JBLU - Earnings call transcript Q3 2019 | JetBlue Airways Corporation

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Operator

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

As a reminder, today's call is being recorded. [Operator Instructions].

to Relations, call Mr. like Director to now Investor of would turn over the JetBlue's I David Fintzen. go please Sir, ahead.

David Fintzen

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

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

Officer; in here Priest, Hayes, York to Geraghty, results Chief our and Robin Executive Officer. our Stephen New discuss our are Operating Chief Joining Joanna Financial and President our me Officer; Chief

joining events. Also Clark, factors reliance of VP these session not results from materially Actual forward-looking This in Scott Dave Revenue and should place Sales undue Laurence, includes Revenue Management. may forward-looking many differ us Head to question-and-answer expressed statements for due of morning's and, those and future and the on investors about Planning; therefore, call are statements statements.

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

measures, of a of please For to the is website. of to measures these available at reconciliation which our the tables non-GAAP copy refer release, GAAP end earnings on our

to JetBlue's CEO. Hayes, call Robin I'd now, over turn to And the like

Robin Hayes

through to I'd passion a XX,XXX customers Dave. summer. with thank crewmembers Good us. their service network for thanks like JetBlue's for challenging outstanding and in to start Thanks, to morning, and more across everyone, my busy joining delivering our our than you

Starting on presentation. of Slide X our

pre-tax was XX.X%, income was per adjusted pre-tax adjusted share and margin was quarter million, earnings $XXX adjusted $X.XX. Third

EPS of our pre-tax with growth. X.X and pleased are We expansion margin points

quarter. a Our margins the the the that Latin/Caribbean even on region both and of ramped with absolute during are headwinds basis unique series from relative expanding

our helped end beat Our the structural the cost results that the of compounding cost by of guidance. program us were driven low benefits

As plans, at thank of I our who majority customers XXXX, stock. to we end long-term crewmembers, want the for create including all our near executing of owners, JetBlue's own teams for value the JetBlue and

are blocks XXXX. pressures Day the we our make building near expect Investor further at of Despite on markets last we and XXXX. costs. deliver Furthermore, our our We in unit are for and in track are believe to I'm myths with on pleased in success of EPS traction decade. laid positioning we progress delays, $X international goal gaining the into the to out and improvement $X.XX to continued next JetBlue particularly in we

beat the to our of over Dorian. loss third the point due CASM despite Hurricane ex-fuel In we quarter, capacity of low X.X end guidance

Our have than we strengthen this offset XXXX, the of improved believe to our midpoint Joanna quarterly completion beat the either and more that made we storm progress Since impact range solid ex-fuel the demonstrates growth. any team while low CASM operation. the the factor and or guidance end

are low-cost to quarter. our our third JetBlue, the model, showing performance in and this our throughout and our keeping award-winning markets, numbers, service. is what operation this and we of enormous I differentiated efforts years ago. the centers set importance working team goal the all acknowledge The our X.X important our our achieving the crewmembers in want to that is culture domestic while clearly we RASM in of unique support with In our understand satisfied of

quarter. during We to see steady the domestic fourth expect trends

and year, seen it above an we XXXX, markets, system eventful international term. our in margin to as the of we RASM unusually but an network In important long see pressures earnings part the contributor JetBlue have this remains in despite

plan we return to XXXX that unit us positive growth. our our building executing and believe commercial Our RASM can to revenues teams are hard the at strengthen work blocks, into

Travel JetBlue network ancillary year network of year innovations the the us we stage-adjusted this the from growth in in loyalty XXXX, on our are contributions In Products, from outperform in second helping and basis Our efforts second initiatives for launching Options well a a quarter. Fare include domestic RASM and X.X progress loyalty reallocation as as initiatives, a put row. ancillary place

fleet. to Turning

punitive We are U.S. airline as between on to ultimately strongly fares be these We JetBlue unnecessary. support U.S. the outcome will Union of trade the aircraft. fare that to environment, fair and impose tariffs the believe choice and disappointed harmful European open the reach dispute making detrimental these tariffs trade for and higher We an with hope whole. a and the less industry that our a deal competitive and and lead believe will Airbus customers. We and tariffs the U.S. decision to will EU

too still cash we balance to sheet. flow a we make discuss maintain capital might our is decisions and positive our manage book, existing make stay changes continue disciplined potential strong We to to early in maximize deployment. it Although returns, to intend any plan capital and the that EPS order to to

XXXX by points not X plan. expected flying our July. we delays announced the lowered significant our to have Regarding XX any our Investor deliveries Day only XXXX AXXXneo growth market deliveries, we the since and been capacity our for at schedule have in the delivery there changes of We're least XXXX, updated last for versus planned X originally XXXX quarter we

from to the fully intend mitigated due to and cost XXXX unit majority in the NEO unit on mitigate XXXX slower delays growth. have we capacity pressure cost We in expect of the impact the

near-term side, RASM as some periods. On delays shifted off-peak headwinds in we the NEO have for flights to quarter fourth resulted the the

to Achieving be XXXX first step should only anticipate the is Given and next goals our our margins. towards current producing superior fleet this for year. we delivery abate early temporary plan pressure XXXX,

CASM of remain and cost trajectory. next Looking discipline. to a intensely costs a ex-fuel to is on JetBlue, goal year, our maintain flattish focused beyond for way we plan Controlling is life

enabling decision us just grow base, fleet cost to more with one replace and XXX example earnings. AXXXs managing our XXXX July to we're how margins expand in Our JetBlue's cost-effective of our our is

last cost per forma opportunity seat review an my pro decrease is of AXXX EXXX represents operating on direct mainly XX% basis year, EPS. by from versus reminder, $X.XX the driven in increase fleet. the This a As a

Before history, on Joanna, and are progress, the to costs gains growth. our pressure in structural have our looking believe international temporary our back items turning margin masking the in recent we and nature. delays, the that at over We made call NEO markets impressive

to Turning our XXXX gains outlook in back positive our our growing. unit into RASM compound margin trajectory keep to will with costs

path drive to confident $X earnings in JetBlue, that plan owners margins believe EPS our growth target are our $X.XX expect and We our our to on XXXX. improve and to for remain we from the

our for work. hard to over crewmembers their thanks you. Joanna, my of Again, all to

Joanna Geraghty

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

X%. grew Higher the near result end During growth third guidance X% of improvement high quarter, X.X%, solid our of in of the factor. was range capacity the completion capacity our to

more impact We and initiatives, Fort of runway and Hurricane offset are pleased JFK. Lauderdale the our of Dorian construction with which than operational the benefits in

throughout Since the DX, operating thank we like beginning I'd the year-over-year year, have to and in of operational improvements all seen JetBlue the factor. team including metrics steady completion year. our the AXX the improvement for of

capacity and of quarter For the X.X%. we fourth expect growth X.X% between XXXX,

our is increase year remains As X%. capacity between improvements we of quarter. Scheduled year in due to and factor plan. capacity for to full a initial the into growth now range for our below expected the completion The XXXX carrying result, capacity guidance expect fourth X%

Turning to our network.

York. and to recently We're our added the with JFK-LAX start continuing me Let grow transcon New develop frequencies through most to network, market.

the carrier between are nonstop New currently most the L.A. We the that Basin. offers flights York and

JFK service long-haul develop to footprint our continue and between Ecuador; Guayaquil, Rica; planned VFR also and Guyana. with Jose, Costa We San Georgetown,

to our network, of have exceeding build pleased the overall, and our customer particularly the relevance we business base. We In unit York. New improve Both hourly daily expectations. grow are with we're the pleased our in Boston markets. to performance Boston, with We've complementing DCA the markets continue Boston flights been and growth between now XX and trends and service

Our Latin/Caribbean relevance progress as and to I'd talk city our to and the a in Hurricane moment to develop by up Lauderdale. the region. focused challenges revenue This other very and loyalty. temporarily about Fort continues in was take in even cities well, like customer Dorian performance drive continue Boston impacted focused

XXX Lauderdale low-cost than to providing the quality, still option are in high We and but proud a more operator differentiated Fort to largest customers. be departures daily offering

This an past million in and gate add Broward improvement experience customer additional the approved $XXX County capacity. enhance month, capital to further

also proud Travel Fort for are JetBlue home We call to Lauderdale Products business.

central Fort growth. in Lauderdale play our to role long-term will continue earnings a and margin

during Transcon markets showed quarter. solid improvement the

put growth segment. again starting we We continue outperformed XXXX, and strong benefits stating -- fourth by driven quarter mid-RASM the in network of in efforts system the the quarter place business to of reallocation see the

this earlier markets. markets. summer. quick impacted of Latin and year, in demand through Caribbean are and to significantly competitive was events ramped demand and number our manage challenges unique We've impacted redeploying capacity the begin in Lastly, by We saw capacity but taken action the franchise a

region be to bullish term. continue We the on long

Over we've strong in Puerto in the had VFR Dominican Today, to and leisure for invested portfolio other a key and produce largest markets margins carrier of continue are and markets. Rico, we that the years, JetBlue. Republic

are how beyond look we As network pleased short-term events, with we the developing. is

that to take confident in focus profitability expand the network building to our returns, our very and we on both and continue disciplined In actions critical growth margins. network aimed capacity are near reallocation helps in at term, We the plan based and mass cities.

outlook. X Slide and to Turning revenue the

our of RASM year, range out due X.X% versus updated headwinds minus domestic Despite decreased X%. called we decelerating X% RASM early the outperforming the X%, to midpoint of the than grew industry. September, our trends RASM slightly quarter over Third during to third quarter last better in

high single disruptions number in Latin/Caribbean demand digits, the from the RASM reduced in quarter. reflecting third the in of declined a markets unique

we year-over-year. decline quarter, X.X% to minus between minus X.X% fourth the For RASM and expect

led markets, as by for see level, yield growth steady and we our industry domestic the JetBlue a From expect at and high the broad Looking up. we decelerating Jet a -- demand for environment business. ticks domestic capacity transcon

out trends ongoing Latin/Caribbean region, we headwinds to demand the specific improve adjustments we third quarter. anticipate to our expect RASM quarter continue QX, recovery with into called markets combined capacity into year. next we In fourth the in the In

take past, mitigate on we to actions external markets RASM these network As in decline. moderate the of and the events current impact intend the to

quality these given the facing off-peak periods. we Robin XXXX. This from come anticipate to some for the headwinds NEO loan NEO as shifted on expectation pressure schedules. in be mentioned, are We fourth As our flights in quarter, delays, some deliveries temporary the to current we with of has headwinds

we Options to efforts, our to X.X, ongoing blocks. in our progress continued to JetBlue work reallocation near-term network XXXX, positive more RASM including to points Heading into building us system our of growth headwinds, of in Beyond commercial and continue ramp Fare loyalty. we Products return forward anticipate initiatives approximately X look Travel from the revenue

platform this will segment We are us particularly attractive. offerings roll to each we excited with provide to that later Fare better allow better year believe and group expect most X.X. this customers Options find out our the they We

launched of crewmembers are by our the to which believe will current iteration We our encouraged next Fare version in the and XXXX, add success customers, even of more value owners. and Options,

drive We will revenue $X.XX with with XXXX. our expect our goal RASM combination initiatives $X blocks growth other EPS in consistent that building in to our

I'd for I'll like across over delivering our call challenging operations a that, safe Steve. to my With summer JetBlue people add to thanks always to amazing turn the the peak. during

Stephen Priest

was billion, year. Thank of X.X some pre-tax the highlights start was quarter from last points third $X.X margin Adjusted up from with X% Slide I'll year-over-year. up quarter. from X you, Joanna. third Revenue the XX.X%,

challenges control, cost revenue Our region. solid our margin in driven pre-tax partially offset the by was by in progress Latin/Caribbean

JetSuite also is to $X.XX per million. GAAP Our margin GAAP $X.XX investment We share. per a small diluted diluted in gain equal pre-tax share. a Adjusted from our reported $XX includes EPS EPS

XX%, we Our adjusted effective tax effective tax XXXX. was similar rate a quarter and expect to rate this

to XX. Slide Moving

low cost our structural quarter, by benefited During X.X%. CASM from CASM program but point driven the ex-fuel beating of the the X.X% third growth due quarter. expenses end X.X% also benefits, year-over-year to the guidance range fourth by ex-fuel half was to increased to shifting of timing of ongoing third

fourth to range quarter, plus we X% Looking expect growth minus and ex-fuel into X%. between CASM the

midpoint our the the controlling year ex-fuel. original fourth the progress to plan we I'm for year well our are retirement better , to pace quarter CASM the ahead on X%. are the full thrilled We making admitted guidance with the of benefits, and of beat we entered on

capacity X.X% for X%. overcome the range of and efforts We have through to between runway scheduled and Lauderdale guidance impact JFK, growth, ex-fuel plus Fort in our CASM crewmembers leaders of delays proud and all am our NEO lowered and Dorian. of managing I lower and Hurricane the mitigating to of XXXX construction

on our contract. progress pilot the entire anticipate some much and a XXXX, ex-fuel In of are focus program carry an through and our As pressure cycled also by of the point costs to mitigate first our unit we the coming a reminder, headwind from JetBlue execution structural from to CASM accomplishment pressure is outstanding team. We we relentless This expect this plan. result through. X.XX in cost year, our cost working through of delays that on we NEO budget the

to we out for We laid delivering year. unit are cost committed guidance the next

minus the CASM minus Progress impact AXXX remains XXXX between will structural the X.X% restyling of be keeping unit costs ex-fuel guidance cost driven and Our in during our by X.X%. our from efforts. and achievements XXXX momentum XXXX

pivotal unit fully are our that We managing JetBlue's margins owners. creating costs is by aware for improving our to value

weeks ago. third the with XXX ended received second aircraft three AXXXneo our and quarter We just XX. Slide to Turning

and additional year-end. of expect the XXXX expect We continue X four in NEO by deliveries deliveries to maximum

we XX earnings XXXX. investor the appendix NEOs reminder, in and is current included anticipated the As to our The a in book update originally order presentation.

target XX and of the continue We've XX restyled XXXX. end AXXXs by to aircraft approximately

plans shifting restyling take Our XXXX in NEO capacity to minimize accounts the order of our impact of on growth. from delays XXXX to aircraft

XX. Slide to Turning

U.S. of to the in sheets enjoy one continue industry. balance airline We strongest the

our to manage aim is XX% of example third quarter. our the grade ratio, debt JetBlue one And was at to investment of the below metrics. range Our target to which is of end just capital this

debt. During million $XX third quarter, repaid the we in

an We last XXXX allocation million share buyback received Day. additional which our $XXX from Investor estimate the also million in to new guided our in Board executed million $XXX our block from $X.XX program. for adds capital goals, prior shares. to We building the our be recently $XXX up authorization This over JetBlue buyback authorization to were remaining EPS to

revenue. short-term XXXX closed and trailing We we next our our XX.X% with growth year XX-month equivalents confident in equating expect ability We see by to achieve to $XXX EPS the the in quarter into and remain million cash investments, earnings are cash, excited to and next the goals decade. of

blocks and is We the execute relentless execution that reaching revenue will EPS our and continue to goals. come offset the earnings most are that X quick taking significant yet actions in success and initiatives. headwinds drive to We our to our cost believe near-term in commercial on building will on benefit

out everything make they like crewmembers do JetBlue I'd add my better to thanks day in, outstanding day a to our company. for to

your take questions. now will We

David Fintzen

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

Operator

[Operator Instructions].

first the JPMorgan. The comes Jamie question of line from from Baker

Jamie Baker

performance, Could transcon Couple The that. of identified housekeeping items. commentary of on transcon part front Mint provide some color the solid you you showing excluding as cabin?

Joanna Geraghty

Transcon performing well. overall is

Jamie Baker

assumptions that of your changed all somewhat? modeling this that I Okay, in loyalty any I'll for part be monosyllabic. perhaps I'll Very At to that All loyalty, may an but the Day, at $X.XX good. have settle. earnings. was but oversight? expected to contribute Investor bucket. loyalty to $X.XX right, it close reference mistaken, settle was to in in I all presentation that. don't Is Yes, Actually, today. the wasn't but Or was see loyalty regard

Joanna Geraghty

mention No. did We it script. the actually in

maybe about is out revenue overall, customer. We're think is ancillary is optimistic component. are $XX.XX now years in at that. Loyalty ancillary It's largest portfolio you revenue look X biggest more our loyalty I'll of and XX% I component we growing the We've of last the very the up what as and point double at per year-over-year. co-brand the program. seen than fastest our future

Jamie Baker

which have a the the what should keep When a our you guide? provide on $X? $X.XX kind for you're -- At times guide several will to of point further what out we this subsequent in one today. real And said Assuming track, we than calendars, just so expect point at Steve. quick can you

Stephen Priest

in that honest, has associated go I that, Investor mean, out And to to with revise at changed. anything macro laid be some we with $X.XX as when we only back the forward. assumptions we would if guide our stands Day, out and went we still $X XXXX

approach call, and expect about earnings first X we of year and the of of But end sort can little quarter margin the we quarter you go a to we next seen to this sort the year and us we look get happy into talk our As momentum and continue very very, pleased Very and JetBlue during to keep bit XXXX, with forward. with the progress we've EPS accretion going further. make. continue that to forward the to

Robin Hayes

deliver are a laid Jamie, Steve's focused it's you point. initiatives think beyond some about as have Robin. cost make we just of because about Right $X. very continue the we We growth and EPS commitment I a we've But now, as XXXX want our that excited of term, to well. I we've on fleet talked as to are to have the XXXX. build changes, on $X.XX out, about, story beyond longer number to the will comment we we talked very entirely important

And so $X the forward our something what we But looking to is that's that's showing too. focus at the to executing time. now, and right are we $X.XX know on right we're

Operator

Next Hunter Research. of question from comes Keay line Wolfe from the

Hunter Keay

in a to you up some the if Are they that update still pick the caught wonder is catch early could all I on again optimism the little do? up? us will have up based on NEO Or next deliveries give that year they delays.

Stephen Priest

here. Hunter, it's that I'll Steve repeat one.

our in we As due XXXX. comments, take to just in XX we prepared to referred were aircraft

expect the have year. another X the taken by end deliveries We of far, X so

result has pretty So materially July nothing X update as comprehensive call, changed gave in a of a XXXX. at and We that.

we us in making adjustments, and come delays further with further take from with to and changed It's discussions restart we'll it's schedule And know, through of update the operations. look a if need and has the to to We for forth, for you the us, to the them. certainly call to continue some in Airbus gave challenge a that as XXXX mitigate in been resulted as work but we have continue to then. July actions nothing that, delays result tactical protect any

Hunter Keay

And guide, deeply expense given the bucket a Okay. tracking P&L $XX is or then that numbers near-term willing nonairline guide CASM hit earnings almost the certainly it's XXXX to you're that the million of drag? the to below cut you're if really

Stephen Priest

delighted that point at I look just and you if sort momentum making with structure. at as to, considering Hunter, our we our terrific mean, basis this you were cost of the the we unit to When low delighted, progress the you're quarter with are seeing actually, X, second CASM cost the cycling adjusted below progressed that costs, deal the wouldn't we Well, on timing of start points of really really because I regards half we're guidance we're look referred making I'm range. negative as XX X.X in point at end a year. result pilot our underlying and the to QX, we shift the as over, that of

So the team is I'm that at fantastic JetBlue moment. a not thinking even job. The at about doing

We to program structured associated the impacts confident and cost execute, continue on the CASMx. and in I'm

Operator

comes Sachs.. line Goldman from Next of question Catherine O'Brien the from

Catherine O'Brien

us color benefits for year? of full walk could deliveries? thinking restyling just how then rate on on the structural think if some how give your us It'd -- performance when and helpful you next through us the and NEO program Could the cadence we cost-cutting you'll run should about maybe we be hit remind about should cost you your be

Stephen Priest

cost just through to structure It's Steve wanted of cadence XXXX? did clarify, the you I our here. say

Catherine O'Brien

the how think like how and program of benefits deliveries and ramping full should then maybe we think about run on just the rate when cost program you'll restyling about Yes, structural hit should the NEO we up? the XXXX

Stephen Priest

wanted to you I Thank make just I heard you, sure Catie. effectively.

structural very with the program. pleased with made progress we've I'm cost regard to again, the So

we're end we As of million sense QX progress QX just $XXX of detailed always give this give at a we on you quarter. to as and those alluded sitting July, have update but since we of to, earnings the calls, in a the made currently

we projects been $XXX ramp. we've that Airports of $XXX and to of of cycle has taken get the XXXX So This nice in area sourcing we're as XXXX. biggest have to in to we execution that the million be structural And with productivity pillar confident a the quarter significant to making we in forward. place the sure very program continues continue as million, we the this end through progress. mix to cost make through

my you that on have And on guide side, I the the the the minus of XXXX the prepared see minus comments, so, X.X X.X as in referred to we CASM to reiteration CASM.

where to exactly leaving it we We as order be are leaving we quarter into to go in go four forward. XXXX need

expect only elements will other continue progress think actually. One, to would point make, I XXXX. continue you I'd as X the we to restyling the through ramp

you'll the do of the go the we anticipate -- to quarter-to-quarter that. the And see that end now our and by aircraft are we only see restyled will maintenance thing, associated material second progress choppiness as with of through, completed we're basis is having And a XX generally We through continuing XXXX. costs ramp time as we so we the contracts. on the on

the that, momentum that very place. confident to continue see we're put So plan other you you the than in progress in XXXX, through and as we've should

Catherine O'Brien

I is your is that Maybe in cost that is share through what that one on follow-up see one you and is should year? repurchases. structure expect running to million right Okay. I it. $XXX so what something just of mentioned, through run achieved the to we else terms you've Steve, -- have Or -- that now? But quick understood next

Stephen Priest

should runs through P&L. you what That's the XXXX assume

benefits program years. structural the been of the the taking various been obviously have going we've We as through cost

we saw we in saw million XXXX. example, For XXXX, in $XX $XX million

sort of mentioned XXXX. just the of cost can through $XXX certainly I and million benefits these appreciate the growth, on levels CASM -- as And for You CASM flattish amounts us see in my to answer should going expect be you P&L. north Hunter, to of producing structured of

XXXX is that would see through million run P&L. rate the cumulative the $XXX the So one

Catherine O'Brien

$X $X.XX us plus to that Understood. quarter, know this And -- first the Or target when $XXX it, you introduced quickly introduced at then was program how had was the you your million much incremental? just to $X? Can new remind on repurchase. contemplated but in $X.XX in all $X.XX that you share I you the is

Stephen Priest

say, went Great the had to when our Board I didn't obviously ahead back in place. Day existing we in get authorization question, I'd at and Investor XXXX, we Catie. want of the

So in Investor the assume about our XXXX didn't the purchase Day at talked purchase million we $X.XX for only completion -- subsequent the that $X.XX any and rest existing of any $XXX program contemplate benefits share agreements. the share

Operator

the comes from question Brandon Barclays. of Oglenski Next from line

Brandon Oglenski

stick the see I coming, in or we will to but Fare that marketplace guess, as guess, look like revenue and you X.X targets? current EPS I be my is the to have Robin, in you with revenue have question to those guidance performance, hit next environment, year, you'll understand the slightly to it you maybe Options if need I better that enough does get are improvement

Robin Hayes

I'm going take that. Joanna to ask to

Joanna Geraghty

thanks. Sure,

So in RASM it's XXXX we're and X/X for think are I worth XXXX. confident for to pointing of low-single-digit yet that growth revenue out come, initiatives our

just you behind me Let walk through what's that.

We're other of carriers pretty that initiatives, their early have carriers, look into benefit. Options of the to initiatives particularly and rate. can we later, were implemented at assumptions able additional has were I take also million much as that economy, X really up beyond and for into Options worked, X as million what think those late confident to Options do. upsell that revenue this ramp you what a in platform will basic and provides 'XX Options revenue. Fare launches to learned launch some And beyond the about Fare the $XXX are XXXX. about conservative experienced, they've mention basic So that economy even represents what than who $XXX so faster from worked around got we we've quarter worth what -- Fare are Fare million the and that we $XXX hasn't

our We've also network efforts. got reallocation

efforts, ability not city, another network its advantage $XX coming planned we that out to, we where progress has drive that every point to opportunities our around our route we XXXX million, had to if so, upward a or meaningful obviously, year we also earn network We it really I'll see then as and into past just but way, Travel there is in underperforming in not City and from contributor. something every $XX such the those, the there into the we way X% take attach and reallocation million JetBlue only represents then of turn week this that actions the protecting have is also we're next believe a is Products, significant ensure we loyalty which rate in and really margins. -- a and Mexico have can And

low-single-digit will So environment. for revenue and get believe, RASM negative we RASM that in comfortably these industry initiatives, environment even four works growth us into a XXXX think we plan negative -- RASM

Brandon Oglenski

way. now? Joanna. is very pretty by And It Okay. Actually significant on Travel right that's appreciate that, driving JetBlue the I maybe thorough. growth Products, that what's your seems revenue other

Robin Hayes

take ask just Dave to to that. going I'm

David Fintzen

ancillary is the Dave. across areas. in number Travel Products of growth I pieces the number driving just stream. other, This on of JetBlue things but adding. wouldn't got good different question. got those we've for call really a We've whole It's a Thanks specifically the

Robin Hayes

JetBlue there you attaching for product between through are that book sell-through OTAs is plan a the question an again, Joanna Products a more higher. said, is to optimize to bit little of fly additional this is because, we opportunity Travel I'll and sort maybe that year. -- JetBlue next X.X% jetblue.com, that when JetBlue, the and preparing of you take buy number to Brandon, And you core as significantly customers are X% when

other we into will progress a identified also the been for I XXXX number travel-related really of lot period some has XXXX, solid million out team $XX rolling has building XXXX. I'm are very be -- well. And very and the So the making into the that as confident products team that around

seeing So about there. what very excited we're

Operator

of comes line from the question DeNardi Next from Joseph Stifel.

Joseph DeNardi

past of tailwinds than your to the Steve, XXXX there the of kind seems years, couple headwinds accomplishing more been like story. it over have CASM

end we the Or down should the X.X%, higher end So of on the play? and that the just kind lower maybe forget more range, still favorable about kind is the focus end? in range of of the of

Stephen Priest

speak Joe, Good it's to you. Steve. to

think have And the have of and headwinds whole headwinds XXXX in take $X.XX the your you had challenge be it ATC the on we've as to be still stride. actually particular said is and XXXX. which we went as capacity it in we Northeast. sort point, to the the into went $X, we've seen, delays, in program of in continued our overexecuted a in we The of of side those initial through delays it gone cost I continued this number we all forward. But you've as adjustments, NEO house,

So that her obviously referred -- in and prepared Latin revenue the comments. to Joanna

the So the think we've leadership seeing is what delighted JetBlue over team. relentless years. the seeing from a old that and our have last And not team too. focus from been personally execution. excuses, JetBlue, what a on with JetBlue X this and and plan wider of delivering you're I'm executing I getting focused We're number team heard you'd The you're absolutely on

So we continue will us. come despite forward continue to to headwinds any towards do that that

Joseph DeNardi

those just then you tariffs, Okay. paying I would for be that Steve. it aircraft. for means consumers leads That's assumption the your around to commentary fares And higher prices Robin, higher that helpful, think

a have actually When you thinking, what decisions? So around through more is can your this you that? And to starts maybe to when bit of make us just kind walk all materialize? little detail,

Robin Hayes

but comment airlines JetBlue. these things. detrimental having Sure. high because and industry level overall obviously have specific the to Thanks, going think Airbus, of not sort conversations with Other comments my I on I'll extremely similar tariffs I'm to JetBlue Joe. are we're said keep that

the complaints the an think which the that that I to in could lead are continue their direction escalate. is goes if other issue year. to issue next of in could EU tariffs There that concern WTO, front it's

also we're where -- become so about are but it could concerned we could just And now, where where it go.

Now we our and terms be of XXXs in which mitigation, -- have here the U.S. assembled on in order, will

have of Our aircraft they that are years, are way was We've tariff that purchase some has the the cases, ordered. been airplanes already products, time production Mobile. been taken. on I also been many big ahead it a have unlike Airbus concern when mean, a of supporter in imposed, about cycle in imposed

the was production leaders. with off there. line came airplane first the fact, there down other In JetBlue I

it sense, sort So of where about tariff we're, macro in go. environment the could a concerned

working of XXXX JetBlue -- on call. get it's with too where to any into at with aircraft that Right now delivery though, say Airbus or point. that we're XXXX early not terms it's to to commentary, I'm leads making In this us our to of very we're going sort this assumptions. changes specific Obviously, that not and --

Operator

comes from the question Pfennigwerth Duane of Evercore. Next line from

Duane Pfennigwerth

I markets from working those What all the not? is Mexico still that profile actually Coast. for in versus good. Mexico you're City, the commentary are points the cutting that think East on is industry of pretty I the international noticed And I think, you well particular about are

better So those use you aircraft? a for as what seeing are

Joanna Geraghty

about talk broadly I'll speaking region. Maybe the Latin

capacity So as into pressures QX, there we were significant obviously think QX. about some Latin, in

about As into decreases there. moving expect we think we a improvements the QX, broader so region in Latin capacity degree, to

QX. those That As will of some headwinds at challenged mitigate try unique the continue some our made into the to mentioned adjustments in we September of said, challenges. to those of we've look we more impact that report, areas

is Customers redeploy it we've to we Cana. area look in have other ability into where areas. the travel and the other at would to are capacity will Punta Caribbean, prefer the there that Caribbean we we've And the In they travel that not areas As just through go an extent continue that past, done different region done it for vacations, will markets. in they islands to to to. to the

Caribbean the in the Caribbean, think The long-haul and we well a long year, to move. in overall, This operating puts for history As based there but a a us also perform to seen we perform us. It's it's our where continue continue about model. markets pressure, region our have had Caribbean and strength it for of markets VFR obviously for bit well more points on are normal temporary takes. and this and fit we've in region great nature will experience, a this our is leisure

produces that committed the than region. very and area that we it's more an margins, offset outstanding there returns the see to volatility. are We the And

like Scott, In to Mexico reappointment, you terms take of would that?

Scott Laurence

Sure.

to is that, of Northeast to of Northeast think we some Caribbean daylight the you're transcon a because going from us so to strength a actually very redeployment Florida for interesting nonmid-transcon, then -- additional mix Mexico So flying capacity. see I in some and see seasonally lot

that. we're us So that change really about for margin is excited a positive really and

Duane Pfennigwerth

partners will of what follow-up, your important spend in and talking a announcements partnership some that credit are just to attractive the about then partnerships of a talk revenue, concern important? you used lot to JetBlue going are recent And still for my quality partner is X to And fact attribute? a the noticing or about of be years just an what extent time there. Can you? that's that attributes extent To what

Scott Laurence

works part This think, Look, the business is for for an question. that XX of that incredibly out I got there and us. important Scott. and us. the produces are Thanks it very well partners for It's we've

tends we'll manage I a we've look, we factor our into they the partner done going volatility what future cities, in seats a is us. into with connecting to think have for And portfolio that amount deciding and past large as a look that of the as probably focus be big the that partners, we have. to fly we do for in with

again, the for potential at think, production. connections we I revenue look So and

Operator

from comes Deutsche Bank. line from question Michael the of Linenberg Next

Michael Linenberg

some specific. on maybe previous Yes, this actually more of the just little a questions, but touches bit

and changes, As seen Just of restrictions Then reimposed to demand curious. of a the to, year, guys in supply sort with that one the then as have you your -- the -- that earlier Cuba, administration following you've a did like than just responded were fall result market? the carrier. Cuba meaningful off you I example, largest this look in the footprints any have U.S. you that for changes

Scott Laurence

will that I again. take Scott one. is This

first that the in we've I that some The not almost under impact piece in Cuba. customers think the flying the secondary seen category. cities is Havana, of were that to at impact directly corresponded

some changes has our to noted like one of earlier, so continue we I do Cuba, we that. Joanna continues and network. cities to watch flights the think, the see of And there. into each continue Cuba to to again, And earn way its

we're excited So that. about

economics right, other we are I for us. to to we're think in the demand able tool. utilized work a is, competitive those the for airplane the we the see have there downgauges what reduced, effectively when use Cuba doing and right-sized as It's EXXX we ensure piece that

Michael Linenberg

Scott may -- you this Right. be Then as maybe, well. to

announcement handle out saw you the interline even out that Is about flights Just number with space had that Norwegian, agreement sure indicated servicing at this accurate? you'd something Kennedy. that if wasn't the that that of be there also the they into you to guys TX. I them I announced have

Scott Laurence

part at carriers. would This one. with similar is handle we we some here. have Scott. looked is relationships the with kind of just take as discussion This At part will partners TX. I that very point, I Again, of haven't We at It's the that do stress that. XX Norwegian. to this of other

others Some things of but closer and forward goes move these discussion. are we'll relationships that like see where they than this involve we as handling, in

Operator

Next Helane question comes Becker from the line Cowen. from of

Helane Becker

Fort you cities, and a Boston let's control you're on to Boston how planning by specifically. focused How ramp and recovering winter, traffic capacity thinking weather operations are say Lauderdale and and air you from you're up Lauderdale, New in seeing through, Fort affected about of secondary your things couple York, get what Just delays? some of in this as

Joanna Geraghty

operates Helane, and carrier. airspace and JetBlue will the storms winter got congested most take solid operating I'll us through other in any take the U.S. We've that than events. a it. plan snow

our in runway I operational significant you JFK continues in look mentioned and we I the JFK, construction through both think Lauderdale November, and of this the at one year-over-year. Fort face improved summer, performance projects performance X if

that of a the experience great and we we Nature the a got control air our experience on significant even to we've the think is customers, face operations that network for continuing Mother dedicated footprint that to I traffic team delays side in So deliver great in operate. the

Operator

from line from of comes Research. Genovesi the question Darryl Vertical Next

Darryl Genovesi

taken customs can to just progress -- the us stuff cost hit and are sense of on that place of guess already transatlantic a you XXXX? what's some Can probably towards getting I that just what need Steve, give do. to sort from where and make the you you us investments in service you ETOPS have you update is some in your potential some going?

Stephen Priest

to with Darryl, to Joanna the regards I'll action. pass it transatlantic over

So to over Joanna, you.

Joanna Geraghty

Thanks, Steve.

the So well is work underway.

we'll regulations. kicked us ETOPS through as Aviation the we're the this. XX-month got move about have year off It's confident external Federal that's process party the that with with supporting before. our process. We're Administration, an an we've outlined process done to two certification We it And that's by confident

be we that a to work -- airport fly looking to what parallel, our reporting to we'll airport of as have in we the we're terms and chosen later at issues to spot access, In and and continue forward to those time. back going that date

Stephen Priest

the regards clarity. included Darryl, launch your And, it's with transatlantic question, within to associated just the service XXXX cost cost for guides, of any within with the CASM,

Darryl Genovesi

I And issue. of Okay. lot for -- as this seems far ACF can it Joe's question, as this a to the of specifically option. I on, following like the specifically, then think, just tariff I up JetBlue quickly guess, lot tell, on trouble related is

think for you is Airbus important trying some How kind think lingers does forego also of ACF out of to Hamburg. in the would that preclude option And something it Mobile, that what's deliveries I caused stuff someways I if of that delays on? more Alabama. from Is you overall? you that's this in guys take tariff

Robin Hayes

Actually, Darryl, over it's team. ago that. Hamburg was with I'll few Airbus the Robin. in weeks take I a

mean, this So I'm familiar with pretty issue. background. some I just

some to now have know, to on the more new to the through will it's it's any modifications will that the tends initial do and to we a Mobile process. and around and move position point, challenges where -- engine had simplicity and the underway. Airbus and new At is sure some capabilities later of move or because XXX, the configuration. approach us NEOs it. it's engines we Toulouse As config until of the configuration been to ended bought a Hamburg cost, of XXX to we want to non-ACF originally produce right to Airbus' did the to the wing that some happen, not of kind what from and a us for CEOs gone back you -- move And we completely initial for in if they too of was ACF thing and right the it's configuration. thing even GTF, left late Airbus a go up have manufacturing forward if in That what that have than in really didn't not ACF ordered sort to I'm then the delaying bit we really

also than, production it's say, And much just not it's It's lower Mobile, that rate. or Hamburg rate the drives Toulouse. a the configuration production so still

that with of all -- Steve that point build guidance. proud these to fact the currently significant of cost I'm we again, and working the extremely So, yet face challenges haven't our from NEO away on I'm we actually, those made, we're issues delays walked

X-point we've other been We the right guided, ways conservatism have that bringing. now already have built Into what have which we're delivery to found is and delays XXXX, comfortable impact into the with these mitigate some we plan significant very our reduction.

Operator

line comes Lalwani from of from Rajeev question the Stanley. Morgan Next

Rajeev Lalwani

then including that? opportunities do guide way Steve, ask later ramp, to other year and beyond think would what the is, have structural to some potentially gross maybe you what based nice the are pretty question do Do you'd the cost for bit you. AXXXs, flattish. number? think given et in you're your going better could longer I to as Or XXXX The it about team continuing being you that next than in a cetera. on you term talked CASM

given So I why longer down term can't you do described? flat to what

Stephen Priest

the to We've Rajeev, myself execution of progress and only delighted that's going that XXXX. we to thank the on. potential ahead sort continued the going at I'm for very we've to through for not XXXX reiterating guided have your much and this I'm in get guide you the Again, comments, just with point. question. through that make of the and 'XX

flattish source single-digit structural makes about forward. should through decade CASM And of are focus cost said always the growth we've to on program CASM, mid- think facilitate going growing what JetBlue. is this flattish right ongoing and of we beyond For me, for when the I sort our of capacity growth end high level

We've migrate we've for game We're as on XXXX. order. of and ahead correct. to go very through as I'm not 'XX absolutely But AXXXs be the the sort myself. You're changer very, happy to beyond. guided they're through said going 'XX, JetBlue again, particularly of to before, going And we have

on engine through focused whether actually The cost structural they point is deals. are deals, doing, I make contractual final are fleet the the execution. are only We whether program, whether they through initiatives would that we're deals, longer-term

very a onto We key just decade and focus. eye short-term next the it's have got not

Rajeev Lalwani

it Do are out you And, interest Joanna, you. as think Or or so a maybe you if Florida for operate South We've much look out overlap, you, as that you see amount in a shouldn't do on? LatAm and different South at threat? of they even there do how good building you a Florida in risk that for Scott, of question longer be from seen term? parts building a American, such network Delta, the

Scott Laurence

with one. very watch This always we we I competitors. what watch Fort impact all do between as we case, impacts competitors I that is something It's In I'll with that I are the we'll Miami here and for Scott. doing think, closely. don't Look, see given this issues. overlap big to Delta Lauderdale. and our continue think, take and certainly American a our monitor LatAm us the

Operator

Next question of comes Syth James. from Raymond Savi the line of

Savanthi Syth

about the we broad-based think on don't in Do it follow-up comment Joanna, there I just demand of seeing, is was is and anymore? have you're based what have slowing fact commentary too driving just, some that your moderating. supply one pressure I'm much of on of kind I'm that. we that curious guessing that Or it going have market? that on? domestic the the kind domestic RASM in fuel a just Is it kind you

Joanna Geraghty

on that. color Yes, maybe a little more

as in So we we think the QX, industry domestic in outperformed RASM about QX.

the remains NEOs pressure a move the delays that our seeing of the that of and nature Demand steady, X.X RASM. the I'll in of with delays. out QX. softness also been closing obviously we consistent was where pointed back RASM half industry, capacity flying seeing about JetBlue. so point deceleration about position schedule, largely out X domestic unique the also RASM to but of we're associated higher with rest into of as tied in largely to the put QX. We're We and reguide also of point something suboptimal We've because in point pressures a the we're ticking

Savanthi Syth

any is is up? I to that know, you short Perfect. there Or that that depends NEOs? clarity that will of as the do on when kind Joanna, think When you ease in you And when term mentioned nature. it get was --

Joanna Geraghty

In on that's know, schedule, information question, believe, NEO, short-term we in that terms short-term NEO delivery The is the nature, we based do the but we of the managing believe yes. obviously, to nature. existing

Savanthi Syth

Meaning just XQ?

Joanna Geraghty

Correct.

David Fintzen

Operator, last one from we'll take the call analysts.

Operator

Caiado Joe of Suisse. line from the from Crédit comes question last Your

Joe Caiado

of Just ones. clarification a couple quick

for Robin maybe X.X. Joanna on Fare Options First or

how it we about roll the do you ramp that Just fully up that should to have think and in the expect international? out out and rollout initiative? domestic Is the plan when to in rolled the market first then system-wide? And

Joanna Geraghty

but at X. at the largely markets quarter there not back of it. where it half So offer will we're system-wide, out rolling we It very quickly, will some be looking ramps

Joe Caiado

it cost Steve, Okay. performance? bucket the you. program is follow-up expectations curious Got Is then it. with for quick find new be I'm structural like the cost stronger a of there to might to announced Do AAR, a that And wondering the you and your opportunities tech outperforming program? incremental just just driving looks which ops this continue incremental maybe that bucket? contract you like underlying

Stephen Priest

you Day, Investor them. thank time of of worked buckets and that progress exercise have out laid was the through. ago, we the to we years the X.X all obviously by that I've of sort XXXX Joe, warmup the we've the been question. did say at a as at for I X delighted Obviously,

through puts and been but gone takes, there's that. So we've some

as I to overachieved, the of in the said where to this quarter. $XXX be update that, at that has of from this probably one do distribution, we've the very, the original -- and probably forward of think very has million that I at we've end been saw nicely, July terms But progressing mean, all us as call overperformed for taken the and you they actually having one. other have buckets are

So of longer-term all with buckets the with overall. very happy contracts beyond happy all some progress, We're the with progressing that progress happy quite but nicely with impact will those in [indiscernible]. XXXX,

David Fintzen

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

Operator

today's Thank a you again, that conclude day. great And, will participation. Have conference. your for

JetBlue Airways (JBLU) 22 Oct 192019 Q3 Earnings call transcript