JetBlue Airways Corporation

Good morning. My name is Brittany, and I would like to welcome everyone to the JetBlue Airways third quarter 2024 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, Kush Patel. Please go ahead, sir.

Thanks, Brittany. Good morning, everyone, and thanks for joining our third quarter 2024 earnings call. This morning, we issued our earnings release in a presentation that we will reference during this call. All of those documents are available on our website at investor.jefflew.com and on the SEC's website at www.sec.gov. In New York, to discuss our results are Joanna Garrity, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer. During today's call, we'll make forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Such forward-looking statements include, without limitation, statements regarding our fourth quarter and full year 2024 financial outlook and future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, ability to achieve operational and financial targets, business strategy, and plans for future operations, and the associated impacts on our business. All such forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from those expressed in implied statements. In these statements, please refer to our most recent earnings release, as well as our fiscal year 2023 10K and other filings for a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. The statements made during this call are made only as of the date of the call, and other than as may be required by law, 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 of these non-GAAP measures and a reconciliation to the corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website, nnicdc.gov. And now, I'd like to turn over the call to Joanna Garrity, JetBlue's CEO.

Thank you, Kush. Good morning, everyone, and thank you for joining us today for our third quarter 2024 earnings call. The team continues to work hard to execute on our multi-year strategy, JetForward, with encouraging early results. This summer, efforts to deliver reliable and caring service a core tenant of Jet Forward, resulted in year-over-year improvements across key reliability and customer metrics. While these investments are showing signs of traction, the results would not be possible without the dedication of our 23,000 crew members, who showed incredible resilience and professionalism throughout the busy summer travel period and in the face of Hurricane Colleen and Milton. We have thousands of crew members that live directly in the path of these storms, and even faced with uncertainty outside of work, you still showed up for your fellow crew members and customers. And for that, we all thank you. The progress we've made this year is encouraging. And in the third quarter, our operating margin improved five points year over year and five points versus our initial expectations for the quarter. We remain committed to achieving our financial targets. And for the full year, we are improving our revenue guidance midpoint by a half a point and also maintaining the ChasmX field target range we set at the beginning of the year. We are progressing toward our goals every day, but there is still significant work ahead on our path to full-year operating profitability. Now turning to slide four. Reliable and caring service drives choice, satisfaction, and cost savings, and we believe that operational performance underpins the success of JetForward. In the third quarter, we built on operational achievements from the second quarter to deliver exceptional year-over-year improvements in A14 and completion factor. Compared to last year, A14 was up over 12 points, and completion factor was up nearly two points on the quarter. Additionally, the operation was particularly resilient during both Hurricane Colleen and Milton, and returned to regular operations with minimal follow-on disruption. This quarter's improved operational performance drove a double-digit increase in Net Promoter Score year over year. A reminder that operational reliability is a key driver of customer choice and satisfaction and is essential to delivering a premium customer experience and continuing to build long-standing relationships with our customers. Revenue performance was strong in the third quarter and was bolstered by the continued success of our 2024 revenue initiative. Progress from the changes to our Blue Basic carry-on baggage policy which was announced in June and went live in September, is performing ahead of expectations. And across all initiatives, we've realized $275 million of the $300 million revenue target set at the beginning of the year. Our premium offerings between Preferred Seating, Evenmore Space, and Mint all continue to perform well. Further evidence that our customers' desire for premium offerings is healthy and growing. On the cost side, better than anticipated operational performance coupled with a shift of expenses to the fourth quarter, resulted in Chasm X Fuel beating the midpoint of our initial third quarter guidance by approximately two points. Over the quarter, we also took substantial steps to secure our financial future, raising over $3 billion of debt to allow us to retire a portion of our existing debt, pre-fund 2024 and 2025 CapEx, and provide us with the necessary runway to execute Unjet Forward. Moving to the fourth quarter, we expect the relatively improved macro backdrop and our core geographies, and especially in Latin, alongside healthy underlying demand and our own self-help capacity trimming, to continue driving positive unit revenues through the second half of the year. At the same time, we expect a large portion of our announced network initiatives to come online over the quarter. As we have previously communicated, these changes will take time to ramp. And though the RASM benefit will be modest system-wide in the fourth quarter, the redeployees are expected to mature throughout 2025. We continue to expect positive year-over-year unit revenue in the quarter, though we expect transitory events to impact our sequential year-over-year RASM progression from the third quarter. We forecast that the disruption to travel and forward bookings from Hurricane Milton, combined with pressure from the election, will negatively impact our RASM performance by about two points. As we head into 2025, we remain confident in the underlying supply and demand backdrop, especially as our Jet Forward initiatives continue to deliver more value. In the fourth quarter, our year-over-year unit costs also face transitory headwinds and are expected to take a temporary step up due primarily to timing of expenses over the year. This should not be viewed as the unit cost levels we are expecting for 2025. Long-term capacity planning continues to be challenged by Pratt & Whitney aircraft on the ground, and we remain in discussions with them over future AOG expectations and compensation. As a reminder, we expect capacity to be roughly flat year over year in 2025. Not having clear line of sight to our longer-term capacity is certainly frustrating. but we must remain focused on controlling what we can, and this is at the heart of JetForward. On slide five, you can see that we've maintained our bias toward action, and over the quarter, we've made substantial progress on our JetForward plan. Last month, we announced enhancements to our loyalty in airport experience to offer products and perks our customers value. These enhancements include the introduction of lounges at JFK's Terminal 5, opening at the end of 2025, and at Boston Logan, opening soon thereafter, as well as the introduction of a premium co-branded credit card. Today, we are announcing additional steps to better match our onboard product to what our customers value, a further differentiated premium extra leg room offering, and a more intuitive purchasing experience for that product. You will hear more from Marty on this topic. I am proud of the progress we've made on these key initiatives. all aligned with our JetForward strategy, which provides a clear roadmap to delivering value to all of our stakeholders. In many ways, we are returning to the core strengths that made JetBlue one of the industry's most beloved brands. At the same time, we are rapidly evolving to compete more effectively in a transformed competitive landscape by consistently delivering reliable service, focusing on our East Coast leader franchises, and offering compelling new product options to customers we expect to be well positioned to deliver on our mission of bringing humanity back to air travel. With that in mind, I'm excited about the future of our business, and I am confident that you'll share my enthusiasm for the next phases of JetForward, as we work toward delivering our goal of 800 to 900 million in incremental EBIT and expanding margins, all while continuing to meet the needs of our shareholders, crew members, and our customers. Now, I'll hand it over to Marty to discuss our commercial progress.