JetBlue Airways Corporation

Good morning. My name is Sylvie, and I would like to welcome everyone to the JetBlue Airways first quarter 2023 earnings conference call. As a reminder, today's call is being recorded. And at this time, all participant lines are in a listen-only mode. I would now like to turn the call over to JetBlue's Director Assistant Treasurer and Fuel, Joe Caiato. Please go ahead, sir.

Thank you, Sylvie. Good morning, everyone, and thanks for joining us for our first quarter 2023 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, and Ursula Hurley, our chief financial officer. Also joining us for Q&A are Dave Clark, our 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 from these statements. Please refer to our most recent earnings release and our most recent 10-K and other filings for a more detailed discussion of the risks and uncertainties 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 outcomes of the lawsuits filed related to our Northeast Alliance and our merger with Spirit Airlines, and various other risks and uncertainties related to JetBlue's acquisition of Spirit. 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 certain non-GAAP financial measures. For an explanation and 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, and thanks to you for continuing to do double duty in two different jobs. Good morning, everyone, and thank you for joining us today. Our thoughts are with those affected by the recent storm and flooding in South Florida. I'd like to start by thanking our 25,000 crew members, particularly those down in Fort Lauderdale, as well as all of the employees of Broward County Aviation Department, for supporting our customers and each other while prioritizing safety above all through a very challenging event. I'd like to thank Mark Gow for his leadership down at the airport and also all county, state, and federal agencies for the incredible work to get the airport reopened again. We stay true to our mission to inspire humanity now for 23 years and counting. We recently celebrated our birthday in February. And as I reflect on our program, I could not be more proud of the exceptional brand and experience we've cultivated that continues to disrupt the border industry. With JetBlue, customers simply do not have to choose between low fares and great service. Before going through our quarterly results, I'd like to provide a quick update on our combination with Spirit. We are fully committed and forging ahead with our planned acquisition. In fact, we are more convinced than ever of the strategic logic of the combinations. We firmly believe that creating a stronger JetBlue is the best solution to transform the industry, creating more competition and loosening the dominance of the big four. Over the past several months, support for our combination and recognition of its pro-consumer benefits have continued to grow, including from the state of Florida, who declined to join the Department of Justice lawsuit and instead views this as an opportunity to grow high-quality and low-fare air service. Indeed, the state of Florida has helped promote the combination, which is expected to result in the biggest transformation in air travel that Florida has ever experienced, including at our Orlando and Fort Lauderdale-focused cities, and additionally entails strong job creation across multiple airports in the state of Florida. It's disappointing, though not surprising, that the Department of Justice is trying to block this transaction And by doing so, protect the status quo and enabling the largest airlines to continue operating unfettered and setting high fares and limiting competition. However, these actions do not change our conviction in the merits of this transaction. JetBlue is one of a kind. There's no other airline that disrupts the market like us. A fact the Department of Justice has recognized and applauded. And combining with spirit, this will give us the scale to keep the big four on their toes in even more markets and with all travelers. As you're here, we all feel good about the process, about the progress, I should say, we are making on our organic plan. But as we said at the outset, our combination with Spirit will turbocharge our plan, enabling us to serve more customers at lower fares and great service while delivering increased value for our stakeholders over the long term as an even better JetBlue brings even more competition to the industry. We are confident in the pro-competitive merits of this transaction, and we look forward to demonstrating that in court this fall. Now let's turn to slide four and our organic business and our first quarter results. For the first quarter, we reported a gap loss per share of 58 cents and adjusted loss per share of 34 cents, above the better end of our guidance. Throughout the quarter, our team delivered excellent operational performance against a very challenging ATC backdrop. The FAA staffing shortcoming, years in the making, has boiled over, especially in New York, and their request for 10% voluntary reductions by carriers creates a significant headwind for the American travelers flying this summer. While we cannot control the ATC staffing issues, nor what happens in the economy, we are focused on successfully managing everything we can control. We've made significant progress in building resiliency into our schedule, buffering our operation, and continuing to make strategic investment in improving operability. By aligning all of our efforts and minimizing operational challenges, we're able to generate more revenue, better control of our costs, and importantly, deliver for our customers. Looking ahead, we expect to carry this momentum forward with strong sequential pre-tax margin improvement into the second quarter. We will remain well on track in executing our comprehensive plan to enhance long-term profitability and restore our historical earnings power. In 2023, we're poised to deliver another year of record revenue performance as we continue to expand our product reach and value proposition to more customers across more destinations. These efforts, combined with the success of our structural cost program, gives me great confidence in our four-year earnings outlook. Having said that, looking beyond 2023, we recognize that we have more work to do to return our margins back to pre-pandemic levels. Moving now to slide five. Looking ahead, there are four key margin builders that are critical to the JetBlue investment case. The Northeast Alliance, our ongoing evolution of our True Blue loyalty program, JetBlue travel products, and our structural cost program. Joanna will provide some additional color on the progress we are making with the NEA and True Blue, and Ursula will provide an update on our structural cost program. I'd like, though, to take a minute to talk about the success of JetBlue Travel Products. Since 2019, Travel Products has achieved profit growth sevenfold. JetBlue Travel Products continues to provide a platform for profitable growth while deepening our relationship with customers. Recently, we announced a very important milestone in opening access to Paisley, our homegrown travel booking website, to all travelers, not just those who have a JetBlue flight, greatly expanding our addressable market. We've already seen a meaningful step change in Paisley bookings in the first few weeks. As we continue to grow, as well as through our planned acquisition of Spirit, these traveler offerings beyond flights will become increasingly relevant to even more customers and will fuel profitable growth for JetBlue. Turning to the second quarter, we do expect strong revenue growth to continue as demand remains robust. And our multi-year structural cost program continues to deliver as we remain on track to hit our four-year Chasm X target, giving us confidence to reaffirm our EPS guidance of 70 cents to a dollar for the full year 2023. Finally, We continue to solidify our sustainability commitment and demonstrate our leadership in aviation decarbonization. Last quarter, we announced a leading agreement with Shell Aviation for delivery of 10 million gallons of blended sustainable aviation fuel, or SAF, at LAX over the next two years, starting this quarter, with an option to purchase more. The deal with Shell is a strong signal of the growing engagement of the oil and gas majors in SAF production and something that we welcome. I'd like to close by thanking our crew members once again for delivering solid first quarter results. Our collective hard work has positioned us well for long-term success. Despite an uncertain economic outlook and a challenged ATC environment, I am optimistic about our future. We've built a solid foundation to succeed based on a unique JetBlue combination of low fares and great service. With that, over to you, Joanna.