JetBlue Airways Corporation

Good morning. My name is Cody, and I would like to welcome everyone to the JetBlue Airways' second quarter 2022 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 Director of Investor Relations, Joe Cairo. Please go ahead, sir.

Thanks, Cody. Good morning, everyone, and thanks for joining us for our second quarter 2022 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 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, Ursula Hurley, our Chief Financial Officer, and also joining us for Q&A are Dave Clark, Head of Revenue and Planning, 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 in our most recent form 10Q or 10K for a more detailed discussion of the 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, the outcome of the lawsuit filed by the DOJ related to our Northeast Alliance, the occurrence of any circumstances that could give rise to the right of JetBlue or Spirit Airlines or both to terminate the merger agreement, failure to obtain applicable regulatory or Spirit stockholder approval in a timely manner or otherwise, and the potential financial consequences thereof, failure to satisfy other closing conditions or failure of the parties to consummate the proposed transaction, and the possibility that JetBlue may be unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all, and to successfully integrate Spirits operations with those of JetBlue. The statements made during this call are made only as of the date of this 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.

Thanks, Joe. Good morning, everyone, and thanks for joining us today. I'd like to start with my thanks to our more than 24,000 crew members for their tremendous work and dedication to delivering the award-winning JetBlue experience to our customers as we mark some significant milestones in our recovery this summer. This morning, we reported a record-breaking absolute revenue result for the second quarter of and we're on pace to top it again here in the third quarter and drive our first quarterly profit since the start of the pandemic. Turning to slide five, before we dig into our financial results and outlook, I'd like to take a moment to discuss our recently announced agreement to acquire Spirit. I'm very pleased we found a path forward with Spirit, and we can't wait to welcome the incredible 10,000 team members to JetBlue as we create a true national low fare, high quality challenger to the dominant Big Four airlines. Together, we will expand our uniquely disruptive combination of award-winning service and competitive low fares to more customers across the country as we combine the best of both airlines. You've heard me say it before. This transaction turbocharges our strategic growth plan. It will diversify and expand our network for customers, create new jobs and opportunities for crew members, and expand our foundation for profitable growth, unlocking sustained long-term value for all of our stakeholders. we remain highly confident in our ability to obtain regulatory approval no later than the first half of 2024. We expect the transaction to be accretive to EPS in the first full year following closing and to deliver $600 million to $700 million in annual net synergies once integration is complete. You can find more information about this transaction and the many stakeholder benefits on our website. We are thrilled about this unique long-term opportunity But we also recognize that we are still some time away from closing. And even as we begin early work on integration planning, we remain focused on running the standalone business in the interim. And we also continue to execute on our organic initiatives. Returning to sustained profitability, slide five. With that, we're here today to discuss earnings. And I'd like to start with our quarterly reports on slide six. For the second quarter, we reported an adjusted loss per share of 47 cents. As you will recall, we had some operational challenges earlier in the spring, which drove a sizable reset to our four-year growth plan and a number of investments to ensure we could operate reliably during this exceptionally busy summer season. I'm proud to say that our operational performance improved significantly throughout the quarter, and we capitalized on the strong demand environment to deliver record revenue growth at the top end of our original guidance range. and a record quarterly revenue result for JetBlue. We were profitable in the month of June on an adjusted basis, entering the third quarter with solid momentum as we expect to carry forward through to sustained profitability. I'm pleased to see record demand for travel with JetBlue and the solid underlying momentum in our recovery as we work to build an even better JetBlue for our stakeholders. Moving now to slide seven. With high fuel prices and our short-term operational investments weighing on our margins this summer, we are making steady underlying progress on our long-term initiatives to structurally improve our profitability and enhance our long-term earnings power. Our network is foundational to our success, and we continue to strengthen relevance this year, primarily through our Northeast Alliance with American Airlines, or the NEA. The NEA will be a significant margin builder for JetBlue, by allowing us to grow in New York and Boston, our two largest focus cities, and offering more value to all customers in the region. Together with American Airlines, we've created robust competition with industry-leading network depth and breadth, and more combined daily departures than Delta and United. The NEA continues to scale nicely on its multi-year path to steady state, as we build out connectivity, enhance loyalty benefits, and a seamless customer experience. Across the pond, I'm delighted to say that we've secured permanent slots at London Heathrow starting at the end of October, the culmination of some great work together with our airport and government partners. In addition, we're excited to expand our award-winning transatlantic service to our second largest focus city with the launch of service in Boston this week, further strengthening our relevance in the Northeast. And with the addition of a third frequency between JFK and London in October, We'll be operating five daily flights between the Northeast and London this fall. More customers are engaging with JetBlue than ever before as we continue to see double-digit growth in our loyalty business, fueled by the NEA and the strength of our brand preference as we generate record cash flows from the program. And back in 2018, we shared with you a vision for our new JetBlue travel product subsidiary with an audacious goal of contributing $100 million in EBIT by 2022. And despite all of the challenges of the last 24 months, we are on track to deliver close to that target this year. Last month, just in time for the busy travel summer travel period, the JTP team rolled out a revamped website and additional inventory to Paisley by JetBlue, a travel website that we launched just over a year ago and offers customers a one-stop shopping platform to conveniently purchase ancillary travel products relevant to their trips. all backed by JetBlue's great customer service. Earlier this year, when we reset our medium-term capacity plan to reflect the industry's constraints, we highlighted some potential mitigating actions to right-size our footprint for this new reality. Today, we announced a further acceleration of our 190 transition, with our fleet modernization efforts poised to accelerate not only our margin expansion, but our path to reducing emissions. And Ursula will walk you through our new structural cost program, which will set a new foundation for our long-term, low-cost structure. Finally, our responsibility to mitigate climate risk is a core part of our mission, and we remain steadfast in leading the industry in our efforts. We've recently announced our commitment to work with the Science-Based Targets Initiative to set a near-term emissions reduction target for our airline operations. In addition to our sustainability efforts, we remain committed by fostering diversity And we're proud to say that underrepresented groups represent over 60% and 90% of students enrolled in our Gateway Select and Gateway Direct programs respectively, which are industry-leading career development programs that allow crew members and external applicants to pursue a path to become a pilot or maintenance technician at JetBlue. Once again, I'd like to thank our passionate crew members for caring for our customers, each other, JetBlue. With the foundation we put in place and the many exciting initiatives we have underway, I've never been more excited about our long-term outlook, which will only be enhanced by our acquisition of Spirit. With that, over to you, Joanna.