Summary of JetBlue Airways (JBLU) FY Conference Call - June 04, 2025 Company Overview - **Company**: JetBlue Airways (JBLU) - **Key Executives Present**: Marty St. George (President), Ursula Hurley (CFO), Jamie Perry (President of Paisley) Key Industry Insights - **New Partnership**: JetBlue announced a new partnership with United Airlines called the Blue Sky Partnership, which is expected to generate significant value through three main components: 1. **Loyalty Program Integration**: JetBlue's TrueBlue program will allow customers to earn and redeem points across the entire United system, enhancing customer experience and loyalty [1][2] 2. **Joint Flight Sales**: Both airlines will sell each other's flights on their respective websites, increasing booking options for customers [2][3] 3. **Paisley Alignment**: JetBlue's subsidiary, Paisley, will sell non-air ancillary products to United customers, expanding its market reach [3][4] Financial Performance and Projections - **Value Generation**: The partnership is expected to be a significant value generator for JetBlue, with updates on the Jet Forward program anticipated in the July earnings call [3][5] - **Regulatory Review**: The partnership is undergoing regulatory review, with optimism about passing the process due to lessons learned from previous partnerships [5][6] Operational Insights - **Demand Trends**: JetBlue has observed a "new normal" in demand, with recent weeks showing flat year-over-year revenue declines. However, there was a positive spike during Memorial Day weekend [30][31] - **Capacity Management**: The company has been proactive in adjusting capacity in response to demand fluctuations, particularly in the Newark market [32][70] Cost Management and Efficiency - **Controllable Costs**: JetBlue has successfully managed controllable costs over the last six quarters, with a focus on aligning capacity with demand [41][43] - **Fuel Optimization**: The company is implementing over 25 initiatives to reduce fuel burn, leveraging technology and AI for operational efficiency [44][45] Future Growth Opportunities - **Paisley Expansion**: The rebranding of JetBlue Travel Products to Paisley reflects a shift towards a multi-customer model, with aspirations to partner with other airlines and travel companies [54][56] - **Technology Investments**: JetBlue is investing significantly in technology to enhance customer experience and operational efficiency, with annual spending between $100 million to $150 million on non-aircraft CapEx [66] Market Positioning - **Premium Travel Segment**: JetBlue continues to see strong performance in the premium travel segment, with high single-digit RASM growth [36][37] - **Competitive Landscape**: The airline is closely monitoring competitive capacity and adjusting its strategies accordingly, with a focus on maintaining a strong market position amidst fluctuating demand [70][72] Conclusion - **Optimism for Future**: JetBlue remains optimistic about its future, particularly with the Blue Sky partnership and ongoing initiatives to enhance customer experience and operational efficiency [78]

Core Points - JetBlue and United Airlines have announced a collaboration called "Blue Sky," which links their loyalty programs, allowing customers to earn and use miles and points across both airlines [1][2][4] - The partnership will enhance customer options for booking flights and accessing benefits such as priority boarding and complimentary seat upgrades [1][5][6] - JetBlue will provide United access to slots at JFK International Airport for up to seven daily round-trip flights starting in 2027, and both airlines will exchange flight timings at Newark Liberty International Airport [1][5][6] Loyalty Program Integration - MileagePlus customers can earn and redeem miles on most JetBlue flights, while TrueBlue members can earn and use points on United's extensive network, including popular international destinations [5][13] - The collaboration includes reciprocal benefits for loyalty program members, such as priority treatment, free checked bags, and no blackout dates for award seats [10][11][12][13] - TrueBlue is noted as one of the most popular loyalty programs in the Northeast, with nearly 60% of people in New York City and Boston holding membership [8][11] Technology and Service Enhancements - United will transition its travel services, including hotel and rental car bookings, to JetBlue's Paisly platform, streamlining the customer experience [14][15] - The Paisly platform is designed to offer a personalized service model, contrasting with typical automated travel platforms [15] - JetBlue is expected to be the first partner to utilize United's Kinective Media technology for personalized advertising and offers [17] Market Position and Future Outlook - The collaboration is seen as a strategic move to enhance customer choice and value, leveraging United's global reach and JetBlue's East Coast network [4][6] - Both airlines will continue to operate independently regarding pricing and network management, including new route launches and promotions [6][17] - The timing for the rollout of reciprocal benefits and additional features will be announced later this year [2][8]

Financial Data and Key Metrics Changes - The company reported a year-over-year increase in RASM of 1.3%, which was within initial guidance, while ASMs decreased by 4.3% year-over-year [15][22] - The company ended the quarter with a strong liquidity position, representing 42% of trailing twelve-month revenue, the strongest liquidity ratio in the industry [12][30] - CASM ex-fuel grew by 8.3% year-over-year, better than the initial guidance midpoint of 9% [34][35] Business Line Data and Key Metrics Changes - The premium segment performed exceptionally well, with premium RASM, including Mint and Even More, outperforming core RASM by high single digits [18][19] - Loyalty revenues grew by 9%, supported by new partnerships and the launch of a premium co-branded credit card [19][20] - The international flying segment showed stronger performance, with Transatlantic RASM up 28% year-over-year [16] Market Data and Key Metrics Changes - The Northeast market experienced a slowdown in demand, impacting bookings more than other regions [49][50] - Domestic markets showed weakness, while international markets, particularly in Latin America, performed relatively better [16][22] - The company observed a wider spread between peak and trough unit revenues, with peak RASM up high single digits and off-peak RASM declining double digits year-over-year [22] Company Strategy and Development Direction - The company is committed to its long-term strategy, Jet Forward, which aims to drive transformational change and achieve breakeven operating profitability [9][10] - The company is adjusting capacity to better match supply with demand, having made significant capacity cuts in response to changing booking patterns [10][14] - The focus remains on enhancing customer loyalty and brand strength, with initiatives under Jet Forward showing early signs of success [19][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macroeconomic environment remains unpredictable, leading to a cautious approach in reaffirming full-year guidance [6][7] - The company is leveraging past experiences from the 2008 financial crisis and the COVID-19 pandemic to navigate current challenges [7][10] - Management expressed optimism about the resilience of the premium segment and loyalty program, which are expected to provide stability amid economic uncertainty [24][26] Other Important Information - The company has deferred $3 billion in capital expenditures, pushing out A321neo deliveries to the 2030s to focus on returning to profitability [12][30] - The company is actively exploring adjustments to its fleet plan to preserve cash and enhance operational flexibility [32][33] Q&A Session Summary Question: When did the change in booking patterns start and what adjustments were made? - Management noted that booking slowdowns were observed in January, leading to aggressive capacity cuts in February and March [43][45] Question: Is the slowdown in demand specific to certain geographies? - Management indicated that the Northeast region is experiencing a more pronounced slowdown compared to other areas, impacting capacity strategy [49][50] Question: Can you provide a range for second-half capacity outcomes? - Management refrained from providing specific guidance but indicated that capacity would be measurably down from initial expectations [55][56] Question: What benefits are expected from the domestic partnership? - Management highlighted that the partnership would enhance network opportunities for TrueBlue points, improving customer utility [58][59] Question: What is the status of the Pratt and Whitney compensation situation? - Management reported that there are currently 10 aircraft on the ground, with improvements noted in operational performance, but compensation discussions remain fluid [78][81] Question: Will there be new market entries this year? - Management confirmed that multiple new routes are expected to be announced later in the year [83] Question: What is the outlook for the spread between premium and core RASM? - Management expects continued growth in premium RASM, with hopes that core RASM will also improve, maintaining the spread [87][88] Question: How is VFR demand performing in Latin America? - Management reported that VFR traffic remains stable, with no significant drops observed in key markets [93]

Financial Data and Key Metrics Changes - The company reported a year-over-year increase in RASM of 1.3%, meeting initial guidance, while ASMs decreased by 4.3% year-over-year [17][24] - The company ended the quarter with total liquidity of $3.9 billion, representing 42% of trailing twelve-month revenue, the strongest liquidity ratio in the industry [13][31] - CASM ex-fuel grew by 8.3% year-over-year, better than the initial guidance midpoint of 9% [36] Business Line Data and Key Metrics Changes - The premium segment performed exceptionally well, with premium RASM, including Mint and Even More, outperforming core RASM by high single digits [20] - Loyalty revenues grew by 9%, supported by new partnerships and the launch of a premium co-branded credit card [21] - Transatlantic RASM increased by 28% year-over-year, benefiting from seasonal optimization, while Latin markets also showed mid-single-digit unit revenue growth [18][19] Market Data and Key Metrics Changes - Domestic markets showed weakness, particularly in off-peak days, while international flying delivered stronger performance [16][24] - The Northeast region experienced a slowdown in demand compared to other parts of the country, impacting capacity strategy [51][52] - The company observed a wider spread between peak and trough unit revenues, with peak RASM up high single digits and off-peak RASM declining double digits year-over-year [24] Company Strategy and Development Direction - The company is committed to executing its long-term strategy, Jet Forward, to drive transformational change and achieve breakeven operating profitability [10][14] - Jet Forward is focused on enhancing customer service, expanding premium offerings, and building a robust loyalty program [20][22] - The company plans to continue adjusting capacity to match demand and is exploring opportunities to reduce costs while maintaining focus on core business [11][39] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macroeconomic environment remains unpredictable, leading to a cautious approach in reaffirming full-year guidance [7][8] - The company is leveraging past experiences from the 2008 financial crisis and the COVID-19 pandemic to navigate current challenges [8][41] - Management expressed confidence in the long-term strategy and the ability to manage through economic uncertainty while focusing on customer loyalty and brand strength [73][74] Other Important Information - The company has deferred $3 billion in capital expenditures, pushing out A321neo deliveries to the 2030s to focus on profitability [13][32] - The company has made significant progress in its cost transformation program, expecting savings to ramp during the second half of the year [10][39] Q&A Session Summary Question: When did the change in booking patterns start and what adjustments were made? - Management noted that booking slowdowns were observed in January, leading to aggressive capacity cuts in February and March [44][46] Question: Is the slowdown in demand specific to certain geographies? - Management indicated that the Northeast region experienced a more significant slowdown compared to other areas, impacting capacity strategy [51][52] Question: Can you provide a range for second-half capacity outcomes? - Management stated that while they expect to be measurably down from initial expectations, they will remain opportunistic based on demand [56][57] Question: What benefits are expected from the domestic partnership? - Management highlighted that the partnership would enhance network opportunities for TrueBlue points and broaden customer travel options [59][60] Question: What is the outlook for premium versus core RASM? - Management expects premium RASM to continue growing while hoping for improvements in core RASM, indicating a stable gap between the two [90] Question: What is the status of the Pratt and Whitney compensation situation? - Management reported improvements in aircraft availability and noted that they are not currently booking any compensation into their P&L [78][84]