JetBlue Airways Corporation

Good morning. My name is Nora. I would like to welcome everyone to the JetBlue Airways Second Quarter 2020 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's Vice President of Investor Relations, David Pinson. Please go ahead.

Thanks, Nora. Good morning, everyone. Thanks for joining us for our second quarter 2020 earnings call. This morning, we issued our earnings release, our investor update, and a presentation we'll reference during this call. All of those documents are available on our website at investor.jetblue.com and have been filed with the SEC. Joining me here in New York to discuss our results are Robin Hayes, our Chief Executive Officer, Joanna Geraghty, our President and Chief Operating Officer, and Steve Priest, our Chief Financial Officer. Also joining us for Q&A are Scott Lawrence, Head of Revenue and Planning, and Dave Clark, VP of Sales and Revenue Management. This morning's call includes forward-looking statements about future events. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, and therefore investors should not place undue reliance on these statements. For additional information concerning factors that could cause results to differ from the forward-looking statements, Please refer to our press release, 10Q, and other reports filed with the SEC. Also, during the course of our call, we may discuss several non-GAAP financial measures. For reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website.

And now, I'd like to turn the call over to Robin Hayes, Jeff Lewis CEO. Thanks, Dave, and good morning, everyone, and thank you for joining us. Our thoughts are with all of our crew members who have been impacted by the ongoing pandemic, especially the families, friends and loved ones of those we have lost at JetBlue. I'm sorry to say that we are deeply saddened to have lost two more crew members to coronavirus, both on July the 16th. We remember Brittany Jones from our airport operations team at Fort Lauderdale, who joined JetBlue just over a year ago. She was known for her kindness and optimism with customers and her colleagues alike. We also remember Orlando Tavares, who was a quality control inspector in technical operations. And he most recently served on the temporary duty assignment in Fort Lauderdale. During his eight-year career with JetBlue, he exhibited our values, working with passion and pride in everything he did, and considered himself quote unquote JetBlue 100%. Losing two beloved members of our JetBlue family on the same day is a painful reminder of this pandemic's reach and severity. In the last quarter, we've also seen issues of racial equality come to the forefront and prompted the long overdue dialogue around racial equality and justice in this country. At JetBlue, We were born with a mission to inspire humanity, and there's no more opportune time for us to show exactly what this means than through our actions. We are looking inwards, addressing our own processes and policies at JetBlue. We have started to work with our crew members to prioritize meaningful changes that they would like to see in support of inclusiveness and racial equality. Leading with our values, we are committed to ensuring that we look at our business practices through the lens of diversity, equality, and inclusion. As a company, we are also faced with a historic decline in demand and the reality of needing to be a smaller company for the time being. I want to take a moment to acknowledge the sacrifice made by our crew members who have decided to take voluntary opt-outs or participate in our voluntary time off programs. which helps us adjust our staffing to the incredible drop in demand that our industry is facing. By stepping up, they have protected many jobs at JetBlue, helping us to navigate the most difficult period in our history. We wholeheartedly thank them for their amazing contribution to JetBlue, and to those of you who are leaving, we wish you all the very best in your next chapter. Turning to slide four of our presentation. For the second quarter, we reported a gap loss of $1.18 per share. Despite reporting a truly staggering loss that reflects the steep fall in demand that started in late February, we have been decisive in taking actions to protect JetBlue and to emerge stronger as we manage through recovery. In the past two months, we've made progress in reducing our cash burn and have been quick to resize operations in this dynamic demand environment. Despite a recent softening in demand, we are still on track to take our cash burn to between $7 to $9 million a day in the third quarter. Since April, we raised nearly $1 billion in liquidity, and our balance sheet remains among the strongest in the industry. While demand has improved materially from the historic lows we saw in April, bookings remain choppy. and we remain focused on addressing changing trends as we progress through the summer. Our network continues to be impacted by spikes in COVID cases and quarantine measures, but we have seen that customers are willing to travel to see their family and friends. It is highly likely that this recovery will not be linear, but our smaller size allows us to respond quickly to changes in demand. We are confident that our low cost, low fare leisure model coupled with our trusted brand will be instrumental and central in navigating recovery. Let's move on to slide five of our presentation. We recognize that recovery starts with rebuilding customers' confidence in flying again. At the onset of this crisis, we created a comprehensive approach we call safety from the ground up. Our focus has been on taking all precautions with health and safety protocols are safe on the ground and, of course, in the air. We have laid out a three-step recovery framework to set JetBlue up for success and to emerge stronger over the coming years. The first is to reduce our cash burn. Despite the challenged and volatile revenue environment, we have been nimble, taking capacity actions to add revenue and minimize variable costs and continue to make progress in reducing our daily cash burn. The second step is to rebuild our margins. On the revenue front, we are working on a series of initiatives that we believe will accelerate revenue recovery and strengthen our relevance in our focus cities. We are seizing on unique network opportunities, repurposing our assets, and entering into strategic partnerships. These actions will make us stronger and make us more competitive, and ultimately bring out superior product and service to more customers. On the cost front, we are resizing JetBlue meaningfully to mitigate the impact of lower demand, and Steve shortly will provide details about our efforts to double down on our low-cost model. We believe that executing on our costs will again be pivotal to rebuilding our margins. The third and last step is to repair our balance sheet. Although we have raised a substantial amount of liquidity in a short period, we are committed to returning to pre-COVID leverage metrics. I want to briefly touch upon our network strategy to position JetBlue for recovery, continuing the work we've put in place prior to the start of the pandemic. We recently announced a significant reallocation of our assets in our network, flying to 30 new markets, launching between July and October. In the near term, we believe this move will support our efforts to generate cash and respond to demand. In the longer term, it will strengthen our New York focus city, with more flying out of Newark, including and our award-winning Mint Transcon service. On the West Coast, moving our primary base of operations from Long Beach to LAX will bring new competition to the airport and position JetBlue strategically to grow in the future, including international service that was just not possible at Long Beach. I'd like to take a moment and thank Los Angeles World Airports for their continued support in our efforts to grow our presence in LA. Lastly, we have entered into a strategic partnership with American Airlines. This new and unique partnership will accelerate our recovery from the impact of the coronavirus and strengthen our ability to compete with our peers in the Northeast, offering our low fares and improved service to more routes to customers in both New York and Boston. For the past 20 years, we have succeeded against the odds, and we firmly believe that we are laying the foundation and repositioning JetBlue to come out of this crisis as a stronger global player in the years to come. Once again, thanks to all our incredible crew members for playing such an incredibly vital role for JetBlue during these most challenging times. With that, I'd like to pass over to Joanna.