Q1 2025 JetBlue Airways Corp Earnings Call
Yes.
Rob: Good morning, My name is Rob I would like to welcome everyone to the Jetblue Airways first quarter 2025 earnings Conference call. As a reminder, today's call is being recorded at this time all participants are in a listen only mode. I would now like to turn the call over to Jetblue Who's director of Investor Relations <unk>. Please go ahead Sir.
Speaker Change: Thanks, Rob Good morning, everyone and thanks for joining us for our first quarter 2025 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 that Jetblue Dot com and on the Sec's website at Www Dot sector in New York to discuss our results are Joanna Geraghty, our chief Exec.
George: Active officer, Marty Thanks, George our President and first of all 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 1965, 90, 95 and such.
George: Such forward looking statements include without limitation statements regarding our second quarter and full year 2025 financial outlook and our future results of operations and financial position, including long term financial targets industry and market trends.
George: <unk> with respect to <unk> and headwinds our ability to achieve operational and financial targets, our business strategy and plans for future operations and the associated impacts on our business. All such forward looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements. Please refer to our most recent earnings release as well as our 2020.
George: <unk> 10-K, and other filings for a more detailed discussion of risks and uncertainties that can 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 this call and other than as may be required by law. We undertake no obligation to update this information to investors should not place undue reliance on these forward looking statements.
George: 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.
Speaker Change: And on FCC desktops, and now I'd like to turn the call over to join a guarantee.
Joie Garnier: Good morning, and thank you for joining Jetblue. This first quarter of 2025 earnings call. During the first quarter. We continued to make progress on jet forward ran a strong operation and efficiently managed costs. We've remained focused on controlling what we can and executing on our long term strategy, while managing the challenges of an uncertain economic.
Speaker Change: In this backdrop and weakened consumer sentiment.
Speaker Change: When we guided the first quarter back in January we saw early indications of softening demand, which was incorporated into our RASM guidance at the time I am pleased that RASM for the quarter met our initial guidance. We also finished the quarter at the low end of our initial capacity range and firmly beat the midpoint of our CASM ex fuel guidance building on our consistent.
Speaker Change: Track record of executing on cost.
Speaker Change: The relatively strong booking trends we saw throughout January deteriorated into February and worsened further in March as we look to the second half of the year the outlook remains unpredictable and given the macro economic uncertainty we are not reaffirming our full year guidance, we plan to provide a more meaningful update on our full year expectations later.
Speaker Change: In a year when we have better visibility.
Speaker Change: We are leaning into our experienced successfully navigating the 2008 financial crisis and the COVID-19 pandemic to inform our immediate path ahead and take decisive action. Additionally, we are fully committed to executing our long term strategy jet forward to drive necessary long term transformational change to our business and.
Speaker Change: We are confident that this is the right plan and the first quarter. We saw several proof points that jet forward is working.
Speaker Change: Turning to page four of the earnings presentation.
Speaker Change: Our efforts to deliver reliable and caring service have led to consistent year over year improvements in <unk> over the last three quarters and the first quarter of 2025 <unk> thousand 14 was nearly four points better year over year, despite significant weather events across our network. We're proud to have entered 2025 with industry lead.
Speaker Change: <unk> net promoter score performance and for the first quarter NPS improved double digits year over year, marking the fourth consecutive quarter of year over year growth NPS is a strong indicator of customer retention and brand loyalty, which will be important as we navigate through the uncertainty.
Speaker Change: Encouragingly, we are seeing reassuring signs that the premium segment is holding up better in the current environment, which supports the evolution of our product offering as part of that forward.
Initiatives under our products in Perth priority move are advancing nicely and Marty will go into greater detail on their progress.
Speaker Change: We've also seen early indications that our network changes are working in the northeast, particularly in markets, where jetblue already holds significant relevance.
Speaker Change: Lastly, we continue to make progress on our cost transformation program and we expect savings to ramp during the second half of the year.
Speaker Change: While our strategy did contemplate a stable economic backdrop, the current macro environment does not change our ultimate goal breakeven operating profitability and eventually a return to sustained profitability, which remain our north star.
Speaker Change: As a reminder, that forward as a multi year plan and as we continue to make progress. We are also acting expeditiously to manage near term uncertainty.
Speaker Change: We were the first carrier to make meaningful capacity adjustments in response to changes in the environment pulling two five points of trough capacity for March and making early changes to April.
Speaker Change: Then we've executed similar reductions across the second quarter and will continue to make adjustments to better match supply with demand throughout 2025.
Speaker Change: Simultaneously, we continue to evaluate all opportunities to reduce cost and return our focus to our core business. This includes efforts to limit discretionary spending and to reduce non essential hiring Additionally, and a lower capacity environment. We also expect savings on maintenance.
Speaker Change: As we meaningfully adjust capacity to address economic conditions, we are committed to pulling all levers available to mitigate potential upward pressure on unit costs.
Speaker Change: The actions we are taking are intended to support our business amidst the current macro backdrop and build resiliency against a prolonged economic slowdown.
Speaker Change: And that scenario the capital structure decisions. We've made over the last 16 months have resulted in a more durable liquidity position to support the near term demands of our business.
Speaker Change: You'll remember that in August of 2024, we raised over $3 billion of strategic financing, primarily backed by our loyalty program.
Speaker Change: As a result, our total liquidity at the end of 2024, excluding our $600 million revolver was $3 9 billion, representing 42% of our trailing 12 month revenue the strongest liquidity liquidity ratio in the industry.
Speaker Change: Last year. We also made the decision to defer 3 billion worth of Capex pushing out <unk> hundred 21, neo deliveries to the 2000 <unk> as we focus on returning to profitability and generating free cash flow again.
Speaker Change: In addition to a durable liquidity position and a manageable horizon a spend commitments, we hold a healthy unencumbered asset base of more than $5 billion.
Speaker Change: This provides us with the financial flexibility and liquidity to weather a broad spectrum of economic outcomes.
Speaker Change: I am confident we have the right long term strategic plan and we are taking the appropriate steps to navigate what is ahead and position jetblue to deliver long term value for our shareholders and to our crew members. Thank you. Thank you for continuing to deliver a safe and reliable operation over the quarter the improvements in our customer satisfaction score.
Speaker Change: <unk> are a direct testament to the reliable and caring service you continued to provide <unk>.
Marty: Over to Marty for an update on revenue trends and our outlook.
Marty: Thank you Joanna and thank you as well to the best crew members of industry, So turning to slide seven.
Marty: In late January we guided to what we're seeing at the time.
Marty: January bookings were strong, but February and March bookings are showing signs of softness, particularly on the shoulders and troughs.
Marty: We're pleased with the approach our team talked to identify the evolving trends early and took action in response.
Marty: We ended the quarter is the only airline with year over year unit revenue within our initial guidance.
Marty: <unk> increased one 3% year over year on guidance of down <unk>, 5% up three 5%.
Marty: Sales were down four 3% year over year in the first quarter within the range of our revised capacity guidance of down 5% to down four.
Marty: During the quarter picture relatively healthy and unit revenues held up well compared to the troughs.
Marty: Most in demand however did not materialize.
Marty: Similar rate to what we saw in the fourth quarter ended January impacting all bookings.
Marty: But more acutely affecting trough in shoulder flying.
Marty: January and February trough performed better than the trough following presence today until Easter.
Marty: Ordinarily, we adjusted our network to better match supply to the trends we're seeing.
Marty: Cutting capacity across 20 different markets centered on off peak days a week during that period.
Marty: We saw weakness across our domestic network. However, our international flying delivered relatively stronger performance with year over year.
Marty: Transatlantic RASM was up 28% year over year, and 25% fewer anthems benefiting from seasonal optimization.
Marty: The large majority of our transatlantic bookings come from U S point of sale, which has remained stable.
What and also performed relatively better than domestic.
Marty: And while the region is lapping a weaker first quarter 2024, I'm very pleased that unit revenues were up mid single digits year over year.
Marty: Premium also performed exceptionally well during the period.
Marty: In late January we launched enhanced even more offering with solid early results.
Marty: Long side continued year over year strength of preferred seating.
Marty: Both maybe expectations despite customer volumes lower than initial plan.
Marty: In the first quarter premium RASM, accordingly, and even more outperformed core RASM by high single digits.
Marty: While other low cost carriers are just notwithstanding the premium.
Marty: Customers have demonstrated strong demand from MIT and even more products for over a decade.
Marty: Now even in times of relative uncertainty.
Marty: Customers continue to split appetite for premium experiences.
Marty: And the further expansion of premium offerings is a significant component of our products have perked proudly move with inkjet forward.
Marty: Growing our loyalty program is another component of the jet for plan and during the quarter loyalty revenues grew by 9%.
Marty: Bolstered by new partnerships additional redemption opportunities and the launch of our premium co branded credit cards at the end of January.
Marty: New premium card is exceeding sign up goals, a testament to the strength of our loyalty program and the value our customers place on our brands in that product.
Marty: <unk> also remained robust up 7% for the quarter.
Marty: To complement our products with perks, we're building the best East Coast Leisure network.
Marty: Network adjustments are still in early stages of risks.
Marty: Beginning to see the initial benefits from new Blue cities, primarily secondary cities that are within the catchment area of our northeast focus cities.
Marty: This further reinforces our decision to pursue growth in markets that know and love and Jetblue brand.
Marty: As we focus in our core markets. We also recognize the importance of providing customers with more utility for triple points and greater productivity.
Marty: We are pleased to have announced earn and burn a triple points with Japan Airlines earlier this month.
Marty: We have made good progress on discussions regarding a domestic airline partnership and are expecting that at some point during the second quarter.
Marty: In the first quarter, we made solid progress on Jeff Ford and achieved our first quarter EBIT goal for us.
Marty: Reinforcing that our plan is working.
Marty: Our goals have not changed.
Marty: And there was some revenue initiatives may react slower through the capacity reductions.
Marty: The priority moves, especially liability and cost transformation.
Marty: Insulated from the macro environment jet.
Marty: Set forward remains crucial to building a more competitive and resilient jetblue as.
Marty: As planned we look forward to sharing a more detailed update during our second quarter call.
Marty: Turning to the second quarter.
Marty: We continue to see the current macro backdrop negatively impact consumer sentiment and travel demand, especially during off peak travel periods.
Marty: Resulting in a wider spread between trough and peak unit revenues.
Marty: Looking at March and April performance combined RASM.
Marty: During peaks was up high single digits.
Marty: While off peak RASM declined double digits year over year.
Marty: We saw particular weakness in domestic markets.
Marty: In times that are generally less attractive to customers.
Marty: The second quarter's booking curve is more exposed to the uncertain macro environment and associated booking trends.
Marty: And we expect unit revenue down between seven five and three 5% in the quarter on capacity. The 345 was down <unk>.
Marty: 5%.
Marty: We continue to manage aggressively our capacity based on the evolution of the demand environment.
Marty: And the midpoint of our guidance as the slide nearly five points fewer ASM in the second quarter that initially schedule at the beginning of the year.
Marty: We've made efforts to meaningfully reduce truck capacity, especially on Tuesdays and Wednesdays during the worst performing times a day.
Marty: We recently decided not to launch a Boston Halifax, Nova Scotia slightest planned.
Marty: Based on advanced bookings versus expectations.
Marty: Was it difficult decision, but we are acting swiftly to meet the demands of the environment. For example, we are introducing a fort Lauderdale <unk> Ecuador.
Marty: We have high market with better performance.
Marty: And as you move through the back half of the year, we will continue to demonstrate a bias towards action when contemplating capacity decisions.
Marty: While the environment is challenging for topline growth right now.
Marty: We do see encouraging signs that premium and international bookings are holding up better.
Marty: Blue member activity in premium related purchases now account for a large majority of our revenue, which creates a strong foundation and builds resiliency against the potential future downturn.
Marty: Our network strategy continues to build upon the strikes.
Marty: And our recent growth in the regions with high loyalty penetration is producing margins above our system average.
Marty: The changes, we are making to our network operation and loyalty program builds upon the already strong brand loyalty we have.
Marty: First quarter loyalty member engagement reach all time highs evidence of the enduring and growing strength of our brand.
Marty: Even in difficult times, we are growing and strengthening our relationship with our customers.
Marty: In building the foundation of our long term strategy.
Marty: In closing I want to reiterate that as we move throughout the year, we have a bias towards action and we are urgently moving to address evolving trends with a focus on operating margin and cash generation.
Marty: That said, we remain fully committed to our long term strategic priorities set forward is essential to meet the needs of our customers and crucial to our long term success.
Marty: We have made progress over the first quarter and we look forward to providing a more thorough breakdown of initiatives during our second quarter call.
Marty: And all of our slot for an update on the balance sheet and cost outlook.
Marty: Thank you Marty turning to slide nine.
Marty: Current macro backdrop remains fluid, but I am confident we are well positioned to weather a range of outcomes.
Marty: As Joanna mentioned when we raise funds last August we had considered the need to provide jet forward the runway to execute including better insulating. Our long term strategy is from macro volatility in the process. We raised $3 2 billion in capital through a combination of royalty backed secure.
Marty: <unk> and unsecured convertible notes.
Marty: The initial goals of this raise were three fold first we addressed our 2026 convertible note, which we paid down by 425 million, leaving a much more manageable $325 million outstanding due in April 2026.
Marty: We wanted to pre fund 2024, and 2025 Capex.
Marty: And third we sought to provide a liquidity runway for 2025 and into 2026 to support chat forward execution and build resiliency against macro economic uncertainty.
Marty: As a result, Jetblue is currently well positioned with ample liquidity.
Marty: Excluding our 600 million Undrawn revolver liquidity at the end of 2024 represented 42% of trailing 12 months revenue.
Marty: <unk> to 29% in the fourth quarter of 2007 at the onset of the financial crisis, and just 16% in the fourth quarter of 2019 before Covid.
Marty: Supplementing our strong liquidity position as a robust base of unencumbered assets valued at over $5 billion, primarily consisting of aircraft engines and slots gates and routes.
Marty: If the recovery is prolonged we believe we have the hard assets available to ensure financing flexibility.
Marty: In 2024, we also took steps to amend our order book and delivery schedule to reduce cash outlays during our transformation.
Marty: We deferred the majority of our <unk> hundred 21, neo deliveries to 2030 and beyond pushing out $3 billion of capital expenditures in the process.
Marty: In 2025, we now expect 21 deliveries from Airbus <unk> hundred <unk> and three <unk> hundred 20 ones.
Marty: We had two <unk> hundred Twenty's and one <unk> hundred 21, neo shift into 2026 and as a result capex for the year is now expected to be about $1 3 billion.
Marty: With respect to tariffs our aircraft are assembled in the U S, Canada and Europe using components from around the world we.
Marty: We do not expect a meaningful tariff impact in 2025 as most of our upcoming aircraft deliveries are assembled in the United States.
Marty: We continue to evaluate the industry wide tariff exposure outside of aircraft purchases focusing on spare parts as well as repairs happening abroad. The.
Marty: The situation is fluid and we plan to be nimble in responding to the changing conditions, and how and where we source.
Marty: Our highly valuable fleet and unencumbered asset base are the biggest levers at our disposal to preserve cash and given the current demand environment. We are actively exploring adjustments to our fleet plan.
Marty: As we previously discussed we have a number of <unk> hundred 20 aircraft, which we were planning to extend it.
Marty: It remains a great option for capacity planning flexibility, but we are currently reevaluating exactly how many of these aircrafts will be extended.
Marty: Additionally, as a reminder, we are still on track to exit the <unk> hundred 90 fleet at the end of this summer, which will provide incremental cost and maintenance savings.
Marty: Through our fleet modernization program, we have avoided over 100 billion of costs to date and expect further cost avoidance in 2025.
Marty: Looking ahead to our contractual obligations over the next three years.
Marty: Other than the $325 million remaining on our 0.5% convertible notes, we have no significant maturities beyond regular amortization and principal payments, reflecting a manageable level of upcoming cash outflows.
Marty: Turning to slide 10.
Marty: In addition to our prudent balance sheet measures and cash preservation efforts, we recognize in this environment. It is even more critical we meet our controllable cost goal so far.
Marty: First quarter marks the sixth consecutive quarter that we have met or beat our CASM ex fuel guidance and during the quarter, we achieved year over year unit cost ex fuel growth of eight 3% better than our initial guidance midpoint of 9%.
Marty: Capacity reductions we action during the quarter pressured unit cost by about one point, but we were but were offset by one point of cost savings from strong controllable cost execution and reliability driven savings.
Marty: We also had a little over a half a point of cost shift out of the quarter from the timing of maintenance events and other expenses.
Marty: We still expect the first quarter to be the peak of year over year CASM ex growth and for the second quarter, we expect CASM ex fuel to grow six five to eight 5% on capacity down 2% at the midpoint.
Marty: It should continue moderating into the second half of the year as we lap last year's pilot step up the cadence of maintenance events declines and our cost transformation program continues to ramp.
Marty: This guidance does not contemplate any potential cost increases from tariffs and we continue to work tirelessly to adapt our cost structure to the macro environment and capacity adjustments.
Marty: For the full year, while we are not reaffirming our prior cost guidance at this time, our model historically implied mid single digit CASM ex fuel growth on flat year over year capacity growth, we are managing our business to this expectation and we plan to pull all levers at our disposal.
Marty: To offset further potential capacity related cost pressures.
Speaker Change: Joanna mentioned several of the cost levers, we're working through we've put in place programs to reduce spend and set targets for corporate budget reductions.
Speaker Change: We also continue to take steps to better match resources with our flying schedule and in the first quarter, we implemented measures to better align pilot staffing with our evolving fleet mix and capacity such as offering a successful early retirement program.
Speaker Change: In addition to these cost saving efforts, we are actively working on a number of additional initiatives to optimize our cost structure and focus on our core business.
Speaker Change: Our cost reductions are intended to be thoughtful and targeted and given the macro backdrop, we are being careful not to take broad stroke cuts that may jeopardize our ability to continue executing on chat forward.
Speaker Change: We are in the midst of repositioning jetblue to deliver value throughout the cycle and as such we are continuing investments in high return projects and we remain focused on our long term priorities.
Speaker Change: To that end, we continue progressing on our cost transformation through jet forward as.
Speaker Change: As we mentioned on our fourth quarter call savings. This year are focused on technology, driven efficiencies and our operational and commercial functions enhanced planning and sourcing strategies and cross functional fuel burn optimization efforts.
Speaker Change: As a reminder, our fuel hedging program has been opportunistic and we currently do not have any fuel hedges in place.
Speaker Change: Fuel continues to moderate a lot of science suppressed revenue trends.
Speaker Change: We should fully benefit from the decline in crude prices.
Speaker Change: In the second quarter, we forecast fuel price per gallon to be $2 25 to $2 40.
Speaker Change: As we wrap up one thing is clear, we're navigating uncertain times, but this isn't unfamiliar territory for us.
Speaker Change: We face challenges as a team before and this time, we are equipped with chat forward to guide our near term actions and long term focus.
Speaker Change: In the first quarter, we saw results that demonstrated chat forward is working and we remain confident that it will help us restore sustained profitability and deliver long term value for our shareholders.
Speaker Change: At the same time, we have taken immediate steps to proactively navigate near term uncertainty, while ensuring jetblue is prepared to manage through a potential downturn.
Speaker Change: We are focused on what we can control and we'll pull all levers to manage through this unpredictable environment in support of our owners crew members and customers.
Speaker Change: Yeah.
Rob: Thank you we will now take your questions I will turn it back over to Rob.
Rob: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand to join the queue.
Rob: I would like to withdraw your question simply press Star one again.
Speaker Change: First question comes from the line of Duane <unk> from Evercore ISI. Your line is open.
Duane: Hey, Thanks, good morning.
Speaker Change: I Wonder if you could just speak to the change when the change in bookings pattern really started.
Speaker Change: What adjustments you made.
Speaker Change: Revenue management, obviously, you are taking some capacity out.
Speaker Change: And how you would characterize bookings patterns now.
Speaker Change: Some others have spoken to stability.
Speaker Change: And I guess the most important what are you assuming with respect to the west the rest of the quarter in a month like June specifically.
Speaker Change: Hey, Duane it's Marty thanks for the question.
Speaker Change: Let me go back to January and it's funny when we did our guide.
Speaker Change: We had seen we definitely seen bookings slowing down in January and.
Speaker Change: Frankly, when our competitors were guiding higher we were looking at the data that we're seeing from the from arc and other sources and thinking I don't know what they're seeing because it doesn't look that great for us. So we guide what we guided we took the hit for it turns out we were right.
Speaker Change: What I mentioned that again, but.
Speaker Change: As far as what we've seen in bookings we have seen a couple of step down since then and I think that's why we reacted so aggressively with capacity cuts.
Speaker Change: In February we are carrying much capacity and we kept some paper capacity at the same time.
Speaker Change: Again, we've been pretty aggressive about reacting to the bookings, we're seeing by pulling that capacity I would say as far as where we are right now we're probably three to four weeks at a plateau.
Speaker Change: And what we're guiding for second quarter is based on the trends we're seeing today. So we're not assuming a recovery when obviously when your first step back but in general I think we've had a relative period of stability recently and hopefully this is a plateau that will come on for a while until we start bouncing back.
Speaker Change: And if we just think about your.
Speaker Change: Focus origination areas, New York and Boston.
Speaker Change: Do you think theres something going on with those geographies or.
Speaker Change: Maybe it's more a competitive capacity situation for you in those geographies because I thought the message was that maybe some of that competitive build was was moderating.
Speaker Change: Yes, it's a great question and obviously, we dig into this and as much details. We can we start with the art data.
Speaker Change: Many airlines use but not all that many airlines around it but not all but.
Speaker Change: Clearly showed from the beginning that.
Speaker Change: This seemed to be a bit of a.
Speaker Change: Northeast led slowdown of demand more so than other parts of the country.
Speaker Change: Bye bye bye multiple points.
Speaker Change: Again, we'd like to triangulate with other data, we expect time with our bank partners at Barclays and with Mastercard, Our network and we've got some really really great data from Mastercard and it is clearly showing that as far as the air travel. It is very much focused on the northeast and to a lesser extent the west coast. So I.
Speaker Change: I would not do something as simple as to say this is a red versus blue recession, or whatever you want to call. It but it does seem like the coast seem to be impacted a little bit more.
Speaker Change: And frankly, that's really what's driven our capacity strategy as.
As we've mentioned, we've been pulling pretty aggressively our trough capacity Tuesday, Wednesday Saturday nights.
Speaker Change: In the northeast, we just added some capacity in Fort Lauderdale, with new frequencies into Fort Lauderdale, South to the Caribbean.
Speaker Change: <unk>.
Speaker Change: And frankly, we're going to do what we have to do to make adjustments like this we just we just cancel announced I think last week announced the cancellation of Halifax, which I think in the history of the company, we have never cancel the city before it opened but I think it was the trends we're seeing in U S Canada.
Speaker Change: Demand and.
Speaker Change: More importantly, what we're seeing in the bookings on the airplane. It's just not it was not to be accretive for us anytime soon so we figured we'd been rip off the band-aid now and move forward.
Speaker Change: I appreciate the thoughts.
Speaker Change: Your next question comes from the line of Savi <unk> from Raymond James Your line is open.
Savi <unk>: Hey, good morning, everyone.
Speaker Change: I was wondering if you were able to provide a little bit of a range for the second half kind of capacity outcome, just maybe like a realistic upper and lower bound assuming the current environment.
Savi <unk>: Hey, Savi, so I'd say given.
Savi <unk>: We've got a couple of scenarios laid out as far as what we're expecting I would not want to go as far as a guide a number for the year, we will certainly be measurably down from what we had expected at the beginning of the year based on the trends, we're seeing right now, but we're going to be very opportunistic based on the demands that we see and frankly I remain optimistic that this is a transitory.
Savi <unk>: Uhm that we're in right now.
Savi <unk>: I've been through so many financial crises and recessions before this is different.
Savi <unk>: We're driving it and I think that because obviously that could change relatively quickly. So we're gonna be went off domestic and I think the best guidance I can give you is we will react to the demand we're seeing at the time.
Savi <unk>: Airlines seem to let it and my hope is that as things change that airlines will lead us out of it.
Marty: That's helpful. Thanks, Marty.
Savi <unk>: And then you mentioned.
Speaker Change: Domestic partner, Marty that could be announced into Q could you remind us kind of what that partnership brings to the table for Jetblue and where we can start to see benefits from such a partnership.
Savi <unk>: So partnerships I need to make sure I.
Speaker Change: Reserve My comments based on what we have said publicly and what.
Speaker Change: What we've said is we are looking at that we're talking to multiple airlines about domestic partnerships I think we're getting very close to making announcements expect to be making announcement this quarter and.
Speaker Change: And as far as the benefits that we expect to offer to our customers. The most important thing is number one.
Speaker Change: A significantly higher network opt.
Speaker Change: Opportunity for earn and burn a triple points, which we think greatly improves utility of true blue.
Speaker Change: That means for example.
Speaker Change: Today, if you are a customer in the northeast and you love Jetblue for leisure, but.
Speaker Change: <unk> you have to go to Omaha or Boise.
Speaker Change: Places that you can't earn two viewpoints on now and whether it's partnership goes forward you will be able to.
Speaker Change: And the second thing is.
Speaker Change: I'm really excited for.
Speaker Change: Just the overall broadening of the network opportunities not just connectivity, but also.
Speaker Change: Just to sort of better.
Speaker Change: Opportunities for our customers to have to find more places with more frequency so as far as one of the benefits could come.
Speaker Change: Uh huh.
Speaker Change: We do have a number of inkjet forward for partnerships. It is a number that does not assume a partnership of the size.
Speaker Change: As we've said we'll be updating.
Speaker Change: The progress on <unk> in the next quarterly call and if we do assume we do side of the deal are completed you announce it if we do need to update that number will do that at the time, but we're really optimistic about what this means for our customers.
Speaker Change: For our investors.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Jamie Baker from Jpmorgan. Your line is open.
Speaker Change: Hey, good morning, Marty so following up on that.
Speaker Change: First question is when you say domestic partnership.
Speaker Change: Does that mean partnership with the domestic airline or providing domestic feed to a non domestic airlines given the Omaha example, that you gave in response to sorry.
Speaker Change: Spec.
Speaker Change: The former.
Speaker Change: But if I could just confirm that.
Speaker Change: Sure I mean as a reminder, we already have 48 or 49 partnerships with international carrier exactly.
Speaker Change: <unk> this is a domestic airline with a.
Speaker Change: Larger network, so yes, okay. Okay.
Speaker Change: It's the former.
Speaker Change: Okay. Thanks.
Speaker Change: And then.
Speaker Change: I guess for Joanna so.
Speaker Change: Every downturn.
Speaker Change: I wonder.
Speaker Change: With tier one franchises might emerge potentially stronger on the other side.
Speaker Change: Thank you.
Speaker Change: I think the United made some fair and accurate comments about.
Speaker Change: Southwest being either align in the past.
Speaker Change: And harnessing the power of the downturn all that kind of stuff. However, you want to put it so when I go down the list of U S Airlines and I get to Jetblue.
Speaker Change: Not readily apparent to me, whether there might be any silver lining to the current environment and thats not necessarily a bad thing at all.
Speaker Change: I guess my question to you.
Speaker Change: What areas of your business, where maybe the timing of certain initiatives.
Speaker Change: Aspects of jet forward.
Speaker Change: That might be.
Speaker Change: Yes.
Speaker Change: In some way shape or form by the downturn.
Speaker Change: Yeah. Thanks for the question.
Speaker Change: I think we're extremely happy with how that forward is performing.
Speaker Change: So I think we've got this great long term strategy and I'll emphasize long term, because we're not managing that for quarter to quarter as a long term strategy that will get jetblue back on the path to profitability and then at the same time, we're taking.
Speaker Change: Closer in tactical actions to manage the underlying macro environment. So when I look at jet forward, it's the right strategy for Jetblue it leans into our strength.
Speaker Change: And as you look at early proof points, particularly around the first priority move which is reliable and caring service I could not be more proud with the progress that we're seeing there.
Speaker Change: And that's really a leading indicator in a we've improved <unk> every quarter since we've launched jet forward, we'd improved NPS four consecutive quarters in a row. We are at the top of the industry, where the most improved in the Wall Street Journal and industry, leading and so when you think about what matters most your brand customer.
Speaker Change: Reoccurring customers coming back time and time again. These are very early indicators that and the cost savings that flows from all of that running more on time operation. These are very early indicators at jet forward is working then you get into the other pillars. So 20% of the network is currently in ramp.
Speaker Change: And you will see that continue throughout this year products and perks are meeting or exceeding our targets are even more product that we launched back in January improved net promoter score by 18 points. The Premier card that we launched far surpassed our initial expectations in terms of sign ups loyalty continue.
Speaker Change: To ramp it's 12% of our total revenue, we're beating cost six quarters in a row. So when you look at jet forward, it's aligned with the latest industry demand trends premium International and then we've got strong liquidity to enable us to have some runway to execute jet forward get our first class product rolled out but also now.
Speaker Change: Mitigate through some uncertain times. So I think the headline is we've got the right strategy for the long term. It's working obviously the macro backdrop is challenging and it may delay some of the some of the jet forward earnings but these these pillars are working the strategy is working and so we need a little runway to complete <unk>.
Executing it but at the end of the day the brand the product offerings are super strong and that's what drives that's what that's what drives performance.
Speaker Change: Okay I appreciate the color. Thanks, Joanna Thanks Marty.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Michael Lindenberg from Deutsche Bank. Your line is open.
Michael Lindenberg: Oh, Hey, good morning, Hey, first of all I, just I wanted to.
Speaker Change: With you on this.
Speaker Change: Pratt and Whitney compensation situation I think last quarter, you were kind enough to provide us what that headwind was it was a couple of points I think direct and then there's an indirect impact and thats been building. It does look like.
Speaker Change: We now have more airplanes on the ground and say, what we were a year ago, what like what's the timing around potentially settling that is that something that it's better for you to settle it sooner or does this go on for a few years because.
Speaker Change: Margin underperformance, what it is.
Speaker Change: <unk> both on a revenue side of the cost side I mean it is.
Speaker Change: It's a real sort of albatross around your neck here.
Speaker Change: Where are we and what's what's kind of the game plan here.
Speaker Change: Sure. Thanks for the question.
Speaker Change: So first off we previously told you guys that we would have.
Speaker Change: And the number of aircraft on the ground. This year in the mid to high teens, and we actually have seen improvement from Pratt and Whitney. So today, we sit here and we actually only have 10 aircraft on the ground.
Speaker Change: So we have been pleased with the progress that we're seeing from prime operationally. So there are two dry three drivers to that improvement.
Speaker Change: First engines are just staying on wing longer so I'm not having to go in the shop as soon as we anticipated and number two on product supply chain is improving and then number three the actual turn time once the engine goes into the shop is slightly improving so we're very pleased with the progress.
Speaker Change: That we're seeing like quite frankly this is happening we're getting aircraft back at a time, when we don't necessarily need capacity.
Speaker Change: When we do get on the other side of this macro backdrop environment challenges.
Speaker Change: This will be a tailwind for jetblue and to your point.
Speaker Change: We previously highlighted in January that the Pratt and Whitney.
Speaker Change: Great that we're under is driving three points of margin degradation. So again that will be a tailwind.
Speaker Change: In the future for Jetblue in terms of their compensation.
Speaker Change: It continues to remain fluid with Pratt and Whitney we continue to work with them.
Speaker Change: I don't have any updates on that today.
Speaker Change: To ensure that we get adequate compensation based on the challenges that we've been facing over the last few years.
Speaker Change: Okay, but just to be clear, you're not booking any GTS related compensation in your P&L right now I'm only asking because many GTS impacted operators are all booking it through their P&L.
Speaker Change: Is that right.
Speaker Change: We do not have any pratt and Whitney assumptions baked into our full year guidance for 2025. The correct. We are not booking anything.
Speaker Change: Okay, Great and then just second.
Marty: Marty just new markets.
Speaker Change: No.
Speaker Change: Adding service.
Speaker Change: Thank you again.
Speaker Change: Given just the fact that this is a challenging year should we expect to see any new dots on on the route map. This year or is all of that now on hold because of the very unclear outlook.
Speaker Change: Yes.
Speaker Change: It's funny I'm actually known is asking a question I'm not sure. If we say this stuff there'll be multiple new data coming later in the year on the roadmap.
Speaker Change: Okay exciting.
Speaker Change: Multiple it could be too but definitely.
More than one more than one.
Speaker Change: [laughter].
Speaker Change: Uh huh.
Speaker Change: Sure.
Speaker Change: Your next question comes from the line of Tom Fitzgerald from TD Cowen Your line is open.
Speaker Change: Everyone. Thanks, so much for the time.
Speaker Change: I was just curious if the spread between premium and.
Speaker Change: And core RASM.
Speaker Change: That's how you or what are your outlook for that is for <unk> and the rest of the year do you expect that spread to widen.
Tom Fitzgerald: Hey, Tom Thanks for the question so.
Tom Fitzgerald: It's a great question because honestly there are two important numbers, there, which is what do we expect the coach RASM to do and we do expect the premium rather than do I think we continue to see progress on premium RASM going up mid single digits and climbing right now as far as year over year growth in premium RASM.
Tom Fitzgerald: Our hopes are that with the changes, we're seeing industry capacity and that capacity that coach RASM will continue to go up a little bit so.
Tom Fitzgerald: I don't expect that get to widen, but im hoping its because the bottom of the.
Tom Fitzgerald: The lower number in other words, the tobacco airplane RASM will continue to go up so I.
Tom Fitzgerald: We remain optimistic.
Tom Fitzgerald: Taking a lot of action ourselves the capacity we have.
Tom Fitzgerald: Second quarter capacity.
Tom Fitzgerald: Capacity cuts one in last weekend and you guys will see them a couple of days.
Tom Fitzgerald: And frankly, the industry overall seems to be reacting in a consistent way, which is as demand comes out capacity comes out.
Tom Fitzgerald: And hopefully that will help shore up what we're seeing in the back of the airplane.
Speaker Change: Okay. Thanks, that's really helpful. Marty and then I'm just curious what you guys are seeing in the VFR markets versus beach markets in Latam, We had one on the Mexican carriers and some other airlines I just talked about VFR demand being pretty depressed on trans border. So just curious what youre seeing given your franchise. Thanks again for the time.
Tom Fitzgerald: Thanks Tommy.
Speaker Change: We watch it very closely you know I think if you go back to 2008 2009. It was a VFR led recovery and frankly, we have a line. We use internally is about how bad things get you always want to see your mom and.
Tom Fitzgerald: We were concerned based on some of the stuff that's happening with.
Tom Fitzgerald: Foreign arrivals into the U S that we'd see that we have not really seen any significant drops in our VFR traffic. So far so we're cautiously optimistic that that market is holding up pretty well, obviously, Puerto Rico, not an issue whatsoever, but for markets like Jamaica Dominican.
Tom Fitzgerald: There are customers, who are less likely to go back and forth. We're just not seeing it right now.
Speaker Change: Your next question comes from the line of Dan Mckenzie from Seaport Global Your line is open.
Speaker Change: Hey, good morning, Thanks, guys going back to the Pratt and Whitney overhang, what does your line of sight look like on EOG is in 2026.
Speaker Change: Just given what you highlighted I am wondering if you could be in a better situation next year.
Speaker Change: Thanks for the question Dan listen this situation with Pride and I don't want to get ahead of our skis, it's pretty fluid and while we are seeing some signs of improvement and we're still working through 2026 and beyond Oh jeez, so more to come.
Speaker Change: Understood Okay.
Speaker Change: And then bigger picture the year has taken a turn for the worse. The question is going back to a prior question on jet forward. The question here is whether there are aspects of gip forward that you could accelerate or bring forward and it seems like the partnership is one of those areas.
Speaker Change: Or is it just as simple as things got bad really fast because of the macro and if we could just get rid of tariff things would get better really fast.
Speaker Change: Yeah, I'll take that Dan again, if we can read the tea leaves.
Speaker Change: Tell you things will get better faster tariffs go away I think we'd be in a different industry.
Speaker Change: At the end of the day I think get forward has got a very clear set of initiatives and we're always adding new ones and adjusting as we kind of move forward through the plan, but there are some that might produce early there are some of the micro. These later I think the partnership com.
Speaker Change: Comment is a good one which is we think there could be upside with the partnership, but we need to kind of finalize that and get that announced.
Speaker Change: Honestly some of the initiatives, particularly around net promoter score and 14 are actually ahead of plan, which is great. Because it shows that our brand is beloved and is resilient and making nice progress. There. So I think you could see some early early wins there as you look at some of the revenue initiatives. Some of those are tied to volume so they'll have a bit of a <unk>.
Speaker Change: Drag based upon the economy, but we're looking for ways to offset those and then continuing to maintain a level of focus on cost loyalty remains very resilient revenues up 9% co brand stands up 7%.
Speaker Change: So its strong and growing even in an environment, where we're seeing air travel take a bit of a step back due to the macro climate. So we've got a pretty diverse.
Speaker Change: As I said revenue streams that we didn't have back and await through premium and loyalty and I think that'll continue to be the area, where we see progress perhaps ahead of what we're seeing on the airline side due to the macro backdrop.
Speaker Change: Thanks for the time you guys.
Speaker Change: Yes.
Speaker Change: Your next question comes from the line of Andrew <unk> from Bank of America. Your line is open.
Andrew: Hey, good morning, everyone.
Speaker Change: First one just on the $1 3 billion of Capex. This year I know you raised the liquidity in August but do you still do you still plan on using kind of current cash.
Speaker Change: On this capex or how should we think about some other form of financing right now just to preserve certain cash levels.
Speaker Change: Yeah. Thanks for the question Andrew So we have 21 deliveries. This year three of them have already delivered and we did pay for them in cash and you know I given our liquidity level on the strategic financing that we did last August if the macro backdrop stays as is through the end of the year.
Speaker Change: <unk> I think we will feel comfortable with our projected year end liquidity number as a reminder, we tend to target about 20% liquidity as a percentage of trailing 12 months revenue and if the macro backdrop deteriorates further.
Speaker Change: We will assess I'm going back to the financing market to help finance the remaining deliveries that we have this year.
Speaker Change: Yeah.
Speaker Change: Okay understood and then.
Speaker Change: I know theres been.
Speaker Change: Questions with regards to the partnership but just with regards to the.
Speaker Change: The American released last night with regards to the lawsuit what does this relate to anything you can discuss some kind of dollar amount theyre, claiming is it material anything you could provide there would be helpful. Thank you.
Yes, so we can't see much obviously.
Speaker Change: We pulled the same market from the docket, the equaled and you haven't been served yet but.
Speaker Change: I will say since the court order that terminated NEA, we've been working with American to wind down the remaining aspects.
Speaker Change: This is not an unexpected turn.
Speaker Change: And it's part of just showing up any monies owed between the parties and that's about all we can say at this point.
Speaker Change: Understood. Thank you.
Speaker Change: Your next question comes from the line of Catherine O'brien from Goldman Sachs. Your line is open.
Catherine O'brien: Good morning, everyone. Thanks for your time.
Speaker Change: Couple of cost actions, we're taking it sounds like they will ramp as we move through the year such as the pilot early retirement program. If there's further downside risks in the second half capacity outlook and capacity ends up being down year over year should we think about CASM ex <unk>.
Speaker Change: Being somewhere up in the high single digit range given your comments around mid single digit inflation on flat capacity or could it be better than that based on what you've.
Speaker Change: Accomplished year to date.
Speaker Change: Yeah. Good morning, Katie so in regards to controllable cost extremely proud of the team we have a really good track record we've hit our controllable cost guide for six consecutive quarters. So.
Speaker Change: And I have the utmost confidence that the <unk>.
Speaker Change: Team will continue to deliver I did mentioned in my prepared remarks that our model historically implies a mid single digit CASM ex fuel growth on flat capacity.
Speaker Change: Obviously, we withdrew our full year controllable cost guide. This morning. However, our aspiration is to continue to work towards hitting that we're.
Speaker Change: We're taking action across the board. So we are obviously, reducing capacity to better align with the van backdrop that is and does put pressure on the cost side of the equation.
Speaker Change: But we are better aligning our resources to the new level the capacity.
Speaker Change: We are reducing all discretionary spend we've given our leaders cost targets above and beyond the 2025 plan. We are revisiting our fleet plan to to SaaS and the ROI on certain fleet investments. So we are actioning and we will pull them all let.
Speaker Change: <unk> that we need to.
Speaker Change: In order to execute.
On the controllable cost guide in terms of the sequencing throughout the year. One age was always expected to be a higher controllable cost part of the year versus two age. So we do have expectations that are or jet forward cost transformation, we'll continue to ramp up.
Speaker Change: In the back half of the year and helped contribute to our full year operation of the original controllable costs.
Speaker Change: Yes.
Speaker Change: Got it thanks, so much that color as well one more on the domestic airline partnership you know I know of a stay tuned for the official announcement, but now we know you won't be pursuing in the northeast the lines with American I guess, what from that partnership could you learn did not work and then how is that informing the new proposed partnership. Thanks, Yeah, I think I'm going to take a hard path.
Speaker Change: On that.
Speaker Change: At the end of the day, we're going to be announcing another.
Speaker Change: Other partners down the road hopefully in this quarter and excited.
Speaker Change: Two to be doing that and we'll let sort of the wind down of the NEA take place as it has been for the past couple of years, but we are we've been meeting with multiple carriers and and you know obviously the value that we think of regarding the partner, we're announcing drive stripes more for jetblue than other carriers that made it to consider.
Speaker Change: Uh huh.
Speaker Change: Fair enough I'll wait and see.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Brandon Glinski from Barclays. Your line is open.
Brandon Glinski: Hey, good morning, everyone and thanks for taking the question.
Brandon Glinski: This one is for Marty or or maybe both but can Marty can you talk to the off peak challenges because I know we've heard that for a number of years now does not just at your airline by others.
Brandon Glinski: With peak versus non peak demand post pandemic and maybe the challenges that it presents though from like a variable and fixed cost perspective, because if we're going to dial down utilization then it throws off your labor efficiency and things like that so how do you approach off peak markets and off peak flying right now.
Bryan: Hey, Bryan Thanks.
Bryan: I mean this is I think every <unk> seen one slowdown youre seeing one slow down they all act differently and I think they all need their own strategies.
Bryan: I'll say this one we have seen a much more.
Bryan: Aggressive aversion from peak trophy from troughs than we've seen historically so this has been a much more.
Bryan: Trough adverse demand set that we've seen historically and it's why we pulled so much trough capacity.
Bryan: I mean fundamentally.
Java spoke capacity, where customers want to fly and what we've seen during the peak is that we have good demand, we have higher RASM and we'd like to find the ones out of the airplanes during the peaks to make sure that we satisfy the customer demand, but the demand of customers to fly and troughs, there's no upside to flying planes 60, 70 people on them.
Bryan: I regret not being able to serve the customers who don't want do you want to fly in the troughs, but ultimately its a business and our job is to make money. So we have been very very aggressive cutting trough capacity and I think specifically if you look at what we just said in the script about second quarter go down five points.
Bryan: From the original guide that is very very heavily trough focus. So it gives you an idea of how much we full trucks.
Bryan: Dakota.
Bryan: First on the cost front, yeah, I mean listen what we're trying to do this and it with as much advanced notice as possible I mean to really capture some of the labor savings we need like two to three months of notice so that the team is really working.
Bryan: <unk>, two H and trying to action further capacity pool. So we can capture as much labor savings as possible. In addition to that I mean, we are obviously in the trough periods trying to continue to offer.
Bryan: R&R programs across some of our work groups. We just executed the pilot early retirement. So we are pulling levers where we can in terms of right sizing the workforce given the drastic capacity poles.
Bryan: Okay.
Okay I appreciate the response to both and then Ursula on maintenance costs. I think you said you should see some alleviation in cost pressure there as the year progresses, but maybe I misheard can you talk to that in the context of potentially extending or not extending some of your older <unk> hundred twenty's.
Bryan: Yeah, Great question. So first off the number in our next generation technology and has the GTS. Those are all on flight hour agreement. So as we pulled down capacity naturally and those flight hours will shift to the right and so the timing of some maintenance spend.
Bryan: It's going to continue to shift that.
Bryan: The second component of the potential maintenance savings as we did anticipate keeping in the fleet 30, <unk> hundred 20 aircraft and we are revisiting that decision. They obviously need a certain level of investment whether it be interiors or significant maintenance shop visits.
Bryan: We're revisiting that decision in light of the capacity backdrop as well as just like cash preservation measures. So more to come on the results of that but early indications is that we won't do the full 30, and we will scale back so that we'll achieve some level of maintenance savings as well.
Bryan: Thank you.
Speaker Change: Your next question comes from the line of Ravi Shanker from Morgan Stanley. Your line is open.
Ravi Shanker: Great. Thanks morning, everyone.
Speaker Change: Couple of follow ups from you Firstly just on the.
Speaker Change: The trend by month, you said stepped down since January but just wanted to confirm that you haven't seen much of a step down since the March update.
Speaker Change: Just also on the trough commentary does this also mean that youre seeing.
Speaker Change: And is that potentially a RASM opportunity.
Ravi Shanker: Hey, Ravi Thanks for the question first as far as the trends.
Speaker Change: We clearly saw a step back in January.
Ravi Shanker: As you went into February it got worse I think March was the worst of the trough so far.
Ravi Shanker: Luckily April had a nice peak sort of 10 to 12 days of peaking there which helps a lot and we really took advantage of that and we had RASM up high single digits during that period. So when people really want to fly during the peak.
Ravi Shanker: They are there and we have service for them and we're getting good yields at that point.
Ravi Shanker: With respect to the.
Ravi Shanker: The opportunity going forward.
Ravi Shanker: One of the questions that was mentioned earlier was change of revenue managed strategy and I didn't hear one of my competitors mentioned that which I didn't fully understand when it was sad because the recommended strategies very much respond to demand and.
Ravi Shanker: It is very clear that we're in a pattern now where.
Ravi Shanker: The only time, when we have the opportunity to take advantage.
Ravi Shanker: During the peak so the team is very much very much focused on making sure that we're competitive in the peaks and that where we're getting the revenue we can for our customers, who really want to fly during the peaks, but at the same time, we have very low fares during troughs. So.
Ravi Shanker: Would love for some of those customers once all the troughs, it's just less of them seem to be doing that now that had been historically.
Ravi Shanker: Understood and then maybe as a follow up I know you had mentioned in your prepared remarks that youre seeing.
Ravi Shanker: Solid step up in demand in secondary cities.
Ravi Shanker: Is that a little bit of a surprise given the macro given this trough weakness maybe some weakness at the low end of the market.
Ravi Shanker: Is that something you'd expect to see this kind of pace.
Ravi Shanker: Well, it's funny the examples we gave her.
Ravi Shanker: We sort of talked about internally of our islip in Manchester.
Ravi Shanker: Cities, where we've had request for jetblue to be there for many years, we had not been there.
Ravi Shanker: And frankly, two cities that had a very long history of Youll see she's got low cost carrier service to Florida. So.
Ravi Shanker: A very formula competitor. So I think we look at that respectfully and said these markets are well established and there's an incumbent who customers love here.
Ravi Shanker: And we learned that they very quickly learned to love Jetblue and we've been very happy with what <unk> seen in both cities. So from that perspective. It was a great reminder of the power of this brand and I think going back to Japan. His comment earlier about how we're going into this.
Ravi Shanker: Secondary type period, and how we're going to come out.
Ravi Shanker: We've got.
Ravi Shanker: Incredible improvements in NPS, our crew members to delivering a fantastic quality product.
Ravi Shanker: We have a fleet, that's either new or being refurbished.
Ravi Shanker: We're really hitting our stride and if you look at the value proposition that we have and I slept for Manchester or even at all.
Ravi Shanker: Body versus southwest Who's been there for 25 plus years.
Ravi Shanker: Fantastic value proposition and I think customers are reacting to it so I did it might be that might affect the crew members for delivering a great product, but I can't thank them enough I mean, we are absolutely killing it out there.
Ravi Shanker: Very good thank you.
Ravi Shanker: Yeah.
Speaker Change: Your next question comes from the line of Scott Group from Wolfe Research. Your line is open.
Speaker Change: Hey, Thanks, Good morning, just.
Speaker Change: Marty just a quick follow up to that last question about I think you were talking about I guess.
Speaker Change: Easter spring break.
Speaker Change: But 10 days or so you had high single digit RASM.
Speaker Change: That suggests it may and June RASM.
Speaker Change: Deteriorate relative to like the midpoint of that five 5% guidance for the full quarter.
Speaker Change: Well I mean, I think if you look at our guide of second quarter versus first quarter I think it sort of speaks for itself as far as how second quarter books on a relative basis.
Speaker Change: And I.
Speaker Change: I fundamentally recognize that we had a tough first quarter. We also had a very good January so it's been very very choppy month by month.
Speaker Change: We do have a nice peak in.
Speaker Change: And they around Memorial day.
Speaker Change: This year the vacations.
Speaker Change: The CB.
Speaker Change: The Metro New York schools are getting out almost the very end of June.
Speaker Change: That's about a week later than it had been historically so that's definitely watch extremely closely again really is your airline when kids are out of school is when we really make sort of really make hay. So we watch it closely.
Speaker Change: But in general, it's a pretty it's a pretty trust fee quarter.
Speaker Change: This year okay.
Speaker Change: And then just one follow up for Marty.
Speaker Change: Marty has got a comment earlier, hey, Doug, we're not giving a full year guide, but the results are.
Speaker Change: Worse than we initially thought from an earnings standpoint, I guess is there a what is the cash flow implications of that is there any way to like.
Speaker Change: Think about like a cash.
Speaker Change: Range of cash burn.
Speaker Change: We'd expect this year, whereas it is the same.
Speaker Change: You hit on a one for one basis or a cash flow are there any offsets just trying to understand the puts and takes on cash flow.
Speaker Change: So let me start with Scott and I'm going to give it up the Earth's one way one thing I want to stress is we recognize it is really important to get capacity up fast.
Speaker Change: The quicker we get it out of our selling schedules the quicker that we have the opportunity to get the costs out with our operating teams. So I own. The first piece of that responsibility, which is making sure that we're moving fast on this one and I'll leave it to us for the second half.
Speaker Change: Yeah listen Scott I mean, we didn't affirm our full year guide today I mean, clearly we do have the $1 3 billion and capital expenditures. This year and you know what I will say is if the macro backdrop stays as is I will still feel comfortable with our year end liquidity.
Speaker Change: So as a reminder, we target a 20% trailing 12 months, we will be healthier than that.
Speaker Change: And so we're.
Speaker Change: We're obviously watching it closely we're trying we discuss today a lot of the levers that we're looking to Paul.
Speaker Change: Mitigate the burn so.
Speaker Change: It's our number one priority is to reduce the burn them and ensure that we continue to maintain a healthy balance of liquidity and unencumbered assets.
Speaker Change: Thank you guys.
Speaker Change: Your next question comes from the line of Stephen Trent from Citigroup. Your line is open.
Stephen Trent: Good morning, everybody and thanks for taking my question.
Speaker Change: I, so I wasn't sure if I heard you mentioned that when you were talking about RASM for example that Latam was up mid single digits.
Speaker Change: Year on year I wasn't sure if you had any color.
Speaker Change: Regarding whether we paid sort of bifurcate, what's happening in Puerto Rico versus the rest of that region. For example are the trends much different or are fairly similar.
Speaker Change: I would say that the trends and just quick question Stephen I think the trend that Puerto Rico is not quite as high and Thats, mostly because a lot of competitive capacity coming in but I will say the same time back to my counterpart isolate Manchester I value proposition is very very very good compared to our biggest competitor there and they've been pretty aggressive putting on capacity, which I think is a testimony success.
Speaker Change: We've had in that market so.
Speaker Change: We remain really bullish on Puerto Rico, We've got you got lots of coming up hopefully relatively soon about another move in Puerto Rico.
Speaker Change: And it's a really really important market for us so.
Speaker Change: I would say that I would not hold up Puerto Rico's and help buyer as far as our Latin performance.
Marty: Oh, great I appreciate that Marty.
Marty: Just one really real quick follow up you've given very helpful color on capacity and when we think about tariffs you know some of your competitors have sort of outright said that they would just not pay any tariffs.
Marty: And I know you talked about U S production for the stuff Youre sourcing.
Speaker Change: Are you sort of willing to draw the line on Europe.
Marty: Your tolerance for tariffs or lack thereof or it's.
Speaker Change: Something you feel that.
Speaker Change: We can kick the can down the road.
Speaker Change: The next year maybe.
Speaker Change: Yeah listen we we have 18 aircraft deliveries remaining the vast majority of those are made in the U S. We only have three aircraft.
Speaker Change: That are coming from Germany, and we're essentially exploring all of our options on how to mitigate that impact so.
Speaker Change: More to come.
Speaker Change: Okay. Thanks for that.
Speaker Change: And your final question comes from the line of Tom <unk> from UBS. Your line is open.
Maria: Good morning, this is Maria.
Speaker Change: Murray on for Tom Water-witch. Thanks, a lot for taking my question.
Speaker Change: Granted the demand backdrop is less than ideal currently but if we go by your second quarter guidance. It would seem that you continue to underperform relative to both domestic as well as the network peers.
Speaker Change: This is despite all of the solid progress on chip forward. So the question really is.
Speaker Change: Are all the gains from jet forward fully incremental or as a result of jet forward, maybe youre slipping in areas of the business not touched by Jack forward and Thats, what showing up on the P&L on in your guidance with respect to your underperformance relative to your peers. So just some thoughts here would be helpful.
Speaker Change: Sure. Thanks, Doug. Thanks for the question I will point you back just so we get a slip up and while we're a flip through it while I'm talking to page five of the deck because we've laid out on page five what we've actually capturing at Ford So far actually as I say in first quarter of 'twenty five versus what we're laying out so the jet forward is phasing in over over.
A time period, and that's actually part of the guide as you laid it out I would say in general as far as the under performance.
Speaker Change: Absolutely I would love to see a better progression from first quarter second quarter I think as we look at what we're hearing from the industry with respect to the drivers of demand right now.
Speaker Change: Much underscores international currently or Underexposed in premium, although that's going to get much better going forward when do we.
Speaker Change: S.
Speaker Change: And so all the domestic first class product.
Speaker Change: And from a.
Speaker Change: From a business model perspective, we also have a lot of capacity to tradition transition right now.
Speaker Change: Also mentioned that.
Speaker Change: Some of the demand challenges are being sort of north sea heavier in the northeast. So they are elsewhere. So that my view is you play the cards you're dealt that caused your results. This is a business model as it is right now it'll be much better manage it forward. This is the environment. We're in right now what do we do about it we adjust capacity, but because we can we get enough SaaS so that the entire team.
Speaker Change: You can get.
Speaker Change: The cost out more aggressively so we can be cash flow positive as we pull things like this none of this changes our long term goal, we know that JAK, Florida, right, Florida traditions company, we're making the progress we expect to make up right now with last time, we reported we said we're putting ahead, we sort of view that today, we're in a great spot with respect to where we stand I'd rather not be in the demand environment that we're in.
Speaker Change: And anyone who says otherwise.
Speaker Change: Is lying I mean, this is not a preference, but I think we have the right tools to be successful and to move forward. The plans you've laid it out.
Speaker Change: Got it Thats helpful.
Speaker Change: Quick follow up can you give us some sense of what portion of May and June are booked at this point.
Speaker Change: Yes.
Speaker Change: Like 70 something percent booked right now June is just under 50, so were pretty heavily booked at this point.
Speaker Change: And again all built into the guide that we will perform at the levels, we're seeing right now as far as bookings.
Speaker Change: Understood. Thanks for that and good luck with the rest of the year.
Speaker Change: Thank you.
Speaker Change: And this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: