JetBlue Airways Corporation

Good morning. My name is Faith. I would like to welcome everyone to the JetBlue Airways first quarter 2021 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 it over to JetBlue's Head of Treasury and Investor Relations, Ursula Hurley. Please go ahead.

Thank you, Faith. Good morning, everyone, and thanks for joining us for our first quarter 2021 earnings call. This morning we issued our earnings release and a presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and has been filed with the SEC. In New York to discuss our results are Robin Hayes, our Chief Executive Officer, Joanna Gary, 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, Dave Clark, VP of Sales and Revenue Management, and Andres Berry, President of JetBlue Travel Products. 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 a 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, JetBlue's CEO.

Thank you, Ursula, and good morning, everyone. And for those regulars on the call, you will notice a change of voice. So, Ursula, congratulations on the your new position and assuming the investor relations portfolio. Also, my thanks to Juan Carlos and Scott here in the room with me who run our IR team. And also, obviously, we have to say farewell to Dave Pinson. He's not leaving JetBlue, but Dave has done an amazing job as the head of our IR team for many years. And like many leaders in JetBlue, he's been doing double duty for the best part of a year. So Dave is now leading our efforts as VP of the NEA, which is a partnership with American Airlines. And Dave is single-mindedly focused on delivering the benefits of the NEA in terms of growth and low fares for JetBlue and our customers. So Dave, the very best in your new role as well. And as Ursula said, we also have Andres Barry joining us on the call today as a new addition president of JetBlue Travel Products. So with that, let's get on with the call again. Good morning, everyone. And as we've done since the start of the pandemic, I'd like to take a moment to remember another crew member we have lost to COVID-19. Alexander Rosas was a member of our JetBlue family for nearly a decade. Alex joined us in October 2011 as a Ground Ops crew member in Tampa, and our hearts go out to Alex's family, friends, and the fellow crew members that he worked with, as it does to all of us who have been impacted by COVID-19. I would now like to start by thanking our amazing 20,000 crew members for their extraordinary work through the most challenging time in our history. They continue to work together to serve our customers with just such incredible passion and determination. Our crew members have demonstrated our decisiveness as a team to overcome the many challenges presented by the pandemic while setting the foundation for JetBlue's recovery and future success. Starting with the presentation, let's move to slide four. I'll start with an update on our ESG efforts, an area where JetBlue continues to lead the airline industry and generate value for our stakeholders. We are taking actions to reduce our impact on the environment and address societal changes and demands, mitigating business risks and enhancing our long-term financial returns. I'll provide an overview of the targets we announced last quarter. Starting with the environment, our ultimate goal is to achieve net zero carbon emissions by 2040. Since last July, we achieved carbon neutrality for all domestic flying using carbon offsets. We've also set interim 2030 goals, which include reducing emissions per ASM by 25% from 2015 levels, converting 10% of our jet fuel to sustainable aviation fuels, and changing over half of our ground support equipment vehicles to electric. In the short term, we are investing in next-generation fuel-efficient aircraft to reduce our emissions and increase returns. Our technology venture subsidiary is positioning JetBlue to help us chart a path towards net zero emissions over the long term, with investments in startup companies like Joby and Universal Hydrogen. Moving on to social, we're focused on empowering our crew members and protecting our talent pipeline through our enhanced diversity, equity, and inclusion strategy. The recent Derek Chauvin verdict reminds us how George Floyd's murder has been a catalyst for change And over the past year, we have reexamined how we can help tackle systemic societal racism by focusing on diversity and equity at JetBlue. We have accelerated our efforts towards building a more diverse slate of leaders and are creating greater access to select career paths with our emerging talent platform, including our new Gateway College program. We have also committed to grow our spend with minority and women-owned businesses, and we are ensuring our brand strategy enhances trust and build connections with customers and the diverse communities we serve. Lastly, regarding governance, we have embedded controls and increased our accountability with oversight from an ESG subcommittee of our board of directors. In addition, we recently incorporated ESG factors as performance measures into our senior leadership incentive compensation plan. Turning now to slide five. In the last quarter, we reported an adjusted loss per share of $1.48. Although EPS remains in negative territory, we have seen meaningful progress in the demand recovery and have started to gain momentum from the groundwork we have laid to emerge from the crisis as a stronger JetBlue. Since mid-February, we have seen a meaningful rebound in leisure travel. We are encouraged by the improving booking trends and with COVID-19 vaccinations rolling out, we believe that ongoing demand acceleration will continue into the summer. We are bringing back capacity in response to demand, and we plan to capture a growing share of improving revenue from our customers in our leisure and VFR or visiting friends and relatives markets. More importantly, we are taking a number of actions aimed to bring us back on a path towards superior margins. Moving to slide six. Looking back to our work from 2020, I could not be more confident in our future. Our teams continue executing our comprehensive recovery plan, reducing our cash burn, rebuilding our margins, and repairing our balance sheet. Starting with cash burn. We've seen positive cash from operations for March, and this milestone is our first step towards achieving positive EBITDA and returning to profitability. We expect our improving operating results and balance sheet will support JetBlue over the coming months as leisure demand approaches pre-pandemic levels. To rebuild our margins, we have been executing network, commercial, fleet, cost, and capital allocation initiatives designed to help us rebuild our margins and repair our balance sheet. With respect to network, we are focused on strengthening our six focus cities and accelerating our recovery. We have taken advantage of unique opportunities that would not have been available to us before the pandemic. We have also expanded and diversified our route map to better serve areas of relative demand strength, and some markets will remain long-term strategic investments for JetBlue. In New York and Boston, we forged a unique alliance with American Airlines that delivers low fares, a trusted brand, and outstanding service to more customers. Lastly, we will soon announce our inaugural flight to London, bringing both our award-winning mint and coal products and low fares to the transatlantic market starting later this summer. Moving to the revenue front, we continue to implement our plan to improve our unit revenues over the coming years. I'll highlight three areas where we have made significant progress, and Joanna will provide additional details in a couple of minutes. The first is our latest update of fare options, which provides our customers with more low fares. Secondly, we are in the contracting stages of our co-brand credit card RFPs, which we expect will meaningfully enhance the economics of our loyalty program. Third, we are seeing momentum with JetBlue travel products. Over the last two months, JetBlue Vacations has performed well ahead of 2019 levels. We are very excited about last month's launch of Paisley, a new travel site that leverages smart technology to provide tailored offers to customers based on their individual itineraries. In its early days, we are already seeing great customer engagement, and believes this will be a significant contributor for future earnings growth. On the cost front, we remain committed to executing our plan to keep our costs low as capacity comes back. Our low-cost business model enables us to compete with low fares while driving higher margins. We continue to reshape our fixed and variable cost base to provide a path to produce better than 2019 Casamex fuel in 2022. Regarding fleets, Our order book solely consists of next-generation aircraft that will help us execute our network plans while producing structurally better margins. We are thrilled that our first A320 entered into service yesterday. We've also started selling transcom flights on our first A321neo low-density aircraft. And tomorrow, we expect to take delivery of our first A321 long-range aircraft. both aircraft-type equipped with our incredible next-generation minc cabin. Lastly, we plan to maintain a balanced approach to our capital allocation, investing in aircraft as we build our margins while reducing debt. Last quarter, we took a step towards optimizing our capital structure, reducing our overall cost of funding with a successful convertible debt offering. In conclusion, As we continue to navigate the challenges of the current year, we are so optimistic about our future. We will make the changes needed to weather the crisis while staying true to our mission and values and placing people and culture at the heart of our company. We have a truly great opportunity ahead of us and have laid the foundation to make JetBlue a stronger airline for years to come. Joanna, over to you.