JetBlue Airways Corporation

Good morning, everyone. My name is Alexandra. I would like to welcome everyone to the JetBlue Airways second quarter 2026 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, Koosh Patel. Please go ahead, sir.

Thanks, Alexandra. Good morning, everyone, and thank you for joining us for our second quarter 2026 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.jefflew.com and on the SEC's website at www.sec.gov. In New York, to discuss our results are Joanna Geraghty, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer. During today's call, we will make forward-looking statements about our outlook, strategy, and future performance. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release and SEC filings for information about risk factors that could cause those differences. These statements speak only as of today and we undertake no obligation to update them. We may also discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable gap measures are included in our earnings materials and available on our investor relations website. And now I'd like to turn the call over to Joanna Geraghty, JetBlue CEO.

Thank you, Koosh. Good morning and thank you for joining JetBlue's second quarter 2026 earnings call. Before we begin, I want to recognize our crew members for their outstanding work throughout a particularly challenging July. Despite extremely difficult, unpredictable, convective weather, coupled with ongoing ATC staffing constraints, our team has shown incredible dedication to our customers and each other. I'm especially appreciative of the many customers who have taken the time to recognize our crew members' professionalism, compassion, and dedication during these very challenging operations. Their performance reflects the very best of JetBlue. It has been two years since we announced JetForward. And during the second quarter, we once again demonstrated our ability to execute and deliver results even as we continue to strengthen our foundation for the long term. Through Jet Forward, we are building a more reliable operation, a more compelling customer offering, and a more focused network, while reinforcing our path to sustained profitability. Our ongoing work across each Jet Forward priority move enabled our crew members to execute during another quarter marked by a complex operating environment, including elevated fuel prices, significant thunderstorm activity and periods of airspace constraints. Delivering a reliable operation remains foundational to JetBlue. And despite these challenges, the investments that we've made in technology and process improvement are driving better performance. Fort Lauderdale is another clear example of our progress. We've grown rapidly and are seeing very strong customer demand for our added flying. We're working closely with the Broward County Aviation Department, who shares our common goal of building a stronger and more diversified portfolio of destination for South Florida travelers. We are very thankful for our longstanding partnership with the airport as we work together to formalize additional gate leases this fall. We've made changes to enhance our customer experience, which in turn improved our revenue performance. Second quarter RASM beat the midpoint of our revised and previously raised guidance. We were able to capitalize on strong demand across nearly all products and geographies, even as JetBlue and industry fairs moved higher throughout the quarter. Fuel prices alone do not determine our earnings trajectory. What matters is how effectively we respond. Throughout the quarter, we made adjustments to both pricing and capacity in response to higher fuel costs. These actions, along with resilient customer demand, enabled us to recover fuel costs more quickly than we originally anticipated. Based on the strength of demand and the traction from our commercial actions, we achieved nearly 50% fuel recapture in the second quarter, exceeding our expectation of 40% or more. Looking ahead, sustained demand strength gives us greater visibility into the second half, even as fuel prices remain very volatile. Assuming demand strength persists, we continue to expect to achieve 100% fuel recapture by early 2027. Following a very strong early start to the year, we withdrew our full year outlook last quarter after the external environment changed dramatically over a short period of time, even though our confidence in the underlying business remained strong. Since then, demand has remained resilient, our commercial actions have proven effective, and fuel prices moderated as expected from the elevated levels we saw in April, recent volatility notwithstanding. Collectively, we believe these developments provide sufficient visibility to reestablish our full-year outlook. We now expect full-year operating margin of approximately negative 2% to negative 5%, an improvement from our very challenging first half of the year. The midpoint of our guidance implies a significant inflection in our profitability, with second half operating margin approximately three and a half points better year over year. We widened our operating margin range given the recent fuel volatility, but still believe that pricing will continue to help offset higher fuel prices if they remain elevated. Despite this second half earnings improvement, we plan to continue to maintain a conservative capacity profile given that the geopolitical backdrop remains fluid and fuel remains volatile. Jet Forward is the key driver of our expected improvement. In the first half of 2026, we delivered $165 million of incremental EBIT from JetForward, bringing the cumulative benefit to $470 million. The most important takeaway is that JetForward is doing exactly what we said it would do. We established a clear plan, committed to measurable milestones, and we're delivering against them. While there have undoubtedly been quarters influenced by factors outside of our control from weather to macro, The underlying trajectory of the business continues to improve, and our confidence in the years ahead continues to grow. We are on track to deliver at least $310 million of incremental jet forward EBIT in 2026, and several of our largest initiatives are still ahead of us or in early ramp, including Blue Sky and Blue First, our new domestic first-class product. As those initiatives continue to ramp, we expect 2027 to mark a return to sustained operating profitability, an important milestone toward annual positive free cash flow. Looking further ahead, we expect Blue First and other JetForward initiatives to continue ramping into 2028 and beyond, helping to drive JetForward annual incremental EBIT to approximately $1.2 billion and a return to positive pre-tax margins. Based on this plan trajectory, we expect to achieve 2028 EPS of at least $1 per share, assuming continued demand strength and an average $3 per gallon jet fuel price in 2028. As I look ahead, our priorities and commitments are clear. Taking care of our people so they can deliver their best, executing jet forward, restoring sustained profitability, improving free cash flow, and strengthening our balance sheets. Our board and leadership team are confident that this disciplined focus is the right path, the best path to create long-term shareholder value by building a stronger, more resilient JetBlue. With that, over to you, Marty.