Q4 2023 JetBlue Airways Corp Earnings Call

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

Please go ahead Sir.

Thanks, Travis good morning, everyone and thanks for joining us for our fourth quarter 2023 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call all of those documents are available on our website at investors that Jetblue dot com and on the SEC website at Www Dot SEC deck.

Travis: Got it.

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.

Speaker Change: Also joining us for Q&A are Dave Clark, our head of revenue and planning and Andrei Sperry President of Jetblue travel products.

Speaker Change: 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 1095, such forward looking statements include without limitation statements regarding our first quarter and full year 2024 financial outlook and our future results of operations and financial position industry.

Market trends expectations with respect to headwinds our ability to achieve our operational and financial targets, our business strategy and plans for future operations and the associated impacts on our business. 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.

Speaker Change: Our most recent earnings release and our most recent 10-K and other filings for a more detailed discussion of the risks and uncertainties that could cause the actual results to differ materially from those contained in our forward looking statements. The statements made during todays.

During this call are made only as of the date of the call.

Speaker Change: Other than as may be required by law, we undertake no obligation to update this information investors should not place undue reliance on these forward looking statements.

Speaker Change: 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 FCC desktop now I'd like to turn the call over to Robin Hayes Jetblue CEO.

Robin Hayes: Good morning, everyone and thanks for joining us today.

Robin Hayes: As always I'd like to start with a huge thanks to our incredible crew members.

Robin Hayes: To tell you today that message takes on even greater importance for me because as you know in two weeks I'll be retiring as CEO.

Robin Hayes: This marks my last earnings call with Jetblue.

Robin Hayes: So after 15 years of earnings calls I want to extend one more public. Thank you to our crew members who are the reason our customers keep coming back to Jetblue.

Robin Hayes: Energy and dedication their attention to delivering exceptional service to our customers.

Robin Hayes: They truly are the thoughts about distinctive culture I'm, Brian we would not be jetblue without them.

Robin Hayes: Let me also thank all of you the analysts and investors, who have supported us and challenged us along the way.

We very much appreciate the constructive engagement over the years.

Robin Hayes: It's been a pleasure working with all of you and I know, you'll enjoy working more closely with yamana.

I'm also very excited Joanna who will be our next CEO effective February the <unk>.

Robin Hayes: No one on our team has worked alongside me she would say suffered longer than Joanna she is an inspiring and energetic leader.

Travis: Good morning. My name is Travis.

Operator: I would like to welcome everyone to the JetBlue Airways fourth quarter 2023 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode.

Robin Hayes: Many of our major strategic operational and commercial initiatives.

Robin Hayes: Over the last six months, she has been leading our effort to develop and implement a turbocharged organic plan.

Koosh Patel: I would now like to turn the call over to JetBlue's Director of Investment Relations, Koosh Patel. Please go ahead, sir. Thanks, Travis. Good morning, everyone, and thanks for joining us for our fourth quarter 2023 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call. All of those documents are available on our website at investor.jeffley.com and on the SEC's website at www.sec.gov.

Robin Hayes: Get us back to sustained profitability and restore our historical earnings power.

Robin Hayes: Youll be hearing more about that today and in the future.

Robin Hayes: I'm very confident about the next phase of our evolution.

You'll hear more about I will deliver sustainable improved performance over time and create value for our shareholders customers and crew members.

Koosh Patel: 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 Andre Sperry, 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 Such forward-looking statements include, without limitation, statements regarding our first quarter and full year 2024 financial outlook and our future results of operations and financial position, industry and market trends, expectations with respect to headwinds, our ability to achieve our operational and financial targets, our business strategy and plans for future operations, and the associated impacts on us. 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.

Robin Hayes: Before passing it over to Joanna I want to briefly touch on the spirit transaction.

Robin Hayes: We strongly disagree with the court's ruling and yesterday, we filed a motion to expedite and appeal of the decision.

Last week, we notified notified spirit that certain conditions to close may not be satisfied prior to the outside date set out in the merger agreement.

Robin Hayes: We are evaluating our options under the merger agreement, which remains in effect.

Unless and until such time as the merger agreement is terminated Jetblue will continue to fully abide by all of its obligations.

We're not in a position to discuss this fair transaction any further at this point and I'll focus today will be on our organic business.

With that for the last time over to you Jonathan. Thank you Robyn I want to start by expressing my deep gratitude to Robin for his leadership and friendship over the years.

Koosh Patel: Please refer to our most recent earnings release and our most recent 10-K and other filings for a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. 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 no obligation to update them. 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 our reconciliation.

Jonathan: He deserves tremendous credit for building Jetblue in the company we are today.

Transformed us from a small domestic airlines to one with a global footprint.

Jonathan: Created new ways to innovate and challenge the competition from free onboard Wi Fi two minutes, our award winning premium offering which has disrupted transcon and now Trans Atlantic business class.

Speaker Change: Behalf of the entire Jetblue team, we wish him all of the best in his next chapter.

Speaker Change: Im honored to be taking on the role of CEO on behalf of this incredible company at a very pivotal moment for our business Jetblue has a strong foundation underpinned by a truly exceptional brand and the industry's best crew members.

Koosh Patel: Corresponding Gap Measures, please refer to our earnings release, a copy of which is available on our website and at sec.gov. Now I'd like to turn the call over to Robin Hayes, JetBlue's CEO. Good morning, everyone, and thanks for joining us today.

We are building on this foundation as we take aggressive action to get back to profitability and intensify our focus on delivering value for our shareholders.

Robin Hayes: As always, I'd like to start with a huge thanks to our incredible crew members. Today that message takes on even greater importance for me because, as you know, in two weeks, I'll be retiring as CEO, and this marks my last earnings call with JetBlue. So after 15 years of earnings calls, I want to extend one more public thank you to our crew members, who are the reason our customers keep coming back to JetBlue because of their energy and dedication, and their attention to delivering exceptional service to our customers. They truly are the source of our distinctive culture and brand. We would not be JetBlue without them.

Speaker Change: I began my remarks, I'm thrilled that my first leadership appointment was announced yesterday promoting Warren Christie to Chief operating officer effective February 12.

Warren has a robust aviation career spanning 30 plus years from his leadership and service in the military Jetblue career, beginning 21 years ago and spanning various role once dedication and passion for safety operational performance and service excellence has been instrumental in our evolution and he is well positioned to help.

US execute a plan that will mark the start of Jetblue is next major factor.

Speaker Change: As Robin mentioned, we've been hard at work evolving our standalone organic plan to restore profitability and reset jetblue for future growth and we've already begun to implement some of the initial component.

Robin Hayes: Let me also thank all of you, the analysts and investors who have supported us and challenged us along the way. We very much appreciate your constructive engagement over the years. It's been a pleasure working with all of you, and I know you'll enjoy working more closely with Joanna. I'm also very excited for Joanna, who will be our next CEO effective February 12th. No one on our team has worked alongside me, or, as she would say, suffered, longer than Joanna.

Speaker Change: The key strategic challenge, we've always face is how to thrive as a small player in an industry dominated by four large airlines. We now face. This challenge in a post COVID-19 environment, where industry dynamics are coalescing around some clear trends for example, customer travel preferences, including a premium onboard experience and improve.

Service. These are increasingly shifting towards jetblue strengths, we will deepen and strengthen our competitive position as a unique brand with a superior customer experience finding new ways to be the best at what we do and further distinguish ourselves from the competition.

Robin Hayes: She is an inspiring and energetic leader who has spearheaded many of our major strategic, operational, and commercial initiatives. For the last six months, she has been leading our efforts to develop and implement a turbocharged organic plan to help get us back to sustained profitability and restore our historical earnings power. You'll be hearing more about that today and in the future. I'm very confident about the next phase of our evolution, which you'll hear more about, which will deliver sustainable, improved performance over time and create value for our shareholders, customers, and crew members. Before passing it over to Joanna, I want to briefly touch on the Spirit Transaction. We strongly disagree with the court's ruling, and yesterday, we filed a motion to expedite an appeal of the decision.

Speaker Change: This begins with refocusing on our most proven geographies, our core networks and some of the largest markets in the world, where there are clear barriers to entry and we intend to capitalize on our deep relevance in these markets by urgently re optimizing our network to make sure that we were taking care of our core customer, making sure. We go where they want to go when they want it.

Speaker Change: No.

Speaker Change: We're also recharging our innovation DNA to bring in even better quality experience to the full spectrum of jetblue customers from leisure visiting friends and relatives to corporate and premium travelers. This means segmenting, our onboard product offering more precisely so that each customer can get the best travel experience at the best price we will use this.

Robin Hayes: Last week, we notified SPIRT that certain conditions to close may not be satisfied prior to the outside date set out in the merger agreement. We are evaluating our options under the merger agreement, which remains in effect. Until such time as the merger agreement is terminated, JetBlue will continue to fully abide by all of its obligations. We're not in a position to discuss the spare transactions any further at this point, and our focus today will be on our organic business. With that, for the last time, over to you, Joanna.

Speaker Change: New chapter to improve how we merchandise to our core suite of customers and to the extent there are opportunities across certain customer segments, we will launch new revenue initiatives and close the gaps on our product offerings.

Speaker Change: All of this is underpinned by a more reliable operation a complementary loyalty program and a strong culture with a competitive cost structure.

Speaker Change: In many ways. This means refocusing on our core strengths, let me be clear. It is not however business as usual I commit to you that with a renewed focus we are bringing more data driven rigor intensity and creativity than ever before.

Joanna Geraghty: Thank you, Robin. I want to start by expressing my deep gratitude to Robin for his leadership and friendship over the years. He deserves tremendous credit for building JetBlue into the company we are today. He transformed us from a small domestic airline into one with a global footprint. He created new ways to innovate and challenge the competition, from free onboard Wi-Fi to Mint, our award-winning premium offering, which has disrupted Transcon and now Transatlantic Business Class. On behalf of the entire JetBlue team, we wish him all of the best in his next chapter.

Speaker Change: Relentless focus on building value for our shareholders over the coming weeks and months, including at an Investor day, We will host in May we will be sharing more with you on our longer term plan, but today I want to share our 2024 priorities a preview if you will of how we intend to return to sustained profitability and how we are taking urgent action is.

Speaker Change: <unk> launching several initiatives in the first quarter.

Speaker Change: Starting with our new initiatives. These are aimed at evolving our offering to better serve our core leisure customer while further diversifying our revenue stream in this process. We've identified over 15 different revenue initiatives and in 2024, we expect these to add over $300 million to our top line of which nearly two thirds is Anna.

Joanna Geraghty: I'm honored to be taking on the role of CEO on behalf of this incredible company at a very pivotal moment for our business. JetBlue has a strong foundation, underpinned by a truly exceptional brand and the industry's best crew members. We are building on this foundation as we take aggressive action to get back to profitability and intensify our focus on delivering value for our shareholders. Before I begin my remarks, I'm thrilled that my first leadership appointment was announced yesterday, promoting Warren Christie to Chief Operating Officer, effective February 12th.

Malaria revenue.

Included in these initiatives is our recent launch of preferred seating, which provides customers with the option to select more desirable seats closer to the front of the aircraft, but also gives us another way to reward our most loyal mosaic customers, who will get this additional benefit for free and it enables us to better match, our product offerings to customer demand another.

Joanna Geraghty: Warren has a robust aviation career spanning 30-plus years, from his leadership and service in the military to his JetBlue career beginning 21 years ago and spanning various roles. His dedication and passion for safety, operational performance, and service excellence have been instrumental in our evolution, and he is well-positioned to help us execute a plan that will mark the start of JetBlue's next major chapter. As Robin mentioned, we've been hard at work evolving our stand-alone organic plan to restore profitability and reset JetBlue for future growth, and we've already begun to implement some of the initial components. The key strategic challenge we've always faced is how to thrive as a small player in an industry dominated by four large airlines.

An example, I will highlight is our expanded distribution and OTT partnership. This expansion further aligns our distribution capabilities with the legacy carriers, allowing us to reach more customers and giving those who rely on otas greater access to our products.

We are also making changes to how we manage our network rebalancing to deploy the right mix of routes and applying even greater discipline to our assessment of underperforming markets as part of this refinement, we are aggressively reallocating capacity to proven leisure and VFR markets, including doubling down in those markets, where we can leverage.

Speaker Change: Jetblue travel products superior offering to better serve customers and help us generate higher margins.

Joanna Geraghty: We now face this challenge in a post-COVID environment where industry dynamics are coalescing around some clear trends, for example, customer travel preferences, including a premium oddboard experience and improved customer service. These are increasingly shifting towards JetBlue's strengths. We will deepen and strengthen our competitive position as a unique brand with a superior customer experience, finding new ways to be the best at what we do and further distinguish ourselves from the competition. This begins with refocusing on our most proven geographies.

Speaker Change: Our loyalty program also remains a priority as we look for additional ways to provide more value to our customers and we expect our true true Blue program to continue to drive margin accretive growth as we execute our multi year plan to close the gap to peers and better monetize the program we.

We are expanding our suite of products with a continued goal of appealing to more of our core customers and plan to launch several new loyalty products in the coming years next.

Speaker Change: Next continued cost and capital discipline are a top priority to that end. We have reached an agreement to defer $2 $5 billion of planned aircraft Capex and smooth our delivery stream ocelot will provide more detail in her remarks finally, as we operate in one of the most complex and challenging airspaces operational reliability is.

Joanna Geraghty: Our core network sits in some of the largest markets in the world, where there are clear barriers to entry, and we intend to capitalize on our deep relevance in these markets by urgently re-optimizing our network to make sure that we are taking care of our core customers, making sure we go where they want to go, when they want to go. We are also recharging our innovation DNA to bring an even better quality experience to the full spectrum of JetBlue customers, from leisure to visiting friends and relatives to corporate and premium travelers. This means segmenting our onboard product offering more precisely so that each customer can get the best travel experience at the best price.

Speaker Change: <unk> to all of our priorities, helping us deliver a better customer experience, while also improving revenues with fewer refunds and disruption vouchers and better costs as we mitigate overtime and premium pack. This will be a continued area of focus in 2024, as we make more targeted investments in our operations prioritizing areas such.

Speaker Change: As predictive aircraft maintenance and scheduling enhancements, where we are already seeing meaningful returns for our liability.

Joanna Geraghty: We will use this new chapter to improve how we merchandise to our core suite of customers. And to the extent there are opportunities across certain customer segments, we will launch new revenue initiatives and close the gaps in our product offering. All of this is underpinned by a more reliable operation, Complementary Loyalty Program, and a strong culture with a competitive cost structure. In many ways, this means refocusing on our core strengths. Let me be clear.

As I mentioned, we will share more at our Investor Day later this year.

Speaker Change: Shifting now to our fourth quarter results, we delivered a strong enter the year as both revenues and costs exceeded our expectations fourth quarter revenues declined three 7% year over year ahead of our December guidance update driven by healthy close in demand with both strong peak holiday period demand.

Speaker Change: And better than expected performance during off peaks are premium offerings and even more space in particular continues to perform extremely well with double digit year over year revenue growth in the fourth quarter.

Joanna Geraghty: It is not, however, business as usual. I commit to you that, with our renewed focus, we are bringing more data-driven rigor, intensity, and creativity than ever before, with a relentless focus on building value for our shareholders. Over the coming weeks and months, including at an Investor Day we will host in May, we will be sharing more with you about our longer-term plan, but today, I want to share our 2024 priorities, a preview, if you will, of how we intend to return to sustainable profitability and how we are taking urgent action, including launching several initiatives in the first quarter. Starting with our new initiatives. These are aimed at evolving our offering to better serve our core leisure customers while further diversifying our revenue stream. In this process, we've identified over 15 different revenue initiatives.

We also benefited from continued strength in our redesigned tribute loyalty program within the fourth quarter and for the full year.

Speaker Change: 2019, we have had the fastest growing loyalty program and a major U S Airlines growing revenues by 75%. This reflects strong performance in our Barclays Co brand portfolio, which achieved a record high for Jetblue co brand spend and generated over $1 billion in cash remuneration in 2023 more than double our 2019 performance.

Speaker Change: We continue to make enhancements that unlock value for our customers by expanding ways to earn and redeem points, which helped to fuel record growth in redemptions in 2023 growing by over 25% year over year.

Joanna Geraghty: And in 2024, we expect these to add over $300 million to our top line, of which nearly two-thirds is ancillary revenue. Included in these initiatives is our recent launch of Preferred Seating, which provides customers with the option to select more desirable seats closer to the front of the aircraft. This also gives us another way to reward our most loyal Mosaic customers, who will get this additional benefit for free.

Speaker Change: We expect continued growth going forward as we recently launched our first seamless partner redemption relationships with Qatar in Hawaii in the fourth quarter of 2023, and I am pleased to announce that we have additional new partners coming on board this year.

Speaker Change: Passive in the fourth quarter grew three 3% year over year above the midpoint of our initial expectations as our strong operational performance in November continued through the end of the year, we operated with high load factors during the peaks and extremely busy time of year and despite weather issues, we were able to recover quickly and minimize cancellations when dealing with.

Joanna Geraghty: And it enables us to better match our product offerings to customer demand. Another example I will highlight is our expanded distribution and OTA partnership. This expansion further aligns our distribution capabilities with the legacy carriers, allowing us to reach more customers and give those who rely on OTAs greater access to our products. We are also making changes to how we manage our network, rebalancing to deploy the right mix of routes and applying even greater discipline to our assessment of underperforming markets. As part of this refinement, we are aggressively reallocating capacity to proven leisure and VFR markets, including doubling down on those markets where we can leverage JetBlue Travel Products' superior offering to better serve customers and help us generate higher margins. Our loyalty program also remains a priority, as we look for additional ways to provide more value to our customers.

Speaker Change: Storms early in the quarter and during holiday peak, our completion factor for the quarter with 99, 8%, which is our best fourth quarter completion factor since 2004 and was one of the best in the industry.

Speaker Change: And we continue to see momentum on this front headed into the first quarter more broadly we saw year over year improvements across nearly all of our operational metrics in 2023, reflecting the benefits of the structural investments, we are making to improve reliability and boost resiliency.

Speaker Change: Strong operational performance, coupled with our continued cost discipline resulted in fourth quarter CASM ex fuel ahead of our expected range as <unk> will discuss.

Joanna Geraghty: And we expect our True Blue program to continue to drive margin and creative growth as we execute our multi-year plan to close the gap with peers and better monetize the program. We are expanding our suite of products with the continued goal of appealing to more of our core customers and plan to launch several new loyalty products in the coming year.

Speaker Change: Looking ahead for the first quarter, we are seeing positive momentum in our revenue demand during peak periods remained strong and we are better matched our capacity to demand during off peak.

Speaker Change: International demand remains very healthy and the domestic revenue environment is improving as industry capacity has been moderating for the first quarter. We are forecasting revenues to be down 5% to 9% year over year at the midpoint and factoring in our capacity outlook of down 3% to 6% year over year. This represents a.

Joanna Geraghty: Continued costs and capital discipline are a top priority. To that end, we have reached an agreement to defer $2.5 billion of planned aircraft capex and smooth our delivery stream. Ursula will provide more detail in her remarks.

Joanna Geraghty: Finally, as we operate in one of the most complex and challenging airspaces, operational reliability is foundational to all of our priorities, helping us deliver a better customer experience while also improving revenues with fewer refunds and disruption vouchers and better costs as we mitigate overtime and premium pay. This will be a continued area of focus in 2024 as we make more targeted investments in our operation, prioritizing areas such as predictive aircraft maintenance and scheduling enhancements, where we are already seeing meaningful returns on assets. As I mentioned, we will share more at our Investor Day later this week. Shifting now to our fourth-quarter results, we delivered a strong end to the year as both revenues and costs exceeded our expectations. Fourth quarter revenues declined 3.7% year over year, ahead of our December guidance update, driven by healthy close in demand with both strong peak holiday period demand and better than expected performance during the off-season. Our premium offerings, and even more space, in particular, continue to perform extremely well with double-digit year-over-year revenue growth in the fourth quarter.

Speaker Change: <unk> five point improvement a five point improvement in year over year unit revenue growth versus last quarter.

Looking further ahead to the full year, we are well positioned to achieve roughly flat year over year total revenue growth, which we believe represents a positive outcome in a year when capacity is decreasing while the first half of 2024 cycles against the high pent up demand we saw in the first half of 2023, we expect.

Speaker Change: Year over year revenue growth to be much stronger in the back half of 'twenty four as comparisons ease and the benefit from our enhanced revenue initiatives grow.

Speaker Change: Like to close by thanking our crew members for their commitment to delivering a safe and reliable experience to our customers. These investments, we are making position us to deliver the jetblue experience better than ever before as we refocus our efforts on serving our core customer we are increasing our efforts to drive reliability and consistency in our operation.

Speaker Change: <unk> and service by digging deeper to do more of what we do best we will be able to compete more effectively returned to profitability and ultimately expand margins and returns for our shareholders with that over to you or solar.

Joanna Geraghty: We also benefited from continued strength in our redesigned True Blue Loyalty Program, both in the fourth quarter and for the full year. In 2019, we had the fastest-growing loyalty program at a major U.S. airline, growing revenues by 75%. This reflects strong performance in our Barclays Cobran portfolio, which achieved a record high for JetBlue Cobran spend and generated over $1 billion in cash remuneration in 2023, more than double our 2019 performance. We continue to make enhancements that unlock value for our customers by expanding ways to earn and redeem points, which helped fuel record growth and redemptions in 2023, growing by over 25% year over year. We expect continued growth going forward, as we recently launched our first seamless partner redemption relationship with Qatar and Hawaiian in the fourth quarter of 2023.

Solar: Thank you Joanna I'd like to add my thanks to our outstanding Crewmembers for all their hard work and closing out the year on a strong note.

Solar: I am, particularly pleased with our cost performance in 2023 amid a very challenging backdrop.

Solar: For the full year 2023, CASM ex fuel increased four 5% year over year within the range. We provided last January despite facing an incremental one five points of CASM ex pressure from weather and ATC challenges in the northeast.

Solar: Fourth quarter cost performance was stronger than expected driven by a higher completion factor and better overall cost execution, specifically, our operational investments have been enabling us to better manage day, I've disruption planning and to recover.

Joanna Geraghty: And I am pleased to announce that we have additional new partners coming on board this year. Capacity in the fourth quarter grew 3.3% year over year, above the midpoint of our initial expectations, as our strong operational performance in November continued through the end of the year. We operated with high load factors during the peaks, an extremely busy time of year, and despite weather issues, we were able to recover quickly and minimize cancellations when dealing with storms early in the quarter and during holiday periods. Our completion factor for the quarter was 99.8%, which was our best fourth quarter completion factor since 2004, and was one of the best in the industry.

Solar: More quickly and complete a higher number of flights without having to incur additional costs related to overtime premium pay or disruption vouchers.

Solar: We continue to be impacted by the GTS engine issues. We currently have seven aircraft park due to these issues and expect the number of out of service aircraft to increase steadily as the year progresses.

Solar: Our current assumption is 11 average aircraft will be out of service throughout the year, peaking at 13% to 15 aircraft out of service at the end of the year.

Solar: We are actively engaged in discussions around compensation with Pratt and Whitney. However, in the meantime, we have launched a number of measures to mitigate the impact including leasing and purchasing extra spare engine.

Joanna Geraghty: And we continue to see momentum on this front headed into the first quarter. More broadly, we saw year-over-year improvements across nearly all of our operational metrics in 2023, reflecting the benefits of the structural investments we are making to improve reliability and boost resiliency. Strong operational performance coupled with our continued cross-discipline resulted in fourth-quarter Chasm-X fuel ahead of our expected range, as Ursula will discuss. Looking ahead, for the first quarter, we are seeing positive momentum in our revenue. Demand during peak periods remains strong, and we have better matched our capacity to demand during off-peak periods. International demand remains very healthy, and the domestic revenue environment is improving as industry capacity has been moderated. For the first quarter, we are forecasting revenues to be down 5% to 9% year-over-year.

Solar: While these efforts have yielded additional spares they are not enough to offset the headwinds associated with the elevated number of engine changes.

Solar: As a result, we expect capacity and departures to be down in 2024 and.

Solar: In a year in which we arent growing cost discipline is even more important and we are taking a hard look at our spending to make sure. Every dollar we invest is making an impact and making a change when it does not.

Solar: As part of this we are making deeper cuts across our cost base.

Solar: <unk> rationalizing our real estate footprint offering voluntary opt out packages to crew member as well as better leveraging data to plan, our operation and reduce unexpected disruption costs.

Joanna Geraghty: At the midpoint, and factoring in our capacity outlook of down 3% to 6% year-over-year, this represents a five-point improvement in year-over-year unit revenue growth versus last quarter. Looking further ahead to the full year, we are well positioned to achieve roughly flat year-over-year total revenue growth, which we believe represents a positive outcome in a year when capacity is decreasing. While the first half of 2024 cycles against the high pent-up demand we saw in the first half of 2023, we expect year-over-year revenue growth to be much stronger in the second half of 2024, as comparisons ease and the benefits from our Enhanced Revenue Initiative grow. I'd like to close by thanking our crew members for their commitment to delivering a safe and reliable experience to our customers.

Solar: We also continue to execute on our structural cost program, which delivered $70 million and cost reduction in 2023.

Solar: We are now on track to track to deliver run rate savings in the range of $175 million to $200 million by the end of 2024.

Solar: Which is $15 million better at the midpoint than previously expected.

Savings accelerated through the back half of 2023, as we launched technology based solutions aimed at enhancing crew member productivity and optimized maintenance planning for our midlife aircraft.

Additionally, through our fleet modernization program, we remain on track to avoid $75 million in maintenance costs through 2024, as we replace or even 90 fleet with a margin accretive <unk> hundred 20.

Joanna Geraghty: These investments we are making position us to deliver the JetBlue experience better than ever before as we refocus our efforts on serving our core customers. We are increasing our efforts to drive reliability and consistency in our operation, product, and service. By digging deeper to do more of what we do best, we will be able to compete more effectively, return to profitability, and ultimately expand margins and returns for our shareholders. With that, over to you, Ursula. Thank you, Joanna.

Solar: We have already achieved $55 million in cumulative cost savings to date and we continue to plan for all of the <unk> hundred 90 <unk> to be retired in 2025.

Solar: In the interim we will still be operating three fleet types, which will result in near term headwinds from associated cost and complexity.

Ursula: I'd like to add my thanks to our outstanding crew members for all their hard work and closing out the year on a strong note. I am particularly pleased with our cost performance in 2023 amid a very challenging backdrop. For the full year 2023, Chasm X fuel increased 4.5% year over year within the range we provided last January, despite facing an incremental 1.5 points of Chasm X pressure from weather and ATC challenges in the Northeast.

However, once we are through this transition period and back down to two fleet types, we expect a bigger benefit in a more meaningful tailwind to our costs.

Solar: This will be further amplified by the fact that the <unk> 20th deliver a 20% improvement in ex fuel unit cost economics compared to the E 190.

Solar: For the first quarter we.

Solar: We expect CASM ex fuel to increase between nine and 11% year over year, which includes impacts from the GTS issues and approximately two points related to wage step ups in our pilot contract.

Ursula: Fourth quarter cost performance was stronger than expected, driven by a higher completion factor and better overall cost execution. Specifically, our operational investments have been enabling us to better manage day of disruption planning and to recover more quickly and complete a higher number of flights without having to incur additional costs related to overtime, premium pay, or disruption vouchers. We continue to be impacted by the GTF engine issues. We currently have seven aircraft parked due to these issues and expect the number of out of service aircraft to increase steadily as the year progresses. Our current assumption is that 11 average aircraft will be out of service throughout the year, peaking at 13 to 15 aircraft out of service at the end of the year.

Solar: As we move past the first quarter.

Solar: We expect absolute CASM ex to moderate downward and supported by our robust set of cost initiatives stay relatively flat on an absolute basis through the end of the year.

We expect this to result in CASM ex growth mid to high single digits for the full year.

Solar: Together with the 300 million of revenue initiatives Joanna mentioned earlier, we expect this cost performance will result in an adjusted operating margin that is approaching breakeven for the full year.

Ursula: We are actively engaged in discussions around compensation with Pratt & Whitney. However, in the meantime, we have launched a number of measures to mitigate the impact, including leasing and purchasing extra spare engines. While these efforts have yielded additional spares, they are not enough to offset the headwinds associated with the elevated number of engine changes.

Turning to our fleet.

Solar: As Joanna mentioned, we reached an agreement with Airbus and other business partners to defer approximately two $5 billion of aircraft Capex previously expected in 2024 through 2027.

Ursula: As a result, we expect capacity and departures to be down in 2024. In a year in which we aren't growing, cost discipline is even more important, and we are taking a hard look at our spending to make sure every dollar we invest is making an impact and making a change when it is not. As part of this, we are making deeper cuts across our cost base, including rationalizing our real estate footprint, offering voluntary opt-out packages to crew members, as well as better leveraging data to plan our operations and reduce unexpected disruption costs. We will also continue to execute on our structural cost program, which delivered $70 million in cost reduction in 2023.

Solar: This agreement supports our path back to positive free cash flow provides a more consistent level of aircraft deliveries and capex through the end of the decade.

Solar: And prioritizes the margin accretive <unk> hundred 20, and fleet modernization program as the <unk> hundred 90 exit the fleet.

Solar: We now expect to take delivery of 27 aircraft in 2024 and expect our full year 2020 for capex to be approximately $1 6 billion.

Solar: While we work through the near term growth challenges stemming from the G. T. F issued we recognize this level of growth is not in line with our historical performance and we are evaluating all of our lever to partially offset the growth headwind.

Ursula: We are now on track to deliver run rate savings in the range of $175 to $200 million by the end of 2024, which is $15 million better at the midpoint than previously expected. Savings accelerated through the back half of 2023, as we launched technology-based solutions aimed at enhancing crew member productivity and optimizing maintenance planning for our mid-life aircraft. Additionally, through our fleet modernization program, we remain on track to avoid $75 million in maintenance costs through 2024 as we replace our E190 fleet with the margin-accretive A220. We have already achieved $55 million in cumulative cost savings to date, and we continue to plan for all of the E-190s to be retired in 2025.

Solar: Most notably we have a significant amount of flexibility to extend the life of over 30, <unk> hundred 20 aircraft to provide growth tailwind and we will continue to explore other cost effective and capital light ways to grow our fleet.

Solar: Turning to the balance sheet.

Solar: We ended the year with $2 3 billion in liquidity, including our Undrawn $600 million revolving credit facility.

Solar: We continue to take a very conservative approach to managing our liquidity and in 2023, we raised $1 4 billion in aircraft financing to support our liquidity needs.

Solar: In 2024, we plan to raise additional financing to support our Capex and our planning assumption for full year interest expense is between 320 and $330 million.

Solar: We also continue to maintain a healthy unencumbered asset base.

Ursula: In the interim, we will still be operating three fleet types, which will result in near-term headwinds from associated costs and complexity. However, once we are through this transition period and back down to two fleet types, we expect a bigger benefit and a more meaningful tailwind on our costs. This will be further amplified by the fact that the A220s deliver a 20% improvement in ex-fuel unit cost economics compared to the E190, although for the first quarter.

Solar: We hold a total financeable asset pool of over $10 billion, which includes the true blue loyalty program. The Jetblue brand our slot portfolio aircraft and engine.

Finally, we continue to Opportunistically look at hedging as a means to manage risk as of today, we have hedged approximately 30% of our expected fuel consumption for the first quarter and approximately 13% for the full year.

Ursula: We expect Chasm X fuel to increase between 9 and 11% year over year, which includes impacts from the GTF issues and approximately two points related to wage step-ups in our pilot contract. As we move past the first quarter, we expect absolute CASMX to moderate downward and, supported by our robust set of cost initiatives, stay relatively flat on an absolute basis through the end of the year. We expect this to result in CASM-X growth of mid to high single digits for the full year.

Solar: Turning to slide 10 for a recap of our financial outlook for the first quarter and full year 2024.

Solar: As you can see we are refocusing our guidance around six key metrics, which we believe are mission critical to understanding our story and measuring our progress.

As we refocus our efforts around returning the business to profitability. We are shifting to adjusted operating margin, which we believe will provide greater insight into our core business performance.

Solar: Additionally for the full year, we have moved towards directional qualitative guidance rather than specific ranges given the number of moving variables.

Ursula: Together with the $300 million revenue initiative Joanna mentioned earlier, we expect this cost performance will result in an adjusted operating margin that is approaching break-even for the full year. Printing to our fleet. As Joanna mentioned, we reached an agreement with Airbus and other business partners to defer approximately $2.5 billion of aircraft capex previously expected in 2024 through 2027. This agreement supports our path back to positive free cash flow, provides a more consistent level of aircraft deliveries and CapEx through the end of the decade, and prioritizes the margin-accretive A220 and fleet monetization program as the E190s exit the fleet. We now expect to take delivery of 27 aircraft in 2024 and expect our full year 2024 CapEx to be approximately $1.6 billion.

Solar: We plan to provide more specific guidance for the full year at our upcoming Investor day in May.

To conclude I'd.

Solar: I'd like to thank our amazing crew members once again for all of your incredible work in 2023.

Solar: We are at a pivotal moment in our company's history and I know that we are focused on the right areas to position the business for long term success and restore our historical earnings power.

Solar: The fourth quarter showed us that we are making progress.

Solar: So while 2024 is a transition year, we have a strong plan in place and we are taking the necessary steps to return the business to profitability.

Solar: We are refocusing on our core customers and proven geographies with network product and operational changes to better meet their needs, while still delivering the low fares and great service Jetblue and has no known for.

Ursula: While we work through the near-term growth challenges stemming from the GTF issues, we recognize this level of growth is not in line with our historical performance, and we are evaluating all of our levers to partially offset the growth headwind. Most notably, we have a significant amount of flexibility to extend the life of over 30 A320 aircraft to provide growth tailwinds, and we will continue to explore other cost-effective and capital-light ways to grow our fleet. Turning to the balance sheet, We ended the year with $2.3 billion in liquidity, including our undrawn $600 million revolving credit facility.

Solar: We are diversifying our revenues with margin accretive initiatives to grow our true-blue loyalty program and Jetblue travel products portfolio.

And we are executing with continued cost and capital discipline, making more aggressive cut to our controllable costs and deferring capex to help the balance sheet.

Taken together I am very confident in our ability to create long term value for our owners and all our stakeholders.

With that we will now take your questions.

Solar: Yeah.

Thank you.

We are now ready for the question and answer section as Robin mentioned, we are not in a position to discuss the spirit transaction any further and we will not be answering any questions related to the transaction on today's call. Travis. Please go ahead with the instructions.

Ursula: We continue to take a very conservative approach to managing our liquidity, and in 2023, we raised $1.4 billion in aircraft financing to support our liquidity needs. In 2024, we plan to raise additional financing to support our CapEx, and our planning assumption for full-year interest expense is between $320 and $330 million. We also continue to maintain a healthy unencumbered asset base. We hold a total financeable asset pool of over $10 billion, which includes the True Blue loyalty program, the JetBlue brand, our slot portfolio, aircraft, and engines. Finally, we continue to opportunistically look at hedging as a means to manage risk. As of today, we have hedged approximately 30% of our expected fuel consumption for the first quarter and approximately 13% for the full year.

Travis: Thank you Sir at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question, we'll pause for a moment to allow questions to queue.

Travis: Our first question comes from Mike <unk> Deutsche Bank.

Yes.

Mike: Good morning, and congratulations Robert on the retirement.

Mike: Congratulations Joanna.

Mike: Sure.

Mike: Essentially to the CEO position.

Mike:

Joanna: Thanks, Jamie you've laid out.

Lot of the elements of what.

Speaker Change: Do you believe will make jetblue are successful.

Speaker Change: And alone company notwithstanding the.

Speaker Change: The M&A process, what still has to play out here with spirit as you think about jetblue over the next several years now.

Ursula: Turning to slide 10 for a recap of our financial outlook for the first quarter and full year 2024. As you can see, we are refocusing our guidance around six key metrics which we believe are mission-critical to understanding our story and measuring our progress. As we refocus our efforts around returning the business to profitability, we are shifting to adjusted operating margin, which we believe will provide greater insight into our core business performance. Additionally, for the full year, we have moved towards directional qualitative guidance rather than specific ranges, given the number of moving variables. We plan to provide more specific guidance for the full year at our upcoming Investor Day in May.

Speaker Change: We still have call it a market share relevance or a scope issue.

Speaker Change: Is that still feature prominently or is that still a priority for jetblue.

Speaker Change: Running it as a standalone debt still longer term, it's important for that company to become bigger.

Speaker Change: As youre thinking on that how has that evolved.

Speaker Change: As you move into the senior right Yeah.

Speaker Change: Thanks, Dan Greg Great question. So maybe you know spirit was about accelerating our organic growth more jetblue to more places more people and we still intend to do that we're going to do it organically it will be a bit slower for sure.

Speaker Change: But as we think about this year. This year is really about a reset year to get the fundamentals of the business right to ensure that as we as we grow and as we bring more jetblue to more places that we're doing it in a.

Ursula: I'd like to thank our amazing crew members once again for all of your incredible work in the 2020 series. We are at a pivotal moment in our company's history, and I know that we are focused on the right areas to position the business for long-term success and restore our historical earnings power. The fourth quarter showed us that we are making progress.

Profitable way on a sustained basis I mean, if you think about some of the unique advantages that Jetblue has me. Neither of these are tremendous strength and we need to redouble our efforts around amplifying those strengths of our network. Obviously, we've got the corner lot of JFK and Boston. These are markets that are constrained they're markets where Jeff.

Speaker Change: With very relevant and customers know our brand and our experience we need to maintain our leadership position there, but we need to be more selective where we fly to bolster profitability in those core geographies.

Ursula: So while 2024 is a transition year, we have a strong plan in place, and we are taking the necessary steps to return the business to profitability. We are refocusing on our core customers and proven geographies with network, product, and operational changes to better meet their needs while still delivering the low fares and great service JetBlue is known for. We are diversifying our revenues with margin-accretive initiatives to grow our True Blue loyalty program and JetBlue travel products portfolio. We are executing with continued cost and capital discipline, making more aggressive cuts to our controllable costs and deferring cap backs to help the balance.

Speaker Change: So that we can start rebuilding topline revenue we've already got an extremely strong leisure franchise with a strong premium onboard offering more than 25% of our seats are actually premium seats in the industry and so when we think about how we can capitalize on the leisure customer.

Speaker Change: With our diverse portfolio of products.

Speaker Change: We are quite bullish there, but we need to improve how we segment, how we merchandise and we need to close gaps in that product offering.

Speaker Change: And we need to kind of do all of this at the same time, hence Dave's focus on delivering over $300 million of revenue initiatives. This year loyalty co brand is well positioned to be an accelerator jetblue travel products. Likewise, it's had one of its best years yet.

Ursula: Taken together, I am very confident in our ability to create long-term value for our owners and all our stakeholders. With that, we will now take your questions. Thank you, everyone.

Speaker Change: Ursula touch on capital and cost discipline, we need to be unflagging in our efforts to reduce and better control our costs.

Speaker Change: And then reliability underpins all of this obviously our network footprint makes that more.

Speaker Change: More challenging, but we're making really nice progress there notwithstanding some of the headlines and then reinvigorating our culture. So scale matters, but we also believe relevance matters and we have scale and we have relevance in some really big markets and we need to focus on doing what we do best in those markets. We also have a path to capital.

Operator: Thank you. We are now ready for the question and answer section. As Robin mentioned, we are not in a position to discuss the spirit transaction any further, and we will not be answering any questions related to the transaction on today's call. Travis, please go ahead with it.

Operator: Thank you, sir. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.

Speaker Change: <unk> growth. So we're sort of touched on the deferrals, but you know I think it's worth noting we're still taking over 50 aircraft over the next two years and we have the ability to defer some of our <unk> hundred 20 deliveries, which isn't the same as acquiring another airline, but it will give us a path to sustainable profitable growth over the next few years. So we have a short term priority.

Operator: Once again, that is star number one to ask a question. We will pause for a moment to allow questions to queue. Our first question comes from Mike Linenberg, Deutsche Bank. Oh yeah, hey, good morning, and congratulations, Robin, on your retirement.

Speaker Change: But yes, we believe we've got a nice long term plan as well.

Speaker Change: Great. Thanks for that answer and then just a quick follow up just on the debt.

Speaker Change: Balance sheet it looked like it was up.

Four seven maybe there was up about 700 million that mostly aircraft debt like what was the swing there quarter over quarter. Thanks, and thanks for taking my question.

Michael Linenberg: Congratulations, Joanna, on your Ascension to the CEO position. Thanks, um, you know, Jenny, you laid out a lot of the elements of what you believe will make JetBlue successful. Standalone Company, notwithstanding, you know, the M&A process, which still has to play out here with Spirit. As you think about, you know, JetBlue over the next several years, though, You know, we still have to call it a market share relevance or a scope issue. Does that still feature prominently, or is that still a priority for JetBlue, even running it as a standalone business that, you know, still longer term, it's important for that company to become bigger? What is your thinking on that? How has that evolved for you? Thanks Dan, great question.

Speaker Change: Good morning, Mike just one.

Mike: Go back to and want to Joanna comments in regards to the one lever that we have is extending our buying out <unk> hundred 20 aircraft so that added to formulary.

Mike: And then extending the retirements yet.

Speaker Change: And back to your question, Mike the increase in debt was driven by the financing of aircraft throughout 2023, So we raised $1.4 billion against various aircraft them as we navigated through last year. So that's <unk>.

Speaker Change: Really what's driving the uptick in the debt metrics year over year.

Michael Linenberg: So maybe Spirit was about accelerating our organic growth, more JetBlue to more places, more people, and we still intend to do that. But we're going to do it organically. It will be a bit slower for sure, but as we think about this year, this year is really about a reset year to get the fundamentals of the business right, to ensure that as we grow and as we bring more JetBlue to more places, we do it in a profitable way on a sustained basis. If you think about some of the unique advantages that JetBlue has, these are tremendous strengths.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Dan Mckenzie Seaport Global.

Dan J. McKenzie: Oh, Hey, Thanks, Good morning, guys on the <unk> III <unk>, providing a growth tailwind are they enough to make up the shortfall from the deferred deliveries in the GTS issues looking ahead to 2025 and 2026.

Dan J. McKenzie: Yeah, Hi, Dan It's a good question, it's definitely an opportunity to backfill some of the loss driven by the GTS. We are still working through DTF exposure that we have in 2025 and beyond so we look forward to sharing more about our multi year growth rate projections.

Dan J. McKenzie: At Investor Day in May.

Speaker Change: Yes understood.

Speaker Change: And then the capital and cost discipline, that's coming through loud and clear. This morning does the capex now slopes sufficiently downwards in 2025 and beyond to get you to free cash flow and at least how can we help you know how can we think about that journey.

Speaker Change: Yeah. So the deferral today, then basically it has us taking on average 24 aircraft over each year over the next five years and we've.

We've prioritized the <unk> hundred 20 aircraft as we want to continue with the <unk> hundred 90, <unk> exit and we believe that this sets us up to be more successful in getting this business back to profitability and hence in return driving free cash flow. So that's that was the essence of what.

Speaker Change: Why we did the deferral I think there are other capital light effective ways that we can continue to grow and Thats a nod to the 30 aircraft that.

Speaker Change: We could potentially extend our buyout on lease so the way we're going to go about driving a level of growth over the next few years is capital friendly.

Speaker Change: Okay. Thanks for the time guys.

Yes.

Speaker Change: Our next our next question comes from Duane <unk>.

Evercore ISI.

Duane: Hey, I appreciate the time.

Duane: And best of luck.

Duane: Robyn.

Duane: Just a couple of questions from me as you dig into the detail of your network Peel back the onion.

Robyn: Can you just speak to the variability of your margins on a route level are there parts of your flying.

Robyn: That are generating sufficiently high enough unit revenue to generate positive decent margins.

Speaker Change: Or are the margins fairly uniform across your network, yes, maybe I'll take it and then I'll throw throw it over to Dave So Caribbean Leisure franchise continues to do very nicely. Obviously, there's some near term RASM pressure with the capacity that's split into those markets, but that continues to be a strong hold for jetblue and as you think about the future obviously the pool.

Speaker Change: On leisure.

Speaker Change: Jetblue travel products and the markets that it is in that remains a very very strong part of the network.

Speaker Change: On the good news front domestic is trending well capacity has moderated across domestic so so that's seeing some nice improvements and then New York and New York continues to improve its most certainly been a bit slower than we'd hoped for but it continues on a nice trajectory and as we think about the future at New York overall continues to be a really really important part.

Speaker Change: Part of our network.

Speaker Change: Trans Atlantic small part, but also doing extremely well. So we've got a number of kind of core geographies that continue to produce very nice margins for jetblue, but in a world where we're not growing we need to be more selective where we fly David I don't have anything to add I'll just add on the over the past couple of years demand has been.

Speaker Change: Pretty fluid in different geographies and as we come through the post Covid environment, I think it's a pretty clear as to what the new customer travel habits and preferences are and we've been working to really actively aligned our network to those demand areas. We did a fairly big network redeploy back in October we had another one in January I think you'll see another one or two as we go through this year.

Speaker Change: And just realigned to really reinforce the core more consider working well and to be more selective and redeploy some of the markets that we see demand shift away from over the last couple of years.

Speaker Change: Okay. Thanks for that and then just for my second question can you talk a little bit about the deferrals in this backdrop not asking for like contract specifics, but.

Speaker Change: Normally there would be penalties and escalators for deferring aircraft, but given how tight things are could we actually envision incentives or maybe some reverse brokering for doing that right now just given how tight things are.

Brian I'm not going to comment on like commercial negotiations with Airbus and we appreciate their partnership I do believe that this was a win win for both them and ourselves over the next few years.

Speaker Change: Okay I appreciate the thoughts.

Our next question comes from Conor Cunningham Melius research.

Conor Cunningham: Hi, everyone. Thank you congrats Robin and Joanna can you.

Conor Cunningham: Maybe help a little bit in terms of.

Conor Cunningham: The comments on head count.

Conor Cunningham: You mentioned earlier, but I was just trying to understand a little bit more in terms of actual magnitude and maybe.

Conor Cunningham: The overall reductions in head count there and if you could just maybe speak to the cadence in CASM ex.

Conor Cunningham: This out through the year. Thank you.

Speaker Change: Sorry, I couldn't hear all I think as CASM ex I'll throw the second part of the question Ursula just on head count, we just launched our voluntary.

Speaker Change: Our voluntary sort of opt out program. It covers our support centers of salaried with the goal of trying to reduce fixed costs in a world, where we're not growing and then it extend to a few of our operational operational groups in the frontline, but if it's literally three days old. So we're not really in a position to provide provide more details, but we're trying to do it in a thoughtful way.

Speaker Change: And provide our crewmembers with opportunities outside of Jetblue to the extent that they want to pursue that.

First maybe on the Capex question. Thanks, Joanne Yeah, just on CASM ex I do want to take a victory lap on 2023, we actually hit the full year controllable cost guide that we set last January despite one five points of headwinds driven by ATC and weather throughout the year.

Speaker Change: I'm. So pleased that we delivered and executed on what we said we would we were going to do in 2023 in terms of 2024.

Speaker Change: I want to note, we're up mid to high single digits with growth down low single digits I do believe that this.

Speaker Change: This is a good and confident guide them, we have been ruthless in terms of addressing the fixed cost base.

Speaker Change: Base, given we're not growing and we are on track to exceed the higher end of our structural cost guide and then we're continuing to capture value given we're progressing with the <unk> hundred 90 exit from our fleet modernization program. So when you combine the laser focus of car across all three initiatives.

I'm exceptionally pleased and we intend to execute the mid to high single digits on a full year basis in terms of how that plays through throughout the year and Q1 is slightly elevated in terms of the year over year and the 9% to 11% guide includes two points.

Speaker Change: Pilot pay and given that contract is lapping here in the January and February timeframe, and as we navigate through the rest of the year.

Speaker Change: From a.

Speaker Change: Pure CASM X cents perspective, we're essentially flat every quarter throughout the year.

Speaker Change: And so the progression improves them from a CASM ex year over year perspective, as we navigate through the rest of the year and I feel confident that we'll hit the mid to high single digits.

Speaker Change: Okay. That's helpful and then on the deferral versus lease extension comment.

Speaker Change: Little confused there.

I would have thought that the change in deferrals meant you were pivoting to slower growth until margins improved.

Some level can you can you just pointed out the scenarios between maybe low single digit growth.

Speaker Change: Historical range of mid to high.

In 2025, thank you.

Speaker Change: Yeah. The deferral, we believed it was imperative because our number one priority is getting this business back to sustained profitability and we had 35 aircrafts that were supposed to deliver in 'twenty five and 45 in 2026, and we just didn't feel like that was the.

Speaker Change: The capital investment that we should be making when we're just getting the business to profitability. So we slowed the growth on average will take 24 aircraft per year or over the next five years.

Speaker Change: We honed in on the <unk> hundred 20, we protected that delivery schedule. So that we can continue to exit the <unk> hundred 90, and and as I mentioned, we do have a lever to pull in terms of extending or buying out these leases and the goal is to get this business to grow again.

Speaker Change: And to overcome the GTS challenges that we're seeing so we do look forward to sharing you the multiyear growth plan at the Investor day in May.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from Jamie Baker Jpmorgan.

Jamie N. Baker: Okay. Good morning, everybody first for first of all just trying to reconcile the unencumbered also disclosure so for the bridge loan can you remind us what was the pledge there and confirm that with 9 billion is that correct. So in theory is that bridge goes away just.

Jamie N. Baker: Equally though.

Jamie N. Baker: Those assets come back to you then there's another billion plus in that figure on page one.

Speaker Change: That the correct way to think of it that is the exact way to think about it Jamie.

Speaker Change: Okay.

Speaker Change: Thank you for that and then second to Joanna.

Joanna: Let's see how do I access.

Joanna: It's plan a.

Joanna: The pre merger trajectory and class B was or is.

Joanna: In the merger.

Joanna: Have you allocated any internal resources to coming up with a potential claim C.

Joanna: Or is that how we shouldn't interpret today's deck I guess I guess put differently are the adjustments you're announcing today.

Joanna: And with the merger plan.

Meaning in a scenario, where if the merger doesn't go through we should be prepared for further revisions does that makes sense. Yes. It does yeah. So the plan that we're talking about today is our organic plan without a spirit acquisition.

Given the the appeal that the pending given the outcome of the judge's decision, we will see that process play through our hope is that the first circuit realizes the decision is erroneous Lee decided and we continue down the path with the spirit acquisition, but if that does not happen we need to be prepared with our org.

Joanna: Ganic plan and so that's what you heard about today, we will explain that greater at an investor day in May.

We're in the process we've been in the process for the last several months of building. This I call. It the plan be actually building. This plan B, which is the kind of a supersized organic plan.

Joanna: In case of Spirit does not happen. So that's what you heard about today from a resources perspective.

There is a team that has been working through the integration management office on the spirit plan.

That team will continue to do what they need to do and this organic plan will be worked by the broader Jetblue organization.

Okay. That's perfect. Thank you very much.

Joanna: Yeah.

Our next question comes from Catherine O'brien.

Joanna: Saks.

Catherine O'brien: Good morning, and congrats Robin Joanna again.

Catherine O'brien: I just wanted to dig in a bit on your comments on reshaping our cost structure to address cost convergence that was on in the presentation.

Catherine O'brien: What types of initiatives are you.

Catherine O'brien: Looking at to achieve this I know you've been talking about being relentless on on our fixed costs and you gave a few examples on the voluntary opt outs that are in the early innings and a few other things, but could you just could you just give us a little bit more color on.

Catherine O'brien: And what exactly you are looking at and I guess you know.

Catherine O'brien: <unk>.

Catherine O'brien: On the cost convergence front.

Catherine O'brien: Where do you see yourself kind of sitting in versus.

The bigger more premium guys and maybe at a lower cost.

Catherine O'brien: How do you view your performance in the last couple of years in that context.

Catherine O'brien: Hey, Katy Thanks for the question. So a couple of thoughts I'm definitely on the labor front costs have obviously converged as we've navigated through COVID-19.

Speaker Change: I'm very hopeful that the peak is behind us and hopefully from a pilot labor perspective attrition has been lower in that environment has been tightening up.

Speaker Change: And so I feel confident that the peaks of labor rates across some of these larger frontline work groups is behind us and so.

Speaker Change: We've got to be laser focused on ensuring that we drive productivity that we set up the network for success in terms of how we recover.

Speaker Change: At work, but also ensure that our frontline crew members have the tools that they need to do their jobs easier and essentially that will result in productivity efficiencies going forward. So.

Speaker Change: Like I said I'm very pleased with our controllable cost execution in 2023 and I do believe that this is a competitive tied them compared to the peer set in light of us not growing this year and.

Speaker Change: I fully expect to deliver on our full year guide again.

Speaker Change: Okay, Great and maybe just one for Dave can you just drill in a little by region for both the fourth quarter unit revenue performance.

David C. Clark: How those trends are evolving into the first quarter.

David C. Clark: You mentioned as well as your peers, but it sounds like theres been a bit of an inflection domestic.

Latam closer.

David C. Clark: Closer or Latam near as perhaps a bit more challenged just given some of the industry capacity.

Speaker Change: What are you seeing what are you seeing the fourth quarter, what underlies that once you guys. Thanks.

Yes, hi, Kevin Thanks for the question, we're seeing some really positive trends demand is certainly remaining healthy and also the unit revenue is being driven by both that healthy demand as well as capacity movements. So for example in Q1, we expect our domestic unit revenue to be positive year over year no for the system we're still.

Speaker Change: Negative, but domestically we expect it to be positive is that demand remains very healthy and we optimize our own capacity to align with demand when we see the industry come down a bit as well.

Internationally.

Speaker Change: Remains very strong we've been adding to it to really increase our focus in service of those markets that always pressures unit revenue a bit and it will take a little while to absorb but.

Speaker Change: These are our bread and butter market for us and we remain extremely committed to them.

Speaker Change: I'd also note internationally Trans Atlantic continues to perform really well as Jordan mentioned earlier fourth quarter RASM was up double digits on about 70% more capacity, we expect that level of strength.

Speaker Change: To not only go through the first quarter, but to probably accelerate further so feeling very good about where demand is at about how we are more closely aligning our capacity with that demand.

Speaker Change: Thanks, so much.

Okay.

Speaker Change: Our next question comes from Helane Becker TD cone.

Helane Becker: Oh, thanks, very much operator, hi, everybody and thank you for the time and yes, I will add my congrats to Robyn and Joanna to I'm on slide 10, or slow you talk about capex and it looks like it accelerates through the year. So she was that an increase in just.

Helane Becker: The way the cadence of the way, it's working or is it an increase in them.

Helane Becker: In in PDP or how should we think about the way the.

Helane Becker: The way that grows.

Speaker Change: Yeah. Thanks for the question Helane, the majority of that $1 6 billion and Capex is aircraft I think over 90% of it is dependent on aircrafts. So it's really just the timing of those deliveries throughout the year, that's driving the Q1 versus the full year.

Speaker Change: Sure.

Speaker Change: Got it that's very helpful. And then just for my follow up question.

Speaker Change: How are you thinking about them.

Helane Becker: Like like raising capital going forward, where would you I mean, not these a few slots. It's I don't think you would do equity, but but would you consider doing more lease being of aircraft or or doing them I don't know testing the ABS market again or doing something you know too.

Helane Becker: To maybe grow that but get yourselves in a position where you can generate positive cash flow at some point.

Helane Becker: So in 2023, and we financed $1.4 billion of aircraft Capex, we were exceptionally successful in the finance lease market and I think what we value when we look at financing in general as obviously the cost of the capital but also the.

Helane Becker: The flexibility and the ability to hopefully and pay down debt over time, and so we are as I mentioned in the market at the moment and assessing opportunities to raise capital in 2024, and so we'll be focusing on obviously cost of funding as well as <unk>.

Helane Becker: <unk> and theirs.

Helane Becker: A decent amount of money in the finance lease market at the moment, but obviously, we had I mentioned earlier, we have a very large financeable asset pool. So we'll continue to optimize across markets and across asset classes as we progress forward.

Speaker Change: Okay. That's really helpful. Thank you.

Speaker Change: Our next question comes from Savi sorry.

Raymond James.

Raymond James: Hey, good morning, everyone and Robinson, a pleasure wish you the best on the next chapter here and congrats to Joanna and Warren.

Raymond James: Joanna you mentioned premium gaps.

Raymond James: I'm just wondering if you can elaborate on that I'm guessing one of them was probably the the.

Savi: Still exceeding that you're introducing in in <unk>, but just wondering if you can elaborate a little bit more on what you mentioned there yes.

Joanna: We'll talk a bit more about it at Investor day, but if you think about how we segment. The cabin are currently we have obviously mint for a subset of our market even more space, we have basic economy.

Joanna: And we have sort of our core our core main core blue product and so as we think about preferred seating. That's one piece of it but we think there are potentially or additional additional product offerings, we could introduce that tap into a broader spectrum of customers and we are focused particularly with a focus on like the leisure customer how we close any gaps in those offerings. So its.

Joanna: Both in terms of how we sell but also the actual hard product itself.

Understood and if I might on the this kind of refocusing on the.

Joanna: The high value leisure, a premium leisure passenger and your kind of sweet mix and you know what's the role that the 8% to 20 plays in this and you can expect I think right now you have around 20% of your revenue that comes from business. It do you expect that mix to change over time.

Joanna: So our focus continues to be on offering a strong product portfolio for all of our customers, whether you're a more price sensitive customer or a customer who wants a more premium experience I mentioned over 25% of our seats fall into either even more space or the mint category. If you look at the H 'twenty, you've got 90% more even more space seats than that.

Joanna: <unk> hundred 90 <unk>.

Joanna: So just think about how we are modernizing the fleet naturally that introduces more even more space seats, but we want to be the airline that can serve all of our leisure customers as well as business customers because the product offering does speak to those customers to the extent, we have a schedule that works for them. So we'll continue to to invest in sort of the broader.

Array, but this this quarter and.

Joanna: Particularly we had an extremely strong premium.

Joanna: Offering both even more space and mint did exceptionally well from a revenue perspective, and so we'll continue to lean into the areas that are doing well, but we want to make sure. We have a product offering that caters to a whole wide spectrum of customers.

I appreciate it thank you.

Joanna: Our next question comes from Andrew <unk> Bank of America.

Yeah.

Andrew: Hey, good morning, everyone. Most of my questions have been answered already but just one as it relates to the GTS first of all I know.

You are still going through the.

Andrew: The exposures for 2025, and the impact there, but I'm just I'm trying to think through what would be the 2025 capacity tailwind from just getting into the 2020 for GTS impacted planes coming back on.

Andrew: Okay.

Speaker Change: Yeah, It's a good question.

Speaker Change: I I.

Speaker Change: We don't yet have detailed color from Pratt and Whitney on our 2025 exposure and I don't believe that it will drastically improve in regards to the average number of aircraft on the ground throughout the year, but.

Speaker Change: More to come on that as we continue to work with Pratt and to give you more color in may.

Speaker Change: Okay. That's all I had thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from Stephen Trent Citi.

Stephen Trent: Good morning, everybody.

And congrats as well to Robert and Joanne are once again.

Stephen Trent: Most of my questions have also been answered, but I was curious about your you lie.

Stephen Trent: <unk> comments and I appreciate what you've said you know how are you guys feeling about your supply of mechanics.

Stephen Trent: And I'm just trying to say.

Stephen Trent: True.

Speaker Change: Maybe who might be departed in and where are you you might still have a big news. Thank you.

Speaker Change: Sorry, Yes, you said who might have.

Speaker Change: Mechanics, sorry, apologies, yes, so we have a healthy pipeline of mechanics. We've spent a lot of time building out gateway program. So that we can actually provide opportunities for crew members and other departments to obtain an A&P license to become a jetblue mechanic. We also have programs with local schools Aviation High school and others to name a few so we feel.

We feel great about sort of our pipeline for mechanics. We've also seen a slowing of attrition across all work groups, which has been nice I think we're through that COVID-19.

Corporate cycle, where where it was just a much more challenging period, where we were doing a lot of hiring so that that's all balanced out so we're in a good place there.

Speaker Change: Okay, Great I appreciate that and just one very quick follow up.

Speaker Change: I believe you mentioned the shift towards adjusted.

Speaker Change: The EBIT margin as we as we move forward and what was just wanted to understand the high level sort of.

Speaker Change: What your view is on that thank you.

Speaker Change: Yeah. So we provided an estimated full year 2024 guidance on an adjusted operating margin perspective, we said that we would be approaching breakeven. We think this is a valid metric or helpful metric in regards to where we are in driving our core business to prop.

Speaker Change: <unk> ability, so and that was the essence of honing in on operating margin. Obviously, we will progress what we provide guidance to as we navigate and get this business back to sustained profitability.

Okay, I appreciate that and thanks for taking my questions.

Speaker Change: Our next question comes from Scott Group Wolfe Research.

Scott H. Group: Hey, Thanks, Good morning, So I wanted to just clarify one thing on the cost guidance I thought you were saying that absolute CASM stays sort of flat throughout the year, which I think would imply something higher than the five to nine but maybe I'm just taking some of that comment a little too literally so just any color would be.

Speaker Change: Yeah. So what we highlighted in the deck is we said roughly flat absolute CASM X fuel throughout 2024, so from a pure CASM X cents perspective, that's what that means so flat throughout the year the year over year comps will.

Speaker Change: We will improve beyond the first quarter.

Okay and that that will result in the up to mid to high single digits on a full year basis. So Q1 is an outsider outlier in terms of a year over year comp.

Speaker Change: Okay.

And then I'm wondering maybe it's too early but do you guys have any visibility too.

Speaker Change: Second quarter unit revenue, yet right. So I mean, you guys a lot of other airlines talking about domestic conflicting positive in Q1 I'm just trying to understand is this a real inflection how much of this is maybe an easier comp for March an earlier Easter do we have visibility that this positive RASM continues into Q2 or maybe it's just too early.

Speaker Change: Hi, Scott This is Dave I'll take that one we do feel very good about our unit revenue momentum that we've built that it will continue going into Q2 and throughout the year. A couple of ways to think about this one is just as we look ahead to the spring and summer. It's still early we don't have a lot of bookings, but the ones. We have are the higher load factor bill.

David C. Clark: And the higher fair year over year. So what we do have on the books is certainly positive for Q2, and Q3, secondly, and just at a higher level as we ramp through the year between our revenue initiatives ramping up throughout the year and then the comp which is much more difficult in the first half of the year than the second half of the year, we expect both of those to drive significantly meaningful revenue improvement.

David C. Clark: Year over year unit revenue as we go through the year.

Speaker Change: Helpful. Thank you guys.

Speaker Change: Our final question comes from Chris stuck your plus.

Chris: Susquehanna International Group.

Chris: Good morning, everyone. Thanks for taking my question I'll keep it to two Robin congrats.

Chris: Best of luck Joanne congrats on the promotion.

My first question if you could give.

Chris: Thank you might have said this on the last.

Chris: Call, but any color.

On these high growth markets.

Chris: As it relates to geography, I think you said high growth accretive and leisure and VFR markets markets, where those are and then two on your transatlantic products. If you could comment on what youre seeing with respect to competitive capacity in fairs, and and just summarize your I guess your value proposition here or kind of how you see this evolving.

Particularly as the network carriers here continue to emphasize that market.

Speaker Change: Sure I'll take the Caribbean VFR piece. So this is one of our core markets, it's foundational to who Jetblue is.

Speaker Change: It's a important part of the Jetblue travel products and our growth and in those markets and so while there is.

Speaker Change: Kris and capacity in those markets. It remains foundational and fundamentals of Jetblue and we do drive some nice margins from those locations in terms of the Trans Atlantic 4% of our seats. So it's a relatively small footprint, we've got a great value proposition.

Speaker Change: Over there with mint and our core product.

Speaker Change: And maybe I'll, let David kind of pick up from there sure I'll just add we're getting continuing to get really strong feedback both from customers on the product as well as our operational liability and it's not only about the individual markets too, but you've got quite a bit of relevance to our New York and Boston focus cities, adding in these major European destinations as part of our larger network portfolio. So we're very pleased.

David: With the ramp up that we've had and see multiple benefits strategically with these markets.

David: Yeah.

Speaker Change: Okay. Thank you.

Speaker Change: That concludes today's questions I would now like to turn the call back over to <unk> for any closing remarks.

David: Thanks Travis.

Speaker Change: Our fourth quarter 2023 earnings call. Thank you for joining us and have a great day.

Speaker Change: Yeah.

Speaker Change: And again that will conclude today's conference. Thank you for your participation you may disconnect at anytime.

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Speaker Change: