JetBlue Airways (JBLU) 23 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

David Fintzen	Director, Investors Relation
Robin Hayes	Chief Executive Officer
Martin George	Chief Commercial Officer
Steve Priest	Executive Vice President, Chief Financial Officer
Joanna Geraghty	President and Chief Operating Officer
Rajeev Lalwani	Morgan Stanley
Duane Pfennigwerth	Evercore
Jamie Baker	JPMorgan
Catherine O'Brien	Goldman Sachs
Brandon Oglenski	Barclays
Michael Linenberg	Deutsche Bank
Kevin Crissey	Citigroup
Matt Roberts	Raymond James
Hunter Keay	Wolfe Research
Helane Becker	Cowen
Jack Atkins	Stephens

Call transcript

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Operator

Good morning. My name is Tammy. And I would like to welcome everyone to the JetBlue Airways First Quarter 2019 Earnings Conference Call.

As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to JetBlue's Director of Investor Relations, David Fintzen. ahead. go Please

David Fintzen

presentation morning, our Good we thanks joining and for our this reference Thanks, call. quarter everyone, XXXX for a update, investor first release, morning, we earnings us will earnings during Tammy. our and that call. issued This

documents on of been at have our investor.jetblue.com those All with the website and filed SEC. are available

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

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

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

Robin Hayes

with network. Good morning our to thanks my our start us. joining members more to across Dave. Thanks XX,XXX like and thank for you I'd than crew everyone

to our of the proud very the they every are and deliver We work do JetBlue experience. team day

regional was top Forbes. top also presentation. recognized Starting adviser. by America X comfort result, our as delighted honors and by passenger America’s employers were trip the of spot And best that in a class and customers best crew was the our a Slide JetBlue work business on North noticed of awarded amongst awarded members. We as JetBlue Our

income was adjusted $XX quarter Our million. first pre-tax

was pre-tax margin adjusted earnings share per our adjusted Our and $X.XX. was X.X%

of software delivering recession. we softening rate To March control placement recent have and adapt holidays, environment. increased the changing initially performance in impacted In then the repeatedly pilot financial environment was our Easter quarter, cost be our a March, and some date, points well third In of industry, there We cautiously seen prices such revenue year of as but fuel the proving since by the our on headwind, revenue we we calendar we the to quickly, plenty our XXXX different. softening are bottom row, which demonstrated areas that believe trough disclosed to are mitigate current Based ability to environment. we bookings, improving. trends In the about GDP, as there we XXXX. and factors, JetBlue, company optimistic are investor by remain have cannot later our excited successfully at many position between RASM $X goal to of we we’re earnings We our blocks our progress control day and lowered This for contract, we growth no do in will we the years, expected. per committed highlighted the to to network, and Passover scheduled early to thrive. execute building in specific share lowest $X.XX our demand. that we a to XXXX a believe annual pressure in very and overall responded our by five is capacity To continue as in as our a

We XXXX. in our to further also in margins XXXX expand to and expect expansion continue margin

our are EPS goals. in We of our making blocks each progress building deliver to steady XXXX five

ramping ancillary initiatives revenue our Our are network and as reallocations expected.

Options to getting rollout are We by the of end X.X XXXX. Fare

On XXXX CASM and remain today, us once block, year. our again in to first the of track our we pleased deliver customer AXXXs. ex-fuel to response capacity are goals Furthermore, fleet our during We deliver growth. we are cost fleet restyled cost to XXXX, very program, pleased guidance this building growing lower quarter allowed with our annual structural the our on in in our of with progress which despite

We of program. in-flight phase the this the technology are second in latest incorporating entertainment

We are AXXXneo. take our first to scheduled

In neo should capabilities. also enhanced the deliver to range customer an fuel bringing experience, and addition savings

As an example, we from Guayaquil, to recently Ecuador. York announced flights New

five be executing blocks, for our Beyond beyond building excited about work XXXX. JetBlue cannot success to we our more position

unit first changing We AXXXs. margin Next be aircraft year, further game to reduce delivery accretive our we anticipate and help margins increase a this our will our the our costs, believe improve us EPS. of

two-weeks XX recently in converted we AXXXLRs. to As announced ago, book AXXXs our order

reducing in we Fort testing are at using the TSA. and from new and digital transactional our service XXXX. project airports, adding incentivizing at Boston, week our self-service, the platform JFK, experience, costs. customer in with starting Other and European cutting-edge technology York by beyond partnership and Boston XXXX and enhancing aimed We begin flights New biometrics approximately expect XX Currently, are a London Lauderdale. to include functionality international In this DCA CBP per boarded

are of the developing We new platform. management currently generation customer a relationship next

all that We to and a in with efficiency levels we as service gladly partner under invested platform with also view points our our aggregates increasing grow. touch members crew customers our provide a single

our breaking to simulators additional will will for our third Orlando, have which to in infrastructure We growth. This our real facilities right Orlando. in and Lauderdale, our have and support redevelop end, JFK facilities X Fort ensure Boston, ground at to securing support tomorrow, work in training and of that we growth our an talked on flight our the developing our estate operations. includes include investment, our of To and plans in network. X progress about are valuable into expansion decade we Terminal This

work next see, but delivering by to also success helps EPS can our As into our only our commitment not goals XXXX, to our decade. today drive you position strengthens the

I experience financial members Before crew our differentiated us our to like delivering would delivering goals. turning Marty? the performance Marty, improve thank operational again call to for over helping our and and

Martin George

capacity our with I’ll Robin. on outlook start Slide X. you, Thank

end range of growth the well the quarter, flown X.X% quarter. During upper our This the guidance X.X%. to factor completion strong capacity due our to first above was of was XX.X%, in

significant number capacity storms second expected from resulting XXXX, of This our and had between a quarter we the from we growth guidance expect winter quarter X.X% we From January. original fewer than lower X.X%. cancellations in

the For This between software half X.X% we and growth continue is by capacity plan trends. mitigate growth full March. updated lowered we X.X%. to to early When rate annual annual RASM year, from capacity the a point guidance our

Rico, discussed off softness, of on peak As the capacity adjustment. a tactical softness specific included to in reduction network. points for reductions in Porto our day in broadly focused in we reallocations address These XXXX form in are made to mainly our markets addressing the more underperforming Caribbean week of changes March,

leisure expand consecutive delighted and expect the both more and benefit to that more Regarding as goal another offering as the other system Lauderdale customers day we first fly quarter XXX efforts our to nonstop our parts service Boston. increase reach the Beginning believe our flights, schedules airline Metro of Washington we than outpaced operate will eighth our to area. for we markets. Boston. took RASM to quarter New growth serve in at Fort We're this the per our destinations, business we and relevance any flights D.C. customers international York to of in and move domestic intend hourly summer, deepen average other network, more during this to step We

example to to and Lauderdale our leisure value and us our ability this unique of model to corporate out recognize setting and success more both differentiated service. Fort grow of our just Mint customer one fares. allows superior key product is product Franchise lower The offer appeals a Our the to at focus of of

the and outlook. X Slide revenue to Turning

Our first X.X%. quarter RASM declined

with relative X.X% guidance our from to was the early We this to our to our clean closed updated equal RASM original from RASM disappointed March. are we relative Considering quarter performance happy our and growth to are January, the we where year-over-year. puts approximately see takes guidance quarter, but

drivers. This placement, Our RASM impacted factor, areas certain during completion observed holiday and the will periods. by was of calendar softness trough be year's three

headwind Passover year Regarding to the X.XX Easter first quarter points replacement this was a of calendar, the RASM.

the expect completion factor. We

from the factor In had XXXX, quarter impacted a impact resulted contrast, of of This operation recalled low a XXXX. in that positively quarter points from RASM was fewer winter. by The headwind headwind from tailwind a X.X of quarter is equal to to a completion two net and these scenarios factor completion first of cancellations. our to opposite combined first very we RASM active

during Finally, for areas counted we saw quarter, a of most going of down few the RASM network our March. first softness that two-point in early our at

and expect growth second RASM XXXX, X% positive X% between Looking into year-over-year. positive we quarter the of

Florida calendar and Our we impact regard expect positive by elevated guidance capacity Caribbean of our shift RASM continued in from pressure in second the included Latin the market, highlights With X.XX-point markets. to quarter. to holiday the

Haiti following in see We demand April expect softness to continued the peak.

expectations. bookings to Puerto do Rico be appear to recovery our Conversely, continues However, recovering. exceed

seeing signs closing pricing bookings improvement in of Transcon. for are We

momentum continued to a trough, June We are as at of season. April signs showing April. showed pleased RASM positive clear which strength we acceleration. and move of in however, very early RASM The peak expected, we peak, anticipate and closer into to is with extended March the summer first sequential weaker half this May the point development the looks and franchise had

to XX% in ancillary our third per we continue focused about And ancillary RASM quarter $XX an plans. optimistic quarter. customer, the quarter. and RASM of to the XXXX. second by executing remain monitor are for per outlook customer, We the will first relative we our months for We trough improving the first cautiously entrance the In of the on close increase revenues surpassed

delivering results turn year-end. my I continue crewmembers to reallocation work service We with Steve. over call X.X for early that, And Option are with the to our work pleased our for to and season, to across to efforts customers. from Fare winter would rollout their and during hard network by own the I’ll thanks like our the JetBlue to outstanding add

Steve Priest

billion, points down everyone joining and Thank pre-tax for X you quarter. Revenue thank I'll up from first Marty. highlights the morning Slide with X.X% $X.X Good Adjusted of year-over-year. you, on the margin was some that We X.X start was X.X% per last $X.XX share. per GAAP increased reported to calendar diluted due EPS quarter revenues a year, pilot mainly for was share. contract. of $X.XX impacted the Adjusted diluted and placements first EPS cost the us.

was tax XX% and expect rate this continue effective approximately to our be effective adjusted rate quarter XXXX. to we tax XX% for Our

the unit below the completion benefit a of during below range. of year-over-year represents X.X% increased a X.XX our low during quarter, quarter, to ex-fuel This and end the factors XX, of and Slide to X.X% includes points increase guidance X.X%. guidance Moving approximately the cost our of CASM improved first mid-point

we and For X.X%. CASM expect ex-fuel range growth second to quarter, between the X.X%

guidance last signed August. our contract a X percentage point and our pilot both include from an approximate quarter quarter first As second reminder, increase

includes details lease to we the to XXXX. back quarter appendix sheet. This balance of accounting new presentation changes results of and adopted statement restated and accounting this income The section our standards

Moving Jet to prouder we encouraged could We��re made goals. commitments the work to the to digest ex-fuel progression continue reduction across the March, the for hard our in half, our we CASM blue rest and our Slide early X% And to first our by we first XX, progress X%. the on of will be not of range despite quarter from the between hit year. first capacity anticipate remains our the contract. we guidance and In pilot deliver

executed of addition the During goals successfully Structural reduction upgrade three quarter cost see exceeding program, distribution of the In recall continue update we according restyling initial plan from fleet the structural XXXX, LOI and we pressures XXXX, our to in even from to system. regards our Program capacity pillar early impact of with to progress in the half an capacity AXXX added that Sabre CSS to made our recent benefits the signing the March, the good we In mitigated in second Cost efforts. and unit XXXX, first compounding expect of to from expectations. cost our reductions to cost our

As expect throughout opportunities keeping XXXX. our to we guidance offset costs find in XXXX, to we move for to unexpected unit and pressure additional XXXX

hence first aircraft had and we fleet. to aircraft our quarter, to we no XX, Turning have deliveries during Slide XXX continue in the

and shortly during will quarter. We expect enter the into delivered service it first AXXXneo our to be third

we minimum For neo a continue expect remainder year, six to deliveries. the of the of

excited compared We’re given our incorporating increase existing fleet, of about our aircraft. in into XX%, fuel the fleet the at least efficiency to neo by

fleet we complete anticipate AXXXs today, our track receiving on our same of we The remain restored XXXX. AXXX. As to first have and we year by XX

minor be to and an book a relevance our We serving our EPS platform, XX LR XXXX. will about incorporating We the of economics it thrilled impacting fleet plan LRs impact order our further beyond or aircraft to destination convert on to European is to body recent Northeast improve into financial which aircraft fleet from updated is to we JetBlue’s believe AXXXneo customers. are commitments. focus, continue for our is our be vision to increase forward the its start without included these and in accretive our narrow CASM our CapEx our This delivers guide from guidance. first our to XXXX. pattern conversion wide-body The and look way ex-fuel earnings We anticipate will share per in part to

unchanged guide CapEx Our $X.X between billion our well XXXX billion, XXXX for expected and between billion as remains $X.X guidance as and $X.X billion. $X.X

to return addition in restyling pursuits to continues on efforts. Aircraft Our accretive focus CapEx our

Turning to Slide XX.

quarter, of to repaid our a investment balance of balanced strongest We continue maintain allocation. metrics. we the capital first industry one We total sheets to to in XX.X% to the investments million have $XXX quarter aircraft revenue. XXX This the approach $XXX million and with in allows grade In XX-month in closed cash short-term a debt, of equivalents, with with the in fleet. bringing unencumbered trailing us cash,

remaining quarter, of During program authorization. million the have and authorized first executed by share a $XXX we balance board share the and the repurchases million part we buyback of to as $XXX

be in approach maintain We capital allocation our balanced will owners. a continue our including returns opportunistic to and to

the result This calculated current aircraft associated a XX% the adjusted last is now of in As standards. valuation our the our with of down standards, is equal methodology lease at new ratio XX%. changes to debt-to-cap end the accounting of the from under quarter new leases

of centers to the I Q&A frontline in add executing would in support their of our turn our helping thanks for my all create us to like session, all and crewmembers to continued our our and for we plan work operation stakeholders. Before value

questions. your take now will We

David Fintzen

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

Operator

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

Rajeev Lalwani

guys. morning good Hi,

Martin George

Rajeev. morning, Good

Rajeev Lalwani

Lat question comfortable that into how a like with your your investment start get Caribbean, that comfortable Robin, look you on do legacy do you Transatlantic exposure isn't get at the Am you, for board first market valuation? going you derating carrier and entry to a combine you the the if how and the to and and community

Robin Hayes

we've capacity I right the certainly is international we've at done mean, about one is to domestic. JetBlue very Thanks XX% morning. the in seen Rajeev the our things network and been would good exposed growth successful our when I over to markets, years now say has XX% of of that about helpful most diversify and Boston.

in and think and making them Now it serve really that can when about we about is next London customers. like Boston, is about the opportunity that focus fly don’t that and we we more so It's to our presents York market the and adding New relevant. our them to adding

developing So, our city the just geographies. we more to terms focus much of markets said maturity in and of flying different

markets are we on I we returns the where community the that out we so, of focusing taking good and And a think the that feel Boston. growth measured drive should and York highest very New are approach to investment can

Rajeev Lalwani

a CASM you've you a far. done good And done the side, for Steve so question job on pretty obviously a Thanks.

to the Now of what's we cadence deal, up assess the for opposed unit consistently I'm as look you the pilot as sort forward trying be or sort bit? of lap to costs? declining and be a potential flat on going to

Steve Priest

helped, even completion for can low the have at the I we progress, made very, not to one. QX. you CASM if we pleased of but the thank in but of and the the completion the made XXXX, see Admittedly, very printed, progress with printed the that progression factor, quarter you we guidance say Rajeev very for in end as question. we morning, terms much Good I'm only factor you in include

we lay down reiterating recall, that XQ. you about for out and by in plan plan As and we're half, our did CASM January we that comfortable brought very

CASM we As capacity the ex-growth the do go as includes half we've sort in point and of get impact deal mentioned, the we reduction we of as expect this negative the half the of cycle second pilot guide year over at about. of this And turn that actually midpoint we do to talked forward. the we into

that half our continue to in very the very execute continue the we very, $X.XX So, we the that you'll as this important point to target EPS see cost progression of goals I'm is have with on an to XXXX. second year, the see, us to happy and as of part inflection $X.XX to we

Rajeev Lalwani

Thanks, it I’ll there. leave

Steve Priest

Thank you, Rajeev.

Operator

of line the from comes question Evercore. with next Your Pfennigwerth Duane

Duane Pfennigwerth

morning. thanks good Hi,

Robin Hayes

morning, Good Duane.

Duane Pfennigwerth

you like related rate, X% on of Rajeev, down looks about I just could the by in it first capacity And that with know X.X% cadence to for CASM full-year the X.X% guess about sort half, the half a the versus implies below on in quarter? a in on put by you half cadence any X%, second it growth Just fuel final back quarter? the same follow-up point growth about

Martin George

I’ll the Marty. take Hi half it’s I'll that Duane, of let take the comment. first CASM Steve and

half yes, in have does based out, play the that but a XXXX delivery decelerate that in I notwithstanding year number the number are the we of have second year. on a I capacity Xs, plan seeing the have Xs, mostly how don't is in the schedules. So, we definitely

we’ve announced changes original as schedule. you had our XXXneo know, As we to some and already

very original taking the when has So, the were but we’d reacted out we planning Airbus it’s again, what forward we year, neo look cost? expected the well Steve on I not and soon. figure very, to

Steve Priest

XXXX to purposely through transparent detail. the greater I that Day XXXX and we’re Investor I’m Good with to of in even went progress making. since said morning, very Rajeev. for our terms we Duane. laying what a We've outside very have cost Again, the ever just to comfortable reiterate guidance and out been

which got quarter at we've that and of in XXXX. by half won’t guide committed to half the did Irrespective think lower capacity stage X we out XXXX X. and also the a The this breakout We environment, quarter it's would about there. way I remain So, timing. as

historically the you particularly we've think you XQ to why QX. you do the that's similar if quarters sort a As in being of get and respective broad talked about, laid on sometimes we’ve should about about little a thinking modeling, maintenance but cost out, choppiness, bit halves pretty of between your perspective

Duane Pfennigwerth

then And Thanks. Robin.

on or the portion update took was here think or the macro you sit you you I business economy of those RASM your mark-to-market attribution views we softer guidance is when if telling us about I as down the today? economy. a wondered XQ just what

Robin Hayes

Duane. Thanks,

I again think early to going back March.

time and called South softness We couple things. was of Caribbean broad-based out think that. and with across we then it was seeing broader were some have something or we I very Transcon. saw fares fares. some more think as We And We what everywhere of out out related of Florida to sort the down a shop we we where couple out, those of called to markets out as called uncertain called else. also a the low was described economic at we I that walk-up anticipated us what than now come

see think as we very forward. pleased that I'm look I to

Some see well. of the normality restored as of to those walk-up close-in we continue strength fares and good very is

months cautiously we of be we and I'm is hopefully us can optimistic So, that about kind – behind optimistic and ahead. more

Duane Pfennigwerth

taking looks sneak one AXXXs in, we what roll percentage sort the Thank one of you. are many today restyled for the I that And year? like and as the Thanks update can questions. you if through on us how last of could

Robin Hayes

to hand to because over Joanna Duane, going that. she’s been I’m running

Joanna Geraghty

Hi Duane. Robin. Sure

tracking So, this It’s year. we’re up XX nicely.

that our efficient restyling of coupled We’ll heavy by be with a end XXXX. restyling our be. completing the our as as Just can is we check, reminder of full campaign we’re so that,

Duane Pfennigwerth

Thank you.

Operator

line question of next Your the from Baker JPMorgan. with Jamie comes

Jamie Baker

everybody. morning good Hi,

loyalty. take and question anyone First topic is wants to it who the for

think value Day, it’s about. on You say had topic to a I it, from didn't driver, think say it’s growing Investor real something a I industry it's but level know, that consider you care do investors slide I core to at event, safe do thrust at increasingly the that the that –

aware obviously progress, and Delta's You’re so forth. ambitions of United's

card so volume I underlying of I the expense going airline when dominate the wrong? at Now, the network, wealth seems value banks, sheer are area competitive of the where like like drivers this for and to the the card why am of JetBlue, increasingly issuing member smaller spend, big the operators think a about breadth three transactions,

Martin George

one. It’s Jamie. Hey, that I’ll Marty. take

Jamie Baker

Hi, Marty.

Martin George

– I above customer prepared the which one I’ll of the in up up this comments the both this both on year-over-year, we’re and know, – well that great in-flight that agree we the the lot feel So, of Barclays, know and is case, for for the know, keeps very with by and, interest the something aligned going the That love the being we Barclays loyalty is made the details we AmEx that you you and, happy of bank now. like about going us. have our company’s benefits opportunity two partnership. right gotten and contribution on know, start you it’s the of talked XX% is we’ve that from I upside has remarks, quarter you with was of a We’ve and XX%, contract from think there. to that fully we was so actually trajectory Barclays closely, very a very,

worth know, it’s we honestly point young being of to know think the that and two had, the I’ll of you relatively think I portfolio still transitioned. the we’ve in And continue that. that general, is value – the to events You point others opportunity to that program, the why I TrueBlue I than us proposition doubling compared it’s remembering have and a frankly since for increase done that is TrueBlue case, the more

– arrangement royalty JetBlue. and proposition we else – airlines, at I’ve every you of then have a know, Two in we to got end call at we’ve to I the look up the in help deemed and the also point out to value then, I’m improve not flying have is I JetBlue. proposition with flying know partner point to of significant and certainly you internally say key our are with give think going we Hawaii making about a that – know, but Boston, point got value specific in he But card. Europe. from utility talked of one things Honolulu flying whatever flocked this you if And You trying are of to why reciprocal one customers London, that’s lot we I to and versus JetBlue again, a is, customers stop biggest have you constantly, that think and competitors, that’s actually never I credit you more, we we around bar ever, I ever have the think raising starting mature know, some which of JetBlue, the that for potential and more TrueBlue I the than point program, think given versus our competitors. a will

Jamie Baker

Excellent.

Marty. Solid related a answer, And small second guidance. just issue to

range, You leisure historically at be more and least attributed one, perhaps the Small range sickle think further potentially and is and so edge. basis about penetrations, I if passenger point I’ve standard, systems that were reflective ask particularly XXX of XXX-basis that point when? to one base, TRASM therefore a not know corporate two, to implying, cutting the industry oriented migrate most to name? When you’ll it the fair whether

Martin George

though, guiding misleading. thing And in, honestly, month. than we are thing even result not the the or going a mean the like we leisure. of to the a were you on JetBlue know, and is that less right the from on very books; for know, we is, relatively we say number you number into you established I us now by for we years the take third quarter misses a heavily half have a, we The of You weak in of less carrier, are although close very two is we we I books. than you still May, know, this. are I’d about most know, June, the have – bookings important give May lot that start is a that one basically

Jamie Baker

Sure.

Martin George

sure love commitments. you I growth the more I’d thing we’re when get make point our our we where, booking to have the made frankly want to we know, is because if most range, changes, a smaller to predictable, but we important mean

So, never history never, on we or doing know, the I’ll you our been for but, at say quarters, based least six have this. five

that we’re books. it, I have think but little pretty the I we good when on range actually do at appreciate so

Jamie Baker

the for care. thanks answers. Marty, Take

Robin Hayes

before on a number Jamie, calls, to day very off, And birthday a of I with other going very think anyway. earnings Thursday happy you sign busy but wish you’re have I you

Martin George

you, Keeping Robin. the Thank JetBlue tradition I that. appreciate alive.

Operator

Catherine comes with O'Brien Goldman Your Sachs. next of question line from the

Catherine O’Brien

everyone. good Hi, morning

Robin Hayes

Good morning, Catherine.

Catherine O’Brien

Hi.

cost you to guidance guidance, or want with respect baked this contemplate any or to into So, Transatlantic X% related airport so, cost to additional confirm to And ETOPS service, the always anything that those? costs in that start-up flat for I will cost to CAGR? if found your are costs up have savings fund

Steve Priest

that morning, at I’ll that. we of the costs the those company Catherine. I do looking we program, are and these are – our we in pick consistently up. Yes, Good guide, means apparently have The that cost make progression will included structural certainly continued things. to on structure our

and our in guide there’s flows know, we cost you of So, structures terms ebbs forward.

the the some and this incorporated associated costs incremental So, are with guide. contemplated obviously in of being

stand are on we very that. so, And happy where we with

Catherine O’Brien

the update believe the just in to for at rate where one, $XXX the are And maybe one us had you on $XXX million I you million? for million? run Steve. you quick the $XXX that Could number follow-up year-end give to

Steve Priest

Yes, I’m that. very happy to do

Just as into cost and QX that in structural lot a QX we reminder where program detail. the on the is detailed for update of we a cadence terms quite of have the everybody, get

at million. rate So, run is July. for our update sitting the $XXX be I’m currently say XXXX to But pleased next will very detailed

I very make to progress, think being and I’ll continue efforts. this terrific focused define quarter, We as sourcing around our

the RFP. concluded we the drove we biggest partner quarter contracts sourcing our CSS as was forward of One the during with Sabre that

the So, standard very happy accounting with the $XXX continued progress on million.

Catherine O’Brien

impact maybe all that What’s quick will implies the Transcon? the the be one know, Is Easter. one quarter? the saw of on the much know Or the turnaround midpoint, you so than March May? even just one And third quarter, that? there excluding that, XX% Any your that April acceleration Congratulations really that Marty, you just at from better in Or March in for guidance and that. have color and of we you in helpful. bookings driving

Martin George

the for question. Thanks Kate. Hi,

know the – acceleration actually trough quarter earlier peak You going it of fact we saw goes fold first the relative we I like had basis, were the peaks, is, challenged environment – the know, forward. And we did on the issue; fee changes a is in in the feels second know, heavily and me, second the more in its what quarter changes, a think, that does half we quarter little related. on know, a few XXXX in know, actually kind you it of – for in the you said think the the versus I about more have, first sort very into about undertaking, fundamental what part etcetera, days. goes basis solid thing is excuse back peak it’s has, really relative of you network a and, second, that had we where It’s XXXX troughs, whether in you do talked those earlier year late initiatives but as third to results and the the

what’s until now, blip know, the this we’re hope know, think end year seeing sort So, that know, perspective, we’re in right optimistic what of know, of of other what is books going that from February sort further between, you April, forward. you about you a the cautiously than you of you I in on know, progression but, based middle

Catherine O’Brien

very you Thank much.

Operator

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

Brandon Oglenski

taking morning my good and for question. thanks everyone, Hi,

Robin Hayes

Brandon. Good morning,

Brandon Oglenski

see I really, improvement. you you discussion? that good know, EPS talk with know, But traction focus on think need your do we and you in now year giving know, your guide side you right Robin, blocks on the next you’ve feel how you does leaving you’re back know, on in agree this so money to customers? Or to building you morning. the just and Hey, prepared ancillary to loyalty you margins mention, highlighted putting table obviously about go you have remarks, place did continued with like you guys been transact you do hit for your there, that the that,

Robin Hayes

go won’t but, JetBlue we now revenue at building know, ancillary, about to flown on already them we that we from I I continue perspective very and No, Brandon. feel blocks the into and again, Marty Thanks, has the a you touched because all No. talked before, both confident think about that. think – trajectory

answer think we’re wholeheartedly that, earlier, point our on I loyalty behind that opportunity which gave Marty with else. is a know everybody agree I an from we’ve been You where coming

are lot a of seeing in we that so, area. strong growth And

know created revenue also new You longer streams. we’ve – ancillary I term

about where will JetBlue running and last is to longer-term. in travel You we’ve very up and a know subsidiary, product Fort that excited now created grow Lauderdale, we’re which

You travel know we brand leisure created more and monetize do industry, strong a in that. very to we’ve the need to

as Marty know in year talked later You the Options well. Fare about

about excited cost years, now over delighted we to I’m the that. how the And starting that are and – really on we’re challenges to the see then, So, thing side. make the we progress is much

we’ve on also revenue know the the left a the side, nice table unit but growth. we��ve cost job on margin seen high You we’ve over done because years

into about that I so, are things beyond. think to margins allow those and all what putting drive will XXXX together And those superior us is we and

Brandon Oglenski

just you I guess What set rate like you’ve those on at lot least it initially of Steve. that lines, are know, growth for program, Okay. the the Is out run will priorities along the you to cost And the to look structural you the achieved economics half unit a back sounds that’s AXXX and restyling into the, drive you? as favorably going of year? the this really

Steve Priest

continues. the journey to Hi, Brandon. say have I

journey over continued will execute journey beyond. flattish yet, impacting have our complete that will to only XXX we We owners and the have executed not such not ex candidly our XXXX, over. that commitments never be CASM, the are CASM through and but We and make JetBlue, to is at initiatives

JetBlue And we sure $X.XX that the as so, when key in XXXX, looking examples. contracts, to enter and the resetting short-term lenses. are give we Number executing the to also we two continue we’re cost these and some deliver stretch we make $X.XX how you time, do next trajectory for at decade, same but I’ll in the one, through

my as far primary as secret at JetBlue. no there’s As focus

priority, cost areas of around my structure standpoint. JetBlue the PRASM is we cost business from of maintenance. the that In the X have terms of a And our one structural at priority the around business is Number largest

initiatives to the next of finishing the the So, – through with we as the through we touches will agreements loyalty – as will maintenance to we some quarter focus put and XXXX. as along the ever, progress the continue this progress we But year. of half remaining

Brandon Oglenski

appreciate Steve, it I thanks.

Steve Priest

Thanks Brandon.

Operator

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

Michael Linenberg

– just to addition of the them directly expense you the for you ETOPS growth you costs? next plan then, is the you Yes, I planned And capitalized? cost underlying can Cate know, XXXX? is startup, the and on you capacity to all up in or what's what question. some hi. know, remind be year, us the AXXXs, on I to will your inducting Or – follow those will want – just Steve, also O'Brien's –

Steve Priest

I’m Good Steve here. morning, Michael.

Michael Linenberg

Hi.

Steve Priest

we perspective of out from of will item. AXXX a We capacity you in XXXX, that costs level whether the of will minus out its coming we involved license P&L. startup the get expense through engines, purchase or will source we take the regards and and be and ensures be that know, laid item expense a XXXX to Day, it guide Note CASM on is that that with obviously minus X.X% from we in X.X% the associated With an Obviously, like back the CASM when to we standpoint. a capitalized, but capacity laid the XXXX will both in the guide Investor fleet when went between to be usual a August. have sits of aircrafts primarily the the this with approach, primarily which that CapEx LR,

of AXXX, rather the aircraft end guide the on back first in so XXXX, as in before, I at XXXX. So, overall for comes minimis terms mentioned de our it’s capacity of the

Michael Linenberg

good, Very generation revenue at leading, Long XXXX? now or as just look at we Long out greater your LAX a where to still Beach – where either than Okay, we and are great. market the that I call focus a as or to city but sort you��re point second know you into question Marty, of Beach is either equal

Martin George

Mike. Hi,

Michael Linenberg

Hi.

Martin George

question. the for Thanks

know specifically some Beach, our the but just from point additional benefits getting even out Long at at our of Transcon LAX and Basin focal Burbank in at also basin You we’re called think franchise, as LA because not I we’ve added where service. the we’ve and

know, the perspective, whether is haven’t Mint LAX that as at I has but a I’d from and generating you revenue think been successful done that. as So, I math LAX, wildly more, public total really it actually data shows again, – don't way level pretty don't know, some But at that us. it’s I’m it sure sort and, you say we conversation even we head, for its on – nail basin look does. of frankly a far

Michael Linenberg

Thanks everyone. good. Marty. Thanks Okay, very

Operator

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

Kevin Crissey

thanks project everybody. talk that? Can Terminal about for time. objectives the you and Hi, JFK completion the for Thanks the

Steve Priest

morning, that pick up. Steve here, Good I'll Kevin.

think terms the States, in predecessor at rights I back This that New areas sure JetBlue to I job facilities JFK we you is of obviously terminal potential that of delighted urban the project extremely award-winning perspective Terminal JetBlue my the about Terminal has good of of go delighted next ongoing for of key decided in across decade. as for the JetBlue, way Terminal the critical growth developments Governor some access gates the and the to through long-term addition access, is our JFK. and the for a growth and some is securing in is the making also would something right describe X JFK to X growth think if the United X that for challenges and did around that proposal York I'm Terminal

excited we're the So, about prospect.

is partnership. The we're that that sure we've done made doing thing this going other forward key in we've that

make be the Partners will of be team happier JFK in with to partnership this we balance this would got using that access is with this migrate something it's we and cetera the Millennium working now a that we've and JetBlue's for the not funding, would it's with. decade. to should that not couldn't again, But are right decade, sheet be this doing be something So, we between and terms that et in the happen. next thinking we We you about, as long-term of JetBlue end ensure the perspective

Kevin Crissey

it, a cross-sell more on to touched stand on I and over Robin, as to it's if could And progression about maybe talk switch status you could on little on we're vacations then, this into of but other you. maybe Can were your you know, – where I the and now we to know you systems the thank you products? the if point. the discussing Perfect, – at where heading go that?

Robin Hayes

to the about have to opportunities say that those light we very in sort see grow of are he of the team; opportunities we to website. is very down morning. a Fort asset – Andres Kevin business Yes, and through in good Thanks, significantly. now revenue. Andres continue space his President ancillary pleased and where Travel behind travel you based went Products, last and year addition, Lauderdale in of a we've know, have thinking challenges very that had they us his – way to see new and and team Sure. hired as I'm on with started new high-margin in we And number we Barry, built grow the JetBlue are

customers only cost of said for – that investments opportunity minimis and have X% that of – between leisure making our the only anyway because sort before, flying only network products us. additional are some The modest into given business de I CapEx. is big flying so very As buying overall these X% are JetBlue to us this we travel-related relatively customers a between acquisition we're compared to think very they're of that's and – very we on a

light. asset very it's So,

something EPS and continue that it fairly about be So, grow more in significant sustain EPS our as part to couple modest think XXXX, to growth. of will much said the that growth beyond but when will we ability we next years, of

Kevin Crissey

for much very time. the you Thank

Operator

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

Matt Roberts

previously the to provided. it as focus both and What mix gauge XXXX XXXX is market is XXXX? was in This the XXXX stage and single-digit of Matt longer-term in we be and your Savi. in similar the the Hi, likely you talk expect could lower I if on good mid-to-high you about growth for end outlook that is capacity given of morning. should range wondering was

Martin George

it's Matt, Marty. Hi,

for digits you the we far a we've move and sort the I we and seen on lot we're guide and are right to a and strikes that. Notwithstanding there of as as time without more than annual give been. we've single don't going lot feel We're I of I cost and fuel, at seen going our to mid and not done of with where think to is guide guide margin goals a on. not long-term of, call, mentality. in we've that than line you've in and we lot that quarter a now if this based high at mean, As don't volatility where what we would used volatility XXXX, – what we place too range trying game is balls fuel cheer look this – get it to hung do that run before, other I as color up on far around us you we're high

I comfortable was very and to in were here number, XX here for been that very JetBlue, growing us we're XXs. guide the I've mid-to-high that for our maintaining think as the very, far out we for the quality as challenging single-digit best I maintaining works laid and shareholders. that's what That's we've that years, commitments

to bit not make now, versus is as I right year-to-year. With little a is is you're I JetBlue, think to that it's that think the back would trend. short stage respect going because forward, – is – best in this Beach necessarily at think of and for want look heavier This on into move Transcons. stage, for I long-term. I But what long-term what think think mostly for moves see best going Long gauge that’s I predictor. year to forth long-term because JetBlue clear redeployment a a of and is we I So, that hauls

Matt Roberts

second you there. again, transitioning here ahead the if in the well configuration. not of back multiple to a the operational of as getting EXXX clarification myself operating from going particularly implications certain AXXX, Okay, having am about And starting appreciate growth, great. longer-term Mint I could I considerations talk as sub-fleets, XXXX,

Joanna Geraghty

Yes, hi, this is Joanna.

different So, I standards those obviously, with are performance and XXX, there and XXX – mean, even the we XXX, currently the there have, are fleets. the

over can we AXXX sub-fleets that the manage exit or next the – EXXX the so. mean, plan confident we're obviously year out of multiple the to working then into and on transition So, I

we're the So, in confident that. transition plans we have with that

Matt Roberts

much. Thank very Alright. you

Operator

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

Hunter Keay

some want – I the to? what's what be are of on sure I Thanks. Steve, compared going everybody. Thank excluding just to talking going you want to to the question, expense, make the you're also you're LR target you I and you. to Can CAGR costs the you X% tell target. thought morning, in that pilot clear costs you just with me about to Hi. implementation CAGR include on CBA these excluded XXX; Mike's follow and CAGR, start-up from Good up to with the AXXX X% the costs

Steve Priest

morning, hear Good to Good from Hunter. you.

to me let X% that EXXX transition our XXXX. specifically when we side really the to as announced Day the X% to X% at talked We guide. So, of AXXX our CAGR, about X% be being in just Investor out the clear really, about

went the EXXX XXXs, out stat to projecting as we were And in minimis which the so, of a guide. costs small – some there transition impact EXXX de minimis relatively had pretty XXXX de

to X% transition are X% might it When LR June those that's clear. with may the XXXX the included really, in the in guide. that LR, comes to the really So come any to associated of costs operating – and are

gave will transition. the no EXXX further impact outside with on XXX to the there we the So, guidance to regards of previous X% the X% be to

negotiation second with, and one-off consistently since message that the any change and of your the X% to we progress. regards went cost. with items was that's our forward of to hopefully the to two X% with transition investors absolutely XXXX not happy very pilots key to clear. With and that sort I’m question, to agreement regards of and a certainly obviously, So, to there the changed we committed that end said We've ever has are

transition signing getting the item agreement the of final forward. that to second of IT de the IT to signature direct costs was with with from mocked the transition. just amount relatively first The to going are was quarter minimis new regards the relationship one up the to the program the the aligned was and that associated bonus; a Those this elements go

that incredibly agreement. that's So that with regards relates – transition it pilots really the what the but associated one-off sets with around it's puts de to minimis to, costs bar and a the

I’m very are on those hopefully clear up those and if items. two So you to two follow don't clarity pleased have items

Hunter Keay

EPS driving to of a that the the if that ahead target of it to CASM sacrifice maybe has for I little of to very like of you answer you, it Yes. know proxy ex And Is then target is added payout. the EPS slightly No. pulled to thank the you of I maybe fair great, maybe you're assume this long-term bit in of important, it one is you EPS ex? one that's sort the pulled to that, priorities, and but guys a is the has sort like know much. over the that Rob, looks fair longer-term other. assume as target terms both are your comp Steve, CASM forced this were to make part decision ahead

Robin Hayes

No.

to to $X.XX goals. $X.XX, initiatives the importance one we same. also and are I and – Cost I think, blocks our achieving revenue were the it ex to then building and five our I integral as mean, and view I program. out Structural EPS mean, CASM performance of central to they some We the laid there accomplish

changes think bonus structure I the year. two this made we to

now third of bonus forward, for from year, combination the year XX% management So, moved our so of for XX%. this the actually CASM ex-fuel last – going management was bonus, annual example that it's we and have margin

it's So, two-thirds.

The customer measuring is other satisfaction. we're that one

a we on So – on on forward – a the takes is have ex-fuel a third third now third margin, NPS. customer so and that going CASM

weights of LTIP importance of made Day and at Analyst ex-fuel CASM margin the So, incentive part both forward, and the question again that this we've change. the getting up we and then the were going

measured like the and to forward going directly others both aligned EPS, LTIP team leadership then me And EPS closed goals. that with on the of team of leaders so will ROIC is So, are the to those think aligned also, who is that. that that the we for goals. on those compensation part continue we've those track that I leadership question to think the and of I But sure make loop we had and incentive

Hunter Keay

you very much. Thank

Operator

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

HelaneBecker

for weakness questions. much, in recovered I seeing the just Caribbean, very have Thanks Thanks about team. I about two is, talk Florida, And you're you can just time, in what the operator. know specifically? there you Rico talked the you One some Puerto Has other the the market specifically. were now? you wondering growth, have to but about then said could question XX% Steve, the quarter. debt-to-cap I sheet you think, your with I balance of PR And at speak is if I'm at respect end that

any increase the for Thank existing repurchase program? goal what's plans you're So, if share that to and you. there, the

Martin George

talking a Rico. there Puerto because on of there. in first there's obviously, I'll of Rico we're Puerto Actually, lot question Hi, different than rest the And noise seeing start specifically Marty, Helane, overall. it's Caribbean take out because storms, of Caribbean. the I'll about We trends in are carved the the the the

is on you look and RASM a think was I producing ago Puerto three if growth time or year years than basis, larger Rico even period. two solid now that over it

of we've last big complexion the sort vacation had focused, a little good a a bit the November season holiday for It's in excuse few really more change of – really me, VFR a seen customers. have the but October, We frankly, good hotels opened.

were are been tough we down just overall. mention very there members impact future Puerto a the It's after Island hundred it's growth the bullish and on nice nice in mix there. But had a the to look we obviously, that been Rico, – want been do it's forward big to – storms, So, like had we crew before we and a several I there. storms

Steve Priest

quarter color there change. lease as Hi, of we accounting Helane, give just is Steve the the this of I noise adopted to a in debt-to-cap some bit wanted terms here. because adjusted little

that for of as back possible, out our bought Appendix deck So, as the all new just as we those to earnings B we under you rules, did for the sure transparency results a get we've that in, much accounting you. reminder to of detail, the make and laid to XXXX any into want details the restate

than primarily about Helane, question – to that's old cap result adjusted it our our your to leased is specifically pertaining under aircraft. roughly and points was our So, rules, X as lower the a debt debt-to-cap accounting of

were We the of the JetBlue X to have and aircraft leased old specific they the is thumb lease change is of and aircraft aircraft traditionally of three done fundamentally times areas of the the leases leases. have. where that at the length XX we attributed remaining rule on payments One annual with

materialize one lease terms at of would the the XX% forward, – a off debt-to-cap, quarter, Secondly, done the line why value on payment had that is us our you've the the on And I'm interest And gone so does of rate accounting balance than high discounts with we adjusted third for what probably this comfortable of lease suppose, quarter on. where to rather present the incredibly when and our is that I in to do therefore, XX% mean calculation. the the method that's payment It's new last benefits that P&L. low it sheet. expense this from most under cash to is the end obviously have end going

one accounting balance a the and are frankly, allocation, approach of going very, capital restatement with associated metrics, not capital because grade sheets to to change change. in we sheet very our to strongest allocation, We running have just pleased and the a we're I'm price our industry. balance investment of with

return very to as continue capital a quarter we'll take at and balanced did So, our we to are. approach, We'll to we our with where owners happy we continue look where in proactively how spend one. CapEx and we

Helane Becker

helpful. much. very Thanks very That's

Steve Priest

a Thanks good day. for and No you problem. have

David Fintzen

And more analysts. one question the Tammy, from take we’ll

Operator

line from the Stephens. Our Atkins of next with question Jack comes

Jack Atkins

for good much questions. Hi, my you very morning. taking Thank

the some you that here of key Just service? first that you to kind flying. the of over work the on through looking milestones Could next ramp is us head two walk as one transatlantic be years to you'll

Robin Hayes

Robin. it time. because Sure. keep the tight of I'll really It's

extended which is the are have So, we to up fly those coming team words, so range that ETOPS that XXXX. The a we focused Atlantic. timelines. ability we the other that, item critical on be will whole operations is set In confident hit executed across and certification, around with before Airbus. are able very is very we amendment on We've that the aircraft are the that in path to

a London of XXXX terms that and is experience that of and plan. had have the everything our the working We with through other ahead of are those product the airports have are easily else lift lot people in big hand company who at terms And in all that in and accomplished different will schedule items; we in be considering similar airlines. really, of

Jack Atkins

Okay. That's fantastic.

your your from one I I any in the to sort to made transatlantic negotiations be sort if last follow-up of new how are of, be as with on Europe, guess that to about may sort before. Just that, think could, flight negotiations labor attendants, you're if your labor Rob, and need you Anything of perspective a of ongoing there contract, next that of over and flying changes your wasn't with or in there terms concessions regard work flying? agreements round that

Robin Hayes

I to you, will on pass Joanna.

Joanna Geraghty

Sure. Thanks.

quite So obviously They're productive. negotiations are ongoing.

contract took about four for pilots first Our years.

in under will the rules different the on and continue work expect to the and the four range years, work We contract. to place in team similar to be three various provisions

Jack Atkins

Thank Okay, that's time. you the for great.

David Fintzen

for XXXX great And that quarter joining Thanks us. conference first concludes day. call. a our Have

Operator

today's will Thank conference participation. that your And conclude call. you again, for

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