Good morning. My name is Brittany, and I would like to welcome everyone to the JetBlue Airways second quarter 2024 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listening mode. I would like to turn the call over to Jet Blue's Director of Investor Relations, Kush Patel. Please go ahead, sir.

Thanks, Brittany. Good morning, everyone, and thanks for joining us for our second quarter 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 investor.jebblue.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 safe harbor provisions of the private securities litigation reform act of 1995 such forward-looking statements include without limitation statements regarding our third quarter and full year 2024 financial outlook and our future results of operations and financial position including long-term financial targets industry and market trends expectations with respect to tailwinds and headwinds our ability to achieve operational financial targets our strategy plans for future operations, and associated impacts on our business. All such forward-looking statements are subject to risks and uncertainties and actual results made differ materially from those expressed in this release, as well as our fiscal year 2023-10K and other filings for a more detailed discussion of risks and uncertainties that could cause the actual results to differ materially from those made during this call are made only as non-GAAP financial measures. For an explanation of these non-GAAP measures and a reconciliation of corresponding GAAP measures, please refer to our earnings release. Senator Garrity.

Good morning, everyone, and thanks for joining our second quarter 2024 earnings call.

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Good morning. So, some technical difficulties. Apparently, our cost pillar is in full swing. We've only paid the phone bill for one of our conference rooms in the office. So, I will start over. Good morning, everyone, and thank you for joining our second quarter 2024 earnings call. I'm happy to report that we generated adjusted $34 million of pre-tax income for the second quarter. This performance would not be possible without our 23,000 crew members, and I would like to thank them for delivering a safe and reliable operation and for living our JetBlue values every day. Turning to slide four for a few remarks on our second quarter performance. Our team has been hard at work ensuring we deliver the best experience from our customers over the busy summer travel season. As part of our refocused long-term strategy, which I will touch on later in my remarks, we've made significant investments to improve our reliability and deliver more of our customers to their destinations on time, despite summer challenges from weather and persistent air traffic control staffing issues. Though we still have room to improve, we're off to a solid start. And for the first six months of the year, we've exceeded our 2023 performance for key operational metrics. This improvement helped us beat or exceed our second quarter guidance ranges. In addition to reliability, our second quarter performance was aided by continued strength in our premium product offerings, with even more space unit revenue up double digits year over year. We are also pleased with the progress of our $300 million and approximately $140 million of top-line benefit in the first half of this year. We also delivered strong progress from our cost savings programs in the second quarter, while fuel prices continued to moderate, and as a result, we were able to keep costs low in order to generate a positive pre-tax profit for the quarter. moving to slides five through seven as I mentioned last quarter even as we were implementing these near-term performance improvement initiatives our full new leadership team coalesced around refining our long-term strategy and we are now pleased to share additional details with you with more announcements still to come in the second half of the year our plan is rooted in thorough analysis of the near and longer term competitive landscape as well as extensive customer research. As a result, we feel confident in our refocused strategy, which we are calling Jet Forward, and are confident it's the right framework to position JetBlue for success. Jet Forward at its core is a back-to-basic strategy to be loved and to be profitable again in order to deliver value to our customers, our crew members, and our owners. This framework is designed to enhance our inherent strengths and effectively overcome the current challenges of our business and industry. Our challenges are clear. The Pratt & Whitney engine-related aircraft groundings, which are significantly impeding our growth rate and pressuring our profitability, as well as industry-wide cost inflation and persistent air traffic control issues, all of which are headwinds we are working hard to overcome. At the end of the day, our revenue growth has not been enough to outpace our cost challenges, and we need to fix that, which is why the goal of our strategy is set a foundation to lead us back to generating positive operating margin in the near term and driving sustainable earnings over the long term. We believe achieving these targets and executing on our strategy will be rooted in enhancing our strengths and focusing on what we can control. We have high-value geographies, a unique culture with a trusted brand, a low-cost structure, and a differentiated product and service that has set JetBlue apart from its peers, all of which we believe can be enhanced to drive even more value. And delivering that value is our ultimate goal. Turning to slide eight, we expect JetForward to deliver an incremental $800 to $900 million of EBIT contribution in 2027 versus year-end 2024, helping to guide our path back to sustained profitability. We expect to realize this benefit evenly over 2025 to 2027, with incremental upside beyond 2027 as several underlying initiatives ramp to their full potential. The $800 to $900 million of EBIT contribution in 2027 is in addition to the $300 million of revenue initiatives we've already announced for 2024. We plan to turbocharge our strengths with four priority moves, which you can see on slide nine, all designed to drive our path forward. They are, number one, delivering reliable and caring service, number two, building the best East Coast leisure network, number three, offering products and perks that customers value, and number four, a secure financial future, enabled by maintaining our cost advantage and restoring our balance sheet. these four moves may sound familiar given we began actioning on them back in the first quarter and we've already seen encouraging results from several underlying initiatives in the first half of the year in particular our investments to deliver reliable service are showing early indications of driving value across the airline operational reliability is essential to the success of our strategy and it's a top priority for our customers we've lagged our peers and on-time performance partially driven by our high concentration of flying in some of the most crowded airspaces in the world and our outsized exposure to air traffic control issues. While we are always working to improve on-time performance and recognizing the reality of our particular airspace, we are aiming to significantly improve our relative ranking in the coming years. This will be a multi-year initiative with many phases of investment, and we've already begun taking action on optimizing the operability of our fleet, delivering a reliable product and service, and providing a consistent customer experience. Initiatives we rolled out this year include adding more scheduled time for maintenance, scheduling greater buffers for VFR flights, and introducing new tools, such as automated turn tracking and enhanced customer-facing self-service and disruption management tools. We expect that over time, these investments will improve customer satisfaction and save on costs, helping to contribute about $100 million of incremental EBIT in 2027. Next, we are refocusing our network to build the best East Coast leisure network. Our network sits in some of the most valuable geographies in the world. We have a leading position in three of the five largest markets on the East Coast, including New York City, which is the highest GDP-producing metro area in the United States. We've already taken significant action in the first half of the year to refocus our network around our core strengths in these geographies, Leisure, VFR, and Transcon, especially along the East Coast and in Puerto Rico, where JetBlue is a household name for many customers. As we've emphasized, our actions are guided by our focus on profitability, and we expect these changes will drive close to $175 million of incremental EBIT contribution in 2027. Marty will provide more specifics on our actions. JetBlue has a long history as a beloved brand in our core geographies. Our attractive value proposition, offering an affordable yet differentiated experience, is well known by customers. We recognize that to be profitable and loved, we need to meet the evolving preferences of our customers, including an increased desire for premium experiences. Our strategy is more focused than ever on offering customers the products and the perks they value today. We believe that delivering on that brand promise will also enable us to ensure our customers feel rewarded for their loyalty. This in turn would help us specifically expand our share of premium customers, customers who want a higher quality experience but may feel forgotten by our competitors. In addition to the product changes we've already implemented this year, including adding new loyalty partners and products and enhancing our Blue Basic offering, we plan to announce additional exciting improvements to our product later this year. So stay tuned. While the financial benefits of our product changes will take time to realize, we expect them to contribute over $400 million of incremental EBIT benefit in 2027, with additional upside into the remainder of the decade. Finally, touching on our last priority move, a secure financial future. While we believe this will be an output of our efforts, we must also better manage what is in our control. And this starts with maintaining our cost advantage. It is imperative we keep our costs low so we can continue offering customers the most value when they fly. However, our Pratt & Whitney GTF engines continue to challenge our ability to plan our business over the long term. And we now expect aircraft on the ground to significantly increase in 2025. Ursula will provide more detail on this. In order to be profitable in this uncertain environment, we must transform our cost base in an aggressive manner, similar to the approach we've taken with our network changes. We'll be biased towards action in making bold decisions required to get our business back to profitability. And through investments in data science and staffing optimization, we expect cost savings will contribute about $175 million worth of incremental EBIT through 2027. Restoring our balance sheet health is also critical to a secure financial future and returning to profitable growth. We simply cannot continue to invest in capital-intensive assets that must be financed upon delivery and that are subsequently unable to produce a return because they have to be parked due to required maintenance and lengthy wait times. With that in mind, we've come to an agreement with Airbus to defer 44 A321neo aircraft, which are the fleet most impacted by the Pratt & Whitney GTF issues. This will reduce our upcoming capital expenditures by $3 billion, helping us to improve our free cash flow outlook and restore our balance sheet health. While many parts of our business will be evolving with Jet Forward, maintaining our unique culture is core to its success. In the second quarter we checked in with our entire organization through a poll survey which showed a number of improvements that indicate crew members are optimistic about our refreshed strategy. Our people are critical to the execution of our strategy and we will continue investing in them to ensure our success. As we navigate through the remainder of 2024 and beyond, you can expect a number of additional announcements that will help fill in the remaining gaps in our strategy and we will regularly share updates on the progress towards our 800 to 900 million EBIT target. With that, over to Marty to provide more detail on our commercial progress.

Thank you, Joanna. I would like to extend a thanks to our crew members for their service and dedication to JetBlue. The amount of change we've implemented in my first six months has been significant, and I appreciate crew members for supporting our rollout of JetForward. At the beginning of this year, we announced a package of initiatives that we expected to drive $300 million of incremental revenue in 2024. We are pleased with the progress and remain on track to achieve the $300 million dollars this year. These initiatives captured an additional $100 million of revenue in the second quarter and have now generated a total of $140 million of top-line benefit in the first half. With JetForward, we will continue this high rate of activity and progress through 2027 and beyond. While the JetForward priority moves include the 2024 revenue initiatives, the $800 to $900 million EBIT we expect JetForward to generate in 2025 through 2027 is entirely incremental to the $300 million we announced earlier. Focusing our network is one of the key priority moves of Jet Forward, and as Joanna mentioned, we've made significant network changes this year in support of building the best East Coast leisure network, which we expect will drive about $175 million of incremental EBIT uplift between 2025 and 2027. In 2024, we've announced four tranches of network changes, collectively driving 15 Blue City closures and over 50 route closures and redeploys. Every route and station needs to earn its way into our network, and our push for profitability has lessened our patience for underperforming routes. Our focus now is squarely on what we call our core franchises. These have long been the profit engine for JetBlue, Leisure, VFR, and Transcon routes, to and from our core East Coast geographies that know and love JetBlue, like New York, New England, Florida, and Puerto Rico and the Caribbean. Our value proposition resonates well with customers in these geographies, given our long history serving those areas and deep entrenchment on the East Coast. Many of the changes we've made to our network are driven by the stronger recovery and quicker ramp of leisure travel. As a result, and specifically in New York, we've shifted capacity out of corporate-focused routes and into leisure and VFR routes. In New England, we remain committed to being the number one value carrier, serving leisure and business customers alike, and continuing to grow our presence across the region. In geographies such as Florida and the Caribbean, our strategy remains the same. We'll continue to invest in high-value leisure destinations and expand our product offering to ensure our customer value proposition remains attractive to the full spectrum. For example, we recently announced adding a complimentary carry-on bag to our Blue Basic offering for travel beginning September 6. Our changes to Blue Basic have allowed us to remain competitive, and since launching about a month ago, we've seen promising early results. Not only is this a meaningful addition to the value proposition of our most affordable fare option, we believe it's a necessary step to stay tuned in 2024 for additional announcements on JetForward's plan to offer more products and perks that our customers value including enhancements to our premium offerings shifting to our second quarter performance on slide 11. second quarter capacity finished down 2.7 percent higher than the midpoint of our revised guidance of down three percent completion factor was 98.8 percent for the quarter one full point better than 2023 driven by our investments in reliability and better managing weather related disruptions revenue was down 6.9 percent beating the midpoint of our revised guidance by about one point. This was supported by strength in our premium offerings, with even more space RASM continuing to grow double digits, and mint unit revenue growth up close single digits on about 30% more capacity. We saw troughs performing slightly better than expectations, with peaks in line and in-month bookings improving over the course of the year. Unit revenues remain challenged in our Latin leisure markets, where industry to supply increases continue to weigh in performance. However, as you look to the third quarter, we are optimistic about the capacity evolution we have seen take shape since the start of the year, as competitive capacity and our overlap markets has come down modestly and is now two points lower than the second quarter. As you predicted, it's still elevated compared to demand growth, but it is coming more into balance, taking self-help measures and reducing trough capacity to better match supply and demand. As you've optimized our network to focus more on our course leisure geographies, our exposure to leisure travel has increased, prompting us to adjust capacity to a seasonality curve with more pronounced peaks and troughs than we've historically flown. Accordingly, we've reduced trough flying throughout the second half of 2024, but most significantly in September, where we are scheduled to fly about 10% fewer ASMs year over year. We are also reducing aircraft utilization during peak months as part of our efforts to improve reliability. As a result of these efforts, we expect third quarter capacity to be down 6% to down 3% year-over-year. Our capacity contraction provides constructive backdrop for unit revenue to improve year-over-year, and we forecast year-over-year revenue growth to be down 5.5% to down 1.5% in the third quarter. At the midpoint of our ranges, we are expecting positive year-over-year RASM and healthy sequential improvement. We expect our unit revenue trajectory will be supported by competitive capacity improvements in our Latin leisure markets, the continued ramp of our revenue initiatives, and the lapping of the wind down of the Northeast Alliance in the third quarter of 2023. For the full year, we expect revenue growth to be down 6% to down 4% on 5% to 2.5% less capacity. In closing, with Jet Forward, we built a solid strategic framework that we are focused on and excited about and though we've seen initial improvements for our business as a result of the strategy there is still work to do to deliver on our multi-year targets including ensuring our crew members understand how pivotal layout to its success is not truly differentiated without the incredible sir thank them again for their service to jet blue especially as they support with that uh over to you arsala thank you marty

thanks again to our crew members for helping to deliver a profitable second quarter. We delivered on our targets this quarter with revenue beating the mid point of our original and revised guidance ranges and Chasm X outperforming the low end of our revised range which was half a point better than our original guidance. While we generated 34 million of adjusted pre-tax profit for the quarter it won't be enough to offset projected losses generated in the other three quarters and we remain steadfast in our urgency to return to full year profitability with jet forward we are setting our financial priorities for the coming years with the goal to restore profitability as soon as possible a secure financial future one of our four priority moves is underpinned by sustaining our cost advantage, driving operating margin improvement, restoring our balance sheet health, and practicing capital disciplines so we can generate positive free cash flow. We are taking steps to achieve each of these priorities and meeting our 800 to 900 million EBIT target will be key to our strategy success and overcoming our challenges before i get into the details from the quarter i want to provide an update on the status of our pratt and whitney gtf engines we take full responsibility for addressing and overcoming challenges within our control and we recognize the need to address and plan for even those outside of our control like weather and atc staffing the magnitude and multitude of availability challenges we are experiencing with the GTF engine are something we are working hard to mitigate, but they continue to have a significant impact on our business and on our long-term planning ability. In addition to powder metal related inspections challenging our engine availability, we've experienced a number of other unscheduled engine maintenance visits that are resulting in GTF engines coming off wing much sooner than anticipated, some after just a year of flying. In fact, a majority of the 11 average aircraft grounded this year are due to inspections outside of powder metal. Based on the latest numbers provided by Pratt & Whitney, we are now expecting the average number of grounded aircraft in 2025 to be in the mid to high teens with greater uncertainty capacity in 2026 and beyond. This will drive roughly flat year-over-year capacity in 2025. In order to reach flat growth, we'll need to continue investing to extend the lives of our A320 fleet. While it comes at a cost to buy out leases and extend the lives of aircraft, the return profile is more attractive than investing in new aircraft. At this stage, we simply can't afford to continue taking delivery of costly new aircraft that may need to be parked due to engine availability issues, especially if we must raise financing to support these deliveries. Our focus going forward will be on driving greater returns from our existing asset base so we can improve our free cash flow outlook. As a result, we've come to an agreement with Airbus to defer 44 A321neo aircraft from our current order book to 2030 and beyond, reducing our 2025 to 2029 planned capital expenditures by approximately $3 billion and reducing Airbus aircraft commitments over the next five years from $5.3 billion to approximately $2.3 billion. This, along with the capital light extension of approximately 30 A320s, allows us to efficiently reduce our capital expenditures and get us closer to our free cash flow goals. Turning to the second quarter cost performance on slide 13, our investments in reliability resulted in solid operational performance, allowing us to complete more flights than plans and helping to spread our fixed costs over more capacity. Second quarter Kazamek Fuel grew 3.7% year-over-year, beating our revised guidance midpoint by more than two points, driven by one point of incremental cost savings from our structural cost program, one point from completion of additional flights and operational efficiencies, and a timing shift of expenses to the second half of the year. Our current cost savings programs are on track to hit our previously communicated targets of $175 to $200 million for our structural cost program and $100 million of cost avoidance from our fleet monetization program. Our structural cost program realized an additional $45 million of benefit this quarter, resulting in cumulative realized benefits of $145 million. When this program hits full run rate, expected at the end of this year, we'll transition our focus to a cost transformation program as part of Jet Forward, which I will touch on shortly. Through our fleet modernization program, we've avoided $83 million of costs to date due to continued optimization of engine maintenance. This program will continue until our E-190s are fully retired in 2025. We also benefited from the moderation of fuel prices over the quarter, as we saw an $0.18 decline in fuel prices between mid-April and the end of the quarter. We remain opportunistic with our fuel hedging strategy, and as a result, we we have entered into hedges for 20% of our volume in the third quarter and 20% in the fourth quarter. In the third quarter, we expect CASM-X fuel to grow 6% to 8%, primarily resulting from wage rate step-ups in our labor agreements impacting CASM-X fuel by two points in each the 3rd and 4th quarter, and a shift of expenses from the first half into the second half worth an additional half a point of impact to each quarter. Since we communicated our initial full-year CHASMx fuel guidance of up mid to high single digits in January, we faced several headwinds, including the change in Pratt & Whitney compensation recognition, a reduction in scheduled trough capacity, and unplanned investments in the extension of our A320 fleet, all of which pressured our unit costs by two and a half points for the full year. Despite these challenges, we've solidly executed on our controllable costs, and we expect to maintain our guidance of up mid to high single digits with Chasm X fuel up six and a half to eight and a half percent. Now turning to slide 14, as we implement our four priority moves, we believe sustaining our cost advantage, especially when faced with flat growth in 2025, is imperative to our success. It's important we make transformational changes to the way we plan our business and we're taking it back to basics with our approach as we ask ourselves, how would we structure JetBlue today if we were just starting an airline. We will evaluate all cost categories though we see specific opportunity in data science driven planning optimization and better aligning our business to peaks and troughs. The focus of our structural cost programs has evolved over the years. Our 2018 program drove savings from business partner contracts while our current program focuses on enterprise-wide efficiencies. JetForward's cost transformation will focus on implementing next-generation technology across the airline and will continue to build on the learnings from our past structural cost programs to sustain our cost advantage and transform our cost structure. We forecast this transformation will add about 175 to EBIT in 2027 through cost savings, and we look forward to revealing more of our long-term plan for costs over the next few quarters. Transitioning now to fleet and our balance sheet. Slide 15 provides an update on our fleet plan. In the second quarter, we took delivery of six aircraft, and we expect to take delivery of six aircraft in the third quarter, driving $365 million of forecasted CapEx for the third quarter. For the full year, we plan to take a total of 27 deliveries and expect full-year capital expenditures to remain around $1.6 billion. As announced this quarter, we are deferring 44 A321 NEOs into 2030 and beyond that were previously scheduled to be delivered between 2025 and 2029. We now expect to take 60 deliveries during that time frame, down from 104 previously, with 56 of the remaining deliveries being A220s. We continue to prioritize reinvesting in our current asset base, and today have successfully extended the lives of 12 A320s of the 30 aircrafts we have been evaluating. These aircraft will remain in our fleet and provide capacity backfill, particularly in 2025 when we expect the remaining E-190s will officially leave the fleet and when Pratt & Whitney-related availability challenges increase. Moving to slide 16, we ended the second quarter with $1.6 billion in liquidity, excluding our $600 million undrawn credit facility. Year-to-date, we have secured $1.3 billion in committed financing to support our capital expenditures. We continuously seek opportunities to strengthen our liquidity position in order to fund our CapEx needs for the next 12 to 18 months, refinance our short-term debt maturities, including addressing as quickly as possible our convertible notes that will become current in April of 2025 and to generally provide us with additional liquidity, which will better position us to execute our strategy discussed today. An example of our strength in liquidity is the amendment and extension of our revolving credit facility, which will now mature in 2029. In addition, we may opportunistically execute on future financing transactions, including in the capital and syndicated loan markets, which may be structured to be secured by a portion of our unencumbered assets, which are currently valued at approximately $11 billion. Our most significant unencumbered asset is our customer loyalty program, which is valued at about half of our current unencumbered asset base. Of course, any future financings are subject to market conditions, and there is no guarantee we will be able to execute on them. Before I hand it back to Joanna to close out the call, I would emphasize how focused we are on making year-over-year margin improvements and getting back to positive operating margin again. Through Jet Forward, we believe we have a clear and actionable strategy to deliver $800 to $900 million of incremental EBIT in 2027 and a strong foundation off of which we can return to our historical earnings power. Joanna, over to you. Thank you, Ursula, and thank you all for joining

us. I want to close by reiterating our commitment to building value for our owners, starting with our return to profitability. I'd like to thank the team for all of the good work behind the JET Forward plan, we have been and are taking aggressive action on every front and strongly believe that the focus of our attention has to be on the execution of JET Forward. Given this, and coupled with the longer-term planning uncertainties from the Pratt & Whitney engine issues, we've decided to communicate more about our strategy now rather than hold an investor day in the fall. Our team is fully committed to ongoing outreach and two-way communication with all of you, and we look forward to continuing to discuss our plans as we roll out additional strategic initiatives through the remainder of the year. With clarity on our path forward, we are energized and moving forward with resolve and determination. I'm incredibly confident in the outlook of our business as we turbocharge our strengths and execute on our four priority moves to return JetBlue to profitability and deliver for all of our stakeholders. Thank you, and with that,

we will take your questions thank you at this time if you would like to ask a question please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star two once again that is star and one if you would like to ask a question and we will take our first question from dan mckenzie with seaport global your line is now open oh hey good

morning thanks guys um i guess first question is for joanna um setting aside the fourth quarter this year. So looking ahead to 2025, you know, it looks like from Jet Forward and the $1 billion plus in initiatives, you're, you know, most likely penciling in summer profitability. But, you know, is the punchline really that JetBlue can get to profitability in each of the quarters? Or is it just given the Pratt & Whitney challenges, is the goal simply to get to break even in the seasonally softer periods? I'm not looking for a forecast. I'm just trying to get a sense of what's aspirational versus realistic in the medium term here from where you sit?

Sure. Thanks, Dan. I appreciate the question. So, you know, maybe just headline, we are so focused on trying to get to profitability as soon as possible. We've actually kicked off our 2025 planning season earlier this year with a goal to build a plan that will deliver a break-even operating margin for the full year of 2025. That said, you know, it's much to early in the planning cycle to commit to that. We traditionally haven't provided, you know, that kind of guidance so early, but we are very focused on trying to get there for next year. This obviously assumes sort of the mid to high teens for Pratt & Whitney and a competitive macro backdrop, but that's, you know,

how we're thinking about things for next year. Yep, understood. Okay, and then, you know, given 11 parked aircraft each month, you know, can you share, you know, what the loss year-to-date is from, you know, the Pratt & Whitney issue or the challenges? And the reason I'm asking is I'm just trying to separate out the temporary earnings impediment to the story here versus the structural impediments to getting back to the financial targets? Yeah, it's a great question. So, you

know, we're not going to break out specifically the Pratt & Whitney item. You know, I can say it's incredibly frustrating, you know, made even more so by I think some of the announcements RTX made yesterday. We are focused on trying to resolve the situation with Pratt & Whitney that reflects the nature of the damages that we're experiencing. You know, this is ultimately a transitory issue that should cycle through over the next few years. But we are entering, you know, a more impactful stage for JetBlue, hence the mid to high teens AOG count that we will have for 2025. It's been challenging to forecast exactly what the AOG impact will be in outer years, which is, you know, why we're not communicating any targets out that far. But, you know, we are taking, I think, all the necessary steps to try to mitigate as much as possible the impact of Pratt, whether that's keeping older aircraft flying longer and, you know, some of the deferrals, frankly, that we're doing will have a positive impact on our A&G count because these aircraft come and the engines, you know, are taken off with, you know, within a year, year and a half. And so that's not a particularly good use of capital. So, you know, it is ultimately a transitory issue, but it will be with us for the next several years.

Thanks for the time, you guys.

Thank you. We'll take our next question from Mike Lindenberg with Deutsche Bank. Your line is now open.

Oh, yeah. I have a question for Marty and Ursula. Marty, the comment that you made about you talked about Mint RASM being up low single digits on, you know, I think I heard 30 percent ASM growth. So the question is, who's driving that? And sort of I'm asking that within the context of you, you know, indicating that you're going to pivot away from corporate out of New York. I would think that you probably do carry a decent amount of price-sensitive corporate. So can you square that with the success that you're seeing right now with Mint?

Sure, Mike. Thanks for the question. Here's what I would say. I mean, first of all, yeah, when we said we're pivoting away from corporate, we will continue to carry corporate customers. There's no walking away from the corporate market. I think the better way to describe it is we're not really designing the network for corporate like we once did. And if you look at some of the changes we've made in New York, some of the routes we've pulled, I think it's very consistent with what we've seen as far as a slower recovery of corporate travel in New York. With respect to the mint results, I think it's clear to say that the cabin on our airplanes may not look exactly like the cabin on some of the legacy airlines. We carry a lot of high-end leisure customers, both in the trans-con market and the European market. And, you know, I think it is not up for debate. This is the best premium product that's offered by a U.S. flag carrier across the Atlantic or Transcon. So we've attracted a lot of customers. And, yes, we absolutely have business customers, especially in New York. And we have a lot of high-end leisure, too. So, you know, to a certain extent, it's for itself. And that's –

And the numbers back it up. Thanks. Ursula, just the question on the CapEx, the $3 billion, just looking at the new fleet plan, it does look like it's back-end loaded. How should we think about how CapEx, you know, it's one-sixth this year, what's the right number for next year, knowing that, you know, just the movement with PDPs and, you know, the fact that the deferrals are for airplanes that come later in the decade. Is it a similar number? Is it just a little bit lower? I'm trying to get a sense of where cash flow could be next year. Thank you.

Thanks for the question, Mike. Sue, this year we've got 27 deliveries, and our CapEx is $1.6 billion. Next year we actually only take 24 aircrafts, so directionally you should expect total CapEx to be a few hundred million lower year over year.

Perfect. Thank you.

Thank you. I'll take our next question with Jamie Backer from J.P. Morgan. Your line is open.

Fair enough. Morning, everybody. How do we square the order deferral against your international ambitions? At a minimum, it suggests that you won't be making any major incremental push from here into Europe. Would it be fair to at least wonder if you intend a European retreat? Just trying to tie your transatlantic ambitions to the fleet changes.

Thanks, Jamie. Thanks, Jamie Backer. It's a great question. Sorry, I couldn't help. So I think you should think of transatlantic as, you know, it's done nicely this summer. We continue to optimize the transatlantic markets to reflect the seasonality of that geography. It's an important part of the JetBlue network. if we're pleased with what it does seasonally and what it does as contributions to our loyalty program. Obviously, the deferrals for the XLR will have an impact on growth in that market, but it's by no means a retreat. It's a, I think, further learning how to best ensure that those routes are profitable and driving earnings for the business.

Excellent. I'll take back or over any reference to bunny slopes, Joanna. And then for Marty, and this echoes a question I asked of Alaska, you cited even more space RASM being up double digits, I guess two parts. One, how does that compare to prior quarters? Has there been a noticeable inflection? And second, relative to, I guess, blue or blue plus, what's the approximate premium you collect on even more space? Thanks in advance.

Hi, Jamie. Thanks. So first thing, this has been a medium-term trend as far as the performance of the RASM for even more space. You know, customers have very much responded to it, and they continue to find value in it. I think it's worth noting that as we measure the RASM growth, we're really talking about the incremental, sort of the buy-up over the core fare. You know, as a reminder, we don't sell it at the cabin. We sell it as an add-on. So the RASM is basically the incremental revenue from the upsell. So it's sort of a little bit – we look at that revenue sort of decoupled from the core. And as far as the value of that product versus the core, I mean, it's – as of now, the way we sell it, and that may change in the future, but as of now, the way we sell it as an add-on, it's still – these are still customers who are fundamentally buying into the JetBlue value proposition and just want to upgrade to get a little bit more. And, frankly, that's very much what we're seeing as far as Mint, too. I mean, these are not all dramatically new customers for JetBlue. These are our current customers who are finding more value in the product offering that we have.

But does that change your total collected yield? You know, does it improve it by 10%? Does it improve it by 60%? You know, just order of magnitude there would be helpful.

Actually, I actually don't know that number exactly, so we'll get back to you on that one. It's, you know, it's about 25. The total premium cabins between Mint and even more cabins is about 25% of ASMs. So you can almost sort of back into it if you want. And I could do it now on the phone, but we'll get back to you later with the number five.

I'll see the floor to others. Thank you, everybody.

Thank you. We'll take our next question from Savvy Sip with Raymond James.

Your line is open. Hey, good morning. And just on the unit cost, you know, the exit rate here is high, but I realize that there's some kind of timing issues and the capacity declining. How should we think about, you know, what type of trend we should expect in 2025, given, you know, capacity is flat, but you also have a lot of cost initiatives here?

Yeah, thanks, Savi, for the question. So historically, when we were growing mid to high single digits pre-COVID, we were targeting a flattish unit cost growth. You know, conceptually, if we're not growing again next year, which we highlighted today on the call, you would target, you know, a mid-single-digit number. Clearly with JetForward, we have aspirations to put a 2025 plan together that is hopefully even better than that.

That's helpful. I appreciate that, Isla. And just following up on that business network change question, I was curious in terms of business demand today, what you're seeing. And with the network changes, do you expect it to account for less than that 20% of revenue that you saw historically? Or is it still around the same ballpark, given that you're retaining that business customer?

Hi, Saiby. Thanks for the question. I'll take that one. The one number I will report is if you look at the contracted corporate customer business revenue, you know, we're still up, so I'd say, very high single digits. So, you know, it continues to grow. And I'd say, frankly, with the retreat that we have been doing over the last three quarters at LaGuardia, I think that was a bit of a pleasant surprise for us because obviously those are much higher business share markets when we flew those. So I think the trend continues. With respect to going forward, even if you look at some of the business routes, and I'll pick one out just because it's a great example of, like, Minneapolis. You know, even though Minneapolis-Boston was a pretty strong business route, it was still, you know, instead of 20% corporate, it was, you know, 25%, 30% corporate. It was more corporate, but I guess I would say it was not more corporate enough, so to speak. So as far as, you know, 1,000 flights a day, I don't think it's going to dramatically move that number from where it is now.

That's helpful. Thank you. We'll take our next question from Dwayne Finningworth with Evercore ISI. Your line is open.

Hey, thanks for the time. On the network benefits bucket that you expect, cutting loss-making routes and increasing your East Coast focus, can you talk a little bit about how you increase your East Coast focus with constraints in the New York market? And then just given the timeline here, 2025 to 2027, why would it take very long to realize that? it seems like you could start to see some of those benefits in the second half of this year. So I guess why aren't those benefits dropping more quickly?

So maybe I'll take it and I'll throw it to Marty. So I think you have to look at what we've announced versus when these are effective. And if we lay that out in the back of the earnings presentation, which shows exactly when some of these markets are closing. So there's a large that close in October. And I think this was some of the confusion on the last call, where I think the announcements get confused with effective date. And so, you know, we'll see full year run rate next year for all of the markets that we've announced so far. And I think it's just a matter of understanding the timing of the announcements versus when this actually takes place.

Yeah, the only thing I'd add is, you know, as difficult as it is for us to make some of these decisions for closing markets and closing routes and the impact it has on our own crew members, which we do not take lightly. You know, at the core, our goal is to be, you know, move to profitability as quickly as we can. And frankly, we're very excited about where we have moved airplanes to take advantage of opportunities right away, especially with our focus on, you know, being the best leisure airline on the East Coast. I think about, you know, the growth we've seen in places like obviously Boston, which has always been a growth focus, but, you know, growth we've put into Providence, Bradley, opening up Islip, opening up Manchester. I think we are establishing ourselves even more so as the best leisure choice for our customers. You know, I'm not taking any victory laps right now as far as this network transformation, but I think we're very, very optimistic about these moves. And, yes, we are starting to see benefits, but, you know, as you'll see in that chat that's in the back of the deck, you know, they do roll out. Some of them just happened last month, and they continue the rest of the year.

Thanks for that detail. And then just for my follow-up on the convert, how are you thinking about addressing that? I think you alluded to it in basically financing options, But how are you thinking about addressing it and kind of your willingness to let that go current early next year?

Yes, thanks for the question, Duane. We obviously have a healthy, unencumbered asset base to the tune of $11 billion. About half of that is attributed to our loyalty program. So we're currently assessing all markets to see the most effective and the most constructive in terms of online cost of funding. we do not intend to let the convert go current. So, I mentioned in my prepared remarks, we're opportunistically looking across markets. Okay. Thank you.

Thank you. We'll take our next question from Connor Cunningham with Melanist Research. Your

line is open. Hi, everyone. Thank you. Marty, you mentioned the strength in mint and even more, But that kind of highlights just the core weakness that's happening in the core cabin right now. There's been a ton of discussion this quarter about, you know, overcapacity and all that stuff, and not really around a demand problem. I'm just curious on how you view the current demand environment right now.

Hey, Connor, thanks for the question. First of all, with respect to the bigger question about, you know, the premium cabins versus the core coach cabin, And, you know, my view is this is why we have a spectrum of customers who we carry and a spectrum of products. You know, we've we talked a little bit about our target customer. You know, we've done a ton of research in the last year or so trying to understand how the market has changed. And the market has clearly changed in 2024 versus what we saw in the world pre-COVID. And we've got a wide spectrum of customers who we carry. You know, well over half of our customers are 100 percent price sensitive. and, you know, they will go fly ULCC to save $5. And, you know, that is a big chunk of our airplane. But luckily, you know, we have a lot of ASMs out there in the premium cabins and a lot of customers who are buying up to blue or higher fare products. And to me, it's a spectrum of everything we carry. With respect to the demand environment overall, I'd say if I look specifically at second quarter, in general, I'd say that the troughs held up a little bit better than we expected. And I think the peak's performed as expected. You know, I think the real news as far as what's happening with demand is actually supply, which is we called out in the last earnings call where supply had gotten a little bit misaligned with where demand was. And, you know, I said at the time, you know, ultimately, you know, water seeks its own level, and we will eventually have supply get back to more equilibrium. It has happened. You know, we've made our own changes as far as where we've moved supply. We've seen other changes in the industry. And I think ultimately, you know, we all have owners and, you know, we all have the goal to be profitable. So ultimately things work out in the end when it comes to that.

Appreciate that. And then you mentioned, you know, the GTF issue outside of the powder metal problem. I was hoping you could flush out that comment a little bit more. Is that the oil consumption issue that some have already mentioned? And I'm just curious, is that new or is that something new and it was just over, you know, somewhat overshadowed by, you know, the powder metal problem that's been out there for a while?

Yeah, I'll take that. It's nothing new. I mean, obviously these engines, you know, have certain maintenance inspection cycles. Various things trigger it. So while powder metal is ultimately what caused the significant challenges with throughput, so that's what backed everything up, There are a number of other maintenance issues that we're working through because it's a new engine. And so that just exacerbates the situation with the shop capacity and then supply chain. I will say incredibly frustrating. We are working with Pratt on reaching a settlement that we believe reflects the extent of the impact to JetBlue. But it is definitely a frustrating situation. And that's why I think going back to the deferrals, it makes a lot of sense to defer the 321 new aircraft, not just because it offsets our capital commitments in the nearer term, but also because nobody wants to take a brand new aircraft and then ground it after, you know, a year, year and a half.

Appreciate it. Thank you.

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

Hey, thanks. Good morning. I want to ask a near-term one and then a longer-term one. So on the RASM front, so low single-digit increase this year, is that – I'm sorry, in Q3 – is that sort of dependent on, like, a September inflection like other airlines have talked about, or are you guys already there? So just sort of thoughts on, like, the cadence of RASM throughout the quarter, and then any initial thoughts around Q4, if you have them.

Hey, Scott, thanks for the question. And, yes, I've listened to the commentary from other carriers. I'm not sure I fully understand what they're saying. Our view is we're looking at the trends as they exist right now. We've got basically two-thirds of the third quarter on the books, but one-third not in the books as of today. And there's no real inflection seen in there. I mean, frankly, I mentioned in my prepared remarks that, you know, we undertook a lot of self-help in September. I mean, our ASMs are down 10% in September. And again, I think as investors and frankly, as crew members and customers, we'll be seeing more and more of that going forward as we pivot a little bit more towards leisure. You know, we're going to be much more respectful of not flying, unproductive flying during the trough. So, you know, my view is, you know, I'd say September is better than it would have been, but it's solely based on self-help. There's no inflection enough.

And then sort of in lieu of the analyst, maybe I'll ask a longer term capacity one. So you guys are deferring planes, but at some point the GTF issue gets better, right? So as you've got this, like, planning now up to 27, I understand capacity is flat next year, but any thoughts on, like, the multi-year capacity outlook in this plan? And then ultimately, does this mean that free cash flow, do we inflect positive on free cash? Is it more likely 26, 27 than 25? Do you have any thought there?

Yeah, maybe I'll touch capacity and Earth can touch on free cash flow. So, you know, we've gone out with flat capacity for next year. We're not guiding beyond that. The Pratt & Whitney GTS issue is volatile, and we are working with them on forecasting. And obviously, we're hopeful that there are improvements there, and we're taking as many self-help measures as we can to try to offset that capacity impact. But we're not in a position, given all of the variables, to guide to any kind of capacity or share any capacity projections out past 2025. On the free cash flow point, Urs, do you want to grab that?

Yeah, listen, Scott, like priority number one is getting the business back to consistent profitability. Priority number two is then delivering positive free cash flow. I do believe that with the deferral that we announced today, it does start to lay the groundwork to help us get there. We've got to execute and we will execute on the $800 to $900 million EBIT. And then, obviously, you've got to layer in the macro backdrop assumptions, but ultimately profitability and then free cash flow, and that free cash flow will go to delever in the balance sheet.

Okay. Thank you. Thanks.

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

Hey, good morning. Marty, I guess I want to come back to the 3Q RASM guide, though, because if I look at it, it appears maybe even unseasonably weak for you guys, and I know seasonality is hard to judge here post-pandemic, but I guess, and I hear you guys on when you announced route changes, but you have done a lot of network reconfiguration since June, and as you stated, you know, you are pulling down trough capacity in September, so I guess is it incremental softness you're seeing in your markets, even with these changes that have already been implemented?

Hey, Brandon. Thanks for the question. It's funny. I don't look at it as a soft guide. We do not look at this as, like, oh, there's something wrong on the third quarter. I think we guide based on what we're seeing right now in the bookings. I think if you look at sort of sequentially the path from second quarter to third quarter, I feel like we're more or less on track to where we've been historically. We control what we can control, and we control our capacity, we control our pricing, And then, you know, obviously we want to deliver, you know, we want crew members delivering a great experience every day. So, you know, my view is, you know, we're fundamentally looking at this as a guide that we're very happy with. I mean, obviously we always want more, but, you know, we are positive year over year, which I think a lot of our competitors are not. And, you know, from that perspective, I'm somewhat surprised by the question. I mean, frankly, my take is we're putting our heads down and just moving forward with the path we're following. I do want to stress again, if you look at that slide in the back of the deck, so many of these network changes are back-loaded. So I would not attribute too much of the RASM in the third quarter to big inflection from the network changes because it just takes longer than that.

I mean, Marty, maybe as a point of clarification, but I think it's down a few points sequentially quarter to quarter, and I get it that it's up year-on-year because you do have a pretty easy comp from last year. I guess that's what we're observing. Thank you. And then, Joanna, just – Sure. That's fine.

Oh, go ahead. I apologize.

Joanna, I guess just on the bigger picture and maybe coming off of Scott's question too, is since we don't have an investor day, we appreciate the outlook on 2027 EBIT improvement, the $800 million to $900 million. But I guess maybe looking backwards on structural cost improvement, even the revenue initiatives this year, they've only been able to offset so much of industry headwinds or macro, what have you. So can you give us a better idea of the baseline? Where do you expect to see the improvement from? Is this like a breakeven basis and then add $800 million to it? or how should investors think about that long term? Yeah, so I would think about it in those

terms. It's a break-even basis and add $800 to $900 to it. You know, I think when you look at what we've done this year against, you know, a challenging first half, we were cycling against pent-up COVID demand, and then elevated industry capacity, particularly in the Latin region, you know, much of what we did this year offset some of those challenges. And so as I think about the path forward. Given, you know, the uncertainty with Pratt beyond 2025, you know, while we would have loved to have gone out with longer-term targets, we're just not in a position to do that, but really proud of what we've executed to so far, whether that's the significant network adjustments, the preferred seating, changes of the blue basic, the deferral of the aircraft, all, I think, contributing to some nice momentum this year going into next year. But the 800 and 900 teams got to execute to that, and everybody's focused on delivering those numbers over the next three years.

Thank you.

Thank you. We'll take our next question from Andrew D'Ora with Bank of America. Your line is open.

Good morning, everyone. Most of my – but, yeah, one conceptually for Marty, I guess we've heard a lot of other domestic airlines speaking about growing their premium seats as well. So there's certainly more capacity coming here. How do you think about some of this premium RASM growth that the industry has been seeing? Do you think it gets competed away at all? How does JetBlue kind of stay away from that?

Hey, Andrew, thanks for the question. It's funny. Obviously, with the results we're seeing in our premium revenues, we've spent a lot of time looking at this market overall. And I think there are people who are attributing this to a sort of a post-COVID bump. Is this something that's just a flash in the pan? And, you know, we can go back and track this change back to the early teens. And we've sort of seen a persistent move from the early teens as far as more and more customers buying up. And, frankly, I think that what we're seeing is a longer-term segmentation of the market where, you know, we've got a big chunk of customers who are, like, they'll do anything for, you know, to save $1 on a fare. They're willing to buy up to have a better experience. And, frankly, this is what excites me so much about the JetBlue business model. is that this company's always been structured around customers willing to pay a little more to get a lot more. So from that perspective, I think we couldn't be better positioned for this

versus some of our competitors. Thank you. We'll take our next question from Tom Fitzgerald with

TD Cowan. Your line is now open. Hi, everyone. Thanks very much for the time. Just a quick one for me. What's the cadence of the E-190s retirements for next year? And then would you like just defining a little bit on the A220s? I think you've been operating those for about three and a half years now. So, just curious just how you're liking the asset. I mean, obviously, you're keeping the deliveries, but, you know, any TV problems, things like that.

Thanks very much. Hey, Tom, it's Marty. Thanks for the question. With respect to the 190s, we said publicly that they will be retired by the end of 2025, and that's the cadence that we're on right now. With respect to the 220, I think we are a very happy 220 customer. We have had some reliability issues, which we've heard from others in the industry, and we share the same. Although the 220 does have GTF engines, it is not being affected nearly as much as the 320 NEO family is. So with respect to 220, we are very happy customers. Tom, and congrats on your

role. And maybe just to put some numbers to it, we currently only have 22 E190s in the fleet, And I believe that we'll end this year, 2024, with 15. And to Marty's point, those 15 will be retired by the end of next year.

Got it. Thanks very much, everyone.

Thank you. We'll take our next question from Stephen Trent with Citi. Your line is now open.

Good morning, everybody. And thanks very much for taking my question. I was intrigued to hear about, you know, you mentioned the Latin overcapacity, but, you know, the big build-out. you guys have in Puerto Rico. Are you able to tell us whether, you know, the Airport Authority and San Juan gave you guys any incentives in terms of volumes and maybe, you know, some

discounts on airport fees and that kind of thing? Yeah, I'll take that. So I'm really proud of the work around Puerto Rico, largest carrier there, important part of our network, tremendous support from our crew members locally and the airport authority. We're not going to get into, you know, what, if any, incentives or otherwise we may or may not have gotten from the government or for the airport authority, but we have a long partnership with the community, with the airport authority. We're excited to open a crew base for pilots and in-flight as well down in that area and, you know, continue to be the carrier of choice in Puerto Rico for that community.

Okay, I understand, and I definitely appreciate that. And just one more very quick housekeeping question. Looking at your full-year ASM guide and 3Q, and I thought I heard Marty say September ASMs are already down 10%. Is it sort of unreasonable to consider 4Q ASMs the implication down somewhere in the low teens, or am I thinking about that the wrong way?

No. They're not down. I don't have the exact number.

Not down low teens. Mid-single digits.

Very helpful. Wanted to make sure it looks like. I was not thinking about that correctly, so I appreciate that.

No problem. Thank you. And we'll take our final question from Chris Staffofolius. I apologize. From SESWAHANA International Group, your line is open.

Thank you. Good morning, everyone. I just want to say, Joanne, Arisola, Marty, and team, the urgency and focus here is clearly evident, and so congrats on this plan. The $400 million in EBIT here, I realize that there's more to come here, but given that you're not holding an investor day and there are more blue dots on the map here relative to the other initiatives, at a high level, should we think about this as more additive or a wholesale change? So, for example, rebranding or introduction of a new fair class. And then also, I don't think I heard you discuss any initiatives around vacation packages and two products. Thanks. Yep. I can

take that. It's great. So, to be clear, the blue dots do not reflect specific initiatives. They are illustrative only. I assume you're referring to the 400 in product and perks. That consists of a number of things, I'd say some of which build on what we've already announced around Blue Basic and preferred seeding, but the majority of which are actually new initiatives and they cover everything from gaps in our product offering to things like a new revenue management system to enhancements in our loyalty program and continued deepening of the offerings we have for JetBlue Travel products, which remains a very important part of the business and one which we think will be a significant driver in the JetForward plan to creating an even greater level of stickiness with our leisure customers.

And I would just reiterate, Chris, that the 400 includes initiatives that we haven't yet announced that you will hear more as we progress through the year.

Right. Okay. Thank you. And my second, so on the competitive overlap in the route exits that you've done here today. You've outlined some of those on the slides in the appendix. Thank you. Are we done here as we think about year end? And so for those that want to do this analysis, if at year end or early next year, if we were to rank order your routes based on RASM, should we expect at that point, for example, first and second quartiles based on arousing to account for the majority of your routes, so meaning two-thirds or perhaps closer to 70%, 75%. Just want to understand as you talk about Marty, you talked about getting back to your core focus, no longer accepting routes that meet your profitability standards, how we should sort of ultimately see that shake out in the Form 41 data. Thank you. Maybe I'll take the higher level

one and I'll throw it to Marty for a bit more detail. So in terms of whether we're done with network announcements you know I don't think you're ever done at the end of the day we need to make sure that the network and where demand is reflects you know that we're driving as much profitability as possible I'd say we've made a large number the most actually ever in our history we may have some some more modest ones to come but you should not expect this level of network changes kind of ongoing Marty do you want to hit the second part yeah thanks

Chris I mean you know my view is the there's a lot of science and network planning and we obviously have force ranked the entire network as far as RASM as it produces right now and also what we see the upside to be and then we compare that to what the growth opportunities are I think the good news is as we've laid out the the pillar of having the best East Coast leisure network we have a lot of growth opportunities in that world I think what's very good is that we're not talking about you know busting into new territory and you know building a hub in kansas city or something like that i mean we're fundamentally looking at coming back to the bread and butter of the big east coast markets that we're focused on so from that perspective we see a lot of really good opportunities for growth uh at the same time um you know we've we i think we did the math last night some some number over 40 airplanes have been um uh have canceled and redeployed uh in the last three or four months on an active fleet of you know 270 280 something like that so it's a lot of change at the same time um you have noticed and you'll see again in that last page that page in the back of the deck uh we have sort of phased things out mostly based on um you know slots you know change the slot portfolio seasonality things like that uh it is a very very deliberate process but absolutely yes you know the roots at the bottom of that force ranking that we don't see upside in are the ones that have gone away. Again, I think it's important to go back to Joanna's point. The majority of the changes have happened, but it never, ever ends. Okay. Thank you. Thank you. I'll turn the call

back over to Kush Patel for any additional or closing remarks. That concludes our second quarter

2024 conference call. Thanks for joining us and have a great day. And again, that will conclude

today's conference. Thank you for your participation. You may just connect at any time.