JETBLUE AIRWAYS CORP Q4 FY2024 earnings call

1. 2024 was a period of transition with a new leadership team launching the JetForward strategic plan in July. 2. Implemented over a dozen strategic initiatives including improving operational reliability with on-time performance up 6 points vs 2023, Net Promoter Score up nearly 10 points, and ranking 6th in Wall Street Journal's 2024 Airline Rankings. 3. Closed 15 Blue Cities, redeployed over 20% of network, refocused LAX footprint, boosted New England and Caribbean flying, reinvested in Florida and San Juan, seasonalized transatlantic line. 4. Rolled out preferred seating, added loyalty and distribution partners, enhanced Blue Basic by adding a complimentary carry-on bag. 5. Deferred $3 billion of capital expenditures to 2030 and beyond, raised strategic financing to strengthen liquidity. 6. Announced additional initiatives like EvenMore domestic first class, lounges, premium co-branded credit card, and new cost transformation program. 7. Crew member engagement scores up year-over-year, core product offering rated best in the industry.

For the fourth quarter, JetBlue outperformed across all metrics relative to its updated guidance, generating adjusted operating income of $18 million. Revenue beat the revised guidance midpoint by 1.4 points, aided by a healthy holiday season and revenue initiatives. The operation delivered a 99% completion factor and on-time performance improved 5 points year-over-year. CASM ex fuel growth finished better than the low end of the revised guidance range. For the year 2024, the company generated a positive adjusted operating margin of 0.8% in the fourth quarter, with operating margin expansion in the second half, and finished with a higher operating margin than expected when JetForward was launched in July.

1. 2025 first quarter capacity planned to be down 5% to down 2% year-over-year. 2025 full-year capacity growth roughly flat. First quarter RASM expected in range of down 0.5% to up 3.5%, with Easter shift being a ~1.5 point headwind. 2. Full-year 2025 RASM expected to increase 3% to 6%. 3. Expect CASM ex fuel growth 5% to 7% in 2025, with first quarter up 8% to 10% due to strategic capacity reductions, lapping pilot wage rates step up, and maintenance timing. 4. Anticipate positive operating margin in 2025, in line with the goal stated in July. 5. Estimate Pratt & Whitney AOG impact to operating margin to increase to about 3 points in 2025. 6. Plan to provide biannual updates on JetForward progress, next in July 2025.

1. Pratt & Whitney aircraft groundings have been and will continue to be a significant impediment to margins. Estimated to have a direct negative impact on operating margin of approximately 3 points in 2025. The situation is fluid but transitory, with margin headwind expected to resolve as grounded aircraft count decreases in the next year or two. 2. Competitive capacity fluctuations in certain geographies like Boston, Northeast, and Florida could impact performance.

Q: How should we think about the revenue acceleration from first quarter to full-year 2025?

A: The first easy chunk is Easter shift, and the rest is continued implementation of JetForward and delivery of promised benefits with no assumption of dramatic change in competitive capacity.

Q: Is Boston likely a RASM drag?

A: RASM growth in Boston is less than elsewhere, still not back to pre-NEA peak, and Northeast in general has certain dynamics.

Q: Should investors add to 2025 EBIT outlook?

A: Yes, should think of 2025-2027 at similar EBIT amounts, with JetForward expected to generate nearly $300 million of total incremental EBIT in 2025 and $800 million to $900 million by 2027.

Q: How does CASM ex cadence trend in 2025?

A: Q1 is very elevated due to maintenance timing and pilot wage rates step up, CASM ex will come down in subsequent quarters, expecting 5%-7% full-year growth.

Q: What about competitive capacity in Fort Lauderdale?

A: Competitive capacity is still down in Fort Lauderdale, and the city is performing well.

Q: Thoughts on non-aircraft CapEx and in-flight entertainment?

A: Non-aircraft CapEx is about 15% of total, with investments in technology, airports ground equipment, etc. Wi-Fi is free and fully outfitted, keeping an eye on customer preference.

Q: GTF issue impact on aircraft on the ground?

A: Aircraft on the ground expected to be mid-to-high teens in 2025, peak likely within next one to two years, situation fluid.

Q: NEA replacement timing?

A: Having conversations with carriers, but nothing to announce now, with little related to JetForward.

Q: Mix change between corporate and discretionary?

A: No significant change to business mix, cities closed weren't working due to lack of business penetration.

Q: First-class timing?

A: CapEx this year for first-class, first install in 2026, no revenue benefit in 2025.

Q: Corporate trends pickup?

A: Corporate demand has picked up, but still a small part of revenue base, no significant impact on network dynamics.

Q: Transatlantic demand?

A: Atlantic still in ramp, growth partially strength and partially ramped, optimistic about yields and mid-cabin.

Q: Revenue capture initiatives upside?

A: Revenue capture initiatives for 2024 outperformed, mostly moved forward, optimistic about JetForward initiatives.

Q: Competitive pressures in Northeast and Florida?

A: Most competitive capacity pressure in Boston, other cities like Lauderdale and Orlando have good trends.

Q: Fleet plan and premium products CapEx?

A: Adjusted A220 delivery schedule due to aircraft order book fluidity. Investment in domestic first class is ~$400 million over few years, small portion in 2025 guide.

Q: 1Q RASM outlook vs industry?

A: First quarter RASM higher than normal historical trend, face competitive capacity headwind but feel good about position due to JetForward.

Q: Key levers to free cash breakeven?

A: Priority is to achieve consistent profitability with JetForward, then get to free cash flow positive, then delever balance sheet.

Q: Overseas alliances?

A: Have 52-53 alliance partners, including international carriers, continue to grow portfolio while negotiating domestic partnerships.

Q: Pilot early exits?

A: Offering early retirements for pilots, win-win, no major cash outflow.