Q3 2023 JetBlue Airways Corp Earnings Call

Good morning, My name is Joelle I would like to welcome everyone to the Jetblue Airways third quarter 2023 earnings Conference call. As a reminder, today's call is being recorded at this time all participants are in listen only mode. I would now like to turn the call over to Jetblue.

<unk> of Investor Relations Couche Vitale. Please go ahead Sir.

Thanks, Joelle good morning, everyone and thanks for joining us.

Third quarter 2023 earnings call. This morning, we issued our earnings release and the presentation that we will reference during this call. All of these documents are available on our website at investor that Jetblue Dot com and on the SEC website at Www Dot SEC Dot Gov.

In New York to discuss our results are Robin Hayes, our Chief Executive Officer, Joanna Geraghty, our President and Chief operating Officer, and Ursula Hurley, Our Chief Financial Officer also joining us for Q&A are Dave Clark, our head of revenue and planning and Andres Barry President of Jetblue travel products. During today's call we will make forward.

Looking statements within the meaning of the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, all such forward looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements. Please refer to our most recent earnings release and our most recent 10-K and other filings for <unk>.

Discussion of the risks.

And uncertainties that could cause actual results to differ materially from those contained in our forward looking statements.

<unk> made during this call are made only as of the date of the call and other than that.

As may be required by law, we undertake no obligation to update the information investors should not place undue reliance on these forward looking statements also during the course of our call. We may discuss certain non-GAAP financial measures for an explanation of these non-GAAP measures and a reconciliation to the corresponding GAAP measures. Please refer to our earnings release.

A copy of which is available on our website and on SEC Gov. Finally, I'd like to add an important note for today's call regarding our proposed transaction with Spirit Airlines given our trial has now begun we will not be taking questions or commenting on spirit beyond what is in today's prepared remarks. We appreciate your understanding and look forward to answering your.

Questions. Once the trial has concluded and now I'd like to turn the call over to Robin Hayes Jetblue CEO.

Good morning, everyone and thanks for joining us and goodbye.

I'd like to start by thanking our incredible crewmembers for their hard work dedication and service to our customers. This pharma airlines faced an exceptionally high number disruptions gave an air traffic control and weather challenges outstanding crew members royalty occasion, each and every day to support our operation and deliver that.

Jetblue experience before getting into the results as many of you are aware the antitrust trial related to our proposed merger with Spirit Airlines began today.

We look forward to presenting our case to court over the next few weeks as we strongly believe our combination with spirit is the best opportunity to disrupt the industry by increasing competition and choice, creating a long overdue national low fare challenger to the dominant big four airlines. We expect the trial will proceed according to the protest the George laid out I mean.

Currently scheduled to conclude during the first week of December.

Joelle: Good morning. My name is Joelle. I would like to welcome everyone to the JetBlue Airways 3rd quarter 2023 earnings conference call.

Assuming a successful outcome, we remain on track to close the transaction in the first half of next year.

Joelle: As a reminder, today's call is being recorded. At this time, all participants are in listen only mode.

For obvious reasons, it would be inappropriate for off the comment on any matters relating to the trend to this transaction, while our judicial proceeding is underway and therefore as coach mentioned, we won't be answering any questions related to spur on today's call or making any other public comments, while the trial is underway.

Koosh Patel: I would now like to turn the call over to JetBlue's director of investor relations, Koosh Patel. Please go ahead, sir. Thanks, Joelle.

Koosh Patel: Good morning, everyone, and thanks for joining us on our 3rd quarter 2023 earnings call. This morning, we issued our earnings release and the presentation that we will reference during this call. All of these documents are available on our website at investor. JetBlue.com and on the SEC's website at www.sec.gov. In New York to discuss our results, a Robin Hayes, our Chief Executive Officer, Joanna Geraghty, our President and Chief Operating Officer, and Ursula Hurley, our Chief Financial Officer. Also joining us for Q&A, our Dave Clark, our Head of Revenue and Planning, and Andre Sparry, our Chief Executive President of JetBlue Travel Products.

Hey.

Now moving to the results in slide four of our presentation, we reported a third quarter adjusted loss per share of 39.

We planned and prepared for several challenges in the quarter, including the wind down of the northeast the lives.

Control of their lives and shift in post COVID-19 customer demand, however, weather related disruptions with significantly greater than expected increases in jet fuel costs also weighed on results.

While we are certainly not satisfied with these results. Our team is working hard to mitigate these headwinds while also working to protect the customer experience.

Koosh Patel: During today's call, we will make forward-looking statements within the meaning of the safe harbor provisions of the private securities litigation or form act of 1995. All such forward-looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements. Please refer to our most recent earnings release and our most recent 10K and other filings for a more detailed discussion of the risks. And on certainties that could cause actual results to differ materially from those contained in our forward-looking statements.

Turning now to slide five.

We are updating our full year outlook to reflect the impact of these near term headwinds, including higher fuel prices and industry capacity that is outpacing domestic demand. We now expect a full loss per share of 45 to 65 cents per share.

Our team remains focused on taking steps to control, what we can control, while identifying additional levers to deliver value to shareholders.

Koosh Patel: The statements made during this call are made only as of the date of the call, and other than as may be required by law, we undertake the obligation to update the information. Investors should not place undue reliance on these forward-looking statements.

First with respect to weather and ATC staffing challenges. We are pleased that the FAA has extended its 10% slot way, but in New York through to October 'twenty, 'twenty, four which we will be taking full advantage of all this is a critical step in affording much needed support to our fragile ATC system importantly, the waiver was announced well ahead of that.

Koosh Patel: Also during the course of our call, we may discuss certain non-gap financial measures for an explanation of these non-gap measures and a reconciliation to the corresponding gap measures. Please refer to our earnings release. The copy of which is available on our website and on SEC.gov.

2020, full planning cycle, providing time to efficiently reallocate capacity, which we were not able to do in 2023.

Koosh Patel: Finally, I'd like to add an important note for today's call regarding our proposed transaction with spirit airlines. Given our trial has now begun, we will not be taking questions or commenting on spirit beyond what is in today's prepared remarks. We appreciate your understanding and look forward to answering your questions once the trial has concluded.

Secondly, as customer travel patterns continue to evolve, we're taking steps to better match capacity with demand, while overall demand remains healthy compared to pre pandemic levels inflationary pressures, including the recent uptick in fuel prices are impacting margins in certain markets. We recently announced the closure of two blue cities and other capacity.

Robin Hayes: And now, I'd like to turn the call over to Robin Hays, JetBlue CEO. Good morning, everyone. And thanks for joining us. I'd like to start by thanking our incredible crew members for their hard work, dedication and service to our customers. This summer, airlines faced an exceptionally high number of disruptions, given air traffic control and weather challenges, and our outstanding crew members rose the occasion each and every day to support our operation and deliver the JetBlue experience.

As we look ahead, our capacity growth is expected to moderate in the fourth quarter and will be driven primarily by international markets, which have demonstrated resiliency this year.

Finally, the M&A wind down continues to progress we began returning laguardia pet slot path to market and as we head into 2024, we plan to continue reallocating capacity out of Laguardia as we retire additional slot pairs. These changes are expected to benefit revenues and costs in 2024 hours.

Robin Hayes: Before getting into the results, as many of you are aware, the anti-trust trial related to our proposed merger with spirit airlines began today. We look forward to presenting our case to court over the next few weeks, as we strongly believe our combination with spirit is the best opportunity to disrupt the industry by increasing competition and choice, creating a long overdue national warfare challenger to the dominant, big for airlines. We expect the trial will proceed according to the process the judge laid out and is currently scheduled to conclude during the first week of December. Schumer, Assuming a successful outcome, we remain on track to close the transaction in the first half of next year.

The quarter is one of our most expensive apples.

Turning now to slide six while we continue to face challenges in the near term. We firmly believe we have the right building blocks in place to position Jetblue for success.

A large footprint in the slot constrained New York market is a compete.

As a key competitive advantage remains our largest focus city with well over 200 departures per day and has historically been our profit engine for Jetblue, while margins in New York have not recovered from that pandemic.

Pre pandemic levels as quickly as the rest of the network. We are encouraged by the continued progress we are seeing in the market. We clearly have more work to do but our competent margins in New York will fully recover to pre pandemic levels over time, we're also driving long term structural improvements in our profitability from Jetblue travel products.

Robin Hayes: For obvious reasons, it would be inappropriate for us to comment on any matters relating to this transaction while a judicial proceeding is underway. And therefore, as Koosh mentioned, we won't be answering any questions related to spirit on today's call, or making any other public comments while the trial is underway.

We have seen a 30% year over year increase in commission revenues for hotels and calls year to date. In addition to our redesigned true Blue program continues to be an important source of royalty revenue, which increased as a percentage of total revenue by approximately one point year to date compared to 2022.

Robin Hayes: Now moving to the results and slide four of our presentation. We reported a third quarter adjusted loss per share of 39 cents. We planned and prepared for several challenges in the quarter, including the wind down on the northeast the lines, air traffic control delays and shifts in post-COVID customer demand. However, weather related disruptions were significantly greater than expected and increases in jet fuel costs also weighed on results. While we are certainly not satisfied with these results, our team is working hard to mitigate these headwinds while also working to protect the customer experience.

Finally, we continued to deliver steady programs progress I should say on controllable cost execution. This quarter. We are seeing great success from our structural cost program, which is on track to deliver $150 million to $200 million savings by the end of 2024. We also continued to make strides in our ongoing fleet modernization program.

As we benefit our E 190 fleet with the margin accretive fuel efficient <unk> hundred <unk>.

Robin Hayes: Turning now to slide five. We are updating our four-year outlook to reflect the impact of these midterm headwinds, including higher fuel prices and industry capacity that is outpacing domestic demand. We now expect a full loss per share of 45 to 65 cents per share. Our team remains focused on taking steps control, what we can control, while identical to what we can do. This is a critical step in affording much needed support to a fragile ATC system.

In conclusion I'd like to thank our crew members again as they continue to go above and beyond to deliver for our customers and for each other day in day out while near term headwinds persist, including the Pratt and Whitney GTS engine issue, which will provide an update Tom we are focused on controlling what we can control.

I'm confident we have the right foundation in place to navigate the current challenges and work towards improving margins and driving profitable growth with that over to you Joanna.

Robin I'd also like to thank our team as we continue to navigate a challenging operating environment. We very much appreciate your unwavering efforts to take care of our customers and support each other.

We continue to experience greater than expected operational disruption during the quarter due to unusual September far worse September weather far worst than we've historically seen coupled with unprecedented ATC restriction.

Robin Hayes: Importantly, the waiver was announced well ahead of the 2024 planning cycle, providing time to efficiently reallocate capacity, which we will be able to monitor. Secondly, as customer travel patterns continue to evolve, we are taking steps to better match capacity with demand. While overall demand remains healthy compared to pre-pandemic levels, inflationary pressures, including the recent uptaking fuel prices, are impacting margins in certain markets. We recently announced the closure of two blue cities and other capacity adjustments.

In the third quarter, we had 68 days of significant operational disruption versus 40 days in the third quarter of last year, often these events occurred on multiple consecutive days, causing extended delays and cancellation and subsequent days as we recovered.

The severity of ATC constraints was also worse than previous summers based on airborne holding diversions taxi time and cancellations <unk> seen throughout the industry due to a T. C. However, our investments enabled us to recover faster and better protect completion factor as a result for the third quarter capacity grew 7.1.

Robin Hayes: As we look ahead, our capacity growth is expected to moderate in the fourth quarter, and will be driven primarily by international markets, which we have demonstrated yield resolutely this year. Finally, the NEA wind down continues to progress. We began returning LaGuardia slot pairs to American, and as we head into 2024, we plan to continue reallocating capacity out of LaGuardia as we return additional slot pairs. These changes are expected to benefit revenues and costs in 2024, as LaGuardia is one of our most expensive apples.

Percent year over year.

As Robin mentioned, we are pleased with the Faa's recent decision to extend the 10% slot waiver.

The New York City area through October of 2024, and we are taking full advantage of it however, given that the extension was announced after our Q4 schedules were published this resulted in close and therefore less efficient schedule changes for the fourth quarter for 2024, we will be able to better plan our network <unk>.

Robin Hayes: Turning now to slide six, while we continue to face challenges in the near term, we firmly believe we have the right building blocks in place to position JetBlue for success. A large footprint in the slot constrained New York market is a key competitive advantage. New York remains our largest focus city with well over 200 departures per day and has historically been a profit engine for JetBlue. While margins in New York have not recovered from their pandemic, Project, pre-pandemic levels as quickly as the rest of the network.

Actively address associated costs mitigate customer disruptions and appropriately manage our hiring plans while the slot waiver is a good initial step we recognize that there is still a long way to go in terms of getting the right level of staffing and experience within ATC to drive substantial improvements in their performance and minimize.

As the number of cancellations, we expect ATC disruptions to continue for the foreseeable future and we continue to plan the operation with conservativism and with elevated crude reserve levels with Mike. What occurs recent appointment we are hopeful that we will see progress as a permanent FAA administrator conserve as a champion.

Robin Hayes: We are encouraged by the continual progress we are seeing in the market. We clearly have more work to do, but our confident margins in New York will fully recover the pre-pandemic levels over time. We're also driving long-term structural improvements in our profitability from JetBlue travel products, where we have seen a 30% year-over-year increase in commission revenues for hotels and cars year-to-date. In addition, our redesign through Blue Programme continues to be an important source of loyalty revenue, which increased as a percentage of total revenue by approximately one point year-to-date compared to 2022.

On these critical infrastructure issues.

For the fourth quarter, we are forecasting capacity to grow between a half a point to three five points year over year, a five point sequential reduction in scheduled capacity growth versus the third quarter of 2022.

We are proactively managing our capacity in light of higher fuel costs and aircraft constraints and have temporarily reduced flying in certain markets in off peak periods, our fourth quarter growth will be driven by international markets, where we have seen yields holding up relatively well for the full year, we are narrowing our capacity growth outlook to five.

Robin Hayes: Finally, we continue to deliver steady-programs, progress, I should say, on controllable cost execution this quarter. We have seen great success from our structural cost program, which is on track to deliver 150 to 200 million dollars savings by the end of 2024. We also continue to make strides in our ongoing fleet modernization program as we benefit our E-19 fleet with the margin-acreative fuel-efficient A-220s.

To 7% year over year.

Turning to revenues third quarter revenues decreased eight 2% year over year and were impacted by the challenging operational backdrop as well as softer than expected off peak and close in leisure demand in September our premium offerings remained a bright spot with year over year RASM outperforming core by four five percentage.

Robin Hayes: In conclusion, I'd like to thank our crew members again as they continue to go above and beyond to deliver for our customers and for each other day-in-day. While near-term headwinds persist, including the Platinum Whitney GTF engine issue, which Ursula will provide an update on, we are focused on controlling what we can control.

Points during the quarter, we continued to see strength in mint, even with our capacity up 19% year over year all of our <unk> hundred 21, neo deliveries for the foreseeable future. It will be in the mint configuration, which we believe will allow us to continue to grow our strong premium leisure offerings.

Joanna Geraghty: I am confident we have the right foundation in place to navigate the current challenges and work towards improving margins and driving possible growth without over to you Joanna.

Joanna Geraghty: Thank you, Robin. I'd also like to thank our team as we continue to navigate a challenging operating environment. We very much appreciate your unwavering efforts to take care of our customers and support each other. We continue to experience greater than expected operational disruption during the quarter due to unusual September, far worse September weather, far worse than we've historically seen, coupled with unprecedented ATC restrictions. In the third quarter, we had 68 days of significant operational disruption versus 40 days in the third quarter last year.

We are also seeing strength in even more space with revenue growing double digits in Q3 year over year and roughly equivalent load factors and we look forward to the continued expansion of even more space as our <unk> hundred Twenty's have 30, even more space seats compared to <unk> 16 on the <unk> hundred 90, <unk> that they are replacing.

Joanna Geraghty: Often these events occurred on multiple consecutive days, causing extended delays and cancellations in subsequent days as we recovered. The severity of ATC constraints was also worse than previous summers based on airborne holding, diversions, taxi time and cancellations seen throughout the industry due to ATC. However, our investments enabled us to recover faster and better protect completion factor as a result for the third quarter capacity grew 7.1 percent year over year. As Robin mentioned, we are pleased with the FAA's recent decision to extend the 10 percent slot waiver in the New York City area through October of 2024, and we are taking full advantage of it.

Trans Atlantic also continues to deliver strong results as we continue to ramp this quarter, we launched service to our third transatlantic Blues City Amsterdam from both New York, and Boston, and we look forward to continuing to expand our transatlantic network as we take delivery of additional <unk> hundred 21 LR aircraft. This includes the new summer seasonal service announced last.

Week to Dublin and Edinburgh.

And in New York City, as we continue to wind down the NDA, we are rebalancing our capacity to better match supply and demand we are meaningfully reducing our footprint at Laguardia reallocating this capacity to geographies with stronger performance such as the Caribbean, where we are launching new services in the fourth quarter from Orlando to Puente Tucana and <unk>.

Joanna Geraghty: However, given that the extension was announced after our Q4 schedules were published, this resulted in close-in and therefore less efficient schedule changes for the fourth quarter. For 2024, we will be able to better plan our network, proactively address associated costs, mitigate customer disruptions and appropriately manage our hiring plans. While the slot waiver is a good initial step, we recognize that there is still a long way to go in terms of getting the right level of staffing and experience within ATC to drive substantial improvements in their performance and minimize the number of cancellations.

Santiago and the Dominican Republic, and from New York to believe in St Kitts and Nevis and.

In addition, we are also taking full advantage of the FAA slot waiver extension to allocate capacity away from New York. These changes will drive continued improvement in our New York performance in 2024 and beyond.

Looking to the fourth quarter, we continue to see healthy travel demand during peak periods, specifically demand for travel around the fourth quarter holidays is in line with our expectations. However, during off peak periods, we're seeing elevated industry capacity significantly outpacing demand that being said, we have seen an acceleration in corporate bookings since.

Labor day, an encouraging sign that recovery in business travel is picking back up after notably dropping off through the summer for.

For the fourth quarter, we expect revenues to be down six five to 10, 5% year over year for the full year, we now expect revenues to grow between 3% and 5% year over year.

Joanna Geraghty: Ed Sheeran. We expect ATC disruptions to continue for the foreseeable future, and we continue to plan the operation with conservativeism and with elevated crew reserve levels. With Mike Whitaker's recent appointment, we are hopeful that we will see progress as a permanent FAA administrator can serve as a champion on these critical infrastructure issues. For the fourth quarter, we are forecasting capacity to grow between a half a point to three and a half points year over year.

Finally, we remain pleased with the strength in our loyalty program is active members have grown nearly 10% year over year and member engagement has more than doubled across all customer levels. Following the launch of our redesigned true Blue program earlier this year.

Brand card spend has increased double digits year to date, and we expect to reach record contributions from Barclays Co brand portfolio. This year as engagement growth. We recently introduced the ability to redeem true bluepoint on key partner Airlines directly on our website. We are excited by the growth. These enhancements have delivered so far and are expected to deliver as part of our multi.

Joanna Geraghty: A five point sequential reduction in scheduled capacity growth versus the third quarter of 2022. We are proactively managing our capacity in light of higher fuel cost and aircraft constraints and have temporarily reduced flying in certain markets and off peak periods. Our fourth quarter growth will be driven by international markets where we have seen yield holding up relatively well. For the full year, we are narrowing our capacity growth outlook to five to seven percent year over year.

Your journey in evolving our <unk> program and closing the gap to our peers.

I'd like to close by once again thanking our crew members for everything they have done to serve our customers amid a challenging operational backdrop with that over to you our seller.

Joanna Geraghty: Turning to revenues, third quarter revenues decreased 8.2 percent year over year, and were impacted by the challenging operational backdrop, as well as softer than expected off peak and close in leisure demand in September. Our premium offerings remained a bright spot with year over year mint rousing out performing core by 4.5 percentage points during the quarter. We continue to see strength in mint, even with our mint capacity up 19 percent year over year.

Thank you Joanna I'd like to add my thanks to our incredible team for their hard work and commitment to ensure we are delivering for our customers. Our fellow crew members and our owners.

As Robin mentioned, we delivered a third quarter loss per share of 39 cents as we faced unprecedented levels of weather and ATC related disruptions and rising fuel prices.

Joanna Geraghty: All of our A321 neo deliveries for the foreseeable future will be in the mint configuration, which we believe will allow us to continue to grow our strong premium leisure offerings. We are also seeing strength in even more space with revenue growing double digits in Q3 year over year on roughly equivalent load factors. And we look forward to the continued expansion of even more space as our A220s have 30 even more space seats compared to 16 on the 190s that they are replacing.

CASM ex fuel was up five 9% for the quarter just above the high end of our guidance.

Our proactive planning and operational investments to boost resiliency through additional pilot reserves and capacity pull downs drove four points of CASM ex fuel pressure in the third quarter. However.

However, a greater number of a greater volume of extended ATC delays versus plan resulted in higher labor premiums hotelier and disruption related costs driving an incremental one five points of CASM ex fuel headwinds in the third quarter.

Joanna Geraghty: Transatlantic also continues to deliver strong results as we continue to ramp this quarter we launched service to our third transatlantic blue city Amsterdam from both New York and Boston and we look forward to continuing to expand our transatlantic network as we take delivery of additional A321 LR aircraft. This includes the new summer seasonal service announced last week to double in an Edinburgh. And in New York City as we continue to wind down the NEA we are rebalancing our capacity to better match supply and demand.

Excluding these unprecedented headwinds we would have delivered CASM X fuel near the midpoint of our guide.

Looking ahead for the fourth quarter, we are forecasting CASM ex fuel to increase eight and a half to 10, 5% year over year.

Joanna Geraghty: We are meaningfully reducing our footprint at LaGuardia, reallocating this capacity to geographies with stronger performance such as the Caribbean, where we are launching new services in the fourth quarter from Orlando to Punta Kana and Santiago in the Dominican Republic and from New York to believe in St. Kits and Nevis. In addition, we are also taking full advantage of a slot waiver extension to allocate capacity away from New York. These changes will drive continued improvement in our New York performance in 2024 and beyond.

As a reminder, the uptick and expected Q4 CASM ex fuel includes four points related to the additional compensation step up tied to our pilot agreement and two points related to the timing of maintenance events in.

In addition, we've made a number of near term capacity cuts to utilize the New York slot waiver, However, as Robin and Joanna mentioned, the waiver was announced shortly before the start of Q4. So many of the costs associated with that flying we're already fixed resulting in an incremental three.

Joanna Geraghty: Looking to the fourth quarter we continue to see healthy travel demand during peak periods specifically demand for travel around the fourth quarter holidays is in line with our expectations. However, during off peak periods we are seeing elevated industry capacity significantly outpacing demand. That being said, we have seen an acceleration in corporate booking since Labor Day, an encouraging sign that recovery in business travel is taking back up after notably dropping off through the summer.

<unk> headwind to our fourth quarter CASM ex fuel.

For the full year, we are raising our CASM ex fuel outlook to four and a half to five 5% just above the high end of our prior range.

This includes two points of headwinds from the challenging operational disruptions. We have faced this summer and the proactive investments we made to more quickly recover from these challenges.

Joanna Geraghty: Governor. For the fourth quarter, we expect revenues to be down 6.5 to 10.5% year over year. For the full year, we now expect revenues to grow between 3% and 5% year over year. Finally, we remain pleased with the strength in our loyalty program. As active members have grown nearly 10% year over year, and member engagement has more than doubled across all customer levels following the launch of our redesigned True Blue program earlier this year.

While we have been successful in identifying levers to offset some of these incremental costs. The sheer magnitude of the ATC and weather related delays has been staggering. Our team is continually looking for opportunities to mitigate additional costs.

Joanna Geraghty: Cobra and Card Spend has increased double digits year to date, and we expect to reach record contributions from our Barclays Cobra and Portfolio this year as engagement grows. We recently introduced the ability to redeem True Blue points on key partner airlines directly on our website. We are excited by the growth these enhancements have delivered so far and are expected to deliver as part of our multi-year journey in evolving our True Blue program and closing the gap to our peers. I'd like to close by once again thanking our crew members for everything we have done to serve our customers amid a challenging operation.

With respect to the GTS engine issues, we continue to have conversations with Pratt <unk> Whitney to assess the longer term impact and discussions around compensation are ongoing.

Based on Pratt and Whitney its initial analysis, we expect to end 2023 with up to six of our aircraft grounded due to GTS engine issues and we anticipate the number of out of service aircraft to increase throughout 2024, ending the year with high single digits.

To low double digits of aircraft out of service.

Ursula Hurley: Thank you, Joanna. I'd like to add my thanks to our incredible team for their hard work and commitment to ensure we are delivering for our customers, our fellow crew members, and our owners. As Robin mentioned, we delivered a third quarter lost per share of 39 cents as we faced unprecedented levels of weather and ATC related disruptions and rising fuel prices. Casm X fuel was up 5.9% for the quarter just above the high end of our guidance.

These issues are also driving an elevated number of engine changes.

And despite introducing a number of self help measures over the last 18 months, we expect our 2024 capacity plans and cost outlook to be meaningfully impacted.

Given the increase in unscheduled GTS related downtime, coupled with the aircraft delivery delays and aircraft retirements were planning capacity in the first quarter of 2024 to be slightly down on a year over year basis.

Ursula Hurley: Our proactive planning and operational investments to boost resiliency through additional pilot reserves and capacity pull downs drove four points of Casm X fuel pressure in the third quarter. However, a greater number of a greater volume of extended ATC delays versus plan resulted in higher labor premiums, hotel and disruption related costs, driving an incremental 1.5 points as Casm X fuel headwinds in the third quarter. Excluding these unprecedented headwinds, we would have delivered Casm X fuel near the midpoint of our guide.

With this lower capacity growth, we remain laser focused on executing our structural cost program and delivering efficiencies.

We expect to drive approximately $70 million in cost reductions this year and $150 million to $200 million and run rate savings through 2024 under our structural cost program.

We expect these savings to ramp quickly throughout 2024, as we streamlined input costs for onboard offerings and ramp up our use of technology based solutions to enhance productivity.

Ursula Hurley: Looking ahead, for the fourth quarter, we are forecasting Casm X fuel to increase 8.5 to 10.5% year over year. As a reminder, the uptick in expected Q4 Casm X fuel includes four points related to the additional compensation step up tied to our pilot agreement and two points related to the timing of maintenance events. In addition, we've made a number of near term capacity cuts to utilize the New York slot waiver. However, as Robin and Joanna mentioned, the waiver was announced shortly before the start of Q4, so many of the costs associated with that flying were already fixed, resulting in an incremental 3.2 point headwind to our fourth quarter Casm X fuel.

Additionally, through our fleet modernization program, we have achieved $55 million in cumulative cost savings to date and remain on track to achieve $75 million of maintenance cost avoidance through 2024, as we replace our E 190 fleet with margin accretive.

<unk> hundred 20.

Additionally, the <unk> hundred 20 is 20% more efficient compared to the E 190 on a unit cost basis, which will be a long term benefit to our cost structure as we transition out of the <unk> hundred ninety's.

18, <unk> hundred 90 days have already exited the fleet and as a reminder, we continue to plan for all our <unk> to be retired by the end of 2025.

Turning to slide 11, we ended the third quarter with $2 1 billion in liquidity, including our $600 million revolving credit facility, which remains undrawn and which we're pleased to announce we recently extended by one year.

Ursula Hurley: For the full year, we are raising our Casm X fuel outlook to up 4.5 to 5.5% just above the high end of our prior range. This includes two points of headwinds from the challenging operational disruptions we have faced this summer and the proactive investments we made to more quickly recover from these challenges. While we have been successful in identifying levers to offset some of these incremental costs, the sheer magnitude of the ATC and weather related delays has been staggering.

We continue to take a conservative approach to managing liquidity as we step up our fleet modernization efforts.

We have been actively financing and have committed financing in place for approximately $1 billion year to date of which 600 million is reflected in our quarter end liquidity position.

Ursula Hurley: Our team is continually looking for opportunities to mitigate additional costs. With respect to the GTF engine issues, we continue to have conversations with Pratt and Whitney to assess the longer term impact and discussions around compensation are ongoing. Based on Pratt and Whitney's initial analysis, we expect to end 2023 with up to six of our aircraft grounded due to GTF engine issues and we anticipate the number of out of service aircraft to increase throughout 2024, ending the year with high single digits to low double digits of aircraft out of service.

We took delivery of five aircraft in the third quarter, bringing our year to date total to 11 new aircraft.

We expect to take delivery of six additional aircrafts through year end for a total of 17, new deliveries. This year with two deliveries now pushed into early 2024.

As a result, we now expect our full year 2023, capex to be $1 $2 billion.

Finally, rising oil prices have led to increased fuel prices, we continue to look for opportunities to layer in hedges to help mitigate this risk.

As of today, we have hedged approximately 30% of our expected fuel consumption for the fourth quarter, which we expect to provide a five cent per gallon benefit to our fourth quarter fuel price.

Ursula Hurley: These issues are also driving an elevated number of engine changes and despite introducing a number of self-help measures over the last 18 months, we expect our 2024 capacity plans and cost outlook to be meaningfully impacted. Given the increase in unscheduled GTF related downtime coupled with the aircraft delivery delays and aircraft retirement, we are planning capacity in the first quarter of 2024 to be slightly down on a year over year basis. With the slower capacity growth, we remain laser focused on executing our structural cost program and delivering efficiencies.

In closing, while we continue to manage through an exceedingly dynamic and challenging operating environment. We are focused on controlling what we can control and executing our plans to mitigate these challenges.

We have reduced our Q4 capacity in markets, where low yields remained pressured and as we trim. Our New York schedules, we are reallocating that capacity to margin accretive leisure and VFR opportunities in.

In addition, we are aggressively focused on pulling the levers at our disposal to manage costs, including our structural cost program and fleet monetization plans we.

Ursula Hurley: We expect to drive approximately $70 million in cost reduction this year and $150 to $200 million in run rate savings through 2024 under our structural cost program. We expect these savings to ramp quickly throughout 2024 as we streamlined input costs for onboard offerings and ramp up our use of technology based solutions to enhance productivity. Additionally, through our fleet modernization program, we have achieved $55 million in cumulative cost savings to date and remain on track to achieve $75 million of maintenance cost avoidance through 2024 as we replace our E 190 fleet with margin accretive A220.

We are confident in our strategy and believe these actions coupled with the strategic initiatives. We have in place are creating a strong foundation positioning us to drive profitable growth return margins to historical levels.

And deliver long term value to our owners and all of our stakeholders.

With that we will now take your questions.

Ursula Hurley: Additionally, the A220 is 20% more efficient compared to the E 190 on a unit cost basis, which will be a long-term benefit to our cost structure as we transition out of the E 190s. 18 E 190s have already exuded the fleet and as a reminder, we continue to plan for all our E 190s to be retired by the end of 2025. Turning to slide 11, we ended the third quarter with $2.1 billion in liquidity, including our $600 million revolving credit facility, which remains undrawn in which we're pleased to announce we recently extended by one year.

Thanks, everyone. We're now ready for the question and answer session. As we mentioned, we will not be answering any questions related to spirit on today's call.

With that Joelle. Please go ahead with the instructions.

Thank you.

And gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear three Tom crop acknowledging your request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star followed by the true.

If you are using a speaker phone please lift the handset before pressing any keys one moment. Please for your first question. Your first question comes from Savi <unk> with Raymond James. Please go ahead.

Hey, good morning, everyone.

If I might on the kind of next year, excluding what kind of the earnings contribution or any merger related spend.

How should we think about some of the key cash outflows and inflows as you think about Capex, and then maybe financing and debt payments.

Ursula Hurley: We continue to take a conservative approach to managing liquidity as we step up our fleet modernization efforts. We have been actively financing and have committed financing in place for approximately a billion dollars a year to date of which 600 million is reflected in our quarter end liquidity position. We took delivery of five aircraft in the third quarter, bringing our year-to-date total to 11 new aircraft. We expect to take delivery of six additional aircraft through year end for a total of 17 new deliveries this year, with two deliveries now pushed into early 2024.

Good morning, Savi. Thanks for the question. So as a reminder, we continue to work through our fleet modernization program. So next year, we do have a step up in terms of the number of aircraft deliveries. So we're expecting 28 aircraft to deliver.

Sure. The majority of those are margin accretive <unk> hundred 20, So we will have a step up in our capex profile related to that fleet modernization program and we also have a manageable debt tower next year as well and we continue to have a really healthy balance.

Ursula Hurley: As a result, we now expect our full year 2023 capex to be $1.2 billion. Finally, rising oil prices have led to increased fuel prices. We continue to look for opportunities to layer in hedges to help mitigate this risk. As of today, we have hedged approximately 30% of our expected fuel consumption for the fourth quarter, which we expect to provide a five cent per gallon benefit to our fourth quarter fuel price. In closing, while we continue to manage through an exceedingly dynamic and challenging operating environment, we are focused on controlling what we can control and executing our plans to mitigate these challenges.

Of unencumbered assets. So the debt raises that we have done thus far this year is inclusive of not only deliveries. This year, but previously purchased aircraft that we did with cash. So I think the headline is I feel comfortable about where the liquidity number is we do have a step up in capex next year with that product.

Debt Paydown is reasonable and we continue to have a healthy unencumbered base to support a healthy liquidity level as we navigate through 2024.

Okay. That's helpful and just two.

If you can provide the unencumbered assets and I would also kind of like the Asti.

The timing of the Laguardia wind down and how Youre thinking about it I know you shared plans earlier, but I wonder if that's changed given you know the kind of a new capacity view.

Ursula Hurley: We have reduced our Q4 capacity and markets will yield remain pressured, and as we trim our New York schedules, we are reallocating that capacity to margin the creative leisure and VFR opportunities. In addition, we're aggressively focused on pulling the levers at our disposal to manage costs, including our structural cost program and fleet monetization plans. We are confident in our strategy and believe these actions coupled with the strategic initiatives we have in place are creating a strong foundation positioning us to drive profitable growth, return margins to historical levels, and deliver long-term value to our owners and all of our stakeholders.

Sure. So in regards to the unencumbered assets as I mentioned in my prepared remarks, we have a $1 billion of liquidity of liquidity coming in the door 600 of that has already hit through the third quarter and the remaining will come in the door through the end of the year once we complete that.

Cash inflow will have about 50 aircraft that will still be unencumbered.

As a reminder, we have the bridge facility current currently in place to support the spirit transaction that bridge is encumbered by.

Our loyalty program, we have aircraft, we have engines and we also have our slots gates and routes and so once that bridge is taken out. We will also have some of those unencumbered assets fall back into the portfolio that we could use in the future to raise additional liquidity.

Koosh Patel: With that, we will now take a question. Thanks, everyone. We're now ready for the question and answer session. As we mentioned, we will not be answering any questions related to spirit on today's call. With that, Joel, please go ahead with the instructions. Thank you.

And I will hand, it over to Dave to answer the Laguardia question Hi, Good morning, Savi for Laguardia, we'd flown as much as 52 departures a day at the height of the NDA.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. And your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please let the hands up before pressing any keys. One moment, please, for your first question.

We hinted back six slot pairs as we entered the winter season here. So worried about mid forties in terms of departures per day from Laguardia as we go through this winter and then in late March will step down to roughly 30 per day and continue that pace through next summer.

Savi Swift: Your first question comes from Savi Swift with Raymond James. Please go ahead. Good morning, everyone.

Very helpful. Thank you for all the color.

Your next question comes from Dan Mckenzie with Seaport Global Please go ahead.

Ursula Hurley: If I'm on the next year excluding what kind of earnings contribution or any merger related spend, how should we think about some of the key cash outflows and inflows? As you think about, you know, Catholics and then maybe financing and debt payments. Herman. Good morning, Savi. Thanks for the question. So as a reminder, we continue to work through our fleet modernization program. So next year, we do have a step up in terms of the number of aircraft deliveries.

Oh, Hey, good morning, Thanks, guys.

Just kind of looking at the stock here Theres a lot of skepticism and I was just hoping you can help us understand the path on the timing back to profitability, maybe not necessarily in 2024, but say $20 25, and so I guess high level can you just help us size the hits of pretax profits from the slower than expected recovery in New York City the.

Ursula Hurley: So we're expecting 28 aircraft to deliver next year. The majority of those are the margin of creatives a to 20. So we will have a step up in our catback profile related to that fleet modernization program. We also have a manageable debt tower next year as well. And we continue to have a really healthy balance of unencumbered assets. So the debt raises that we have done thus far this year is inclusive of not only deliveries this year, but previously purchased aircraft that we did with cash.

ATC cancellations in the Pratt <unk> Whitney engine issues. It just seems like Theres, a huge chunk of revenue huge chunk of course, you know that.

At some point go away and just how can we size that.

Yeah. Thanks for the question, Dan I mean.

Our goal is to get the business back to a consistent profitability and we believe that we have specific tailwind to jetblue that are going to come to fruition as we navigate through 2024 and the New York recovery has.

It has been slower than we anticipated. However, we continue to see meaningful progress and in New York profitability levels, we still need to get them back up to pre COVID-19 levels, but we're seeing progress, but the 10% slot relief, obviously provides us meaningful runway to redeploy.

Ursula Hurley: So I think the headline is I feel comfortable about where the liquidity number is. We do have a step up in catbacks next year. The debt, the debt paydown is reasonable. And we continue to have a healthy unencumbered base to support a healthy liquidity level as we navigate through 2024.

Capacity to more margin accretive opportunities.

The second issue is ATC and as I mentioned the slot portfolio reduction of 10% allows us to plan more effectively as we build the 2024 plan and so that will definitely provide some relief from a cost perspective.

Ursula Hurley: Great, that's helpful. And just to if you can provide the unencumbered assets, and I would also kind of like to ask the timing of the liquidity of wind down on how you're thinking about it. I know you shared plans earlier, but I wonder if that's changed given, you know, the kind of new capacity view. Sure, so in regards to the unencumbered assets, as I mentioned in my prepared remarks, we have a billion dollars of liquidity of liquidity coming in the door 600 of that has already hit through the third quarter, and the remaining will come in the door through the end of the year.

Our continued execution of structural cost in our fleet modernization program. We're still in the very early stages of our fleet modernization program or about a third of the way in them and so that will continue to deliver meaningful value given the age of 20 provides a 20% unit cost benefit compared to the <unk> hundred 90, and then I am.

Pleased with the structural cost program progress, we've achieved 70 million of date and our 2024 plan will assume that we achieved $150 million to $200 million commitment that we made so on the whole I believe we have the right foundational pillars to bring the business back up to consistent profitability.

Ursula Hurley: Once we complete that cash inflow, we'll have about 50 aircraft that will still be unencumbered. As a reminder, we have the bridge facility currently in place to support the spirit transaction, that bridge is encumbered by our loyalty program. We have aircraft, we have engines, and we also have our spot gates and routes. And so once that bridge is taken out, we will also have some of those unencumbered assets fall back into the portfolio that we could use in the future to raise additional liquidity.

I'll also add just loyalty and Jetblue travel products those are continuing to expand with profitable growth and I think you could expect one to three incremental points of margin tailwind as we move through 'twenty four 'twenty five and then just to kind of reemphasize ours will appoint a New York New York is progressing nicely, it's not back to where it was pre COVID-19.

And pre Covid. It was a a margin engine for Jetblue. It will get back there, it's a constrained environment and over time, we think it's strategically important and an incredibly important part of it.

Dave Clark: And I will hand it over to Dave to answer the LaGuardia question. Hi, good morning, Favi. For LaGuardia, we'd flown as much as 52 departures a day at the height of the NEA. We handed back six slot pairs as we entered the winter season here, so we're about mid 40s in terms of departures per day from LaGuardia to this winter. And then in late March, we'll step down to roughly 30 per day and continue that pace through next summer.

Of our network and in our efforts here.

Yes.

And I guess.

To that point I'm wondering if there's a second question here, if you'd be willing to address the credit card competition Act of 2023, and so I guess, maybe this would be for Robyn we are seeing other Ceos predict that these the programs would go away, but I wonder if you could elaborate what that would mean for for Jetblue.

Savi Swift: I hope we'll thank you for all the color.

And I guess just in particular is this revenue that would necessarily disappear or I guess, how should investors think about this I think.

Dan Mckenzie: Your next question comes from Dan McKenzie with Seaport Global. Please go ahead. Oh, hey, good morning, things guys. You know, I'm just kind of looking at the stock here. There's a lot of skepticism.

Think about that at this point.

Yes. So thanks for the question Dan and in case, everyone is aware the issue. This is a proposal to basically bring more competition into the interchange space. So that merchants have an alternative to either visa master card to a protest for.

Dan Mckenzie: I'm just hoping you can help us understand the path on the timing back to profitability. Maybe not necessarily in 2024, but, you know, say, 2025. And so I guess high level. Yeah, can you just help us size the hit the pre-tax profits, you know, say from the slower than expected recovery in New York City, the ATC cancellations and the Pratt and Whitney engine issues. It just seems like there's a huge chunk of revenue, huge chunk of costs. Yeah, but at some point, you know, go away and just, you know, how can we size that?

The transaction.

Really a follow on to the what we saw in the debit card side.

2010.

Personally I.

I think that this is likely to continue to face a lot of opposition. The majority of Americans have a rewards card.

Robin Hayes: Thanks for the question, Dan. I mean, our goal is to get the business back to a consistent profitability, and we believe that we have specific tailwinds to JetBlue that are going to come to fruition as we navigate through 2024. The New York recovery has been slower than we anticipated. However, we continue to see meaningful progress in New York profitability levels. We still need to get them back back up to pre-COVID level, but we're seeing progress that the 10% slot relief obviously provides us meaningful runway to redeploy capacity to more immersion, a creative opportunity.

Whether that's a travel card or another.

Sort of a benefit.

And that would be lost if this.

Pauses because the.

Divide those consumer benefits come through that.

And to change <unk>.

Work and so.

The argument goes out price reductions would get passed on by retailers to consumers I think there's a healthy level of skepticism whether that would happen I think it's you know.

It's far from clear that there were benefits to consumers when we sold the debit card changes back in 2010, and frankly, if consumers want the cash option. There were plenty of 2% cashback cards available now that they can go and get so whether it's kind of cash or whether it's travel whether it's hotels or airlines or these travel cards.

Robin Hayes: The second issue is ATC, and as I mentioned the slot portfolio reduction of 10% allows us to plan more effectively as we build the 2024 plan. And so that will definitely provide some relief from a cost perspective. And then our continued execution of structural cost in our fleet modernization program, or still in the very early stages of our fleet modernization program, or about a third of the way in. And so that will continue to deliver meaningful value given the A220 provides a 20% unit cost benefit compared to the E190. And then I'm pleased with the structural cost program progress. We've achieved 70 million a date, and our 2024 plan will assume that we achieved 150 to 200 million dollar commitment that we made.

These are very very popular and I think that.

If this thing progresses, then I think members of Congress across both sides of the aisle here.

Significant number of complaints and that constituents because these causal popular vacations and other things more accessible for people that they would be otherwise and I think people want to keep the benefits rather than see them.

We pass through big box retailers, who.

You know put decided just to keep the profit for themselves. So.

Robin Hayes: So on the whole, I believe we have the right foundational pillars to bring the business back up to consistent profitability. I'll also add just loyalty and jet blue travel products, those are continuing to expand with profitable growth. And I think you could expect, you know, one to three incremental points of margin tailwind as we move through 24 into 25. And then just to kind of re-emphasize ourselves point on New York, New York is progressing nicely.

I've got a great level of skepticism.

Whether this would pass.

Okay. Thanks for the time you guys.

Yes.

Your next question comes from Jamie Baker with Jpmorgan go ahead.

Oh, Hey, good morning, everybody so.

Obviously lots of talk about air traffic control, whether an oversupply and all that but one thing that mark and I had been thinking about is the remuneration from from your credit card partners.

Robin Hayes: It's not back to where it was pre-COVID and pre-COVID. It was a margin engine for jet blue. It will get back there. It's a constrained environment. And over time, we think it's strategically an important and incredibly important part of of our network and our efforts here. Yeah.

Loyalty, so if we tie loyalty back to earnings.

And if we think about your margins relative to just pick one delta United and I know Joanna talked about closing the gap, but do you have an internal estimate as to how many points of margin differential loyalty might currently be driving.

Dan Mckenzie: And I guess, you know, to that point, I'm wondering if there's a second question here, if you'd be willing to address the credit card competition act of 2023. And so I guess maybe this would be for Robin. You know, we are seeing other CEOs predicted these, the programs would go away. But I wonder if you can elaborate what that would mean for jet blue. And I guess, you know, just in particular, is this revenue that would necessarily disappear? Or, you know, I guess, how should investors think about this at that, think about that at this point? Yeah. So thanks for question, Dan.

Yeah, Hi, Jamie.

No.

It's clearly a margin gap plus right I mean.

Sure.

I think all these airlines report sort of roughly what that percentage of our revenue is and then if you assume.

The module among these programs are all high.

Yeah, it's definitely.

It's definitely single digit low single digit percentages of of a difference.

Robin Hayes: And in case everyone isn't aware of the issue, this is a proposal to basically bring more competition into the interchange space so that merchants have an alternative to either visual mastercard to process the transaction. It's really a follow on to the what we saw in the debit card side 2010. Personally, I think that this is likely to continue to face a lot of opposition. The majority of Americans have a reward card, whether that's a travel card or another sort of benefit.

This is why actually we have been so focused on not just building our travel.

Let alone loyalty program to sort of play catch up but also creating jetblue travel products. We know that we do not have the same exposure to business travel or some of these global leisure Airlines and so how do we gain more exposure more shallow share of wallet for leisure customers as well and so our goal over time is to.

Get to a point, where our jetblue travel products and our loyalty program together.

Dana point can be at a point, where they can compete for what I'd call a legacy airline type margin. So thats. The road were on Jamie we're not yet, but we are I.

I think might be really good.

Robin Hayes: And that would be lost if this act passes because the, you know, the, the virus consumer benefits come through that, you know, that interchange network. And so, you know, the argument goes that price reductions would get passed on by retailers to consumers. I think there's a healthy level of skepticism, whether that would happen. I think it's, you know, it's far from clear that there were benefits to consumers when we saw the debit card changes back in 2010.

Really good progress.

And thank you Robin and then as a follow up to that you've talked about loyalty as a means to fund the business, particularly if you do find yourself hypothetically with greater leverage a year or so down the road.

Garrett and Hawaiian loyalty is now trading north of 20% I guess.

How are you thinking about loyalty as a funding option.

Going forward do you need to identify some contingencies in terms of funding potential.

Robin Hayes: And frankly, you know, if consumers want the cash option, there will plenty of 2% cash back cards available now that they can go and get. So whether it's kind of cash off or whether it's travel, whether it's hotels or airline or these travel cards, these are very, very popular. And I think that, you know, if this thing progresses, then I think members of Congress across both sides of the aisle will hear a significant number of complaints from their constituents because these cars are popular and they make vacations and they make other things more accessible for people than they would be otherwise.

Hey, Jamie.

I think we're just going to kick that question to following the trial I'm not really addressing any of the spirit related questions today on the call.

Well it had more to do with leveraged and spirit, but fair enough. Okay. Thank you.

Your next question comes from Conor Cunningham with Melius Research. Please go ahead.

Hi, everyone. Thank you could you just speak a little bit to the puts and takes as you think about the cost structure and a 24. It seems like maintenance is going to be up a fair bit flight attendant deal, but you also have some self help initiatives just curious on how you're thinking about it in the context of.

Robin Hayes: And I think people want to keep the benefits rather than see them be passed the big box retailers who, you know, could decide just to keep the profit for themselves. So I've got a great level of skepticism as to whether this would pass.

Now youre talking about <unk> capacity being down year over year. It just seems like it hasn't Mexico start to track.

Year over year for 24, just curious on how you're thinking about it. Thank you.

Yeah. Thanks for the question Conor So maybe at the highest level Jetblue typically is targeted at mid to high single digit growth rate and then flat CASM ex fuel that profile is going to look different next year because of aircraft delivery delays, we have GTS aircraft that will be grounded.

Dan Mckenzie: Okay, thanks for the time, you guys.

Jamie Baker: Your next question comes from Jamie Baker, with JP Morgan, Dr. O'House.

Jamie Baker: Okay, good morning, everybody. So, you know, obviously, lots of talk about, you know, air traffic control, weather and over supply and all that. But, you know, one thing that Mark and I have been, you know, thinking about is the remuneration from your credit card partners, you know, from loyalty. So, if we tie loyalty back to earnings, and if we think about your margins relative to, you know, just pick one Delta or United, and I know Joanna talked about closing the gap, but do you have an internal estimate at the how many points of margin differential loyalty might currently be driving?

And also we're continuing with the <unk> hundred 90 retirement plan and so the growth profile will look different.

As you mentioned the capacity will be down in the first quarter, a slightly down year over year, and we're still working through our 2020 for planning assumption you should assume that we will pinpoint CASM ex fuel to be competitive compared to where we put them depending on where we put capacity.

The headwinds, which we've always known about them is maintenance next year, just given the aging fleet and also continued pressure on labor right and just the inflationary environment, which is consistent with what others have been seeing we obviously have a another pilot step up in August of next year. So those are the headwinds, but those are really the reasons whereby.

Jamie Baker: Yeah, hi, Jamie. You know, look, it's clearly a margin gap to us, right? I mean, you know, I think all these airlines report sort of roughly what their percentage of revenue is, and then, you know, if you assume that the margin on these programs are high, you know, it's definitely, you know, it's definitely single digit, low single digit percentages of difference. This is why actually we've been so focused on not just building our travel, but our own loyalty program to sort of play catch up, but also creating jet blue travel products.

Which we put in place the structural cost program and so those are the structural cost program is meant to offset some of these headwinds so working through the planning process. You can expect us to have a competitive CASM ex fuel number in next year once we pinpoint capacity.

Jamie Baker: You know, we know that we do not have the same exposure to business travelers on these global leisure airlines. And so how do we gain more exposure, more share of wallet for leisure customers as well? And so, I'll go over time is to get to a point where our jet blue travel products and our loyalty program together can be a point, can be a point where they can compete for what I'd call a legacy airline type margin. So that's the road we're on, Jamie. We're not, yeah, that, but, you know, we're, I think, making really good, making really good progress.

Okay. Thank you that's helpful and then.

On premium products or are you needing to discount those in the current environment. The reason why I ask is you've seen a sequential deceleration versus 19 from <unk> to <unk> and I would have thought that maybe even more space sort of protected you a little bit is that I think you called out four points.

Hum RASM benefit from that and is that continuing in the fourth so just curious on.

Products are holding up. Thank you. Yes. Thanks. This is Joanne a great question. Yes. We are we are really pleased with how well premium continues to hold up and we would expect those trends to continue into the fourth quarter. As we mentioned in the scripted remarks is you look at next year, we're actually taking all 320 ones in the mint configuration and the 221 90 retirement will be.

Robin Hayes: And thank you, Robin. And as a follow up to that, you know, you've talked about loyalties, it means to, you know, fund the business, you know, particularly if you do find yourself hypothetically with greater leverage a year or so down the road, you know, Spirit and Hawaiian loyalty is now trading north of 20%. I guess, you know, how are you thinking about loyalty as a funding option going forward? Do you need to identify some contingencies in terms of funding potential?

<unk> seen them going from 16 U S seats to 30 MFC. So we're very pleased with the strength that we are seeing in the premium.

In the premium sector moving forward.

Okay. Thank you.

Yeah.

Robin Hayes: Hey, Jamie, I think we're just going to kick that question to, you know, following the trial, not really addressing any of the spirit related questions today on the call. Well, it had more to do with leverage than spirit, but fair enough.

Your next question comes from Michael Lindenberg with Deutsche Bank. Please go ahead.

Hi, Good morning, this is actually Shaun Doherty on for Mike.

Robin Hayes: Okay.

Just a quick one we're hearing about the GTS engine inspection requirements are not based on aircraft manufacturer needs between mid 2015, and mid 2021, rather than production and the timeline of looking how many cards, which can be spilling into newer aircraft delivery can you confirm that and at this point you think that your 18 twenties are going to be affected by this issue.

Unknown Executive: Thank you.

Connor Cunningham: Your next question comes from Connor Cunningham with Melius Research. Please go ahead. Hi, everyone. Thank you. Can you speak a little bit to the puts and takes as you think about the cost structure in the 24? It seems like maintenance is going to be up a fair bit. You have a flight attendant deal. We also have some self-help initiatives. Just curious on how you're thinking about it in the context of, you know, you're talking about one queue capacity being down your rear. It just seems like has mechs to start to track up your rear at 24. Just curious on how you're thinking about it now. Thank you.

Yeah.

Thanks for the question. So proud have given US an initial assessment of Jetblue is exposure. So we highlighted on the call today, we will have up to six aircrafts grounded by the end of this year and then that will increase as we navigate through next year. So will end next year with.

Ursula Hurley: Yeah, thanks for the question, Connor. So maybe at the highest level, JetBlue typically has targeted mid to high single digit growth rate, and then flat Kazemax fuel. That profile is going to look different next year because of aircraft delivery delays. We have GTS aircraft that will be grounded and also we're continuing with the E 190 retirement plan. And so the growth profile will look different. As you mentioned, capacity will be down in the first quarter, slightly down year over year.

High single digits low double digit number of aircraft on the ground. So in regards to your specific serial number question. So on the PW 1100, so that C. <unk> hundred 21 aircraft a service bulletin is coming out imminently and that's important because it will give a very detailed view of serial number.

And it will solidify what we believe to be our exposure in 2024 and beyond <unk>.

In regards to the 1500 mm the majority of our engines were manufactured post 2021, and we have a very small amount of engines that were and where that were manufactured pre 2021 and so I think that's what you were referencing in terms of.

Ursula Hurley: And we're still working through our 2024 planning assumption. You should assume that we will pinpoint Kazemax fuel to be competitive compared to where we put, depending on where we put capacity. The headwinds, which we've always known about, is maintenance next year, just given the aging fleet and also continue pressure on labor, right. And just the inflationary environment, which is consistent with what others have been seeing. We obviously have another pilot step up in August of next year.

A handful that are pre 2021 are going to need full part replacements. We do have a view on how the a 220 P. W. 1500 will impact US next year and that is built into.

The mid or high single digits low single digit number by the end of next year. It is very small compared to the <unk> hundred 21 aircraft in terms of exposure so hopefully that helps.

Ursula Hurley: So those are the headwinds, but those are really the reasons whereby which we put in place the structural cost program. And so those are the structural cost program is meant to offset some of these headwinds. So working through the planning process, you can expect us to have a competitive Kazemax fuel number next year, once we pinpoint capacity. Okay. Thank you. That's helpful.

Yeah that is that's really helpful. Thanks.

We saw that you pulled eight percentage points of capacity growth in the March quarter schedules over this past weekend was that driven by you know the anticipated acceleration of the grounding.

Or was that demand driven cut maybe something that you're seeing in the off peak period before spring break or something.

Ursula Hurley: And then on premium products, are you needing to discount those in the current environment? The reason why I asked is, you're seeing us sequential deceleration, verse 19, from 3Q to 4Q. And I would have thought that mint may be even more space would have protected you a little bit. Is that, I think it called out four points of, of, of, of, of, of, of, of Rasm benefit from mint? Is that continuing into for you? Just curious on, on how those products are. Thank you.

Sure. Thanks for the question. This is Dave the Q1 2024 capacity is driven by aircraft availability constraints, so largely the engines and the delivery delays and we expect that to remain the case throughout 2024.

Yeah.

Thank you.

Your next question comes from Duane <unk>.

Pending worth with Evercore ISI. Please go ahead.

Ursula Hurley: Yep. Thanks. This is doing a great question. Yeah. We are, we are really pleased with how well premium continues to hold up. And we would expect those trends to continue into the fourth quarter. As we mentioned in the script of remarks, as you look at next year, we're actually taking all 321s in the mint configuration. And the 220, 190 retirement will be seeing going from 16 EMS seats to 30 EMS seats. So we're very pleased with the strength that we are seeing in the premium, in the premium sector, moving forward. Okay.

Ursula Hurley: Thank you.

Hey, Thank you.

Can we talk a little bit about the revenue outcome capacity up seven revenue down eight.

Obviously, you're taking some steps on capacity into <unk> and into early next year, but.

But maybe within domestic can you speak about relatively stronger versus weaker markets.

The domestic entity, how does your Latin RASM compare.

With that domestic decline.

And obviously many of these changes were forced on you without much lead time.

Michael Linenberg: Your next question comes from Michael Lindenberg with Deutsche Bank. Please go ahead. Hi, good morning. This was actually Shannon's already on from Mike. Just a quick one. We're hearing about the GTF engine inspection requirements are not based on aircraft manufacturer dates between mid 2015 and mid 2021. But rather the production of it and the timeline of the contaminated parts, which could be spilling into near aircraft delivery.

And I guess over time, you'll be able to plan for that a little bit better can you quantify how much the NDA wind down impacted you in the quarter.

Sure. Thanks, Duane this is Dave I'll take that so clearly it's been a challenging environment as we've seen demand sort of.

Transition out of the domestic space in the third quarter on a year over year basis, while at the same time a lot of capacity was coming in from the industry.

Ursula Hurley: Can you confirm this? And at this point, do you think that your 1820s are going to be affected by this issue? Thanks for the question. So Prada has given us an initial assessment of jet blues exposure. So we highlighted on the call today. We'll have up to six aircraft grounded by the end of this year, and then that will increase as we navigate through next year. So we'll end next year with high single digits, low double digit number of aircraft on the ground.

Where we've been reallocating capacity out of it and see and I think the most acute demand challenges have been some of the shorter haul markets and some of the business markets. So we've really focused there to rightsize that capacity to the new reality in those markets.

You know the corporate side continues to recover for us, but it's still well below about 20% below the revenues are pre COVID-19.

Let them continues to be pretty resilient.

And we've been growing there.

Ursula Hurley: So in regards to your specific serial number question, so on the PW 1100. So that's the A321 aircraft. The service bulletin is coming out eminently. And that's important because it will give a very detailed view of serial numbers, and it will solidify what we believe to be our exposure in 2024 and beyond. In regards to the 1500, the majority of our engines were manufactured post 2021. We have a very small amount of engines that were manufactured pre 2021.

And traditionally have done extremely well there.

And then some other places like Florida has a lot of industry capacity right now demand demand is healthy.

No concerns there, but it's I'd say temporarily.

Our shared by industry capacity, which should you know I'd say absorb over time, but we've really been focused on the places where we've seen demand rollout.

Ursula Hurley: And so I think that's what you were referencing in terms of the handful that are pre 2021 are going to need full part replacement. We do have a view on how the A220 PW 1500 will impact us next year, and that is built into the mid or high single digits, low single digit number at the end of next year. It's very small compared to the A321 aircraft in terms of exposure. Hopefully that helps. Yeah, that's really helpful. Thanks, Ursula.

And making sure that we're aligned with regards to New York City.

For the first for the third quarter. It was about a one point headwind we did have a partial quarter. There as we did not terminate until late July through to the Hudson sales for the quarter.

It grows to about two points this quarter, which we expect to be the biggest impact and then it starts to get better next year as we could allocate more capacity out of New York City and take advantage of the Redeployments. We've done recently I'll also address on Trans Atlantic also some very strong performance, there, 140% ASM growth with flat year over year, RASM and I think.

You see some of the moves we're making in terms of doubling in Scotland trying to take advantage of that leisure seasonal leisure seasonal flying.

Yes Duane.

Don't know if having all three of US answer a question I think that.

Dave Clark: And, you know, we saw that you pulled eight percentage points of capacity growth from the March quarter schedules over this past weekend. Was that driven by, you know, the anticipated acceleration of the grinding or, you know, was that demand driven cut, maybe something that we were seeing in the off peak period before spring break or something. Thank you. Sure, thanks for the question. This is Dave. The Q1224 capacity cut is driven by aircraft availability constraints. So largely the engine from the delivery delays. And we expect that to remain the case throughout 2024.

What we're trying to be very it is very easy to reallocate capacity in this industry its.

Duane Pfennigwerth: Thank you.

It's very mobile it moves quickly and sometimes things become hot very quickly and everyone moves towards it.

And then ends up being oversupplied and so what we're trying to do is kind of be very thoughtful around not just the immediate trends that we're seeing now and some of the commentary, but what do we think kind of sits behind that because the really good news for US is the new slot waiver, which we know about now means that we can be much more considered about these.

Duane Pfennigwerth: Your next question comes from Duane Pfennigwerth with Evacore ISI.

<unk>, rather than sort of having to pull flights at short notice order of hide the crews we got the cost embedded in the business not really an opportunity to efficiently.

Duane Pfennigwerth: Please go ahead. Hey, thank you. Can we talk a little bit about the revenue outcome capacity up seven revenue down eight? Obviously, you're taking some steps on capacity into 4Q and into early next year. But maybe within domestic, can you speak about, you know, relatively stronger versus weaker markets within the domestic entity? How does your Latin Rasm compare with that domestic decline? And obviously, many of these NEA changes were forced on you without much lead time.

Redeploy that it's a very different chessboard, we have in front of us for 2024.

Okay. Thanks for those thoughts and then just for my follow up on <unk>.

2020 for Capex. It looks like you have a contractual delivery table and then some footnotes with kind of likely deliveries simple question does the aircraft commitments capex of roughly $2 2 billion reflect.

Reflect your contractual or or likely deliveries very long winded way of asking you what your what your total capex will be next year.

Duane Pfennigwerth: And I guess over time, you'll be able to plan for that a little bit better. Can you quantify how much the NEA wind down in back to you in the quarter? Sure, thanks Duane. This is Dave. I'll take that. So clearly it's been a challenging environment as we've seen demand sort of transition out of the domestic space in the third quarter on a year basis, while at the same time, a lot of capacity was coming in from the industry.

So there's definitely a difference between our contractual commitments and what we're planning. So we're planning to receive 28 aircraft. However, the Capex number you referenced is ballpark, where we should end up.

Duane Pfennigwerth: Where we've been reallocating capacity out of and have seen, I think, the most acute demand challenges have been some of the shorter haul markets and some of the business markets, so we've really focused there to right size that capacity to the new reality in those markets. But, you know, the corporate side continues to recover for us, but it's still well below about 20% below the revenues of pre-COVID. Latin continues to be pretty resilient.

And what would we add to that $2 2 billion, what would your total day it'll be slightly less than that.

Okay. Thank you very much actual commitments are higher.

Thank you.

Your next question comes from Catherine O'brien with Goldman Sachs. Please go ahead.

Hey, good morning, everyone. Thanks for the time I just wanted to dig in on on New York, a little bit more.

The advance notice of the slot relief in New York this upcoming summer.

Duane Pfennigwerth: And we've been growing there and traditionally have done extremely well there. And then some other places, you know, Florida has a lot of industry capacity right now. The demand is healthy. We have no concerns there, but it's bit, I'd say temporarily pressured by industry capacity, which should, you know, I'd say absorb over time. But we've really been focused on the places where we've seen demand roll out and making sure that we're aligned with regards to New York City, the NEA for the first, for the third quarter was about a one point headwind.

How does that impact profitability in and I guess longer term do you need to get back to full ability to fly or New York Salt portfolio with like pre Covid operational reliability for those New York margins to recover.

How do you think about getting back to 2019 margins on a system basis without New York recovery, Our full New York recovery is that possible.

So we do expect a full new York recovery, it's just a bit slower than I think anybody would have hoped but if you look specifically at JFK. For example, we're really pleased with the progression that J F. K is making in terms of the operational impact and a T. C. You know our hope is now that there's a administrator will see even greater focus on how to ensure.

Duane Pfennigwerth: We did have a partial quarter there as we didn't terminate until late July, so we did have some sales for the quarter. It grows to about two points this quarter, which we expect to be the biggest impact and then starts to get better next year as we can allocate more capacity out of New York City and take advantage of the redeployment we've done recently. I'll also add just on transit, Atlantic, also some very strong performance there, 140% ASM growth with flat year-rear rasm.

That New York.

Is staffed appropriately from an air traffic control perspective.

And that's a couple of years in the making it takes a little while to to fully bring on staffing, but we're hopeful that with these slot with the slot waivers that's not something that's sustainable and at some point.

The underlying issue has got to be addressed in a more a thoughtful way and so making sure that we're prepared to take full advantage of that with the slot portfolio that we do have here.

Duane Pfennigwerth: And I think you see some of the moves we're making in terms of Dublin and Scotland trying to take advantage of that leisure seasonal flying. Yeah, Duane, you're at the honour of having all three of us answer a question. I think that what we're trying to be very thought, it is very easy to reallocate capacity in this industry. You know, it's very mobile. It moves quickly. And sometimes, you know, things become hot very quickly and everyone moves towards it.

It's constrained that's a good place to be particularly when you're a leisure carrier.

Duane Pfennigwerth: And then it ends up being over supplied. And so what we're trying to do is kind of be very thoughtful around not just sort of the immediate trends that we're seeing. Now some are commentary, but you know, what do we think kind of sits behind that? Because I think the really good news for us is the new slot waiver, which we know about now, means that we can be much more considered about these changes, rather than sort of having to pull flights at short notice already have hired the crews. We've got the cost embedded in the business, not really an opportunity to effectively redeploy that.

And we're looking forward to seeing New York fully return, but it'll take a little while to get there, but on pace on pace for a for a probably call. It 24 25.

Okay got it.

And then and then how should we think about the puts and takes between aircraft on the ground increasing over the course of 'twenty four against aircraft deliveries.

It sounds like we should stay tuned for official guidance, but just high level is down slightly year over year in the first quarter is that the high watermark with declines going deeper through year end or just anything high level on where year over year capacity goes from <unk>. Thanks.

Yeah. So I think the first quarter is probably close to a representation I mean, just to put a high level right. We take 28 deliveries next year. We're retiring 24 and then we've got grounded aircraft due to the G. T. App. So in the mid to high single digits.

Ursula Hurley: It's a very different chess board we have in front of us for 2024. Okay, thanks for those thoughts. And then just just for my follow up on 2024 catbacks, it looks like you have a contractual delivery table and then some footnotes with kind of likely deliveries. Simple question, does the aircraft commitments catbacks of roughly 2.2 billion reflect your contractual or or likely deliveries a very long-winded way of asking what your what your total catbacks will be next year?

It's to low double digits, so and that progresses throughout the year. So we start with six at the end of this year and then that will end the year at low double digits. So I think that the first quarter is a fair representation. We are still working through our 2020 for planning process. So we'll obviously provide you more color on that.

Next call.

Got it thanks for the time.

Ursula Hurley: So there's definitely a difference between our contractual commitments and what we're planning. So we're planning to receive 28 aircraft. However, the catbacks number you referenced is ballpark where we should end up. And what would we add to that 2.2 billion? What would your total be? It'll be slightly less than that. Okay, thank you very much. Contractual commitments are higher. Thank you.

Your next question comes from Andrew <unk> with Bank of America. Please go ahead.

Hi, good morning, everyone.

Robin just seems like a lot of the capacity pull down that you talked about on the call is coming from.

External factors in the GTS slot extensions at JFK.

Can you speak to maybe some of the more proactive capacity adjustments, you're making what.

Katherine O'Brien: Your next question comes from Katherine O'Brien with Goldman Sachs, please go ahead. Hey, good morning everyone, thanks for the time. I just wanted to dig in on New York a little bit more. Now that you have the advanced notice of the slot relief in New York this upcoming summer, how should that impact profitability? And I guess longer term, do we need to get back to full ability to fly our New York slot portfolio with pre-COVID operational reliability for those New York margins to recover?

Make most sense for your product now I know you are looking at moving capacity to international markets, but what are the real structural changes youre considering right now to kind of help the margin profile going forward.

I'll turn the microphone back I said I'm going to start and then hand over to Joanna.

Katherine O'Brien: I guess how do you think about getting back to 2019 margins on a system basis without a New York recovery or full New York recovery? Is that possible? So we do expect a full New York recovery. It's just a bit slower than I think anybody would have hoped, but if you look specifically at JFK, for example, we're really pleased with progression that JFK is making. In terms of the operational impact in ATC, you know, our hope is now that there's a administrator will see even greater focus on how to ensure that New York.

Dave I mean, we've actually been extremely proactive over the last couple of quarters and reallocating capacity.

Clearly we've seen the strength in international that others have seen we just don't have.

As much exposure to it but I think we got we got to be really thoughtful around what trends do we see into 2024.

If everyone starts pulling domestic capacity and that's you know some of the commentary that's been made.

Could see a bounce back to domestic much more quickly than we think and then you might have too much exposure to international so the team is kind of constantly.

Katherine O'Brien: Is staffed appropriately through an air traffic control perspective. And, you know, that's a couple years in the making. It takes a little while to fully bring on staffing, but we're hopeful that, you know, with these slot with these slot waivers, that's not something that's sustainable. And at some point, you know, the underlying issue has got to be addressed in a more thoughtful way. And so making sure that we're prepared to take full advantage of that with the slot portfolio that we do have here. It's constrained, that's a good place to be, particularly when you're a leisure carrier.

You know reallocating and I'm moving moving things around.

And we're going to continue to do that I think the other thing that's going on with our fleet renewal is that with the two 'twenty. There's a boarder set of markets that would work compared to a one nine as you know the 190 <unk> historically had some range.

Considerations and the 220 removes that as well so that also creates the opportunity of redeploying outside of some of these shorter more business markets that have sort of been a really set by the 190 into sort of more leisure focused eight to 20 markets as well. So I don't know view Geronimo, Dave do you want us yes.

Ursula Hurley: And, you know, we're looking forward to seeing New York fully returned, but it'll take a little while to get there, but on pace for probably called 2425. I got it. And then how should we think about the puts and takes between aircraft on the ground, increasing over the course of 24 against aircraft deliveries? You know, sound like we should stay tuned for official guidance, but just high level is down slightly year over year in the first quarter.

Maybe I'll just add on the leisure front I mean, I think as you look at Jetblue overall, knowing that this is you know our core bread and butter and what we were built for you know we've got the point to point network. We have the product offering that covers an array of customers who want different different things from a more basic unbundled product to a premium product and then our strength as we see it growing in sort of.

Ursula Hurley: Is that the high watermark with with declines getting deeper through your end or just anything high level on where your rear capacity goes from one cue? Thanks. Yes. So I think the first quarter is probably close to a representation. I mean, just to put it at high level, right, we take 28 deliveries next year. We're retiring 24. And then we've got grounded aircraft due to GTF. So in the mid the high single digits to low double digits.

The premium sector and then you look at that overlaid with you know being in these constrained environments, whether it's Boston with gate constraints or JFK Newark, and places like that you know we've got we've got a network over the long term that should perform very well in these leisure markets and a product that also performs well and then you wrap that with loyalty and Jetblue travel products, creating.

Ursula Hurley: So that progresses throughout the year. So we start with six at the end of this year. And then that will end the year at low double digits. So I think that the first quarter. There is a fair representation and we are still working through our 2020 for planning process.

That leaves your ecosystem over time, we expect.

No we expect it to to produce some nice results were just in a more challenging environment right now as as we navigate through this court enter into next year with some of these external headwinds facing us around engines and excess capacity in some of the leisure markets.

Yeah.

Unknown Executive: So we'll obviously provide you more color on the next call. God, I think for the time.

Okay. Thanks for those thoughts.

As a follow up.

I know you mentioned corporate travel has improved and sorry, if I missed this but can you quantify that.

Andrew DeDora: Your next question comes from Andrew Dedora with Bank of America. Please go ahead. Hi, good morning, everyone. So Robin just seems like a lot of the capacity pull down that you talked about on the call is coming from external factors in the GTF, a lot of conventions at JFK. Can you speak to me some of the more proactive capacity adjustments you're making? What, you know, what markets make the most sense for your product now?

Quantify the corporate travel improvement and is this more of the New York comment are you seeing it more broadly across your network. Thank you.

Sure. This is Dave so corporate travel has had a very nice step up since labor day.

It had sort of softened over the summer it appeared to be a seasonal thing that happened in the summer then bounce back at the end.

But if you look at say since Covid, if you look at our best seven booking weeks since.

Since Covid started three or four years ago six of them in the past few months, we've seen a real.

Andrew DeDora: You know, I know you're looking at moving capacity to international markets, but what are the real structural changes? You're, you're considering right now to kind of help the margin profile going forward? I turn the microphone back. I said I'm going to start and then head over to Joanna and Dave. I mean, we've actually been extremely proactive over the last couple of quarters in in and we've been reallocating capacity. You know, clearly, you know, we've seen the strength and international that others have seen.

A nice pick up here in terms of percent recovered, we're still sort of 80% or low eighty's.

But we are seeing that sequential improvement I'm also seeing some areas like media and entertainment, which has seen some softness over the summer with strikes pick back up in the fall. So feel good about how we're progressing on the corporate side, but but still feel it's largely are in steady state and we'll just grow sort of with the economy going forward.

Okay.

Got it thank you.

Your next question comes from Helane Becker with TD Cowen. Please go ahead.

Andrew DeDora: We just don't have as much exposure to it. But I think we, you know, we've got to be really thoughtful about what trends that we've seen to 2024. You know, if everyone starts pulling domestic capacity and that's, you know, some of the commentary has been made. You know, we could see a bounce back to domestic much more quickly than we think and then you may have too much exposure to international. So, you know, the team is kind of constantly reallocating and moving things around.

Oh, hi, everybody. Thanks, very much for squeezing me in here so.

So I just have a clarifying question I have two questions one is on <unk>.

I think first of all you mentioned competitive CASM X can you just say what competitive CASM ex <unk>.

Yeah, I think we're obviously going to have a much lower growth profile than we have historically and so if you look at competitors' performance at a lower growth profile I would envision us being in that same realm and again, we're still going through our planning process for.

Andrew DeDora: And we're going to continue to do that. I think the other thing that's going on with our fleet renewal is that, you know, with the 220, there's a broader set of markets that would work compared to a 190. You know, the 190 historically had some range considerations and the 220 removes that as well. So that also creates the opportunity of redeploying outside some of these shorter, more business markets sort of sort of been really served by the 190 into sort of more leisure focused to a 220 markets as well.

<unk> 2024, but I guess, you can expect us to ensure that we're building a plan with <unk>.

Our CASM ex that that is competitive based on the growth rate that we pinpoint compared to historical competitive performance.

Okay. I think that's helpful. Thanks, and then just my other clarifying question on corporate where you're talking about you know New York being slow to come back actually can you parse out how many are away is there a way to of course out trips that are just one day.

Andrew DeDora: So, I don't know of you and I don't know what Dave, you want to. Yeah, maybe I'll just add on the leisure front. I mean, I think if you look at Jeff Lou overall, knowing that this is, you know, our core bread and butter and what we will built for. You know, we've got the point to point network. We have the product offering that covers an array of customers who want different, different things from a more basic, unbundled product to a premium product.

Like are those the ones that aren't coming back versus trips that are two or more days.

Yes, Thanks Helane so.

Andrew DeDora: And then our strengths as we see it growing sort of the premium sector. And then you look at that overlaid with, you know, being in these constrained environments, whether it's Boston with gate constraints or JFK, Newark and places like that, you know, we've got. We've got a network over the long term that should perform very well in these leisure markets and a product that also performs well and then you wrap that with loyalty and just with travel products creating that leisure ecosystem.

So certainly yes, we're seeing the most pressure on the short haul day trip markets and we're seeing that in our network and in sort of the global data seems to be indicating that in other parts of the world as well.

One of the places we've been right sizing is on those sort of a day trip market.

Keeping still a robust schedule, but some places were hourly we're now sort of early when accounts are the key times a day and then you know every couple of hours the rest of the day and so that's certainly been our experiences the shorter the hall the source when they come back.

Andrew DeDora: You know, over time we expect, you know, we expect it to produce some nice results. We're just in a more challenging environment right now as we navigate through this. We're going to record into next year with some of these external headwinds facing us around engines and excess capacity in some of the leisure markets. Okay, thanks for those thoughts. And then just as a follow-up, I know you mentioned corporate travel has improved and sorry if I missed this, but can you quantify that, quantify the corporate travel improvement?

Got it okay. Thank you.

Yeah.

Your next question comes from Stephen Trent with Citi. Please go ahead.

Good morning, everybody and excuse me and thank you very much for taking my question.

Just one clarification here I appreciate a lot of this other stuff is out of your control, but you mentioned, taking some steps to try and ease of disruption.

Andrew DeDora: And is this more of the New York comment or are you seeing it more broadly across your network? Thank you. Sure, this is Dave. So corporate travel has had a very nice step up since Labor Day. We'll admit it had sort of softened over the summer. It appeared to be a seasonal thing that happened. Being in the summer, then sounds back at the end. But you know, if you look at say since COVID, if you look at our best seven booking weeks since COVID started three to four years ago, six months in the past two months.

Andrew DeDora: So we've seen a real nice pick up here. I mean, in terms of percent recovered, we're still sort of 80% or low 80s. But we are seeing that sequential improvement. Also seeing some areas like median entertainment, which has seen since office over the summer with strikes pick back up the most. So we're still going to fall. So feel good about how we're progressing on the corporate side, but still feel it's largely in steady state. And we'll just grow sort of with the time to going forward. Got it. Thank you.

Could you just give a little color.

It's a you know that was adding crew bases or.

Doing something in your scheduled you know maybe.

AI and in your your flight scheduling or something that would just love to hear that thank you.

Yeah, I can speak to that so a few things I think number one how do you make sure. The day is more resilient you do that by ensuring you have adequate reserves in place whether that's pilots are in flight and so we've done that I think the good news is we're getting smarter about how we do it. So it was more efficient but for the foreseeable future. We will have additional reserves in place during peak summer period.

To protect the operation so that when you experienced long delays and cruise bump up against their hours limit. We can replace them. So that's kind of the first thing. We've also gotten I think much smarter around how we think about the day. So AI tools that can enable our system operations team.

Helane Becker: Your next question comes from Haleim Becker with TD Cowan. Please go ahead. Hi, everybody. Thanks very much for squishing me in here. So I just have a clarifying question.

At her plan the day and we're in the process of introducing a number a number of these so one example, when you have lengthy delays and long air traffic control initiatives that can be longer to fly from New York to the Caribbean for example, and so he may protect that fly by double Crewing, It and we want to make sure. If we double crude these things we're doing it in the most efficient way.

Ursula Hurley: I have two questions. One is, I think or so, as you mentioned, competitive Kazim X. Can you just say what competitive Kazim X means? Yeah, I think we're obviously going to have a much lower growth profile than we have historically. And so if you look at competitors performance at a lower growth profile, I would envision us being in in that same realm. Again, we're still going through our planning process for 2024, but I guess you can expect us to ensure that we're building a plan with a Kazim X that is competitive based on the growth rate that we pinpoint compared to historical competitor performance. Okay, I think that's helpful. Thanks, Ursula.

So we save cost that we're getting smarter about making decisions on which flights double corn, which like not to double crew by.

By way of example, also how you cascade delays through the day and making sure that we understand when we do see air traffic control delays earlier in the day that Cascades through the day, we're making smart decisions on what flights to hold on to versus what flights, we may want to proactively cancel.

Not there yet, but well underway in terms of building tools to better enable our team to make decisions day of as we address this more challenging operating environment that jetblue operates in.

And if I could just add to that I do think that.

Helane Becker: And then just my other clarifying question on corporate, where you're talking about, you know, New York being slow to come back. Actually, can you parse out how many are a way, is there a way to parse out trips that are just one day. Like we're doing the ones that aren't coming back versus trips that are two or more days. Yeah, thanks, Elaine. So certainly yes, we're seeing the most pressure on the short haul day trip market and we're seeing that in our network and sort of the global data seems to be indicating that in other parts of the world as well.

Uh huh.

We've got a whole pharma of experience to look back on and really partner with the FAA, who are absolutely committed we have a new administrator, who is the perfect person for the job it might whitaker and whilst the staffing challenges won't go.

Why.

Helane Becker: And that's one of the places we've been right sizing is on those sort of day trip markets, keeping still a robust schedule, but some places were hourly, we're now sort of hourly when it counts at the key times a day and then, you know, every couple hours the rest of the day. So that's certainly been our experiences to shorter the haul, the source going to come back. Got it. Okay, thank you.

We can accomplish a lot by mitigating now we've got the 10% slot way, but it's been done ahead of time, which is terrific.

We at Jetblue is going to continue to advocate that 10% might not be enough for 10% should be mandated.

<unk> should include international carriers now this is our view ultimately the FASB.

Final decision maker on that but we can advocate for our perspective and also as the summer when Tom.

The airlines and the FAA you kind of built some ways of working to deal with these issues, we saw better performance overall as well and so.

Stephen Trent: Your next question comes from Stephen Trent with City. Please go ahead. Good morning, everybody. And, excuse me, and thank you very much for taking my question. Just one clarification here. I appreciate, you know, a lot of this, whether stuff is out of your control. But you mentioned taking some steps to, you know, try and eat the disruptions. And could you just pay a little color? Or if, you know, that was adding crew bases or doing something in your schedule, you know, maybe AI in your flight to scheduling or something would just love to hear that.

Hum.

Oh yeah.

Great.

And his team to make.

Even better job.

It wouldn't be kind of.

Morphine.

Hi.

Revenue.

Hum.

Business.

Okay.

Okay.

Correct.

We grew up.

Volume.

Oh.

Uh huh.

Quickly.

I know, it's not worth it.

The team has done.

Food is not alone.

Stephen Trent: Thank you. Sure. Yeah, I can speak to that. So a few things. I think number one, how do you make sure the day is more resilient? You do that by ensuring you have adequate reserves in place, whether that's pilots are in flight. And so we've done that. I think the good news is we're getting smarter about how we do it. So it's more efficient. But for the foreseeable future, we will have additional reserves in place during peak and summer periods to protect the operations of that when you experience long delays and crews bump up against their hours limit.

In fact in July.

Martin.

Oh.

Wow.

Yeah.

Got it.

Coming in every day.

Basically the impact so we're going to continue to it's all really number one operating priority is to kind of improve.

Improve try and make sure next summer is better than the summer.

Stephen Trent: We can replace them. That's kind of the first thing. We've also gotten I think much smarter around how we think about the day. So AI tools that can enable our system operations team that are planned the day. And we're in the process of introducing a number, a number of these. So one example when you have lengthy delays and long air traffic control initiative that can be longer to fly from New York to Caribbean, for example.

Many thanks Robyn.

Breaking up a bit there, but I think I got the gist of what you were saying.

Thanks for the time.

Yeah.

Good day, because it's good.

Yeah.

Stephen Trent: And so you may protect that flight by double crewing it. We want to make sure if we double crew these things, we're doing it in the most efficient way. So we save costs. So we're getting smarter about making decisions on which flights, double crew and which flights not to double crew by way of example. Also how you cascade delays through the day and making sure that we understand when we do see.

Operator can we move to the next question.

For the show.

Yes.

No there shouldn't be afraid or said they would do him operator.

Okay.

Sure.

Stephen Trent: Air traffic control delays earlier in the day that cascade through the day. We're making smart decisions on what flights to hold on to versus what flights we may want to proactively cancel. We're not there yet, but well underway in terms of building tools to better enable our team to make decisions day of as we address this more challenging operating environment that Jeff Blue operates in.

Right.

Okay.

Operator.

Robin Hayes: Yeah, and if I could just add to that, you know, I do think that we've got a whole summer of experience to look back on and really partner with the FAA who are absolutely committed. We have a new administrator who is the perfect person to the job in might would occur. And whilst the staffing challenges won't go away, you know, we can accomplish a lot by mitigating. Now, you know, we've got the 10% slot way, but it's been done ahead of time, which is terrific.

Operator can you hear us.

Yeah.

Okay.

Yeah.

Yeah.

Operator, if you can hear us where we can go ahead.

I'm, so sorry about that.

Okay are we are we back on yes. Your next question comes from Chris <unk>.

That's who lopolith with Corona International. Please go ahead.

Yeah.

Thank you the Susquehanna International I'll keep it to one question, it's been there's been a long call.

Robin Hayes: You know, we're Jeff Blue's going to continue to advocate that 10% may not be enough or 10% should be mandated. You know, 10% should include international carries. No, this is our view. Ultimately, the FAA is the final decision maker on that, but we can advocate for our perspective. And also, you know, as the summer went on and as the airlines and the FAA kind of built certain ways of working to do with these issues, we saw better performance overall as well.

So Robyn I want to go back to your comments you made around this chess board as it relates to thinking about.

Your network for next year.

Spoke about reallocating capacity to margin accretive leisure and VFR markets.

I'm curious where those are referred from another competitor that's sort of a plan here.

It doesn't seem that there's sort of.

No.

Areas that are perhaps.

Untapped and kind of looking at some of these more leisure focused destination.

Robin Hayes: And so, you know, I think we've got a whole year nearly to look at this infrastructure and his team to learn even better jobs. And, you know, when we try more things on time, when we say, you are very new from, you know, add and cost for our business really quickly. So, you know, if you're protecting trade and you've got to pack three crores at a time, that day is not for a business and quickly.

Capacity as it stands today is up double digits.

I realize you have the main piece here, but trying to square that away.

With how for instance, travel products might kind of fit into or so is this sort of.

Our wholesale we look at a geography or kind of fine tuning just would love to hear some of your thoughts there on us.

So it might be picked up thank you.

Sure. Thanks, Chris This is Dave as mentioned before we're increasing our mix of leisure even more heavily.

Robin Hayes: You know, and I know it's not always panicking, but those will work with the team as done, but you know, Jeff, there was another one in completion practice in July, which was my thing in New York City. And, you know, the team should be proud of that achievement. We're going to continue to, it's our really number one operating part is to kind of improve, try and make sure next summer is better than this summer. Many thanks Robin, you break it up a bit, but I think I got the gist of what you were saying and thank you for the time.

Reallocate out of some of the shorter haul business, but we feel very confident in our ability to compete and win I mean these are the markets Jetblue was founded to designed to serve 23 years ago. These are the markets. We had in mind when we built our loyalty program. When we updated the earlier this year, we introduced things like tiles that give infrequent customers, even more rewards and more incentives than they get.

The other loyalty programs that fits right into our Jetblue travel products, which is designed to provide a holistic experience to drive a lot of ancillary revenue. It goes with our point to point network because of their customer service. So.

We have our six focus cities that are leisure.

You know our leisure focus and we're going to compete hard and we're going to win in these markets and of course there'll be tweaks around the corner are around the edges and we're doing that very actively with we had about a dozen markets, we've closed or announced the closure over the last two months we've closed two cities.

Operator: Yeah, operator, can we move to the next question? No, they shouldn't. Yeah, freighters, but they would do it. Operator? Operator, can you hear us? Operator, if you can hear us, we can go ahead. I'm so sorry about that. Okay, are we, are we back on?

But for our bread and butter for Florida, and the Caribbean. The Transcon, we're gonna fight and we're going to win in those markets.

Yes, I think the point, yes, I mean, the point I was trying to make as well is that you know obviously the industry data we have a historic we we see short term sort of trends. It's also trying to kind of get ahead of that.

And think through what markets may be there was lots of commentary last week about Las Vegas, and so you know does now so much to get put out of Vegas Vegas becomes a stronger performer guidance. So all I'm, saying is we're trying not to just respond to what's in front of us, but before Paul and think through what are the what are the things we need to do.

It is more closely aligned with our strategy to drive margin recovery and that's what we're gonna be focused on and you know more news to follow as we get into next year, but I think you know I think the message through 'twenty four is going to be capacity constraints because of the.

Engine issues in the delivery delays, we have and so we want to make sure. We're flying the most margin accretive markets given those constraints.

Chris Stathoulopoulos: Yes, your next question comes from Chris Stathoulopoulos with Quran International, please go ahead. Thank you, the Susquehanna International, I'll keep it to one question and it's been a long call. So so Robin, I want to go back to your comments you made around this chess board as it relates to thinking about your network for next year. Ursula spoke about reallocating capacity to margin of creative leisure and via far markets. I'm curious where those are.

Okay. Thank you.

There are no further questions at this time. Please proceed.

And that concludes our third quarter 2023 conference call. Thanks for joining us and having great day.

Chris Stathoulopoulos: We've heard from another competitor, that's sort of a plan here. It doesn't seem that there's sort of, you know, areas that are perhaps untapped and, you know, kind of looking at some of these more leisure focused destination capacity as it stands today is up double digits. I realize you have the mint piece here, but trying to square that away, you know, with, with how, for instance, travel products might kind of fit into all of this. So is this sort of a wholesale? We look at geography or kind of fine-tuning.

Dave Clark: Just, we'd love to hear some your thoughts there on this. Yeah, I'm going to have a good day to maybe pick that up. Thank you. Sure. Thanks, Chris. This is Dave. As mentioned before, we're increasing our mix of leisure even more heavily, as we reallocate on some of the shorter haul business. But we feel very confident in our ability to compete and win. I mean, these are the market's Jeplu was founded to and designed to serve 23 years ago.

Dave Clark: These are the markets we had in mind when we built our loyalty program when we updated it earlier this year to introduce things like tiles, like if increasing customers, even more rewards and more incentives. And they get through other loyalty programs. If it's right into our Jeplu travel products, which is designed to provide a holistic experience and drive a lot of employee revenue. It goes with our point to point network, goes with our customer service.

Dave Clark: So we have our six focus cities and our leisure, you know, our leisure focus. And we're going to compete hard and we're going to win these markets. And of course, there'll be tweaks around the corner or around the edges. And we're doing not very actively with we had about a dozen markets we've posed or not the closure of the last two months, we've closed two cities. But for our bread and butter for Florida and the Caribbean and transcom, we're going to fight and we're going to win in those markets.

Dave Clark: David. Yeah, I think the point, yeah, just, I mean, the point I was trying to make as well is that, you know, obviously the industry fair data we have is historic, you know, we, we, we, we see short-term sort of trends, you know, it's also trying to kind of get ahead of that. And, and think through, you know, what, what markets maybe, you know, there was lots of commentary last week about Las Vegas.

Dave Clark: And so, you know, there's now so much to get put out of Vegas, Vegas becomes a stronger, a formal game. So all I'm saying is we're trying not to just respond to what's in front of us, but be thoughtful and think through, you know, what are the, what are the things we need to do that are more closely aligned with our strategy to drive margin recovery. And, you know, that's what we're going to be focused on.

Dave Clark: And, you know, more news to follow as we get into next year. But I think, you know, I think that the, the method for 24 is going to be capacity constraints because of the engine issues and the delivery delays we have. And so, you know, we want to make sure we're flying the most margin of creative markets, given those constraints. Okay. Thank you. There are no further questions at this time. Please proceed.

Koosh Patel: And that concludes our third quarter 2023 conference call. Thanks for joining us and have a great day.