JetBlue Airways Corporation

Good morning. My name is Frenzy. I would like to welcome everyone to the JetBlue Airways 3rd 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 the call over to the JetBlue's Director of Investor Relations, Joe Cayado. Please go ahead.

Thanks, Francie. Good morning, everyone, and thanks for joining us for our third quarter 2021 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call. All those documents are available on our website at investor.jetblue.com and have been filed with the SEC. In New York, to discuss our results are Robin Hayes, our Chief Executive Officer, Joanna Garrity, our President and Chief Operating Officer, and Ursula Hurley, 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 Barry, President of JetBlue Travel Products. This morning's call includes forward-looking statements about future events. All such forward-looking statements are subject to certain risks and uncertainties, and actual results may differ materially. Please refer to our most recent earnings release and our most recent form 10Q or 10K for a more detailed discussion of the risk factors that could cause the actual results to differ materially from those contained in our forward-looking statements, including, among others, the COVID-19 pandemic, fuel availability and pricing, and the outcome of the lawsuit filed by the DOJ related to our Northeast Alliance. The statements made during this call are made only as of the date of the call, and we undertake no obligation to update the information. Investors should not place undue reliance on these forward-looking statements. 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 CEO.

Thank you, Joe, and good morning, everyone. As we have done throughout the pandemic, I'd like to take a moment to remember four crew members we have lost to COVID-19 in recent months. Richard Oh was a beloved member of our systems engineering team here at Long Island City and has worked for us for almost 12 years. He was also a close friend to his fellow crew members. Joseph Anderson supported training and development programs for our customer support team for the last five years and was known for his generosity and adventurous spirit. Manny Gomez was a cherished member of our in-flight team for almost as many years as JetBlue has been operating. And Alex Conjura joined the JetBlue family in October 2002. He was a treasured member of the ground ops team at Orlando. where he was always known for being first to chip in and help. Our hearts go out to their family, friends, and fellow crew members, and to all of those who have been impacted by COVID-19. I'd now like to thank our truly amazing 21,000 crew members. They continue to deliver for our customers, and they give me great confidence that JetBlue is well positioned for future success. Moving to slide four of our 3Q21 earnings presentation. For the third quarter, we reported an adjusted loss per share of $0.12. I'm encouraged by the steady progress we are making while capitalizing on opportunities to enhance our future earnings power. And while the demand environment has been affected by case counts, We believe that demand is once again poised to re-accelerate into the peak holiday periods and beyond as people adjust to a new normal. As we look ahead and plan for 2022, we'll retain the agility that has characterized our planning process for the last 18 months and as we prepare for continued demand recovery. We are marching towards a full recovery and a return to sustained profitability with margin truly as our North Star. I'm a firm believer that our unique business model, low cost, low fares, and a superior product, positions JetBlue to thrive in the years ahead. Now turning to slide five of our presentation. Throughout the pandemic, we have not lost sight of our commitments to serve our communities, add more diversity to the aviation industry's pipeline, and increase sustainability across our operations. JetBlue continues to lead the industry in ESG. As the first airline, US airline, to file SASB and TCFD aligned ESG reports, the executive compensation to ESG, Thai executive compensation to ESG metrics, execute a sustainability link loan and operate an ESG subcommittee of our board of directors. We're also pleased to see our initial 2017 investment in Joby Aviation validated as they went public this past quarter. With our efforts, we are honoring our responsibility to our customers, our crew members, development, and strengthening shareholders' value as we recover and grow. I'm pleased to say we are now well ahead of pace to achieve our target of transitioning 10% of our fuel usage to sustainable aviation fuel by 2030, enabled by our recent deals with SG Preston, Neste, World Energy, and World Fuel Services. We are taking a diversified approach on staff by engaging with multiple partners. Our industry has a responsibility to decarbonize, and we cannot do it alone. Earlier this month, the International Air Transport Association member airlines committed to achieving net zero carbon emissions by 2050. Following the IATA resolution, we are pleased to see the Air Transport Action Group, or ATAG, adopt a net zero carbon goal for 2050. ATAG is a global organization comprised of airlines, airports, aircraft, and engine OEMs and air traffic controllers. These commitments underscore an unparalleled and collaborative approach across our entire industry to address key challenges and advance collectively towards our net zero targets. We are happy to play a role in continuing to lead the industry with the most holistic plan to address sustainability. And we're delighted to see some of our competitors up to this issue. We've also recently released our annual ESG and social impact reports, which includes the results of our first ever climate risk scenario analysis, as well as an overview of our corporate responsibility programs focused on youth education, the environment, and increasing diversity within the STEM fields that fuel our airline. Both comprehensive reports can be found on our investor relations web page. Moving now to slide six. As we work through the annual planning process, our teams are setting solid goals for our network, commercial and cost initiatives, and capital allocation priorities. I could not be more proud of our team's efforts, and I'm confident we are setting JetBlue on a trajectory to restore our earnings power to beyond 2019 levels over the coming years, generating long-term value for all of our stakeholders. Over the course of the pandemic, we launched game-changing network moves and continued to pursue strategic initiatives to build a strong foundation for our long-term success. We're thrilled to have finally landed in London in the third quarter, a milestone achievement that was years in the making, and we look forward to bringing JetBlue's low fares and award-winning service to even more customers across the Atlantic, just as the U.S. prepares to ease entry requirements for U.K. travelers next month. Our team is doing a fantastic job in rolling out and expanding our commercial initiative, including the latest evolution of our fare options, which helped drive the industry's best revenue acceleration this summer. Our JetBlue travel product subsidiary remains a bright spot in recovery, delivering over 40% revenue growth versus pre-pandemic levels. And our efforts in loyalty are starting to materially enhance earnings performance. Our talent Our relentless work to shape our cost structure is a key pillar of our goal of achieving superior margins. We are deep in our planning process and working diligently to mitigate the external cost pressures tied to the recovery. I'm confident that we'll maintain a competitive cost structure and return to our roots as a low-cost airline. Lastly, we made incremental progress in deleveraging our balance sheet by paying off our CARES Act loan and other bank loans. Our unwavering commitment to repair our balance sheet is part of our balanced approach to capital allocation. And moving to slide seven. I'd like to spend a minute discussing in greater detail our Northeast Alliance with American Airlines and the many benefits this alliance brings to all of our stakeholders. New York, a capacity-constrained region, has historically been dominated by just two carriers. And in Boston, our alliance is enabling JetBlue to expand our low fares and superior products to new markets, and create a broader and virtual network. This alliance is no uncertain term to supercharge competition in the region. It's important to note that our commitment to competition and low fares is steadfast, as is our commitment to our home here in the Northeast as New York's hometown airline. We will continue to implement this important alliance and deliver meaningful value to all of our stakeholders, including our customers, crew members, owners, and the broader economy here in the Northeast. We are fully committed to this alliance and to delivering the tremendous benefits of added competition to our customers. Together with American Airlines, we plan to operate close to 500 daily flights in November, 300 of which will be flown by JetBlue. Given a vastly expanded network and flying, the NEA is estimated to generate more than $800 million in annual consumer benefits. We're also in the process of hiring 1,800 new crew members as a direct result of the growth the NEA is enabling for us, jobs that otherwise wouldn't be created without this alliance. I'll close with another huge thank you to our crew members. With exciting revenue initiatives, a firm grip on costs, and superior margins as our guiding light, I am very confident we are charting a course to emerge from this crisis stronger than ever. Joanna, over to you.