Q2 2024 JetBlue Airways Corp Earnings Call

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Brittany: Please stand by. Your program is about to begin. Should you need audio assistance during today's program, please press star zero. Good morning, my name is Brittany, and I would like to welcome everyone to the JetBlue Airways second quarter 2024 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listening mode. I would like to turn the call over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir.

Brittany: Good morning. My name is Brittany and I would like to welcome everyone to the JetBlue Airways second quarter 2024 earnings conference call.

Brittany: As a reminder, today's call is being recorded. At this time, all participants are in a listening mode. I would like to turn the call over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir.

Koosh Patel: Thanks, Brittany. Good morning, everyone. And thanks for joining us for our second quarter 2024 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.jetblue.com and on the SEC's website at www.sec.gov.

Koosh Patel: Thanks, Brittany. Good morning, everyone, and thanks for joining us for our second quarter 2024 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call.

Koosh Patel: In New York to discuss our results are Joanna Geraghty, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer. 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. Such forward-looking statements include, without limitation, statements regarding our third quarter and full year 2024 financial outlook and our future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational financial targets, our strategy, plans for future operations, and associated impacts on our business.

Speaker Change: All of those documents are available on our website at www.investor.jetblue.com and on the SEC's website at www.sec.gov. In New York to discuss our results are Joanna Geraghty, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer.

Koosh Patel: All such forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from those expressed in these statements. Please refer to our most recent earnings release, as well as our fiscal year 2023 10-K and other filings, for a more detailed discussion of 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 the information.

Speaker Change: During today's call, we'll make forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Such forward-looking statements include, without limitation, statements regarding our third quarter and full year 2024 financial outlook and our future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational financial targets,

Speaker Change: Our strategy, plans for future operations, and associated impacts on our business.

Speaker Change: All such forward-looking statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed provided in these statements.

Speaker Change: Please refer to our most recent earnings release as well as our fiscal year 2023 10-K and other filings for a more detailed discussion of risks and uncertainties that could cause the actual results to differ materially from those contained in our forward-looking statements.

Speaker Change: The statements made during this call are made only as of the date of the call and other than that.

Koosh Patel: 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 of corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website and on sec.gov. Now, I'd like to turn the call over to Joanna Geraghty. CEO. Thank you, Koosh. Good morning, everyone.

Speaker Change: 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.

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 of corresponding GAAP measures, please refer to our earnings release, a copy of which is available at our website and on sec.gov. And now I'd like to turn the call over to Joanna Geraghty.

Joanna L. Geraghty: And thanks for joining our second quarter 2024 earnings call. Please stand by. We are experiencing a technical difficulty.

Joanna L. Geraghty: CEO . Thank you, Koosh. Good morning, everyone. And thanks for joining our second quarter 2024 earnings call.

Speaker Change: Please stand by, we are experiencing a technical difficulty.

Joanna L. Geraghty: Once again, we ask that you please stand by.

unknown: Once again, we ask that you please stand by. And once again, we are experiencing a technical difficulty. We ask that you please continue to stand by. TheFNDC.com The FNDC 2014 TheFNDC.com, [inaudible] www.jetblue.co.uk [inaudible] Daniel McKenzie, Andrew Didora, Michael Linenberg, Duane Pfennigwerth, Conor Cunningham, www.jetblue.co.uk [inaudible] and more, www.jet Your program is about to resume. Thank you for your patience. Good morning.

Joanna L. Geraghty: And once again we are experiencing a technical difficulty. We ask that you please continue to stand by.

Speaker Change: If you enjoyed this video, please subscribe to my channel. And if you have any questions, please leave a comment. I'm always happy to help. I'll see you in the next video.

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Speaker Change: Please stand by, your program is about to resume, thank you for your patience.

unknown: So some technical difficulties. Apparently, our cost pillar is in full swing. We've only paid the phone bill for one of our conference rooms in the office.

Speaker Change: Good morning. So with some technical difficulties, apparently our cost pillar is in full swing. We've only paid the phone bill for one of our conference rooms in the office.

Speaker Change: So I will start over. Good morning, everyone, and thank you for joining our second quarter 2024 earnings call. I'm happy to report that we generated adjusted $34 million of pre-tax income for the second quarter.

Joanna L. Geraghty: So I will I will start over. Good morning, everyone. And thank you for joining our second quarter 2024 earnings call. I'm happy to report that we generated adjusted $34 million of pre-tax income for the second quarter. This performance would not be possible without our 23,000 crew members, and I would like to thank them for delivering a safe and reliable operation and for living our JetBlue values every day. Turning to slide four, for a few remarks on our second quarter performance.

Speaker Change: This performance would not be possible without our 23,000 crew members, and I would like to thank them for delivering a safe and reliable operation, and for living our JetBlue values every day.

Joanna L. Geraghty: Our team has been hard at work ensuring we deliver the best experience for our customers over the busy summer travel season. As part of our refocused long-term strategy, which I will touch on later in my remarks, we've made significant investments to improve our reliability and deliver more of our customers to their destinations on time, despite summer challenges from weather and persistent air traffic control staffing issues that we still have room to improve. We're off to a solid start.

Joanna L. Geraghty: And for the first six months of the year, we've exceeded our 2023 performance for key operational metrics. This improvement helped us beat or exceed our second quarter guidance range. In addition to reliability, our second quarter performance was aided by continued strength in our premium product offerings, with even more space unit revenue up double digits year over year. We are also pleased with the progress of our 300. We realized approximately $140 million of top-line benefit in the first half of this year.

Speaker Change: Though we still have room to improve, we are off to a solid start, and for the first six months of the year, we have exceeded our 2023 performance for key operational metrics.

Joanna L. Geraghty: We also delivered strong progress from our cost savings programs in the second quarter, while fuel prices continued to moderate, and as a result, we were able to keep costs low in order to generate a positive pre-tax profit for the quarter. Moving to slides five through seven.

Speaker Change: We also delivered strong progress from our cost savings programs in the second quarter, while fuel prices continued to moderate, and as a result, we were able to keep costs low in order to generate a positive pre-tax profit for the quarter.

Joanna L. Geraghty: As I mentioned last quarter, even as we were implementing these near-term performance improvement initiatives, our full new leadership team coalesced around refining our long-term strategy, and we are now pleased to share additional details with you, with more announcements still to come in the second half of the year. Our plan is rooted in thorough analysis of the near and longer-term competitive landscape, as well as extensive customer research. As a result, we feel confident in our refocused strategy, which we are calling JetForward, and are confident it's the right framework to position JetBlue for success. JetForward, at its core, is a back to basics strategy to be loved and to be profitable again, in order to deliver value to our customers, our crew members, and our owners.

Speaker Change: Moving to slides five through seven.

Speaker Change: Our plan is rooted in thorough analysis of the near and longer-term competitive landscape, as well as extensive customer research. As a result, we feel confident in our refocused strategy, which we are calling JetForward, and are confident it's the right framework to position JetBlue for success.

Speaker Change: JetForward, at its core, is a back-to-basics strategy to be loved and to be profitable again, in order to deliver value to our customers, our crew members, and our owners.

Joanna L. Geraghty: This framework is designed to enhance our inherent strengths and effectively overcome the current challenges of our business and industry. Our challenges are clear. The Pratt & Whitney engine-related aircraft groundings, which are significantly impeding our growth rate and pressuring our profitability, as well as industry-wide cost inflation and persistent air traffic control issues, all of which are headwinds we are working hard to overcome. At the end of the day, our revenue growth has not been enough to outpace our cost challenges, and we need to fix that, which is why the goal of our strategy is to set a foundation to lead us back to generating positive operating margins in the near term and driving sustainable earnings over the long term.

Speaker Change: This framework is designed to enhance our inherent strengths and effectively overcome the current challenges of our business and industry.

Speaker Change: Our challenges are clear. The Pratt & Whitney engine-related aircraft groundings, which are significantly impeding our growth rate and pressuring our profitability, as well as industry-wide cost inflation and persistent air traffic control issues, all of which are headwinds we are working hard to overcome.

Speaker Change: At the end of the day, our revenue growth has not been enough to outpace our cost challenges, and we need to fix that. Which is why the goal of our strategy is to set a foundation to lead us back to generating positive operating margin in the near term, and driving sustainable earnings over the long term.

Joanna L. Geraghty: We believe achieving these targets and executing on our strategy will be rooted in enhancing our strengths and focusing on what we can control. We have high-value geographies, a unique culture with a trusted brand, a low cost structure, and a differentiated product and service that has set JetBlue apart from its peers.

Speaker Change: We believe achieving these targets and executing on our strategy will be rooted in enhancing our strengths and focusing on what we can control.

Joanna L. Geraghty: All of which we believe can be enhanced to drive even more value, and delivering that value is our ultimate goal. Turning to slide eight, we expect JetForward to deliver an incremental 800 to 900 million of EBIT contribution in 2027 versus year-end 2024, helping to guide our path back to sustained profitability. We expect to realize this benefit evenly over 2025 to 2027, with incremental upside beyond 2027, as several underlying initiatives ramp up to their full potential.

Speaker Change: and delivering that value is our ultimate goal.

Speaker Change: Turning to slide 8, we expect JET Forward to deliver an incremental $800 to $900 million of EBIT contribution in 2027 versus year-end 2024, helping to guide our path back to sustained profitability.

Speaker Change: We expect to realize this benefit evenly over 2025 to 2027, with incremental upside beyond 2027 as several underlying initiatives ramp to their full potential.

Joanna L. Geraghty: The $800 to $900 million of EBIT contribution in 2027 is in addition to the $300 million revenue initiative we've already announced for 2025. We plan to turbocharge our strengths with four priority moves, which you can see on slide nine, all designed to drive our path forward. They are number one, delivering reliable and caring service.

Speaker Change: The $800 to $900 million of EBIT contribution in 2027 is in addition to the $300 million of revenue initiatives that we've already announced for 2024.

Joanna L. Geraghty: Number two, building the best East Coast leisure network. Number three, offering products and perks that customers value. And number four, a secure financial future, enabled by maintaining our cost advantage and restoring our balance sheet. These four moves may sound familiar, given we began acting on them back in the first quarter, and we've already seen encouraging results from several underlying initiatives in the first half of the year. In particular, our investments to deliver reliable service are showing early indications of driving value across the airline.

Speaker Change: We plan to turbocharge our strengths with four priority moves, which you can see on slide 9, all designed to drive our path forward. They are, number one, delivering reliable and caring service. Number two, building the best East Coast leisure network.

Speaker Change: 3. Offering products and perks that customers value, and 4. A secure financial future, enabled by maintaining our cost advantage and restoring our balance sheet.

Speaker Change: These four moves may sound familiar, given we began actioning on them back in the first quarter, and we've already seen encouraging results from several underlying initiatives in the first half of the year. In particular, our investments to deliver reliable service are showing early indications of driving value across the airline.

Joanna L. Geraghty: Operational reliability is essential to the success of our strategy, and it's a top priority for our customers. We've lagged our peers in on-time performance, partially driven by our high concentration of flying in some of the most crowded airspaces in the world and our outside exposure to air traffic control issues.

Speaker Change: Operational reliability is essential to the success of our strategy and it's a top priority for our customers.

Speaker Change: We've lagged our peers in on-time performance, partially driven by our high concentration of flying in some of the most crowded airspaces in the world, and our outside exposure to air traffic control issues.

Joanna L. Geraghty: While we are always working to improve on-time performance and recognize the reality of our particular airspace, we are aiming to significantly improve our relative ranking in the coming years. This will be a multi-year initiative with many phases of investment, and we've already begun taking action on optimizing the operability of our fleet, delivering a reliable product and service, and providing a consistent customer experience. Initiatives we rolled out this year include adding more scheduled time for maintenance, scheduling greater buffers for VFR flights, and introducing new tools such as automated turn tracking and enhanced customer-facing self-service and disruption management.

Speaker Change: While we are always working to improve on-time performance and recognizing the reality of our particular airspace, we are aiming to significantly improve our relative ranking in the coming years.

Speaker Change: This will be a multi-year initiative with many phases of investment, and we've already begun taking action on optimizing the operability of our fleet, delivering a reliable product and service, and providing a consistent customer experience.

Speaker Change: Initiatives we rolled out this year include adding more scheduled time for maintenance.

Speaker Change: scheduling greater buffers for VFR flights and introducing new tools such as automated turn tracking and enhanced customer facing self-service and disruption management tools.

Joanna L. Geraghty: We expect that over time, these investments will improve customer satisfaction and save on costs, helping to contribute about $100 million of incremental EBIT in 2027. Next, we are refocusing our network to build the best East Coast leisure network. Our network sits in some of the most valuable geographies in the world.

Speaker Change: We expect that over time, these investments will improve customer satisfaction and save on costs, helping to contribute about $100 million of incremental EBIT in 2027.

Speaker Change: Next, we are refocusing our network to build the best East Coast Leisure Network.

Joanna L. Geraghty: We have a leading position in three of the five largest markets on the East Coast, including New York City, which is the highest GDP-producing metro area in the United States. We've already taken significant action in the first half of the year to refocus our network around our core strengths in these geographies, Leisure, VFR, and TransCon, especially along the East Coast and in Puerto Rico, where JetBlue is a household name for many customers.

Speaker Change: Our network sits in some of the most valuable geographies in the world. We have a leading position in three of the five largest markets on the East Coast, including New York City, which is the highest GDP-producing metro area in the United States.

Speaker Change: We've already taken significant action in the first half of the year to refocus our network around our core strengths in these geographies, Leisure, VFR, and Transcon, especially along the East Coast and in Puerto Rico, where JetBlue is a household name for many customers.

Joanna L. Geraghty: As we've emphasized, our actions are guided by our focus on profitability, and we expect these changes will drive close to $175 million of incremental EBIT contribution in 2027. Marty will provide more specifics on our actions. JetBlue has a long history as a beloved brand in our core geographies.

Speaker Change: As we've emphasized, our actions are guided by our focus on profitability, and we expect these changes will drive close to $175 million of incremental EBIT contribution in 2027. Marty will provide more specifics on our actions.

Joanna L. Geraghty: Our attractive value proposition offering an affordable yet differentiated experience is well known by customers. We recognize that to be profitable and loved, we need to meet the evolving preferences of our customers, including an increased desire for premium experiences. Our strategy is more focused than ever on offering customers the products and the perks they value today. We believe that delivering on that brand promise will also enable us to ensure our customers feel rewarded for their loyalty. This, in turn, would help us specifically expand our share of premium customers.

Marty: JetBlue has a long history as a beloved brand in our core geographies. Our attractive value proposition, offering an affordable yet differentiated experience, is well known by customers.

Marty: We recognize that to be profitable and loved, we need to meet the evolving preferences of our customers, including an increased desire for premium experiences.

Marty: Our strategy is more focused than ever on offering customers the products and the perks they value today.

Marty: We believe that delivering on that brand promise will also enable us to ensure our customers feel rewarded for their loyalty.

Marty: This, in turn, would help us specifically expand our share of premium customers.

Joanna L. Geraghty: Customers who want a higher quality experience but may feel forgotten by our competitors. In addition to the product changes we've already implemented this year, including adding new loyalty partners and products and enhancing our Blue Basic offering, we plan to announce additional exciting improvements to our product later this year. So stay tuned.

Marty: Customers who want a higher quality experience, but may feel forgotten by our competitors.

Marty: In addition to the product changes we've already implemented this year, including adding new loyalty partners and products, and enhancing our Blue Basic offering, we plan to announce additional exciting improvements to our product later this year. So stay tuned.

Joanna L. Geraghty: While the financial benefits of our product changes will take time to realize, we expect them to contribute over $400 million of incremental EBIT benefits in 2027, with additional upside into the remainder of the decade. Finally, touching on our last priority move, a secure financial future. While we believe this will be an outcome of our efforts, we must also better manage what is in our control, and this starts with maintaining our cost advantage.

Marty: While the financial benefits of our product changes will take time to realize, we expect them to contribute over $400 million of incremental EBIT benefit in 2027, with additional upside into the remainder of the decade.

Marty: Finally, touching on our last priority move, a secure financial future. While we believe this will be an output of our efforts, we must also better manage what is in our control, and this starts with maintaining our cost advantage.

Joanna L. Geraghty: It is imperative we keep our costs low, so we can continue offering customers the most value when they fly. However, our Pratt & Whitney GTF engines continue to challenge our ability to plan our business over the long term, and we now expect aircraft on the ground to significantly increase in 2025. Ursula will provide more detail on this.

Marty: It is imperative we keep our costs low, so we can continue offering customers the most value when they fly. However, our Pratt & Whitney GTF engines continue to challenge our ability to plan our business over the long term, and we now expect aircraft on the ground to significantly increase in 2025.

Joanna L. Geraghty: In order to be profitable in this uncertain environment, we must transform our cost base in an aggressive manner. Similar to the approach we've taken with our network changes, we will be biased towards action and making bold decisions required to get our business back to profitability. And through investments in data science and staffing optimization, we expect cost savings will contribute about $175 million worth of incremental EBIT through 2027. Restoring our balance sheet health is also critical to a secure financial future and returning to profitable growth.

Marty: Ursula will provide more detail on this.

Ursula: In order to be profitable in this uncertain environment, we must transform our cost base in an aggressive manner, similar to the approach we've taken with our network changes.

Ursula: We'll be biased towards action and making bold decisions required to get our business back to profitability. And through investments in data science and staffing optimization, we expect cost savings will contribute about $175 million worth of incremental EBIT through 2027.

Ursula: Restoring our balance sheet health is also critical to a secure financial future and returning to profitable growth.

Joanna L. Geraghty: We simply cannot continue to invest in capital-intensive assets that must be financed upon delivery and that are subsequently unable to produce a return because they have to be parked due to required maintenance and lengthy wait times.

Ursula: We simply cannot continue to invest in capital-intensive assets that must be financed upon delivery and that are, subsequently, unable to produce a return because they have to be parked due to required maintenance and lengthy wait times.

Joanna L. Geraghty: With that in mind, we've come to an agreement with Airbus to defer 44 A321neo aircraft, which are the fleet most impacted by the Pratt & Whitney GTF issue. This will reduce our upcoming capital expenditures by $3 billion, helping us to improve our free cash flow outlook and restore our balance sheet health. While many parts of our business will be evolving with JetForward, maintaining our unique culture is core to its success. In the second quarter, we checked in with our entire organization through a poll survey, which showed a number of improvements that indicate that crew members are optimistic about our refreshed strategy. Our people are critical to the execution of our strategy, and we will continue investing in them to ensure our success.

Ursula: With that in mind, we've come to an agreement with Airbus to defer 44 A321neo aircraft, which are the fleet most impacted by the Pratt & Whitney GTF issues.

Ursula: This will reduce our upcoming capital expenditures by $3 billion, helping us to improve our free cash flow outlook and restore our balance sheet health.

Ursula: While many parts of our business will be evolving with JetForward, maintaining our unique culture is core to its success.

Ursula: In the second quarter, we checked in with our entire organization through a poll survey, which showed a number of improvements that indicate crew members are optimistic about our refreshed strategy.

Ursula: Our people are critical to the execution of our strategy, and we will continue investing in them to ensure our success.

Martin J. St. George: As we navigate through the remainder of 2024 and beyond, you can expect a number of additional announcements that will help fill in the remaining gaps in our strategy, and we will regularly share updates on the progress towards our 800 to 900 million EBIT target. With that, I'll turn it over to Marty to provide more detail on our commercial progress. Thank you, Joanna.

Ursula: As we navigate through the remainder of 2024 and beyond, you can expect a number of additional announcements that will help fill in the remaining gaps in our strategy.

Ursula: and we will regularly share updates on the progress towards our 800 to 900 million eBit target. With that, over to Marty to provide more detail on our commercial progress.

Martin J. St. George: I would like to extend a thanks to our crew members for their service and dedication to JetBlue. The amount of change we've implemented in my first six months has been significant, and I appreciate their support for our rollout of JetForward. At the beginning of this year, we announced a package of initiatives that we expected to drive $300 million of incremental revenue in 2024. We are pleased with the progress of those initiatives thus far and remain on track to achieve the $300 million this year.

Marty: Thank you, Joanna. I would like to extend a thanks to our crew members for their service and dedication to JetBlue.

Marty: The amount of change we've implemented in my first six months has been significant. And I appreciate crew members for supporting our rollout of Jet Forward.

Speaker Change: At the beginning of this year, we announced a package of initiatives that we expected to drive $300 million of incremental revenue in 2024.

Speaker Change: We are pleased with the progress of those initiatives thus far and remain on track to achieve the $300 million this year.

Martin J. St. George: These initiatives captured an additional $100 million of revenue in the second quarter and have now generated a total of $140 million of top line benefit in the first half of 2024. With JetForward, we will continue this high rate of activity and progress through 2027 and beyond, while the Jet Forward Priority Moves include the 2024 Grammy Initiative. The $800 to $900 million EBIT we expect JetForward to generate in 2025 to 2027 is entirely incremental to the $300 million we announced earlier this year. Refocusing our network is one of the key priority moves for JetForward.

Marty: These initiatives captured an additional $100 million of revenue in the second quarter and have now generated a total of $140 million of top-line benefit in the first half of 2024.

Marty: With JetForward, we will continue this high-rated activity and progress through 2027 and beyond.

Marty: While the Jet Forward priority moves include the 2024 revenue initiatives, the $800-900 million in EBIT we expect Jet Forward to generate in 2025-2027 is entirely incremental to the $300 million we announced earlier this year.

Martin J. St. George: And as Joanna mentioned, we've made significant network changes this year in support of building the best East Coast Leisure Network, which we expect will drive about $175 million of incremental EBIT uplift between 2025 and 2027. So far in 2024, we've announced four tranches of network changes, collectively driving 15 Blue City closures and over 50 route closures and redeployments. Every route and station needs to earn its way into our network. And our push for profitability has lessened our patience for underperforming. Our focus now is squarely on what we call our core franchises.

Marty: Refocusing our network is one of the key priority moves of JetForward. And as Joanna mentioned, we've made significant network changes this year.

Joanna L. Geraghty: and support of building the best East Coast Leisure Network.

Joanna L. Geraghty: Which we expect will drive about $175 million of incremental EBIT uplift between 2025 and 2027.

Joanna L. Geraghty: So far in 2024, we've announced four tranches of network changes collectively driving 15 Blue City closures and over 50 root closures and redeploys.

Joanna L. Geraghty: Every route and station needs to earn its way into our network, and our push for profitability has lessened our patience for underperforming routes.

Martin J. St. George: These have long been the profit engine for JetBlue, Leisure, VFR, and Transcon routes to and from our core East Coast geographies that know and love JetBlue, like New York, New England, Florida, Puerto Rico, and the Caribbean.

Joanna L. Geraghty: Our focus now is squarely on what we call our core franchises. These have long been the profit engine for JetBlue, Leisure, VFR, and Transcon routes, to and from our core East Coast geographies that know and love JetBlue, like New York, New England, Florida, and Puerto Rico and the Caribbean.

Martin J. St. George: Our value proposition resonates well with customers in these geographies, given our long history serving those areas and deep entrenchment on the East Coast. Many of the changes we've made to our network are driven by the stronger recovery and quicker ramp of leisure travel. As a result, and specifically in New York, we've shifted capacity out of corporate-focused routes and into leisure and VFI routes. In New England, we remain committed to being the number one value carrier, serving leisure and business customers alike, and continue to grow our presence across the region, across our other core geographies, such as Florida and the Caribbean.

Joanna L. Geraghty: Our value proposition resonates well with customers in these geographies, given our long history serving those areas and deep entrenchment on the East Coast.

Joanna L. Geraghty: Many of the changes we've made to our network are driven by the stronger recovery and quicker ramp of leisure travel.

Joanna L. Geraghty: As a result, and specifically in New York, we've shifted capacity out of corporate-focused routes and into leisure and VFR routes.

Joanna L. Geraghty: In New England, we remain committed to being the number one value carrier, serving leisure and business customers alike, and continuing to grow our presence across the region.

Martin J. St. George: Our strategy remains the same. We'll continue to invest in high-value leisure destinations and expand our product offering to ensure our customer value proposition remains attractive to the full spectrum of leisure customers. For example, we recently announced adding a complimentary carry-on bag to our Blue Basic offering for travel beginning September 6.

Joanna L. Geraghty: Across our other core geographies, such as Florida and the Caribbean, our strategy remains the same. We'll continue to invest in high-value leisure destinations and expand our product offering to ensure our customer value proposition remains attractive to the full spectrum of leisure customers.

Joanna L. Geraghty: For example, we recently announced adding a complimentary carry-on bag to our Blue Basic offering for travel beginning September 6.

Martin J. St. George: Our changes to Blue Basic have allowed us to remain competitive, and since launching about a month ago, we've seen promising early results. Not only is this a meaningful addition to the value proposition of our most affordable fare option, but we believe it's a necessary step on our path to profitability. Stay tuned in 2024 for additional announcements on JetForward's plan to offer more products and perks that our customers value, including enhancements to our premium offering.

Joanna L. Geraghty: Our changes to Blue Basic have allowed us to remain competitive, and since launching about a month ago, we've seen promising early results.

Joanna L. Geraghty: Not only is this a meaningful addition to the value proposition of our most affordable fare option, we believe it's a necessary step on our path to profitability.

Joanna L. Geraghty: Stay tuned in 2024 for additional announcements on JetForward's plan to offer more products and perks at our customers' value, including enhancements to our premium offerings.

Martin J. St. George: Shifting to our second quarter performance on slide 11. Second quarter capacity finished down 2.7%, higher than the midpoint of our revised guidance of down 3%. Completion factor was 98.8% for the quarter, one full point better than 2023, driven by our investments in reliability and better managing weather-related disruptions. Revenue was down 6.9%.

Joanna L. Geraghty: Shifting to our second quarter performance on slide 11.

Joanna L. Geraghty: Second quarter capacity finished down 2.7 percent higher than the midpoint of our revised guidance of down 3 percent.

Joanna L. Geraghty: Completion factor was 98.8% for the quarter, one full point better than 2023, driven by our investments in reliability and better managing weather related disruptions.

Martin J. St. George: This has been the midpoint of our revised guidance by about one... This was supported by Strength in Our Premium Offering, even more space for ASM, continuing to grow double digits, and mint unit revenue growth of close single digits on about 30% more capacity. We saw trust performing slightly better than expectations, with Peaks and Lines and in-month bookings improving over the course of the quarter. Unit revenues remain challenged in our Latin Leisure markets, where industry supply increases continue to wane. However, as you look to the third quarter,

Joanna L. Geraghty: Revenue is down 6.9%, beating the midpoint of our revised guidance by about 1 point.

Joanna L. Geraghty: This was supported by Strength in Our Premium Offerings.

Joanna L. Geraghty: With even more space in RASM, continuing to grow double digits, and mid-unit revenue growth up close single digits on about 30% more capacity.

Joanna L. Geraghty: We saw trust performing slightly better than expectations.

Joanna L. Geraghty: with PeaksInline.

Joanna L. Geraghty: And in-month bookings improving over the course of the quarter.

Joanna L. Geraghty: Unit revenues remain challenged in our Latin leisure markets where industry supply increases continue to weigh on performance.

Martin J. St. George: We are optimistic about the capacity evolution we have seen take shape since the start of the year, as competitive capacity and our overlap markets have come down modestly and is now two points lower than the second. As we predicted, it's still elevated compared to demand growth, but it is coming more into balance. We are also taking self-help measures and reducing trough capacity to better match supply and demand.

Joanna L. Geraghty: However, as you look to the third quarter, we are optimistic about the capacity evolution we have seen take shape since the start of the year, as competitive capacity and our overlap markets has come down modestly and is now two points lower than the second quarter.

Joanna L. Geraghty: As we predicted, it's still elevated compared to demand growth, but it is coming more into balance.

Joanna L. Geraghty: We are also taking self-help measures and reducing trough capacity to better match supply and demand.

Martin J. St. George: As you've optimized our network to focus more on our course leisure geographies, our exposure to leisure travel has increased, prompting us to adjust capacity to a seasonality curve with more pronounced peaks and troughs than we've historically seen. Accordingly, we've reduced trough flying throughout the second half of 2024, but most significantly in September, where we are scheduled to fly about 10% fewer ASMs year over year. We are also reducing aircraft utilization during peak months as part of our efforts to prove Reliability. As a result of these efforts,

Joanna L. Geraghty: As you've optimized our network to focus more on our course leisure geographies, our exposure to leisure travel has increased, prompting us to adjust capacity to a seasonality curve with more pronounced peaks and troughs than we've historically flown.

Joanna L. Geraghty: Accordingly, we've reduced trough flying throughout the second half of 2024, but most significantly in September .

Joanna L. Geraghty: Where we are scheduled to fly about 10% fewer ASMs year over year.

Joanna L. Geraghty: We are also reducing aircraft utilization during peak months as part of our efforts to improve reliability.

Martin J. St. George: We expect third-quarter capacity to be down 6% to down 3% year-over-year. Our capacity contraction provides a constructive backdrop for unit revenue to improve year-over-year. And we forecast year-over-year revenue growth to be down 5.5% to down 1.5% in the third. At the midpoint of our ranges, we are expecting positive year-over-year RASM and healthy sequential improvement. We expect our unit revenue trajectory will be supported by competitive capacity improvements in our Latin Leisure markets.

Joanna L. Geraghty: As a result of these efforts, we expect third quarter capacity to be down 6% to down 3% year-over-year.

Joanna L. Geraghty: Our capacity contraction provides constructive backdrop for unit revenue to improve year-over-year.

Joanna L. Geraghty: And we forecast year-over-year revenue growth to be down 5.5% to down 1.5% in the third quarter.

Joanna L. Geraghty: At the midpoint of our ranges, we are expecting positive year-over-year RASM and healthy sequential improvement.

Joanna L. Geraghty: We expect our unit revenue trajectory will be supported by competitive capacity improvements in our Latin Leisure markets.

Martin J. St. George: The continued ramp of our revenue initiatives and the lapping of the wind down of the Northeast Alliance in the third quarter of 2023. For the full year, we expect revenue growth to be down 6% to down 4%, on 5 to 2.5% less capacity.

Joanna L. Geraghty: The continued ramp of our revenue initiatives and a lapping of the wind down of the Northeast Alliance in the third quarter of 2023.

Joanna L. Geraghty: For the full year, we expect revenue growth to be down 6% to down 4% on 5% to 2.5% less capacity.

Martin J. St. George: In closing, with JetForward, we've built a solid strategic framework that we are focused on and excited about. And though we've seen initial improvements in our business as a result of the strategy, there is still work to do to deliver on our multi-year targets, including ensuring our crewmembers understand how pivotal they are to its success. Our product is not truly differentiated without the incredible service they provide our customers, and I want to thank them again for their service to JetBlue, especially as they support JetForward's path to profitability. With that, over to you Urs.

Joanna L. Geraghty: In closing, with JetForward, we built a solid strategic framework that we are focused on and excited about.

Joanna L. Geraghty: And though we've seen initial improvements to our business as a result of the strategy, there is still work to do to deliver on our multi-year targets, including ensuring our crew members understand how pivotal they are to its success.

Joanna L. Geraghty: Our product is not truly differentiated without the incredible service they provide our customers.

Arsalan: And I want to thank them again for their service to JetBlue, especially as they support JetForward's path to profitability. With that, over to you, Ursula.

Ursula L. Hurley: Thank you, Marty. And thanks again to our crew members for helping to deliver a profitable second quarter. We delivered on our targets this quarter, with revenue beating the midpoint of our original and revised guidance ranges, and Chasm X outperforming the low end of our revised range, which was half a point better than our original guidance. While we generated $34 million of adjusted pre-tax profit for the quarter, it won't be enough to offset projected losses generated in the other three quarters, and we remain steadfast in our urgency to return to full year profitability

Arsalan: Thank you, Marty. And thanks again to our crew members for helping to deliver a profitable second quarter.

Arsalan: We delivered on our targets this quarter, with Revenue beating the midpoint of our original and revised guidance ranges, and ChasmX outperforming the low end of our revised range, which was half a point better than our original guidance.

Arsalan: While we generated $34 million of adjusted pre-tax profit for the quarter, it won't be enough to offset projected losses generated in the other three quarters, and we remain steadfast in our urgency to return to full-year profitability.

Ursula L. Hurley: With JetForward, we are setting our financial priorities for the coming years with the goal of restoring profitability as soon as possible. A secure financial future, one of our four priority moves, is underpinned by sustaining our cost advantage, driving operating margin improvement, restoring our balance sheet health, and practicing capital discipline so we can generate positive free cash flow. We are taking steps to achieve each of these priorities, and meeting our 800 to 900 million EBIT target will be key to our strategy success and overcoming our challenges. Before I get into the details of the quarter, I want to provide an update on the status of our Pratt & Whitney GTF engine. We take full responsibility for addressing and overcoming challenges within our control.

Arsalan: With JetForward, we are setting our financial priorities for the coming years, with the goal to restore profitability as soon as possible.

Arsalan: A secure financial future, one of our four priority moves, is underpinned by sustaining our cost advantage.

Arsalan: Operating Margin Improvement, Restoring our Balance Sheet Health, and Practicing Capital Discipline so we can generate positive free cash flow.

Arsalan: We are taking steps to achieve each of these priorities, and meeting our 800 to 900 million EBIT target will be key to our strategy's success and overcoming our challenges.

Ursula L. Hurley: And we recognize the need to address and plan for even those outside of our control, like weather and ATC staffing. The magnitude and multitude of availability challenges we are experiencing with the GTF engine are something we are working hard to mitigate, but they continue to have a significant impact on our business and on our long-term planning ability. In addition to powder metal related inspections challenging our engine availability, we've experienced a number of other unscheduled engine maintenance visits that are resulting in GTF engines coming off the wing much sooner than anticipated, some after just a year of flying. In fact, a majority of the 11 average aircraft grounded this year are due to inspections outside of powder metal.

Arsalan: Before I get into the details from the quarter, I want to provide an update on the status of our Pratt & Whitney GTF engines.

Arsalan: We take full responsibility for addressing and overcoming challenges within our control, and we recognize the need to address and plan for even those outside of our control like weather and ATC staffing.

Arsalan: The magnitude and multitude of availability challenges we are experiencing with the GTF engine are something we are working hard to mitigate, but they continue to have a significant impact on our business and on our long-term planning ability.

Arsalan: In addition to powder metal related inspections challenging our engine availability, we've experienced a number of other unscheduled engine maintenance visits that are resulting in GTF engines coming off wing much sooner than anticipated.

Arsalan: Some after just a year of flying. In fact, a majority of the 11 average aircraft grounded this year are due to inspections outside of powder metal.

Ursula L. Hurley: Based on the latest numbers provided by Pratt & Whitney, we are now expecting the average number of grounded aircraft in 2025 to be in the mid to high teens, with greater uncertainty in 2026 and beyond. This will drive roughly flat year-over-year capacity in 2025. In order to reach flat growth, we'll need to continue investing to extend the lives of our A320 fleet. While it comes at a cost to buy out leases and extend the lives of aircraft, the return profile is more attractive than investing in new aircraft. At this stage, we simply can't afford to continue taking delivery of costly new aircraft that may need to be parked due to engine availability issues, especially if we must raise financing to support these deliveries.

Arsalan: Based on the latest numbers provided by Pratt & Whitney, we are now expecting the average number of grounded aircraft in 2025 to be in the mid to high teens, with greater uncertainty in 2026 and beyond.

Arsalan: This will drive roughly flat year-over-year capacity in 2025.

Arsalan: In order to reach flat growth, we'll need to continue investing to extend the lives of our A320 fleet.

Arsalan: While it comes at a cost to buy out leases and extend the lives of aircraft, the return profile is more attractive than investing in new aircraft.

Arsalan: At this stage, we simply can't afford to continue taking delivery of costly new aircraft that may need to be parked due to engine availability issues, especially if we must raise financing to support these deliveries.

Ursula L. Hurley: Our focus going forward will be on driving greater returns from our existing asset base so we can improve our free cash flow outlook. As a result, we've come to an agreement with Airbus to defer 44 A321neo aircraft from our current order book to 2030 and beyond, reducing our 2025 to 2029 planned capital expenditures by approximately $3 billion and reducing Airbus aircraft commitments over the next five years from $5.3 billion to approximately $2.3 billion. This, along with the capital light extension of approximately 30 A320s, allows us to efficiently reduce our capital expenditures and get us closer to our free cash flow goals.

Arsalan: Our focus going forward will be on driving greater returns from our existing asset base so we can improve our free cash flow outlook.

Arsalan: As a result, we have come to an agreement with Airbus to defer 44 A321neo aircraft from our current order book to 2030 and beyond.

Arsalan: Reducing our 2025 to 2029 planned capital expenditures by approximately $3 billion and reducing Airbus aircraft commitments over the next five years from $5.3 billion to approximately $2.3 billion.

Arsalan: This, along with the capital light extension of approximately 30 A320s, allows us to efficiently reduce our capital expenditures and get us closer to our free cash flow goals.

Ursula L. Hurley: Turning to the second quarter cost performance on slide 13, our investments in reliability resulted in solid operational performance, allowing us to complete more flights than planned and helping to spread our fixed costs over more capacity. Second quarter CASMX fuel grew 3.7% year over year, beating our revised guidance midpoint by more than two points, driven by one point of incremental cost savings from our structural cost program, one point from completion of additional flights and operational efficiencies, and a timing shift of expenses to the second half of the year.

Arsalan: Turning to the second quarter cost performance on slide 13.

Arsalan: Our investments in reliability resulted in solid operational performance, allowing us to complete more flights than planned and helping to spread our fixed costs over more capacity.

Arsalan: Second quarter CASMX fuel grew 3.7% year-over-year, beating our revised guidance midpoint by more than two points.

Arsalan: Driven by one point of incremental cost savings from our Structural Cost Program, one point from completion of additional flights and operational efficiencies, and a timing shift of expenses to the second half of the year.

Ursula L. Hurley: Our current cost savings programs are on track to hit our previously communicated targets of $175 to $200 million for our structural cost program and $100 million of cost avoidance from our fleet modernization program. Our structural cost program realized an additional 45 million of benefits this quarter, resulting in cumulative realized benefits of 145 million.

Arsalan: Our current cost savings programs are on track to hit our previously communicated targets of $175 to $200 million for our structural cost program and $100 million of cost avoidance from our fleet modernization program.

Arsalan: Our structural cost program realized an additional $45 million of benefit this quarter, resulting in cumulative realized benefits of $145 million.

Ursula L. Hurley: When this program hits full run rate, expected at the end of this year, we'll transition our focus to a cost transformation program as part of JetForward, which I will touch on shortly. Through our fleet modernization program, we've avoided 83 million dollars in costs to date due to continued optimization of engine maintenance. This program will continue until our E-190s are fully retired in 2025. We also benefited from the moderation of fuel prices over the quarter, as we saw an $0.18 decline in fuel prices between mid-April and the end of the quarter.

Arsalan: When this program hits full run rate, expected at the end of this year, we'll transition our focus to a cost transformation program as part of JetForward, which I will touch on shortly. Thank you. Thank you.

Arsalan: Through our fleet modernization program, we've avoided $83 million of costs to date due to continued optimization of engine maintenance. This program will continue until our E190s are fully retired in 2025.

Arsalan: We also benefited from the moderation of fuel prices over the quarter, as we saw an $0.18 decline in fuel prices between mid-April and the end of the quarter.

Ursula L. Hurley: We remain opportunistic with our fuel hedging strategy, and as a result, we have entered into hedges for 20% of our volume in the third quarter and 20% in the fourth quarter. In the third quarter, we expect Chasm X fuel to grow six to 8%, primarily resulting from wage rate step-ups in our labor agreements impacting Chasm X fuel by two points in each of the third and fourth quarters, and a shift of expenses from the first half of this into the second half worth an additional half a point of impact in each quarter.

Arsalan: We remain opportunistic with our fuel hedging strategy, and as a result, we have entered into hedges for 20% of our volume in the third quarter and 20% in the fourth quarter.

Arsalan: In the third quarter, we expect ChasmXFuel to grow 6% to 8%.

Arsalan: primarily resulting from wage rate step ups in our labor agreements impacting Casimek fuel by two points in each the third and fourth quarter, and a shift of expenses from the first half of this into the second half.

Arsalan: Worth an additional half a point of impact to each quarter.

Ursula L. Hurley: Since we communicated our initial full year Chasm X fuel guidance of mid to high single digits in January, we've faced several headwinds, including the change in Pratt & Whitney compensation recognition, a reduction in scheduled trough capacity, and unplanned investments in the extension of our A320 fleet, all of which pressured our unit costs by two and a half points for the full year. Despite these challenges, we've solid And we expect to maintain our guidance of mid to high single digits with Chasm X fuel up six and a half to eight and a half percent. Now turning to slide 14.

Arsalan: Since we communicated our initial full-year CASM-X fuel guidance of mid-to-high single digits in January , we've faced several headwinds, including the change in Pratt & Whitney compensation recognition.

Arsalan: Reduction in Scheduled Trough Capacity, and unplanned investments in the extension of our A320 fleet, all of which pressured our unit costs by 2.5 points for the full year.

Arsalan: Despite these challenges, we've solidly executed on our controllable costs, and we expect to maintain our guidance of up mid to high single digits with ChasmXFuel up 6.5% to 8.5%.

Ursula L. Hurley: As we implement our four priority moves, we believe sustaining our cost advantage, especially when faced with flat growth in 2025, is imperative to our success. It's important we make transformational changes to the way we plan our business. And we're taking it back to basics with our approach as we ask ourselves, "How would we structure JetBlue today if we were just starting an airline?" We will evaluate all cost categories, though we see specific opportunities in data science-driven planning optimization and better aligning our business to peaks and troughs. The focus of our structural cost program has evolved over the years.

Arsalan: Now turning to slide 14, as we implement our four priority moves, we believe sustaining our cost advantage, especially when faced with flat growth in 2025, is imperative to our success.

Speaker Change: It's important we make transformational changes to the way we plan our business, and we're taking it back to basics with our approach as we ask ourselves, how would we structure JetBlue today if we were just starting an airline?

Speaker Change: We will evaluate all cost categories, though we see specific opportunity in data science-driven planning optimization and better aligning our business to peaks and troughs.

Speaker Change: The focus of our structural cost program has evolved over the years. Our 2018 program drove savings from business partner contracts, while our current program focuses on enterprise-wide efficiencies.

Ursula L. Hurley: Our 2018 program drove savings from business partner contracts, while our current program focuses on enterprise-wide efficiencies. JetForward's cost transformation will focus on implementing next-generation technology across the airline and will continue to build on the learnings from our past structural cost programs to sustain our cost advantage and transform our cost structure. We forecast this transformation will add about $175 to EBIT in 2027 through cost savings, and we look forward to revealing more of our long-term plan for costs over the next few quarters.

Speaker Change: JetForward's cost transformation will focus on implementing next-generation technology across the airline, and will continue to build on the learnings from our past structural cost programs to sustain our cost advantage and transform our cost structure.

Speaker Change: We forecast this transformation will add about $175 to EBIT in 2027 through cost savings and we look forward to revealing more of our long-term plan for costs over the next few quarters.

Ursula L. Hurley: Transitioning now to Fleet and our balance sheet. Slide 15 provides an update on our fleet plan. In the second quarter, we took delivery of six aircraft, and we expect to take delivery of six aircraft in the third quarter, driving 365 million in forecasted CapEx for the third quarter. For the full year, we plan to take a total of 27 deliveries and expect full year capital expenditures to remain around $1.6 billion.

Speaker Change: Transitioning now to Fleet and our Balance Sheet.

Speaker Change: Slide 15 provides an update on our fleet plan. In the second quarter, we took delivery of six aircraft, and we expect to take delivery of six aircraft in the third quarter, driving $365 million of forecasted CapEx for the third quarter.

Speaker Change: For the full year, we plan to take a total of 27 deliveries and expect full-year capital expenditures to remain around $1.6 billion.

Ursula L. Hurley: As announced this quarter, we are deferring 44 A321neos into 2030 and beyond that were previously scheduled to be delivered between 2025 and 2029. We now expect to take 60 deliveries during that time frame, down from 104 previously, with 56 of the remaining deliveries being A220s. We continue to prioritize reinvesting in our current asset base, and today have successfully extended the lives of 12 A320s of the 30 aircraft we have been

Speaker Change: As announced this quarter, we are deferring 44 A321neos into 2030 and beyond that were previously scheduled to be delivered between 2025 and 2029.

Speaker Change: We now expect to take 60 deliveries during that time frame, down from 104 previously, with 56 of the remaining deliveries being A220s.

Speaker Change: We continue to prioritize reinvesting in our current asset base and today have successfully extended the lives of 12 A320s of the 30 aircrafts we have been evaluating.

Ursula L. Hurley: These aircraft will remain in our fleet and provide capacity backfill, particularly in 2025, when we expect the remaining E-190s will officially leave the fleet and when Pratt & Whitney-related availability challenges increase. Moving to slide 16. We ended the second quarter with $1.6 billion in liquidity, excluding our $600 million undrawn credit facility.

Speaker Change: These aircraft will remain in our fleet and provide capacity backfill, particularly in 2025 when we expect the remaining E-190s will officially leave the fleet and when Pratt & Whitney related availability challenges increase.

Speaker Change: Moving to slide 16. We ended the second quarter with $1.6 billion in liquidity, excluding our $600 million undrawn credit facility.

Ursula L. Hurley: Year to date, we have secured $1.3 billion in committed financing to support our capital expenditures. We continuously seek opportunities to strengthen our liquidity position in order to fund our CapEx needs for the next 12 to 18 months, and refinance our short-term debt maturities, including addressing, as quickly as possible, our convertible notes that will become current in April of 2025. And to generally provide us with additional liquidity, which will better position us to execute the strategy discussed today.

Speaker Change: Year-to-date, we have secured $1.3 billion in committed financing to support our capital expenditures.

Speaker Change: We continuously seek opportunities to strengthen our liquidity position in order to fund our CapEx needs for the next 12 to 18 months.

Speaker Change: Refinance our short-term debt maturities, including addressing, as quickly as possible, our convertible notes that will become current in April of 2025, and to generally provide us with additional liquidity, which will better position us to execute our strategy discussed today.

Ursula L. Hurley: An example of our strength in liquidity is the amendment and extension of our revolving credit facility, which will now mature in 2029. In addition, we may opportunistically execute on future financing transactions, including in the capital and syndicated loan markets, which may be structured to be secured by a portion of our unencumbered assets, which are currently valued at approximately $11 billion.

Speaker Change: An example of our strength in liquidity is the amendment and extension of our revolving credit facility, which will now mature in 2029.

Speaker Change: In addition, we may opportunistically execute on future financing transactions.

Speaker Change: Including in the capital and syndicated loan markets.

Speaker Change: which may be structured to be secured by a portion of our unencumbered assets, which are currently valued at approximately $11 billion.

Ursula L. Hurley: Our most significant unencumbered asset is our Customer Loyalty Program, which is valued at about half of our current unencumbered asset base. Of course, any future financing is subject to market conditions, and there is no guarantee we will be able to execute on them. Before I hand it back to Joanna to close out the call, I would emphasize how focused we are on making year over year margin improvements and getting back to positive operating margin again.

Speaker Change: Our most significant unencumbered asset is our Customer Loyalty Program, which is valued at about half of our current unencumbered asset base.

Speaker Change: Of course, any future financings are subject to market conditions and there is no guarantee we will be able to execute on them.

Speaker Change: Before I hand it back to Joanna to close out the call, I would emphasize how focused we are on making year-over-year margin improvements and getting back to positive operating margin again.

Ursula L. Hurley: Through JetForward, we believe we have a clear and actionable strategy to deliver 800 to 900 million of incremental EBIT in 2027 and a strong foundation from which we can return to our historical earnings power. Joanna, over to you.

Speaker Change: Through JetForward, we believe we have a clear and actionable strategy to deliver 800 to 900 million of incremental EBIT in 2027, and a strong foundation off of which we can return to our historical earnings power.

Joanna L. Geraghty: Thank you, Ursula, and thank you all for joining us. I want to close by reiterating our commitment to building value for our owners, starting with our return to profitability. I'd like to thank the team for all of the good work behind the Jet Forward plan. We have been and are taking aggressive action on every front and strongly believe that the focus of our attention has to be on implementing Jet Forward.

Speaker Change: Joanna, over to you. Thank you, Ursula, and thank you all for joining us. I want to close by reiterating our commitment to building value for our owners, starting with our return to profitability. I'd like to thank the team for all of the good work behind the Jet Forward Plan. We have been and are taking aggressive action on every front.

Speaker Change: and strongly believe that the focus of our attention has to be on the execution of JetForward.

Joanna L. Geraghty: Given this, and coupled with the longer-term planning uncertainties from the Pratt & Whitney engine issues, we've decided to communicate more about our strategy now rather than hold an investor day in the fall. Our team is fully committed to ongoing outreach and two-way communication with all of you, and we look forward to continuing to discuss our plans as we roll out additional strategic initiatives through the remainder of the year. With clarity on our path forward, we are energized and moving forward with resolve and determination.

Speaker Change: Given this, and coupled with the longer-term planning uncertainties from the Pratt & Whitney engine issues,

Speaker Change: We've decided to communicate more about our strategy now rather than hold an Investor Day in the fall. Our team is fully committed to ongoing outreach and two-way communication with all of you, and we look forward to continuing to discuss our plans as we roll out additional strategic initiatives through the remainder of the year.

Speaker Change: With clarity on our path forward, we are energized and moving forward with resolve and determination. I'm incredibly confident in the outlook of our business as we turbocharge our strengths and execute on our four priority moves to return JetBlue to profitability and deliver for all of our stakeholders.

Joanna L. Geraghty: I'm incredibly confident in the outlook of our business as we turbocharge our strengths and execute on our four priority moves to return JetBlue to profitability and deliver for all of our stakeholders. Thank you, and with that, we will take your questions. Thank you. 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: Thank you, and with that, we will take your questions.

Speaker Change: Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad.

unknown: Once again, that is star and one if you would like to ask a question. And we'll take our first question from Dan McKenzie with Seaport Global. Your line is now open.

Speaker Change: You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 if you would like to ask a question. And we will take our first question from Dan McKenzie with Seaport Global. Your line is now open.

unknown: Oh, hey, good morning. Thanks, guys. I guess the first question is for Joanna.

Joanna L. Geraghty: Setting aside the fourth quarter this year, so looking ahead to 2025, you know, it looks like from JetForward and the 1 billion plus in initiatives that you're, you know, most likely penciling in summer profitability. But, you know, is the punchline really that JetBlue can get to profitability in each of the quarters? Or is it just given the Pratt & Whitney challenges?

Daniel J. McKenzie: Oh, hey, good morning. Thanks, guys. I guess first question is for Joanna. Setting aside the fourth quarter this year, so looking ahead to 2025, you know, it looks like from Jet Forward and the $1 billion plus in initiatives, you're, you know, most likely penciling in summer profitability.

Daniel J. McKenzie: But, you know, is the punchline really that JetBlue can get to profitability in each of the quarters, or is it just given the Pratt & Whitney challenges?

Speaker Change: is the goal simply to get the break even in the seasonally softer periods. I'm not looking for a forecast, I'm just trying to get a sense of what's aspirational versus realistic in the medium term here from where you sit.

Joanna L. Geraghty: Is the goal simply to get the break even in the seasonally softer periods? I'm just not looking for a forecast. I'm just trying to get a sense of what's aspirational versus realistic in the medium term from where you sit. Sure, thanks, Dan. I appreciate the question. So, you know, maybe just the headline. We are so focused on trying to get to profitability as soon as possible. We actually kicked off our 2025 planning season earlier this year with a goal to build a plan that will deliver a break-even operating margin for the full year of 2025. That said, you know, it's much too early in the planning cycle to commit to that.

Speaker Change: Sure. Thanks, Dan. I appreciate the question. So maybe just headline, we are so focused on trying to get to profitability as soon as possible. We've actually kicked off our 2025 planning season earlier this year with a goal to build a plan that will deliver a break-even operating margin for the full year of 2025.

Speaker Change: That said, you know, it's much too early in the planning cycle to commit to that. We traditionally haven't provided, you know, that kind of guidance so early, but we are very focused on trying to get there for next year. This obviously assumes sort of the mid-to-high teens for Pratt & Whitney and a competitive macro backdrop, but that's, you know, how we're thinking about things for next year.

Joanna L. Geraghty: We traditionally haven't provided that kind of guidance so early, but we are very focused on trying to get there for next year. This obviously assumes sort of the mid-to-high teens for Pratt & Whitney and a competitive macro backdrop. But that's, you know, how we're thinking about things for next year. Yeah, understood. Okay.

Joanna L. Geraghty: And then, you know, given Levin Parked aircraft each month, you know, is there, can you share, you know, what the loss year to date is from, you know, the Pratt and Whitney issue or the challenges? And the reason I'm asking is I'm just trying to separate out the temporary earnings impediment to the story here versus the structural impediments to getting back to the financial target. Yeah, it's a great question.

Speaker Change: Yeah, understood. Okay. And then, you know, given Levin parked aircraft each month, you know, is there, can you share, you know, what the loss year to date is from, you know, the Pratt & Whitney issue or the challenges? And the reason I'm asking is, I'm just trying to separate out the temporary earnings impediment to the story here versus the structural impediments to getting back to the, the financial targets.

Joanna L. Geraghty: So, you know, we're not going to break out specifically the Pratt and Whitney item. You know, I can say it's incredibly frustrating, you know, made even more so by I think some of the announcements RTX made yesterday. We are focused on trying to resolve the situation with Pratt and Whitney that reflects the nature of the damages that we're experiencing. You know, this is ultimately a transitory issue that should cycle through over the next few years.

Speaker Change: Yeah, it's a great question. So, you know, we're not going to break out specifically the Pratt & Whitney item. You know, I can say it's incredibly frustrating, you know, made even more so by I think some of the announcements RTX made yesterday. We are focused on trying to resolve the situation with Pratt & Whitney that reflects the nature of the damages that we're experiencing. You know, this is ultimately a transitory issue that should cycle through over the next few years. But we are entering, you know, a more impactful stage for JetBlue, hence the mid to high teens.

Joanna L. Geraghty: But we are entering, you know, a more impactful stage for JetBlue, hence the mid to high teens AOG count that we will have for 2025. It's been challenging to forecast exactly what the AOG impact will be in the later years, which is, you know, why we're not communicating any targets out that far.

Speaker Change: AOG count that we will have for 2025. It's been challenging to forecast exactly what the AOG impact will be in outer years, which is why we're not

Joanna L. Geraghty: But you know, we are taking, I think, all the necessary steps to try to mitigate as much as possible the impact of Pratt, whether that's keeping older aircraft flying longer. And, you know, some of the deferrals, frankly, that we're doing will have a positive impact on our AOG count because these aircraft come and the engines, you know, are taken off with, you know, within a year, year and a half And so that's not a particularly good use of capital. So, you know, it is ultimately a transitory issue, but it will be with us for the next several years. Thanks for the time again.

Speaker Change: communicating any targets out that far. But you know, we are taking I think all the necessary steps to try to mitigate as much as possible the impact of Pratt, whether that's

Speaker Change: Keeping older aircraft flying longer. And, you know, some of the deferrals, frankly, that we're doing will have a positive impact on our age count, because these aircraft come, and the engines, you know, are taken off with, you know, within a year, year and a half. And so that's not a particularly good use of capital. So, you know, it is ultimately a transitory issue, but it will be with us for the next several years.

unknown: Thank you. We'll take our next question from Mike Linenberg with Deutsche Bank. Your line is now open.

Speaker Change: Okay, thanks for the time you guys.

Speaker Change: Transcribed by https://otter.ai

Speaker Change: Thank you. We'll take our next question from Mike Linenberg with Deutsche Bank. Your line is now open.

unknown: Oh, yeah, um, I have a question for Marty and Ursula. Marty, the comment that you made about Mint Rasm being up most single digits on, you know, I think I heard 30% ASM growth. So the question is, Who's driving that, and sort of I'm asking that within the context of you, you know, indicating that you're going to pivot away from corporate out of New York. I would think that you probably do carry a decent amount of price-sensitive corporate. So can you square that with?

Michael John Linenberg: Oh yeah, I have a question for Marty and Ursula. Marty, the comment that you made about, you talked about Mint RASM being up most single digits on, you know, I think I heard 30% ASM growth. So the question is,

Michael John Linenberg: Who's driving that? And sort of I'm asking that within the context of you, you know, indicating that you're going to pivot away from corporate out of New York, I would think that you'd probably do carry a decent amount of price sensitive corporate. So can you square that with

Martin J. St. George: The success that you're seeing right now with men. Mike, thanks for the question. Here's what I would say. I mean, first of all, Yeah, when we said we're pivoting away from corporate, you know, we will continue to carry corporate customers; there's no walking away from the corporate market. I think the better way to describe it is as we're not really designing the network for business like we once did.

Michael John Linenberg: The success that you're seeing right now with Mint.

Michael John Linenberg: Mike, thanks for the question. Here's what I would say. I mean, first of all,

Martin J. St. George: And if you look at some of the changes we've made in New York, some of the routes we've pulled, I think it's very consistent with what we've seen as far as a slower recovery of corporate travel in New York, with respect to the, excuse me, Mint results. I think it's clear to say that, you know, the cabin on our airplanes may not look exactly like the cabin on some of the legacy airlines.

Michael John Linenberg: Yeah, when we said we're pivoting away from corporate, you know, we will continue to carry corporate customers. There's no walking away from the corporate market. I think the better way to describe it is we're not really designing the network for corporate like we once did. And if you look at some of the changes we've made in New York...

Michael John Linenberg: Some of the routes we've pulled, I think it's very consistent with what we've seen as far as a slower recovery of corporate travel in New York.

Speaker Change: With respect to the Mint results...

Speaker Change: Unknown Speaker .

Martin J. St. George: And we carry a lot of high-end leisure customers, both in the Transcon market and the European market. And, you know, I think it's, I think it is not up for debate, this is the best premium product that's offered by a US flag carrier across the Atlantic or Transcon. So we've attracted a lot of customers, and yes, we absolutely have business customers, especially in New York. And we have a lot of high-end leisure activities too.

Speaker Change: I think it's clear to say that, you know, the cabin on our airplanes may not look exactly like the cabin on some of the legacy airlines. We carry a lot of high-end leisure customers, both in the Transcon market and the European market. And, you know, I think it's...

Speaker Change: I think it is not up for debate. This is the best premium product that's offered by a U.S. flag carrier across Atlantic or Transcon. So we've attracted a lot of customers. And yes, we absolutely have business customers, especially in New York, and we have a lot of high-end leisure too. So to a certain extent...

Martin J. St. George: So, to a certain extent, I think the product speaks for itself, and that's how customers are responding to it, and the numbers back it up. Thanks. Ursula, just a question on the CapEx, the $3 billion. Just looking at the new fleet plan, it does look like it's back-end loaded. How should we think about how CapEx, you know, it's one-sixth this year? What's the right number for next year, knowing that, you know, just the movement with PDPs and, you know, the fact that the deferrals are for airplanes that come later in the decade? Is it a similar number?

Speaker Change: I think the product speaks for itself, and that's how customers are responding to it.

Speaker Change: Absolutely, and the numbers back it up.

Speaker Change: Thanks. Ursula, just a question on the CapEx, the $3 billion, just looking at the new fleet plan, it does look like it's back-end loaded.

Ursula: How should we think about how CAPEX, you know, it's one-sixth this year, what's the right number for next year, knowing that, you know, just the movement with PDPs and, you know, the fact that the deferrals are for airplanes that come later in the decade, is it a similar number?

Ursula L. Hurley: Is it? A little bit lower. I'm trying to get a sense of, you know, where that free cash, where cash flow could be next year. Thank you. Thanks for the question, Mike. So this year, we've got 27 deliveries, and our CapEx is $1.6 billion. Next year, we actually only take 24 aircraft.

Speaker Change: just a little bit lower. I'm trying to get a sense of, you know, where that cash flow could be next year. Thank you.

Speaker Change: Thanks for the question, Mike.

Speaker Change: So this year we've got 27 deliveries and our capex is $1.6 billion. Next year we actually only take 24 aircraft. So directionally, you should expect total capex to be a few hundred million lower year over year.

Ursula L. Hurley: So directionally, you should expect total CapEx to be a few hundred million lower year over year. Perfect. Thank you. Thank you. We'll take our next question with Jamie Bakker from JP Morgan. Your line is open. Fair enough. Morning, everybody.

Michael John Linenberg: Perfect, thank you.

Speaker Change: Thank you. We'll take our next question with Jamie Bakker from JP Morgan. Your line is open.

unknown: How do we square the order deferral against your international ambitions? You know, at a minimum, it suggests that you won't be making any major incremental push from here into Europe. Would it be fair to at least wonder if you intend a European retreat, just trying to tie your transatlantic ambitions to the fleet changes? Thanks, Jamie. Thanks, Jamie Bakker. It's a great question. Sorry, I couldn't help.

Jamie Nathaniel Baker: Fair enough. Morning, everybody. How do we square the order deferral against your international ambitions? You know, at a minimum, it suggests that you won't be making any

Jamie Nathaniel Baker: major incremental push, you know, from here into Europe , would it be fair to at least wonder if you intend

Speaker Change: A European Retreat.

Speaker Change: Just trying to tie your transatlantic ambitions to the fleet changes. Thanks.

Speaker Change: Thanks, Jamie. Thanks, Jamie Bakker. It's a great, it's a great question. Sorry, I couldn't help. So I think you should think of Transatlantic as, you know, it's done nicely this summer. We continue to optimize the Transatlantic markets to reflect the seasonality of that geography. It's an important part of the JetBlue network. We're pleased with what it does seasonally and what it does as contributions to our loyalty program. Obviously, the deferrals for the XLR will have an impact on growth in that market. But it's by no means a retreat. It's a, I think, further, further learning how to best ensure that those routes are profitable and driving, driving earnings for the business.

Joanna L. Geraghty: So I think you should think of transatlantic travel. As you know, it's done nicely this summer; we continue to optimize the transatlantic markets to reflect the seasonality of that geography. It's an important part of the JetBlue network. We're pleased with what it does seasonally and what it does as contributions to our loyalty program. Obviously, the deferral to the XLR will have an impact on growth in that market. But it's by no means a retreat.

Joanna L. Geraghty: It's a further, further learning how to best ensure that those routes are profitable and driving earnings for the business. Excellent. I'll take back or replace any reference to bunny slopes, Joanna.

Martin J. St. George: And then for Marty, and this echoes a question I asked of Alaska, you cited even more space RASM being up double digits. I guess two parts. One, how's that compared to prior quarters? Has there been a noticeable inflection? And second, relative to, I guess, blue or blue plus.

Speaker Change: Excellent. I'll take back or over any reference to bunny slopes, Joanna. And then for Marty, and this echoes a question I asked of Alaska, you know, you cited even more space, Razem being up double digits.

Speaker Change: I guess two parts. One, how does that compare to prior quarters? Has there been a noticeable inflection? And second, relative to, I guess,

Martin J. St. George: What's the approximate premium you collect on even more space? Thanks in advance. Hi Jamie, thanks. So first thing, this has been a medium-term trend as far as the performance of the RASM for even more space is concerned. Customers are very much responding to it. And they continue to find value in it. I think it's worth noting that as we measure RASM growth, we're really talking about the incremental, the sort of the buy-up over the core fare.

Speaker Change: I guess blue or blue plus.

Speaker Change: What's the approximate premium you collect on even more space? Thanks in advance.

Martin J. St. George: You know, as a reminder, we don't sell the cabin; we sell it as an add-on. So the RASM is basically the incremental revenue from the upsell. So it's sort of a little bit we look at that revenue sort of decoupled from the core. And as far as the value of that product versus the core, I mean, it's, you know, as of now, the way we sell it, and that may change in the future.

Speaker Change: Hi, Jamie. Thanks. So first thing, this has been a medium-term trend as far as the performance of the RASM for even more space. Customers have very much responded to it.

Speaker Change: and they continue to find value in it.

Speaker Change: I think it's worth noting that as we measure the RASM growth, we're really talking about the incremental, the sort of the buy-up over the core fare. You know, as a reminder, we don't sell it as a cabin, we sell it as an add-on. So the RASM is basically the incremental revenue from the upsell. So it's sort of a little bit, when we look at that revenue, it's sort of decoupled from the core.

Martin J. St. George: But as of now, the way we sell it, as an add-on, you know, these are still customers who are fundamentally buying into the JetBlue value proposition and just want to upgrade to get a little bit more. And frankly, that's very much what we're seeing as far as Mint too.

Speaker Change: And as far as the

Speaker Change: Unknown Speaker .

Speaker Change: As far as the value of that product versus the core, I mean, it's...

Speaker Change: As of now, the way we sell it, and that may change in the future, but as of now, the way we sell it as an add-on, these are still customers who are fundamentally buying into the JetBlue value proposition and just want to upgrade to get a little bit more. And frankly, that's...

Speaker Change: very much what we're seeing as far as Mint2. I mean, these are not all dramatically new customers for JetBlue. These are our current customers who are finding more value in the product offering that we have. But does that change your total collected yield?

Martin J. St. George: I mean, these are not all dramatically new customers for JetBlue. These are our current customers who are finding more value in the product offering that we have. But does that change your total collected yield? You know, does it improve it by 10%? Does it improve it by 60%?

Martin J. St. George: You know, just an order of magnitude there would be helpful. Actually, I actually don't know that number exactly, so we'll have to get back to you on that one. It's about 25.

Speaker Change: You know, does it improve it by 10%? Does it improve it by 60%? You know, just order of magnitude there would be helpful. Thanks.

Speaker Change: Actually, I actually don't know that number exactly, so we'll get back to you on that one. It's about 25, the total premium cabins between Mint and even more cabins is about 25% of ASMs.

Martin J. St. George: The total number of premium cabins between Mint and even more cabins is about 25% of ASMs. So you can almost sort of back into it if you want, and I could do it now on the phone, but we'll get back to you later on the number. No, no, no.

Speaker Change: So you can almost sort of back into it if you want and I could do it now on the phone, but we'll get back to you later with the number. No, no, no. I'll cede the floor to others. Thank you everybody.

Martin J. St. George: I'll cede the floor to others. Thank you, everybody. Thank you. We'll take our next question from Savvy Seth with Raymond James. Your line is open. Hey, good morning.

Speaker Change: Thank you. We'll take our next question from Savvy Seth with Raymond James. Your line is open.

unknown: And just on the unit cost, you know, the exit rate here is high, but I realized that there's some kind of timing issues and capacity is declining. How should we think about, you know, what type of trend we should expect in 2025, given, you know, capacity is flat, but you also have a lot of cost initiatives here? Yeah, thanks, Sabi, for the question. Historically, when we were growing mid to high single digits pre COVID, we were targeting a flattish unit cost growth.

Speaker Change: Hey. Hey.

Savvy Seth: Good morning, and just on the unit costs, you know, the exit rate here is high, but I realize that there's some kind of timing issues and the capacity declining.

Speaker Change: How should we think about, you know, what type of trend we should expect in 2025, given, you know, capacity's flat, but you also have a lot of cost initiatives here?

Speaker Change: Yeah, thanks, Sabi, for the question. So historically, when we were growing mid to high single digits pre-COVID, we were targeting a flattish unit cost growth.

Ursula L. Hurley: And, you know, conceptually, and if we're not growing again next year, which we highlighted today on the call, and you would target, you know, a mid single-digit number. And clearly, with JetForward, we have aspirations to put a 2025 plan together that is hopefully even better than that. That's helpful. I appreciate that, Ursula.

Speaker Change: Conceptually, if we're not growing again next year, which we highlighted today on the call, you would target a mid-single-digit number. Clearly with JetForward, we have aspirations to put a 2025 plan together that is hopefully even better than that.

Martin J. St. George: And just, Following up on that business network change question, I was curious about business demand today, what you're seeing, and with the network changes, do you expect it to account for less than that 20% of revenue that you saw historically? Or is it still around the same ballpark, given that you're retaining that business customer? Hi Savi, this is Marty.

Sabi: That's helpful. I appreciate that, Ursula.

Speaker Change: Just following up on that business network change question.

Speaker Change: I was curious in terms of business demand today, what you're seeing, and with the network changes, you know, do you expect it to account for, you know, less than that 20% of revenue that you saw historically? Or is it still around the same ballpark, given that you're retaining that business customer?

Martin J. St. George: Thanks for the question. I'll take that one. The one number I will report is if you look at the contracted corporate customer business revenue, you know, we're still up, so I'd say very high single digits. So, you know, it continues to grow, and I'd say frankly, with the retreat that we have been doing over the last three quarters at LaGuardia, I think that was a bit of a pleasant surprise for us because, obviously, those are much higher business share markets when we fly those.

Speaker Change: Hi Savi, this is Marty. Thanks for the question. I'll take that one.

Speaker Change: The one number I will report is, if you look at the contracted...

Marty: corporate customer business revenue, you know, we're still up, so I'd say very high single digits. So, you know, it continues to grow. And I'd say, frankly, with the retreat that we have been doing over the last three quarters at LaGuardia, I think that was a bit of a pleasant surprise for us, because obviously those are much higher business share markets when we flew those.

Martin J. St. George: So I think the trend continues. With respect to going forward, even if you look at some of the business routes, and I'll pick one out just because it's a great example of like Minneapolis, you know, even though Minneapolis-Boston was a pretty strong business route, it was still, you know, instead of 20% corporate, it was, you know, 25-30% corporate. It was more corporate, but I guess I would say it was not quite as corporate enough, so to speak.

Marty: So I think the trend continues. With respect to going forward, even if you look at some of the business routes, and I'll pick one out just because it's a great example of like Minneapolis.

Marty: Even though Minneapolis, Boston was a pretty strong business route, it was still, you know, instead of 20% corporate, it was, you know, 25 30% corporate, it was more corporate, but

Martin J. St. George: So as far as, you know, a thousand flights a day, I don't think it's going to dramatically change. I don't think it's going to dramatically change that number from where it is now. That's helpful.

Marty: I guess I would say it was not more corporate enough, so to speak. So as far as 1,000 flights a day, I don't think it's going to dramatically move that number from where it is now.

Speaker Change: That's helpful, thank you.

unknown: Thank you. Thank you. We'll take our next question from Duane Pfennigwerth with Evercore ISI. Your line is, Hey, thanks for the time.

Speaker Change: Thank you. We'll take our next question from Duane Pfennigwerth with Evercore ISI. Your line is open.

unknown: On the network benefits bucket that you expect, cutting loss-making routes and increasing your East Coast focus, can you talk a little bit about how you increase your East Coast focus with constraints in the New York market? And then, just given the timeline here, 2025 to 2027, why would it take very long to realize that? Seems like you could start to see some of those benefits in the second half of this year. So I guess why aren't those benefits dropping more quickly? Maybe I'll take it, and I'll throw it to Marty.

Duane Thomas Pfennigwerth: Hey, thanks for the time. On the network benefits bucket that you expect, cutting loss making routes and increasing your East Coast focus,

Duane Thomas Pfennigwerth: Can you talk a little bit about how you increase your East Coast focus with constraints in the New York market?

Duane Thomas Pfennigwerth: And then, just given the timeline here, 2025 to 2027, why would it take very long to realize that? It seems like you could start to see some of those benefits in the second half of this year. So, I guess, why aren't those benefits dropping more quickly?

Joanna L. Geraghty: So I think you have to look at what we've announced versus when these are effective. And if we lay that out in the back of the earnings presentation, which shows exactly when some of these markets are closing. So there's a large one that closed in October.

Duane Thomas Pfennigwerth: So maybe I'll take it and I'll throw it to Marty. So I think you have to look at what we've announced versus when these are effective.

Marty: And if we lay that out in the back of the earnings presentation, which shows exactly when some of these markets are closing. So there's a large that closed in October , and I think this was some of the confusion on the last call, where I think the announcements get confused with effective date.

Marty: So, you know, we'll see full year run rate next year for all of the markets that we've announced so far. And I think it's just a matter of understanding the timing of the announcements versus when this actually takes place.

Ursula L. Hurley: And I think this was some of the confusion on the last call, where I think the announcements got confused with the effective date. And so, you know, we'll see full year run rates next year for all of the markets that we've announced so far. And I think it's just a matter of understanding the timing of the announcements versus when this actually takes place. Yeah, the only thing I'd add is, you know, how difficult it is for us to make some of these decisions about closing markets and closing routes and the impact it has on our own crew members, which we do not take lightly.

Ursula L. Hurley: You know, at the core, our goal is to move to profitability as quickly as we can. And frankly, we're very excited about where we have moved our airplanes to take advantage of opportunities right away, especially with a focus on, you know, being the best leisure airline on the East Coast. I think about, you know, the growth we've seen in places like, obviously, Boston, which has always been a growth focus. But, you know, the growth we put into Providence, Bradley, opening up Iceland, opening up Manchester. I think we are establishing ourselves even more so as the best leisure choice for our customers. You know, I'm not taking any victory laps right now as far as this network transformation is concerned.

Speaker Change: Yeah, the only thing I'd add is, um...

Speaker Change: You know, as difficult as it is for us to make some of these decisions for closing markets and closing routes.

Speaker Change: and the impact it has on our own crew members, which we do not take lightly. At the core, our goal is to move to profitability as quickly as we can.

Speaker Change: And frankly, we're very excited about where we have moved airplanes to take advantage of opportunities right away, especially with our focus on, you know, being the best leisure airline in the East Coast.

Martin J. St. George: But I think we're very, very optimistic about these moves. And yes, we are starting to see benefits. But you know, as you'll see in that chat that's in the back of the deck, they do roll out, some of them just happened last month, and they continue the rest of the year. Thanks for that detail.

Speaker Change: I think about, you know, the growth we've seen in places like, obviously, Boston, which has always been a growth focus, but, you know, growth we've put into Providence, Bradley, opening up Icelip, opening up Manchester. I think we are establishing ourselves.

Speaker Change: even more so as the best leisure choice for our customers.

Speaker Change: I'm not taking any victory laps right now as far as this network transformation, but I think we're very, very optimistic about these moves. And yes, we are starting to see benefits, but as you'll see in that chat that's in the back of the deck, they do roll out. Some of them just happened last month, and they continue for the rest of the year.

Ursula L. Hurley: And then just just for my follow up on the conversion, how are you thinking about addressing that? I think you alluded to, yeah, I think you alluded to in basically financing options, but how are you thinking about addressing it and kind of your willingness to let that go current early next year? Thank you. Yeah, so thanks for the question, Duane. We obviously have a healthy unencumbered asset base to the tune of $11 billion.

Speaker Change: Thanks for that detail and then just just for my follow-up on the convert how are you thinking about addressing that I think you I think you alluded to yeah I think you alluded to in basically financing options but how are you thinking about addressing it and kind of your willingness to let that go current early next year thank you

Ursula L. Hurley: About half of that is attributed to our loyalty program. So we're currently assessing all markets to see the most effective and the most constructive in terms of online cost of funding. We do not intend to let the conversion go current.

Speaker Change: Thanks for the question, Duane. We obviously have a healthy, unencumbered asset base to the tune of $11 billion. About half of that is attributed to our loyalty program. So we're currently assessing

Speaker Change: All markets to see the most effective and the most constructive in terms of all in cost of funding. We do not intend to let the convert go current. So I mentioned in my prepared remarks for opportunistically looking across markets.

Ursula L. Hurley: So I mentioned in my prepared remarks the importance of opportunistically looking across markets. Okay, thank you. Thank you. We'll take our next question from Conor Cunningham with Melloness Research. Your line is open.

Duane: Okay, thank you.

Speaker Change: Thank you. We'll take our next question from Conor Cunningham with Melloness Research. Your line is open.

unknown: Everyone, thank you. Marty, I was what you mentioned, Strengthened Mint, and even more. But that kind of highlights just the core weakness that's happening in the core cabin right now.

Speaker Change: Everyone, thank you. Marty, I was

Martin J. St. George: There's been a ton of discussion this quarter about, you know, overcapacity and all that stuff, and not really around a demand problem. I'm just curious about how you view the current demand right now. Thank Hey, Conor, thanks for the question.

Speaker Change: You mentioned

Speaker Change: The strength and men and even more.

Conor T. Cunningham: But that kind of highlights just the core weakness that's happening in the core cabin right now. There's been a ton of discussion this quarter about, you know, overcapacity and all that stuff, and not really around a demand problem. I'm just curious on how you view the current demand environment right now. Thank you.

Martin J. St. George: First of all, with respect to the bigger question about, you know, the premium cabins versus the core coach cabin, you know, my view is this is why we have a spectrum of customers who we carry in a spectrum of products. You know, we talked a little bit about our Tiger customer. You know, we've done a ton of research in the last, you know, year or so, trying to understand how the market has changed.

Conor T. Cunningham: Hey Conor, thanks for the question. First of all,

Conor T. Cunningham: With respect to the bigger question about, you know, the premium cabins versus the core coach cabin, you know, my view is this is why we have a spectrum of customers who we carry in a spectrum of products.

Conor T. Cunningham: You know, we've, we talked a little bit about our Tiger customer, you know, we've done a ton of research in the last, you know, year or so, trying to understand how the market has changed. And the market has clearly changed in 2024 versus what we saw in the world pre-COVID. And we've got a wide spectrum of customers.

Martin J. St. George: And the market has clearly changed in 2024 versus what we saw in the world pre-COVID, and we've got a wide spectrum of customers. Who we carry, you know, well over half of our customers are 100% price sensitive, and, you know, they will go fly ULCC to save $5. And, you know, that is a big chunk of our airplane. But luckily, you know, we have a lot of ASMs out there in the premium cabins and a lot of customers who are buying up to the blue or higher fare products. And to me, it's a spectrum of everything we carry.

Conor T. Cunningham: who we carry, you know, well over half of our customers.

Conor T. Cunningham: Transcribed by https://otter.ai

Conor T. Cunningham: or higher fare products. And to me, it's a spectrum of everything we carry. With respect to the demand environment overall, I'd say if I look specifically at second quarter,

Martin J. St. George: With respect to the demand environment overall, I'd say if I look specifically at the second quarter, in general, I'd say that the troughs held up a little bit better than we expected. I think the peaks performed as expected. You know, I think the real news as far as what's happening with demand is actually supply, which we called out in the last earnings call where supply had gotten a little bit misaligned with where demand was.

Conor T. Cunningham: In general, I'd say that the troughs held up a little bit better than we expected. I think the peaks performed as expected.

Conor T. Cunningham: I think the real news as far as what's happening with demand is actually supply, which is we called out in the last earnings call where supply had gotten a little bit misaligned with where demand was.

Conor T. Cunningham: And, you know, I said at the time...

Conor T. Cunningham: You know, ultimately, you know, water seeks its own level, and we will eventually have supply get back to more equilibrium.

Martin J. St. George: And, you know, I said at the time, ultimately, water seeks its own level, and we will eventually have supply get back to more equilibrium. It has happened, you know; we've made our own changes as far as where we've moved supply. We've seen other changes in the industry. And I think, ultimately, we all have owners, and you know, we all have a goal to be profitable. So, ultimately, things work out in the end when it comes to that.

Conor T. Cunningham: It has happened, you know, we've made our own changes as far as where we've moved supply. We've seen other changes in the industry, and I think ultimately, you know, we all have owners, and, you know, we all have a goal to be profitable. So ultimately things work out in the end when it comes to that.

Martin J. St. George: Okay, appreciate that. And then you mentioned, you know, the GTF issue outside of the powder metal problem. I was hoping you could flesh out that comment a little bit more. Is it the oil consumption issue that someone else already mentioned? I'm just curious, is that new?

Speaker Change: Okay. Appreciate that. And then.

Speaker Change: You mentioned, you know, the GTF issue outside of the powder metal problem. I was hoping you could flush out that comment a little bit more. Is it that the oil consumption issue that someone already mentioned? And I'm just curious, is that new? Or is that something new? And it was just over, you know, somewhat overshadowed by

Ursula L. Hurley: Or is that something new? And it was just overshadowed by, you know, the powder metal problem that's been out there for a while. Yeah, I'll take that. Yeah, thanks. Sure. It's nothing new. I mean, obviously, these engines, you know, have certain maintenance inspection cycles; various things trigger them.

Speaker Change: Transcribed by https://otter.ai

Ursula L. Hurley: So while powder metal is ultimately what caused the significant challenges with throughput, so that's what backed everything up, there are a number of other maintenance issues that we're working through because it's a new engine. And so that just exacerbates the situation with the shop capacity and then supply chain, which I will say is incredibly frustrating.

Speaker Change: Transcribed by https://otter.ai

Speaker Change: challenges with throughput. So that's what backed everything up. There are a number of other maintenance issues that that we're working through because it's a new engine.

Speaker Change: And so that just exacerbates the situation with the shop capacity and then supply chain.

Ursula L. Hurley: We are working with Pratt on reaching a settlement that we believe reflects the extent of the impact on JetBlue. But, it is definitely a frustrating situation. And that's why I think going back to the deferrals, it makes a lot of sense to defer the 321 new aircraft, not just because it offsets our capital commitments in the near term but also because nobody wants to take a brand new aircraft and then ground it after, you know, a year, year and a half. Thank you, Thank you. We'll take our next question from Scott Group with Wolf Research. Your line: Hey, thanks. Good morning.

Speaker Change: I will say incredibly frustrating. We are working with Pratt on

Speaker Change: Reaching a settlement that we believe reflects the

Speaker Change: extent of the impact to JetBlue. But, but it is definitely a frustrating situation. And that's why I think going back to the deferrals,

Speaker Change: It makes a lot of sense to defer the 321 new aircraft, not just because it offsets our capital commitments in the nearer term, but also because nobody wants to take a brand new aircraft and then ground it after, you know, a year, year and a half.

Speaker Change: Appreciate it. Thank you.

Speaker Change: Thank you. We'll take our next question from Scott Group with Wolf Research. Your line is open.

unknown: I want to ask a near term one and then a longer term one. So on the RASM front, so a low single-digit increase this year, is that in Q3, is that sort of dependent on a September inflection like other airlines have talked about? Or are you guys already there? So just sort of thoughts on the cadence of RASM throughout the quarter and then any initial thoughts around, if you have any.

Scott H. Group: Hey, thanks. Good morning. I want to ask a near-term one and then a longer-term one. So on the RASM front, so low single-digit increase this year in Q3, is that sort of dependent on like a September inflection?

Speaker Change: Other airlines have talked about or are you guys already there? So just sort of thoughts on like the cadence of RASM throughout the quarter and then any initial thoughts around Q4 if you have them.

unknown: Hey, Scott, thanks for the question. And yes, I've listened to the commentary from other carriers. I'm not sure I fully understand what they're saying. It's, you know, our view is, we're looking at the trends as they exist right now. We've got basically two-thirds of the third quarter on the books, but you know, one third, one third not in the books as of today. And there's no real inflection scene in there.

Speaker Change: Hey Scott, thanks for the question and yes I've listened to the commentary from other carriers I'm not sure I fully understand what they're saying it's you know our view is

Speaker Change: We're looking at the trends as they exist right now. We've got basically two-thirds of the third quarter on the books, but one-third not in the books.

Speaker Change: as of today.

Speaker Change: and there's no real inflection scene in there. I mean, frankly.

Speaker Change: I mentioned in my prepared remarks that, you know, we undertook a lot of self-help in September . I mean, our ASM did down 10% in September .

Martin J. St. George: I mean, Frankly, I mentioned in my prepared remarks that, you know, we undertook a lot of self-help in September. I mean, our ASM went down 10% in September. And again, I think, as investors and, frankly, as crew members and customers, we'll be seeing more and more of that going forward. As we pivot a little bit more towards leisure, we're going to be much more respectful of not flying unproductively during the trough. So, you know, my view is, you know, we're, I'd say September is better than it would have been, but it's solely based on self-help. There's no inflection in our forecast.

Speaker Change: And again, I think...

Speaker Change: As investors and frankly as crew members and customers, we'll be seeing more and more of that going forward as we.

Speaker Change: Pivot a little bit more towards leisure You know, we're going to be much more respectful of not flying unproductive flying during the trough. So, you know, my view is You know, we're I'd say September is better than it would have been but it's solely based on self-help. There's no inflection in our forecast

Martin J. St. George: And then, sort of in lieu of the analysis, maybe I'll ask you guys a longer-term capacity one. So you guys are delaying planes, but at some point, the GTF issue gets better, right?

Speaker Change: And then sort of in lieu of the analysts, maybe I'll ask a longer term capacity one. So you guys are deferring planes.

Joanna L. Geraghty: So as you've got this like planning now out to 27, I understand capacity is flat next year, but any thoughts on the multi-year capacity outlook in this plan? And then ultimately, does this mean that free cash flow, do we inflect positively on free cash? Is it more likely 26, 27 than 25?

Speaker Change: But at some point, the GTF issue gets better, right? So as you've got this like planning now out to 27.

Speaker Change: I understand capacity is flat next year, but any any thoughts on like the multi-year capacity outlook in this plan? And then ultimately, does this mean that free cash flow, do we inflect

Speaker Change: Positive on free cash, is it more likely 26, 27 than 25?

Ursula L. Hurley: Do you have any thoughts there? Thank you. Yeah, maybe I'll touch on capacity, and Urs can touch on free cash flow. So, you know, we've gone out with flat capacity for next year. We're not guiding beyond that.

Speaker Change: Do you have any thought there? Thank you.

Speaker Change: Yeah, maybe I'll touch capacity and Urs can touch on free cash flow. So, you know, we've gone out with flat capacity for next year. We're not guiding beyond that. The Pratt & Whitney GTF issue is volatile and we are working with them on forecasting. And obviously we're hopeful that there are improvements there and we're taking as many self-help measures as we can to try to offset that capacity impact. But we're not in a position, given all of the variables, to guide to any kind of capacity or share any capacity projections out past 2025.

Joanna L. Geraghty: The Pratt & Whitney GTS issue is volatile, and we are working with them on forecasting. And obviously, we're hopeful that there are improvements there, and we're taking as many self-help measures as we can to try to offset that capacity impact. But we're not in a position, given all of the variables, to guide to any kind of capacity or share any capacity projections out past 2025.

Speaker Change: on the free cash flow point. Ursula, do you want to grab that?

Ursula: Yeah, listen, Scott, like priority number one is getting the business back to consistent profitability. Priority number two is then...

Ursula: Delivering Positive Free Cash Flow. I do believe that with the deferral that we announced today, it does start to lay the groundwork to help us get there. We've got to execute, and we will execute, on the $800 million to $900 million EBIT. Then obviously, you've got to layer in the macro backdrop assumptions, but ultimately, profitability and then free cash flow, and that free cash flow will go to delivering the balance sheet. Thank you.

Ursula L. Hurley: On the free cash flow point, Urs, do you want to grab that? Thank you. Thank you. We'll take our next question from Brandon Oglenski with Barclays. Your line is open. Hey, good morning.

Speaker Change: Okay, thank you. Thanks.

Speaker Change: Thank you. We'll take our next question from Brandon Oglenski with Barclays. Your line is open.

unknown: Marty, I guess I want to come back to the 3Q RASM guide, though, because if I look at it, it appears maybe even unseasonably weak for you guys, and I know seasonality is hard to judge here post-pandemic. But I guess, and I hear you guys on when you announce root changes, but you have done a lot of network reconfiguration since June. And as you stated, you are pulling down trough capacity in September. So I guess it is incremental softness you're seeing in your markets, even with these changes that have already been implemented? Hey, Brandon.

Brandon Oglenski: Hey, good morning. Marty, I guess I want to come back to the 3Q RASM guide, though, because if I look at it, it appears maybe even unseasonably weak for you guys, and I know seasonality is hard to judge here post-pandemic.

Brandon Oglenski: But I guess, and I hear you guys on when you announce root changes, but you have done a lot of network reconfiguration since June . And as you stated, you know, you are pulling down trough capacity in September . So I guess, is it incremental softness you're seeing in your markets, even with these changes that have already been implemented?

Martin J. St. George: Thanks for the question. It's funny, I don't, I don't look at it as a soft guide. We don't, we do not look at this as like, oh, there's something wrong in the third quarter.

Speaker Change: Hey Brandon, thanks for the question. I, it's funny, I don't, I don't look at it as a soft guide. I, we don't, we don't look at this as like, oh, there's something wrong in the third quarter. I think we, you know, we guide based on what we're seeing right now in the bookings.

Martin J. St. George: I think we, you know, we guide based on what we're seeing right now in the book. I think if you look at it sort of sequentially, you know, the path from second quarter to third quarter, I feel like we're more or less on track to where we've been historically. You know, we control what we can control, and, you know, we control our capacity, we control our pricing, and then, you know, obviously, we want to deliver. We want crew members delivering a great experience every day. So, you know, my view is that we're fundamentally looking at this as a guy that we're very happy with. I mean, obviously, we always want more.

Speaker Change: I think if you look at sort of sequentially,

Speaker Change: You know, the path from second quarter to third quarter, I feel like we're more or less on track to where we've been historically, you know, we control what we can control. And, you know, we control our, you know, our capacity, we control our pricing.

Speaker Change: And then, you know, obviously we want to deliver, you know, we want crew members delivering a great experience every day. So, you know, my view is, you know, we're fundamentally looking at this as...

Martin J. St. George: But, you know, we are positive year over year, which I think a lot of our competitors are not. And, you know, from that perspective, I'm somewhat surprised by the question. I mean, Frankly, I'm You know, my take is, you know, we just put our heads down and just, you know, moving forward with the path we're following. I do want to stress again, if you look at that slide in the back of the deck, you know, so many of these network changes are backloaded. So I would not attribute too much of the RASM in the third quarter to, you know, the big inflection from the network changes because it just takes longer than that.

Speaker Change: as a guy that we're very happy with. I mean, obviously, we always want more. But you know, we are positive year over year, which I think a lot of our competitors are not. And, you know, from that perspective, I'm somewhat surprised at the question. I mean, I, frankly, I'm

Speaker Change: You know, you know, my take is, you know, we just we're putting our heads down and just, you know, moving forward with the path we're following. I do want to stress again, if you look at that slide in the back of the deck,

Speaker Change: So many of these network changes are back-loaded, so I would not attribute too much of the RASM in the third quarter to big inflection from the network changes, because it just takes longer than that.

Martin J. St. George: Okay, I mean, Marty, maybe as a point of clarification, but I think it's down a few points sequentially, quarter to quarter. And I understand that it's up year on year because you do have a pretty easy comp from last year. I guess that's what we're observing.

Speaker Change: Okay, I mean, Marty, maybe as a point of clarification, but I think it's down a few points sequentially, quarter to quarter. And I get it that it's up year on year, because you do have a, you know, pretty easy comp from last year. I guess that's what we're observing.

Joanna L. Geraghty: Okay, thank you. Thank you all. And then, Joanna.

Marty: Okay, thank you.

Marty: Thank you, and then, Joanna, just...

Joanna L. Geraghty: That's fine. Thanks. Oh, go ahead. I apologize.

Joanna L. Geraghty: That's five things. I'll go ahead. I apologize. Joanna, I guess just on the bigger picture, and maybe, you know, coming off of Scott's question, too, since we're on investor day, we appreciate the outlook on 2027 EBIT, the improvement, the 800 to 900 million. But I guess maybe, you know, looking backwards on structural cost improvement, even the revenue initiatives this year, they've only been able to offset so much of industry headwinds and macro, what have you.

Joanna L. Geraghty: Joanna, I guess just on the bigger picture, and maybe, you know, coming off of Scott's question, too, since we're on Investor Day, you know, we appreciate the outlook on 2027 EBIT, you know, improvement, the $800 to $900 million.

Speaker Change: But I guess maybe, you know, looking backwards on structural cost improvement, even the revenue initiatives this year, they've only been able to offset so much of industry headwinds and macro, what have you.

Joanna L. Geraghty: So can you give us a better idea of the baseline? Where do you expect to see the improvement from? Is this like a breakeven basis, and then add 800 to 900 million to it? Or how should investors think about that long term?

Speaker Change: So can you give us a better idea of like the baseline, where do you expect to see the improvement from? Is this like a breakeven basis, and then add eight to 900 million to it, or how should investors think about that long term?

Martin J. St. George: Yeah, so I would think about it in those terms, it's a break even basis, and add 800 and 900 to it. You know, I think when you look at what we've done this year against, you know, a challenging first half, we were cycling against pent-up COVID demand and then elevated industry capacity, particularly in the Latin region, much of what we did this year offset some of those challenges.

Speaker Change: Yeah, so I would think about it in those terms. It's a break even in basis and add 800 and 900 to it. You know, I think when you look at what we've done this year against, you know,

Speaker Change: challenging first half we were cycling against pent-up COVID demand.

Speaker Change: and then elevated industry capacity, particularly in the Latin region. Much of what we did this year offset some of those challenges. And so as I think about the path forward, given the uncertainty with Pratt beyond 2025, while we would have loved to have gone out with longer-term targets, we're just not in a position to do that, but really proud of what we've executed to so far, whether that's the significant network adjustments.

Martin J. St. George: And so as I think about the path forward, given, you know, the uncertainty with Pratt, beyond 2025, you know, while we would have loved to gone out with longer-term targets, we're just not in a position to do that. But really proud of what we've executed so far, whether that's the significant network adjustments, the preferred seating changes at Blue Basic, the deferral of the aircraft, all I think contributing to some nice momentum this year going into next year.

Speaker Change: The Preferred Seating, Changes at Blue Basic, the Deferral of the Aircraft, all I think contributing to some nice momentum this year going into next year. But the 800 and 900 teams got executed at, and everybody's focused on delivering those numbers over the next three years.

Martin J. St. George: But the 800 and 900 teams got executed on, and everybody's focused on delivering those numbers over the next three years. Thank you. Thank you. We'll take our next question from Andrew Didora with Bank of America. Your line is open. Hi, good morning, everyone. Most of my questions have already been answered.

Speaker Change: Thank you.

Speaker Change: Thank you. We'll take our next question from Andrew Didora with Bank of America. Your line is open.

Martin J. St. George: But yeah, one, very conceptually for Marty, I guess we've heard a lot of other domestic airlines speaking about growing their premium seats as well. So there's certainly more capacity coming here. How do you think about some of this premium RASM growth that the industry has been seeing? You know, how do you think it gets competed away at all?

Andrew George Didora: Hi, good morning, everyone. Most of my questions have already been answered, but one very conceptually for Marty, I guess we've heard a lot of other domestic airlines speaking about growing their premium seats as well, so there's certainly more capacity coming here. How do you think about some of this premium RASM growth that the industry has been seeing? Do you think it gets competed away at all? How does JetBlue kind of stay away from that? Thank you.

Martin J. St. George: You know, how does JetBlue kind of stay away from that? Thank you. Hey, Andrew, thanks for the question. It's funny, we've, you know, obviously, with the results we're seeing in our premium revenues, we've spent a lot of time looking at this market overall. And I think what the other people who are attributing this to a sort of a post-COVID bump, is this something that's just a flash in the pan?

Marty: Andrew, thanks for the question. It's funny, you know, obviously with the results we're seeing in our premium revenues, we've spent a lot of time looking at this market overall. And I think what

Speaker Change: Yeah, there are people who are attributing this to a sort of a post-COVID bump. Is this something that's just a flash in the pan?

Martin J. St. George: We can go back and track this change back to the early teens, and we've sort of seen a persistent move since the early teens as far as more and more customers are buying up. And frankly, I think that what we're seeing is a longer-term segmentation of the market where we've got a big chunk of customers who are like they'll do anything to save $1 on a fare, and we've got other customers who are willing to pay more to have a better experience. And frankly, this is what excites me so much about the JetBlue business model: this company has always been structured around customers willing to pay a little more to get a lot more.

Speaker Change: We can go back and track this change back to the early teens.

Speaker Change: And we've sort of seen a persistent move since the early teens as far as more and more customers buying up and frankly

Speaker Change: I think that what we're seeing is a longer-term segmentation of the market where, you know, we've got a big chunk of customers who are, like, they'll...

Speaker Change: they'll do anything for, you know, to save $1 on a fare. And we've got other customers who are willing to buy up to have a better experience. And frankly, this is what excites me so much about the JetBlue business model is that

Speaker Change: This company's always been structured around customers willing to pay a little more to get a lot more. So from that perspective, I think we couldn't be better positioned for this versus some of our competitors.

Martin J. St. George: So from that perspective, I think we couldn't be better positioned for this versus some of the other companies. That's all I had, thank you. Thank you. We'll take our next question from Tom Fitzgerald with TD Cowen. Your line is now open. Hi, everyone.

Speaker Change: Great, that's all I had, thank you.

Speaker Change: Thank you. We'll take our next question from Tom Fitzgerald with TD Cowen. Your line is now open.

unknown: Thanks very much for your time. Just a quick one for me. What's the cadence of the E-190 retirements for next year? And then would you like to chime in a little bit on the A-220s? I think you've been operating those for about three and a half years now. So just curious how you're liking the asset.

Tom Fitzgerald: Hi, everyone. Thanks very much for the time. Just a quick one for me. What's the cadence of the E-190s retirements for next year? And then would you like us to pine in a little bit on the A-220s? I think you've been operating those for about three and a half years now. So just curious how you're liking the asset. I mean, obviously, you're keeping the deliveries, but you know, any TV problems?

Martin J. St. George: I mean, obviously, keeping the deliveries, but you know, any PV problems, things like that. Thanks very much. Hey, Tom, it's Marty.

Martin J. St. George: Thanks for the question. With respect to the 190s, we said publicly that they would be retired by the end of 2025. And that's the cadence that we're on right now. With respect to the 220, I think we are a very happy 220 customer. We have had some reliability issues, which we've heard from other industries, and we share the same. Although the 220 does have GTF engines, it is not being affected nearly as much as the 320 Neo family is.

Tom Fitzgerald: things like that. Thanks very much.

Tom Fitzgerald: Hey Tom, it's Marty. Thanks for the question. With respect to the 190s, we said publicly that they will be retired by the end of 2025, and that's the cadence that we're on right now.

Speaker Change: With respect to the 220, I think we are a very happy 220 customer. We have had some reliability issues, which we've heard from other things in the industry, and we share the same. Although the 220 does have GTF engines, it is not being affected nearly as much as the 320 Neo family is. So with respect to the 220, we are very happy customers.

Martin J. St. George: So with respect to 220, we are a very happy customer, Tom, and congrats on your role. And maybe just to put some numbers to it, we currently only have 22 E-190s in the fleet, and I believe that will end this year 2024 with 15. And to Marty's point, those 16 will be retired by the end of next. Got it.

Speaker Change: Tom, and congrats on your role. And maybe just to put some numbers to it, we currently only have 22 E-190s in the fleet, and I believe that will end this year, 2024, with 15. And to Marty's point, those 16 will be retired by the end of next year.

Ursula L. Hurley: Thanks very much, everyone. Thank you. We'll take our next question from Trent, from Stephen Trent with Citi. Your line is now open. Good morning, everybody.

Speaker Change #100: Got it. Thanks very much, everyone.

Speaker Change #101: Thank you. We'll take our next question from Stephen Trent with Citi. Your line is now open.

Joanna L. Geraghty: And thanks very much for taking my question. I was intrigued to hear about, you know, you mentioned the Latin over capacity, but you know, the big build out you guys have in Puerto Rico. Are you able to tell us whether, you know, the Airport Authority and San Juan gave you guys any incentives in terms of volumes and maybe, you know, some discounts on airport fees and that kind of thing? Yes, I'll take that.

Stephen Trent: Good morning, everybody, and thanks very much for taking my question. I was intrigued to

Stephen Trent: I hear about, you know, you mentioned the Latin overcapacity, but, you know, the big build out you guys have in Puerto Rico. Are you able to tell us whether, you know, the airport authority

Speaker Change #103: and San Juan gave you guys any incentives in terms of volumes and maybe you know some some discounts on airport fees and that kind of thing?

Joanna L. Geraghty: So I'm really proud of the work around Puerto Rico, the largest carrier there, an important part of our network, tremendous support from our crew members locally and the airport authority. We're not going to get into, you know, what, if any, incentives or otherwise we may or may not have gotten from the government or the airport authority.

Speaker Change #104: Yeah, I'll take that. So I'm really proud of the work around Puerto Rico, largest carrier there, important part of our network, tremendous support from our crew members locally and the airport authority. We're not going to get into, you know, what, if any, incentives or otherwise we may or may not have gotten from the government or for the airport authority, but we have a long partnership with the community, with the airport authority. We're excited to open a crew base for pilots and in-flight as well down in that area and, you know, continue to be the carrier of choice in Puerto Rico for that community.

Joanna L. Geraghty: But we have a long partnership with the community and the airport authority. We're excited to open a crew base for pilots and in-flight as well down in that area. Oh, okay. I understand. And I definitely appreciate that. And just one more very quick housekeeping question looking at your, you know, your full year ASM guide and 3Q. And I thought I heard Marty say September ASMs are already down 10%. Is it sort of unreasonable to consider 4Q ASMs the implication of a down summer in the low teens? Or am I thinking about that the wrong way?

Speaker Change #105: Okay, I understand. And I definitely appreciate that. And just one more very quick housekeeping question looking at your, you know, your full year AFM guide and 3Q. And I thought I heard Marty say September AFMs are already down.

Speaker Change #106: Is it sort of unreasonable to consider 4Q-ASMs the implication down summer in the low teens or am I thinking about that the wrong way? Thank you.

unknown: Thank you. No. No, no, no, they're not down. I don't know the exact number. They're not downloading. Not downloading.

Marty: No, no, no, they're not down. I don't have the exact number. They're not downloading. Mid-single digits down.

unknown: Mid-single digits down, very helpful. I wanted to make sure it looks like I was not thinking about that correctly. So appreciate that. Thank you. Thank you. And we'll take our final question from Chris Stathoulopoulos. I apologize.

Speaker Change #107: Very helpful. Wanted to make sure it looks like I was not thinking about that correctly, so appreciate that. Thank you.

Speaker Change #107: Thank you and we'll take our final question from Chris Stathoulopoulos, I apologize, from SESWAHANA International Group, your line is open.

unknown: Your line is open. Thank you. Good morning, everyone.

Christopher Nicholas Stathoulopoulos: Thank you. Good morning, everyone. I just want to say...

Joanna L. Geraghty: Just want to say, Joanna, Ursula, Marty, and team, the urgency and focus here are clearly evident. And so, congratulations on this plan. The 400 million in EBIT here, I realize that there's more to come here, but given that you're not holding an investor day, and there are more blue dots on the map here relative to the other initiatives at a high level. Should we think about this as more additive or a wholesale change? For example, rebranding or the introduction of a new fare class. And also, I don't think I heard you discuss any initiatives around vacation packages and food products. Yep, I can take that. It's great!

Christopher Nicholas Stathoulopoulos: Joanna, Ursula, Marty, and team, the urgency and focus here is clearly evident and so congrats on this plan.

Christopher Nicholas Stathoulopoulos: The $400 million in EBIT here, I realize that there's more to come here, but given that you're not holding an Investor Day and there are more blue dots on the map here relative to the other initiatives, at a high level

Speaker Change #109: Should we think about this as more additive or a wholesale change? So, for example,

Speaker Change #109: Rebranding or Introduction of a New FARE Class, and then also

Speaker Change #110: I don't think I heard you discuss any initiatives around vacation packages and food products. Thanks. Yep, I can take that. It's great. So to be clear, the blue dots do not reflect specific initiatives. They are illustrative only. I assume you're referring to the 400 in product and perks.

Ursula L. Hurley: So to be clear, the blue dots do not reflect specific initiatives; they are illustrative only. I assume you're referring to the 400 in product and perks. That consists of a number of things, some of which build on what we've already announced around Blue Basic and preferred seeding, but the majority of which are actually new initiatives. And they cover everything from gaps in our product offering to things like a new revenue management system to enhancements in our loyalty program and continued deepening of the offerings we have for JetBlue travel products, which remains a very important part of the business and one which we think will be a significant driver in the JetForward plan for creating an even greater level of stickiness with our leisure customers. And I would just reiterate, Chris, that the 400 includes initiatives that we haven Right, OK.

Speaker Change #110: That consists of a number of things.

Speaker Change #111: I'd say some of which build on what we've already announced around Blue Basic and preferred seeding, but the majority of which are actually new initiatives. And they cover everything from gaps in our product offering to things like a new revenue management system, to enhancements in our loyalty program, and continued...

Speaker Change #111: Deepening of the offerings we have for JetBlue travel products, which remains a very important part of the business and one which we think will be a significant driver in the JetForward plan to creating an even greater level of stickiness with our leisure customers.

Speaker Change #111: And I would just reiterate, Chris, that the 400 includes initiatives that we haven't yet announced that you will hear more as we progress through the year.

Joanna L. Geraghty: And my second question, so on the competitive overlap in the route exits that you've done here today, you've outlined some of those on the slides in the appendix. Thank you. Are we done here as we think about year-end? And so for those that want to do this analysis, if at year-end or early next year, if we were to rank order your routes based on RASM, should we expect at that point, for example, first and second quartiles based on Routes in Two account for the majority of your route, so meaning two-thirds or perhaps closer to 70, 75%.

Christopher Nicholas Stathoulopoulos: Right, okay. Thank you. And my second, so on the competitive overlap and the route exits that you've done here today, you've outlined some of those on the slides in the appendix. Thank you.

Speaker Change #112: Are we done here as we think about year-end? And so for those that want to do this analysis, if at year-end or early next year, if we were to rank order your routes based on RASM, should we expect at that point,

Marty: For example, first and second quartiles, based on Rousin 2, account for the majority of your routes, so meaning two-thirds or perhaps closer to 70-75%. Just want to understand, as you talked about, Marty, you talked about getting back to your core focus.

Joanna L. Geraghty: Just want to understand, as you talk about Marty talking about getting back to your core focus, no longer accepting routes that meet your profitability standards, how we should sort of ultimately see that shake out in the Form 41 data. Thank you. Yes, maybe I'll take the higher level one, and I'll throw it to Marty for a bit more detail.

Speaker Change #113: No Longer Accepting Routes That Meet Your Profitability Standards, how we should sort of ultimately see that shake out in the Form 41 data.

Joanna L. Geraghty: So in terms of whether we're done with network announcements, you know, I don't think you're ever done. At the end of the day, we need to make sure that the network and where demand is reflect, you know, that we're driving as much profitability as possible. I'd say we've made a large number, the most actually in our history. We may have some more modest ones to come, but you should not expect this level of network changes to be kind of ongoing. Marty, if you want to take the second part,

Speaker Change #114: Thank you. Maybe I'll take the higher level one and I'll throw it to Marty for a bit more detail. So, in terms of whether we're done.

Marty: I don't think you're ever done. At the end of the day, we need to make sure that the network and where demand is reflects that we're driving as much profitability as possible. I'd say we've made a large number, the most actually ever in our history. We may have some more modest ones to come, but you should not expect

Marty: This level of network change is kind of ongoing. Marty, do you want to take the second part? Yeah, thanks, Chris. I mean, you know, my view is...

Martin J. St. George: Yeah, thanks, Chris. I mean, you know, my view is that the there's a lot of science and network planning. And we obviously have force ranked the entire network as far as RASM, as it produces right now, and also what we see the upside to be. And then we compare that to what the growth opportunities are. I think the good news is, as we've laid out the pillar of having the best East Coast leisure network, we have a lot of growth opportunities in that world.

Marty: There's a lot of science in network planning, and we obviously have force-ranked the entire network as far as RASM, as it produces right now, and also what we see the upside to be, and then we compare that to what the growth opportunities are. I think the good news is, as we've laid out

Marty: the pillar of having the best East Coast Leisure Network. We have a lot of growth opportunities in that world. I think what's very good is that we're not talking about, you know, busting into new territory and, you know, building a hub in

Martin J. St. George: I think what's very good is that we're not talking about, you know, busting into new territory and building a hub in Kansas City or something like that. I mean, we're fundamentally looking at coming back to the bread and butter of the big East Coast markets that we're focused on. So from that perspective, we see a lot of really good opportunities for growth. But at the same time, you know, I think we did the math last night, some number of more than 40 airplanes have been cancelled and redeployed in the last three or four months on an active fleet of, you know, 270, 280, something like that.

Marty: Kansas City or something like that. I mean, we're fundamentally looking at coming back to the bread and butter of the big East Coast markets that we're focused on. So, from that perspective, we see a lot of really good opportunities.

Marty: GROWTH

Marty: at the same time.

Speaker Change #115: You know, I think we did the math last night, some number over 40 airplanes have been

Speaker Change #115: has been cancelled and redeployed in the last three or four months.

Speaker Change #115: on an active fleet of, you know, 270, 280, something like that. So it's a lot of change at the same time. You have noticed and you'll see again in that last page, that page in the back of the deck, we have sort of phased things out mostly based on.

Martin J. St. George: So it's a lot of change at the same time. You have noticed, and you'll see again on that last page, that page in the back of the deck, we have sort of phased things out, mostly based on, you know, swaps, you know, changing the swap portfolio, seasonality, things like that. It is a very, very deliberate process, but absolutely, yes, you know, the roots at the bottom of that, that force ranking that we don't see upside in are the ones that have gone away. Again, I think it's important to go back to Joanna's point. The majority of the changes have happened, but it never, ever ends.

Joanna L. Geraghty: You know swap, you know change the swap portfolio seasonality things like that It is a very very deliberate process, but absolutely yes You know the roots at the bottom of that that force ranking that we don't see upside in are the ones that have gone away Again, I think it's important to go back to Joanna's point the majority of the changes have happened, but it never ever ends

Martin J. St. George: Okay, thank you. Thank you. I'll turn the call back over to Koosh Patel for any additional or closing remarks. And again, that will conclude today's conference. Thank you for your participation. You may disconnect at any time.

Speaker Change #116: Okay, thank you.

Speaker Change #116: Thank you. I'll turn the call back over to Koosh Patel for any additional or closing remarks.

Koosh Patel: That concludes our second quarter 2024 conference call. Thanks for joining us and have a great day.

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