JBLU - Earnings call transcript Q3 2020 | JetBlue Airways Corporation

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Operator

Good morning. My name is Mary. I would like to welcome everyone to the JetBlue Airways Third Quarter 2020 Earnings Conference Call.

As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. turn Relations, over David to President JetBlue's like Investor of Fintzen. would the to call Vice I Please go ahead.

David Fintzen

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

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

Joanna events. our Geraghty, York to President discuss VP results and Chief therefore, here Executive materially Officer, me Hayes, This & Officer, Also differ joining reliance Operating our call in forward-looking Actual New from of Chief those are Management. statements. us expressed future not Joining due Priest, for Revenue should Revenue on and results of Sales factors, Chief our & Head Dave these Officer. are to many and our Steve Q&A Robin in may includes and Clark, undue morning's place statements investors Laurence, Planning Scott about Financial forward-looking statements

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

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

Robin Hayes

dedication for most sacrifice with crew history. crew start you to morning, I us. Good like joining XX-year in members to my difficult their to members also customers. to Dave. our our and want thanks the thank our thank our during period for Thanks, everyone, for their I'd

has seven air for on over been pandemic. And now service the and delivering humanity. mission months crew passion deliver to restore our in especially our work as members and travel. Their in we out, dedication confidence outstanding day into to our truly are remarkable, inspire day We customers'

this to industry-leading keep the responded crew our safe. health every day. grateful are teams up leading program bringing from have crisis ground to our customers members the protocols We're and of and safety unprecedented that action, our with all to with We life industry safety

Our recognizing their customers of professionalism efforts, are their customer scores we record as are care. high result and and satisfaction a seeing

have and Let's share. $X.XX reported let's we - of of protect presentation. to loss an ongoing the slide turn Despite X third per slide JetBlue. stabilize our worked adjusted to challenges, we the In demand quarter,

to We and have are Our cautiously upcoming reshape season. liquidity, steady network improvement the efforts raise our reduce remain immediate navigate and us into will we crisis. see holiday further that costs bearing in bookings optimistic our the helped fruit

their from pent-up return and we remain go customers seen positioned demand friends signs they We air want as extremely to believe of that vacation. on or have to family will visit these travel. who customers serve And to well we

Moving slide to X. now

customers that in a our brand Since the with best stronger recovery from will have low-fare trust and the that three-step model confident process. are help on industry We focused emerge crew low-cost, we members the to been all JetBlue leisure March, the crisis.

have we strides our made burn. reducing great First, cash in

flying and actions manage we demand cash to continue generate recovers. ensure as daily We our take tactical to

cost initiatives. our rebuild executing we on margins, to Secondly, are and revenue

are each Fort expand we service. future off up for to I'd setting regulatory the the for environment. get term, to the New American. under aircraft near JetBlue today we JetBlue to In We've the American market this with to and franchise job Getting and teams our Starting is the and a self-help in are ground exciting growth. for Caribbean New preserve we the a accelerate effort opportunities believe for taking margins positioning attention better Boston the in serious in out, track for our are connectivity partnership York reviewing thank a Airlines. strong where advantage team's rebound, we past partnership demand. working Northeast, In LAX and position and and our we and leadership pause the are structurally our disrupting reflect at our and which to our and from and in Boston redeploying Florida making help of while the of coming to accretive strengthening network Lauderdale, fair our us industry when and currently enhance We agency summer South new road cash fares proposal. critical in been the And our our on cities accelerate XX-year continue quickly Transcon network, our and want alliance, the tirelessly challenging Latin their low low both in strategic are produce jobs we Newark, like a of record to stronger. our building DOJ. success focus years. York recovery, margins to see partnership recovery helping faster Further with speed DOT JetBlue in choice our we Our a revenue review, is us to to of allow will spring, clear we to of great save region. announced recovery the made crisis grateful are parts in I moment highlight to Washington that this markets with adding our this with other to

subsidiary. forward product looking repeat JetBlue travel our We are to of

for in personalized to and trusted leisure a it advantage give who a travelers are As that competitive believe we unique us demand offers looking providing value experience. a flexibility brand will offering recovers, a

true we the working Steve our our temporarily On remain a from early base. provide us to believe JetBlue's realign routes revenue to we will the help cost as efforts are some structure details cost crisis. side, teams smaller our will low-cost to about that recover

to we positive more billion March, of raised cash of we be need free we the further terms repairing since goal $X with capital sheet than successfully access the years. we it. in and over balance coming flow aim should have our have to balance Naturally, Finally, sheet,

timing be demand largely the the pace executing of a returning. and our will of initiatives result course, on cost Of

to forward recovery, the reopen markets a and look our major safe space advancements to international testing, to that best we we can Rapid in cautiously the are public technologies this evolve, believe, will and in will travel. continue step help public balance promoting As help the domestic we The expected to and return find continues that work we leaders support future. a with considerations policies in near see landscape we while in to be health recovery. an economic critical and elected optimistic

and of loan this country. The support behalf has crew to a Cares we our would program crisis, some expect moment at Before payroll that all of demand for take to closing, their members, JetBlue and the for thank many Act are depressed jobs the helped to still remain and save navigating continued advisers like across is their and unprecedented The we reality time. I and support. federal on government

a in execute plan. of We Thanks, are path the to leaders show for time recovery us our our amazing taking to giving other. optimistic jobs our provide to will care customers to support find and members our soon country additional to their vital over safely that dedication crew you. Joanna, and the continue who, again, our each of to inspiring serving hardships, industry, despite current

Joanna Geraghty

other and of I'd you, both each expressing ground-up their on for start Thank the of on customers in our efforts, behalf the safety by gratitude out Robin. like day to thanks and in to commitments our and behalf and made our day extraordinary profound we've my members delivering program. from crew on

with confident return it customers And will members to air have face safe undertaken and of way, Our safety for the we observed convincing travel measures our who more the are lead crew be and is all. know travel, become members public air the flying indeed the crew JetBlue. as we that

the studies the low. bottom We very the often, just that airflow Because bacteria of transmission air to IATA continuously the hospital board new of name the and and spreading removed risk an limits patterns which is re-circulated, air data the particles avoid proves HEPA Independent environment is aircraft continue cabin and to Defense, that bacteria. safe of of filters, aircraft, controlled to top few, grade COVID. see how cabin and is on travel COVID-XX that XX.X% mask, research contracting indicate Department a a by particularly Harvard, wearing when that

nearly they will customers taking telling the have fly that we near them to us of right very the Our with XX% JetBlue safe, who customers flown actions again during saying us in future. pandemic are with keep the are

in government COVID experience safe key we crew to test simply trust uniformity said, our with more are near are markets. comply an during reflecting doing accessible. This a scores U.S. additional we rules. foreign high, times. first support for exceptional recovery, an increase to prior working of unique Promoter of and quarantining our airline to delivering travel, those that and and XX-point Net present lack understand remarkable. partnerships with remain job are in a the choice and Our related to a customers regulations members are need our these testing challenges their to these building Customers make state to we JetBlue, And That coronavirus is that all-time

modest to in welcome declined Moving in improvement restrictions sequential were quarter, to compared counts August September our as slide a revenue X. In states our demand expectation. A the new some initial quarantine saw and third decreased XX% case eased. We year-over-year. and improvement

rollout the we were through During such manage states to Connecticut options see to pleased travelers and help Massachusetts quarantines. as quarter, testing

be to continues impacted. geography Northeast Our disproportionately

undoubtedly past it has So challenges. we always will believe it rebound with as

our By travel region, of with from saw key our and end the In relative U.S., XX visiting were we Caribbean terms to markets, customers especially of albeit relative quarter, XX varying Latin open and international driven friends destinations demand. by in the strength the requirements. of

measures more demand modestly to foreign and following government expect of California. destinations removal reopen We trends quarantine the subject between TransCon from travel York New improved, rules. to

of a Lastly, northeast and strength, traffic pressures source the quarantine from was pricing despite elevated capacity. tristate Florida of relative industry

is XX% decline approximately of assumption for the Our quarter planning year-over-year. fourth revenue a

trends remain curve rise in to uncertainty We to coronavirus, see our late case customers starting but close by we and to sale including upcoming lot of in are improve holiday evolution largely although the in, period. of extend encouraged And continued promotional an September. Thanksgiving positively travel the about activity, is recent Booking despite slightly responding quite are there December counts. the holiday a into still booking early the

terms see In markets, of and Caribbean recovering demand continue destinations. Latin Florida we to quickest to

eight. on Turning capacity to slide

months managing focus adapting demand on few planning environment trends. it volatile scheduled a capacity, through the are a or and We in out close with laser to

to flying third capacity sorry, optimize the fourth our than planning manage During lower burn. during our - cash as year-over-year, quarter, assumptions flowing the XX% declined initial we

improved As slightly our at summer trends revenue increased the end load months, to approximately XX% quarter. factor the system through the of

cash year-over-year to helping fourth our cities For cash aircraft additional is VFR which in for we have holiday XX% expectations approximate for demand, bookings. planning and the the non-traditional improved These announced to current decline months, XX summer JetBlue. capacity given and some In season. the generate to focus our for routes fall markets current the leisure near our term, us quarter, expect reallocated our the include new in assumption during capture to and we this approximately during into markets we contribute will

expectations. To-date, are than markets transcon performing Newark, routes anticipated. from new within better particularly performing new we are Mint Our our

in Florida, are We similar flying and Providence in seeing added Hartford. results recently our

enhanced to our about in Along agreement they activating bring New in This and that customers, serving terms of those I thanking partnership, with is help connectivity look in faster strategic Boston schedules, more want just generate industry. our should with do. our again in customers offer American. to for to have members more jobs options we expected Steve. passion you, our cash, excited Over frequent completed offer crew are American us improved everything our We loyalty fares the We and to incredible which to recover York, forward close for by to flyer allow with low more partnership an program. alliance offer lines, Airlines. the preserve

Steve Priest

down efforts like I'd thanks each my and Joanna. and customer the determination also you, keep XX brief Operating for to Thank of $XXX million, with be a on of ensure and were financial down to of XX% start leaders. overview slide I JetBlue. was safe XX% to could and to results sustainability our crew add the financial our a quarter. year-over-year. other not Revenue year-over-year. members expenses proud their I'll

GAAP members, was lead our Excluding adjusted per operating loss diluted expense crew XX% $X.XX Act fleet the and loss and related $X.XX. for was benefit down share from per charges year-over-year. to and was diluted CARES voluntary programs share

to slide XX. on Moving

million for of variable we improvement the of million to achieved cash the August, capacity the was daily in was costs took anticipated through ahead cost a range a across ago. and $X.X three million, result minimize $X fixed our demand average $X we approach This to third quarter months burn Our the modest beginning in many actions business. savings to balanced

daily we million For our $X between estimate cash to The the cash costs. fourth sequential $X our quarter, and million. reflects to burn improvement continued actions minimize be

addition, as we August actions and demand and costs manage the continue, In will as our we optimistic needed recovery. are in taking to revenue are Joanna cautiously consequential and we mentioned, that September saw trends capacity support

we will September, our and total the see the fall within cash unrestricted we the $X.X revenue restricted included billion, the range or end of again XX% was of revenue. pace XXXX on recovery liquidity, of At quarter. our during depend While the

quarter, raised loan the of a proceeds $XXX drew $XXX million we mix new CARES and the on and sale-leaseback program During from million down aircraft of deliveries. over existing Act

refinanced our term billion we transactions. two with addition, EETC loan $X facility In

of $X regard to the explore billion With loyalty on both U.S. unencumbered sheet, up our to loyalty and markets billion the We program, we and excluding treasury assets traditional subsidiaries. to with $X raise liquidity. have our balance continue program paths to of additional capital parallel approximately

XX. slide to Turning

opt-out related of loss adjusted $XX a third crew This on charges $XX $XXX member declined a fleet payroll charge million, number resources opt the million flying. related lead year-over-year. CARES to from us benefit excludes to volunteers million Since extended members the X,XXX help to XX% operating the programs, continue charge During sale cumulative to we in leasebacks. offer the related of impairment over to furloughs. and quarter, expenses to our million programs, Act help $XXX start or significant initiatives of programs and voluntary support COVID-XX, for jobs that avoid our On crew adjust we preserve a have basis, offered similar outs a and are us incurred

those JetBlue. to financial in members up grateful crew has in health stepped programs. are preserving these instrumental contribution We the who to Their been participate of

Our year-over-year. for capacity lower total the our continued to fourth mitigated XX% costs. reduction operating efforts of quarter primarily our in change by a increase sequential assumption to in due scheduled to fixed is expenses revenue The working is approximately support

our hand, the work steady As our margins. current we a navigate environment with to rebuilding we are shifting

revenue industry. work to improving our superior We structure, is that fixed cost capacity. are cost versus intention ultimate approach pre-tax return We the profitability aligning base taking our structurally our margins, to an our variable better aggressive JetBlue and and to and will with to temporarily believe margins achieve low better

a working our reducing assuming We lowering on spend efficiency. be reference, and for are Using a as permanent prolonged currently driving XXXX on basis, revenue our XXXX, our will emphasis a costs recovery. budget external

an which recovery even we believe of crisis in demand emerge reinforce structural margin can delivery this recent cost as that Our stronger returns. our full gives will program confidence we our from cost us position,

XX. AXXXneos AXXXneos the expect quarter, of fourth, took Moving slide two two our first delivery we and we and the AXXX. third in of additional to delivery In

like agreement Earlier with of second capital we expenditure reached industry. and times, for the I this a sale over opportunity collectively approximately tremendous partnership, defer All October. Airbus to crisis, the to XXX these navigate currently XXX unprecedented CapEx, in and XXXX. the next deliveries of covered our beginning thank negotiated few XXXX reduced month, recent half Airbus, years. and are billion, additional The JetBlue for their we leasebacks. second as stands our in have including aircraft early $X between XXXX take by the we Since at this of non-aircraft associated by aircraft aircraft, the delivery to fleet would

into look bringing rebuild both help margins, strategy. to AXXX And AXXXLR forward economics. execute continue to JetBlue their to our the, We the and our network through fleet, the outstanding

remainder of of CapEx majority of funded for sale-leasebacks. $XXX which spend, the through will We approximately are million the be forecasting XXXX,

XXXX expect than less to be $X CapEx, continue our in billion. We to

our our appendix We have in of section the laid advised deck. out book order

debt-to-cap of Act end recent program. a on the And our at XX, loan September, sale-leasebacks. was slide ratio driven draw from the prior small Cares XX%, increase to by quarter, the Moving the

sheet strongest our current believe leverage that balance manageable. is amongst the remains Our we in very And industry. the

unprecedented earnings our to levels, years, has And and a strong to will intend enable our we pre-pandemic to to with fleet be coming the foundation. recovery Over truly while the potential. believe to pandemic we entered efforts, reestablish to full proven our financial strategic sheet crisis balance faster We investments us accelerate while both the and our in recover a ultimately past return and our our making network downturn, efforts. present,

towards will for short-term, JetBlue while again As I With positioning prolonged a be we owners continue take in we for we success work. our for what years relentless members to XXXX, thank us in their come. their support. and also move protect And recovery, to questions. the now thank to to crew that, our the will continued work appears to your want

David Fintzen

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

Operator

Thank comes you. Our James. [Operator Instructions] first Syth Savi Raymond with from question

Savi Syth

good Hey, morning.

improved I cash the of on wondering, I guidance. of of at And fare coming of the Or to in so end sales kind the the do revenue? drivers of from just that kind Thanks. there towards improvement the QX all you see what's biggest we as expecting benefits of you're well? the had end in the that also, kind indication Is towards was of September? cost end that cash the some of is QX, Just to lower think kind September, was burn the of much, the difference burn. related that

Steve Priest

take here. morning its Steve Good that. Savi, I'll

the balanced about it's think I approach.

the burn QX of overall of cash quarter. talked the the was that we million So average about $X.X

that it, I the our the and of our structure. our to teams balance getting would the way job the is cash we're helping obviously, overall are which capacity, and describe and the capacity think our flow cost demand, a our dynamically managing revenue doing really right, fantastic our between is cost performance. -- And I

three of As from in had QX, sequential million it's it's ruthless - demand forecasting take on QX. come But about steady we the of, quarter sort continue in we've into going sort $X for as focus to we we million also are million $X that are, quarter the terms think our a through of continued we the increasing QX. down. structure forecast we as to And we improvement $X.X that's that overall why cost things three to predicting that

thank to our crew big So members. you

I work revenue been has and cost. it's of think the tremendous. a And balance both

Savi Syth

you program. Makes follow-up, sense. wanted or I loyalty clarify. might the liquidity And to monetize kind if with Steve, to of the the trying loyalty mentioned I raise just

I treasury think with capital or said market. you the

go now? opportunity more there? financing treasury, collateral with you just out if you is you -- kind right have there Or get in So of the you would there whatever swap an to

Steve Priest

Thank you, Savi.

way think Robin tiller, the prepared comments. about approach I government the it's from on a our our very flexibility. the I having talked in the steady had we've support with would about describe hand

continue, that to at to don't the we government obviously, wonder with outcome too. moment. We is of going look the to what And what's the CARES federal to happen know

happen very to not going clear are also We to what's environment. demand ultimately

about access to to So when. for draw flexibility me, and the what continue liquidity and to have having the about it's

to parallel looking federal loan, to a also running government sort have we With transaction. both of up with the are billion. a market but the at $X.X government regards do we access so And path, public

with -- drawn did the $XXX of of end the the million. September a as by we've slither just that we So small

to we the the route, down go if we've Obviously, program in actual forward, need of built terms that of we'd community in already markets message we decide But to the the obviously in both need the path that put we go analysts the forward. we've and at in loyalty forward then terms the in provisions of supplement in place the I loyalty determine the liquidity and terms the collateral committed. the or we chose markets. overall to give but then so flexibility, we we've I think public liquidity go would not look program, assessing pledging go that is if And would we also public take whether investor

Savi Syth

you. Thank it. Got

Operator

Keay is Research. question with Wolf next from Hunter Our

open. is line Your

Hunter Keay

few those the thinking appropriate comp? But have Good sort are of realize is do years? to the how about given years prior shape yet ROIC variable compensation morning, probably own everybody. drives going right pay Robin, of for over what's how you not are your to few priority the now. not drivers target you I drivers you, next -- component target the sort think and executive your what next and EPS shape of of discussions Have the of, Board

Robin Hayes

focused morning. Good Sure. right Hi, on we're Yes, I obviously, now, short-term. mean, Hunter. the

we've we burn. to we the in out out executive laid before, and then our priorities building and do balance three-stage about compensation align approach As said with a -- try comments, cash margins sheet. minimizing this as I We're laid my What repairing that targets a we've business. ensure is

and EPS, us So with that's think -- on on as get margins as what track I I right goal is our to soon now. mean, we're back I possible. actually that focused

at think we've of Act take the them of you, we adjusted is the CARES remind also to that to priorities taken by years restrictions. time the I and time. where least period are approach the targets comp the what for loan, we've limited will exact government flexible I next if though, reflect longer the over a

with. And is and also comply so that we of something mindful to ensure have be we

Hunter Keay

worse that to of are for sort around you I knowing bit holiday I weekend, sort I'm that, the worsening but of over Is sure here a the set not last little week? a what the things the the edit periphery? least. just specificity Understood. mean, but expectations fourth few sorry you demand bookings. over obviously, got then things And ridiculous of commentary cautious Did do days for of top a on little that -- to it that know, of we want this write follow-up, quarter bit last you've had like striking - at feels to the maybe we're because opportunity ticking tone like you're maybe optimism course, make script

Robin Hayes

Hunter, of you at clarity, just worse when got what looking things a weekend? you over are point the say

Hunter Keay

I'm the is tests I than tri-state ridiculous such like positivity New in specifically. a City but… area, know, looking Again, specific area at rather Connecticut York the this in question

Robin Hayes

making I didn't Yeah. that you of No, secret that just have a we sure was no, source data see. didn't

Hunter Keay

Okay. normally already this taken, point question. to But on… obviously, -- get I as No, that I realist this morning, make you've your answered of sure is I the want it. just you like is still feel

Robin Hayes

Yeah.

Let me say to hand maybe to more one it over then details. thing and Joanna

what I summer about we talked back count bookings. think see did impact Sunbelt. study the was see gap the that in We've on that an did our case before. We in

We that yet. haven't seen

as case that to around started up counts haven't yet. we country, So come seen have the

and big pretty of -- travel. just path. I coming think around to recovery up hold traffic think But also some this non-linear home the that been a is is we pent-up demand and in going said We're Thanksgiving lots is of a we holiday that there's well. be students moving before, period, for Thanksgiving -- there's as

Hunter, to give and But on think pretty it around this know, you plugged sort make we thing that that. can wane, quickly. ebb different jurisdictions an move around see. very quarantines estimate going of in expect into we as try to – we We're what's We and insight

rate optimistic, makes. see our at and that close we'll X.X, sort holiday continue in to what But and December. X.X% sorry, right several we days, is into the states that we and to think of period XX the have now see or or XX about last I now, - - over about we're states especially Thanksgiving where cautiously the maybe

Hunter Keay

it. Appreciate Robin. Thanks, Great.

Operator

from Jamie next Our Baker with comes question JPMorgan.

is line open. Your

Jamie Baker

a everybody. abandoning it morning somehow. My It's Hey, I couple done New of I've of talk know a Hunter’s. structure follow-up is York to an about quarantine there's really modifying quarantines sort system. mostly myself. or current honor good question first the

quarantine, comments Any off Florida talked if recent care about what the resented some New your and otherwise bookings whether I be in York resilience. maybe quarantine, color I is a just make blowing You me further people that? blowing the of headlines. there that would surge really off maybe about mean, are the think on

Robin Hayes

quarantine Jamie, over hand our to I'll expert, Joanna, this Yes. you for one.

Jamie Baker

Robin. Thanks,

Joanna Geraghty

California are doing? to Jamie. provide Hi, bit the How quarantine upside little a color, came we bookings. list, when in off of you Maybe saw

testing talk countries strategy term, economic vaccine. short rapid a balances panacea. through a We or the say put of and there, recovery and considerations case link to testing a to to little something going need terms and We medium definitely necessarily what And we perspective, states cancels believe back. provide But looks upside and a that about first we like demand recovery. color a absolutely pre-pandemic travel the Massachusetts, people the more allows there. And reopen those But that eliminate when into Northeast it's to quarantines. we're the critical think health slowing. will it. think quarantines have restrictions. so to that it's place, were we a that's even saw the the how an adjusted public have don't on see out I amount to quarantine we negative entirely. of the see as Connecticut, definitely is and in There's potential and as time about with vaccine maybe options, And spending other ability understand relax largely they From or lot the travel our is a eliminate reduce of we're of returning test in level, to of longer-term remotely We've a ineffective the seen testing. and coming enormous in to quarantines

But be reduced of that Spending be by of of method many which now. believe the with a combination right largely are or and lot lot So our quarantines, we will states and on international, will of we're a vaccine that eliminated. believe time spending which longer-term we a there's ineffective, Caribbean testing time destinations.

Jamie Baker

That's Okay. helpful.

question Steve. for Second

activity, any being the in which before you you about going deals I of increasingly rates can On your thought to component? own an idea sale-leaseback give popular of guess the revised you any cost the the the also, sort - compared And of lease How better just have is offered ratio us economics downturn? hopes variabilizing, lease term, forward as structure? what monthly were variabilizing versus to

Robin Hayes

pleasantly Thanks, Jamie, work been terms and the vintage and AXXXs sale older of we that the neos of older I back activity aircraft, good not leaseback newer in on We to I'm bifurcate on forward morning. done, going economics I'd good the has on. obviously the the doing of with. JetBlue the lease we've have work last sort sale metal. the some towards surprised. was for there pleasantly did and been the did into get the been go of call. surprised we've pretty But And the quarter. start been them managed demand the that a I've to obviously about transactions

So I with we rates from pleased sort perspective. -- up ended with of a pretty where was

that big and happen for bring team away I've that in had, generate balance complex has cash about JetBlue for transactions we've regard aircraft used which we've to were and from steered the And public we're business. and meant backs. because the continue generally so make as sheet, cash deliveries, a position years, JetBlue of thrown your this the the the work my there of operations strength strong sale-lease to into last have to relatively this cash very leaned and that back, was shout-out our off the to we through over balance sales-lease the X views so times, a Obviously, from that the With about unprecedented that been of question teams the worked team, to the outstanding. we

forward - of on towards have back. notched I pre-pandemic forward. But ownership back situation, the fleet And so to geared our looking proportionality up the things more genuinely certainly short in the we fleet the we're side term, in of is our sale-lease going

Jamie Baker

Got both. Thank it. care. you Take

Robin Hayes

Thanks, Jamie.

Operator

question Our next comes ISI. Pfennigwerth from Evercore Duane with

Your open. is line

Duane Pfennigwerth

Hey, thank you. Good morning.

question, much quarantine another – ask quarantine and As I New I as holiday much won't. another my want play as you I want ask as to York to question out

you Mint. Which if one had clean AXXX the premium compare the say, slate to AXXX more premium? leaning to So now, now just right a to on if you AXXX, of or with AXXX recovery stages right would early density is And with more in profitable? a of or high-density be respect value high-density you cabin like-for-like,

Joanna Geraghty

to it Dave ask take add I'll color. and any then

performing space for to the about additional on do Dave, performing providing is add? at So pretty travel. additional – performing TransCon have in longer point, you of both like same. haul markets. We opportunity do are you'd our like the It's the terms anything and this other customers Mint relative to well actually

Dave Clark

the that think it our Clearly, customers goes extra an product with covered well. space appreciate cabin. excellent you've I

been So extremely it's always popular.

is coming Transcon As the before, [indiscernible] back. mentioned on

to of go the given knit You the are really densities, strength the traffic. in down which that the well high out routes largely mix performing Transcon because in of though have region, Caribbean the quite

Duane Pfennigwerth

again? you're the pushed you how think and that tell would thinking just order the priorities you in about today be invest stands AXXX begin us on of I pause where that to refresh? you button but where can it, kind And when of your

Steve Priest

here. We full button Steve pick I'll on Duane, that pause program. It's XXX did put up. initially Hi, the the

As of had terms the sort that fleet obviously, doing the cetera. already our at up et of sunk. say the It's the – expenditure honest, program we've at would one minimis, as appreciate But started again. have The come I is to a sort we're of through. September, capital of we into back vast our the was seats, that be that, pretty brought cabin time. we majority of back We leased big shell Duane, sort they of thing de customers in Newark the kits,

of So when we'll in up very And slow sort doing then depending environment, environment, we assess very, on start of at go one as steadily as ramping the depending revenue the demand again a we'll – sort ramp. on complete things through XXXX the we time we're a fleet. to

Duane Pfennigwerth

Thank Okay. you.

Steve Priest

Thanks, Have good Duane. a day.

Operator

next Goldman Sachs. Our Catherine with comes question from O’Brien

open. is line Your

Catherine O’Brien

Hey. Good time. so for the morning, much everyone. Thanks

incremental before just secured next cost that we And about this $XXX to run your time. exclusively. So deal the already of Steve, was before But in rate a target. just be think end I for program. expecting versus should million the you've this savings high how million one your cost year maybe we the on know program from structural COVID, $XXX locked you'd in question above engine should XXXX,

in over And cost over, XXX XXXX? will – is of through savings So be then, what me, flowing $XXX that excuse million year? of next Thanks. what incremental

Robin Hayes

morning. Good Catherine. Thanks,

really say we that First our was navigated terms build set on been number our very consciousness the us two of pleased across how a your like there in to cost to of able up the it's a I cost of structural initiatives continuing where cost embedded to with point, well would upon significant are crisis. program The all, through secondly, of we've think focus JetBlue. as structure. we've extremely One, for whole culture I reasons. And of

biggest I our with when our the our I think sort and partners crew external costs structure, associated members outside both and labor, perspective. from think stand cost spend business fuel, back obviously, of about

getting that one, is already taking way sort And look business. costs of term, time, our test structural will this, to that so of additional thinking point on industry-leading 'XX. around back XXXX. at XXXX, cost initiatives we're XXXX as in for normality at back sort industry cost is unit those we whole capacity XXXX. we're of we were The back some the consensus on is, -- obviously, coming a couple And started will of unit that doing fixed that use we're on the in into sort think million that things go building things. XXXX the thinking some a they continue is, get taking the in in focused some in thing which you we so top And did stand of We're and about saw out truly about looking We we industry to XXXX. and savings of way at The we'll in we've we to cost point before early Number a Katy, the be forward real progression. progression terms year. and delivered to getting $XXX of of curve short of through the about this in as the lot leading as

Catherine O’Brien

And And these any another request of then the just to is aircraft years in should at $X at COVID just the push probably Okay. then that couple of all with Were any then we delays Got back CapEx billion neo in on moving back you, Airbus Steve, era. Thanks. of one those the the request of the asking production cuts for JetBlue? aircraft and deferrals out the period? over concessions last actually, deliveries? push it. reduction are assume these all deferrals, will of and that Or the of delays? Or

Steve Priest

my I'll I again this in And Kate. prepared comments. partner our do want Thanks, to mention Airbus. thank

I partnership numerous think we've crisis we've the as preceding months. together. this navigated had a It's been discussions over

aircraft it's in joint fleet. high-return of in very purely around years, got bringing We this It deferral Just I of we've to point that book we XXXX of through two of out XX% have of over feel $X keep a right? the balance the of of been high navigating process. future, go sort reduction delivered aircraft. sort billion-ish which now has AXXX to to shells, our the crisis a order margin, XXXX, moved over simple. the And right CapEx of This and those so is JetBlue the the this supplement between sort

Catherine O’Brien

you. Thank Understood. Okay.

Operator

DeNardi next comes Our from from question Stifel. Joseph

open. is line Your

Joseph DeNardi

of think to CASM Okay. do get me. Good ASMs ones Two for ex XXXX? morning. need to fly Steve, you level what back to easy you

Steve Priest

Well, in of say. XXXX. I to would it regards couple it's There's sort a things with when -- at terms we interesting sort of of of look

and billion regards it CapEx, $X depends had expecting obviously, deferred we sort less are with of But environment. recovery. pre-COVID over the growth deferred on billion around than -- we of demand capacity the So to $X having

company intending what is that shape, denominator of as navigate we're good initiatives to in thinking that sort XXXX 'XX. and of we've than going are we're But be XXXX. taken back that's puts assuming of and But to overall tremendous that working in efficiencies. we the it's sort dose had to capacity planned about doing sort going expected make in the drive to the our I of our through, at to we'll exactly the to members get we terms so Joe, that why towards assumption to in and the overall this lower And that crew evolve sure work we'll cost confident that and those sort this and structure, back early getting very, in with is forward But cost start wrestle But continue point, that. very of we're remain us fly. our level to we through structure,

Joseph DeNardi

to you get closer Steve, XXXX capacity Okay. to need is it or it is XX%? of to XX%

Steve Priest

to end back who have expect anticipated going I think I would of time environment. of the what's I it is, the I into to nearer demand to happen we getting be XXXX, describe sort sort the mean, XXXX way would the the -- us by in of we're capacity. knows higher But

Joseph DeNardi

then of mix business revenue traffic for versus question the or a pre-COVID of all, a maybe standpoint Thank then importance And for Okay. earnings to your you. the Joanna, and of just Dave power? from business kind you the leisure

Joanna Geraghty

Sure.

de quite like times we to absolutely that this, to minimis business leisure mean the So, before travel. do out largely in business play seeing path in traffic since pandemic, tends be said, resilient I the out. we're be will of VFR well of onset very of leisure. there's recovery it's this as believe travel there. VFR And and sort we've this

Operator

comes Our next with Oglenski question from Barclays. Brandon

Your line is open.

Brandon Oglenski

Joanna, come taking Hey, good one questions. morning, question. for everyone. to want a the to I to my you back of had Thanks response,

think solution? Do if to I bear think I you is helping follow-up mentioned of testing. who's can bigger role? going a gap that, cost to bridge you And it a between guess, And that travel a be proactive you the as play and could authorities in the guys that restrictions?

Joanna Geraghty

Sure.

regard So absolutely testing proactive to few angles. we with are from being a

states, states consistent or working international First, testing framework. governments, actively a we're governments into to it's with whether put place

they're understand, different. challenges, all customers part of the First, that

day, ultimately, out few And others, a quarantines. airport. can then upon that we're Environment, So options, think a and of negative a cost-effective, that allow believe We're very on length people. asymptomatic now, we states five that the facilities in out. of testing in those that. there's have rapid, that creates also one, confusion it, customers. At countries end test, of which a at a of pre-departure or number the for so exploring working locations detect antigen will, and accurately level of COVID rolled inexpensive, symptomatic a also need there's and we these test reduce we've to test then announced minutes of customer see home the both testing the looking Right as we and proof providing

basis of I like a own. pre-departure a in take you that that ideally, do So we think use future lateral kind leave could your on applied a of actually on or think that before the be that how that's And moving. your flow you even test home, could see you can test could one pregnancy you

purchase that's of longer-term be by needs a that sort That's test take not a can clinician, actually any who largely right is of In cost, they tests effective cost do whether that anything is that people. bear share the of government are of airline But all are the it's by there $XX revenue many initiative And COVID The or We rapid $XX, to key anything you on just not that out that which you cost that take, test And test, we people. tests pretty here would doctor. share depends the testing. It now, terms think of any take, the obviously, test. standard. to that we administered passing PCR an the asymptomatic give a are $XXX, antigen gold we it not explored whether haven't in cost our they're of PCR test around detect, adding COVID a as very or asymptomatic inexpensive a now, it's about there a initiative, can we're how test the Bolt, of solution. on current customers need cost We're detect kind partner. see would expensive. that. in when we Right through

Brandon Oglenski

is right, of guess price kind things Yeah. you expensive? it, but elasticity there, I lot answered too there if of a get

Joanna Geraghty

Sorry, clicked. is this thing

So elasticity testing? a price lot with of

Brandon Oglenski

right? on guess, base, I your customer Yeah.

Joanna Geraghty

setting passing through now, that own. customers in various I it's not something we we And are the from be we something, and for companies envision those would mean, partnership companies. nature. that reach think, a and Yeah. their think on pay -- I customers This with willing to are to don't as up something, anything directly our procure is test going out it's I on think I necessarily it or far -- right

Brandon Oglenski

you. Thank right. All

Operator

Our question Linenberg from next with comes Deutsche Mike Bank.

Your line is open.

Mike Linenberg

what can heard Hey. you thought, And DOJ finished you on Joanna, loyalty sort mention you before of that point? approval? you Good I everybody. program. elements the Hey the rollout DOT, I had at morning, the curious, American, with up just I'm Or partnership proceed this work without now of blessing can their

Joanna Geraghty

take have to going that Scott I'm Sure. one.

Scott Laurence

to obviously, Mike. this, Scott focus, traveler. So is and again, low recovery. I I we're obviously, excited are with we think that, all we move fares be a again, But Hey -- It's here. How and elements think you? respectful faster what Northeast forward bringing our to want the the I think of, points as of doing frequent the about And we're growth regulators. including with

a do. position moving what more I And move again, kind think in could So of I forward it's better We're on I think, be toward, we'll think of holistically. sort this. close to a we

that in think of us a kind to versus forward to it's move don't makes what what do, I believe So moving sense. allows a want that in we matter a we're do. we I can of timeframe that way

Mike Linenberg

like blocking it goes And booking function Great, when that then a Scott, of you, higher? loads Dave, know to, are of maybe I also early that modified And middle been past for of on lot maybe look question. just Okay. a something. away. for lot was to and/or I a in sort may relative maybe the think, or yields in territory December then, blocking you are the go I others, at couple mean, realize this I And helpful. you bit that And looks from that's positive seat Middle that seat. it the be think some of you up to quarters, you've running is a guys your lower. my but XX% to your that second And I mid-October, just

I a can this better that. get, on maybe you. to yields, You sort do question, quarter? we the answer? some RASM the a should feel lower anything you lifts? about we going maybe higher see revenue best because middle as So seat as leaving yield think multi-pronged like ultimately, and you're that How we we the haven't Are however Thank fourth have loads mean, table, block? there? you you trends, Will of to higher, seen into counteract though move

Joanna Geraghty

Scott take then color. I'll to it. Sure. ask some I'll Dave or add And

said something the rebuilding in that been is of onset, seat So sustainable seat expensive. term as customer cost largely that's quite recognize middle block block since w back, the confidence as it's Middle longer the we've travel. about not has the loads come And that and absolutely

And that safe, increase so X inherently through safer safety than studies continue we'll most and that we saying are come out seen based is what have indoor what aircraft you've letting December seats those us XX%, below recent to is announce the events. just lids longer-term upon cabin the

seats And so in upside, terms as in but of as we see terms also open holidays fair, into frankly, up of load. the both

Mike Linenberg

Joanna. Great. Thanks,

Joanna Geraghty

Thanks.

Operator

Your next Suisse. Joe comes with Caiado go from question ahead. Please Credit

Joe Caiado

those employee as you QX what Steve, please? expenses. your And expenses with could Thanks that are QX? severance Hi. right? burn much. for or any in so, be separation-related Good tell well, if costs average us And everyone. to it you very got daily outlook Is cash morning, onetime XXXX just excludes if expected associated

Steve Priest

Hi, Joe. Steve. It's

correct. The comments. QX You're special public statement, about obviously, answer I'll the $XX took in and actually item we opt-out in prepared excluded. sort provision It's million. the in We -- of that is

that. that regard share, any slide to we're future QX. been already us booked XX, of the not have yet regards And to them share But lion's up, the stepped to because has sort thank in I absolute to in crewmembers the of support so that Obviously, what you're terms into of know We've to we the is with what we say - lion's holds. opportunity absolute moment. with through getting really our lion's of at know won't and see what going that sort share of it's don't

Joe Caiado

quick then for it. a follow-up, Thanks clarifying And maybe Joanna. just that. Got for

system. two? think And year part management in the describe with for I optimization capabilities last initiatives, highlighted just the recently the slide revenue the what you're or of I'm this system unlocking upgrade your as curious, you that? RM what and the revenue upgrade of you you didn't everyone. on time And Thanks an so exactly can upgrade is

Joanna Geraghty

Dave Sure. pass Clark him. system, I'll RM very so is our about to new talk it excited over to

Dave Clark

Thanks Sure. for the question.

of in As management system mentioned, Revenue Sabre's version the we're the to called process upgrading revenue of Optimizer. newest

process, of over to new like business quarter that. team things demand, reworking to structure the abilities a few for which revenue a part better our have years. this of Investor more about was the It's improvement management sophisticated continuous of forecast Planning this part to cut understand and talking team of customer elasticity, been the later and tool. XXXX tools, the our We'll the system. Day. is process have We maximize This benefits

when quarter in excited we it So this using start later I'm production.

Joe Caiado

the for Thanks color.

Operator

Our Didora next question of with from is Andrew Bank America.

line Your open. is

Andrew Didora

everyone. for Hi, good is or Robin question Joanna. My morning, first

leisure total Northeast from And and the based to at General on guess is, But revenue is years, with this you top flying this begin to your it Just been Would projection like outperform prevent Or to thoughts a growth as on, could fight next to more there. think might you JetBlue think traveler your for continues just carriers leisure XQ major has obviously, that just here. maybe here, when line? what comments them it outperform few as my today, line your oriented your doesn't that network big on the love seem leisure recovery to the do leading is as get clearly is question corporate I I have network. for hindrance kind the look over in really your is be. consensus big similar catalyst it's been you well. the happening? of do

Robin Hayes

significant. to we and very, in really, the Northeast know a down example, bringing job for all maybe this, was Thanks, start over We did I accordingly. Look, terms we QX, in And in I'll really No. of OpEx the coronavirus. our most and very then Joanna. Northeast the impacted issue pass QX, how good that saw been think has Yes.

on count come significant into whilst, few Northeast case that last open. course, gone down. As the York months aren't are keeping that people the QX, New over a we done still still parts There states are visit terrific we've of job have of the and

is Broadway, for next down year. shut So into example, well

is best, and being seen it into when the then think we to exceptions fly. So quarantines, I'm barrier of trends mixed the business people positive kind, -- demand yes, the have And quarantines. is for would for that test is states say, Joanna we leisure. a about we've that at quarantine I I also the compliance positive out And see do catalyst. traction create both a And some but that and also talked -- nevertheless, Northeast,

job again, routes. it new of a to I airline those done has redeploy first team Those good understate mitigant. done the the new So is flying. large -- think I amount I XX but mitigating mean, the We act can't a and -- were terrific We've a impact.

to so we think And continue I that do that. will

I at see that for now, homes. states mean, for we're manage a the I home, accordingly, but think, in going seeing about option. yes, months. about we're Northeast course, what back to coming And we to coming in continue, the I encouraging if quarantine but continue virus think testing think to as Thanksgiving will and of we're Thanksgiving, We people's headwinds think is into people to are spread

I as before So actually to health you I that think, public some actually with have, you well add? could positive bring. demand think, as leave the deal quarantine Joanna, when you testing headwinds us, or here, a of anything really on helping get impact either

Joanna Geraghty

just I'd a structure this crisis VFR we all It's add, navigate and that, that's we see we leisure. are a price were the is. what on, demand is got leisure as do. a Yes. through I point, founded product, cost to built where for mean, think what I And and we built

meet to carriers demand and travel. recover positioned on reliant when overly are uniquely are business We that that more quickly

Andrew Didora

know back second get question the clearly pandemic? couple Understood. of end think right you your on get on where lot, you of sheet the worth Thank sort just get to levels. now ask burn I liquidity of And question to move balance have because fourth of probably wanted requirements years' a you quarter a I cash this of liquidity just this thoughts -- you my you. your for And then on but Steve. kind at

out a to start can get the just quickly to recover trying Thank trying more demand once how -- to balance be just sheet So repaired see figure robustly you. we here?

Steve Priest

this team the on Thanks, as having in we've XX% of with with coming into make measured work the I've I've and months brief. again, liquidity in I'll trailing Andrew. We've the have treasury gone We kept been been described crisis one raise of delighted before about We've flexible. it the industry. And hand a been the tiller. done. XX% steady through how sheets the cash strongest terms XX balance to of revenue.

rethinking a in we're the a Obviously, had going have obviously but think in as time, benefit position forward. into forward. like whole us stronger where coming once those a will balance are that sheets I going we Andrew, pandemic that undoubtedly, same at a industry the be this will think I in generational

So we'll certainly assess as that out come size. we the to

cash as margins our And pandemic, operations. well get the is burn, at the forefront of said at positive of down comments, sheet to thinking. can is the in absolutely the really at on repair start thinking at night. driving During repair balance of prepared We've the are the come focus our that crisis. in to from making through his we and Robin and $X billion that bank of as front this moment, the cash sure right sort I speak over the balance having navigating sheet side out But, as we eliminate the got

Andrew Didora

Thank you everyone.

Steve Priest

Thank you.

Operator

last Myles comes from from Our question Walton UBS.

is open. line Your

Myles Walton

Thanks. Great.

looking operating that couple last for into costs you've maybe other upcoming quarter system maybe the perhaps rate? XX% that better Or that run avoided savings are quarter, at growth? the looking back XXXX, to appropriate So an to looking the in revenue coming Steve, you're are to drop-through there quarters, and at, to your And guiding through. of is drop to just last then a incremental be this relative earnings or cost structural going be

Steve Priest

Myles. Hi,

a I think the I'd headwinds. with of start off couple

the where got procedures I a costs of I sort to in have of to very, have where going some traffic quarter about, et public off, you put sort you're of future, think the cetera. and through. the we've the going the have sort a in you less have think think got end very fees, that of obviously, generally, is rents as two the come peak But airports they terms back and people people landing in sort of of biggest out where short-term, the of sort a bit medical elective that about navigate think immediate entities of

that the in puts amount the structure. and to got a of sort of that has as the cost industry up, So, addition, pressure thinking the And whole initiatives services forward. customers sort of on natural about put go cleaning as our volumes of

couple. think the they I probably the when are about So headwinds

been maintenance. fixed last out. of tech we've outsourcing our some We've over also done cost the a to the of about at as variable. cost really We've doing We're heavy terms questions. in of in I've bringing We've through maintenance tailwinds, the Think my items. engine program. JetBlue said standpoint. to few into tremendous costs that about from done some benefits millions But job HAM really, dollars heavy predominantly organization. structural maintenance, shifting we're about work. the of a cost previous done terms fixed taken in some We've Think drive in-sourcing of bigger before airport months, answers think to In that's taking work the an some UPS

stone into no year. as of we make trajectory financial XXXX sort -- leaving early to on we're get sure unturned XXXX XXXX of So back the to that we sort get

So the pleased with I'm progress making. we're

Myles Walton

Thanks. that Okay. one. I’ll leave

Steve Priest

Myles. much, Thank you very

David Fintzen

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

Operator

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

JetBlue Airways (JBLU) 27 Oct 202020 Q3 Earnings call transcript