Q2 2020 JetBlue Airways Corp Earnings Call
[music].
Good morning, My name is Nora.
I would like to welcome everyone to the Jetblue Airways second quarter plenty plenty earnings conference call.
As a reminder, today's call is being recorded.
At this time all participants are in a vsan they'll be mode.
I would now like to tactical over to Jeff lose the Vice President of Investor Relations David Fintzen. Please go ahead.
Thanks, Nora good morning, everyone. Thanks for joining us for a second quarter 2020 earnings call. This morning, we issued our earnings release, our Investor update and a presentation will reference during this call all of those documents are available on our web site at Investor Dot Jetblue Dot com and have been filed with the FCC joining me here in New York to discuss our results.
Robin Hayes, our Chief Executive officer join a guarantee or President and Chief operating Officer, and Steve priest, Our Chief Financial Officer also joining us for Q and I are Scott Lawrence head of revenue and planning and Dave Clark VP of sales and revenue management.
This morning's call includes forward looking statements about future events actual results may differ materially from those expressed in the forward looking statements due to many factors and therefore investors should not place undue reliance on these statements for additional information concerning factors that could cause results to differ from the forward looking statements. Please refer to our press release.
10-Q, and other reports filed with the FCC.
Also during the course of our call. We may discuss several non-GAAP financial measures for reconciliation of these non-GAAP measures to GAAP measures. Please refer to the tables at the end of our earnings release, a copy of which is available on our website and now I'd like to turn the call over to Robin Hayes Jetblue CEO.
Hi, Thanks, Dave and good morning, everyone and thank you for joining us.
Our full all with all of our crew members, who had been impacted by the ongoing pandemic, especially the families friends and loved ones of those we have lost the jet blue.
I'm, sorry to say that we're deeply saddened to have lost two more crew members to Corona Vivus both on July the 16th.
We remember Britney Jones from a airport operations team at full loved it out who joined jet Blue just over a year ago.
She was most kindness and optimism with customers and her colleagues alike.
We also remember Orlando to borrowers who was a quality control inspector and technical operations.
And he most recently served on the temporary duty assignment in foreclosure, though.
During his eight year created with jet Blue exhibited a our values working with passion then pride in everything he did.
And considered himself.
Quote unquote Jetblue 100 per se.
Losing tupelov members about Jetblue family on the same day is a painful reminder of this pandemics reach and severity.
In the last quarter, we've also seen issues of racially quality comes at the forefront.
I'm prompted the long overdue dialogue around racially quality and justice in this country.
Our Jetblue, we were born with a mission to inspire humanity and there's no more opportune time for us to show exactly what this means then through our actions.
We're looking in woods addressing alone processes on policies that jet blue.
We have started to work with our crew members to prioritize meaningful changes that they would like to see in support of inclusiveness and ratio equality.
Leading without values, we're committed to ensuring that we look at our business practices through the lens of diversity equality and inclusion.
As a company. We've also faced we're also faced with the historic declining demand.
And the reality of needing to be a smaller company for the time being.
I want to take a moment to acknowledge to sacrifice made by a crew members who have decided to take voluntary alltel all participate and our voluntary time off programs.
Which helps us adjust our staffing to the incredible drop in demand that our industry is facing.
By stepping out they have protected many jobs that jetblue, helping us to navigate the most difficult period in our history.
We wholeheartedly thank them for the amazing contribution to Jetblue and to those of you who are leaving we wish you all the very best in your next chapter.
Turning to slide four of our presentation.
For the second quarter, we reported a GAAP loss of $1.18 cents per share.
Despite reporting a truly staggering loss that reflects the steep fall in demand that started in late February we have been decisive in taking actions to protect jetblue and to emerge stronger as we manage through recoveries.
In the past two months, we've made progress in reducing our cash burn and have been quick to re size operations in this dynamic demand environment.
Despite a returning a recent softening in demand we are still on track to take our cash burn to between $7 billion to $9 billion loads a day in the third quarter.
Since April we raised nearly $1 billion in liquidity and our balance sheet remains among the strongest in industry.
While demands has improved materially from the historic lows. We saw in April bookings remain choppy and we remain focused on addressing changing trends as we put a good progress through the summer.
Our network continues to be impacted by Scott spikes in cobot cases, and quality measures, but we've seen that customers are willing to travel to see their family and friends.
It is highly likely that this recovery would not be linear, but our smaller size allows us to respond quickly to changes in demand.
We are confident that our low cost low fare leisure model, coupled with our trusted brand will be instrumental and central in navigating recovery.
Let's move onto slide five of our presentation.
We recognize that recovery starts with rebuilding customers competence in flying again.
The onset of this crisis, we created a comprehensive approach we call safety from the ground up.
Our focus has been on taking all precautions with health and safety protocols that are crew members and customers a site on the ground and of course in the air.
We have laid out a three stacked recovery framework to set jetblue up for success and to emerge stronger over the coming years.
The first is to reduce our cash burn.
Despite the challenging and volatile revenue environment, we have been nimble taking capacity actions to add revenue and minimize variable costs and continued to make progress in reducing our daily cash burn.
The second step is to rebuild our margins on the revenue from we're working through we are working on a series of initiatives that we believe will accelerate revenue recovery and strengthen our relevance in our focus cities.
We are seizing on unique network opportunities, we purchasing our asset entering into strategic partnerships.
These actions will make is stronger and make us more competitive and ultimately bring after period product and service to more customers.
On the cost from where we sizing jetblue meaningfully to mitigate the impact of lower demand and Steve Shortly will provide details about our efforts to double down on our low cost model.
We believe the executing on our cost will again be pivotal to rebuilding our margins.
The third and last step is to repair our balance sheet.
Although we have raised a substantial amount of liquidity in a short period, we're committed to returning to pre koby leverage relative pre coated leverage metrics.
I want to briefly touch upon our network strategy to position Jetblue for recovery continuing the work we put in place prior to the started a pandemic.
We recently announced a significant we allocation of our assets in our network flying to 30, new markets launching between July and October.
In the near term we believe this move will support our efforts to generate cash and respond to demand in the longer term. It will strengthen our new focus cities with more flying out of Newark, including.
Our award winning main transform service.
On the West Coast moving our primary base of operations from long Beach to Lx will bring new competition to the Apple and position Jetblue strategically to grow in the future.
Including International service that was just not possible as long beach.
I'd like to take a moment and tank Los Angeles' what airports for their continued support our efforts to grow our presence in ally.
Lastly, we have entered into a strategic partnership with American Airlines This new and unique partnership will accelerate our coverage from the impact to the quarter Mvrs and strengthen our ability to compete with our peers in the northeast offer in our low fares and improved service to more to momo routes to both to come.
Customers in both New York and Boston.
For the past 20 years, we have succeeded against the odds and we firmly believe that we're laying the foundation and repositioning jetblues come out to this crisis as a stronger global player in the years to come.
Once again, thanks to all our incredible crew members for playing such an incredibly vital role that jetblue. During these most challenging.
Times.
With that I'd like to pause.
Over to John.
Thank you Robyn I'll start with a heartfelt. Thank you Chuck crew members. These past few months has banned the most challenging and our 20 year history, MP and we cannot be more thankful and proud of their kindness and professionalism caring for one another and caring for our customers I'd also like to give them a special shout out for their amazing work, which was recently recognized by traffic.
And leisure magazine for the second hearing of rail Jetblue was rated the number one domestic airline in the 2020 world.
During this unique time this award speaks to the hard work and exceptional service and our crew members deliver everyday.
In addition, we're also very pleased to see our industry, leading and record high net promoter scores, reflecting how well generally with meeting the commitment of our safety from the ground up program.
Customers historically chose Jetblue for our fares, great service and product choice drivers have shifted to cleanliness, physical distancing and facial covering compliance and customers are telling us what is working and how well we are performing against our unplanned.
Capital already offers a leading differentiated and preferred experience and I cannot be more proud of our crew members, who are delivering on our safety promise, which matters now more than ever.
Moving on to slide seven.
As Robin mentioned, we're laser focused on managing the current volatile demand environment due to increasing case counts and shifting government quarantine and international entry requirement.
In the short term, we are managing and shifting capacity will they focus on operating only those flights that cover our variable costs.
In the long term, we're solidifying our network strategy to build and consolidate our focus cities. We are taking advantage of unique opportunities presented by the pandemic that will allow us to rebuild our margins when demand returns.
Starting with Newark are added flying solidifies, our relevance in the New York Metro area.
During low fares, and our industry, leading product and service, including meant to more customers.
This will ultimately bring our new look operation to 60 daily flight post recovery.
In South, Florida, we remain steadfast in our long term plan to grow Fort Lauderdale to 140 flights per day, bringing our product and our service to more customers.
With the addition of two international Gates, our focus is on connectivity to promote origin and destination traffic between our domestic and Latin networks.
We believe that improving schedule connectivity will enhance our already successful point point strategy in this high value geography.
On the West Coast, we announced the closure of long Beach due to performance and are moving the operation to Lx, one of the strongest markets in our network.
This consolidation and an otherwise gate constrained airport will help us reduce costs and improve our margins with more profitable flying.
And we'll also set us up longer term to expand both domestically and internationally.
Longer term. Thank 2025, we envision taking LTX to 70 flights per day.
I look forward to growing in the future with the support of Los Angeles World Airport.
Moving onto our recently announced northeast partnership with American Airlines.
We've built a strategic relationship that combines the strength of both airlines physicians Jetblue the global player and we believe creates a faster path to recovery.
By adding more routes to our network our customers will have access to more destinations and frequencies.
This partnership includes 130, new routes for American customers 60, new non stop for Jetblue customers are combined networks will also significantly strengthen our Boston and New York focus cities.
In Boston This partnership will allow us to bring our low fares to more markets quicker in the case of New York, we will be able to compete more effectively with larger airlines overcoming the current limitations to grow in the slot constrained airspace.
While we're currently working through the regulatory process, we anticipate entering into reciprocal co chair and loyalty agreements offering low fares improved schedules and options for connectivity.
Loyalty members for both Airlines will also be able to earn and burn miles on both airlines networks.
Driving loyalty is a significant focus for Jetblue and these enhancements will go a long way toward making trueblue, even more beneficial to our customers.
We look forward to bringing the jetblue effect more customers and more markets in the near future.
Turning to slide eight and the current demand environment.
Bookings and traffic volumes improved revenue sequentially during may and June from down 93% to down 83% year over year.
Volumes have increased since demand bottomed out in April and during the second quarter, our revenue broadly track to two R.L. shaped recovery forecast.
Although we saw some demand recovery the coded resurgence in late June and the Tri State quarantine has not surprisingly pressure to demand.
We expect demand will continue to the volatile and recovery will not be perfectly linear as customers willingness to travel evolve as regions reopen for business and as infection rates change overtime.
In terms of geography during the second quarter traffic between the northeast in South, Florida held up relatively better throughout the back half of the quarter and we saw relative strengthening of our transcon markets.
Both of these regions have traditionally been strong profit drivers for Jetblue supported by the strong BFR and leisure demand.
Due to the Tri state quarantine, an increase in case counts and much of the south we continue to experience near term volatility.
When these regions stabilize we expect they will support our recovery given the pent up demand we saw for travel.
Latin the if our demand remained strong through the quarter, especially in Puerto Rico, and the Dominican Republic, where we have tactically added back capacity in response to demand.
We have resumed service to 15 Latin destinations during the month of July with more coming online in the later portion of this summer as always driven by demand strength.
The situation in the region continues to evolve as foreign governments are starting to reopen their borders to international flying.
Government Affairs team and international stations have done a great job managing a concerted effort to bring this important region back online.
Subject to restrictions, we expect more than 50% of our Latin capacity to be in place by the end of the summer.
And we remain committed to this region as a long term source of superior margins.
Based on forward bookings and current planning assumptions, we are estimating our third quarter revenue to decline approximately 80% year over year.
In some markets industry capacity has returned faster than demand, putting downward pressure on fares and creating a headwind to revenue even as more customers travel.
Given the Choppiness in demand, we will continue to take a conservative approach and planning capacity.
We recently extended our middle see blocking policy through labor day, continuing our efforts to instill confidence and customers and deliberately making investment to protect our revenue base.
Cost of our policy is relatively small and less than 10% of our flight are currently reaching the lids, we put in place to maintain physical distance in the cabin.
We believe that this is the right decision I present, because our customers continue to tell us visit that this policy is important for them as they choose jetblue among many carriers.
We continue to evaluate RC policy balancing the needs of our customers with our efforts to reduce cash burn and rebuild our margins.
Moving to capacity on slide nine.
We've managed our capacity to safeguard the financial security of Jetblue.
Since the start of the pandemic, we have been among most aggressive carriers to make schedule reductions will also putting into place a process for closing cancellation to avoid costs and mitigate cash burns.
As a result of our actions our second quarter capacity declined 85% year over year.
After making deep cuts in our forward scheduled during March we adjusted our flying falling demand in May and June we added capacity back to generate cash when demand was improving.
As we saw signs of demand trends stalling, we shifted back to reducing capacity and have recently pull 15 to 20 points from our August schedules. Overall, we will continue to monitor demand trends and we'll adjust capacity to reflect the current demand environment.
For the third quarter, our current planning assumption is for capacity to decline at least 45% year over year.
Our guiding criteria as cash generation and we will continue to react to changes in demand trends rationalizing and pulling capacity as needed before each schedule month is flown.
Our teams have done an outstanding job and strategically managing our fleet to minimize maintenance and fuel costs. While we have started to bring some aircraft back from temporary storage. We will remain flexible supporting our goal is to generate cash we have a firm grip on cash breakeven economics, and a solid process to manage capacity toward cash Jenny.
Duration.
Thank you again to our crew members for continuing to serve our customers and maintaining a safe operation Steve over to you.
Thank you Jonah and good morning, everyone I.
I would like to add my thanks to our crew members.
Even with the challenges presented in our personal lives, but continue to live our values and worked tirelessly to protect the financial sustainability of Jetblue.
I'll start on slide 11, with a brief overview of our financial results for the quarter.
Revenue was $215 million.
90% year over year.
Operating expenses were down 66% year over year.
Excluding the benefit from tells us on salaries wages and benefits operating expenses were down 50% year over year.
GAAP loss per diluted share was $1.19 cents on adjusted loss per diluted share was $2.02.
Our effective tax rate for the quarter was 27% on a non-GAAP basis.
We continue to manage through this fluid environment with a near term focus on preserving liquidity.
Just as importantly, we are positioning jetblue to thrive as we emerged from the pandemic.
We are putting jet blue Buffalo pop to long term success. Following a three step framework the Robyn introduced.
Thus, reducing our cash burn second rebuilding our margins.
Repairing our balance sheet.
Moving to slide 12.
Our treasury team has done an exceptional job executing capital advisors and exceeded that goal to rise at least $750 million of additional liquidity.
Last month revised just under $750 million with a new term loan, but by JFK, Laguardia, Washington, Reagan slots as well as our jet Blue brands.
This is the first time in the industry. The an airline has used its brand as collateral.
We also entered into a sale and leaseback transaction device nearly $120 million during the quarter.
Our total liquidity, including restricted and unrestricted cash equates to $3.4 billion at the close of June or 42% about 29 senior revenue.
The July we've executed further sale leasebacks that will add an additional $200 million to our liquidity, bringing the total amount rise insightful, so roughly $1 billion.
We are now shifting our focus to refinancing the threesixty for term loan that we executed back in March.
Jim has also been working closely with the U.S. government and its advisors page I see on our application for the Kazakh loan.
As a reminder, we're eligible for up to $1.14 billion.
Over the forthcoming ways, we will assess our needs to access the loan.
Although the cash burn improved every single month since April to an $8 million at the end of June.
The improvement during the quarter came mainly from our efforts to manage capacity reduce our cost base on managed payment terms.
Small improvements in revenue trends during the quarter also contributed to our progress in cash flow.
Looking into the third quarter, we continue to estimate outside of the cash burn between seven a $9 million, mainly driven by a continuation of our to reduce our cost base on capacity auctions to respond to the changes in demand.
Well, we fall within the range will depend on the revenue environment during the third quarter.
Our expectation is to further reduce our daily cash spreads in the fourth quarter, but the mindful of the continued uncertainty in the revenue environment.
Turning to slide 30.
While we are focused on the near term images not cash burn we're also laying down the foundation to rebuild our margins.
We are in the midst of a company wide effort to re size jetblue. So our demand assumptions cost is what are the most important levers that we can control so much stronger from the classes.
During the second quarter operating expenses in our peer now declined 50% year over year. This figure excludes the play will benefit from the catches up.
This impressive achievement as result of a concerted effort of our teams have been relentless to protect the financial viability of jet Blue.
There's a short term, we succeeded reducing our variable costs by taking aggressive capacity auctions.
Quickly, reducing the size of the operation.
Our focus has shifted to restructuring our fixed cost base by making the organization, even better to respond to reflect changes in demand.
We continue to focus on external spend with our business partners on some mitel support sense is more efficiently.
We're pleased to announce so we've entered into a long term maintenance agreement plus so that one engines, helping us manage through one of the largest items about external spend.
We've also added flexibility in staffing for most of our front line work groups through time off programs.
This added flexibility will service, well, where we need to dollars on capacity and will give us the ability to ramp up quickly when demand returns.
Let's turn insightful to all of our crew members the stepped up to protect the financial future Jetblue.
Given the uncertainty of recovery, we are managing headcount needs in this fluid environment through voluntary programs.
We've already had about 25% about crew members saw that for voluntary time of program will opt out package.
Expect to see these numbers increase as we continue to offer additional voluntary programs.
Our goal has been to make it through this period without further and crew members if it's all possible.
For the cause that probably will support the guests through September on a voluntary programs underway. We believe we have a path to protecting many jobs.
Our crew members willingness to take voluntary auctions speaks very highly of October on the resilience as a team.
The third quarter, we expect total operating expenses declined by nearly 35% year over year in line with capacity adds that responds to demand trends, we saw during the second quarter.
Based upon the reason execution of our structural cost program. We are confident that we will again, succeeding reaching our costs goals.
We believe the I've network actions, coupled with our cost restructuring efforts will help us rebuild our margins.
Moving to slide 14.
In early July we took delivery of one Athree 21, they are taking our fleet to 263 aircraft. We're currently managing the economics of bringing back aircraft into our network has the ability to start retiring some aircraft early.
As we move through recovery, we will continue to evaluate the size and shape of our fleet to support our goal is to reduce cash burn and execute on that what plans to rebuild our margins.
We expect our total capex for Twentytwenty, so being the range of 800 $850 million.
We expect to finance the remaining deliveries this year to sale leasebacks.
We view, our future Capex as an investment to rebuild our margins given the economics of adding newer and more fuel efficient aircraft into our fleet.
We are mindful of the financial commitments talks about kind of order book and we will continue to revisit our capex forecast as we navigate the classes.
Moving to slide 15.
At the end of June our debt to cap by show was 55%, which reflects our recent financing transactions.
Given our current that level, we anticipate cash principal and interest payments through the end of twentytwenty of approximately $130 million per quarter.
We remain committed to working again towards reaching investment grade metrics similar to those that we proudly exhibits is not too long ago.
Over the next couple of years, we expect to approach our capital structure by balancing our goal is paying off balance sheet, while making accretive investments that create value for our stakeholders.
We remain optimistic about the future jetblue.
As in past crises, we believe we can emerge strong was an ally.
We certainly have the best crew members an industry other brands that Chris custom is truly love.
We operate in high value geography, with a low cost ledger model that positions us well for future success.
On behalf of the Jetblue leadership team I want to again, thank all of our crew members as well as our business partners and documented Ansys pool is a tremendous support during the past few months.
We will now take your questions.
Thanks, everyone nor are ready for the question and answer session with analysts. Please go ahead with the instructions.
Thank you, ladies and gentlemen in order to ask the question you'll need to press star one on your telephone and to drive your question. That's the pound key features standby will be compiled acuity roster.
Our first question comes from the line of Jamie Baker JP Morgan Your line is open.
Hey, good morning to the team.
So my first question relates to the pilot deal that was announced at the beginning of the month it appears.
That's the primary impetus from management's perspective was you know.
[noise] being able to two to announce the American relationship.
Partnership, but theyre do appear to be some other smallish tweaks in the deal should we be thinking about any temporary or.
Or even permanent cost reductions or efficiencies or is or is the pilot be will really best viewed as some of that you needed in order to do you know proceed with the American announcement.
Hi, Jamie this is Joanne I'll take that question, Dan first I, just like say our pilots have been great partners over the past several months, particularly given the challenges that the business is facing the work we've done with pilots provides jetblue and level of relief insofar as there are many I'm an hour on schedule requirements.
That have been reduced and we also achieved a level of scope relief on the scope clause in the pilot contract required us to grow and higher strip number of new pilots and obviously in this environment. That's not something that's happening. So there was a level of scope belief in there and then also a level of our commitment to know furlough City ended April.
So we're really pleased with on the partnership over the past few months and on they along with our other work with had been absolutely committed to making jetblue successfully navigate through this crisis, but do you consider this scope component to be the most relevant.
I think they all work together and all were important to both capital into our pilots. Okay, and then Steve could you run down the incremental sources of liquidity remaining.
Would you envision pledging for the loan should you draw it.
The brand was pledged already but you know is there other intellectual property, where we would not encumbered aircraft just just an update in that regard should be helpful. Thank you.
Hi, Good morning, Jamie and thank you for the question our society as a starting point I couldn't be happier with by.
The fact that we came into this crisis was probably the second strongest balance sheet industry and then secondly, the incredible levels of urgency of focus and execution or there's a team has gone through over the last few months in fraught with rise it's harder to $3.7 billion. Since we started the crisis or whether that's a cap.
He is on these sorts of sitting up 55%, which candidly is pretty strong when you realize when you realize that says the the competitive set with regards to additional liquidity sources that we have I would describe this is a saw continued focus which is one we continue to have.
North of a billion dollars of unencumbered assets available to us on the balance sheet and that excludes our loyalty program and also excludes our subsidiaries in jet Blue.
The carries a focus through us will be one as I mentioned or in the prepared remarks will be the Wi Fi.
364 facility that we took out in March and then in terms of the focus of additional liquidity rises one we've got some southern leaseback activity that will isn't the contracts and review at the moment. Secondly, we will continue to use the balance sheet for any additional debt rises depending how we navigate the a the store and then thirdly we.
Working or on a a close a focus with the government on the cause outlined facility or we can see repos that we'll use the loyalty program associated with that ill say parallel passing now in the capital markets just to make sure we'll end up with.
The best return on that investment as we think about liquidity going forward. So that's how I'm thinking about navigating. The next few months any recent third party appraisal of the program loyalty program.
We have we have a supposed to have gone through a that recent appraisal than not being part of Oh work that we've begun to the government and we continue to work through that facility as we go forth.
Thank you very much thank you Jamie.
Your next question.
It's from Duane Pfennigwerth of Evercore ISI Your line is open.
Hey, good morning, Thanks, Thanks for the time.
Just in terms of the the sequential drivers of your cash burn improvement you know high level. It looks like you're planning assumptions call for Opex down less sequentially by about 15 percentage points.
And revenue down last by about 10 percentage points on Capex slightly higher sequentially Threeq versus twoq. So I'm not at Nada question, you need to Jetblue. It's one I've asked most of the airlines what is the driver of of sequential cash burn improvement.
Thank you as to why and good morning office, Alex its Dave here. So first I would say I think the work we've done sequentially on month on month, just as a reminder to everyone. We last March where the cash burn of 18 million or die and we ended June 7.7, so absolutely tremendous progress.
So we've made in terms of having a fixed costs go vote I see fund our variable costs.
And obviously, we saw some revenue recovery in June the biggest thing it's wise I would really focus on the coordination between the finest saving the plumbing sales has been exceptional and obviously in is causing vitamins. We all three totally focused on making sure. The all of a flying cash positive on so is your.
Look at that that's really the so called driver a as the country's focus going forward and this cause active on so I mentioned it serves the thinking about the sequential move from June at 7.7 says they have reaffirmed rising sea freight from seven to nine is candidly is a reflection on the revenue volume.
Vincent I say that because we.
We're looking at sort of sequential capacity growth in Q3 versus Q2 as it was also some of the of what we saw as we took time into that and obviously as results of sequential for policy growth. You also see some slight increase in us of I will fiber cost structure and obviously.
And.
So a strategic and tactical process Joanna Scott in the CMO incredibly focused on making sure that we align the schedule to cash positive flying and say you know the 15% to 20% reduction in a recent reduction our August schedule will.
Shows off in terms of the a the capex side, we have been doing a lot worse on southern lease, but its a little choppy, but I wouldn't suggest it's material when I look at combination of Capex in cost of financing on a quarter to quarter basis, it's relatively flat and so.
It's really a function of the revenue environment coming off the back of June into Q3, or so of marginal or such as operating costs as a so we'll now the guy this the and the Big driver. That's why these range. This Hawaiian between seven to nine that will really be a reflection of the providing revenue volume in that receives.
Now the guys through the quarter.
Okay. Thanks for that and then on intermediate term demand, maybe before Q and into 2021.
What what base line do you think and this is.
A follow up maybe from Jamie's question, what baseline do you think jetblue needs to align its cost structure to.
As we look into it into 2021 relative to 2019, how much smaller do you think beer or wine needs to be or is it simply a hope that the things get better over time, it and certainly appreciate the difficulty of all this question. Thanks. Thanks for your thought it's a it's an excellent questions Ryan it's probably.
One of the saw so three questions. That's supposed to go through my mind than the leadership teams lines as we go through the let me just give you a little bit of a flavor about was planning assumption as we've mentioned Dr. pass the assumption of she's today, a which will be a recession of at least the 45% and as a says.
We will be very nimble and quick sort of think about.
Websites thing from a planning some 0.7 position where in Q4, we're thinking about pricing around two thirds of the schedule.
So that will give you a sense and says the how we so it's got a force.
And obviously that will have its a impacts on so the revenue environment, well us that fast and things about how we leave leave or this year and go forward. It's all about our cost structure on making sure. We sized currently as we said we expect to be a small talia as we I sit tavis.
Well I think about our cost structure.
You know the more relevant cost stretches on cash Sobi type C and I asked of the equation. We currently in a specific tries to fix the cobiz caused this on a cash basis.
70% of costs, including fuel with valuable in about 30% with it.
As we come out of says that there's a smaller business.
Around 60% of our cash cost survival versus 70% three covis. So a whole philosophy as we go forward here is how do we have cost structure.
Back to the sorts of 70% of a the lets he said that we can very clearly manage.
Our cost structure in line with the capacity and ultimately the revenue and that's where it is on three things one the what we've been doing on eliminates now fixed cost structure thinking about things like how support footprint thinking about Ah things, the IC infrastructure or architecture, secondly, which is incredibly important transitioning from.
Cost of valuable we've gone very very safe on our business partner contracts and Bulls eye, but it seems to those contracts and obviously more recently made it difficult decisions and some of our smaller that force to transition from our crew members to outsource Division and then 30 really how moving down a valuable unit costs think about things.
But the maintenance agreements, including the sort of a 2500 still that we've just done.
And secondly.
Hi. Good example of this is our distribution cost structure.
Well with are driving more most diverse distribution and also are driving down our cost of in direct distribution. So I think other top level it getting fixed costs outside any more fixed cost survival going into 2021 understanding postcards off so we're going to be a smaller business. Unlike.
Sure the as much of our cost structure is valuable as possible. So that we can continue to focus on a driving on margins going forward.
Appreciate the thoughts.
That's right.
[noise] next question comes from Catherine We know ran up Goldman Sachs. Your line is open.
Good morning, everyone. Thanks for the time.
Maybe a question on Capex. So some aircraft leasing companies have shared that after an aircraft in 12 months or more Lee you cancel in order and Gallagher <unk> basically no penalty what doesn't mind I guess first do the same conditions in your contact with Airbus and stuck in you know how much flexibility.
He's obviously, if your cap that how you're thinking about that back for a couple of years.
Okay.
Good morning, Casey I heard your question about what's the contract with a bus and how much flexibility going forward, but I'm sorry I.
I didn't hear you, particularly well for the first half of your question could you repeat it plays.
Yeah sure sorry about that can you hear me now, yes, it's much better.
Okay, great. Yeah. So I was just knowing you know some aircraft leasing companies and share that after an aircraft to 12 months or more Lee you can cancel kinda your PDP back the basically no penalty.
So I was just wondering if that's the case if your contract with everybody I know you you've been running late on delivery for a couple of years now so just wondering what the flexibility in your future Capex looks like it and how you're thinking about capex for the next couple of years.
Great question Casey I think the first thing I'd say I think that's still a country in the market dice, you're talking about is ready for timing. So some of the challenges at the 77 masses on some of this stuff the site in the market. I mean, you. Obviously you wouldn't expect me to get his today in terms of any details about contractual arrangements you that bus.
What I would say is the as we've been in this crisis as ever for 20 years, they've been a good partner.
Security since Weve come into this causes says continue to sit side by sides with us or to the to the two where as you remember last quarter, we announced the deferral of $1.3 billion of Capex between last earnings call than 2022.
Obviously, a as you got a little bit further out with regards to the order book I'm not sure that you would expect to have to follow rights or the close of and you all it just generally with between the Oems on the Airlines is this a commercial discussion, but we continue to engage with Airbus again, another good partner.
We all by the conscious about balancing our capex needs.
Cross needs, a the new and improved aircraft that drives 90 or better so surface sustainable lets you from a financial and environmental standpoint, and we got enough balance right and we'll continue to upsize the markets as we navigate the next few months.
Okay, Great and then for my follow up actually fell a bit in the fall if you're doing question. So you know you noted that revenue is the driver better.
Some cash burn and revenue is declining less according to the corner cost will be relatively no less negative year over year accorded a corner. So you know are those top line production masking a better net sales improvement with me on falling off there's something going on with aircraft financing I know you're talking about.
Kelly I'm just trying to.
To better understand that sequential improvement given that the mix. So you know the change in revenue and yeah. There are.
I think that's a single it's like Casey Outsize helps us on so jetblues in a position that we were able to be very nimble I think you know from the competitive earnings calls everybody's aware of wall or what we saw as we navigate to June and think about Japanese geography, a in terms of why we also as part.
Typically pleased with our cash burn that we supposed to came out of June with thinking about geography. It doesn't are continuing to be choppy I think the balance you've got to so I think about is a it's really around gotten our capacity right and as we still so that's why with range. So seven to nine as we supposed to time into QC there.
Because it is a reflection on demand and why we all without variable cost structure I don't really thing from from when you look at where we are and we look out Q3 in Q4, obviously, the Kazakh throws off in Q4, but there's nothing material. That's moving some are from a a cost structure standpoint, except the solar capacity side of things as we saw.
Okay foods, so the reflection of Casper Israeli of products of the capacity that we fly and this other revenue that we saw bringing into the business.
Thank you.
Hi, Good case, you have a good day.
Your next question comes from Dallas, San Ignacio vertical your line is open.
Hi, guys. Thanks for the time.
I just one follow up on what's weighing Encaje. That's you meet your planning for a 45% capacity decline in third quarter, which is a reduction of.
7.3 billion as.
On that reduction you're talking about a 35% offer opex decline, which is about 650 million bucks or nine cents per ask them.
On the reduction this is incredibly strong cost performance.
Your your demonstrating a much more variable cost structure than I would've thought you keep going into the crisis, especially with no furloughs and what I assume is probably higher rent expense in Q3, but.
This also make for a very high hurdle to port capacity back in sequentially and so I'm trying to understand.
How your marginal flight can be cash flow positive as you suggest because you're implying Q3, total RASM and kind of the four and a half cent range and correct me, if I'm wrong, but I'd imagine that earmark horizons or even lower than that.
So if that's the case and if you think nine cents for every asked them that you pull down then why isn't capacity down a lot more versus the 45 or something you're talking about thanks Im sorry for the one question.
No worries are Dilo I'll kick this one off and all the different to such a lot on Scott's they've got any additional thoughts on the revenue environment.
I am very very pleased with the what we've done a from an opex standpoint, I'm actually members of really stepped up and so we've got a tremendous amount of voluntary time off during the quarter or not so to continues to go forward into quarter three I'm not really gives us despite renaissance.
Has that environment, we've been able to not sunny rationalize our business partner spend I continue to push things on a BOE basis as I said in my comments to Dwyane I feel about the company's really got halls of this fixed to variable shift, but the you know things some of them off just thinking about your libraries in essence is.
Very very fixed rates continue to see someone else of each some point coming through again, what continues to happen at a high in terms of the steps that we go through a with regards to our cost to revenue standpoint, I'll hand over to Ah, Joe and I just to say she wants or are they kinda from a revenue standpoint, yeah sure. Thanks.
I think what I would say is you know we're very focused on ensuring our capacity is in line with demand picking up and Steve point about being nimble you know our planning process has become much closer end and we lock our capacity decision. It's just a few months out this is enabling us to really a josh I'm quickly to that changing that changing going.
Manned environment, it's been somewhat disrupted obviously to crew members on the Bhavan unbelievably support has given me I'm current environment, we understand our cash breakeven economics for flight, we will not operate like it or not to cash positive and you know I think back what that's what factoring into what what you're seeing in terms of their numbers.
Well I guess.
Just a pushed back a little bit I mean, if your total RASM.
Four and a half than such as well, which is just the math of what you what you said on revenue and capacity.
Versus last year and.
Foreign absences is clearly below the nine cents right. Some marginal CASM yep nice Empresa marginal CASM you guys were talking about I mean is it that the <unk> you said that the marginal play it actually has higher RASM.
Than the average flight I mean, they I mean I've heard you tell stories like that during during good times, but I guess I just have a hard time, believing that that's the case today that you'd probably the play your capacity and sort of good markets. First then each each incremental market that your anchoring regional frequency that you're adding is likely to be rather than balloon.
For it or is that not the case.
Yeah, Daryl, it's Scott I'll I'll give us when I try here, because I think I know where you're going with this.
And like I think when when Joanna and Steve talk about how we make these incremental decisions and how we're planning versus variable costs I, you know what sort of pick it up a level and think about it as.
He again.
The first piece the governing piece there is the variable breakeven load factor between about 20 and 30%.
The other portion of that has the potential of recapture in a market with multiple frequency. So you know as we plan to network. What we look at is what's the appropriate frequency count what can we actually fly and then as trying to talk about this process. We got to sort of moved closer and has got a couple fail saves and until we plan to schedule.
We then take a scrubber that a couple of weeks out and then we took a scrubber, but a couple of days out.
And you know that allows us to move in and obviously try to combine it canceling combine if necessary that's sort of the tricky part of this is making sure that frequencies were flying and the incremental frequencies in markets makes sense now across our network of course were relatively low frequencies in a lot of places we got one twice a day.
But that's the goal and if you sort of look at the bottom line associated with that you know that allows us to drive a better cash result at the end of the day.
Okay. Thanks, very much appreciate the time.
Next question comes from Helane Becker of Cowen Your line is open.
Thank you very much operator suit. So I appreciate all the information. Thank you very much just sort of a question about moving from long Beach <unk> L.A. acts.
So I guess a driver there was the fact that long beach isn't allowing or didn't allow international flights and you have international opportunities said L.A. acts, which I think you talked about so just kind of wondering if you could talk about the route because because L.A. seems like a very competitive more.
Yeah, I guess im interested in the fact that only acts had better margins is that better margins relative to long beach or relative to the whole network, where maybe you could just talk a little bit about that thank you hi, Atlanta since you and I'll take that one and there's a few reason like July we why we a consolidated long beach and Los Angeles, I think I'd look at it.
There are two and a short term relocating or operation had a long beach has enabled us to consolidate our capacity into a single station. This creates efficiencies and cost savings in the short term and you're correct. Yes, we were disappointed years ago when long beach on when they city Council didn't improve the airport to move forward with a constant facility, thereby I'm not.
How many international flights in long Beach in that was part of our plan a longer term for long beach. So that was absolutely one of the reasons behind consolidated operations in terms of L.A. In this is a really great opportunity for Jetblue. Our transcon flying has performed extremely well Los Angeles Outperforms long Beach.
By quite a wide margin as we think about international we have that opportunity.
In Los Angeles, you should think longer term, obviously for international flying and that's on something that we're really looking forward to and you know the west coast move it allows us to take advantage of produce capacity from our peers in Los Angeles. So, yes, it's a competitive airport, but we compete extremely well against the legacy carriers currently out as I, Los Angeles, and we expect continued to do so.
Moving forward.
And then would you be able to through the American.
Oh I guess a coach here is just on that in the northeast right. It's not going to include Wesco. So you couldn't necessarily hook up with them or Alaska Air out of it won't include Intrawest. It would include flights that touch the New York area. So at JFK L.A. flight Boston at least like when do you covered.
Gotcha and then just for my follow up is there been any movement on the E. One ninetys any decision there.
Hi, align its Steve Hey, good morning, Oh, we continue to US foods, we continue to work through that I mean, it goes back to sort of tied to so a question about the order book and going through obviously, we are expecting us to come out of this causes a small along this does a lot of enabled us to give some sort to potentially.
Thomas the fleet or how many going through the analysis and ER will give us some oh I can give about continued so over the next few months and you know once we make any specific decisions as we go through this than a well go forth.
Thank you.
Next question comes from Brandon Oglenski of Barclays. Your line is open.
Hey, good morning, everyone and thanks for taking my question.
Steve I, it's come back to that chain of questions, but I guess, you know should investors expect you know that jetblue should be managing to earnings outcomes before we get any sort of you know cure to this virus and you know that to some other airline management seems too, but as that using the right outcome for jetblue to manage to you know cutting costs.
So much with revenue down you know where it is today or are you, making longer term plans to get that margin recovery. Once we get things quote unquote back to normal.
Hi, Brian and good morning, a number one focus is cash.
Cash cash cash cash cash as you would expect it to be in this environment and so the point, we made a there in terms of the coordination with flying the capacity, which is cash positive. How did you can imagine in the cause that environment.
With a high level of our cost structure being fixed or the work we're doing a star outlined a is really about that.
But if you think about managing the short term I've done my guys in the longer term, we all resetting our cost structure because as you come out of this is a smaller airline not only do you have to have a small the cost structure, but in order to preserve cash in the short term unrestricted.
For the margins in the longer term, it's pivoting the fixed cost to the fiber cost structure. So I don't view. This is like one or the other there's a so a complete alignment with the short term for long time I'm not so what you're saying that the leadership team a jet blue do is I conserve cash and as I've said earlier.
Being very very pleased with our sequential improvement in the cash burn in the short term, but we're also setting ourselves up for success as we come out the other side of the crisis to my show that strategically really good place with our margins. So then also not leave it has a balance sheet as robin alluded to in his prepared comments.
So that's I suppose it's not one or the other but in the short term were absolutely focused on cost.
Yes, I definitely appreciate that response and you know maybe joining it can you just talked to a spot where do you see check with it a smaller size of the networks and the flexibility you maybe have with some of your I'm encumbered assets you know how do you get to a smaller jetblue what are you willing to share today.
Yeah, I mean, I think what I will say is there remains a lot of uncertainty around the timing of recovery and so we talked at the last earnings call that planning to an l. shaped recovery that assumes a slow yet steady ramp up of revenue through the rest of the year that said if you look toward 21, you know we're planning for a wide range of assumptions right now.
Our focus is entirely on building customer confidence in flying again remaining nimble as capacity I need to change as Steve mentioned getting cost out of the business. So shifting you know fixed to variable our resource plan around crew members, reducing our capital spending you know we feel that.
We're well positioned for recovery when it does happen a trusted brand superior product a much lower cost structure. So we're planning for a variety of scenarios I'm not gonna get into how much smaller you know how much smaller we are I mean for Q3, we expect revenue to be down the 80% Q4, we're looking at 60% to 70%, but this is all.
What we are planning currently and it's an incredibly volatile environment and things could change, which is why I flip back to Steve and say, we're focused on cash preservation at the moment.
Thank you.
All right next question comes from CVC enough Raymond James Your line is open.
Hey, good morning, everyone.
Just on the Capex I realize things are very slow Ed, but I was wondering what a realistic range might be for 2021.
Hi, Savi good morning.
We've we've talked about I mean, we haven't gone as you can imagine CPT, yet, but we've said so but that is no. There's obviously a headline.
Capex number, but we've also got us and goodbye cash basis, and I think it's probably useful just associated with you how effective with the as you think about the so a cash in the short term. So you know I don't think about Q4 this year.
There is obviously the headline capex number that we've talked about but because of the Doc services in the success. We've had we saw that lease spots and thinking about the order book, you're running so sitting about 100 250 million.
I'll leave the business from a cash standpoint in Q4, so when we pivot to Q2 2021, and we think about capex or other macro level. It's its spicy silver billion, but we all obviously going to be timing attention to what I saw a capex profile looks like because we.
Now the guy the recovery on and we see what the next few months bank.
That makes sense and then just on the voluntary program I Wonder if he could provide a little bit more detail you know, particularly what portion of the 25% just related to kind of opt outs, where it is time Austin and also the time off like how long that goes through that that you have that flexibility to to work with.
Hey, Savi, it's a robyn I'll I'll take that and a good morning.
I think I'm, just a comment on philosophy before I get into some of the details you know what we really try to do is a line a little thing philosophy that maybe we're just sort of a uncertainty that we see in terms of the future you know I think that we keep using the word choppy or it is.
Ics, we can see changes in the course of two or three weeks and so just as we need to take a costs down and in an environment, where the demand isn't that we also need to get a moved quickly to capture it when it when you did that and a you know that away. Some slickers I mean, our vacations business for example over the long.
Seven days has sold as many vacations as they did in the same seven days as they did last year now the timing was shifted so it was sort of left in August than we would've expected and so we have to remain extremely flexible in this environment. So the way we approached it we said that we know we're gonna be smaller we know that there's a number of a role.
It was here that we can you know take out of the business permanently and so we had a number of long term accounts. We also created long term time all programs that varied for most work groups are between a there was this mine in the 12 month option.
And we had a significant amount of take up a in a in other work groups them in like imply a we've created a time of programs that vary between one with a one month and my mum and so what we've really tried to do you know didn't the operation climbing team that people team to resulting theme or kind of monitoring that and then as we get close.
So we're in and we have line of sight on <unk>, a schedule till two or three months out. We then roll out more short term programs to kind of a if you like for like the got we have between what the schedule is calling for and the amount of interest we've had in uptown longer term program. So that 25% that we shared with you today.
The combination of Optel, a longtime time off program and also some of the I should probably more programs and work with what we've got them. It excludes.
A number of short term programs that we haven't gone out with yet for the last quarter of the yeah. So that number actually will will go higher I know a quote I will you gave them a law school was when we put them the programs out in the summer we had 60% about crew members I take some form of time off.
Either short time, all along so we're not sharing ace ER specific numbers because it's constantly influx yeah. We have programs going out with the time bought a bottom line. If you've already had 25 to 10 out on medium long time, an opt out program and that excludes additional medium time programs and Showtime pro.
Ground that we will be going out with into the future.
I appreciate the detail. Thank you.
Okay. Next question comes from two <unk> been idea of Stifel. Your line is open.
Thanks. Good morning sees is a 160 million from the Barclays point purchase is that all the cash you're getting from Barclays, whereas that kind of a combination of it in advance purchase plus the normal cash transactions hi, Good morning, Jos I was just the advanced transaction. So obviously.
If we sort of have to the the low teens. The study state little to activity that goes on but that was a one all sorts of liquidity transaction or there about security back in April.
Okay. That's the second transaction a there was 150 million in first quarter. That's the only one no you see only once a week we executed it back in April so 150 money.
Got it rather than in an environment, where an industry as capital intensive as airlines in one with margins is relatively low as they are one where the revenue environment is structurally lower for a multiyear period why should investors assume that there will be a period of consolidation.
And on the other side of this as there has been in prior cycles. Thank you [noise].
No Oh, Great question, then obviously I can't tell what investors, what investors should or shouldn't assume but what I will say is I think the different. This time is that was the severity of this event is clearly more than we've ever seen certainly in my memory of this industry that.
I was quite a way back you know every every U.S. and line came into this with a strong balance sheet total liquidity position and so you know our ability I think to whether this I think is is significant and you know I think you know as we as we count as we come out of this I I'm still optimistic that.
In the leisure markets and in the V.F. all markets most of which is what we do a and when I think about the routes that we announced you know most of that was just sort of acknowledging I think some of the business line. We do is likely to stay suppressed for a while to moving not more into leisure MBF. Our markets you know I'm still confident.
That a significant amount about will recover by 2021, we saw strong and quick recovery as we were in June and it was really I'd be surprised again once the case count went up once the corn team came in and so I think once case count get under control when people get more comfort comfort either with a vaccine or bad with that.
If you take so.
Sort of herd immunity that may even exist in some places off the wall. Yeah, I think that demand is going to its going to come back quickly and so I think that to as we exit this would be focusing on reducing our cost structure, improving our balance sheet delevering, but but I think you know our abilities and industry over the next two or three years to recover from this.
Should be should be pretty should be pretty strong, especially for those of us.
Focused on on the leisure side and I think I'm excited about our partnership with American Airlines, because I think it's a very innovative way for us to grow organically, what we know that what jetblue dollars is bring low fives and competition to more markets, but we sometimes like scalp and.
And I think in many ways. This gives us the ability to continue to do what we do really well, but also a partner with American to build some of the benefits of a a larger network.
Thank you.
Next question comes from Michael smell kind of you'd be yes. Your line is open.
Thanks, Good morning, maybe just the first one in particular or sorry, Joes question why should investors not assume that airlines are getting more than enough liquidity ample liquidity different than prior downturns and could this be a situation where.
M&A and natural restructuring is it doesn't take place and we're in a prolonged fair worst situation.
So miles or so so picked up a I think from a liquidity standpoint, we are just rising cash to weather. The storm I I think the uncertainty around this as we still see you don't want anyone beans, so to provide the asleep at the well and so we've all gone.
How are you know jetblue is going out and done some significant work around making sure we saw the balance sheet and the cash to weather. The storm. So it's nothing to do with the perspective in terms of I'm and I just so for the Robbins perspective, it's really just about making sure we've got the cash.
To weather the storm got to do the size of this and you know we will be quick as feasibly as possible to start piling up back to get ourselves back to sort of the position we work because of its so I don't see this cash position has anything beyond protecting the balance sheets and the viability of dialogue.
In the U.S. sector.
Okay, and then the follow up I'm on the Delta or seven to 9 million burn per day and getting to breakeven should we think there but that is a formulaic from the top line and the incremental or accretion from revenue or to kind of the conversation around cost how much more is left from a cost side.
Lotus seven to 9 million burn.
It's a good question so on the seven to nine basis.
Okay, we've given sorts of a a perspective around.
The capacity why we've said like or at least to sort of 45% reduction. It's a combination of the two we've seen a incredibly focused as you can imagine miles are not cost structure.
But it is gonna be a question about what the providing revenue environment is obviously I have a crystal ball at this point, but I think the seven to nine like based on the what we've done on our fiber cost structure in cash breakeven load factors give us a good range to look out for Q3 on the providing better.
You violent world to tell me, whether at the top into that range or towards the bottom about lunch.
Alright, thank you.
Thanks Mall.
Next question comes from my opinions I get the CIT Bank. Your line is open.
Oh, Yeah, Hey, good morning, everyone. Joanna question for you I'm just on the American agreement you did talk about you know code sharing and you know connections and the like I know it's been reported in the press that there was I'm also the transaction would include eight slots swap then there's sort of differing reports out there about.
What that actually in town I'm not sure if that's laguardia and Kennedy or if that's gates decent Newark, any any color that you can share on that.
Yeah, that's got to a step in and answer that question.
[laughter]. Thanks. Thanks for the question. So you know as we continue to work through this you know we've talked.
A bit about what we're gonna do you know I think there's a first part of this is either that there's obviously for US. We're excited about this because there's a ton of benefit right. There's both fares. This great service, it's going to come to new markets and you know as we look at slots and we if we look at how we move forward.
You know American has talked about a you know things like Laguardia, where they're going to be I, removing 50 seat airplanes that creates some room for jetblue a at laguardia spots are freed up.
You know there's lots of potential for us to look at other opportunities certainly in the afternoon at JFK I'm you know not only does that allow our transcon network to come in and arrive and feed Americans long haul network.
But but it also brings competition some of those long haul market. So again you know we're we're working through this right now we we obviously or talking to the regulators will be respectful I want to be respectful of their ability to to look at this but.
Again I think.
We look at the benefits here, we look at the ability to move forward and recover faster because of this and we're certainly excited about it.
Great and then just the second question and this is either Joanna or Robyn I.
I believe I think it was a day or two ago. It looks like the house is proposing an extension of the P.S.P. and I'm curious you know where as as a company. You. You stand you know you know acknowledging the fact that it looks like you know you already have a deal with your pilots that takes you into next year. So it looks like you're you're protected there and and you know if.
Others its competitors in the industry do take up an extension of the P.S.P. are you as a company compelled for competitive reasons to do the same knowing that there could be strings attached right. You know more debt, maybe maybe warrant dilution. So I sort of a multipart question, but sort of where you stand as a company. Thank you.
Yeah, I'll take the a I'll take the case or what I'll call cast to I'm not sure. That's the technical time of it but you know what I mean, yeah, I I think that the weight, where I think about it. It has won say the industry I'm kind of two is about jobs.
You know, we we have a planning assumption going into Q4, we have some planning assumptions going into next year as Joanna mentioned, you know, there's a high level of uncertainty around that there was a team we're having to play a lot of scenarios and you know one of the hardest things climbing to scale up or down is our people and so you know we make certain assumption.
And then we push hard on voluntary program, but voluntary programs will only get you snowfall and if you you know if we take a view and some of those sort of more pessimistic outcomes as to where demand could go is you got to a point, where it's hard to bridge that gap without considering furloughs and so you know we're confident right now based on what we.
See in front of us over the next few months out we can get bad through voluntary means, but there's a high level of uncertainty woman I think you know you can move that across the industry and some airlines, who perhaps I've a different business mix to US you know look at that maybe kind of see even more concerning food costs and so when we look at as an industry, there's no doubt that occur.
As to a would be I significant game changer in protecting jobs and give them the industry more trying to recover and so you know that's how I think about it I mean, we can certainly manage through this is as jetblue, but as an industry, but I think the ability to protect us.
Significant number of jobs, if cash to what happened I think is a is that and if we think about you know the alternative evolve or furloughs. All other things you know not to have they cost and so that's how I think about it no. We'll see how it plays out certainly is a CAD two is offered on similar.
And as I was CAD, one Oh, I think a you know that would be a of interest, but let's just see how it plays out I think this is going to be very difficult negotiations in the house and in the Senate and with the administration and.
We'll see where we sit at the end of it.
Very good thanks, Robyn thanks, everyone.
All right. That's concludes our second quarter 2020 conference call. Thanks for joining us have a great that.
And again that will conclude today's conference. Thank you for your participation.
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