JETBLUE AIRWAYS CORP Q1 FY2025 earnings call

JetForward Progress

• Continued to make progress on JetForward, with consistent year-over-year improvements in A14 and NPS over the last three quarters. NPS improved double digits year-over-year for the first quarter, marking the fourth consecutive quarter of growth.
• Premium offerings advanced nicely, with the Enhanced EvenMore offering launching to solid early results. The new Premium co-branded credit card exceeded sign-up goals.
• Network changes in the northeast, particularly in markets where JetBlue holds significant relevance, showed early benefits. BlueCities, secondary cities within the catchment area of Northeast-focused cities, began to show initial benefits.
• Cost transformation program progressing, with savings expected to ramp during the second half of the year.

Operational Actions

• Adjusted capacity in response to softening demand, pulling two and a half points of trough capacity from March and making early changes to April, with further reductions across the second quarter.
• Reintroduced the Fort Lauderdale to Guayaquil Ecuador route and canceled the Boston to Halifax Nova Scotia flight based on booking trends.
• Evaluated fleet plan, including reevaluating A320 extensions and planning to exit the E190 fleet by the end of the summer.

Liquidity and Finances

• Strong liquidity position with $3.9 billion in total liquidity excluding the $600 million revolver at the end of 2024, representing 42% of trailing 12-month revenue.
• Deferred $3 billion of CapEx, pushing out A321neo deliveries to the 2030s, with 21 deliveries expected from Airbus in 2025 (18 A220s, 3 A321s).

In the first quarter, transatlantic RASM was up 28% year-over-year on 25% fewer ASMs, benefiting from seasonal optimization. Latin unit revenues were up mid-single digits year-over-year. Premium RASM, including Mint and EvenMore, outperformed Core RASM by high single digits. Loyalty revenues grew by 9% during the quarter, bolstered by new partnerships, additional redemption opportunities, and the launch of the Premium co-branded credit card.

Second Quarter Guidance

• RASM expected to be down 7.5% to 3.5%, with capacity down 3.5% to 0.5%.

Full-Year Guidance

• Not reaffirming full-year guidance, will provide a more meaningful update later in the year when visibility improves.

Cost Guidance

• CASM ex-fuel expected to grow 6.5%-8.5% in Q2, moderating in the second half of the year as cost transformation ramps.

Partnerships

• Expecting to announce a domestic airline partnership during the second quarter. Also, earn and burn of TrueBlue Points with Japan Airlines was announced earlier in the month.

• Macro economic uncertainty impacting demand, especially in trough periods, requiring continued capacity adjustments.
• Ongoing Pratt & Whitney engine issues, with engines on the ground but seeing improvement, though compensation with Pratt & Whitney remains fluid.
• Tariff exposure, with potential impact on aircraft deliveries and spare parts, though most upcoming deliveries are U.S.-assembled.

Q: Duane Pfennigwerth asks about the change in booking patterns, adjustments to revenue management, and bookings patterns now.

A: Marty St. George responds that there were step-downs in bookings since January, aggressive capacity cuts were made in response, and currently, there's a relative period of stability with a plateau.

Q: Savanthi Syth inquires about the range for second half capacity outcomes and the domestic partner announcement.

A: Marty St. George says they will react to demand seen at the time, and expects a domestic airline partnership announcement in the second quarter, with benefits including higher network opportunity for TrueBlue Points.

Q: Jamie Baker asks about the domestic partnership type and Joanna Geraghty talks about JetForward's progress.

A: Marty St. George clarifies it's a partnership with a domestic airline, and Joanna Geraghty highlights JetForward's progress in areas like reliable service, product offerings, loyalty growth, and cost savings.

Q: Michael Lindenberg asks about Pratt & Whitney compensation and new market additions.

A: Ursula Hurley states they have 10 aircraft on the ground currently, seeing improvement from Pratt, and no compensation booked in P&L; Marty St. George mentions multiple new markets will be added to the route map later in the year.

Q: Thomas Fitzgerald asks about Premium vs core RASM outlook and VFR vs beach markets in LATAM.

A: Marty St. George expects Premium RASM to continue growing and hopes coach RASM will also increase, and mentions VFR traffic in LATAM has not seen significant drops so far.

Q: Daniel McKenzie asks about Pratt & Whitney AOGs in 2026 and accelerating JetForward initiatives.

A: Ursula Hurley says the situation with Pratt is fluid with more to come; Joanna Geraghty mentions some JetForward initiatives are ahead of plan, like loyalty growth, despite macro challenges.

Q: Andrew Didora asks about CapEx funding and the American lawsuit.

A: Ursula Hurley says they will assess financing market if macro backdrop deteriorates further; Joanna Geraghty states they haven't been served yet and are working to wind down remaining aspects with American.

Q: Catherine O'Brien asks about CASM-ex outlook and domestic airline partnership lessons.

A: Ursula Hurley is confident in the team's controllable cost delivery, with expectations of CASM-ex moderating in H2; Ursula Hurley defers on partnership lessons, excited about the upcoming domestic partnership announcement.

Q: Brandon Oglenski asks about off-peak challenges and maintenance costs.

A: Marty St. George talks about aggressive trough capacity cuts; Ursula Hurley mentions revisiting A320 extensions to achieve maintenance savings.

Q: Ravi Shanker asks about booking trends by month and RASM opportunities in peaks.

A: Marty St. George says there were step-downs in bookings from January to March, with April having a peak, and the team focuses on competitive peaks.

Q: Scott Group asks about cash flow implications of guidance and May/June bookings.

A: Marty St. George and Ursula Hurley discuss cash flow mitigations and liquidity targets; Marty St. George states May is 70-something percent booked and June is just under 50% booked.

Q: Stephen Trent asks about LATAM region trends and tariff tolerance.

A: Marty St. George says Puerto Rico's trend is not as high but remains bullish; Ursula Hurley says they are exploring options to mitigate tariff impact on remaining aircraft deliveries.

Q: Atul Maheswari asks about JetForward gains and May/June bookings.

A: Marty St. George mentions JetForward is phasing in and May is 70-something percent booked, June is just under 50% booked.