Good morning. My name is Krista. I would like to welcome everyone to the JetBlue Airways First 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, Kush Patel. Please go ahead, sir.

Thanks, Krista. Good morning, everyone, and thanks for joining us for our first quarter 2026 earnings call. This morning, we issued our earnings release and the presentation that we will reference during this call. All of those documents are available on our website at investor.jevelu.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 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 our factors that are reconciliations to the most directly comparable gap measures are included in our earnings materials and on our website. And now, I'd like to turn the call over to Joanna Cary.

Thank you, Kush. Good morning, and thank you for joining Jeff Liu's first quarter 2026 earnings call. I want to begin by thanking our crew members for their continued dedication during what has been another challenging start to the year. And I also want to recognize the TSA agents for their commitment during this shutdown. This person in TSA disruptions, but our teams remain focused. On fuel prices is the most significant headwind we've faced as an industry since COVID. Given the sharp increase in the price of fuel and the expectation for elevated prices throughout this year, we are suspending our prior full-year guidance as we aggressively adjust to the evolving macro backdrop. I want to be clear. Suspending our full-year guidance reflects external factors alone and not a change in the strong progress of Jet Forward. We have taken immediate action to offset fuel costs with our ultimate focus on minimizing the financial impact and preserving our liquidity position. The three primary levers available to us are adjusting fares to better aligned with input costs, moderating unproductive capacity, and pursuing additional cost savings opportunities. We recognize that customers expect strong value from JetBlue, and we're continuing to carefully balance our path to restoring profitability with meeting those expectations. Importantly, demand remains strong. This backdrop allows us to recover some of the increase in fuel costs, and as such, we've adjusted fares along with the industry over the last two months. Bookings have remained resilient amidst these changes, which is an encouraging sign. However, the first quarter was already over 90 percent booked before fuel prices suddenly spiked, reducing the opportunity to immediately recapture the impact of this significant fuel increase. We expect 30 to 40 percent fuel recapture in the second quarter and plan to achieve 100% recapture by early 2027. Given the broader cost environment, we've also made targeted updates to ancillary fees, such as check bags. This allows us to better cover costs while keeping our base fares competitive. We will continue looking for additional ways to strengthen revenue performance throughout the rest of the year. At the same time, we are aggressively reducing capacity, targeting adjustments in off-peak and shoulder periods. We've acted quickly, reducing capacity by nearly one point versus close-in expectations in the second quarter, with plans to reduce the second half by at least two to three points. While we are able to reduce capacity closer in, as we've done, these decisions are more beneficial when made at least 60 days in advance to take even greater advantage of cost-savings opportunities. And with demand continuing to remain strong, it's important we take a flexible approach to trimming capacity as we head into the peak summer season. We plan to closely monitor market conditions and expect to reduce additional capacity after the summer peak, assuming fuel prices remain elevated. In addition to managing capacity, we have opportunities to reduce other expenses and better align our cost profile with capacity. This includes efforts to reduce controllable spending and hiring, and in a lower capacity environment, we also expect savings on maintenance and other variable costs, such as landing fees. As we meaningfully adjust capacity to address higher fuel, we are committed to pulling all levers available to mitigate potential upward pressure on unit costs. Alongside these efforts, we believe Jet Forward remains the right strategy to navigate us forward. Across each of our priority moves, reliable and caring service, best East Coast leader networks, products and perks customers' value, and a secure financial future, we are seeing clear evidence that our strategy is working, and we remain on track to drive $310 million of incremental jet forward EBIT in 2026 and $850 to $950 million in 2027. And as a reminder, we have transformational initiatives launching this year, including domestic first class, the continued implementation of our Blue Sky Collaboration, and our second Blue House, which are expected to drive significant value for years to come. In closing, demand remains intact. Our jet-forward initiatives are performing, and we are actively managing levers within our control. I remain confident we have the right strategy and the right team to navigate yet another challenging year for the sector, even in the face of these macro factors. As we gain greater visibility into fuel and its impact on the macro environment, we will plan to provide an updated view on full-year expectations. I'll now turn it over to Marty.

Thank you, Joanna, and thanks again to our crew members. We delivered strong RASM performance, a positive 6.5% in the first quarter, in line with our revised guidance and exceeding the midpoint of our initial RASM range by 4.5 points. The Caribbean airspace closure in January and winter storms Fern and Hernando combined to reduce capacity by nearly four points, which benefited our RASM performance by two points. The remaining 2.5 points of our RASM beat is a reflection of demand strength and the effectiveness of our jet forward initiatives. Demand trends strengthened as the quarter progressed, and importantly, that momentum has carried into the second quarter. We saw strength across the booking curve, both close-in demand and further out, with improvements in both peak and trough periods. Premium continued to outperform core, with year-over-year premium RASM better than core by nine points in the first quarter. We are encouraged by improvements in core demand and RASM, which is now strongly positive year-over-year, reflecting a more balanced demand environment across our offerings relative to what we experienced last year. Delivering the differentiated JetBlue experience across each unique customer offering meant even more in core remains a priority, reinforcing our commitment to all customers, not just select segments, even as fuel costs remain elevated. Lastly, while we saw strength in both domestic and international bookings, domestic has recovered meaningfully, and year-over-year RASM outperformed international. First quarter RASM was also benefited by about 1.5 points from the shift of up-punch Easter traffic into late March. This was a historic quarter for our loyalty program, highlighting the investments we've made in our product and operation. Loyalty cash remuneration grew 19% year-over-year, driven by double-digit growth in spend on the JetBlue Card. In addition to record levels of spend and a 45% increase in card acquisitions, we achieved all-time highs for True Blue active members and attached rates. Blue Sky is also driving co-brand sign-ups in our non-focused city geographies, reflecting the broader reach the collaboration brings to our loyalty program. We continue to add utility and value for our members in other ways this quarter, including the ability to use points for ancillary purchases, which is off to a very strong start. We also launched Family Tiles, an industry first that allows parents to earn status faster when traveling with their children. Finally, customers are responding exceptionally well to our Blue House at JFK, with NPS trending well above expectations and driving premium credit card signups beyond our initial targets. We believe the opening of our next launch in Boston later this summer will be a further catalyst for premium growth alongside the launch of Domestic First Class, expected in the second half. As these products and perks ramp, and both new and existing members deepen their loyalty engagement, we expect meaningful sequential growth in loyalty revenue throughout the year. Strong customer response to our strategic growth in Fort Lauderdale to a first-quarter RASM growth of 5%, even with capacity growth of 23%. In late March, we announced another round of additional service from Fort Lauderdale. one new destination to Cleveland and added frequencies on nine routes where customers want more choices where they fly. With the addition of Cleveland, JetBlue will have launched nonstop service to 21 cities and increased frequency on over 20 high-demand markets from Fort Lauderdale over the past year, further strengthening our investment in building depth and connectivity in Florida's biggest premium market. Through our recent growth and competitive reductions, we've been able to take advantage of the newly available gate space to build a schedule with four connecting banks beginning this summer, up from two banks previously. This provides our customers in the Northeast with significantly more opportunities to connect to our growing portfolio of destinations in the Caribbean and Latin America. We remain excited about the long-term opportunity in this focus city and continue to view it, and additionally key leisure destinations across the state of Florida, as an essential component of our network strategy. We've now grown to 11 destinations in Florida, following the launch of service to Destin-Fort Walton Beach from both New York and Boston in the first quarter. Blue Sky reached a new milestone in the first quarter with the launch of interline flight sales with United. We are encouraged by the early results we're already seeing and are excited by the new opportunities we expect this collaboration to bring to our customers. This quarter, reciprocal loyalty benefits across Mosaic and Mileage Plus tiers are expected to turn on in addition to sales of rental cars through our Paisy platform. For the second quarter, we expect contingent strength in resin, supported by sustained demand trends and progress from our jet forward initiatives. This quarter is anchored by peak periods in early April, late May, and late June. The Easter outbound shift represents a second quarter headwind of about 1.5 points of RASM. As a result, we expect RASM to grow 7% to 11% year-over-year on 1.5% to 4.5% more capacity. Our investments in Fort Lauderdale now comprise all of our second quarter capacity growth. We are taking a similar approach to guiding RASM as we have in the past, guiding to what we see today, which points to a sustained level of strong yields and loads for the remainder of the quarter. As we progress through the quarter, we plan to monitor the demand environment for opportunities to continue optimizing yields to help offset fuel costs. As of today, over two-thirds of the quarter's values are on the books, and as you already mentioned, a second quarter RASM guidance implies we recapture 30 to 40 percent of the fuel cost increases versus our initial plan for the quarter. We are encouraged by the demand trends we're seeing and believe we are well positioned to generate significant RASM growth this quarter as we head into the summer peak travel season. Now I will turn it over to Ursula.

Thank you, Marty. As Joanna mentioned, the start to 2026 was marked by a dynamic operating environment and macro backdrop. The industry climate seems to be evolving every day, and we are responding quickly to position Jeff Liu to achieve our financial priorities. For example, we've actioned several capacity reductions across the second quarter and plan to stay nimble in the second half of the year. At the same time, we are prioritizing capacity investments in our Fort Lauderdale-focused city, where customer response has been strong, and the resulting RASM is performing extremely well. Our underlying business is clearly improving, with a roughly five-point spread between RASM and ChasmX expected at the midpoint of our guidance ranges this quarter. We haven't seen a gap like this in years, and it reflects strong demand for our product, better cost discipline, and real momentum from our Jet Forward initiatives. During the first quarter, ChasmX fuel growth finished up 6.6%, four points of which was due to closing capacity reductions from the operational disruption. Without these impacts, ChasmX would have finished up 2.5% or two points better than our initial midpoint. One point of this beat was due to cost-saving efforts, while one point of spend is expected to shift into the remainder of the year. For the second quarter, we expect Chasm X Fuel to increase in the range of 3% to 5% year-over-year. We continue to expect Chasm X Fuel growth to moderate down during the second half of the year, with over two points less unit cost growth than the first half, although this remains subject to how the price of fuel evolves in the coming months and our final capacity levels. Average fuel price for the first quarter was $2.96, 26% higher than the midpoint of our initial guidance. We expect second quarter fuel price to be in the range of $4.13 to $4.28, with the midpoint 75% higher year-over-year, which is derived from the forward Brent curve as of April 10th. As a reminder, every $0.10 increase or decrease in fuel price is the equivalent to about $85 million of expense for the full year. To help offset a portion of fuel costs, we continue to focus on our fuel efficiency programs. With 30% of our second quarter capacity powered by more fuel-efficient new engine technology, supporting a targeted 5% fuel efficiency improvement over the last three years. With oil and crack spreads expected to remain elevated for a sustained period, we are actioning incremental cost reductions beyond capacity cuts to mitigate the impact. These include reducing spend across both OpEx and CapEx, and slowing hiring in some workgroups to better align with our capacity expectations. At the same time, we are executing on our structural cost initiatives under JetForward, including rolling out new technology and AI to support improved planning for our crew and operation, launching a sourcing center of excellence to further optimize contract spend with business partners, and implementing more efficient insourcing and outsourcing opportunities across the business. Taken together, we expect our near-term cost reduction efforts and our jet-forward cost initiatives to support strong cost control this year. While we did suspend our full-year CASM-X fuel guidance, we expect its historical relationship to capacity to continue this year, which implies roughly flat CASM-X fuel on mid-to-high single-digit capacity growth. Turning to our fleet and capital expenditures. In the first quarter, capital expenditures totaled $141 million, $59 million lower than our initial guidance due to timing shift of deliveries. Looking ahead, we expect approximately $275 million of capital expenditures in the second quarter and approximately $800 million in 2026. There has been a slight shift to our A-220 deliveries, and we now expect 12 total aircraft deliveries this year, down from our January guidance of 14 aircraft. And as previously discussed, we expect CapEx to remain below $1 billion annually through the end of the decade. Shifting to our balance sheet, we believe our unencumbered asset base and liquidity help us successfully manage through industry shocks like these, and I am pleased with the runway we've built for JetBlue. We've raised over $3 billion back in 2024 to secure our financial future and give JetForward a runway to perform, and the cash we have on hand as a result is a valuable cushion in this volatile, high-fuel environment. We ended the quarter with $2.4 billion of liquidity, or 26% of trailing 12-month revenue, above our liquidity target of 17% to 20%. This excludes our $600 million undrawn revolving credit facility. Earlier this month, we raised $500 million secured by Aircraft Collateral with an accordion feature that allows us to upsize to $750 million. We plan to reassess our funding needs as the year progresses. We also recently repaid the remaining $325 million of our 2021 convertible notes. Lastly, following this month's capital raise, our unencumbered asset base remains over $6 billion, with approximately a quarter in tangible collateral. Our priority remains maintaining a strong liquidity position and ensuring JetForward has the runway to perform. To wrap up, the environment we are operating in is challenging and volatile. We are focused on taking swift action and executing on our jet-forward strategy to put JetBlue in a position to restore operating profitability when the environment has normalized. We have taken meaningful action across the three main levers we control, fare, capacity, and cost, and we are pleased with the early results of these actions. We remain encouraged by the underlying performance of the business and are confident that Jeff Forward is the right plan to navigate this challenging environment and deliver value for our shareholders. With that, we will now take your question.

Thank you.

If you would like to ask a question, please press star 1 on your telephone keypad

to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star 1. We also ask that you limit yourself to one question and one follow-up. For any additional questions, please re-queue. And your first question comes from Mike Linenberg with Deutsche Bank. Please go ahead.

Yeah, hey, two questions here. With respect to your domestic first class, have you actually started selling that for the back part of the year? And if you are, can you just give us a sense of what the initial uptake looks like?

Good question, Mike. No, we have not begun selling it yet. We want to wait until we understand fully the implementation timeline. As we said, it was going to come in the second half of 2026, and we're still on track for that to happen. But we will announce the open for sale date when we know the first plan is going to be out there for sale.

We're currently going through the certification process.

Yes. Okay, great. And then just my second question, probably to you, Joanne, there appears to be like a subset of the industry that, among other things, is requesting a suspension of the ticket tax. And given that that is a user fee to fund the system, could we be in a situation where half the industry is, I don't know, subsidizing the use of the system for the benefit of the other? Is something like that even possible? I'm just curious about your thoughts about that. Thanks for taking my question.

Yeah, not entirely for me to feel like size tax you're speaking about, but, yeah, no, I mean, at the end of the day, if it were to apply to, you know, one carry, we presumably need to apply to everybody. The numbers associated with that, we looked at that early on, aren't significant. I mean, it's at the area of $20 million, $25 million annually.

In there, which is the ticket tax, we as an industry view this as a very unfair tax because we way overpay versus private aviation. So I would love for it to be reformed for other reasons, but I'm not sure this is the reason.

Your next question comes from the line of Connor Cunningham with Malia's Research. Please go ahead.

Hi, everyone. I'm trying to understand the comment that you were 90% booked in 1Q when JetPool started to move up and just what that means to sequentials. Again, I realize you expect 30% to 40% recapture, but I would think that the fact that I think there's been, what, six industry fare increases, that the uplift in revenue would have been a little bit better in the 2Q. So if you could just talk about what's going on there on a sequential step up. I realize the capacity is stepping up with it, but just any thoughts.

Yeah, no, hey, Connor, thanks. The comment was about right now we're 90% booked for the second quarter. So we've got another 10% of the revenue to come. That was not the number on March 31st or March 30th, whenever the fuel spiked. If I have that right?

No, one Q, we were 90%. Yeah, one Q, we were 90%. Remember, fuel spiked in early March. We were 90% already booked for one Q. So you aren't able to recapture with those fare increase some of the bookings because they were booked in January and February at a lower price. So everybody would have been largely in the same position as us because there were already bookings that had taken place for 1Q. So headline, I don't think there's no news there. It's just saying we are able in 1Q to take advantage of the fare increases because people had already bought fares at the lower prices. Going forward, once those fairs started going in, very different stories.

Okay, helpful. And then, Ursula, maybe you could, I mean, I think you have $6 billion of unencumbered assets. I realize you probably don't want to touch that quite yet. But if you could just talk about the accordion that you have within that current structure, what scenarios you would see yourself looking to tap at $250 million just in general?

Thanks for the question, Connor. I'm so extremely pleased with where we ended the quarter in terms of liquidity. Our target is the 17 to 20 percent. We ended the quarter at 26 percent, so we still have a cushion. Our original 2026 plan assumed that we would raise $500 million this year. We executed a deal utilizing aircraft to lock that in. We've drawn on a portion of that already, and we'll draw on the second portion later this year. We obviously did build in that flexibility in the accordion, so we do have an incremental $250 million that we can draw on. Given the magnitude of the fuel price impact that we're seeing in the business, we will most likely draw down on that in order to maintain our 17% to 20% liquidity target.

Thank you.

Your next question comes from the line of Dan McKenzie from Seaport Global. Please go ahead.

Oh, hey, good morning. Just, Ursula, following up on that last question, what additional cash could potentially be raised from extracting equity from deliveries or just aircraft financing? And, you know, under, you know, what scenarios, you know, might you want to raise additional capital beyond that accordion?

Yeah, thanks for the question, Dan. So our target is 17% to 20% liquidity, so I feel comfortable staying within that range. The aircraft that we're purchasing this year, there's 12 of them that are coming. We're assuming we purchase those with cash. So if we are at risk of falling below our liquidity level, we could decide to lever up those new deliveries. But as I mentioned in my script, we also have – we currently have a healthy unencumbered asset base of the $6 billion. So, of the $6 billion, about 30% is incremental aircraft and engines that we currently have on property. And then we also have our slots, gates, and routes. We have our brand. We have incremental loyalty that we can do. So, we have options. And so, if we're at risk of falling below our liquidity target, we'll assess all markets and look at all of our collateral and decide what would be the most effective.

Yeah. Thanks for that. And then second question here, you know, I think maybe for Dave or Marty, just going back to the script here, two points of RAS and B from stronger than expected demand and demand that sort of accelerated at the end of the quarter. So I suspect demand at the end of the quarter was worth more than two points of RAS and B. But my question really is what's driving that, how sustainable is it, and at what point would you expect demand to be more elastic?

Hey, Dan, thanks for the question. I'd say two things. I mean, I think if you look at the fourth quarter, when we did our fourth quarter call a few months ago, we did call out that, you know, we had ramp performance accelerating through the end of 2025. So I think what we saw in early 26 is just consistent with what we'd seen in general. With respect to the current revenue environment, I think it's clear that the revenue environment has been extremely robust, even in the face of pretty high fare increases. And frankly, I think that what you see in the industry right now is that air travel is still at a really, really good value. The A4A put out a document last couple of months or so looking at price changes from 2019 until 2026. They're looking at 20, 30 different commodities. Air travel was the only one where prices are actually down from 2019. You know, eggs up 96%, air travel down 3%. And frankly, I look at this and I realize we still offer really good value, and especially Jeff Liu, who's focused on, you know, the more, you know, lower fare part of the business. And I'll, you know, use the metaphor that we use here all the time, which is it is very common that you can fly – in fact, we just looked at it a little bit ago. You can fly, I think, the first couple of weeks of June. You can fly from Orlando to JFK for cheaper than it takes to take an Uber from JFK to Midtown. So air travel is still a fantastic good value. And honestly, with the quality of JetBlue, I think demand has held up very, very well for us. So we're very happy. Back to the point I made earlier, even with the price increases, we still see economy demand strong. and actually positive unit revenue in the economy cabinets. I think that's actually very good for us.

Maybe I'll just add our Jet Forward initiatives, we do see them contributing to this. When you think about product loyalty and merchandising, they're driving stronger engagement and yield performance. Our co-brand acquisitions are up, so it's a stronger environment.

Your next question comes from the line of Jamie Baker with J.P. Morgan. Please go ahead.

Hey, good morning, everybody. So, Marty, JetBlue ordinarily generates less revenue in the third quarter relative to the second quarter. And, of course, you know, there's a positive Easter benefit in this year's second quarter. I guess that, you know, makes the comparison even tougher. But there's significant yield momentum right now. Fuel recapture improves over time. What probability would you ascribe, I'm not asking for a guide, but what probability would you ascribe to third quarter revenue being higher than that of second quarter? Or is that simply off the table? No way.

First of all, if someone's not asking for a guide, you seem to be asking for a guide. I'm asking for a probability. If you want to give me a number, I'm just asking for a probability. No, we've not guided third quarter. We're not going to guide third quarter. But I will say that based on what we're seeing in the demand environment right now, we remain optimistic that we will continue as the year progresses to start recovering more and more of the increased price of fuel. Now, obviously, we need to recover more than that because so many of our other inputs have gone up. But I think we feel very optimistic of what we're seeing with demand. Second thing is, certainly for the last month of the third quarter, we've talked about capacity cuts. I mean, we've, as far as our internal planning, we've taken two to three points out of our second half supply, very much focused and concentrated more in the September through December period. We're assuming fuel prices at the current curve, and because of that, there's certainly capacity that we think will not be economical. And I think it's also very much contributory to a good revenue environment. So I will not go as far as giving you a guide or probability or any sort of percentages, But I'd say that as of now, we are very happy with the demand environment we're seeing, and not just in the premium cab, but also in coach.

So you're saying there's a chance. Sorry. So, and then second, Joanna, you know, you're not an official member of this Association for Value Airlines, but I've seen very impressed reports that maybe you did participate in the recent $2.5 billion bailout request. Can you just clarify and kind of bring us up to speed in general your thoughts as to selective government bailouts?

We're in a bit of a different position because we're open to anything and everything, assuming the terms would continue to control the P.E.C.N. We'll watch just like you're watching the news and see how that works.

Thank you, everybody.

Your next question comes from the line of Duane Fenningworth with Evercore ISI. Please go ahead.

Hey, thanks. Maybe just follow up right there. Joanna, in the scenario where Spirit gets support but nobody else does, would this influence your thinking about consolidation?

No. At the end of the day, you know, gosh, there's enough people out there that are commenting on every little piece of the business right now. And, again, we're focused on executing the plan. You know, even in the situation where there is a potential Spirit bailout, We're going to continue to execute our Fort Lauderdale strategy. I mean, as I think was mentioned in the script, you know, we're, you know, Q1, ASMs are up 23%. RASM is up 5%. Customers are clearly picking JetBlue because it's a better product, a better service, and we're going to fly. And they're not afraid for if they're going to get canceled. We've got a, you know, great plan regardless of the outcome of spirit. I feel for their people. You know, we're hiring a number of them to try to make sure that they, you know, have a soft landing. But it's a really, really tough, really tough situation. And, you know, there continues to be this imbalance of scale in the industry. We're doing what we can with Blue Sky. But it is full steam ahead in Fort Lauderdale. And we look forward to continuing to bring the great Jeff Luce product and service there. We're now the number one carrier at Fort Lauderdale, bigger than when we were pre-COVID. And we look forward to continuing to grow.

Thanks for those thoughts. And then, Marty, as you think about dialing down your schedule in the second half, What is your focus? What types of flights are most under the microscope?

Hi, thanks. And that's a simple one. I mean, fundamentally, we are assuming the fuel price for the rest of the year will match what the forward curve is saying. And at that level, there are certainly a small percentage of flights that we believe will not actually be accretive during that time period. So, again, the economics of reducing capacity are very much biased towards reducing it further out in advance because you can save a lot of expense when you do that. You know, we did do a little bit of pulling from the May schedule, and I saved a little much lower for that, for example, because, you know, the crews are already bid. They're going to get paid one way or the other. But when we make decisions this early for the fall, it's actually very effective for us to save some significant expense. So when you see where the pulls are happening, it generally is, you know, off-peak periods, Tuesday, Wednesday, stuff like that. Nothing really unusual, although we did say, and we are seeing good strength in the troughs, there's still troughs in comparison to the peak period. So I think it's just the math exercise rather than strategic exercise. And, you know, our goal, you know, always our goal is to try to get to the best top manager we can get to. So if we see stuff that will not be contributed to that, we will certainly take action.

Next question comes from the line of Savvy Sight with Raymond James. Please go ahead.

Hey, good morning. Marty, maybe just on Fort Lawville, you know, Given all the changes that you've done and the significant investment there with the last years, I was curious, post this summer, re-banking, where are you in the innings of really building up Fort Lauderdale outside of maybe the opportunity if you get more gates?

That's a great question. I think the real question is what happens with our biggest competitor there. Now, first of all, we have now added significant capacity down there. We're double the size of our next biggest competitor. We did not go into this with any expectation of Spirit going away. What we have done is we've taken advantage of gate availability that they've created with some of their pull-downs. So we have been lucky enough to be able to take advantage of the gates to add more international service and have more formal bank structure down there, which we're very excited about. But to the extent that they keep pulling down, we will backfill that capacity. And frankly, you know, when you think about us adding, you know, a quarter of our capacity and still having, you know, RASM that's basically one point off the system RASM, that is outstanding performance. And I think what it shows is that, you know, the JetBlue value proposition resonates in South Florida. And I think, frankly, it's a market we're extremely excited about the arrival of the domestic first class products later on in 2026. So, you know, my view is success should breed success, and we will absolutely continue to build Fort Lauderdale to the extent we can. I think when we first talked about Fort Lauderdale, we said we thought it would be, you know, our goal is to get it to the sides of Boston. And I'd say when gateability happens, it will absolutely be at that point. So instead of being focused on, you know, two focus cities sort of holding us up, we'll have a third leg of the stool in Fort Lauderdale. But, again, a lot of that's going to be predicated on gate availability.

Makes sense. And maybe just to follow up, sort of board it up, like the other focus, you know, when you kind of first came back was really building the new England strength back up. Just where are you on that front?

I mean, fundamentally, I'm very comfortable with what we've done in New England. I think the addition of service in a place like, you know, Bradley, Providence, in addition to what we've done in Boston, I think we're really excited about and happy how the markets have responded. We're not due for Lauderdale at the expense of those markets. You know, we do continue to have deliveries coming, which I think will help fund for Lauderdale a lot. But, you know, frankly, I think the most important thing to focus on is that the airplanes are going to follow where the demand is. You know, we've been very happy with the demand we've seen in the Northeast. We're sort of on year two of the ramp of these markets and, in general, more or less ahead of where we expected they would be. And frankly, I'd say Fort Lauderdale is way ahead of the ramp that we'd expect it. And, you know, I think that's how Fort Lauderdale is going to attract more supplies to go forward. You know, we are sort of coming into the summer period, which is, you know, a somewhat lower demand period for Fort Lauderdale. But I think, you know, once we get to the fall, sort of the November time period, I think we should expect significant additional growth from Fort Lauderdale to the extent that we have gates available.

Okay. Thank you.

Your next question comes from the line of Michael Goldie with BMO Capital Markets. Please go ahead.

Good morning, and thank you for the question. You're seeing healthy card spend in acquisitions. Can you unpack this by region? Is this really JFK-driven right now, and how does that influence your thinking for the opening of Boston as well as how things are trending with Fort Lauderdale?

Well, hey, Michael, thanks for the question. I think, first thing, you know, I would not say there's any significant regional differences at the card spend. There's certainly significant regional differences in where the cards are. And the cards are basically New York, New Jersey, New England. You know, that's the majority of our card business. And, frankly, one of the things we're focusing on for 2026 is to increase our base in South Florida. I think we've done well with the credit card, but I would say we're under-indexed in South Florida versus where we should be. We already have efforts that are going on in South Florida to try to improve our card base. And frankly, I think if you've added some capacity down there, and then plus the addition of the United capacity into the blue sky redemption opportunities so that customers can fly anywhere in the world with the two blue points, we're really bullish about our ability to have a really broad offering from South Florida, and that will translate into credit cards. Clearly, you know, given the location of the Blue House, You can tell that New York and Boston are the focal points for the credit card business right now. And if we said this publicly, and I'll say it again, we are looking at trying to find space for a Blue House facility in Fort Lauderdale. For those of you who know Terminal 3, it is a tough terminal as far as finding enough space for a lounge. But we are working with our partners at Broward County Air Force Division trying to find a place for a lounge down there. No news report because you haven't found the right solution yet. That's right for everybody. But I do think that's sort of the natural next third step, and that will be a very good help for things like kind acquisition.

And then on Paisley, you continue to ramp blue sky. Can you talk about the pipeline and initiatives to add additional partners to scale this platform?

You're saying partners over and above United?

Yes.

So for Paisley, we have talked to a single-digit number of other entities, some airlines, some non-airline partners. We're actually in the RFP process right now with one partner, which we're very excited about. Nothing to report now as far as details, but I think to the extent that airlines and other partners are looking at opportunities for looking for a partnership beyond some of the sort of traditional partners, I think we'll certainly be there for it. We're really, really excited about the technology platform that the Paisley team has built, and I'm looking forward to finally getting our first RFP and our first evaluation after United because I think we're going to be very competitive in this marketplace. I think it's also worth noting that we are now just now starting to get some of the United content into Paisley. Today, you can buy a JetBlue Vacations package that actually has United Air in it, And we have JetBlue Vacations has sold packages to United Destinations. We have rental cars coming very, very soon, hotels coming beginning of the third quarter, and we'll continue to go through the implementation for packages, cruises, things like that later in the year. So the relationship with United has been very strong so far. They have great partners, and, you know, more than anything, we're excited to get their customer-based experience and the benefits of Paisley. Thank you.

Your next question comes from the line of Tom Fitzgerald with T.D. Cowan. Please go ahead.

Hi, thanks so much for the time. Just wanted to stick with Blue Sky for a minute. I think it was on this call a year ago you talked about a true blue person or a customer who might need to go to Omaha or Boise and just the value prop for them. Are you seeing the response from those type of customers that you hope for? And what's just like early days still? What type of response have you seen from Mileage Plus customers under your own network?

That's a great question. And we watched this very, very closely. We had put together a forecast of where we would expect United customers to book on us, and it's exactly what we expected. It's things like, you know, L.A., New York, Boston, New York. Actually, L.A., New York, Sanford, New York, Sanford, Boston. We've had surprisingly good results at DCA. you know, D.C.A. to Florida and D.C.A. to Boston, given United's live presence at Dulles, this is exactly what we were hoping for in this partnership. You know, the ability to have JetBlue flights within the United distribution channel I think is extremely helpful for us because as strong as JetBlue is, you know, we don't have the same sort of share of mind in places like, you know, Washington on the West Coast, places like that. So it's doing exactly what we thought it would. We're very much looking forward to actually expanding this. We're still working on plans to create what we're calling mixed metal connections, which is customers who fly JetBlue into, let's just say, example, we just went back into New York, Houston, which we've been out of for a while. That'll be in the United Banks, and customers can fly New York, Houston on JetBlue and then fly Houston to El Paso or somewhere on United going forward. We don't have a date for that yet because that's actually a bit of a technology challenge, but we're optimistic because that will be coming as well. Overall, at the core, this is like the other 50-something interline relationships we have with a lot of partners. It just is with a very big airline that has really great distribution strength that complements our network really well.

I'll just add, I mean, the whole point is to not provide customers with any chance to choose anybody other than JetBlue, particularly in Boston where we have a very robust scheduling network, likewise in New York. and we were with an investor who was telling us a story about how Asia would typically have chosen one of our competitors with United. Thanks so much for that. That's a really helpful caller.

And then just as a follow-up for Ursula, just curious, you guys have had, obviously, it's been a pretty fluid environment the last few years coming out of COVID. So just like some lessons learned on pulling controllable spend out kind of last minute or closer than maybe you were expecting and just like some levers you're looking to pull in the second half of the year. Thanks

thing for the time. Yeah, thanks, Tom. I mean, this is one area where I'm just, like, super proud of the team and the way in which they've managed controllable costs. I mean, we pulled a significant amount of capacity out of the network last year, given the lack of demand, and the team found $40 million that allowed us to maintain our full-year guide. We get creative. There's everything from, you know, better aligning, hiring. We revise maintenance schedules. We reduce all discretionary spending. The team has made great progress on our fuel efficiency initiatives. You know, we have driven, you know, 5% savings over the last three years, and so super proud of the team. They are in the process of also ramping up all the cost initiatives associated with JetForward, so creating a sourcing center of excellence. We're leveraging data science and AI to build tools so that we can drive better operating efficiency and put in place more effective planning. As a reminder, we've gone through and simplified the fleet, right, by exiting the E-190. And so we've got multitude of levers at our disposal. And I'm confident that this year our cost profile definitely improves in the second half of the year versus the first half. Q1 is kind of the high watermark. Obviously, it was also impacted by disruptions. But as yet forward, cost initiatives ramp through the rest of the year, and as capacity grows slightly in the second half of the year, we'll continue to see efficiency. So we're going to do everything we possibly can to come as close as possible to the original full-year controllable cost guide.

Your next question comes from the line of Brandon Oglensky with Barclays. Please go ahead.

Hey, good morning, and thank you for taking the question. And, Joanna, I mean, it's another frustrating year, right, because we have volatility in oil markets, and it's, you know, a fifth or sixth year here of not turning a profit or potentially not turning a profit, I should say. And you mentioned it earlier, just the lack of scale versus maybe some of your larger competitors where there's, you know, objectively better balance sheet, better profitability. I mean, how do you structurally address the lack of scale in your business relative to those of your competitors that are doing better and have done better in this whole time period? Is there something you need to think about maybe strategically?

Let me start with we are seeing JetFolward underlying performance in the business. If you look at our operating margins for three, margin three points. Over a year, there was a three-point expansion. Lauderdale, Fullward this year, including one of our brands. The Northeast, Fort Kent, we think Blue Sky is an important part of helping with that. And then Paisley is the other piece and gives us sort of an obsession to help propel us back. I appreciate the very thorough answer, Joanna.

And, Ursula, I guess as you think about capital needs, I mean, is more debt the right path here as well?

Cognizant that the Melanchi isn't where we want it to be. It's clearly been strained post-COVID. You know, our number one priority is ensuring we maintain, obviously navigate, you know, volatile times, such as what we're in at the moment. I acknowledge the level of interest expense is material, and so that decision lightly. We need to maintain our liquidity target of 17% to 20%, and we try to be super thoughtful and cognizant. I mean, our number one priority, as Joanna mentioned, is continuing to execute on Jeff Bullard and get to a break-even or better off margin. That was the goal this year. Clearly, we're now facing material headwinds, which makes that exceptionally challenging. But the goal is positive operating margin, number one. Number two is delivering free cash flow. And then number three is delivering the balance sheet. So we need to focus on the things we can control and execution. And in terms of liquidity in the back half of this year, if there's risk that we fall out of our 17% to 20% target, You know, we will assess, you know, all markets, and we've got $6 billion of unencumbered assets. So, we have some flexibility to choose, you know, how we raise on a go-forward basis.

Thank you. Your next question comes from the line of Atul Mashwari with UBS. Please go ahead.

Good morning. Thanks a lot for taking my question. I want to circle back on the second quarter recapture rate of 30% to 40%. It does seem a little lower than some of your larger peers who are, say, about 10 points ahead on the recapture. So your booking curve is probably a bit shorter than them since you have more of a domestic business. And by that, it would imply that more of the second quarter would be booked at higher fares for you. So any color on why the lower recapture rate versus the legacy peers would be helpful?

Yeah, thank you. So I'm thinking about some of the things we heard in the other calls. I don't think we're dramatically lower than what I remember hearing. The one thing I would say is I think the recapture rate is different at different fare levels. And back to the point we've made about Jet Forward, like the biggest goal we have in Jet Forward is to improve our penetration in the premium market. I'm guessing that the airlines that are, you know, the $6,000 business class fares to Asia may have a different recapture profile than we do. And, again, that will be resolved or certainly get significantly better as we finish Jet 4 the next 18 months or so. But I don't look at our – when I look at our own internal calculations as far as our recapture, they may be a slightly different shape curve, but end of 26, early 27 is sort of what we've heard from other airlines as well. So I'm not sure I agree with that.

I mean, I think we think it's maybe premium and corporate mix.

That's helpful. And then as my second question, you know, on the capital raise plan that you have the $7.50 in total. What fuel recapture and demand scenarios did you use to come up with that number, that $7.50 that you've secured for now? I think just understanding that would be helpful as we try to assess whether or not you might need to raise more capital later in the year. Thank you.

At the highest level, our plan for 2026, our original budget, had rent at $63. Clearly, we're in an environment where it's severely elevated. The original budget for this year assumed we would raise $500 million in liquidity to maintain our 17% to 20% liquidity target. So we locked in that $500 million. As a reminder, we have an accordion, so we can pull that accordion, and that's an incremental $250 million. It's too early to tell, given the volatility of oil in the back half of this year, what the impact is going to be. I mean, this is part of the reason we pulled our full year guidance is just the volatility has been so extreme. We don't have clear line of sight in the second half of this year. So we will assess as we progress forward if we need to raise more liquidity to maintain that 17% to 20% target.

I think the headline is we are planning for multiple scenarios and we're maintaining a level of flexibility. time things and take advantage of our unencumbered asset base in the most favorable way. That makes sense. Thanks a lot for that and good luck with the rest of the year.

Your next question comes from the line of Chris Strapilopoulos with SIG. Please go ahead. Good morning, everyone. I'll keep

it to one question. So as we think about a response to demand, demand elasticity or potentially demand destruction, I prefer more of the former as far as terminology, but if you could perhaps frame potential resiliency around yields, you have a lot of initiatives out here at Blue House, JFK, Boston, domestic first class, of course, Blue Sky. Could you speak to that in a scenario where we do start to see some pushback or potential pressure bubbling up for more price-sensitive travelers against these initiatives that you have rolling out this year as we think about yield, resiliency, and things like that.

Yeah, maybe I'll start, and then I can sort of remind, I think, just first and foremost, we're not seeing any meaningful elasticity. Demand is strong across the booking curve. We are focused on yield. This is consistent with the broader industry trends. A load factor is, again, we are focused. Customers are an extremely resilient franchise. And then, obviously, all the things we're doing to try to increase our premium share, which remains more resilient when inflation goes up, are all the right moves. So, domestic first, the cabin seeing really nice progress. And then, frankly, the Lauderdale is, in our model, we do have a very strong portion, except with customers who are VFR who do go home to their family and friends over the holidays and for vacations, and they've always been very loyal to Gemma. No, I think the only thing I

mentioned, in addition to what Joanna said, was we've already taken action as far as reducing capacity in the second half of the year, And I'd say when we hit those windows of making significant costs, we look at the market, the man environment at that time. And if it makes sense for us to pull additional capacity, we certainly will. I mean, again, our number one goal is to make sure to get, you know, our project back where we want it to be. So I think being very flexible and open on capacity changes is an important part of that. Great. Thank you.

Your next question comes from the line of Catherine O'Brien with Goldman Sachs. Please go ahead.

Hey, good morning, everyone. Thanks so much for the time. So a bit of a follow-up to an earlier question, but you know there's a really strong 45% increase in credit card acquisitions in the quarter, and it sounds like Blue House was one of the drivers of that. Can you give us some color on how much the JetBlue Premier card growth was underlying that system number? And then if you're able to share if there's a notable difference in annual credit card spend between the Premier card and some of your other cards.

Hey, Katie, thanks. I'll say a couple of things. And we don't need a lot of detail, but I'll give you some color that I think should help. Our first thing is we only lapped the Premier Card in the first quarter. So there's really no base. For half the quarter, there was no base to compare it to. So it was really only March that we had year-over-year numbers. For the first year, we had put what I would consider to be a conservative, prudent forecast in, knowing the lounge was not open until later on in the year, and we significantly exceeded that number. When we go to the 45%, yes, the Premier Card is definitely a contributor. But a lot of that is just the base plus card that we offer every single day. And I think that – I want to go back to the point we made earlier about Blue Sky. The secret sauce of Blue Sky is the utility it brings to True Blue. The value – I should say the utility of a True Blue point dramatically changed when you got the ability to earn and burn anywhere in the world on the United Network. And I will throw to that – we didn't mention this in this call, but I'll throw it out here again. And later on this year, we will have full elite benefits between the two airlines as well. So if you're a mosaic experiment at four, you'll have an experience like you would get on JetBlue when you're flying United later on this year. So our goal is to make sure that our customers feel like that the TrueBlue program will bring them anywhere in the world they might potentially want to go, which is something we have not had for a while. So, to me, when I see the acceleration like we're seeing it, there's no change in approval rate as far as credit standards. It's just a lot more interest than JetBlue has. And to me, that is something that really, really excites me about Blue Sky. I think people get very focused on, you know, comparing to other programs. But, you know, frankly, this ability to have, you know, worldwide access for our customers to fly places that JetBlue could never imagine flying, I think that, to me, is a game changer. And I think that's translating into credit card acquisitions. I'll also mention that, you know, we're very lucky that the core of our customer base is basically, you know, New York, New Jersey, New England. And, you know, if we look at the economic status of those customers, you know, it's generally a more affluent group and a high spending group. So, you know, having the spend go up as much as it did in the base card, I think, is also huge for us as well and also better than some of them would refer to my competitors talking about spend.

That's really interesting. And maybe just a final question for Ursula. I appreciate, you know, we've suspended the full year of guidance. There's a lot of moving pieces. But on my math, you know, based on the color you've given on the capacity cuts versus the original plan and taking into account the first quarter, it looks like your capacity will be up, you know, low single-digit territory as of now. I guess first, correct me if I'm wrong, but if that's correct, is it reasonable to assume that on low single-digit capacity growth for CASMX would be kind of, you know, know, mid-single-digit range for the year based on your commentary on the relationship between capacity and chasm? And I guess anything we should be aware of when thinking about the cadence over 3Q and Thanks so much for the time.

Thanks, Katie, for the question. I think the historical relationship still stands between capacity and chasm X. So if capacity is at mid to high single digits, you know, chasm X fuel would be flat. So I think your example is roughly in that ballpark. As mentioned in my script, we definitely expect Casimex fuel growth to moderate down during the second half of this year. So, based on what we know in pulling, you know, two to three points of capacity in the second half of the year, our unit costs, you know, will be over two points less in 2H versus 1H. So, that's directionally where we sit today. I mean, I do acknowledge, you know, this is all dependent on the oil backdrop. So, clearly, if we start to get some relief or further pressure, we will adjust capacity as necessary. And then I mentioned earlier in the Q&A, I mean, the team has done historically a great job at executing uncontrollable costs And I have a lot of confidence that we can get, you know, as we can to the prior guides, given what we know today.

Thanks so much. Appreciate the moving target.

Your next question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Hi, this is Madison on for Ravi. Thanks for taking the question. I was just wondering if you could, guys, could give just some more color. I know you've touched on it a bit, but just your thoughts on international in light of potential fuel shortages in Europe and kind of resource allocation across the company, and if there's kind of like any opportunity to cut back there, or do you think you need to defense the slots you have?

Yeah, I appreciate the question. You know, we serve eight different countries over in Europe. I think our frequency this summer will be about 14 daily flights. It's only 6% of our ASMs as we navigate through the summer. So the point being, it is a small part of our network. Obviously, there continues to be supply concerns over in Europe. We're watching it very closely. We're working with A4A and our peers to advocate for, you know, certain operating procedures so that we can consume as much fuel as possible. We're also hopeful, given our flying is all long-haul, that that will be more protected versus the short-haul flying. So we're watching it very closely, and we're engaged and involved, but the exposure is minimal for us.

Got it. That makes sense. Thank you.

Your next question comes from the line of John Godin with Citigroup. Please go ahead.

Hey, guys. Thanks for taking my question. I just wanted to better understand, you know, the philosophy behind the capacity cuts in the back half. I think it's fantastic that you guys are making some changes in response to fuel. And it's not just you, but across the board, you know, companies have been a little bit reluctant to cut to levels that seem to more directly offset what's going on in the fuel environment, what is your guiding light as you contemplate 2% to 3% being appropriate and maybe the next cut behind it? Is it trying to get to 100% pass-through because 2% to 3% doesn't get you there? It doesn't seem to be free cash flow because you're targeting free cash flow positive by the end of 27. It's not margin neutrality. I'm just trying to understand, like, when you're running these scenarios, what is the output that you are managing to?

Hey, John, thanks for the question. I mean, I would say that it kind of is the free cash flow. It's just basically an EBIT overall. Our goal is to, you know, contribute as much to getting a positive EBIT as we can with the assets we have. And to the extent that we make decisions early and we have the ability to save more of the expenses, and we think that with the fuel price that we're assuming for the rest of the year and demand we're expecting, especially in trough periods, I think it's actually very important that we take action soon to make sure that we do what we can to maximize our EBIT. I would say that I do think I've seen a lot more talk of capacity cuts than I've seen actual action in the rest of the industry, so I'm not sure that I'm as positive about what you say the other airlines are doing. but I'll be clear that we are taking action. You know, we, as you go back to the free war guide that we did, you know, our goal is to get to a positive up margin this year. You know, we've suspended that guidance, obviously, but our goal is to get, you know, do everything we can to make sure we get as close to that number as possible. And frankly, you know, my view is, you know, given the fuel curve we're seeing right now, it would be imprudent to make decisions that would not be profit-maximizing. Now, we do have some constraints with our slot base at JFK. I think it's worth mentioning that this is a long-term asset for the company, and unfortunately, we probably could cancel a little bit more if we were to take the risk on slots, but that's actually not a risk we want to take because, frankly, this is a transitory situation, and I do think we'll eventually get back to normal. and we want to make sure that we will absolutely be in a position to maintain our franchise at JFK. And I think giving up slots would be a very bad idea in the short term. And the last issue is we are so happy with what we're seeing in Fort Lauderdale. I'd say there'd be fewer cuts in Fort Lauderdale and elsewhere just because the demand is coming in as well as it is. But clearly, with fuel up 75 percent, it's not quite 75 percent in the fourth quarter, but with fuel up as much as it is for the rest of the year, There are absolutely going to be flights to not be cash contributors, and those flights have to go.

Yeah, and, you know, that makes sense. But, you know, if I just look at the fuel curve today, round numbers, it seems to imply like a 30% reduction in fuel from current spot by the end of the year. So, you know, I know that we need some basis for an estimate, and I can appreciate that you guys are using the fuel curve. but you've got a very large embedded fuel tailwind kind of making the math work from here. It seems like you could hit the pass-through numbers that you're describing, even if the demand environment didn't improve at all. I'm not quite sure that that's like a reasonable framework. I don't know. It feels like you do, but maybe we could just talk about that a little bit.

I think that's a great question. And frankly, we look at the fuel curve and wonder how realistic it is during that time period. And that's one of the reasons why, you know, the comment earlier in the answer, you know, when we hit those windows of making commitments on cost with respect to things like, you know, bidding pilot schedules and things like that, before we get to that point, we will reevaluate the capacity plan we're offering. And it turns out the fuel curve ends up being better than we expected. You know, maybe we put some points back. If the fuel curve is worse than we expected, we will make sure to do the evaluation when we can pull more with the goal of saving as much of the money as possible. So, you know, my view of this is this is just prudent business, and we will continue to watch that curve. I think if you think about that timeframe of 90-ish days out when we have a pretty good handle on saving some of the costs, I think we'll have a much, much better view of the fuel cost 90 days out than we have right now for six months out.

and we're going to maintain as much flexibility as possible. And I think that's the headline. If you could tell me where fuel is going to be in September, then I could tell you closer to what my capacity is going to look like in September. But at the end of the day, you know, given where the demand environment is right now and the investments in full water on the slot portfolio in New York, you know, we want to be mindful, but we need to be aggressive in capacity cuts to the extent that fuel remains in a highly elevated state.

I mean, I follow the logic. You know, I can't tell you where fuel prices are going to be, but it seems plausible they could just be flat from here. And it doesn't seem like that's being compensated in a serious way. Okay.

Yes, it's possible.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.