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 of 2024 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 .jetblue.com and on the SEC's website at .sec.gov. In New York, to discuss our results, our Joanna Garrity, our Chief Executive Officer, Fardy 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 included 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 and implied in these statements. Please refer to our most recent earnings release as well as our fiscal year of 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, WZO.

Thank you, Kush. Good morning, everyone, and thank you for joining us today for our third quarter earnings call. The team continues to work hard to execute on our multi-year strategy, Jet Forward, with encouraging early results. This summer, efforts to deliver reliable and caring service, a core tenet of Jet Forward, resulted in -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 hurricanes 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 Jet Forward. 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 Selene 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 BlueBasic 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 offering, between preferred seating, even more 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, -than-anticipated operational performance, coupled with a shift of expenses for the fourth quarter, resulted in ChasmXFuel 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 un-jet forward. Moving to the fourth quarter, we expect the relatively improved macro backdrop in 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 redeploys are expected to mature throughout 2025. We continue to expect positive -over-year unit revenue in the quarter, though we expect transitory events to impact our sequential -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 -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 -over-year in 2025. Not having clear line sight to our longer-term capacity is frustrating, but we must remain focused on controlling what we can, and this is at the heart of Jet Forward. 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 Jet Forward plan. Last month, we announced enhancements to our loyalty and 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 legroom 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 Jet Forward 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 am excited about the future of our business, and I am confident that you'll share my enthusiasm for the next phases of Jet Forward, 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.

Thank you, Joanna, and thank you to our crew members for their service and dedication to JetBlue. Our crew members differentiate us, and I am extremely proud of the way they continue to deliver caring service in the face of challenges to our industry, like hurricanes Helene and Milton. They've also managed an immense amount of network change over the past nine months, as we continue to execute Jet Forward and build the best East Coast leisure network. As part of this network recalibration, we have announced and implemented over 50 route exits and 15 Blue City closures. Just last week, we officially left Burbank, Charlotte, Minneapolis, San Antonio, and Tallahassee. I know these actions are tough for crew members, especially crew stations in those cities, and also for customers who love our brand, but these decisions are a necessary part of our plan to return to sustained profitability. We must have profits in order to serve our mission, and we simply cannot tolerate perpetually loss-making flying. Every aircraft must continue to earn its way into the network. In total, the redeployees announced and executed this year represented over 20% of our network and have freed up aircraft to serve markets where we perform the best. Origin markets in the East fly into Florida, to the Caribbean, Transcon, and to Europe. These routes serve the large majority of our customers and our core geographies who know our brand, name where we have, and can build scale locally. To better serve these franchises and reinforce our deep and relevant East Coast leisure network, we have renounced service to seven new Blue Cities since the start of the year. Blue City openings in Manchester, New Hampshire, and Iceland, New York, leverage our brand awareness and regional relevance in geographies where we have a loyal customer base. As we continue to adjust our network, we plan to focus our efforts on serving these and similar markets. Markets such as Providence and Hotford, where in the fourth quarter, we are operating our largest schedules ever. In Providence, we expect to be up nearly 200% in seats year over year, and in Hotford, more than 30% year over year, further deepening our East Coast leisure network. We also remain committed to better matching our onboard product to the needs of our customers who have increasingly asked for more premium experience. Today, we are announcing another Jet 4 to milestone in the Priority Move Products and Perks customer value. As we have mentioned, even more space has performed exceptionally well as interest in premium options continues to be strong. We believe that we can build on the success to attract more customers in the premium leisure segment and capture additional revenue by evolving how we merchandise and sell our even more space seats. Starting in mid-November, we plan to give even more space greater visibility in the booking process by offering to customers directly on the Flight Search Results page on jetblue.com, in addition to later in the booking process where customers find it today. As we move into 2025, we plan to rebrand the offering to even more and package new benefits and amenities with the extra legroom seat. By making it easier for customers to find and book an enhanced offering, we expect to strengthen JetBlue's competitive position in the premium leisure segment and deliver even more value to our customers. We are also working to ensure our customers have a premium experience on the ground. Our recent announcements to bring lounges to JFK's Terminal 5 and to Boston Logan and to offer a premium co-branded credit card will allow us to serve the premium leisure customer in a way we have not before and enable our loyalty and airport experience to complement the reliable service customers expect to receive on board. Throughout the travel experience, it is clear we are quickly moving to address gaps and serve the full spectrum of leisure customers, but we are not yet finished and we expect to make further exciting product and perk announcements over the coming months. Now, let's turn to slide 7 to discuss third quarter revenue performance and our outlook for the fourth quarter. Reliability initiatives drove higher than expected completion factor and capacity for the period, with capacity for finishing down .6% versus the midpoint of our commercial guidance of down 4.5. Over the third quarter, we also took self-help capacity measures that included day-week cuts during the trough and in September, we were down nearly 100 flights Monday, Wednesday, and Saturday versus peak days, better matching our flying with customer demand. These thoughtful capacity pulls combined with an improving competitive capacity environment, healthy demand close in and during peaks, and the continued success of our 2024 revenue initiatives supported positive -over-year resume of .3% for the quarter. Revenue improved across all geographies in the third quarter, but the Latin recovery was the most substantial, with the -over-year overlapping competitive capacity in the region, seven points improved versus the last quarter. Peak performance remained healthy, and as we previously announced, third quarter revenue was aided incrementally by one point from the industry-wide crowd strike event in July. Off-peak performance also improved relative to our expectations in September, supported by our trough capacity reductions. Preferred seating and seasonal check bag pricing, as well as our blue basic baggage policy change, also contributed to the revenue progress over the quarter. Our premium segments, even more space in the mid, continue to outperform, with revenue of double digits -over-year. Grand Atlantic mid performance improved over the summer peak, with present in the third quarter, a high single digit -over-year, a nearly 90% more ASMs. We are encouraged by the ramp of these markets, but have also worked to further seasonalize our transatlantic schedule, allowing us to redeploy high ROI mid-aircraft to the sun and sand when weather in Northern Europe turns. Our true blue customer base continues to grow, and increased their share of wallet on jet blue flights. In the third quarter, nearly half of our customer flight revenue came from true blue members. The deepened engagement and sustained strength in our co-brand portfolio contributed to an 11% growth and loyalty revenue versus last year. The improvements we've made to our true blue and mosaic programs over the past year now make it one of the most attractive programs for introductory elite status members, which is reflected in the true blue value proposition. The true blue value proposition continues to improve, and the addition of new partnerships, lounges, and product offerings, such as a premium condo, continue to further bolster that proposition. The work the team is doing to reward and attract customers, along with continued evolution of our network, to further match flying to the preferences of our true blue customer base, leaves us excited by the trajectory and growth potential for our program. Shifting to the fourth quarter. We have made incremental trough capacity adjustments, and as a result, fourth quarter capacity is planned to be down seven to down four percent year over year. We're also copying against near perfect completion factor in the fourth quarter of last year, and while we had hoped to perform similarly this quarter, the tropical weather environment has been more challenging than last year. For the full year, capacity is planned to be down 4.5 to down 2.5%. In the fourth quarter, we expect revenue down seven to down three year over year, which implies positive unit revenue at the midpoint of our revenue and capacity ranges. Positive fourth quarter resume is supported by trends continuing from the third quarter, healthy peak demand, an increasingly constructive industry supply backdrop, and the progress of our 300 million dollars in revenue initiatives. When adjusting for the crowd strike benefit in the quarter, and the negative impacts of Hurricane Milton and the election of the fourth quarter, -over-year RASM is expected to be consistent from the third quarter into the fourth. Our fourth quarter revenue is also in line with our historic seasonality and prior expectations. For the full year, we are raising the midpoint of our guide by a half point, and narrowing the revenue range to down five to down four percent for the full year. I echo Joanna's excitement for our and the progress made so far this year. As we look forward, as you look towards the fourth quarter and in the new year, I'm confident we are taking the right steps to give our customers the best experience and the best value. And in a small part because of the dedication of the greatest crew in the industry. Thank you all for always putting our customers first and prioritizing a safe operation. With that, over to Ursula, we'll share more on the financial status and outlook of business.

Thank you, Marty. We ended the quarter with an adjusted operating loss of just 11 million, about 130 million better than our July expectations, or the equivalent of about a five point margin improvement. Over three points of the improvement were driven by outcomes in our control. As Marty described, we posted better revenue performance than expected, a trend we know must continue in order to effectively offset the significant cost increases we've seen since 2020. We also saw improved operational reliability and in turn, cost efficiencies and better customer satisfaction scores as our jet forward reliability priority move is beginning to produce benefits that directly impact the bottom line. Fuel prices moderated down 23 cents from our initial midpoint, resulting in the remaining two points of improvement to margin over our July expectations. While fuel prices aren't in our control, we continue to manage our exposure to volatile prices through our opportunistic hedging program. At the end of the day, we still weren't profitable, but the progress we made this quarter is evidence that we are taking the necessary steps to get the business back to operating profitability. It is also indicative of our commitment to hitting our financial targets. From the 300 million in revenue initiatives for 2024, which we expect to exceed to the second iteration of our structural cost program, which we expect to achieve at the top end of our range, we have a consistent record of hitting our program targets. The groundwork is set to realize the jet forward plan and hit the EBIT targets we set out for the next three years. Turning to our third quarter results and fourth quarter outlook on slide nine. In the third quarter, our ChasmX fuel growth of .8% beat the end of our initial guidance of up 6 to 8% driven by better operational performance and a shift in the timing of expenses to the fourth quarter. Our structural cost program has also progressed well over the year, achieving 24 million in savings in the third quarter and year to date savings of 169 million. And during the quarter, we continued our commitment to a more sustainable industry, signing an agreement alongside World Fuel Services and Valero to bring to New York the first ever ongoing supply of blended sustainable aviation fuel with initial delivery expected in 2024. Turning to the cost outlook. I am pleased we are maintaining the midpoint of our prior full year guidance of 7.5%. In the fourth quarter, we do expect ChasmX fuel to be temporarily pressured due to a number of transitory factors, including one, 2.5 points of largely maintenance related expenses that shifted into the fourth quarter. Two, the impact of contractual wage rate step ups were 2 points. Three, the lapping of one-time credits from the fourth quarter of last year, including our 2023 Pratt & Whitney compensation worth about 1.5 points. And four, one point from pumping against a near perfect completion factor in 4Q last year and the impact on capacity from Hurricane Milton cancellations. In total, these factors represent about 7 points of transitory headwinds to our controllable costs, resulting in ChasmX fuel expected to be up 13 to 15% year over year for the quarter. Independent of these headwinds, ChasmX fuel would be firmly in the mid to high single digits for the quarter. I want to be clear. We remain firmly within the full year ChasmX fuel range we shared last quarter and have now narrowed our range to up 7 to 8%. As we look to next year, I would like to reiterate our previous commentary on 2025 costs. On flat capacity, which we currently expect in 2025, our model has historically resulted in annual ChasmX fuel growth in the mid single digit range. While we will not guide 2025 metrics until the January call, these fourth quarter unit cost levels are not indicative of where we expect ChasmX fuel growth to be in 2025. Now shifting to our fleet. In the third quarter, we took delivery of six A220 aircraft, supporting the continuation of our fleet monetization program. So far, the program, which we have increased from 75 million to 100 million earlier in the year, has avoided roughly 95 million of costs to date through the continued optimization and avoidance of engine maintenance on our E190s. The program and its benefits will continue through 2025 when our E190 fleet is set to be fully retired. In the fourth quarter, we expect to take seven deliveries for a total of 27 aircraft deliveries this year. These deliveries make up the majority of our CAPEX forecast of about 450 million for the fourth quarter and 1.6 billion for the full year. Turning to our balance sheet on slide 10. At the end of the quarter, our total liquidity excluding our undrawn 600 million revolver was 4.1 billion. This includes the proceeds from our 3.2 billion debt raise in August, which consisted of senior secured notes and a term loan, both backed by our True Blue loyalty program, as well as 460 million worth of new convertible notes. The proceeds from the new convertible notes were used to retire a portion of our existing 2026 convertible notes. The remaining capital is expected to pre-fund CAPEX for the remainder of 2024 and through 2025 and provide ample runway for jet forward. The deal structure also gives us balance sheet flexibility with prepayment options and exposure to more floating rate debt. We expect aircraft deliveries to be funded with cash, further adding to our existing unencumbered asset base of about 5 billion. Being well capitalized allows our team to fully focus on getting the business back to profitability, improving our balance sheet, and working to eventually produce free cash flow. We firmly believe jet forward is the right plan to get the business back to operating profitability and we are confident in the 800 to 900 million EBIT uplift in 2027. Jet forward consists of initiatives that are in our control, providing reliable service even in the face of ATC challenges, building out our leisure network in the northeast where our brand is already well positioned to win, and offering our customers the products and perks that they desire. All the while ensuring our cost base allows us to offer more value versus our peers. Jet forward is clear, it is actionable, and as we move through the fourth quarter and into 2025, I believe we have a solid foundation to realize its benefits and drive value for our shareholders, crew members, and customers. Thank you. We will now open it up to your questions.

Thank you. At this time, if you would like to ask a question, please press the start and one. Your telephone keypad. You may remove yourself from the queue at any time. Star two. Once again, that is star and one if you would like to ask a question. We will take our first question from Savvy Sith with Raymond James. Your line is now open.

Good morning, everyone. I know Joanna mentioned network deployment is maturing in 2025 and you do have the jet forward initiative. I'm not sure if there is a question for Marty or David, but when should we start seeing the -over-year revenue or RASM trends as they move sequentially, performing better than seasonality?

Hi, Savvy. Thanks for the question. It is funny. I think if you look at all of the contributors to jet forward, there are a lot of puts and takes in here. I will go back to the first $300 million we promised in 2024. The beauty of having a lot of different initiatives is that some can be above, some can be below. I think we have said already that the network changes are not among the biggest changes that we are making. Certainly things like the preferred seating program, preferred seating fees have changed even more. Some other stuff we will be announcing soon. On a relative basis, we will be bigger. We really focused on the more macro elements of both the $300 million 2024 promise and the $800 million promise of jet forward. We will be updating you going forward about that one. I would say from a network perspective, we are very happy with what we are seeing so far. I will say that if you think about the path for that to phase in, the redeployment of the capacity is going to start ramping. The good news is if you look at our fourth quarter capacity, the last big capacity changes are coming out in the stations we just closed and then being redeployed. I will give you an example of Minneapolis. We flew to Minneapolis for 57 months and we had phased pretty aggressively as far as revenue going up there. That plane is now flying I think in Iceland and we are in month one of Iceland and yet we are still maintaining the opportunities. We are putting the airplanes in places where we already have a very strong -of-fire base. In fact, Iceland is already in part of the top quartile of -of-fire attach rates for our network. We are very positive about what we are seeing there and I am actually very much looking forward to the redeployment. I think it is a big part of building the depth that we need in the East Coast leisure market.

That is a helpful perspective. Thanks, Marty. If I might just ask on the competitive capacity side, so you are doing what you can do to control that, what you can control, but it seems like industry capacity is also moderating. I wonder if you could give a little bit more color and especially on what you are seeing from frontier and spirit because there were some aggressive cuts this quarter.

I do not want to go into too much detail airline by airline, but I would say on a macro level competitive capacity. Our competitive capacity is actually up fourth quarter over third quarter. Competitive capacity in our markets is really not being contributed to by the ULCCs, but we are seeing it from other carriers. I would say even with, in fact, I have got a pretty big increase and frankly even among that we are still maintaining our third quarter unit revenue. I think that just speaks to the underlying strength of the revenue performance we have right now.

Helpful. Thanks, Marty. Thank you. We will take our next question from Jamie Baker with JP Morgan. Your line is open.

Oh, yeah. Good morning, everybody. So when I think back to the murder, Joanna, I always viewed your predecessor as sort of leading the charge on that and it is water under the charge at this point. But when I think of the international strategy, I was always of the impression that there was pretty widespread agreement that it made sense and the domestic network could support it and so on. So I guess that is my question. With the downsizing that is taking place and what you internally are contemplating from here, is there still widespread logic for the transatlantic operation and are we anywhere near the point where the domestic franchise might not be able to adequately support it?

Thanks, Jamie. Appreciate the question. I think maybe just the headline. You have seen us communicate the different pillars of Jet Forward on a very good trajectory and I am pleased with direction that we are moving. Obviously, one of the pillars is focused on building the best East Coast leisure network. But transatlantic is an important part of that as a spoke. It drives nice relevance in our loyalty program. But if you actually look at the underlying performance from this summer, we were really pleased with how it did. And as we think about the future, I think team has done a nice job seasonalizing it appropriately and looking for opportunities to redeploy the fleet during those long, cold winter months and focusing on the revenue that we can drive during the summer from some great leisure destinations across the Atlantic. So it has evolved since my predecessor, but I think evolved in the way it needed to as we move forward with our Jet Forward plan.

Okay, helpful. And then second, I do have to ask, can you envision any scenario where you might reengage with Spirit or maybe scratch that, a better way to ask the question, do any of the tenants of the original deal still stand or still appeal to you given how your balance sheet and your margins have evolved since then? Thanks in advance.

Sure, thanks for question. So it may be to be clear, we're not interested in revisiting the Spirit, the Spirit potential acquisition. You know, we want to really focus on improving our margins within JetBlue, delivering on Jet Forward, controlling what we can, and keeping the team leader focused on that. I will say that if there are opportunities that come up with assets that are reasonable and may allow us to grow in a capitally prudent manner, obviously we would consider and evaluate those. But of course, there's a complexity there, lease price, aircraft age, reconfiguration, and the list goes on. So headline, we're not interested in revisiting the Spirit acquisition, focusing on Jet Forward, laser focus on delivering sort of the organic plan for JetBlue, and then the opportunity to potentially consider things that may shake free to the extent it makes sense for JetBlue.

Super helpful. Thank you very much.

Thank you. We'll take our next question from Daniel McKenzie with Seaport Global. Your line is now open.

Oh, hey, good morning. Thanks. Great job on the third quarter. And, you know, thanks for the commentary on 2025. It would be great to go back to that confidence in the 2025 supply demand backdrop that you guys mentioned in the script. And I know you're not going to guide to the 25 metrics, but it'd be great just to revisit the goals. And so if we could just set aside any further hiccups from Pratt & Whitney, based on what you're seeing today is the goal of breakeven margin still a reasonable base outlook for next year? And I guess, you know, what are the moving pieces that you're watching most closely that could potentially change that?

Hi, Dan. Thanks for the question. Appreciate it. So in regards to 2025, we're just going to reiterate what we've been saying. So we're still expecting mid to high teens number of aircraft on the ground due to the GTF issue. And that is going to result in flat capacity year over year. We're in the middle of the planning process at the moment. In terms of chasm ex-fuel, historically, with a flat capacity, you should expect a mid single digit chasm ex-fuel number. It's still a little too early to provide guidance beyond that. So we're reiterating what we've previously said, which is building a plan with a goal to have op margin, which is breakeven or better. So we're pleased with the momentum that we're seeing in jet forward. And we also continue to assume that the macro backdrop continues to be constructive. So more to come in January, but we're just reiterating what we've previously said around our 2025 outlook.

Yeah, helpful. And I guess, second question here on jet forward, I don't believe the benefits that you guys are current targeting included in other large partnership, but I believe that's something that you're looking at. And so I guess my question is, is how quickly, you know, if a new partnership is announced, how quickly could that be turned on? And how quickly could any incremental revenue potentially fall to the bottom line?

Hi, Dan, thanks for the question. So I will say we did, there is a plug in jet forward for the concept of some level of partnership going forward. And it's certainly something that we're looking at. I, it certainly could be with American, it could be with another carrier. I do want to remind you, we do have 52 partners right now that we work with that mostly at JFK in Boston. So, you know, we understand partners well, I think we learned a lot through the NEA as far as what worked for us, what might not work for us. So I'm cautiously optimistic that that we might have an opportunity at some point in the future. It's not a gigantic number that's, you know, that's going to make this plan pivot. But I think it's certainly one of the tools that could be in the toolbox to try to achieve jet forward. Now, second thing is, with respect to speed, I think it'd be too early to say, I think it depends on what the structure of the partnership is. But, you know, we have a lot of experience at this and I'm, it'll be the appropriate speed for whatever size partnership we choose.

Yeah, thanks, you guys.

Thank you. We'll take our next question from Dwayne Fesemworth with Evercore ISI. Your line is open.

Hi, thanks. Good morning. Just on the election impact, Marty, maybe for you, can you speak to the shape of bookings on the other side of the election? Is this, you know, are we seeing this pick up on the other side or is it an expectation that booking activity, you know, will pick up when we get to the other side of it?

So we've, you know, when we modeled 2024, we were making an assumption for election impact, which is, which has come true, because we've seen this in previous presidential elections. And it's really two pieces of the change. The first one is depressed travel during the actual week of elections. And that's something we've seen historically. And I think we're forecasting it this year. Luckily, we had already made trough adjustments. Because as we've talked about in the fourth quarter, we were much more aggressive pulling down the troughs. So I think we had that piece recovered. The longer the I think actually slightly larger impact and longer term impact is it's just a period of seven to 10 days where there's just not as much booking activity as you've been historically. And it's actually not that different from what we saw during Milton, which was, yes, during the hurricane, there was no flying in and out of Tampa and Sarasota and that West Coast of Florida. But at the same time, there was also people who just weren't booking because they were focused on, you know, dealing with a hurricane. I think during the election, it's sort of the same thing, which is there's some bookages sort of melt away because people are focused on other things. But again, this is nothing different than what we've seen historically. But we really felt the need to call it out and mostly to make sure that we can give you a clean comparison between third and fourth quarters.

Great. And then maybe just to stay with you, I wonder if you could comment on how you're seeing Caribbean RASM playing out this winter. You know, we had at least one carrier give some forward look on, you know, early 1Q, January, February yield commentary. I just wonder what sort of RASM improvement you're thinking about. Would that be a leading entity for you or would it be sort of more similar to system average? Thank you.

So Caribbean has always been above system average for us. So it's a very strong market and it's a market where we have a strong franchise and a very strong customer following. I think it's really too soon to really talk about first quarter RASM. I will say in general, we've been pretty aggressive as far as adding capacity into San Juan and we've been very happy what we've seen so far, including putting mid capacity in there. But, you know, this market's going to be important to us and we have a lot of confidence about how Caribbean will shake out.

Okay. Appreciate the thoughts.

Thank you. We'll take our next question from Scott Group with Wolf Research. Your line is now open.

Hey, thanks. Good morning. So on the capacity front for flat next year, any initial thoughts on how to think about the first half of next year? And then I think you said we're going to have mid to high teams aircraft on ground related to GTF. Would you expect to end the any higher or lower than that mid to high teams? I just want to understand the trajectory of the GTF. Thank

you. So maybe I'll start with the fleet and then I can hand it over to Marty. So no, our expectation continues to be on average, we will have mid to high teams number of aircraft on the ground next year. That's our planning assumption that we're using heading into the 2025 plan. I also in the process of extending 30 leases that were set to retire and we're keeping those in the fleet in order to backfill some of the loss capacity due to the GTF. So we are in the process of working through those negotiations. And so that is helping the capacity outlook for next year. Maybe over to Marty just on any more detail that you would add.

Yeah, the only detail, I mean, we're not going to, obviously in the fourth quarter call, we'll give better guidance as far as what to expect in the first half of 2025. But based on what we know about the fleet plan right now, you see that ASMs are negative in fourth quarter, we will still be negative in first quarter as well. And it's, unfortunately, this fleet situation is very, very dynamic. And we continue to be very frustrated as far as the status right now, as far as being able to actually get a handle on what's happening with frat. But we'll give more detail about that in the fourth quarter on the fourth quarter call.

Okay, that's helpful. And just secondly, when we talk about the mid single digit type chasm for next year, I just want to make sure are we including the sort of the two point hit from the wage step up? I guess you'll still have that for a couple quarters next year. And are we assuming anything around pilots? Because I think that the extension becomes starts to be starts to expire, I guess, early next year.

So with flat capacity, as a reminder, our historical unit cost performance would insinuate that we would be at mid single digit chasm fuel next year. And that is inclusive of, you know, all labor assumptions, maintenance assumptions. I mean, that's all in next year, at the highest level, we'll continue to see inflationary pressures across the labor work groups. We also will have a step up in maintenance expenses as well, just due to the nature of the V 2500 fleet. But these are reasons why we also put in place that the cost pillar as part of jet forward. So we have ways in which we're going to offset these pressures that we're seeing across labor and maintenance and which will result in a mid single digit number for 2025.

Thank

you. Thank you. We'll take our next question from Brendan Oglinski with Barclays. Your line is open.

Hi, good morning. And thanks for taking my question. Marty, if I'm hearing you right, I think the majority of the improvement you're seeing on the commercial side is really being driven by changes to product and pricing. Is that correct? And the network changes are going to maybe potentially be more impactful in 2025? Is that correct?

That's absolutely correct.

I mean, can you elaborate a little bit on what changes have been made this year, though, that you're where you're seeing, you know, that growing rate of 300 million or more?

Sure. So as a bunch of changes we've made already, I think the most impactful ones so far have been the preferred seating program where, you know, for the non-even more seating that's in the front of the airplane, we are charging a fee to get into those seats. Now, to be clear, we have not taken away free seat assignments. We still offer free seat assignments for even Apple basic customers. But you will be, if you want to sit in the front of the airplane, there will be a fee for that. That has been above our expectations. We just recently in September announced a change to BlueBasic where we now are offering a free carrying bag for BlueBasic customers. Also, it's formed well above expectations. We're quite happy with that and how that's gone. With respect to the change even more, we are actually very excited about that with respect to how we'll hopefully be able to better merchandise that product and make it a little bit more attractive product. And we'll be announcing some product changes as we go forward. Let's see. Oh, we've also put in variable pricing for check baggage during peak periods. Again, in the fourth quarter call as we close out 2024, we're going to give a full accounting of the $300 million we promised and some little more detail as far as where the benefits have come. But again, this is the point of having a multifaceted approach. You know, some things can be above forecast. Some things can be at. Some things can be low, can be below. But, you know, the goal we as a leadership team is to make sure that we make a commitment to our investors and we deliver on that commitment if not more. So that's why we actually really enjoy having a basket. And the last thing I want to mention, and Joanna mentioned it in the script, but I can't stress it enough, our crew members have really stepped up as far as delivering a fantastic product. Whether it's, you know, our airport folks and, you know, flight and in-flight crews as far as improving our performance, whether it's maintenance, getting airplanes in tip-top shape, you know, having our on-tip performance go up by 12 points and the improvement in NPS, I can't stress enough how important that is. So again, I should give a thanks to all our crew members for their hard work because we're really seeing in some of our numbers. I think we're definitely seeing the benefit of an improved customer experience.

I appreciate all that, Marty. And maybe if I can just do one last thing for Joanna. I mean, if things aren't turning towards profitability next year, and I know you guys don't want to provide guidance right now, but what are incremental levers you can pull to get the business, you know, in the black solidly?

Yes, so I think it's jet-forward. And if you look at what we laid out, you know, the goal is to get us back on the trajectory towards profitability. So as we think about next year, you know, we're building a plan with the goal to get to op-margin break even or that's the first step. And then, you know, we'll continue after that. But all of these pillars contribute to that, some of which, as you know, we've announced, but there's more to come down the pipeline. Even more space is obviously the announcement today, but we've actually got a number of additional announcements coming. Obviously, this is all against a macro backdrop of, you know, cooperative fuel, other airline capacity, and then obviously managing through our own AOG issues. If those improve in any meaningful way, that will be tailwinds on the plan.

Thank you.

Thank you. We'll take our next question from Andrew Dodora with Think of America. Your line is open.

Hi, good morning, everyone. So Ursula, just kind of going back to GTF, you know, I know it's very fluid, but any thoughts on what 2026 could look like maybe relative to 2025 in terms of AOGs? And then I guess for next year, any kind of framework on how we should think about potential, what any potential compensation from Pratt could look like?

Morning, Andrew. Thanks for the question. We do have clear line of sight beyond 2025. We're continuing to work constructively with Pratt & Whitney, both on our aircraft on the ground forecast, as well as compensation. So both are a work in progress.

Okay, got it. And then maybe just a follow up for Marty, just on the election impact. Just curious, you know, are there any particular markets where you see an outsized, you know, impact? Or is it pretty broad based? Just curious your thoughts there. Thank you.

It's definitely broad based. There's no systemic markets. We see it.

Thank you. We'll take our next question from Steven Trent with City. Your line is open.

Thanks very much, everyone. And I appreciate you taking my question. I'm sort of curious when you think about your focus on premium leisure customers, do you anticipate any movement or adjustments in how you think about your Freak and Flyer program?

I see him. Thanks for the question. You know, actually, I think if you look at how we've structured True Blue right now, it is already more friendly for leisure customers than we see in competitive programs. And frankly, we've had a great year in True Blue, even in the world when we're flat or down in capacity. You know, our credit card spend is up in the low teens. You know, we're actually, I think we've released a number. We've had a major growth in mosaic customers. We've got a program out there for elite customers from other airlines to come over to Jet Blue and earn elite status here. I think it's actually worked extremely well with respect to what we've done in True Blue. And I think the beauty of this is, and it's funny, if you think about the sort of the customer target for us, and one of the phrases I like to use is, every single person who flies is a leisure customer. There's a subset of them who are both leisure and business customers. So, you know, being focused on leisure customers actually, I think it's an opportunity for us. And frankly, you know, if you look at, you know, I think we're one of the very first programs in the country to have dollar-based earning and dollar-based earning, which we did, you know, at least 10, 12 years ago. Our value proposition is fantastic. So, you know, we're very happy with how True Blue is structured, and I'm very optimistic about the ability of that team to continue to shift more share.

Yeah, if I could just add on top of that, you know, I think this all ladders back, not to sound like a broken record, but ladders back to our Jet Forward plan in delivering the things that customers value. And if you look at our loyalty program, whether it's the lounges or some of the improvements to mosaic that we're rolling out, including the premium card, that all plays to the premium customer. You know, we've launched a business card down in Puerto Rico. We've got a great status match with ABUS for mosaics. And so, the list goes on and on. So, as we think about loyalty in particular and how we've designed the program, as Marty pointed out, it's very much designed with the leisure customer in mind, but we also are being very thoughtful and deliberate about how we drive more stickiness with our mosaics and really make them feel important to JetBlue. You know, there's this vast amount of people who fly, a good amount every year who are lost by some of the bigger programs, and we see a real opportunity with them.

Appreciate it. And if I may just follow up real quickly on that, you know, when you think about the growth of True Blue, for example, any high-level idea of what portion of that growth is attrition from other carriers?

So, we don't have that number. We can circle back with you on it. Some of it is clearly that, but at the end of the day, that's not how we're thinking about True Blue. It's not about necessarily trying to see others attrid out. It's trying to demonstrate we've got a program that people want to be a part of because it drives value for JetBlue, value for the customers on JetBlue, and frankly, a unique approach to loyalty. So, perks that you care about and perks that you want. Marty?

Yeah, the one thing I would add is I think that for us, True Blue represents on a relative basis a somewhat better opportunity than you'll see from some other carriers. You know, the example I'll give is, you know, if you're a frequent flyer in an OA hub, you know, whether you're in Minneapolis or Dallas or whatever, there's not a lot of share to shift. You know, we tend to be in very competitive markets. You know, South Florida, there's, you know, two other airlines hubbing in South Florida. We've got multiple airlines hubbing in Metro New York, two airlines hubbing in Boston. Hubbing, I use the phrase loosely, but, you know, we're in very competitive markets. So, as a relatively low share wallet airline, I think we actually have a lot of upside that, you know, you would not have if you were, you know, a Delta customer in Minneapolis where they probably have all that share wallet already.

Okay. Appreciate the time. Thank you.

Thank you. We'll take our next question from Thomas Fitzgerald with TD Cowan. Your line is open.

Thanks so much for the time. Just curious how the adding the carry-on bag to Blue Basic has performed versus your expectations as well as some of the seasonal mint flying you're rotating Transatlantic this winter.

Hi, great questions. First of all, with respect to the carry-on bag, it is above what we've expected. And, you know, I think as we've seen, I think during the peak, we were able to be competitive without having that product against our biggest competitor. But clearly in the tropes season, we really suffer from it. And frankly, we've seen more upside than we had originally forecasted. So that's been a great program for us. With respect to the rotation of the seasonal mint services, I almost jumped in when Joanna finished her comment to Jamie about the Transatlantic. But I think we have really found a fantastic formula with being able to shift airplanes between the Atlantic in the summer and some of the seasonal mint markets in the winter time. So historically, I think this summer we had 13 or 14 daily round trips across the Atlantic. This winter we're down to six. Those airplanes are being redeployed into domestic markets that are actually very strong in the winter. You know, one, I'll give one example. We've got, I think, three or four airplanes that are in Phoenix, both from Fort Lauderdale, Boston and New York. You know, the mint bookings are actually been fantastic in that. I think we just started that service this week, in fact. But that looks to be a rousing success as far as the ability to shift airplanes back and forth. Now, back to a line that's in the script, every airplane has to earn its way into the network. You know, when you talk about an international strategy, when Jamie used that phrase, you know, in 2019 when we started talking about the Atlantic, I said it is a spoke. And the Atlantic still is a spoke. And this summer it's been a profitable spoke. So I think, actually, we have a really good combination. And it's a testimony to how good the mint product is because, you know, we just had this week a customer who did a mint review that was published. We've had a couple of emails from customers who had come over to JetBlue. It is a fantastic product. And it's been a great, great profit generator for us.

That's super helpful. Thanks so much for that call, Marty. Just curious as a follow up, there's been reports in the press about cutting out hot food on transatlantic and basic economy. I'm just kind of curious on the broader strategy of how you just driving a revenue premium while also being really judicious on costs. So a little bit here more on the thinking there. Thanks again for the time.

Thanks so much for the question. We have a fantastic core product across the transatlantic, whether it's cold or it's hot. I personally sat through an entire food tasting process with dig. And it is second to none. So I would put it up against any other hot product currently flying the transatlantic. So I think there's much to see. There's not much to see there, frankly. It's a fantastic product. We moved it to cold because we think that there's an opportunity there to save some costs. But it's still a far superior product to what you've got flying transatlantic and coach currently. So really proud of what we're delivering there.

Thank you. And we will take our final question from Connor Cunningham with Molly S. Your line is open.

Everyone, thank you. Just back to the network for a second. I realize a lot of the changes that you've made have been added up to Rasm and returns and all that stuff. And that's great. But when you think about relevancy as you've made those changes, are you finding that you're growing the pie of people that are coming towards jet blow? Point being is like, do the network adjustments really drive more dependence for people that are

coming to jet blow? I think that's a good question. The answer is absolutely yes. I'd say based on the numbers we're seeing in places like Providence, Bradley, Manchester, Islip, we're absolutely pulling customers towards jet blow. I will note that all four of those markets had competitors, both ULCC competitors and full service competitors, our legacy competitors, I guess. I'm not sure we can call Southwest full service, but we had a lot of Southwesters up there as well. And we are actually doing a very good job of pulling these customers over. And frankly, in these markets, in New York State, in New England, we are sort of the default carrier for leisure. And I don't want to be in a situation where we have customers who would like to fly jet blow, who do not have the opportunity in a market that we forecast we can do profitably. So this is not the end of the growth we're going to see in those markets. And it's because customers respond to it extremely well.

Okay. I'll just keep you going. Thank you,

guys. Thank you, Annette. We have no further questions in the queue at this time. I'll turn the program back over to Mr. Kush Patel for any additional or closing remarks.

Thanks, everyone. That concludes our third quarter 2024 earnings conference call. Have a great day.

And again, that will conclude today's conference. Thank you for your participation.