Okay, good morning, everyone, and welcome to Barclays' 42nd Annual Industrial Select Conference. I'm Brandon Oglenski, Airline and Transport Analyst, and joining us first up today is actually JetBlue Airways, and we have Marty St. George, President of the Company, and Ursula Hurley, Chief Financial Officer. I know we're going to have a great conversation, but just want to thank everyone for coming down to Miami. This is going to be a great event, I think the most attended event that, at least, I've seen in the 13 or 14 years I've been hosting, so throughout the fireside chats, you're going to see these old-school BlackBerry-looking things in front of you. We're going to do audience response questions in all of these presentations, so if you don't mind participating, we get a pretty good sample set out of this. Coming out of the conference, we can pick up on what people like and what they don't like. Before we jump into the discussion here on JetBlue, can we queue up the audience response question number one? These are going to be consistent through every presentation today. If you can pick up the handheld there. Do you currently own JetBlue? Yes, overweight; 2, market weight; 3, underweight; or 4, no? It takes just you can go ahead and hit the vote. Can we vote? We used to put them up here, but then we figured management teams skew that a little bit. Question number two, please. Sorry, we'll get you the results. What is your general bias towards JetBlue right now? Positive, negative, or neutral? And whoever's queuing this up, just go ahead and vote. Thank you. Okay, and then question number three. In your opinion, through-cycle EPS growth for JetBlue will be above peers, in line with peers, or below peers? Sir, yeah, thank you. Okay, maybe a little bit more tougher crowd here. But guys, thank you very much for coming down, Marty and Ursula. I don't know where you guys want to start, but I guess folks are pretty excited about airlines in general right now at this conference. Obviously, valuations have rebounded a little bit here from the lows of last year. There is a little bit of concern right now that, hey, capacity creep into the Q2 from an industry perspective. I know JetBlue, your capacity is actually a little bit more tame. But how do you guys approach these peak periods? Is demand deteriorating or actually in a better position now? I mean, so capacity-wise, just to reiterate, we're flat, basically, with 2025. So if we're looking for suspects on growth, it's not us. With respect to how we're managing capacity, we laid out in the JetForward plan a pretty significant change to our network structure that's really focusing on depth more than breadth. So we've basically canceled and redeployed 20% plus of the system, focused on our key growth areas up and down the East Coast. And us, we have a plan, heads down on the plan. Competitive capacity will come and go. I will say the last two years, there's always been a story. In 2023, it was a Florida story; in 2024, it was a Latin story. Like this year, we'll see. I will say that in general, to a certain extent, we're not even really looking at the details of it because we know what our plan is and we're following it, and I think given that we have fundamentally a leisure focus versus our competitors who sort of aren't as leisure focused, we feel very good about what our long-term plan is. Can you talk to those near-term dynamics, Marty? Because I think your revenue guidance was impacted by the Easter shift for the Q1. But obviously, you should get that back in the Q2. Are those dynamics playing out in real time the way you would have thought? Q2, we're not heavily booked yet. So certainly during the peak, the Easter peak and the New England break, we're getting what we expected in that period. But again, we haven't really guided the quarter. But yes, we will get that Easter number back, as we have every year that Easter is moved between the quarters. With respect to the Q1, I think it's very consistent with what we said on the earnings call, which is it's generally a trough quarter compared to Q1 or Q2 to Q4 last year or Q2. And I think it's playing out given the demand environment right now, which is during the peak period, which, by the way, we're in one right now. During the peak periods, demand is great. I think in the period of the troughs, it's a little bit more challenged and it's a little bit more troughy than either the previous or the following quarter. Got it. Appreciate that. And the other subject's very specific to your stock in. You guys probably can't say much, but obviously, there's been a lot of speculation swirling around broadly industry M&A. And your name comes up specifically a couple of times. But I think you guys did say on the last call that you're open to some sort of code-share agreement, potentially, or a partnership with other airlines. So can you speak to what are the ambitions, especially following when you had the NEA with American and obviously that's not there anymore? So I would say that the NEA was never fully played out because just as we were getting toward the back half of the ramp, the judge struck it down. But there were some core things in the NEA that we really liked and were creative. And we're very much looking forward to letting the NEA play out in the original design. Obviously, the judge had a different idea. But if you read the ruling, which we've all read in excruciating detail many, many times, he basically laid out a roadmap of how the partnership could look like. And frankly, when I look at the benefits that we got from the partnership we had, I think that's something that's attractive for us. We have said we're talking to multiple airlines. We're still talking. If we find a deal that's accretive, we will absolutely do it. There is an amount of money in the JetForward plan for partnership, but we didn't really gauge how big it would be or how small it would be. So if that number has to change, we'll guide it. If we reach a deal, if the number changes, we'll guide it when the time comes. But I certainly do think a partnership would be good for JetBlue. And I guess in the context of how the NEA worked, if you can't have revenue sharing, do you lose some of the benefits? Or I guess, what are the benefits partnering with another airline? I think the biggest benefit, in my view, is actually on the loyalty front. One of the things that we clearly hear from our customers is that the utility of a TrueBlue point is not as strong as the utility of a point from the Big Three airlines, and we had not really gotten to full earn and burn with American before that deal was struck down, but I think the ability to bring that utility to TrueBlue would be fantastic. We're very happy with where TrueBlue revenues have been as far as the percentage total, which I think we talked about on the last call, but we think that there's a lot of upside. Given that we really don't have full global earn and burn, I think to be able to add that to our network would be very, very helpful. Appreciate that. And I guess along the lines of JetForward, can you talk to what are the big commercial initiatives this year in 2025? Especially looking beyond that too, because I think you want to deploy first class in the next year or two, right, across the fleet. So what are the stepping stones this year? This year, obviously, we continue to have the network changes ramping. As I said, 20% of the network was canceled and redeployed. That ramp is going forward this year. Last year, we announced the preferred seating program and the change to Blue Basic, both of which have been very good for us. In fact, we said on the Q4 call that we'd actually achieve some of those benefits faster than we'd expected and that moved into Q4 of last year. Just a couple of weeks ago, we announced a change to Even More product, which is to make it more consistent with a premium economy product you would see at any of the Big Three airlines. So those are some of the 2025 areas of focus for us. There's also, I mean, if you look at the page of initiatives, there's 50 or 60 initiatives. I mean, a lot of them are smaller. But there's no piece of the network, excuse me, no piece of the airline that has not been examined for opportunities for accretion. Obviously, we recognize where we need to get to as far as earnings. We've laid out $800-$900 over the next three years, and we're on the path to get there. Yeah, I would just add in terms of loyalty. Marty and the team just launched the premium credit card. We're actually rolling out lounges. The New York lounge will open later this year. And then the lounge in Boston will open next year as well. And then we also did announce the first class product. So that will hit the market next year. Ursula, maybe along those lines, and I want to come back to the network and some of these commercial initiatives, but guidance for better than break even this year, full year. What are some of the headwinds? Well, maybe talk about the GTF issues too. Sure. So clearly, the largest headwind for JetBlue at the moment is the GTF engine. So last year, we had 11 aircraft on the ground. This year, we will have. We actually quantified on the earnings call a few weeks ago that it is a headwind for JetBlue in 2025. The GTF issue remains very fluid. I did mention on the call that our conservative view is that we believe that the aircraft on the ground will peak within the next one to two years. Obviously, there are a lot of levers that can improve that scenario, such as shop capacity and just the overarching supply chain. So we hope for that to improve so that this headwind mitigates over the years to come for JetBlue. I'm super pleased in terms of the momentum of JetForward. We announced the plan mid-last year. And if you look at our op margin guide for 2025, we're adding five points of op margin since the announcement of JetForward. And about three points of that is driven by JetForward. So pleased with the initiatives, pleased with the momentum. And I am hopeful that Pratt & Whitney in the outlook will hopefully improve. You said the peak of groundings could actually carry into 2026. Is that correct? It could. I mean, there's a lot of puts and takes that drive that. I'm hopeful that we start to see improvements in terms of the Pratt & Whitney aircraft on the ground forecast. Our planning assumptions are pretty conservative. So I'm hopeful that we can pull that in. Okay. And how is this impacting your unit cost outlook in 2025? And I think you've mentioned that you hit structural cost targets of, was it $100 million or $150 million run rate as of last year? So what's the outlook for costs going ahead? Yeah, so the team did an exceptional job in terms of controllable costs in 2024. We actually hit or exceeded our cost guide in all four quarters last year. To your point, Brandon, we wrapped up our structural cost program that delivered $190 million in run rate savings, and so I'm pleased. We have been saying for the last six to eight months that our 2025 controllable cost outlook would be mid-single digits with a flat ASM growth, so we've hit that. As part of JetForward, we have a new cost initiative to the tune of $175 million, and the essence of that program is really around just how do we better leverage AI and technology to drive productivity throughout our internal workforce? And then how do we continue to build tools for our customers to self-serve? I have a lot of confidence given our track record of cost execution that we'll be able to deliver the $175 million as part of JetForward. Got it. And by the way, if there's any audience questions, just raise your hand. We'll get a mic to you. Marty, coming back to the network, because I think you said a significant percentage of capacity has been shifted at JetBlue. And I think it's pretty profound, right, within the history of the airline. So where have been the priorities of growth and how is the new East Coast focus playing out right now? The priorities have been up and down the East Coast. We are the biggest leisure airline in three of the five big metro areas in the East Coast. From that perspective, that is a base for what we think this airline strategy should be going forward. We made our chops on leisure from the very beginning. We still see ourselves as a low-fare airline, and we want to play in the elastic side of the business. I think if you look at where we had put capacity in the last five years or so, there have been a lot of other explorations in different parts of the country. I think it's about things like Los Angeles, where I think if something had gone forward in the Spirit, that might have been different. But I think without any sort of transaction and certainly without any large-scale partnership, that was really not going to be good for us. And during that same time period, frankly, we lost ground on the East Coast. And I think what we looked at as far as the redeployment of the network is to make sure that all the customers in New York and Boston who didn't have the chance to fly JetBlue because we pulled capacity, we could put capacity back there and sort of reclaim that customer base. How many markets right now are in development phase or new markets for JetBlue? I think it's about 40 or 50-ish that are either significant capacity increases or net new markets for us. Depending on the market, it's a one to three-year ramp. The ramping itself is built into JetForward. Again, we're on path or ahead of JetForward. We don't really give a lot of details on specific pieces of ramp, but this is sort of normal course of business for an airline. I guess within that context, what's the long-term capacity outlook here, especially given that you're going to have the GTF issues into 2026? Obviously, we've guided for flat in 2025. 2026 is a bit of a toss-up because we really don't know what's going to happen with Pratt. But ultimately, we want to get back to our sort of mid-single digits, mid to high single digit growth rate. I think that will be not incredibly soon based on how well Pratt does. But we do have deliveries coming. It's just that the next few years are going to be a little bit lumpy because of the GTF issue. And to be clear, we will be a 100% Pratt airline by the end of this year as the 190s go away. And with the V2500s aging, we're very excited with GTF when it works. We just need to get through the quality issues now. Specific to that, is the GTF solution solved after these groundings, or is it ongoing after that? No, listen, like I said, I think we'll peak in the next one to two years. And then it will be a tail from that point on. If you look at JetBlue's order book, we've got 24 deliveries this year. We have 17 next year. And then in 2027, we significantly step down. And I'm hopeful that we'll start to get these aircraft on the ground back in the air. And so I think the timing is hopefully going to line up really well in terms of how the order book is structured. And to Marty's point, I mean, we have aspirations to grow again. We need to gain economies of scale and continue to build depth in these focus cities of ours. So it's just a matter of time. The JetForward strategy is a multi-year strategy. We did an aircraft deferral last year to set us up to, quite frankly, deliver free cash flow again. And so priority number one is op margin positive. Priority number two is positive free cash flow. And then priority number three is going to be to deliver the balance sheet. So we believe that the order book and the GTF situation is set up for us to successfully hit those three goals. But I guess specifically to Ursula, I was asking, once these inspections are done, the engines go back on wing, are you seeing reliability come back to where it should be, or? We are. So we are starting to see some bright spots, quite frankly. So we've been doing some self-induced help in terms of making enhancements to the engines. We're seeing them stay on wing longer. We are seeing Pratt & Whitney extend the life of the engines being on wing before they have to go into shop. So there are some bright spots that we're starting to see that could hopefully improve the situation. Okay. Marty, back on the network, what's the competitive impact right now from what other carriers are doing in your core markets? If you look at competitive capacity for the industry, certainly look at the Big Four, it's flat to up 0.5%. Competitive capacity in JetBlue markets is up 3% in the Q1. And frankly, this is the blessing and the curse of being in big metro areas, Boston, New York, South Florida. Big markets attract a lot of capacity. And we see capacity cycle in and out. This is not uncommon for the experience of flying in these markets. But we're in this for a long run. And we've watched this cycle come and go. And again, back to the, if you remember all the panic about Florida capacity in 2023, not an issue now, panic about capacity last year sort of resolved itself. Fundamentally, the advantage of the sector is the hotels move. If capacity is not earning appropriate returns, it's going to move somewhere else. I guess that might be counterintuitive to folks because obviously Spirit's going through restructuring right now and their capacity is down significantly. They do have a lot of overlap with them in markets, but is it just not coming out of the markets where you're overlapping? Yeah. I mean, if you look at where Spirit has made their cuts, it's been very much focused on the legacy hubs where they sort of had a skimming strategy, it appeared. If you look at their POR as it was laid out, they said that Fort Lauderdale is going to be the center of their network going forward. Frankly, nothing about that surprised us. We've been in one-on-one meetings for the last six months with people speculating of tailwind, Spirit, whatever. Having looked at the numbers, they're like, a lot of that is the only thing in that airline that's really probably going to be sustainable in the long term, which is where we have by far the most overlap with them. This is not in any way different than what we had expected from the beginning as far as reorganization. We'll see what the plan looks like when they come out. Obviously, we're all going to find out together. But I don't think we're expecting a massive tailwind from them. Okay. On the commercial side, I think you made changes to Blue Basic last year, right? And you're marketing Even More Space as a separate product now, or do I have that wrong? Sorry. No, it's basically more like it's a separate cabin. So the product spec is different: enhanced snacks, free alcohol, things like that. It's actually sellable on the website as a standalone product in addition to as an ancillary. So it's sort of an all-encompassing move to make it look a little bit more like what you would see on Delta or United. Are there any significant technology changes that need to happen in the background for this Ursula? No. No. So how much are these initiatives adding this year, Marty? I mean, I can only go to the higher level of the JetForward guide. Whatever you've done, basically the $800 million-$900 million is going to be a third, a third, a third over the three years. So we haven't really gone to a lot of detail on an annual basis in each one of the pillars. But obviously, the majority of the benefit we're seeing in JetForward is going to be revenue and product related. Okay, and you guys are definitely pushing forward with a more premium strategy like a lot of airlines because it appears that that's a very sticky trend, but what can you tell us about the cyclicality of premium products? Do you think it's going to track in line, or is that going to be something better in the future? So I'll say two things about premium products. First of all, the trend towards premiumization really started in the early teens. 11, 12 was when we started seeing tremendous pickup in these markets. Number two is that we very much see it happening all across the system, including in our VFR markets, Dominican Republic and Jamaica and places like that. I think as we've seen in the country overall and in multiple sectors, there is more of a segmentation of demand where there are people who really want to get the rock bottom price and there are people who want to pay more to get more. And frankly, that is the core of what the business model for JetBlue was from the very beginning. So to me, that fits right in the wheelhouse of what we're trying to accomplish. With respect to the cyclicality of it going forward, one thing we mentioned on the last call that I think is worth mentioning now. Today, premium seating is about a quarter of our capacity, and it's not dramatically changing as we go forward, so what we're going to see is the total seats in the airplane are going to be split differently between Even More and the new people call it Mini Mint. We do not call it Mini Mint, but. Junior Mint? First class product. First class product, but it's basically going to be more or less the same percentage of the tube. Okay. And can you talk about the rollout of your domestic first class product? It sounds like there's not going to be a gauge impact or a CASM impact. Is that right? So well, first of all, the rollout is going to be in 2026. And the biggest challenge for us is basically the seat certification, which is getting the seat certified on our airplanes, in our cabins. That is generally a year to 18-month process, which we've kicked off already. We just signed the contract last year. So that process started at that point. We'll see what happens with the FAA and the certification process. If it goes faster or slower, we really have no idea what's going to happen. But it will start showing up in the market in 2026. And we'll give more details as we get a little bit closer and have a better vision on the timeline. And obviously, I think a big discussion topic at this conference is going to be changing administration here in the U.S. and DOGE and potential upside and downside from that. But how is the FAA operating today versus maybe a few years ago in your perspective? I mean, we have not seen the difference literally today versus six months ago. I will say that we have been tapping on the need for air traffic control reform for over a decade. We've got 70% of our ASMs touched the Boston and New York metro markets. And air traffic control up there is challenging. So frankly, everything we're hearing about the focus on air traffic control to us is good. And I think it's going to be very good for us. But the devil's in the details. And we'll see how this actually gets executed. Okay. Appreciate that. Sorry, you have a question here? Just going back to the GTF engine, are your A220s affected by that? And is that part of why there's an elongated repair schedule? Yes. The A220s are impacted by the GTF engine issues. Between the A321 fleet and the A220, there's a slightly different timing of when they peak. So when we quote these numbers of 11 aircraft on the ground last year and mid to high teens this year, it's inclusive of both fleet types. We're more heavily exposed at the moment to the A321. And Marty, I think you talked about how a couple of years ago, Florida was a challenging sector and then Latin was last year. Can you talk about what's working this year and maybe what is a little bit behind? I think clearly, and I think it's something we've heard from our competitors as well, international in general is doing well. Atlantic is doing extremely well year -over -year. Latin is doing well. I think if you had to pick an area that's the most challenged, it's been Boston. We put a lot of capacity in there. Delta's put a lot of capacity in there. It's a very important market for us. We're very deliberate as far as we're able to put capacity. We're very confident about the long-term path for Boston. Okay. Can we cue up question number four, please, for the audience? In your opinion, what should JetBlue Airways do with excess cash? And then first two are bolt-on or larger M&A, three share repurchases, four dividends, five debt paydown, and six internal investment. You can go ahead and hit the vote button, please. And Ursula, while we wait for the response here, and I suspect probably focused on debt, which it is, can you talk to the most recent financing you did late last summer and how that plays out with your CapEx outlook for the next two years? Yeah. So last August, we raised a significant amount of capital against our loyalty program. So we did a bond and a term loan. I mean, the essence of that was to pre-fund aircraft deliveries. So we will utilize that cash to buy all 24 deliveries that we have coming this year. It was a strategic financing. We wanted to give JetForward runway. We're going to continue to build up our really healthy unencumbered asset base with these new aircraft that are delivering. So I feel well-positioned in terms of liquidity and giving the business runway to execute on the JetForward program. Okay. And can you queue up question number five, please? In your opinion, what multiple of 2025 earnings should JetBlue trade? And it's less than 10, 10 to 12, 13 to 15, 16 to 18, 19 to 21, and higher than 21. I don't think any airline's going to hit anything above one there. All right. And then question number six, please. What do you see as the most significant headwind facing JetBlue? One, core growth; two, margin performance; three, capital deployment; or four, execution and strategy? Margin performance. So Ursula, coming back to the capital question, where's target leverage in two to three years at the end of JetForward if you're successful? Yeah. Listen, clearly, balance sheet is not in a place where we want it to be. We have aspirations to get the metrics in general back to pre-COVID levels. This is a multi-year journey. I mean, I mentioned earlier, JetForward is a three-year program to get the business healthy again and really leverage our strengths between our network and our footprint as well as the product offering that we have. So number one is consistent profitability. Number two is free cash flow, which I do believe we have a runway to achieve within the timeframe of JetForward. And then the number one priority is going to be deleveraging the balance sheet. So I do feel like we're set up for success and we have a runway to do that and we're pleased with the momentum thus far. But peak leverage should be behind us. Is that right? Looking forward. It should be behind us. Yep, so I do envision we're not raising incremental debt in 2025. As I mentioned, we accomplished that last August and then going forward, I do believe that we'll be generating free cash flow in this timeframe of JetForward, so I do believe we've hit the peak. We're almost at the end of time here, but I want to come back to what I think is a critical piece here for your company and obviously airlines in general, but the loyalty program. How important is getting another partnership to the success of that outlook? Or can you do something on your own? First I'd say if you look at the percentage of revenue you get from loyalty, the industry overall is sort of two packs. There's Southwest and Alaska at the very top, and then there's the next four airlines sort of clustered together. We're second out of those four. As a percentage, given that we have points that don't have the same utility, I think we're actually in a very, very good spot. I'm really looking forward to some sort of partnership that will help improve the utility of the points. I will say I know it's a Chinese wall, different part of the bank, but Barclays is an extremely important partner for us. They've been with us for 10 years. And they've done a really, really good job of trying to help the credit card program be really successful, including the Premier Card that just launched a couple of weeks ago. So from my perspective, we still have a somewhat fanatical customer base who loves JetBlue. And I think that knowing the power of loyalty programs in this country, and there have been rumors about whether Durbin or something would change loyalty programs, I think in the new administration that's probably unlikely. So I actually am very optimistic about the future of loyalty in this country and more optimistic about JetBlue given what we're accomplishing right now, the point we're starting from, and the potential we have with the partnership program. Ursula and Marty, thank you so much for coming down. Obviously, JetForward is the focus here. It looks like a pretty bright outlook from here.