Q3 2024 JetBlue Airways Corp Earnings Call
Brittany: Good morning, my name is Brittany and I would like to welcome everyone to the JetBlue Airways, third quarter 2020 for our earnings conference, Gong.
Speaker Change: As a reminder, today's call is being recorded. At this time, all participants are in the Alicin Only mode. I would now like to turn the call over to Jeff Blue's director of Investor Relations, Kus Patel. Please go ahead, sir.
Kus Patel: Thanks Brittany. Good morning everyone and thanks for joining our third quarter of 2024 earnings call.
Kus Patel: This morning we issued our earnings release in a presentation that we will reference during this call.
Kus Patel: and all of those documents are available on our website at investor.cheflu.com and on the SEC's website at www.scc.gov. In New York to discuss our results, our Joanna Geraghty, our Chief Executive Officer, Marty St. George, our President and Ursula Hurley, our Chief Financial Officer.
Kus Patel: During today's call, we'll make forward looking statements within the meaning of the safe harbor provisions of the product securities litigation or format of 1985.
Kus Patel: Such forward-looking statements included without limitations, statements regarding our fourth quarter and full year 2024 financial outlook and future results of operations and financial position including long-term financial targets, industry and market trends, expectations with the respect to tailwinds of the headwinds.
Kus Patel: and the ability to achieve operational and financial targets, business strategy and plans for future operations. And the associated impacts on our business, also strong looking statements of subject to risk and uncertainties. And actual results may differ materially from those expressed and implied.
Kus Patel: and D-Statements. Please refer to our most recent earnings release as well as our fiscal year of 2023, and can't gain other violence for a more detailed discussion of the risks and uncertainties that could cause actual results to different materials from those contained in our full living statements.
Kus Patel: The same as majoring this color made only as of the date of the call and other than as maybe required by law we undertake no obligation to update the information. Investors, snap-place, undo reliance on these world-picking statements.
Kus Patel: Also during the course of our call, we may discuss certain non-gap financial measures. For next explanation of these non-gap measures and our reconciliation of the course funding gap measures, please refer to our earnings release, and copy of which is available on our website and nacdc.gov.
Kus Patel: and now I'd like to turn over the call to Joanna Geraghty, Chuck Lucio. Thank you, Koosh. Good morning, everyone, and thank you for joining us today for our third quarter, 2024 earnings call.
Joanna Geraghty: The team continues to work hard to execute on our multi-year strategy jet forward with encouraging early results. The summer efforts to deliver reliable and caring service to a court tenant of jet forward resulted in year-over-year improvements across key reliability and customer metrics.
Joanna Geraghty: All these investments are showing signs of traction. The results would not be possible without the dedication of our 23,000 crew members.
Joanna Geraghty: who showed incredible resilience and professionalism throughout the busy summer travel period and in the face of Hurricane Pauline and Milton. We have thousands of crew members that live directly in the path of these storms and even faced with uncertainty outside of work, you still showed up for your fellow crew members and customers.
Joanna Geraghty: And for that, we all thank you.
Speaker Change: We remain committed to achieving our financial targets. And for the full year, we are improving our revenue guidance midpoint by a half a point, and also maintaining the ChasmX field target range we set at the beginning of the year.
Speaker Change: We are progressing toward our goals every day, but there is still significant work ahead on our path to full year operating profitability.
Speaker Change: Now turning to slide four.
Speaker Change: Reliable and caring service drives choice, satisfaction, and cost savings, and we believe that operational performance underpins the success of JetForward. In the third quarter, we built on operational achievements from the second quarter to deliver exceptional year-over-year improvements in A14 and completion factor.
Speaker Change: Compared to last year, A14 was up over 12 points and completion factor was up nearly two points on the quarter. Additionally, the operation was particularly resilient during both Hurricane Colleen and Milton and returned to regular operations with minimal follow-on disruption.
Speaker Change: This quarter's improved operational performance drove a double-digit increase in Net Promoter Scores year-over-year. A reminder that operational reliability is a key driver of customer choice and satisfaction.
Speaker Change: and is essential to delivering a premium customer experience and continuing to build long-standing relationships with our customers.
Speaker Change: Revenue performance was strong in the third quarter and was bolstered by the continued success of our 2024 revenue initiative.
Speaker Change: Progress from the changes to our Blue Basic carry-on baggage policy, which was announced in June and went live in September, is performing ahead of expectations.
Speaker Change: And, across all initiatives, we've realized $275 million of the $300 million revenue target set at the beginning of the year.
Speaker Change: Our premium offerings, between Preferred Feeding, Even More Space, and Mint, all continue to perform well, further evidence that our customers' desire for premium offerings is healthy and growing.
Speaker Change: Over the quarter, we also took substantial steps to secure our financial future, raising over $3 billion of debt to allow us to retire a portion of our existing debt, pre-fund 2024 and 2025 CapEx, and provide us with the necessary runway
Speaker Change: to execute on JetForward.
Speaker Change: At the same time, we expect a large portion of our announced network initiatives to come online over the quarter.
Speaker Change: As we have previously communicated, these changes will take time to ramp, and though the RASM benefit will be modest system-wide in the fourth quarter, the redeployees are expected to mature throughout 2025.
Speaker Change: We continue to expect positive year-over-year unit revenue in the quarter, though we expect transitory events to impact our sequential year-over-year RASM progression from the third quarter.
Speaker Change: We forecast that the disruption to travel and forward bookings from Hurricane Milton combined with pressure from the election Will negatively impact arousal performance by about two points
Speaker Change: As we head into 2025, we remain confident in the underlying supply and demand backdrop, especially as our Jet Forward initiatives continue to deliver more value.
Speaker Change: In the fourth quarter, our year-over-year unit costs also face transitory headwinds and are expected to take a temporary step up due primarily to timing of expenses over the year. This should not be viewed as the unit's cost levels we are expecting for 2025.
Speaker Change: Long-term capacity planning continues to be challenged by Flat Whitney aircraft on the ground and we remain in discussions with them over future AOG expectations and compensation. As a reminder, we expect capacity to be roughly flat year over year in 2025.
Speaker Change: Not having clear line of sight to our longer term capacity is certainly frustrating, but we must remain focused on controlling what we can. And this is at the heart of Jet Forward.
Speaker Change: On slide five, you can see that we've maintained our bias toward action, and over the quarter we've made substantial progress on our Jet Forward plan.
Speaker Change: Last month, we announced enhancements to our loyalty and airport experience to offer products and perks our customers value.
Speaker Change: These enhancements include the introduction of lounges at JFK Terminal 5, opening at the end of 2025, and at Boston Logan, opening soon thereafter.
Speaker Change: As well as the introduction of a premium co-branded credit card.
Speaker Change: Today, we are announcing additional steps to better match our onboard product to what our customers value, a further differentiated premium extra legroom offering, and a more intuitive purchasing experience for that product.
Speaker Change: You will hear more from Marty on this topic.
Speaker Change: I am proud of the progress we've made on these key initiatives, all aligned with our JetForward strategy, which provides a clear roadmap to delivering value to all of our stakeholders. In many ways, we are returning to the core strengths that made JetBlue one of the industry's most beloved brands.
Speaker Change: At the same time, we are rapidly evolving to compete more effectively in a transformed competitive landscape.
Speaker Change: By consistently delivering reliable service, focusing on our East Coast leader franchises, and offering compelling new product options to customers, we expect to be well positioned to deliver on our mission of bringing humanity back to air travel.
Speaker Change: With that in mind, I'm excited about the future of our business. And I am confident that you'll share my enthusiasm for the next phases of Jet Forward, as we work toward delivering our goal of $800 to $900 million in incremental EBIT.
Speaker Change: and expanding margins, all while continuing to meet the needs of our shareholders, crew members, and our customers. Now I'll hand it over to Marty to discuss our commercial progress.
Marty: Thank You Joanna and thank you to our crew members for their service and dedication to JetBlue. Our crew members differentiate us and I'm extremely proud of the way they continue to deliver caring service in the face of challenges to our industry like Hurricanes Helene and Milton.
Marty: They've also managed an immense amount of network change over the past nine months as we continue to execute JetForward and build the best East Coast leisure network.
Marty: As part of this network recalibration, we have announced and implemented over 50 route exits and 15 Blue City closures. Just last week, we officially left Burbank, Charlotte, Minneapolis, San Antonio, and Tallahassee.
Marty: I know these actions are tough for crew members, especially crew stationed in those cities.
Marty: and also for customers who love our brand. But these decisions are necessary part of our plan to return to sustain profitability. We must have profits in order to serve our mission. And we simply cannot tolerate perpetually loss making flying. Every aircraft must continue to earn its way into the network.
Marty: In total, the redeploys announced and executed this year represented over 20% of our network and have freed up aircraft to serve markets where we perform the best, origin markets in the east flying to Florida, to the Caribbean, Transcon, and to Europe.
Marty: These routes serve the large majority of our customers and our core geographies who know our brand and where we have and can build scale locally.
Marty: To better serve these franchises and reinforce our deep and relevant East Coast Leisure Network, we have renounced service to seven new Blue Cities since the start of the year.
Marty: Blue City Openings in Manchester, NH and Islip, NY leverage our brand awareness and regional relevance in geographies where we have a loyal customer base.
Marty: As we continue to adjust our network, we plan to focus our efforts on serving these and similar markets. Markets such as Providence and Hartford, where in the fourth quarter, we are operating our largest schedules ever.
Marty: In Providence, we expect to be up nearly 200% in seats year-over-year, and in Hartford, more than 30% year-over-year, further deepening our East Coast leisure network.
Marty: We also remain committed to better matching our on-board product to the needs of our customers who have increasingly asked for a more premium experience.
Marty: Today, we are announcing another JetForward milestone in the Priority Move products and perks customer value.
Marty: As we have mentioned, Even More Space has performed exceptionally well as interest in premium options continues to be strong. We believe that we can build on the success to attract more customers in the premium leisure segment and capture additional revenue by evolving how we merchandise and sell our Even More Space seats.
Marty: As we move into 2025, we plan to rebrand the offerings even more and package new benefits and amenities with the extra legroom seat.
Marty: By making it easier for customers to find and book an enhanced offering, we expect to strengthen JetBlue's competitive position in the premium leisure segment and deliver even more value to our customers.
Marty: We are also working to ensure our customers have a premium experience on the ground.
Marty: Our recent announcements to bring lounges to JFK's Terminal 5 and to Boston Logan and to offer a premium co-branded credit card will allow us to serve the premium leisure customer in a way we have not before and enable our loyalty and Airports experience to complement the reliable service customers expect to receive on board.
Marty: Throughout the travel experience, it is clear that we are quickly moving to address gaps and serve the full spectrum of leisure customers.
Marty: But we are not yet finished, and we expect to make further exciting product and perk announcements over the coming months.
Marty: Now turn to slide 7 to discuss 3rd quarter revenue performance and our outlook for the 4th quarter.
Marty: Thank you for tuning in. I'm Robin Hayes.
Speaker Change: Reliability initiatives drove higher than expected completion factor and capacity for the period, with capacity finishing down 3.6% versus the midpoint of our initial guidance of down 4.5.
Speaker Change: Over the third quarter, we also took
Speaker Change: Self-help capacity measures that included day we cut during the trough and in September, we were down nearly 100 flights Monday, Wednesday, and Saturday versus peak days. Better matching our flying with customer demand.
Speaker Change: These thoughtful capacity polls, combined with an improving competitive capacity environment, healthy demand close in and during peaks, and the continued success of our 2024 revenue initiatives support a positive year-over-year RASM of 4.3% for the quarter.
Speaker Change: Unit Revenue Improved Across All Geographies in the 3rd Quarter. The Latin Recovery was the most substantial, with year-over-year overlapping competitive capacity in the region, 7 points improved versus the last quarter.
Speaker Change: Peak performance you made healthy.
Speaker Change: And as we previously announced, third quarter revenue was aided incrementally by one point from the industry-wide CrowdStrike event in July.
Speaker Change: Our peak performance also improved relative to our expectations in September.
Speaker Change: Supported by Atrof Capacity Reductions.
Speaker Change: Preferred seating and seasonal check bag pricing, as well as our blue basic baggage policy change, also contributed to the revenue progress over the quarter.
Speaker Change: Our premium segments, even more space than Mint, continue to outperform with revenue up double digits year over year.
Speaker Change: Transatlantic Mid-Performance
Speaker Change: Improved over the summer peak with Prism in the third quarter, up high single digits year over year, and nearly 90% more ASMs.
Speaker Change: We are encouraged by the ramp of these markets.
Speaker Change: Our TrueBlue customer base continues to grow and increase their share of wallet on JetBlue flights. In the third quarter, nearly half of our customer flight revenue came from TrueBlue members.
Speaker Change: The improvements we've made to our True Blue and Mosaic programs over the past year now make it one of the most attractive programs for introductory Elite status members.
Speaker Change: which is reflected in the record number of both our customers and our competitive customers who have chosen to earn status with JetBlue this year.
Speaker Change: The True Blue Value proposition continues to improve.
Speaker Change: and the addition of new partnerships, lounges and product offerings, such as a premium condo, continue to further bolster that proposition.
Speaker Change: The work the team is doing to reward and attract customers, along with continued evolution of our network, to further match flying to the preferences of our True Blue customer base.
Speaker Change: Leads us excited by the trajectory and growth potential for our program.
Speaker Change: Shift into the fourth quarter.
Speaker Change: We have made incremental trough capacity adjustments, and as a result, fourth quarter capacity is planned to be down 7% to down 4% year over year.
Speaker Change: We're also comping against near-perfect completion factor in the fourth quarter of last year.
Speaker Change: And, while we had hoped to perform similarly this quarter, the tropical weather environment has been more challenging than last year.
Speaker Change: For the full year, capacity is planned to be down 4.5% to down 2.5%.
Speaker Change: Thank you. Thank you.
Speaker Change: In the fourth quarter, we expect revenue down seven to down three year-over-year, which implies positive unit revenue at the midpoint of our revenue and capacity ranges.
Speaker Change: Positive fourth quarter RASM is supported by trends continuing from the third quarter healthy peak demand and Increasingly competitive constructive industry supply backdrop and the progress of our 300 million dollars in revenue initiatives
Speaker Change: when adjusting for the crop strike benefit in the third quarter.
Speaker Change: and the negative impacts of Hurricane Milton and the election of the fourth quarter, year-over-year RASM is expected to be consistent from the third quarter into the fourth.
Speaker Change: Our fourth quarter revenue is also in line with our historic seasonality and prior expectations.
Speaker Change: For the full year, we are raising the midpoint of our guide by a half point and narrowing the revenue range to down 5% to down 4% for the full year.
Speaker Change: I echo Joanna's excitement for our plan and the progress made so far this year.
Speaker Change: As we look forward to
Speaker Change: As you look towards the fourth quarter and into the new year, I'm confident we are taking the right steps to give our customers the best experience at the best value, in a small part because of the dedication of the greatest crew in the industry.
Speaker Change: Thank you all for always putting our customers first and prioritizing a safe operation.
Speaker Change: With that, over to Ursula, who will share more on the financial status and outlook of the business.
Ursula Hurley: Thank you, Marty. We ended the quarter with an adjusted operating loss of just 11 million, about 130 million better than our July expectations, or the equivalent of about a five point margin improvement.
Ursula Hurley: Over three points of the improvement were driven by outcomes in our control.
Ursula Hurley: As Marty described, we posted better revenue performance than expected, a trend we know must continue in order to effectively offset the significant cost increases we've seen since 2020.
Ursula Hurley: We also saw improved operational reliability, and in turn, cost efficiencies and better customer satisfaction scores, as our jet-forward reliability priority move is beginning to produce benefits that directly impact the bottom line.
Ursula Hurley: Fuel prices moderated down 23 cents from our initial midpoint, resulting in the remaining two points of improvement to margin over our July expectations.
Ursula Hurley: At the end of the day, we still weren't profitable. But the progress we made this quarter is evidence that we are taking the necessary steps to get the business back to operating profitability.
Ursula Hurley: It is also indicative of our commitment to hitting our financial targets.
Ursula Hurley: From the $300 million in revenue initiatives for 2024, which we expect to exceed, to the second iteration of our Structural Cost Program, which we expect to achieve at the top end of our range, we have a consistent record of hitting our program targets.
Ursula Hurley: The groundwork is set to realize the Jet Forward plan and hit the EBIT targets we set out for the next three years.
Ursula Hurley: In the third quarter, our CHASM-X fuel growth of 4.8% beat the better end of our initial guidance of up 6-8%, driven by better operational performance and a shift in the timing of expenses to the fourth quarter.
Ursula Hurley: Our structural cost program has also progressed well over the year, achieving $24 million in savings in the third quarter and year-to-date savings of $169 million.
Ursula Hurley: And during the quarter, we continued our commitment to a more sustainable industry, signing an agreement alongside World Fuel Services and Valero to bring to New York the first ever ongoing supply of blended sustainable aviation fuel with initial delivery expected in 2024.
Ursula Hurley: Turning to the Cost Outlook, I am pleased we are maintaining the midpoint of our prior full year guidance of 7.5%.
Ursula Hurley: In the fourth quarter, we do expect ChasmXFuel to be temporarily pressured due to a number of transitory factors, including, one, 2.5 points of largely maintenance-related expenses
Ursula Hurley: Three, the lapping of one-time credits from the fourth quarter of last year, including our 2023 Pratt & Whitney compensation worth about 1.5 points.
Ursula Hurley: 4. One point from comping against a near perfect completion factor in 4Q last year and the impact on capacity from Hurricane Milton cancellations.
Ursula Hurley: Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com
Ursula Hurley: In total, these factors represent about seven points of transitory headwinds to our controllable costs, resulting in Chasm-X fuel expected to be up 13 to 15 percent year-over-year for the quarter.
Ursula Hurley: Independent of these headwinds, CASM-X fuel would be firmly in the mid to high single digits for the quarter.
Ursula Hurley: I want to be clear, we remain firmly within the full year chasm X fuel range we shared last quarter and have now narrowed our range to up seven to eight percent.
Ursula Hurley: As we look to next year, I would like to reiterate our previous commentary on 2025 COS.
Ursula Hurley: While we will not guide 2025 metrics until the January call, these fourth quarter unit cost levels are not indicative of where we expect Chasm X fuel growth to be in 2025.
Ursula Hurley: Thank you. Thank you. Thank you.
Ursula Hurley: Now shifting to our fleet. In the third quarter, we took delivery of six A220 aircraft, supporting the continuation of our fleet modernization program.
Ursula Hurley: In the fourth quarter, we expect to take seven deliveries for a total of 27 aircraft deliveries this year.
Ursula Hurley: These deliveries make up the majority of our CapEx forecast of about $450 million for the fourth quarter and $1.6 billion for the full year.
Ursula Hurley: Thank you. Thank you.
Ursula Hurley: Turning to our balance sheet on slide 10.
Ursula Hurley: At the end of the quarter, our total liquidity, excluding our undrawn $600 million revolver, was $4.1 billion.
Ursula Hurley: This includes the proceeds from our $3.2 billion debt raise in August, which consisted of senior secured notes and a term loan, both backed by our True Blue Loyalty Program, as well as $460 million worth of new convertible notes.
Ursula Hurley: The proceeds from the new convertible notes were used to retire a portion of our existing 2026 convertible notes.
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Speaker Change: The remaining capital is expected to pre-fund CapEx for the remainder of 2024 and through 2025 and provide ample runway for JetForward.
Speaker Change: We expect aircraft deliveries to be funded with cash, further adding to our existing unencumbered asset base of about $5 billion.
Speaker Change: Being well capitalized allows our team to fully focus on getting the business back to profitability, improving our balance sheet, and working to eventually produce free cash flow.
Speaker Change: We firmly believe JetForward is the right plan to get the business back to operating profitability, and we are confident in the $800 to $900 million EBIT uplift in 2027.
Speaker Change: JetForward consists of initiatives that are in our control, providing reliable service even in the face of ATC challenges.
Speaker Change: building out our network, building out our leisure network in the Northeast, where our brand is already well positioned to win and offering our customers the products and perks that they desire.
Speaker Change: All the while ensuring our cost base allows us to offer more value versus our peers.
Speaker Change: Jet Forward is clear, it is actionable, and as we move through the fourth quarter and into 2025, I believe we have a solid foundation to realize its benefits and drive value for our shareholders, crew members, and customers.
Speaker Change: Thank you. We will now open it up to your questions.
Speaker Change: Thank you.
Speaker Change: Thank you.
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.
Speaker Change: You may remove yourself from the queue at any time, star two. Once again, that is star and one if you would like to ask a question. And we'll take our first question from Savvy Sith with Raymond James. Your line is now open.
Savvy Sith: Hey, good morning, everyone. I know Joanna mentioned like network deployments, kind of maturing in 2025. And you do have the jet forward initiatives. I'm not sure if there's a question for Marty or David, but
Savvy Sith: When should we start seeing kind of the year over year revenue aurasm trends, you know, as they move sequentially kind of performing better than seasonality?
Savvy Sith: Thank you.
Speaker Change: I saw it. Thanks for the question.
Speaker Change: You know, it's funny, I think if you look at all of the contributors to JetForward,
Speaker Change: The beauty of having a lot of different initiatives is that some can be above, some can be below.
Speaker Change: I think we've said already that.
Speaker Change: The Preferred Seating Program, Preferred Seating Fees.
Speaker Change: Robin Hayes, Martin George, Ursula Hurley, Robin Hayes, Linda.
Speaker Change: But I will say that if you think about the path for that to phase in
Speaker Change: The redeployment of the capacity is going to start ramping. Now the good news is, if you look at our fourth quarter capacity, the last big trunch capacity changes are coming out in the stations we just closed, the books that we just closed.
Speaker Change: And I will give the example of Minneapolis. We flew to Minneapolis for 57 months and we had phased pretty aggressively as far as revenue going up there. That plane is now flying in
Speaker Change: and we're in month one of ISLEP, and yet we're still maintaining the RASM growth that what we've already seen in the third quarter. So actually I'm really really happy with the redeployment opportunities. We're putting the airplanes in places where we already have a very very strong frequent fire base.
Speaker Change: In fact, Icelapez is already in the top quartile of frequent flyer attach rates for our network. So we're very, very positive about what we're seeing there and I'm actually very much looking forward to the redeployment. So I think it's really a big part of building the depth that we need in the East Coast Legion market.
Speaker Change: That's helpful perspective. Thanks, Marty. And if I might just ask on the competitive capacity side, so you're doing what you can do to control that, you know what, what you can control, but it seems like industry capacity is also moderating. I wonder if you could give a little bit more color and
Speaker Change: Especially on what you're seeing from Frontier and Spirit because there were some aggressive cuts this quarter.
Speaker Change: So I don't want to go into too much detail airline by airline, but I would say on a macro level competitive capacity.
Speaker Change: Our competitive capacity is actually up fourth quarter over third quarter.
Speaker Change: Competitive Capacity in Our Markets. It's really not being contributed to by the ULCCs, but we're seeing it from other carriers. And I'd say even with, in fact, I've got
Speaker Change: helpful. Thanks, Marty.
Speaker Change: Thank you. We'll take our next question from Jamie Baker with J.P. Morgan. Your line is open.
Jamie Baker: Oh, yeah. Good morning, everybody. So when I think back to the murder, Joanna, you know, I always viewed your predecessor as, you know, sort of leading the charge on that. And, you know, it's water under the bridge at this point. But when I think of the international strategy,
Jamie Baker: I was always of the impression that there was pretty, you know, widespread agreement that it made sense and, you know, the domestic network could support it and so on. So, so I guess that's my question. With the downsizing that's taking place,
Jamie Baker: and what you internally are contemplating from here is, is there still
Jamie Baker: widespread logic for the trans-Islamic operation? And are we anywhere near the point where the domestic franchise might not be able to adequately support it?
Speaker Change: Thanks, Jamie. Appreciate the question. I think maybe just the headline.
Speaker Change: You know, you've seen us communicate the different pillars of Jet Forward.
Speaker Change: Transatlantic is an important part of that as a spoke. It drives nice relevance in our loyalty program, but if you actually look at the underlying performance from this summer, we were really pleased with how it did.
Speaker Change: and focusing on the revenue that we can drive during the summer from some great leisure destinations across the Atlantic. So it's evolved since my predecessor, but I think evolved in the way it needed to as we move forward with our Jet Forward plan.
Speaker Change: Thank you very much.
Speaker Change: Okay, helpful. And then second, I do have to ask, can you envision any scenario where you might re-engage with SPIRT? Or maybe, scratch that, a better way to ask the question, do any of the tenants of the original deal
Speaker Change: still stand or still appeal to you, given how your balance sheet and your margins have evolved since then. Thanks in advance.
Speaker Change: Sure, thanks for the question. So it may be to be clear, we're not interested in revisiting the spirit, the spirit.
Speaker Change: potential acquisition, you know, we want to really focus on improving our margins within JetBlue, delivering on Jet Forward, controlling what we can, and keeping the team laser focused on that. I will say that if there are opportunities that come up with assets,
Speaker Change: that are reasonable and may allow us to grow in a capitally prudent manner. Obviously, we would consider and evaluate those. But of course, there's a complexity there, lease price, aircraft age, reconfiguration, and the list goes on. So headline, we're not interested in revisiting.
Speaker Change: Super helpful. Thank you very much.
Speaker Change: Thank you. We'll take our next question from Daniel McKenzie with Seaport Global. Your line is now open.
Speaker Change: Oh, hey, good morning. Thanks. Great job on the third quarter. And, you know, thanks for the commentary in 2025.
Daniel Mckenzie: It would be great to go back to that confidence in the 2025 supply-demand backdrop that you guys mentioned in the script.
Daniel Mckenzie: And I know you're not going to guide to the 25 metrics, but it'd be great just to revisit the goals. And so if we could just set aside any further hiccups from Pratt and Whitney.
Speaker Change: Hi, Dan. Thanks for the question. Appreciate it.
Speaker Change: In regards to 2025, we're just going to reiterate what we've been saying. So we're still expecting
Speaker Change: We're in the middle of the planning process at the moment. In terms of TASMxFUEL,
Speaker Change: It's still a little too early to provide guidance beyond that. So we're reiterating what we've previously said, which is building a plan with a goal to have op margin, which is break even or better. So we're pleased.
Speaker Change: with the
Speaker Change: momentum that we're seeing in jet forward. And we also continue to assume that the macro backdrop continues to be constructive. So more to come in January, but we're just reiterating what we've previously said around our 2025 outlook.
Speaker Change: Yeah, helpful. And I guess
Speaker Change: Second question here on Jet Forward, I don't believe the benefits that you guys are current targeting included another large partnership, but I believe that's something that you're looking at. And so I guess my question is, is how quickly, you know, if a new partnership is announced, how quickly could that be turned on? And how quickly could any incremental revenue potentially fall to the bottom line?
Speaker Change: Thank you for tuning in.
Speaker Change: Hi Dan, thanks for the question. So I will say we did, there is a plug in JetForward for the concept of some level of partnership going forward.
Speaker Change: And it's certainly something that we're looking at. It certainly could be with American. It could be with another carrier.
Speaker Change: I do want to remind you, we do have 52 partners right now.
Speaker Change: that we work with at mostly at JFK in Boston.
Speaker Change: So, you know, we understand patent as well. I think we learned a lot through the NEA as far as what worked for us, what might not work for us. So I'm cautiously optimistic that we might have an opportunity at some point in the future. It's not a gigantic number that's, you know, that's going to make this plan pivot. But I think it's certainly one of the tools that could be in the toolbox.
Speaker Change: Ursula Hurley, Robin Hayes, Joanna Geraghty Ursula Hurley, Robin Hayes, Joanna Geraghty Ursula Hurley, Robin Hayes, Joanna Geraghty
Speaker Change: Thanks, you guys.
Speaker Change: Thank you. We'll take our next question from Duane Sessenworth with Evercore ISI. Your line is open.
Duane Sessenworth: Hey, thanks. Good morning. Just on the election impact, Marty, maybe, maybe for you, can you speak to the shape of bookings on the other side of the election? Is this, you know, are we seeing this pick up on the other side? Or is it an expectation that booking activity, you know, will pick up when we get to the other side of it?
Speaker Change: So when we modeled 2024, we were making an assumption for election impact, which has come true because we've seen this in previous presidential elections.
Speaker Change: And it's really two pieces of the change. The first one is depressed travel during the actual week of elections. And that's something we've seen historically. And I think we're forecasting it this year. Luckily, we had already made trough adjustments.
Speaker Change: Because as we've talked about in the fourth quarter, we are much more aggressive at pulling down the troughs So I think we have that piece recovered the longer that the I think actually slight larger impact and a longer-term impact is it's just a period of seven to ten days where there's just not as much booking activity as you've been historically and
Speaker Change: It's actually not that different from what we saw during Milton, which was yes, during the hurricane, there was no flying in and out of Tampa and Sarasota and that West Coast of Florida. But at the same time, there was also people who just weren't booking because they were focused on, you know, dealing with a hurricane. And I think during that, during that, during the
Speaker Change: Election sort of the same thing, which is there some book just sort of melt away because people are focused on other things
Speaker Change: But again, this is nothing different than what we've seen historically, but...
Speaker Change: We really felt the need to call it out and mostly to make sure that we can give you a clean comparison between third and fourth quarters.
Speaker Change: Great. And then maybe just to stay with you, I wonder if you could comment on how you're seeing
Speaker Change: Caribbean RASM playing out this winter. You know, we had at least one carrier give some forward look on, you know, early 1Q, January, February yield commentary. I just wonder what sort of RASM improvement you're thinking about. Would that be a leading entity for you or would it be sort of more similar to system average? Thank you.
Speaker Change: I think it's really too soon to really talk about first quarter RASM. I will say in general, you know, we've been pretty aggressive as far as adding capacity into San Juan, and we're very happy with what we've seen so far, including putting mid capacity in there.
Speaker Change: But, you know, this market's gonna be important to us and we have a lot of confidence about how Caribbean will shake out.
Speaker Change: Okay, appreciate the thoughts.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thank you. Maybe I'll start with the fleet and then I can hand it over to Marty. So no, our expectation continues to be on average, we will have mid to high teens.
Speaker Change: leases that were set to retire. And we're keeping those in the fleet in order to backfill some of the lost capacity due to the GTF. So we are in the process of
Speaker Change: working through those negotiations. And so that is helping the capacity outlook for next year, maybe over to Marty, just on any more detail that you would add.
Speaker Change: Yeah, the only detail I mean, we're not going to, I mean, obviously, in the fourth quarter call, we'll give better guidance as far as what to expect in the first half of 25.
Speaker Change: Thank you for listening. Please visit www.patreon.com for full disclosures. This is a production of the US Department of State. Transcripts provided by Transcription Outsourcing, LLC. © 2013 The U.S. Department of State. All rights reserved. The U.S. Department of State.
Speaker Change: Based on what we know about the fleet plan right now.
Speaker Change: You see that, you know, where ASMs are negative in fourth quarter, we will still be negative in first quarter as well. And
Speaker Change: Unfortunately, this fleet situation is very, very dynamic. And you know, we continue to be very frustrated as far as the status right now as far as being able to actually get a good handle on what's happening with Pratt. But we'll get more detail about that in the fourth quarter on the fourth quarter call.
Speaker Change: Okay, that's helpful. And just secondly, when we talk about
Speaker Change: the mid single digit type chasm for next year. I just want to make sure are we including the sort of the the two point hit from the wage step up? I guess you'll still have that for a couple quarters next year. And are we assuming anything around
Speaker Change: pilots, because I think that the extension starts to expire, I guess, early next year.
Speaker Change: With flat capacity, as a reminder, our historical unit cost performance would insinuate that we would be at mid-single-digit CASMX fuel next year, and that is inclusive of
Speaker Change: you know, all labor assumptions, maintenance assumptions, I mean, that's all in. Next year at the highest level, we'll continue to see inflationary pressures across the labor workgroups. We also will have a step up in
Speaker Change: maintenance expenses as well, just due to the nature of the V2500 fleet. But these are reasons why we also put in place
Speaker Change: the cost pillar as part of Jet Forward. So we have ways in which we're going to offset these pressures that we're seeing across labor and maintenance and which will result in a mid single digit number for 2025.
Speaker Change: https://www.youtube.com.actionkit.com
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you. We'll take our next question from Brendan Oglenski with Barclays. Your line is open.
Brendan Oglenski: Hi, good morning, and thanks for taking my question. So Marty, if I'm hearing you right, I think the majority of the improvement you're seeing on the commercial side is really being driven by changes to product and pricing. Is that correct? And the network changes are going to maybe potentially be more impactful in 2025. Is that correct? Yes, that's absolutely correct.
Brendan Oglenski: www.mytrendyphone.co.uk
Brendan Oglenski: preferred seating program where, you know, for the non even more seating that's in the front of the airplane, we are charging a fee to get into those seats. Now, to be clear, we have not taken away free seat assignments that we still offer free seat assignments for even our Blue Basic customers, but you will be,
Brendan Oglenski: If you want to sit in the front of the airplane, there will be a fee for that. That has been above our expectations. We just recently, in September, announced a change to Blue Basic, where we are now offering a free carry-on bag for Blue Basic.
Brendan Oglenski: for Blue Basin Customers.
Brendan Oglenski: The change even more, we are actually very excited about that with respect to how we'll hopefully be able to better merchandise that product and make it a little bit more attractive product and we'll be announcing some product changes as we go forward.
Brendan Oglenski: Again, in the fourth quarter call, as we close out 2024, we're going to give a full accounting of the $300 million we promised, and some little more detail as far as where the benefits will come. But again, this is the point of having a multifaceted approach. You know, some things can be above forecast, some things can be at, some things can be below. But, you know, the goal we have as a leadership team is to make sure that we make a commitment to our investors, and we deliver on that commitment, if not more. So that's why we actually really enjoy having a basket.
Brendan Oglenski: And the last thing I want to mention, and Joanna mentioned it in the script, but I can't stress it enough.
Brendan Oglenski: Our crew members have really stepped up as far as delivering a fantastic product.
Brendan Oglenski: whether it's
Brendan Oglenski: and Tip Top Shape.
Brendan Oglenski: You know, having our on-site performance go up by 12 points and the improvement in MPS, I can't stress enough how important that is. So, again, I should give a thanks to all of our crew members for their hard work because we're really seeing it in some of our numbers. I think we're definitely seeing the benefit of an improved customer experience.
Brendan Oglenski: Thank you for tuning in. I'm Robin Hayes. I'll see you next time.
Speaker Change: I appreciate all that, Martin. And maybe if I can get one lesson for Joanna. I mean, if things aren't turning towards profitability next year, and I know you guys don't want to provide guidance right now, but what are incremental levers you can pull to get the business, you know, in the black solidly?
Speaker Change: And that's the first step. And then, you know, we'll continue after that, but all of these pillars contribute to that.
Speaker Change: Some of which, as you know, we've announced, but there's more to come down the pipeline, even more space is obviously announcement today. But we've actually got a number of additional announcements coming.
Speaker Change: Obviously, this is all against a macro backdrop of, you know, cooperative fuel, other airline capacity, and then obviously managing through our own AOG issues. If those improve in any meaningful way, that will be tailwinds on the plan.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thank you. We'll take our next question from Andrew DeDora with Bank of America. Your line is open.
Speaker Change: Thank you. Thank you.
Speaker Change: I guess for next year, um, any, you know, kind of framework on how we should think about potential.
Speaker Change: what any potential compensation from Pratt could look like.
Speaker Change: Morning, Andrew. Thanks for the question. We didn't have clear line of sight beyond 2025. We're continuing to work constructively with Pratt & Whitney, both on our aircraft on the ground forecast, as well as compensation. So both are a work in progress.
Speaker Change: Thank you. We'll take our next question from Steven Trent with Citi. Your line is open.
Steven Trent: Thanks very much everyone and I appreciate you taking my question. I'm sort of curious when you think about your focus on premium leisure customers, do you anticipate any movement or adjustments in how you think about your frequent flyer program?
Steven Trent: Thank you very much.
Speaker Change: I see him. Thanks for the question. You know, actually, I think if you look at how we've structured True Blue right now,
Speaker Change: It is already more friendly for leisure customers that we see in competitive programs. And frankly, we've had a great year in True Blue, even in the world when you know, we're we're, you know, flat or down in capacity, you know, our credit card spend is up in the low teens.
Speaker Change: You know, we're actually, I think, I think we've released a number, we've had a major growth in Mosaic customers.
Speaker Change: We've got a program up there for elite customers from other airlines to come over to JetBlue and earn an elite status here. I think it's actually worked extremely well with respect to what we've done in TrueBlue. And I think the beauty of this is, and it's funny, if you think about the...
Speaker Change: sort of the customer target for us. And one of the phrases I like to use is, every single person who flies
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Speaker Change: I think we were one of the very first programs in the country to have
Speaker Change: dollar-based earning and dollar-based earning.
Speaker Change: which he did, you know, at least 10, 12 years ago. Our value proposition is fantastic. So, you know, we're very happy with how True Blue is structured and I'm very optimistic about the ability of that team to continue to shift more share. Yeah, if I could just add on top of that, you know, I think this all ladders back not to sound like a broken record, but ladders back to our Jet Forward plan and delivering the things that customers value. And if you look at our loyalty program, whether it's the lounges or some of the improvements to Mosaic that we're rolling out, including the premium card, that all plays to the premium, the premium customer. You know, we've launched a business card down in Puerto Rico. We've got a great status match with ABUS for Mosaics. And so the list goes on and on. So as we think about loyalty in particular and how we.
Speaker Change: and Jeff Loo. They are so important to JetBlue. There are a vast amount of people who fly every year who are lost by some of the bigger programs and we see a real opportunity with them.
Speaker Change: Thank you. Thank you.
Speaker Change: Appreciate it. If I may just follow up real quickly on that, you know, when you think about the growth of True Blue, for example, any sort of high level idea of what portion of that growth is attrition from other carriers?
Speaker Change: Go to Beadaholique.com for all of your beading supply needs!
Speaker Change: So we don't have that number. We can circle back with you on it. Some of it is clearly that, but at the end of the day, that's not how we're thinking about True Blue. It's not about necessarily trying to see others a trit out, it's trying to demonstrate we've got a program that people wanna be a part of, because it drives value for JetBlue, value for the customers on JetBlue, and frankly, unique approach to loyalty. So perks that you care about and perks that you want. Marty? The only thing I would add is, I think that for us, True Blue represents.
Marty: on a relative basis, a somewhat better opportunity than you'll see from some other carriers. You know, the example I'll give is, you know, if you're a, you're a frequent flyer in an OA hub, you know, whether you're in, you know,
Marty: Minneapolis or Dallas or whatever? There's not a lot of share to shift
Marty: You know, we tend to be in very competitive markets, you know, South Florida, there's, you know, two other airlines having in South Florida, we've got multiple airlines having a Metro New York to airlines having in Boston.
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Speaker Change: Okay. Appreciate the time. Thank you.
Speaker Change: Thanks so much for the time. Just curious how the adding the carry-on bag to Blue Basic has performed versus your expectations, as well as some of the seasonal mint flying you're rotating out of Transatlantic this winter.
Speaker Change: Great questions. First of all, with respect to the carry-on bag, it is above what we'd expected. And, you know, I think, as we've seen,
Speaker Change: , , , , , , , , , , , , , ,
Speaker Change: I think during the peak, we were able to be competitive without having that product against our biggest competitor. But clearly in the trough season, we really suffer from it. And frankly, we've seen more upside than we had originally forecasted. So that's been a great program for us. With respect to the rotation of the
Speaker Change: that decedent mid-services. [inaudible]
Speaker Change: I almost jumped in when Joanna finished her comment to Jamie about the transatlantic, but I think we have really found a fantastic formula.
Speaker Change: with
Speaker Change: being able to shift airplanes between the Atlantic in the summer and in some of the seasonal mid markets in the wintertime. So historically, I think this summer, we had 13 or 14 daily round trips across the Atlantic. This winter, we're down to six.
Speaker Change: Those airplanes are being redeployed into domestic markets that are actually very strong in the winter, you know one I give one example We've got I think three or four airplanes are in Phoenix both from Fort Lauderdale, Boston and New York
Speaker Change: back to aligners in the script. Every airplane has to earn its way into the network. You know, we talked about the international strategy when Jamie used that phrase. You know, in 2019, when we started talking about the Atlantic, I said, it is a spoke.
Speaker Change: And the Atlantic still is a spoke. And this summer, it's been a profitable spoke. So I think actually, we have a really good combination. And it's a testimony to how good the Mint product is because
Speaker Change: You know, we just had this week a customer who did a mint review that was published We've had a couple of emails from customers who had come over to JetBlue It is a fantastic product and it's been a great great profit generator for us
Speaker Change: That's super helpful. Thanks so much for that color, Marty. Just curious as a follow up.
Speaker Change: There's been reports in the press about cutting out cost food on transatlantic in basic economy. I'm just kind of curious on the broader strategy of how you just driving a revenue premium while also being really judicious on cost. So love to hear more on the thinking there. Thanks again for the time.
Speaker Change: Thank you for watching. Please subscribe to my channel. I upload videos on a weekly basis. Please like and share this video.
Speaker Change: Thanks so much for the question. We have a fantastic core product across the transatlantic, whether it's cold or it's hot. I personally sat through an entire food tasting process with dig, and it is second to none. So I would put it up against any other hot product currently flying the transatlantic. So I think there's much to see. There's not much to see there. Frankly, it's a fantastic product. We moved it to cold, because we think that there's an opportunity there to save some costs, but it's still a far superior product to what you've got flying transatlantic in coach, coach currently so really proud of what we're delivering there.
Speaker Change: Thank you. And we will take our final question from Connor Cunningham with Mellie S. Your line is open.
Speaker Change: Thank you.
Connor Cunningham: Everyone, thank you. You know, just back to the network for a second, I realized a lot of the changes that you've made have been added up the razzle and returns and all that stuff. And that's great. But when you think about relevancy, as you've made those changes, are you finding that you're growing the pie of people that are coming towards JetBlue? Like point being is like, do the network adjustments really drive more dependence for people that are using your product overall? Thanks.
Speaker Change: Thank you for watching. Please subscribe to our channel. And as always, thanks for watching.
Speaker Change: Hi. Thanks, John, for the question. The answer is absolutely yes. I'd say based on the numbers we're seeing in places like Providence, Bradley,
Speaker Change: Manchester Islip. We are absolutely pulling customers towards JetBlue. I will note that all four of those markets had competitors, both ULCC competitors and full service competitors.
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Speaker Change: In New England, you know, we are sort of the default carrier for leisure and
Speaker Change: I don't want to be in a situation where we have customers who would like to fly JetBlue who do not have the opportunity in a market that we forecast we can do profitably. So this is not the end of the growth we're going to see in those markets and it's because customers respond to it extremely well.
Speaker Change: Okay, maybe I'll just keep it going. Thank you guys.
Speaker Change: Thank you. And we have no further questions in the queue at this time. I'll turn the program back over to Mr. Koosh Patel for any additional or closing remarks.
Koosh Patel: Thanks, everyone. That concludes our third quarter 2024 earnings conference call. Have a great day.