trajectory for one savings of Structural the or so, not the detriment we will individual rush long-term absolutely Cost JetBlue.

the So, hopefully, sequencing context very important to that negotiations in how about items. you about and how gives thinking we’re are about the approach we disciplined some these

Brandon Oglenski

Thank Steve. you,

Operator

of the Hunter from next from line Keay question comes Our Wolfe Research.

open. line Your is

Hunter Keay

Hey. Thank you, guys. morning. Good

Robin Hayes

Good Hunter. morning,

Hunter Keay

Hey.

scrapping I’m your fuel that gallon was consumption you for for to these are year or up reductions stuff. schedule guys the that Thank that the cuts you. stuff announced from were prior months going this asking context just contemplated you’re in I’m they as capacity -- the lower year, the in to few capacity. all of XXXX trying actually reconcile ago a despite So this

Marty St. George

very biased going Thanks Hey, course to wouldn’t of on routes It’s through question. we off-peak pattern be. Hunter. I for this It business going or the either of old go It’s adjustment. it’s are call It’s where would the far routes. Marty. to I multi-frequency flying capacity especially cuts as any as markets. be say -- was whether new as there’s sort normal towards

Hunter Keay

or mean like And just -- it that does consumption, Okay. sort more in? how you factor relates as a idling? is forecast miss something I there the I how mean are to gallon was that -- or like of

Steve Priest

It’s Hi, Steve good [ph]. you Hunter. All here. with

to we’re Just economics with specific lapping you follow the last overlapping and should give specific specifically the details to year. Dave from you the that of to last hurricanes around two we but get with start items the year. burn, fact about fuel I’ll perspective, some you some those And ATC the think regards

Robin Hayes

Hunter. Hey,

Hunter Keay

Okay.

Robin Hayes

I Can second, for Hunter? dive a in

Hunter Keay

Sure. Yeah.

Robin Hayes

are is, you we question that what already your Is capacities that’s loaded? cutting If meant?

Hunter Keay

Yeah.

Robin Hayes

I’m listening, okay.

Hunter Keay

Yeah.

Robin Hayes

yeah. Okay. what cutting are cutting Everything -- we already is loaded, is we’re

I’ve… So

Hunter Keay

Got it.

Robin Hayes

I fully you think yeah don’t to that. clarify want understood. But I So,

Hunter Keay

you Okay. Yeah. That’s an then, of factor sale on how long-term and CASM/CAGR can Thanks. I’m or Thanks. view deal long-winded. M&A Robin, the how into your sorry. the lens about acquisition And any I be a think through does target either making? perfect.

Robin Hayes

we plan. question. I the Thanks, organic appreciate our mean, Hunter. are I XXX% focused on

next just the an part said, that. of we JetBlue it not Steve extremely setting important structure fleet over next the decade. years cost are for is about re-setting three As The deal of but the

We not margin drives that’s running returns we’re very, rewarding part we a how that be else. company. distracted and that that and that superior and So and believe so anything we’re to setting by this very on up are shareholder will focused

Hunter Keay

you. Thank

Operator

question next Our Atkins comes Jack from Stephens. the from

Your open. line is

Jack Atkins

taking and you for my questions. morning Good thank

on clear didn’t I get plan on with because on of sort just what you of months. a some a of you sort picture next earlier few the over of Marty, just to Could exactly the moment the So, aware currently rollout not that back question going plan side guys move today. all revenue to an ancillary maybe you forward ancillary expand initiatives that on to that for we’re

revenue story more the that part of some be color particular helpful. would Just on

Marty St. George

platform what cutover. the about to until tied make vacation see saw a That’s obviously something can’t detail we we forward should get want really I more to way but shortage changes to in we Hi, we for a ancillary up places, find sort higher not something Jack. extent the back to I anything can of into the to really in and any other I bring level future over pricing with want get that to it is to Thanks detail the respect is about. which question. Obviously, going the announce.

Jack Atkins

Okay.

two-year back fuel Okay. from recover of the far offset through really it’s look so rapid fuel a have And more you holding that been fuel rise XXXX that, fares a up of XX% just I average moving as follow prices fares? to second And really stack really believe for the is these Marty, on last a that we’ve at levels. couple of you up been much years? think in do what in well. gallon the in versus up then, about you basis, guess, to seeing think How in per higher pace able prices to sort the industry raising that cost When quarter goes this guys I you and

Marty St. George

as have changes on is with the the this mean, ladder own mine. how much to I’ve The bigger control the All And does. than two commitments questions. most including adjustments question, last recapture the fourth far times, is I in taking why over as capacity the forward. that’s of right we’re there, these on to years. talked these to say recent calls as can well Well, of ancillary To going call actions thing margin make And the on JetBlue up XX% talked we do industry respect that’s what why will Hi. we’ve many and cuts. thing. we said bigger for do capacity about -- our following one we’re our that’s this some of where I frankly, and I that’s fuel to us increase, get and which about recapture. today. path don’t and very, to very taken cuts industry we’ve we actually your current about respect first with the We actions over would quarter it our the two all, seriously good that the was take the we’re under

Jack Atkins

Okay. you. Thank

Operator

from Kevin line Citigroup. next the of Crissey question comes from Our

line is open. Your

Kevin Crissey

Good everybody. morning,

Robin Hayes

Good Crissey. morning,

Kevin Crissey

simply flexibility growth from have there, XXXX, just trying to base the cabin you about what on the understand what you solely kept your assuming restyling would come but pace seats? be On capacity would current some Thanks. from growth you additional the just can rate talk obviously,

Steve Priest

sort expect in Investor give Steve said earlier just of I question, to It’s Day October. further Kevin. Hi, to here. the color we

If you the ramp in restarting the XXXX, of Investor look talked back we program. our Day about

be to into and refer how as get we ramp of materials, in giving you I’d those the the more about Day color interim, increases. parts some but those So component we Investor will the

Kevin Crissey

I concerns of to to maintenance some I I say, better there’s and thing, of put with And I’m the are investors that it in a with the going Thanks. do Okay. lot and at call. loading if JetBlue the back -- have some better be really it, though CASM look kind been good of had CASM would I quite They do on in really is years think the has at as at side. what they’re ex, ex. view to weren’t don’t of seeing expense why understand a CASM back RASM, looking some But my long pressure for to struggling days. early aircraft. and the story, of don’t want ex this I easy there the I they on CASM When What on struggle this

tech view broad ex sense get ops CASM provide what maybe you We for get the provide long-term it’s why areas want and So a could maintenance years. wasn’t recent the could CASM Rob really particularly or early. lines have pressure on been who to why challenges? does JetBlue maybe other it on ex good in I there’s

Robin Hayes

Kevin. very well past. Thanks, that your have and one on here we very jump we’re But worked focused on are I’ll in as -- future. thoughts the own you having focused the maybe

who’d number significant we very year-after-year but done on changing I costs. people a long support about the costs, are absolute an reliable last think review that a past that to number These think about We are We we of that going over impact did and airline that unit here cost things. becomes to have had in want be we doing performance fixing know very we way it. owners and the week our changing things think our of and about we delivering it mean are way been consistent in easy, I commitment the strong time. never shows an the a

benchmark again and about the of we’re will significantly the to them area XXXX. in good we we about not be look highlighted as tax engine long-term have there to a some an gaps. most the knocking are is complex EXXX cost about and notice where us, underperformed, the kicks Now the you have some Steve earlier. doing it’s But fleet had that areas talked part there are really work call is We’ve maintenance to you opportunity which time. now big we going when you We a an for at the in maintenance those what These that over guide where beyond But it. post-XXXX. through. NEO update of talked area been other one contracts Steve

our on years. we as and balance Now, continue strength and I that think we we as in increased of taking are the earlier also grow had advantage we our advantage focused the grow, didn’t that sheet we to things do leverage of taking vXXXX necessarily and

Kevin Crissey

Okay. That’s fair. Thank you.

Operator

Andrew Our the from of from America. next line question of Bank comes Didora

Your line is open.

Andrew Didora

Hi. question Marty, one everyone. Good morning, here. just

little Just XQ, the performance. one XQ up understand bit is revenue impact X.X% if out core your travel your from take in a more, XQ around guide is trying at the your which basically from guess, to core the still point midpoint platform unchanged I I

So Does shift if capacity with that to XQ, it getting some September, Thanks. is why to core just Jewish is have it schedule in really maybe CASM to is at different this point better, your conservatism is RASM not in better? not time? XQ holiday or do

Marty St. George

of we last from pieces. lapping Start Andrew. two-tenths guidance. point, hurricane did which other up And a good of year we’re Thanks, Hey. Hi. -- was a couple I yeah, did call with,

there’s -- point guide also right there that’s tenths of a we Kippur, the We talked bat. a half a us in least off point for Haiti. about Yom not so at

like I the we’re you on when strip Obviously, that So, all and do those just we’d for the call. about initiatives we in to frankly, that’s see earlier why better, talked coming be sequential things. improvement

Andrew Didora

you. Thank Okay.

Operator

from the question next line from of Becker comes Helane Our Cowen.

open. line Your is

Helane Becker

in Hi, Operator. everybody. so Thanks, here. for you squishing me Thank much

just improvement can structure, and improvement. a it technologies Marty and I seen delays the I’m guys referred talked control in into August. One, Net questions. I’m FAA getting about and how traffic we’re respect Score, seen you I if the to Just I’m then, you you’ve mentioned if Two, year in think wondering ready that, this the adjust cost you’ve you just your wondering heading say with improvement up Steve presentation, you to of there at you if help think weather now couple to And summer. earlier in going just you’re your air that invested coming if if ClimaCell last can on talked wondering finally, and or that’s Promoter to and the all.

Okay. Thank you. That’s it.

Joanna Geraghty

is Hi. take Great. I’ll one. Joanna. Helane. that Thanks, This

to referring numbers. our Promoter So, the and first, of of AXXX restyling Promoter what that’s the Net Score you’re terms the Score in think having I increase, Net impact on

We’re NPS regard experience the in with to the seeing in excess improvement customer of restyle X-point and cabins.

ATC our obviously, we congestion positive all one footprint regard probably most fly operational performance, Boston that’s direction. challenged York So, in the network the air right where and and the is the industry, and space. With delays delays in in trending and news to the given New

in summer. we improvements. is focused control focus make on performance continuing with first we’ve on can of we’re seen pleased we’re and the to Our Obviously, efficient think that what operation I half the and an running the

of made number cost a investments have our and tactical keeping focused improve to margin. an commitments of We mindful performance, eye and our being on

think mentioned in nearly AXX. I Robin XX-point improvement

for ahead question, us next you the to ClimaCell. will are week, the So, days. the are with weather York and of summer living right investor few trending yes, an volatility you this your New have in in outside direction but a regard if we see we still last ClimaCell, half in And

very We to can real-time the currently and to data that prototypes. number where tell a the ClimaCell we this are about working with go. early But it’s could of on weather excited table kind are bring them little a too of all

Helane Becker

Thanks, Joanna. Great.

Operator

line next from DeNardi the question Joseph Our of Stifel. from comes

open. is line Your

Joseph DeNardi

continue Dave. in, some this, point offset do third the to correct expect I Marty, you’re quarter, RASM out should rolling the fourth squeezing missed that? Thanks that but that quarter headwind Yeah. if initiatives or of X we for these in in me me

Marty St. George

will about whether it’s think make capacity quarter but the commitment. we Thanks I all changes, talked that do sure ancillary our all part yet Hey, it’s tapestry we cuts, we’re guiding say Joe. the I asking. what full question. to for of of that for make not Thanks the initiatives to Obviously, we fourth want marketing

level, say, o part commitment more sure that. and So sort accomplish ladder to about this of is and we’ll very take making but of up high all a I’ll fourth closer say just we we quarter we get at have margin the seriously as in,

Joseph DeNardi

Okay.

Marty St. George

business to IT last a just lot our be I partner on our the team as would week in clear two are say, we have will I and issues. address vacation. say, weeks, in or recovery seeing of the

path. So it’s absolutely right on the

Joseph DeNardi

Okay.

I as Okay. Can you think And then Marty described provide your the perspective -- you the intracal that or is? think I market unusually unnecessarily soft. mentioned you just on why

Marty St. George

Basin expansion. Beach. really I really tough get We the place with great citizens capacity put into Beach. five player I at yield lower sort We could the deciding very decision things aspirations had we have laid worked and and it originally it environment. for airport speak the was we number include us. of It facility out. frankly, of the for did didn’t unfortunately is JetBlue, but to out thought do wanted the Long rejection had from not fares international wish just the into our the perspective, for market a frankly, had for Long in of FIS we work to our out. a Mexico in great -- for was for what a the And airport factor was what it And intra-west

on. move to just we So

Joseph DeNardi

you. Thank

David Fintzen

for quarter joining second call. XXXX our a Have concludes day. us. conference That great Thanks

Operator

will participation. conference. today’s And for again that you Thank conclude

JetBlue Airways (JBLU) 24 Jul 182018 Q2 Earnings call transcript