Q4 2021 JetBlue Airways Corp Earnings Call
Airline.
As we look ahead, we believe jetblue is positioned extremely well for future success as many of our investments come to fruition in 2022, and we remain well on track to restoring our earnings power.
We have a great team of crew members and I am confident they will continue to deliver the best service and products in the industry, while inspiring humanity.
Let's turn now to slide four in the deck.
For the fourth quarter, we reported an adjusted loss per share of 36.
While on the chrome has temporarily weighed on demand in the very near term, we expect sequential month on month improvement through the quarter ultimately returning to sustained profitability in the spring.
And beyond <unk>.
In fact, if it was not for Omnicom. We believe we would have generated higher revenue this quarter than in the first quarter of 2019.
Like to highlight several key achievements in 2021 enabled by the outstanding work of our crew members. We generated revenue close to 2019 levels. This summer outperforming the nine largest U S airlines aided by the solid execution of our commercial initiatives and we turned a profit in the months of July and August as a result.
We put a solid plan in place to deliver low single digit CASM ex.
Growth in 2022 versus 2019, methodically identifying savings to help offset significant industry cost headwinds and our investments in the NII.
You'll recall that we were quick to identify and call out these cost pressures in the middle of last year, and we will continue to be extremely transparent with all of you on the trajectory of a recovery.
We brought much needed competition and customer choice to the northeast with our northeast Alliance. We also disrupted the trans Atlantic market with the launch of our service to London, and our award winning products and services.
We now have a greatly enhanced network with stronger relevance to all customers both business and leisure as we come out of the pandemic.
Turning to 2022, we look forward to continuing to execute on our plan to create value for all of our stakeholders our customers. Our crew members our owners and our communities with our primary focus remaining on margin.
Moving to slide five.
The recent surge in Covid case counts nationwide, particularly here in the northeast underscores the need to remain nimble and adjust capacity quickly.
However, with respect to Omnicom, we are confident the worst is behind us and evidenced by recent case count trends in New York City Plummeting. We believe demand is poised to reaccelerate through the quarter into a robust spring and peak summer travel season.
Similar to the setup around this time last year.
And we're already seeing demand rebound strongly with net revenue builds are roughly 30% compared to the first week of January .
Consequently, while we do not expect to be pre tax profitable in Q1, we expect the month of March there'd be much stronger than January and February I firmly believe that 2022 will prove to be a transformational year for jetblue structural profitability as we look to restore our earnings power and create value for us shareholders.
And we plan to achieve this by pulling meaningful commercial levels, keeping a relentless focus on costs and maintaining our measured approach to capital allocation.
Despite all the near term volatility we plan to leverage our enhanced network enabled by our northeast alliance to unlock further value in our key geographies, while promoting robust competition.
And we plan to bolster our relevance and competition in the region, even more with the expansion of London Service from New York and the exciting addition of Boston Trans Atlantic Service later this year as well.
I'm also pleased with the ongoing execution of our other commercial initiatives, including fare options and our true Blue loyalty program, both of which continue to be important drivers of revenue growth.
On the cost front, we saw meaningful pressure across the industry in 2021 as the recovery took hold the non linear recovery emphasizes our need to double down on cost control as <unk> will discuss I believe our focus on driving tangible productivity benefits will help ensure we can become an even more efficient enterprise.
We have also demonstrated our commitment to repairing our balance sheet, having paid down approximately $1 9 billion of debt this year.
We will continue to be measured and balanced in our capital allocation to drive further shareholder value over the coming years.
Let's move now to slide six.
Today, I'd like to spend a minute highlighting the tremendous momentum from our Jetblue travel products subsidiary.
Back in 2018.
We announced our plan to deliver $100 million in run rate EBIT and we're marching towards our goal.
21 was a banner year with record <unk> revenue, including 50% commissions revenue growth versus 2019, and $45 million and EBIT contribution.
Importantly, we saw growth in all of our offerings across the GTP portfolio, which is an exceptional result, just considering how challenging this period has been for aviation.
We have also been able to leverage Jetblue, CT DNA of creating better customer experiences backed by our exceptional service.
A few accomplishments to highlight include enhanced flight and hotel vacation packages with accelerated take rates to key Caribbean destination.
The long tail of Paisley.
Post travel as a post purchase platform to add more ancillary components, such as car rentals and additional updates to our travel insurance offering.
Im extremely proud of the ongoing work from the JCB team and I'm optimistic as to how this business will scale up as demand stabilizes and we build customer awareness, putting us firmly on the path to reaching a $100 million EBIT run rate this year.
Turning to slide seven.
Mitigating risk to ensure the long term sustainability of our business is southern imperative for Jetblue and this is why we are at the forefront of ESG.
Our efforts, where we can have the most positive measurable impact.
Last year, Jetblue, along with our venture capital.
Subsidiary Jetblue technology ventures from the aviation climate Task Force with nine other airlines and the Boston Consulting group.
Together, we plan to invest in and facilitate the development of emerging technologies to Decarbonize aviation.
And earlier this month, we launched our sustainable travel partners program, enabling our corporate customers to play a direct role in this the sustainability of that business travel by purchasing SaaS credits.
We're also delivering on our commitment to our crew members our greatest asset by creating new development opportunities.
Growing our talent pipeline is critical to the sustainability of our long term success.
And our Gateway direct program, which provides a path to pilot in tech technical operations careers for current crew members women represent roughly 40% of our first group of selected candidates far exceeding the industry average.
And then our gateway select program open to all aspiring to become pilots people of color represent more than 44% of our classes compared to roughly 10% of the industry pilots in the U S.
And now we are expanding these programs to the families of all of our crew members.
Thanks again to our crew members, we have so much to look forward to and so much to do in 2022 and beyond as we work to make Jetblue, an even better travel company for our customers crew members and owners and with that over to you Joanna.
Thank you Robyn I'd also like to thank our crew members for living our values and their commitment to our customers and each other despite.
Despite all of the challenges of the past year, including the most recent COVID-19 wave across the country disrupting operations. During the holidays you have continued to step up and I cannot be more excited for the future thats being shaped by the best people in the industry.
Turning to slide nine during.
During the fourth quarter, our revenue declined nine 7% year over too.
Driven by strong holiday peaks.
Within range of our initial assumption despite a late quarter impact from the omicron wave the surgeon case counts disproportionately impacted the northeast hitting New York, particularly hard driving increased customer cancellations and booking softness during the most significant revenue weeks of the quarter and also led to some crew related cancel.
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The abrupt tightening of international travel restrictions starting in early December also temporarily dampened the momentum in leisure bookings.
Despite all these challenges our underlying revenue performance was very strong and this keeps us optimistic about the future as we continue to ramp up hiring efforts towards a fully staffed operation.
This is an essential prerequisite to our long term performance.
And just might be omicron, Serge we were extremely pleased with the strength of our mint cabin, which outperforms during the holidays, even when compared to pre pandemic levels. We expect premium leisure to continue to be a source of strength going forward and one that our business model is ideally positioned for.
For the first quarter of 2022, we expect revenue to decrease between 11% and 16% year over three.
This sequential slowdown reflects the large negative impact from omicron on Q1 demand, however trends have largely stabilized and are improving across all geographies.
As quickly as the omicron wave swept through the northeast we are seeing cases rapidly decline and we expect sequential month on month improvement leading to a profitable Q2, and a very strong summer peak even.
Even with the Delta in Omicron variants are underlying performance during the holiday and peak travel periods demonstrates our ability to generate revenue.
We are also very encouraged by our <unk> ATP vacations bookings, having rebounded last week to over three times. The revenue we saw four weeks ago, which we view as a leading indicator as we look ahead.
Our revenue performance continues to be underpinned by our various unique commercial initiatives.
We've had an outstanding milestone with our northeast Alliance with American Airlines with a greatly enhanced network reciprocal elite loyalty benefits and accelerated growth that of all yet to be fully rolled out we reached $100 million and codeshare revenue generated by the alliance in its early stages.
We are bringing sorely needed competition and growth with low fares in the region and creating economic benefit with thousands of new jobs.
As a proof point since the launch of the NEA, we announced the largest expansion of our network in the past 15 years with 99, New Jetblue cities and 32, new routes. This would not be possible without this alliance.
Together, we've added over 50, new routes, including 19 international flights.
Business travel may have been pushed out further with this latest wave we see a strong business travel recovery on the horizon for this region and we expect to capture an increasing share of this tremendously valuable market as we stand up a true third competitor in the region and offer business travelers additional choice with a fabulous travel experience and.
Low fares on Jetblue.
Our team has also expanded our portfolio of partners, allowing jetblue to broaden its reach and serve more customers with more options. In addition, we bolstered our codeshare with Iceland Air to <unk> in Europe . We also grew our codeshare with air Lingus, giving customers the ability to book flights to Dublin, and Shannon from JFK and Boston through <unk>.
Lynn.
Our box fare options offering has driven a step function improvement in our revenue base in excess of two points in the fourth quarter. The buy up right to the Blue fare was roughly 10 points higher than in the third quarter, our customers continue to find value in our products across all categories. As we continue to offer competitive fares.
And on the loyalty front, we took steps to further evolve our program building on a busy year for our team. In addition to introducing reciprocal elite benefits for Jetblue and American customers, We recently announced new mosaic benefits for 2022 to reward our most loyal customers, we introduced a new tier with an all new mosaic plus program that include.
Mint upgrades the most widely requested perk from our loyal mosaic customers.
And our mosaic customers will now enjoy even more space seat parks Heathrow Express upgrades and more as I've said on prior calls we are still in the early innings of our loyalty evolution and look forward to continuing to grow this meaningful contributor to our business.
Turning to capacity on slide 10.
During the fourth quarter, our capacity declined 5% year over too for.
For the first quarter of 2022, we expect capacity to range between a decrease of 1% to an increase of 2% year over three as the demand recovery regains steam following the temporary setback tied to the omicron variant.
We will continue to be nimble and react to the environment and this capacity guide is five points lower than our planned before omicron.
That being said, we expect demand to accelerate throughout the year and we are positioning jetblue to serve more customers than ever this year.
For the full year 2022, we are planning to grow capacity between 11% and 15% versus 2019, as we bring aircraft utilization back towards pre pandemic levels and take delivery of new aircraft, while retaining flexibility.
Over three quarters of our 2022 growth is planned to be deployed in the northeast as we ramp up the NEA and deliver better service to a wider range of destinations we.
We believe corporate travel will recover in a non linear path similar to the shape of leisure demand.
This past quarter, we were encouraged to see corporate bookings recover to roughly half of 2019 levels. Prior to the onset of the latest wave compared to approximately one third at the start of the quarter.
And through the NDA, we intend to gain a larger share of business travel as we are able to offer an expansive network robust schedule as well as a superior product and service.
On surveys and conversations with our corporate customers, we expect business travel to accelerate in Q2 and beyond.
Throughout the year, we will remain nimble and tactical with capacity as we serve the growing travel needs of our customers and deliver the jetblue experience.
Again, a huge thank you to our crew members I know, it's not been easy, but we are positioned for a strong year as we restore earnings in 2022 and beyond now I will turn the call over to you our solar.
Thanks, Joanna I'd also like to thank our amazing crew members for continuing to deliver the experience that gets our customers coming back and keeps our brand is strong we have an incredibly passionate team who are out there delivering every day. Despite the many challenges we face in this industry the dedication to our company.
And our customers is a key reason why we're so confident in our long term future.
I'll start on slide 12, with a brief overview of our financial results for the quarter.
Revenue was $1 8 billion down nine 7% year over too.
Cost per available seat mile was up 14, 4% year over too.
CASM ex fuel was up $16 three year over to adjusted EBITDA was $31 million.
GAAP loss per share was <unk> 40.
And adjusted loss per share was <unk> 36.
It is important to note that if not for OMA crime, we would've hit the better end or exceeded our original revenue unit costs and EBITDA assumptions for the quarter.
For the first quarter of 2022, we are forecasting a pre tax law. However, we're confident that we're on a path to sequential pre tax margin improvement with sustained profitability in the second quarter and beyond.
We're encouraged by economic forecasts that point to a strong macro backdrop for 2022, and we expect to achieve greater operating leverage as we grow revenue, while continuing to improve our unit cost performance.
Turning to slide 13.
We believe we are well on track to building back our margins through a solid plan to produce strong revenue growth and maintain a competitive cost structure ultimately creating value for our owners given the non linear recovery will continue to be nimble in managing the business through the lens of margin.
During the fourth quarter CASM ex fuel increased 16, 3% versus 2019, consistent with the industry. Our cost performance was impacted by incremental incentives and premium pay tied to the surge in case counts and the resulting operational impact worth approximately two points.
CASM ex fuel in the quarter.
Our fourth quarter costs also exclude a bonus related to the ratification of our first five year contract for our in flight crew members with GW you were.
We are pleased that we have finally reached an agreement.
For the first quarter of 2022, we expect CASM ex fuel to increase between 13% to 15% year over three.
Excluding the impact of short term headwinds such as incentives and premium pay worth roughly three points as well as rents and landing fees that we covered on prior calls we estimate our first quarter CASM ex fuel would be up 8% to 10% year over three.
Moving to slide 14.
For the full year 2022, we expect CASM ex fuel to increase in the range of 1% to 5% versus 2019.
We expect elevated unit cost in the first half followed by a meaningful improvement in the second half of the year as we plan for our network operation and aircraft utilization to settle into a new normal with optimal staffing levels, along with the ramp of our planned cost initiatives.
As a reminder, our full year CASM ex fuel outlook includes our maintenance headwind of roughly two points in northeast Alliance investments worth two to four points.
We have established a comprehensive plan to help us achieve our cough cold.
This includes productivity initiatives for both our frontline and support center crew members collectively worth $60 million in annualized savings in 2022 to help offset wage increases.
In addition, we now expect to benefit from technology investments, which we made throughout the pandemic by improving efficiencies and streamlining processes through better data leverage we continue to maintain our discipline in managing business partner needs through sourcing initiatives and tight controls on discretionary spending.
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Our teams have also identified solutions to cost effectively maintain our aging fleet and as we continue to onboard new crew members to support future growth, we expect to gain meaningful efficiencies as we optimize staffing in our operation in addition to benefiting from Genuity.
Nearly 20% of our crew members have been with us for less than two years.
Our teams continue to work tirelessly in executing our plan to make our cost structure more competitive and positioning jetblue for long term value creation.
Keeping our costs low is foundational to our success and we are confident about our plan that will drive unit cost.
Turning to capital allocation on slide 15, we.
We closed 2021 with a healthy liquidity balance with unrestricted cash and short term investments of $2 8 billion or.
Or 35% of 2019 revenue.
During the fourth quarter.
Paid down approximately $120 million of debt, which included approximately $20 million in prepayments.
For the full year, we have paid a total of approximately $1 9 billion of debt.
I'm proud of the team for this tremendous achievement.
Our adjusted debt to cap ratio ended the ended the year at 53% and our balance sheet continues to be among the strongest in the industry.
For the full year 2022, our Capex forecast remains at approximately $1 billion, consisting mostly of aircraft spend which we intend to fund with cash.
We're thrilled to be adding next generation fuel efficient aircraft into our fleet, which is fundamental to our path to generating long term earnings growth.
We will continue our balanced approach to capital allocation to drive shareholder value and we remain absolutely committed to returning our balance sheet to investment grade credit metrics.
I'll close with another thank you to all of our crew members.
We are approaching the third year of the pandemic, we are firmly on track to execute our cost plan grow our earnings power and create value for all of our stakeholders.
With that we will now take your questions.
Thanks, everyone. Sarah we're now ready for the question and answer session with the analysts. Please go ahead with the instructions.
Thank you Sir as a reminder to ask a question you will need to press star one on your telephone to retry question brushed around key.
Please standby, while we compile the Q&A roster.
Our first question comes from Mike Lindenberg with Deutsche Bank. Your line is open.
Oh, Hey.
Good morning, everyone.
I guess Joanna the $100 million of Codeshare revenue that you identified from the NDA is that is that cumulative or was that for the quarter and how should we think about the run rate of that like annually.
What's the magnitude where does that go. Thank you, yes. Thanks, Mike.
You should think of that as a cumulative and I can say that we haven't gone into a great detail in terms of what we think the future path is here will give you I think it's more insight as we move through Covid, but it will ramp up significantly in the coming years.
Okay Grill in the very early stages of of the NDA.
Okay, Great. That's helpful. And then just Robin on just kind of the ESG initiatives I think what was it in.
2020, what you were the first major carrier to become carbon neutral neutral domestically and then I think in 2021, you added the London sites for.
For 2022 are you are you planning carbon neutrality.
100% of your system, how have you come out with sort of what your goal is for this year. Thank you.
Yeah. Thanks, Mike Good morning, Yes.
Right now our position is.
Net carbon zero by 2040, which is about Oh no about his 10 years ahead of the industry.
And right now.
When we think about the challenges around climate, which are very real and airlines really need to lead in this area.
For both the short and the long term.
So right now in terms of some of the shorter term initiatives that we're focused on we're very focused on continuing to build the book of our sustainable aviation fuel deals that's very important.
We've talked about before about the electrification of some of our ground equipment, we're going through a big fleet replacement as you know in terms of.
New airplanes coming in there was a lot more fuel efficient and whilst we have delayed the retirement of our one month of airplanes. That's something obviously, we still have pending in the future.
Future and then finally as we come out of Covid and traffic ramps are really working with the FAA ITC to use a lot of these more fuel efficient approaches that we've been working on because there will be significant savings that we estimate in the U S potentially up to 6% to 8%.
Fuel.
Albany admission reductions.
With a more efficient air traffic control system and as traffic comes back that's going to get more important.
Okay. Okay very good thank you.
Our next question comes from Dan Mckenzie with Seaport Global Your line is open.
Hi, good morning. Thanks.
You guys alluded to strong demand trends in the script here and Dave I am just wondering if you can comment a little bit if you could elaborate a little bit further on what the dashboards, saying about pent up demand from here and I'm. Just wondering if you can help us understand how does it how does it compare to what you've seen historically are there any demographic demographic or what.
Factors that might cause it to be different this time.
And I just wonder if you can elaborate a little bit more.
Good morning, Dan. Thanks for the question and as noted we are seeing very positive revenue momentum throughout Q4 seen that both in the peaks of the holiday travel as well as with our business customers, which we're recovering pretty steadily throughout the quarter and we're absolutely seeing signs of pent up demand as.
As we recover from the pandemic probably the biggest example is the New York City, The London Route where we saw our.
Revenue and demand jumped five times in the quarter opened last fall. It went from a market that was sort of behind initial forecast because of travel restrictions to right back on track.
Also seen as I mentioned earlier about a 30 point improvement just in the last three weeks here for revenue. So a very quick snapback after omnicom.
Faster than what we saw last year with previous waves, where where it took maybe six months or so to improved 50 points. So we're seeing the cycles accelerate more quickly.
And then there's just other indicators that consumer spending is healthier sort of on a historical basis, that's going to go up after the last couple of Big crisis is.
The GDP growth were seeing now the excess customer savings.
We are spending in the other categories and even things like New York City rent snapping back pretty quickly all seem to indicate real strength for the customer and pent up demand that wasn't there in the past. So we've seen good revenue momentum and we expect to continue seeing that throughout 2022.
Yes, very good.
And then second question here going back to the Powerpoint presentation, restoring earnings and margins beyond 2019 levels should that be interpreted as a restoration of the $2 50 to $3 EPS target that Jetblue previously had for 2020.
And as we kind of think about that the restoration of earnings should we be thinking about 2023 is a transition year as well or.
As this is the glide path.
More smooth as you kind of as you kind of think about restoring the company.
Dan I'll take that and good morning, hope you're doing well.
And no I mean, I think that's very important I mean, we.
I think one of the challenges that this industry industry has continued to face as witnessed by what we've just went through with the latest wave has.
So much about this we have not been able to control.
What we do know and Dave I think gave some very good data points is that every time. We go through this recovery snaps back quicker. So on the basis that as we look ahead for the rest of the year into next year.
There is not something that is going to get troubled by future waves. We have incredible revenue momentum I mean, we've got the proof points of what we were able to deliver last year in the peak we've got the.
So really good momentum that we sold before the latest wave at the end of the year. We got the fact that revenue in the first quarter. This year would have been greater than 2019, if it wasn't the wipes so tremendous flow revenue momentum and then overlay order revenue initiatives, which continue to perform extremely well, whether that's true blue.
Fare options Jetblue travel products.
Some of the Codeshare revenue around the NDA.
And then without laser like focused on cost and we were making great progress as we came into 2020 a lot of the.
What are what we've all seen in the last two years really relate to the fact that our business was fundamentally disrupted.
A lot of the.
Flying was stopped.
Really sort of we've been in recovery mode, but as we look ahead.
Laser focus on cost control, we know that's extremely important for our ability to drive superior margins and so yes with the revenue momentum and are focused on cost.
Absolutely and we will be in a position not to just restore those earnings to $2 50 to $3, but too.
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That's terrific. Thanks for the time you guys.
The next question comes from Duane <unk> with Evercore. Your line is open.
Hey, Thank you.
On the full year capacity of 11% to 15.
Starting from flat in <unk> can.
Can you talk about the components of that growth.
How much is Europe .
How much is stage engage.
And any help you can give us with the cadence. So for example, as we think about <unk>.
As in your planning cycle.
Big of a step up as it into <unk>.
Yeah, Thanks, Duane I'll take that and then I'll flip it to Dave for any additional color. So I think you should think of it as sort of a slow and steady ramp up through the year and with summer obviously being what we're focused on given our performance from last summer specifically, we need to be in a position to take advantage of what we see will be a tremendous pent up demand.
Through that peak period just.
If you recall, we actually had the strongest revenue performance last summer of any U S carrier and so we feel that we can absolutely.
Duplicate that performance this summer, particularly given leisure and leisure has led the way as you know we performed extremely strong in that area. We've also got the NEA ramping up contributing to about three quarters of the capacity growth that you are seeing.
We'll be on track for a record setting year in New York with 300 departures out of JFK and Laguardia combined so very excited about what we're seeing maybe just quickly on the utilization front as well the capacity ramp up we think will be quite efficient and now our utilization is still down 10% and we will get much closer to.
2019 levels as we step into the rest of the year and Dave maybe a bit on stage engage.
Sure. Thanks, the only color I'd provide as mentioned our gauge is up for seats per departure is up versus two years ago. As we brought in 371, new deliveries and as we have restyled <unk> hundred 20 fleet and added 12 more seats. So feeling good about that efficient flying last piece too just on the ramp up of the capacity through the year.
Joanna noted it's fairly smooth it is but keep in mind that with the five point capacity pull out of Q1, we did not pull five points out of Q2 also so there will be a bit faster acceleration as we go to Q2, just due to the adjustment we made in Q1, yes, and I'll just add the 300 and New York includes Newark as well.
And sorry, Europe and that new Europe is de Minimis. If you think about the contributor to that I wouldn't view Europe as a meaningful contributor to capacity growth. Okay. And then just for my follow up on staffing with the staff you have in place now and maybe you alluded to it with that utilization comment.
How much larger of an airline could you be today.
And given this.
Fairly ambitious ramp into the second half how would you compare your hiring needs this year versus last year or an average year pre pandemic. Thanks for taking the questions sure. So I'd say, we're hiring more this year, then pre pandemic, but it's important to note that we had a large number of crew.
Remember as actually leave the organization over the last two years. So a lot of the hiring is actually to replace Crewmembers to fly the capacity that we would have otherwise.
Flown I think in terms of hiring we're hiring well over 5000, and we're very much on track for doing that in the first half of the year specifically for the summer the summer ramp up and so we're pleased with the progress we're making we still have we still have a little ways to go but.
Everybody's laser focused on making sure that we're prepared to fly the capacity we have in place for the summer.
Okay. Thank you.
Our next question comes from Savi <unk> with Raymond James Your line is open.
Hey, good morning, everyone.
First off just to follow up on <unk> question. There could you quantify just how much of the 11% to 15% growth in 2022.
Much of that is stage how much of that is gauge and and then just kind of the rest of it being growth.
Okay.
Sure Savi. This is Dave I'll take that this stage for the year is up about sort of six months to 7% or so engages roughly in the same ballpark. So that's giving.
Two of those contributors to growth.
Okay.
Very helpful. Thank you and also just on the the staffing question I'm just kind of curious is.
If you have any confidence that as we get into the next peak so it would be like spring break.
Or can the Easter time period or even in the summer is there kind of confidence that we won't have to rely on kind of the elevated incentive page.
That.
That we saw last summer over over the holidays here is there something about kind of the level of hiring that's happening versus kind of the level of capacity that you are planning.
That gives you that confidence, yes, let me it Kevin I'll give us sort of broad view on incentive pay. So you look at the incentive pay we had to pay over the holidays that was largely associated with a massive number of sick calls tied to the omicron variance and so I view that as a very unique.
A unique circumstance the incentive pay we paid last summer, which actually.
Isn't as meaningful as what we paid over the holidays that was tied to a very fast ramp up of jetblue ramped up faster than any other airline from the March into summer timeframe in the U S. If you recall the northeast obviously disproportionately impacted we saw an opportunity in March to really ramp up for the summer. So we ramped up very quickly.
So staffing and other areas where pressure last summer so to the extent we paid any level of premium was it was too to help with that faster than expected ramp up our goal is to not pay incentive pay outside of very unique circumstances, such as massive sit calls tied to a new variant or <unk>.
Weather.
You have got unique sort of irregular operations. So we do think it's very important to get back to a more stable environment.
Carriers are not paying meaningful amounts of incentive pay and the way you do that is by being properly staffed. So that you can support the level that you are flying and that's what we're focused on right now as I mentioned, we're hiring well over 5000 people are training center is that Max throughput and it's all about trying to get in position for the summer timeframe, we should be.
Relatively well situated as well for the spring break.
Yes.
Okay.
Just a quick question does the new CDC rules would that have helped with the kind of this it calls that you saw back in kind of the December holiday, yes. So the CDC roles actually came out in the middle of the December peak and it absolutely helped a bit there needs to be a reconciliation however, with the New York State and state sick pay laws and that five days.
CDC, well Theres still incongruent and that you get paid for example in New York 14 days Covid sick pay notwithstanding the fact that the CDC says that you are if you if youre asymptomatic you can come back after five five days. So it's a little bit of a conflict that I think we are hopeful that the.
The various states will remedy and kind of close that gap as we learn more about these various variance.
Very helpful. Thank you.
Our next question comes from Catherine O'brien with Goldman Sachs. Your line is open.
Hey, good morning, Ron Thanks, so much lead time.
Maybe just a quick one on encore room bookings and you called out that pretty material improvement.
Over the last couple of weeks as we start to recover from the AUM of crime impact very impressive can you speak to how spring break and summer 2022 bookings are running on a versus 2019 basis at this point.
Yeah, maybe I'll take it and then have Dave add any colors. I think you should still think about in terms of peaks and troughs. The peaks are performing very well, particularly if you look at the.
February Presidents' day and into March ramping up as the quarter moves on it a bit far out for the summer at this point, but Dave I know if you want add any color just.
Just in terms of color the selling fares for sort of the summer and even April and beyond are up versus 2019. So we feel that demand will be there.
And a sort of planning likewise as demand improves throughout the.
The first half of the year and we see strength in those peaks.
Okay got it and then maybe just coming back to the cost.
I know a large percentage of the growth. This year is driven by EMEA and then you've got more structural changes you're to your cost structure of two to four points also different by the NEA and I'm not sure that you have 90, there in that bucket or the two two points maintenance have been bucket.
But either way I think some of these M&A cost should be transitory like the IP investment and then whichever buckets. It's in the <unk> hundred 90, heavy maintenance or it will be lumpy, but then we will move past it could be.
Think about 'twenty 'twenty three I know, it's a far way off but should rolling past. These transitory pieces of the EMEA and in <unk> hundred 90, <unk> drive a cost tailwind next year or where maybe we could see better than flat CASM ex year over year on your on your standard kind of mid to high single digit growth profile, just just trying to understand like.
What what is what hits this year that should in theory drive some tailwind into next year. Thanks, so much.
Good morning, Katie. Thank you for the question. So as a reminder, we have two to four points. So as you noted and NEA investments and what falls into those two to four points is number one just the cost of operating at higher cost airports, So think rents and landing fees here in the northeast.
Category is to your point the investment and the <unk> hundred 90, <unk> owned that we have decided to hold into the fleet longer to provide support for the ramp up of the <unk> and then the third component of the 2% to four points is investments in the Cmos cut.
<unk> experience.
So as we think about 2022, excluding the NDA, we would've had flat CASM ex fuel as I think beyond 2022.
Our sweet spot pre Covid was growing high single digits, while maintaining a flattish CASM ex fuel and so I would expect as we navigate into 2023 that would become the objective that's where we believe we can grow margins over an extended period of time.
Understood I guess.
A quick follow up if I may but if some of these costs from the NEA are one time ish in nature is there a is there a reason we shouldnt expect those headwinds to turn to tailwind kind of versus your normal operating procedure of flat CASM on materially to growth.
I think how you should think about it is.
It's margin accretive growth. So as you look forward to 2023 and the top line should be able to more than overcome the level of investment in regard specific to the E. 190, eventually we do intend to retire those even ninety's and replace them with 800, Twenty's, which will provide a.
Tailwind from a CASM ex fuel perspective.
Understood. Thank you.
Our next question comes from Conor Cunningham with MK partners. Your line is open.
Hi, everyone. Thank you.
<unk> <unk> tailwind in 2022.
Is that already captured in your cost structure right now and its just not visible given a lot of the near term noise that you're seeing.
Conor just to clarify specific to the NDA.
No Mike in the bridge that you have on the costs you have two points from productivity and business initiatives.
Got it so as.
As we progressed through the year.
We expect a robust demand environment, where we're normalizing aircraft utilization so capacity is going to continue to ramp.
We need greater stability in our schedules, which is going to allow us to deliver on the two points of productivity initiatives.
And that's really driven by.
Our frontline crew members Gail it scaling and gaining efficiencies as capacity ramps back up the other cost initiatives.
Really ensuring that we continue.
Our fixed cost reductions and hold those through as capacity ramps up through the remainder of this year.
Okay.
And as my follow up just on the second half historically, you guys are going to be 25% larger or so versus 2019.
Do you still expect CASM ex to be flat or below 2019 levels during that growth. It just seems like <unk>.
The capacity plans really haven't changed all that much but obviously the environment's a little bit different so on and so forth.
Yeah. We've always said that this is definitely a year of two halves. So as capacity ramps. The expectation is that we will have negative CASM ex fuel in the second half of this year.
Okay.
Thank you.
Our next question comes from Ravi Shanker with Morgan Stanley . Your line is open.
Thanks, Good morning, everyone.
Just a clarification on kind of what you are.
Trans Atlantic strategy is going to be for this year is it a waiting and watching to see how that comes how are you guys going to go kind of all in trying to.
Ladies and kind of boost the capacity there and also.
Just on that note kind of are you happy with your current.
Corporate exposure distribution plans your visibility in terms of being able to really capitalize on that corporate customer flank Lucky.
Thanks, Todd Ravi I'll take that and as my colleagues will tell you I'm never happy.
Now look I think.
Certainly I think Dave alluded to London, we kind of started at a good time, because they coincide with some of the travel restrictions there are restrictions are eased and.
As Dave said once that happened we started.
Second London, London ramp up to sort of our system average and then did take a step back with some of the measures were put in our guidance.
Before the holidays, but we're encouraged by some of the recent announcements out of the UK and we're already starting to see that.
In terms of additional.
Interest in bookings and traveling in terms of your question about size and then we have three long range airplanes coming this year.
It's going to be another fairly modest step up so we expect to see we're gonna add Boston, London, which we've already talked about.
Now certainly for this year.
Moving beyond London, we do have 26 at all in excess of our airplanes coming over the next several years.
And so obviously at some point, we will look at other markets to Europe .
Believe we could succeed in but they're focused on this year will be more incremental growth.
In London.
Understood. Thanks for the color and just a follow up.
<unk>.
The strength in the the premium leisure.
Part of the cabin.
Do you think thats sustainable and be Where's the opportunity there in the in the medium to long term is it more of a pricing opportunity as people want those seats or is there room to actually boost the number of seats in the plan and so it's more of a mix opportunity.
Yes, actually I'm going to hand that to directly but I just remembered.
To your question on London.
I want to make sure I didn't say that so in terms of distribution again very strong.
As you are offering and.
I think our segment in business travel, we do very well small medium size.
Corporate and I think the just the sheer size of fat reduction, but they are able to enjoy when they fly jetblue to London. Both in some of our competitor has meant that we don't have any concerns about the ability to attract.
So a good mix of business and leisure travelers, so Dave sorry, Julien and then taking the question more broadly sure and thanks for the question on premium leisure.
Notice throughout 2021, we've been seeing.
<unk> relative performance in a premium leisure, especially our transcon mint.
Flights and that actually sort of peaking of a great sort of ulcerative point over the holidays here over the December holidays, we had stronger rather than revenue on a transcon meant that we had in 2019.
Compared to a sort of system revenue that was about 10 points below so certainly outperformance there on a more leisure focused space, obviously a period like this where we'd normally have more business customers in mint.
Is it still trailing a bit versus 2019, but as we recover this year and how the ramp up in business.
See a great opportunity, where we should have combined business plus leisure demand exceeding what it was in 2021.
A bunch of opportunities both sort of in terms of load factor in terms of pricing.
Obviously in terms of capacity to where we see a lot of area to grow and add new seats into these markets.
Great. Thanks for the detail.
Our next question comes from the line of Helane Becker with Cowen Your line is open.
Thanks, very much operator, hi, everybody and thank you for the time, just as we think about.
So two questions. The first is as we think about your network.
Significantly different is it in 2022, let's say second half versus 2019, where you're flying a significant amount of capacity to places like Puerto Rico and the Caribbean.
And then my second question, probably for Dave and then my second question is for probably Robyn.
Eileen Thanks for the question I think the most important thing I would highlight is the continued growth in the north east at the end of the day, the NEA is driving meaningful meaning.
A meaningful focus there and also growth in our focus cities overall.
So I think that's probably the biggest difference as I mentioned will be over 300 departures. This summer across Newark, Laguardia and JFK, Boston will get back to pre pandemic levels as well. This summer. So I think that's probably the biggest difference I don't know Dave if there's anything you want to add beyond that no beyond that it's pretty consistent we're still very focused in our focus cities with 90, 798% of our flying switching focus.
So this is just more growth in New York and Boston.
Then the rest of the network overall.
That's very helpful. Thank you and then just for my follow up question.
Last week <unk> was a big thing and.
Robin you were very visible talking about it and I just had a question about the <unk> hundred 90, <unk> because as I understand it.
90% of aircraft have been cleared to fly into the biggest airports, but the regional airlines.
And there are a a.
Are concerned about smaller airports and I'm just wondering if a that informs where your E 190, <unk> can fly or.
There is some thought of accelerating retirement of those because of limitations or maybe I have that all wrong.
So you say Helane my team, we're very why that I would kind of get this question because it.
It brings all of my Avionic engineering background out and so I'm going to try and keep it very tight.
Rest of the time, but.
This is going to be a dynamic process.
The way it works is the FAA issued no time and then.
What was called a mark.
Alternative means of compliance issue that affected.
In fact, the exemptions.
No time.
So a really issued on our fleet tight and altimeter or a perimeter combination and so it kind of looks different depending on what.
Planes, you have and what alternatives have.
We certainly do on you won't mind to have a.
Let me say, a less forgiving footprint and so we would have issues operating on one <unk> equipment right now in certain airports, including some of our larger airports in conditions, where we could not fly a cat one Fortunately that's a very low percentage of our flights.
But it's out there now the point I wanted to say this is a dynamic process. So right now the FAA is coming up.
It will be updated every month based on more data.
As more <unk> cell towers.
And so it's going to be an ongoing iterative.
Process, whilst I'm pleased the big crisis was averted, whilst I'm pleased that the industry and the government is now collaborating effectively to work through this put them together.
Assume that we are completely out of the woods yet.
Okay. Thank you very much for that that's very helpful.
I appreciate the time.
Our next question comes from Andrew <unk> with Bank of America. Your line is open.
Yeah.
Hi, Good morning, everyone, maybe just one.
Follow up here on the growth plan.
During the one when I look at kind of what tier back half of 2022 capacity implies I'm getting kind of high teens, pushing 20% and then when I look at the fleet plan and the presentation from this morning. I know you are taking 29 more aircrafts in 2023, so kind of with this exit trajectory in <unk>.
82, plus your plan what could 2023 capacity look like at this point.
Yes, I think we're probably a little bit a ways from guiding that given how the environment remains still quite volatile I think that the message that we're very confident about is we have extremely strong revenue performance. Our business model is well positioned to take advantage of the recovery.
<unk> is extremely well positioned to enable jetblue to grow in an otherwise constrained market.
And so as we think about kind of 2022 and beyond.
That northeast footprint as Dave talked about demand recovery in the northeast, we're very encouraged by what we're seeing and so we're confident that we have the right fleet plan for the next several years, although my network team, obviously always wants more airplanes, but we're very confident with the fleet plan that we have and will continue to focus on margin and if we can drive.
Superior margins as we move through the next few years, then we will take that in consideration as we plan our capacity out.
Andrew One thing I would add this is our floor is that even though we have 29 deliveries next year, we're actually moving into a phase where we're starting to retire airplanes. So we're actually planned to retire at least 10 shell in 2023.
So as a reminder, 30 of our even nineties are leased and so they start to return next year as well as our E. 320 fleet is aging and so we're retiring a few of those next year as well. So this is going to be a common theme as we navigate 2023 and beyond.
Understood.
And then per slot.
To ask you when you built out your 2022 cost plan just curious what type of labor inflation are you baking into sort of each of your big labor groups for this year. Thanks.
Yeah. Good question.
So obviously, we're seeing the pressures that everyone else is seeing we're ensuring that our frontline crew members are paid appropriately and.
Order to attract relevant talent. So the objective is that once we get to a normalized schedule on the capacity starts to uptick through the latter part of this year, we really got to drive these productivity initiatives to offset that level of inflation that we're all seeing so that's the objective is to drive efficiencies.
And productivity to offset that inflationary pressure.
Okay. Thank you.
Our next question comes from Jamie Baker with Jpmorgan. Your line is open.
Hey, good morning, everybody back to some of the topics from Ravi's question and a bit of a rehash of what Ive asked before but can you give some color on how the trans Atlantic year to profit plan has evolved since you first announced the expansion I mean that was obviously pre COVID-19 it was pre NDA.
Got some Heathrow operating experience under your belt at this point.
The competitive landscape has changed.
It feels like a mix of pros and cons I've got to imagine your margin assumptions today are different than what they initially were.
Yes, Jeremy and obviously I failed to answer your question in a while in a block time, so I'll, let Dave have a go at.
At this time.
Sure. Thanks, Jamie for the question and yes, it's been a dynamic first sort of half year in London, but in general we're really pleased.
I think we've had terrific customer response terrific media response for building a name for ourselves in the U K point of sale, both with leisure and with the corporate side, where we have a team there working to deepen those relationships.
We feel great about our first six months of operating in London have had really strong performance. There. So all the foundational pieces are coming together really well in.
In terms of sort of revenue and demand has obviously been volatile with omnicom cases, as well as travel restrictions are coming in and out but we remain I think extremely.
Bullish on what will transpire this spring and summer in the second half of the year. We expect cases to go down we expect travel restrictions to continue to Peel away I think the last one comes off February 11th.
For the U K market.
So feel very good that we will continue to ramp up well not only our JFK flying employment, but our new Boston falling as well so feeling really good.
The choppiness of the first year, unless we go through the second half.
Dave because I kind of know what Jamie was asking from last time so.
What I'll say as I said, when I look at our Mint flying.
Both from a trend point of view I know London.
It ramps up quicker.
And it performs above system margin and so when I look at London.
I'm very confident.
Our unique offering.
Great product at a lower fat targeting the vast majority of customers who fly in premium that don't have access to a corporate deal or any kind of form of discounted ticket.
I think.
We're looking forward to let's say I think Dave gave a very good point, obviously its been a bit of a stop start for six months, but.
We truly believe London will take its place in our hall of Fame.
Together with many of our mid market. So we see that and I will remind you because you've been following us a long time, what a disaster JFK to ally base it used to be for us and how <unk> transformed our profitability.
I thought at one point and the most profitable route that we flew so I'm looking forward to seeing the progress we can make in London. Just a reminder, it's 2% of our ASM.
Yeah.
But it'll be more jamey just a quick question.
Yes.
But thats actually and thank you for everybody's comments there. It's a good segue into my follow up on premium leisure you've cited mint outperforming several times you just opined on the transcon, but.
Other than men.
Where are you really capturing premium leisure demand.
Again aside from mix I mean, do you really have the right hard product to compete in this market.
Non transcon or non long haul markets, let's call it yes.
Yeah, Jamie maybe I'll take and Dave feel free to add colors I mean at the end of the day our product offering is.
As far superior to what other carriers are currently out there offering with regard to sort of that premium core coach customer even more space. The free Wi Fi most legroom and coach I mean, we like to think that our core offering you know really tap into sort of this leisure customer that is willing to spend a bit more for more.
In exchange if you look at our performance into Florida over the holiday period and to some of the other markets. We've really we've really done well with even more space product and really capturing our fair share of of customers. So you know I think you hear a lot of other carriers talking about the premium segment, we are well positioned.
Already given the product offering to tap into those leisure markets.
Given you know what what our business model is built around Dave anything beyond that.
No.
And then Jeremy please don't forget our jetblue travel products offering with the ability to give the customers a single.
Booking with multiple parts of that experience and.
I think the inside of experiments I offer the Comcast service.
And when things go wrong.
All of that is very very focused on now premium leisure and other segment.
Excellent I really appreciate it I suspect our next call is from Hunter Keay Wolfe research.
No you're wrong about that Jamie.
[laughter] Oh well.
Sure.
[laughter].
Yeah.
Our next question comes from Brandon <unk> with Barclays. Your line is open.
I guess.
Jamie don't try to box out Barclays. So soon there.
Guys. Thanks for taking my question I guess Joanna.
Following that discussion on premium economy, how does that square up with the NDA, where obviously the products are not going to be necessarily fully aligned if you're booking at Jetblue co chair you expect free Wi Fi most leg room and coach you might not get that on the other partner.
And I guess the second part to that question how does the revenue sharing sure help incentivize that competitive growth. Thank you. Thanks. It's a great question me at the end of the day, we're very focused on making the experience between American and Jetblue as seamless as possible. There are as you point out some differences in the product offerings, we have certain things that we offer.
They have certain things they offer from our perspective, it's all about ensuring adequate disclosure on the website. So that customers know what they are getting.
But if you think about loyalty I think we've done some really great work there in terms of bridging those loyalty programs reciprocal on burn we now have elite recognition, which is very exciting for our most.
Loyal mosaics and American has access to that for their most loyal so that's how we're approaching it but at the end of the day there are unique product differences and we need to make sure customers know when they book that Jetblue.
Jetblue is operating the flight or Americans operate as late as the as the case may be.
And I guess.
As a unique aspects here with the revenue sharing between the Codeshare partners can you talk to how that helps incentivize what you guys wanted to accomplish.
Sure Brandon This is Dave I'll take that in general what it does is it ensures that we're both thinking about the EMEA as a whole and the partnership as a whole and we're not worrying about is the customer choosing the jetblue flights out there the American fight that day. So it's a nice sort of alignment mechanism to ensure that that we're aligned and focused on the NDA providing.
Sort of the most consumer good and also.
Driving the best sort of revenue outcome.
Alright, Thank you all for the time.
Yeah.
Our next question comes from James Hollins with BNP. Your line is open.
Thanks for taking the question.
Very key shape Brzycki ask you mentioned Atlanta, even though it's 2%.
Just.
I was wondering if you could just give me a bit of feedback on new customer reaction to Heathrow and Gatwick.
Hey, you got Heathrow slots. So you can see in October 2002, I was wondering if it was absolutely <unk> percent.
In terms of making this route network really works, even where the gap, which is performing just as well. Thanks.
Now I'll take that.
Look I mean, I think that.
We've been pleased with both.
If we if we strip out the noise has come with some of the travel restrictions when we were sort of in a more.
Close to steady state and we were pleased with what we're seeing both at Heathrow.
<unk>.
Reality is there isn't that much option to Gatwick and there was a.
Big population center, both in South London Southeast.
North or south.
About the Gatwick that really.
We would prefer to fly out of Calvert, so but.
Yeah, we've been we've been very pleased and so certainly whilst we they're likely to get into Heathrow I think that was very important because heathrow is.
As the airport has suffered.
From very high fares to the U S over the years I think.
The ability to fly into Heathrow has helped.
The whole fast structure across the market has come down.
But obviously offers greater growth potential as well. So we continue to see a path to serving more than one airport and I think the fact were flying it with a narrow body that plane also gives us optionality that some of the whiteboard at all prices doesn't necessarily have as they think about moment apples.
Appreciate the thoughts and just just a broader question on your ESG commitments I was wondering if youre seeing strong signs of incremental customer loyalty from you you will clear leadership in that space or even price.
Elasticity.
And regarding ESG already sort of done with major announcements also with ESG question last time as you sort of said that in.
Medium term.
Yes.
No. Thank you.
On the customer loyalty.
Yes, well there was a <unk>.
Very small group of customers.
Customers currently who I think put a high value on that I think well I'm confident that it's going to grow and it's going to grow quickly I think the only reason we haven't seen more of that is really linked to.
Covid, which is became sort of such a distraction for many.
People in terms of your second question then.
I mean once we have been very pleased with the five deals that we have in place we want to continue to lead here. We are we have a 2030, 10%.
Ill get for.
It is our goal to try to.
Exceed that and so our team is currently continuing to work on a number of.
A follow up.
Deals more in due course.
Okay. Many thanks for your time thank you.
Our next question comes from Hunter Keay with Wolfe Your line is open.
Hi, good morning, Alright.
That was my fault in the queue.
And thank you for passing it anyway. Thank you Jamie so the couple of questions for you.
When you say you are going to take market share in New York for the NDA when Youre taking share from is that Americans share shifting over to you or is it.
Many else.
No I mean, I think what we're looking at as being sort of a third viable competitor in the region compared to United and Delta and so given the combined network between American and Jetblue, We're confident and we're seeing the response from the business customers in the business.
Companies that we're meeting with that you know, they're very encouraged by the network offering that we have.
And in terms of the ability to drive more competition into the region.
And so that's our focus specifically in the northeast.
Okay. Thanks, Jonathan.
The capacity plan in just a minute on that in jet fuel obviously.
Historically the relationship between a little bit of marginal supply getting dialed back when when jet fuel goes up.
But is that relationship sort of on hold right now or where you might be a little bit more hesitant.
To dial back some of the marginal supply just because we're in such.
And anomalistic demand environment or are you going to wait until we get into the summer before you would make a customary decision on dialing back capacity in response exclusively at the higher jet fuel.
Yeah.
Hi, Hunter. This is a follow up thanks for the question.
Yeah listen we made capacity decisions through the lens of margin historically.
<unk> performed very well in high fuel environment to your point there has been that historical dynamic where we've been able to pass on.
70% of jet fuel increases with a month or two of lag and high fuel environment.
Given the environment that we're in today, we will have to see if that relationship settled back in and as we continue to dial up our capacity and work our way through this recovery, but just as a.
A reminder, we will continue to make all capacity decisions through the lens of margins as we navigate through the summer.
And I would say can I, just add to that <unk> I think in terms of timing.
I think one of the and I know this isn't a fuel answer but we've been in this situation with some of these waves.
Of Covid, where we're making capacity changes within a one to two month period, that's expensive because you already got the crews scheduled until you have to effectively pay for the crew and so with a fuel environment. At this point, if we start to see months out that we start to get concerned about this then.
We can make adjustments and I think if there's one thing.
Really all airlines have learned to do a last couple of years to be extremely nimble and react quickly to changes in capacity when we need to make them.
<unk> will help us drive that we just saw.
Very bullish coming into some up because of the demand that we anticipate.
And then.
And later in the year, we have time to review them.
Okay. Thanks, Ron.
Our last question comes from Chris <unk> with Jessica Hanna International Group. Your line is open.
Thanks for taking my question, so im guessing.
<unk> been doing some survey work around business travel and if so curious if theres been any meaningful change in the appetite.
For corporate large corporate or SMB travel versus where it was six or seven months ago or pre delta and.
Also are you seeing any change in user demand, meaning a shift between tech consulting.
Finance or health care. Thanks.
Thanks, Chris for the question. This is Dave I'll take that.
No we have not seen any fundamental shifts in the last six months, we have seen some I'd say choppiness based on variance coming through but we're seeing really good recovery pace in the fourth quarter and we went from about a third recovered in terms of bookings to have recovered in the pieces about one month before Thanksgiving. So things are moving really nicely.
Absolutely Peel it back a little bit here, what we're seeing right now is mostly sort of individual travel it's going to see clients going to build new relationships going to close the deal.
Sort of large meetings, whether external or internal or a bit on hold for Q1, you guys probably saw a couple of high profile ones go entirely virtual or.
Largely virtual versus the original plan.
So we continue to see right now those those industries that have more of that client relationship.
Traveling a bit more as well as other continued things we've had throughout such as media production and whatnot, but I think once we get through omicron here into the spring we will see a return to that strong recovery that we're seeing in the fall and have sort of not only all these different industries growing but different user types.
Growth grown, especially some metadata pretty largely pent up now in terms of gatherings, whether external or internal large gatherings I think are set to really grow.
Warmer months this year.
Okay, and just my follow up so you've historically looked at margin as your North star and given what increasingly looks like.
Transition to an endemic state for COVID-19, this year as well as.
Significant pent up demand and business in long haul international travel.
How should we think about the cadence of recovery in your pre tax margins through this next stage of the recovery and.
And I guess, the punch line or do you still think that you can exceed 2019, 95% next year. Thanks.
I'll take that.
<unk>.
Just give a health warning my answer it all depends on future Covid.
<unk> because I do think we have to be realistic and once we are hopefully.
We want to enter an endemic phase.
No for sure if another wave isn't going to come along I think what we're confident is.
As these weights com, providing people feel protected against the impact will be shorter, but having said that as I look ahead to the rest of the year.
With Q1 behind US I would expect us to be profitable for the rest of the year.
Based on the revenue momentum and based on the cost initiatives that we have in place to grow back to that $2 50 to $3 as quickly as we as we can.
Then grow beyond that and I think that when I think about the revenue momentum when I think about the older revenue initiative.
And our long term cost trajectory, we're very focused here.
In the short term I do appreciate it's fairly bumpy and hard to sort of see the wood from the trees, sometimes but when we look at the 820.
The fleet renewal when we look at the one <unk>.
Retiring when we looked at as we kind of peaked through some of the B 2500 shop visits on the engines, which would drive a lot of the maintenance costs. We have a very strong cost trajectory over multi years and so we should be sitting here with the expectation that we can grow this business mid to high single digits capacity.
Maintain our cost flat or close to flat and drive top line revenue and so all of that I think gives me a great deal of confidence that we can continue to grow margins at all earnings.
Beyond even what we had expected to earn in 2020 had COVID-19 not come.
Great. Thank you for the time.
Great. Thank you and with that we'll conclude our fourth quarter 2021 conference call. Thanks, everyone for joining us have a great day.
And again that will conclude today's conference. Thank you for your participation you may now disconnect.
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