JetBlue Airways Corporation

Good morning. My name is Anthony. I would like to welcome everyone to the JetBlue Airways Third 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 Caiado. Please go ahead.

Thanks, Anthony. Good morning, everyone, and thanks for joining us for our Third Quarter 2022 Earnings Call. This morning, we issued our earnings release and a presentation that 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. 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 Berry, 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 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 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 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 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.

Thanks, Joe. Good morning, everyone, and thank you for joining us today. Our thoughts are with all of those affected by the recent hurricanes in the Southeast and the Caribbean, including many of our crew members, customers, and their loved ones. As always, supporting our crew members and the communities is a top priority after devastating events like these, And we know it's going to be a long road to recovery for several impacted regions. JetBlue is working with nonprofit partners such as World Central Kitchen to ship supplies and assist with relief efforts. And alongside our JetBlue crew member crisis fund, we're working to provide support for our crew members who were hardest hit. And we're going to stay with them every step of the way. I'd like to thank our more than 24,000 crew members for their dedication, patience, and service. I am always amazed at how our crew members step up in these challenging times to care for each other and the communities we serve, prioritizing safety above all else. Our crew members also help deliver another record quarter of revenue, resulting in our first quarterly profit since the start of the pandemic. Despite the macroeconomic uncertainty, we're building momentum in the second half of the year, and I'm confident that we're on a path to continue increasing our margins as we bring our low fare, award-winning JetBlue experience to more customers. Let's now turn to our quarterly results on slide four of the deck. For the third quarter, we reported an adjusted pre-tax income of $118 million adjusted pre-tax margin of 4.6 percent and an adjusted earnings per share of 21 cents the changes we made earlier this year to enhance operational resourcing and the resilience of our schedule resulted in strong operational performance over the summer peak despite significant weather and air traffic control challenges and record customer demand we've made excellent strides on hiring And we're now at a point where we believe we are appropriately resourced from a staffing perspective, which in turn should translate to improved productivity. Looking ahead, we expect our momentum to continue through to another solid quarter of mid-single digit pre-tax margins in the fourth quarter. We'll look to build margins further in 2023 as we continue to restore our pre-pandemic earnings power. We continue to see a very healthy revenue environment with no signs of slowing demand for air travel. Moving now to slide five. Our teams are diligently working on the strategic initiatives driving our earnings recovery and enhancing our business for the long term. We're fortifying our unique business model to more effectively compete with entrenched big four carriers and deliver significant consumer benefits as we continue to disrupt the market. It starts with our network. Our Northeast Alliance, which has been up and running for more than a year and a half, is fundamentally about growing capacity in consumer choice, and it has promoted competition in both New York and Boston. By all measures, JetBlue and American are delivering substantial consumer benefits with the launch of dozens of new routes, increased frequencies on over 100 additional routes, an improved schedule offering, and reciprocal frequent flyer benefits for our customers. Again, this growth would not be possible without the NEA, and consumers are further benefiting from the clear competitive response that we have stimulated. The NEA is doing what it's set out to do, giving consumers more choice and better value, and we look forward to continuing to expand these benefits. Outside of the NEA, I'm extremely pleased with the recent Spirit shareholder approval for our combination, which will create value for all of our stakeholders. Together, we'll build a low fare challenger to the dominant Big Four airlines on a national scale and expand our compelling combination of award-winning service and low fares to more customers across more destinations. On the transatlantic front, by the end of this week, we'll offer five daily flights between the Northeast and London. And we look forward to taking delivery of a handful of Airbus 321LR aircraft next year to support our expansion to Europe, notwithstanding some modest delivery delays. Stay tuned for an announcement in the near future. Customer engagement with JetBlue remains at record levels, and we continue to see healthy spend on our co-branded credit cards. Our loyalty program is producing record cash flows, which is a testament to our customer value proposition. Separately, our JetBlue travel product subsidiary continues to innovate with the launch of Troop, a free group planning app to help groups decide when to travel, where to go, and what to do, building on efforts to make the travel experience more seamless. JetBlue Travel Products is on track to generate close to $100 million of EBIT this year, compared to $15 million in 2019. We also continue to make great progress on the structural cost program we announced last quarter, which Ursula will discuss shortly in more detail. We made further progress on the ESG front with an agreement to purchase 25 million gallons of sustainable aviation fuel starting in 2027 from Air Company, one of the JetBlue Ventures investments. We're committed to growing and diversifying our SAF supply as we progress towards our goal of converting 10% of our jet fuel usage to SAF by 2030. We also applaud the International Civil Aviation Organization, or ICAO, for endorsing a net zero by 2050 goal for international aviation emissions. an important milestone that US Airlines had already voluntarily committed to. We expect this will continue to drive the investments and technological innovation needed to enable our industry to continue to grow sustainably. I'll close with another huge thank you to our crew members. Thank you for all of your hard work, your patience. We're building strong momentum and I'm excited about the journey that lies ahead. With that, over to you, Joanna.