JetBlue Airways Q4 2024 Earnings Report

JetBlue Airways EPS Results

• Actual EPS: -$0.21
• Consensus EPS: -$0.42
• Beat/Miss: Beat by +$0.21
• One Year Ago EPS: -$0.19

JetBlue Airways Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.24 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

JetBlue Airways Announcement Details

• Quarter: Q4 2024
• Date: 1/28/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, January 28, 2025
• Conference Call Time: 10:00AM ET

JetBlue Airways (NASDAQ:JBLU) provides air transportation services. The company operates a fleet of Airbus A321, Airbus A220, Airbus A321neo, Airbus A320 Restyled, Airbus A320, Airbus A321 with Mint, Airbus A321neo with Mint, Airbus A321neoLR with Mint, and Embraer E190 aircraft. It also serves 100 destinations across the United States, the Caribbean and Latin America, Canada, and Europe. The company was incorporated in 1998 and is based in Long Island City, New York.

JetBlue Airways Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning. My name is Christa, and I will be your conference operator today. I would like to welcome everyone to the JetBlue Airways 4th Quarter 2024 Earnings Conference Call. As a reminder, today's call is being recorded. And at this time, all participants are in a listen only mode.

[Operator]

I would now like to turn the conference over to JetBlue's Director of Investor Relations, Kush Patel. Please go ahead, sir.

[Koosh Patel, Director of Investor Relations at Jetblue Airways]

Thanks, Christa. Good morning, everyone, and thanks for joining us for our Q4 2024 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. Chepului.com and on the SEC's website at www.sec.gov.

[Koosh Patel, Director of Investor Relations at Jetblue Airways]

In New York to discuss our results are Joanna Garrity, our Chief Executive Officer Marty St. George, our President and Ursula Hurley, our Chief Financial Officer. During today's call, we'll make forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements include without limitation statements regarding our Q1 and full year 2025 financial outlook and our future results of operations and financial position, including long term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational and financial targets, our business strategy and our plans for future operations and the associated impacts on our business. All such forward looking statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in these statements.

[Koosh Patel, Director of Investor Relations at Jetblue Airways]

Please refer to our most recent earnings release as well as our fiscal year 2023 10 ks and other financial and other filings for a more detailed discussion of the risks and uncertainties that could cause the actual results to differ materially from those contained in our forward looking statements. The statements made during this call are made only as of the date of the call and other than as may be required by law, we undertake no obligation to update the information. Investors should not place undue reliance on these forward looking statements. Also during the course of our call, we may discuss certain non GAAP financial measures. For an explanation of these non GAAP measures and a reconciliation to the corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website and on sec.gov.

[Koosh Patel, Director of Investor Relations at Jetblue Airways]

And now, I'd like to turn the call over to Joanna Garrity, JetBlue's CEO.

[Joanna Geraghty, CEO at Jetblue Airways]

Good morning and thank you for joining JetBlue's Q4 2024 earnings call. Before I begin, I want to take a moment to express our sympathy and support to those affected by the devastating wildfires in Los Angeles, especially several of our crew members who have experienced tremendous loss. We ended the year with momentum and I am pleased to announce for the Q4, we generated a positive adjusted operating margin of 0.8%, over 2 points better than in 2023. 2024 was a period of transition for JetBlue. And at the onset of the year, we introduced a new leadership team who worked expeditiously to launch our standalone strategic plan, JetForward, last July.

[Joanna Geraghty, CEO at Jetblue Airways]

This plan is fundamental to achieving our goal of returning to sustained profitability. Though we weren't profitable for the year, we made progress in 2024 with operating margin expansion during the second half of the year. I'm very proud of the achievements so far and believe that the early results bear evidence that we are taking the right steps towards profitability. Turning to Pages 45 of the earnings presentation. At the start of 2024, we knew we had big challenges to tackle, including evolved customer preferences, ongoing issues with Pratt and Whitney, air traffic control and costs growing faster than revenues.

[Joanna Geraghty, CEO at Jetblue Airways]

JetForward was designed to leverage our strengths to combat these challenges and put us back on a path to profitability. With great urgency, we announced and implemented over a dozen different strategic initiatives and made progress in every facet of our business, including customer satisfaction, member engagement and operational performance. We launched a multiyear investment to improve operational reliability and we are seeing benefits across nearly all the metrics that we track. For example, on time performance was 6 points better in 2024 than in 2023. Net Promoter Score improved by nearly 10 points and we ranked 6th place overall in Wall Street Journal's 2024 Airline Rankings, improving 3 spots from last place overall in 2023.

[Joanna Geraghty, CEO at Jetblue Airways]

We closed 15 Blue Cities and redeployed over 20% of our network, realigning our network into our core strengths on the East Coast. We refocused our LAX footprint and boosted flying across New England and the Caribbean. We reinvested in our core Florida franchises and expanded our San Juan focus city with the addition of a crew base and more flying. We also further seasonalized our transatlantic flying in the winter, creating new destinations for Mint aircraft. Many of these changes are now in their early stages of ramp.

[Joanna Geraghty, CEO at Jetblue Airways]

We also announced and implemented a variety of changes to our products and perks to ensure we are evolving our offering to deliver the experience our customers want. We rolled out preferred seating, added multiple loyalty and distribution partners and enhanced our Blue Basic offering by adding back a complementary carry on bag. This initiative has outperformed our expectations and our data shows we are attracting incremental customers to JetBlue. To secure our financial future, we deferred $3,000,000,000 of capital expenditures to 2,030 and beyond and raised significant strategic financing to provide runway for Jet Forward. These moves strengthened our liquidity positions and will ensure we have the runway in place to achieve the benefits of Jet Forward.

[Joanna Geraghty, CEO at Jetblue Airways]

Alongside implementing these changes, we announced additional initiatives, which launched this year and next, such as Even More, Domestic First Class, lounges, a premium co branded credit card and a new cost transformation program. JetBlue has gone through immense change and feedback from our customers has been positive. Crew member sentiment on the strategy has also been encouraging with crew member engagement scores up year over year demonstrating better alignment across the organization in support of executing Jet Forward. Importantly, even as we take steps to evolve our offerings to meet the needs of customers today, I'm proud that our core product offering was once again rated best in the industry. In 2024, we were awarded the best economy class across U.

[Joanna Geraghty, CEO at Jetblue Airways]

S. Airlines by the Points Guy for the 5th time, boosted by our changes to BlueBasic and the personalization efforts we've implemented. The progress we made during 2024 combined with robust 4th quarter results strengthens the confidence we have and our ability to deliver on our commitments in 2025. Now shifting to Slide 6 to review 4th quarter performance. For the Q4, we outperformed across all metrics relative to our updated guidance, enabling us to generate adjusted operating income of $18,000,000 We saw benefits from our continued investments in reliability as we persevered through and quickly recovered from inclement weather and ATC challenges over the holiday period.

[Joanna Geraghty, CEO at Jetblue Airways]

The operation delivered a completion factor of 99% in the quarter and on time performance improved 5 points year over year despite navigating more air traffic control programs than in the Q4 of 2023. The improved operational performance also benefited our 4th quarter CASM ex fuel growth, which finished better than the low end of our revised guidance range. Revenue beat our revised guidance midpoint by 1.4 points aided by a healthy November December holiday season and the performance of our 2024 revenue initiatives. These initiatives drove $395,000,000 of revenue for the year, dollars 95,000,000 over our target of $300,000,000 Encouragingly, this was quicker ramp than we anticipated and was originally part of the forecast we expect for JetFold in 2025. As a result, we are pleased to say we've already captured $90,000,000 of our $800,000,000 to $900,000,000 target for incremental EBIT through 2027.

[Joanna Geraghty, CEO at Jetblue Airways]

Going forward, we plan to provide biannual updates in the progress of Jet Forward with our next update scheduled for our July 2025 earnings call. We finished 2024 with a higher operating margin than we expected in July when we launched JetFold. This strong performance combined with benefits from lower fuel resulted in 2024 operating margin 3.5 points higher than what was implied by our July guidance. Turning to Page 7. In 2025, we plan to build an even more reliable and resilient operation as we continue refining our schedules to further improve on time performance, enhancing the tool set in our system operations center and investing in technical dispatch reliability to reduce controllable cancels.

[Joanna Geraghty, CEO at Jetblue Airways]

Marty and Ursula will provide more detail on what to expect from our other priority moves this year. In all, we believe JetForward is on track to deliver about $200,000,000 of incremental EBIT contribution in 2025. As a result, we expect to achieve a full year positive adjusted operating margin ranging from 0% to 1%. We recognize, however, there is still significant room to grow and close the gap to our industry peers. The Pratt and Whitney aircraft groundings have been and will continue to be a significant impediment to margins in the near term.

[Joanna Geraghty, CEO at Jetblue Airways]

We believe the groundings had a direct negative impact on operating margin of approximately 2.5 points in 2024 and we estimate that direct impact will grow to 3 points in 2025 as AOGs are expected to increase to the mid to high teens. Ursula will expand on the breakdown of this impact. This is a pivotal year for JetBlue, but also for the industry. The new administration in Washington focused on efficiency, there is a real opportunity to structurally improve the FAA and fix the air traffic control challenges our industry has been plagued with. This could represent a clear benefit to the traveling public and another tangible tailwind if a focused effort is undertaken.

[Joanna Geraghty, CEO at Jetblue Airways]

We look forward to partnering with the new leaders at the DOT and FAA to help make this happen. I'm excited by the opportunity in front of us. And as we approach the 25th anniversary of JetBlue's first flight in February, I'm confident we are executing on the right plan to usher in the next 25 years of flying. JetForward positions us to lean into our historic strengths, adapt to a changing industry and meet our commitments to our shareholders, customers and crew members. The first commitment of which is to run a sustainably profitable business and we will continue to work with absolute urgency to get there.

[Joanna Geraghty, CEO at Jetblue Airways]

As we close the chapter in 2024, I would like to share a heartfelt thank you to our crew members, who continue to deliver exceptional customer service while managing immense change. I would also like to recognize the efforts of those that stepped up during the holidays. Without your commitment, meeting our goals would not be possible. We have incredible momentum coming out of 2024 and I'm excited to build on it in 2025. Over to Marty for a commercial update and outlook.

[Marty St. George, President at Jetblue Airways]

Thank you, Joanna. I echo your thanks to our crew members. Thank you all for delivering the JetBlue experience to our customers day in and day out, especially over the busy holiday season. Turning to Slide 9. 4th quarter revenue performance was solid with unit revenues growing 3.2% year over year on 5% less capacity.

[Marty St. George, President at Jetblue Airways]

Close in demand was strong in the November December holiday peaks and helped to drive about 1.5 points of unit revenue improvement versus our initial guidance. Unit revenue was strong across many geographies. On the transatlantic front, we saw unit revenue ramp nicely as the region continues to mature, particularly as we enter our 1st winter with a more seasonal schedule. In our Latin leisure and VFR flying, we are pleased with the RASM improvements we saw in the first half excuse me, in the second half, which recovered sequentially as competitive capacity growth slowed from the first half. Our TransCon franchise continued to produce healthy year over year RASM supported by strong mid performance.

[Marty St. George, President at Jetblue Airways]

Across Mint and EMS, unit revenues were up in the high single digits year over year in Q4. The success of Preferred Seating in 2024 is another testament to the strength of the premium leisure customer segment. It is healthy and growing and we are enhancing our suite of products to better serve those customers. Loyalty also drove strength during the quarter, now accounting for 12% of our total revenue, which is a multi point improvement from where we were in 2019. Card spend was up high single digits year over year and active TrueBlue members were up low single digits.

[Marty St. George, President at Jetblue Airways]

As amplifying that, while the core airline may not be growing, our customers are driving outsized loyalty growth through their positive responses to the Jet Forward strategy and the enhancements to our program. 4th quarter benefited from our 2024 revenue initiatives, which generated $395,000,000 of top line benefit for the year. The breakdown of these initiatives can be found on Slide 10 of the earnings presentation. Our revised blue basic carry on baggage policy and preferred seating were the key contributors to quicker revenue capture in 2024. The progress of these revenue initiatives is only the beginning and it provides us with significant momentum heading into 2025.

[Marty St. George, President at Jetblue Airways]

Turning to our Q1 and full year outlooks. 1st quarter capacity is planned to be down 5% to down 2% year over year and for the year capacity growth will be roughly flat compared to 2024. In the Q1, we expect year over year RASM in the range of down 0.5% to up 3.5% with a shift of Easter back into the 2nd quarter expected to be a roughly 1.5 point headwind. As a reminder, the Q1 is historically slower period of flying for leisure airlines with many trough weeks. We've also redeployed about 20% of our network and much of it is in the early innings of its ramp.

[Marty St. George, President at Jetblue Airways]

In the Q1, we are seeing elevated competitive capacity in many of these markets, particularly in the Northeast of Florida. We expect competitive capacity will continue to ebb and flow and we remain committed to competing in these geographies core to our JetWorD strategy. As we look to the rest of the year, the continued execution of our JetWorD Forward plan is expected to propel unit revenue growth higher than 1st quarter levels. For the full year, we expect RASM to increase 3% to 6%. In May, we will launch new daily non stop service to Madrid and Edinburgh from Boston as part of our efforts to expand and further seasonalize our transatlantic flying.

[Marty St. George, President at Jetblue Airways]

Earlier this month, we made an additional network announcement and even more summer seasonal destinations in support of flying the best East Coast leisure network. And as we continue to take a hard look at route profitability across our network, we will plan to remain nimble and dynamic in our network optimization efforts. In 2025, our products and perks will also take a step forward, complementing changes to our network. In addition to the merchandising changes to even more announced last quarter, we are updating the onboard experience to elevate the offering. Even more will now include dedicated overhead bin space and soft product enhancements among other perks.

[Marty St. George, President at Jetblue Airways]

These updates go live today and position us well to compete with the premium economy options our domestic payers offer. We also recently added a new way for customers to pay for their flights using Venmo, demonstrating our commitment to enhancing customer experience on every step of the travel journey. Over the course of the year, several JetFold initiatives announced last year are also scheduled to go live, including our premium co branded credit card, which begins accepting applications very soon and our launch at JK Terminal 5 set to open in the 4th quarter. Unlocking incremental margin accretive revenue is crucial to the success of our plan and the progress for the shareholders. Between the momentum we have from the 2024 revenue initiatives, the improvements in customer satisfaction as a result of a better operation, the ramp of our network changes and our 2025 Jet 4 initiatives.

[Marty St. George, President at Jetblue Airways]

I am confident we have all the right pieces in place to generate meaningful unit revenue growth and achieve positive operating margin. Now I hand it over to Ursula for the financial update.

[Ursula Hurley, CFO at Jetblue Airways]

Thank you, Marty. In the early months of 2024, we refocused JetBlue on a path to profitability, which we have moved quickly to execute against. We exceeded our revenue initiative forecast of $300,000,000 by $95,000,000 delivered on all of our commitments since launching Jet Forward, concluded our structural cost program, delivering $190,000,000 of benefit at the top end of our forecasted range, beat our CASM ex fuel guidance 4 quarters in a row and delivered full year 2024 CASM ex fuel in line with our initial January guidance. Encouragingly, we ended the year delivering positive operating margin for the second half, a significant improvement from our July expectations. We also acted quickly to secure our financial future, deferring CapEx and raising over $3,000,000,000 of strategic financing, helping to provide Jet Forward the runway it needs to generate meaningful benefits.

[Ursula Hurley, CFO at Jetblue Airways]

Our new leadership team delivered on our refocused commitments in 2024 and we aim to do the same in 2025. Now turning to Slide 14. For the full year, 2024 CASM ex fuel grew 6.6% year over year, firmly within our initial guidance of mid to high single digits year over year. Through the combined benefits of controllable cost reductions as well as reliability driven cost efficiencies, we were able to offset about one point of headwind from the Pratt and Whitney compensation accounting change and a half a point of headwind from targeted capacity reductions in the second half. For the 4th quarter, unit costs increased 11%, which beat our revised guidance of 12.5% to 14.5%, driven again by operational efficiency, controllable cost reductions and year end adjustments.

[Ursula Hurley, CFO at Jetblue Airways]

With our performance over the year and in the Q4, we have sustained momentum on controllable costs heading into 2025. Looking to this year, we expect aircraft on the ground from the GTF engine issue to rise to the mid to high teens, resulting in flat capacity and CASM ex fuel up 5% to 7%. And with the help of strong unit revenue growth, we are forecasting positive operating margin in 2025 in line with the goal we first stated back in July. As Joanna mentioned, the AOGs represented a significant headwind to our operating margin performance in 2024 and we estimate that impact will increase to about 3 points of drag to operating margin in 2025. We've broken down this impact on Slide 15 of the earnings presentation.

[Ursula Hurley, CFO at Jetblue Airways]

The direct impact includes the variable profit and staffing efficiencies we lose by not flying all of our available aircraft and also the net cost from extending our A320 fleet. It does not include the indirect impacts to JetBlue, such as impacts to our market share and gate utilization. This situation is fluid, but ultimately transitory and the margin headwind is expected to resolve as the grounded aircraft count begins to decrease, which is expected to occur in the next year or 2. In the meantime, we plan to continue employing creative growth and cost optimization strategies to offset as much of the impact as possible. We expect CASM ex fuel growth to remain slightly elevated in the Q1 of 2025, driven by the strategic capacity reductions during the trough, lapping against our 2024 pilot wage rate step up and the timing of maintenance.

[Ursula Hurley, CFO at Jetblue Airways]

As a result, we anticipate CASM ex fuel to be up 8% to 10% in the Q1. Over the course of the year, CASM ex is expected to moderate down from 1st quarter levels. In 2025, we expect to begin realizing benefits from the $175,000,000 2027 Jet Forward cost transformation target, with capture weighted more to the back half of the year. Cost savings include technology driven efficiencies in our operational and commercial functions, enhanced planning and sourcing strategies and savings from a cost functional fuel burn optimization effort. Turning to our balance sheet on Slide 16.

[Ursula Hurley, CFO at Jetblue Airways]

In 2025, our financial priorities remain the same. 1st and foremost, achieving sustained operating profitability is critical, which will set us on a path to generate free cash flow and pay down debt in the coming years. One of the first steps towards securing our financial future was our $3,200,000,000 strategic capital raise last August. We ended 2024 with $3,900,000,000 of total liquidity, excluding our undrawn $600,000,000 revolving credit facility. The incremental liquidity is expected to fund all aircraft deliveries in 25 with cash, adding to our existing unencumbered asset base of about $5,000,000,000 Our CapEx forecast for 2025 is approximately 1,400,000,000 dollars $270,000,000 for the Q1.

[Ursula Hurley, CFO at Jetblue Airways]

We anticipate ending 2025 with a healthy liquidity buffer. Turning to our fleet plan on Page 17, which has a number of puts and takes this year. In 2025, we expect 24 deliveries, 20 A220s and 4 A321neos. We've also been working to extend the lives of our A320 fleet and thus far we've taken steps to extend 14 aircraft through a combination of lease extensions, lease buyouts and changes to the retirement dates of owned aircraft. The capacity benefits from these actions are expected to phase in over several years.

[Ursula Hurley, CFO at Jetblue Airways]

Finally, in 2025, we plan to retire the remaining E190 aircraft after the summer peak, fully replacing them with the more fuel efficient and customer friendly A220s. In closing, the culmination of our efforts from 2024 into 2025 expected to result in positive operating margin for the year, a big milestone for JetBlue and a commitment we made in July. By the end of 2025, we are forecasting nearly 300,000,000 dollars of total incremental EBIT generated from our Jet Forward program, growing to $800,000,000 to $900,000,000 by the end of 2027. One constant in our industry is that it never stands still and we know we can't control every change or challenge. However, with JetFold, JetBlue is relentlessly focused on outpacing our challenges and hitting our commitments for our shareholders, crew members and customers.

[Ursula Hurley, CFO at Jetblue Airways]

Thank you. And we will now open it up to questions. Over to you, Christa.

[Operator]

Thank Your first question comes from the line of Jamie Baker with JPMorgan. Please go ahead.

[James Baker, Managing Director & Investment Specialist at JP Morgan]

Hey, good morning everybody. Probably a couple for Marty. So if we look at the implied revenue guide in the Q1 and compare it to the full year guide, it's clear that you're modeling for several points of acceleration. Basically, Slide 12 is what I'm referencing. But how should we think about each of those buckets of improvement?

[James Baker, Managing Director & Investment Specialist at JP Morgan]

So for example, let's just pick a round number you're modeling for 5 points of revenue acceleration. How much of that is rising tide? How much is idiosyncratic to jet forward? Maybe there's some corporate in there. You did call out the Easter shift.

[James Baker, Managing Director & Investment Specialist at JP Morgan]

Yes, that's my first question.

[Marty St. George, President at Jetblue Airways]

Sure. Thanks, Jamie. Thanks for the question. Well, obviously, the first easy chunk is Easter because it's a point and a half move from Q1 to Q2. And frankly, the rest of the improvement is basically the continued implementation of JetFold and the continued phasing of the benefits from all the things that we promised already and started delivering.

[Marty St. George, President at Jetblue Airways]

There was no assumption in here about a dramatic change in competitive capacity. This is basically us managing what we can manage ourselves and delivering on all those commitments. So there's no sort of exogenous factor that's driving the numbers we're seeing. It's basically our forecast of the baseline JetBlue and putting on top of that, all the things that we're doing. Obviously, we look at the normal factors, GDP, CPI, capacity, things like that, but we're not expecting any direction change from sort of consensus numbers out there right now.

[James Baker, Managing Director & Investment Specialist at JP Morgan]

Okay. And then as a follow-up to that, Marty, just looking at forward schedules, you've got some double digit growth going on in Boston. You called out 2 international markets. But relative to that full year revenue aspiration, is it fair to characterize Boston as a likely RASM drag? And if so, could you quantify that?

[Marty St. George, President at Jetblue Airways]

I mean, obviously, with the growth that it's getting, I'd say, RASM growth in Boston is less than we're seeing elsewhere. I think that's a mathematical question more than anything else. I would say we're still not back to the peak we were in Boston, pre NEA. And frankly, I think what we realized in the entire Northeast and I think what was one of the things we talked about during the communication of the Jet Forward Plan is that, we had basically given up a lot of leisure lift when we moved airplanes from Northeast leisure into basically LaGuardia to cover business, business bankruptcy and the NEA. So we finally finished unwinding LaGuardia growth, in 2024 and that traffic those ASMs are being now redeployed back into where they originally were, which was Northeast Asia.

[James Baker, Managing Director & Investment Specialist at JP Morgan]

Okay, very helpful. Thanks for taking my questions, Bonnie. Take care.

[Marty St. George, President at Jetblue Airways]

Thank you.

[Operator]

Your next question comes from the line of David or sorry, Daniel McKenzie with Seaport Global. Please go

[Operator]

ahead.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Hey, good morning guys. Thanks for the time. So setting aside today's stock price, it looks like you are giving us the first kind of giving us your how you're thinking about normalized earnings longer term. So giving us the first pieces, sorry.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

So if we could just if all goes according to plan, should investors simply add 6 $50,000,000 to their 2025 EBIT outlook to get to some semblance of normalized earnings if they want to discount back to the day today?

[Joanna Geraghty, CEO at Jetblue Airways]

Yes. Thanks, Dan. Appreciate the question. I think maybe just pulling up a notch. I'm really proud of the team and the momentum that they're delivering under JetFold.

[Joanna Geraghty, CEO at Jetblue Airways]

We announced it back in July and have consistently met all of our guidance metrics or outperformed in many cases. As you think about this year, we should end this year with $200,000,000 to $300,000,000 of EBIT and you should think of $26,000,000 $27,000,000 as similar amounts. So as we look at exiting Jet Forward, a commitment to $800,000,000 $900,000,000 of EBIT that obviously sits on top of a constructive macro backdrop, and we're cycling against some of the Pratt headwinds. So yes, you're thinking about it absolutely in the right way. I think frustratingly, we would love to have I think even faster ramp, but this is a multiyear strategy and it's not linear and we're focused on the long term here and getting JetBlue back to sustained profitability.

[Joanna Geraghty, CEO at Jetblue Airways]

So it's just going to take a little time, but really, really pleased with the progress so far. The implied guide when we launched JetForward for full year 2024 was 4.5%, negative 4.5% margin. We ended the year with negative 1%, So a 3.5 point improvement. This year, we're meeting our commitment to go out with a breakeven or better op margin. And that'll be a 5 point improvement since we launched Jet Forward.

[Joanna Geraghty, CEO at Jetblue Airways]

So I think really good progress there and just continuing to focus on executing for the long term.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Understood. Terrific. And then Ursula, second question on unit cost, CASM X, the CASM X cadence in particular. I'm wondering how that trends throughout the year. And can we and does that imply as we exit 2025 some CASM X directionally as we head into 2026?

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Or is there some perspective you can share on Pratt and Whitney groundings that could potentially impact that?

[Ursula Hurley, CFO at Jetblue Airways]

Yes. Good morning, Dan. Thanks for the questions. So I'm really proud of the team delivering on 2024 controllable cost guide that we laid out last January despite Pratt and Whitney headwinds and also some capacity that we pulled down in the trough. Here in 2025, we're delivering exactly what we've been telling you guys with roughly flat capacity expecting a mid single digit unit cost growth.

[Ursula Hurley, CFO at Jetblue Airways]

Q1 is very elevated. It's the most elevated throughout the whole year. That's really driven by timing of maintenance as well as the pilot wage rate step up that we executed last August. So CASM ex will come down in the quarters to come and I have a lot of confidence the team will deliver on the 5% to 7% full year guide. As we look beyond 2025, the Pratt and Whitney scenario does continue to be really fluid.

[Ursula Hurley, CFO at Jetblue Airways]

I do think that we will hit the peak AOG within the next 1 to 2 years. I mentioned that in my prepared remarks. If we sit here in 2026 with a roughly flat capacity number for example, I would yet again expect that mid single digit range in terms of controllable costs. We do continue to see inflationary pressures, but with the launch of our new cost transformation program as part of Jet Forward, that is to offset the inflationary pressures.

[Daniel McKenzie, Equity Research Analyst at Seaport Research Partners]

Thanks so much for the time you guys.

[Operator]

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

[Duane Pfennigwerth, Senior MD at Evercore]

Hey, thank you. So just to follow-up on Dan's question. One of the questions we're getting earlier this year, is that bridge from the March quarter cost outlook to the rest of the year and 2Q specifically. So I wondered if you had any early thoughts on the shape of 2Q CASM relative to the Q1?

[Ursula Hurley, CFO at Jetblue Airways]

Yes. Thanks for the question, Duane. As I said, Q1 is the most elevated. I do expect there to be a step down as we head into the Q2. We're not guiding here today, but I would expect a different capacity layout as well, which you can probably tell from the forward schedules that are already posted.

[Ursula Hurley, CFO at Jetblue Airways]

So I do envision us being in a slightly positive capacity environment, which should also help support the step down in Q2. As a reminder, the pilot wage rate step up, we granted last August. So that doesn't last until we hit August. So Q2, we'll see a headwind associated with that as well.

[Duane Pfennigwerth, Senior MD at Evercore]

Got it. And then just, Marty, can you expand a little bit on what you're seeing in Caribbean and Latin and maybe taking Easter shift off the table? What sort of improvement are you seeing there? And relative to the rest of the system and maybe just talking sequentially 4Q to 1Q or 4Q to 1Q adjusted for Easter shift? Thanks for taking the questions.

[Marty St. George, President at Jetblue Airways]

Sure, Duane. Thanks. I'd say consistent with what we've heard about Q4 results and Q1 outlook, international is a strong point for us. Latin has actually fully recovered from what we had seen at the beginning of 2024 and Latin has actually been strong for us. A little bit of pressure in San Juan with mostly capacity driven, but we're maintaining our customer base there very well.

[Marty St. George, President at Jetblue Airways]

And also Transatlantic has done very well. So again, I think it's just what we've heard international is a strong point. I'd say on a relative basis international is the transatlantic is really not big for us at all, enough to move the needle. And San Juan is a relatively big part of Latin. So overall, I think the fundamental demand profile for Latin is very strong right now, very happy.

[Duane Pfennigwerth, Senior MD at Evercore]

Thank you.

[Operator]

Your next question comes from the line of Tom Fitzgerald with TD Cowen. Please go ahead.

[Tom Fitzgerald, VP - Equity Research at TD Cowen]

Thanks so much. Would you mind just touching on the competitive capacity in Fort Lauderdale, what you're seeing there?

[Marty St. George, President at Jetblue Airways]

Yes. I mean, it's funny. When we had gone through the process of spares bankruptcy, there are a lot of conversations at the time about opportunities that may represent in Fort Lauderdale. I think if you look at the reorganization plan, they put a stake in the ground that a lot of that is important to them. And frankly, it's exactly what we had expected because a lot of those were important to us too.

[Marty St. George, President at Jetblue Airways]

Overall competitive capacity is still down in Fort Lauderdale. Surrection, a very good environment, but I don't think we're expecting, any significant pull down from Spirit down there. And frankly, we're very happy with our Fort Lauderdale performing right now.

[Tom Fitzgerald, VP - Equity Research at TD Cowen]

Okay. That's really helpful. And then, I'd love to get your perspective on non aircraft CapEx and in flight entertainment, Wi Fi, your mobile apps, just given kind of the arms race across the industry and making investments there. Just kind of curious how you're thinking like the size of investments you're thinking and any focus areas? What are your thoughts?

[Tom Fitzgerald, VP - Equity Research at TD Cowen]

Thanks again for the time.

[Joanna Geraghty, CEO at Jetblue Airways]

Yes. Hey, Tom, thanks. It's Joanna. I can let Urs touch on the CapEx question in general. But from a WiFi perspective, we've got a fully outfitted fleet of WiFi by SAS, the partner, and it's free.

[Joanna Geraghty, CEO at Jetblue Airways]

And we've had that for 10 years. And we're the only carrier that can make that claim. And we continue to be very pleased with how that Wi Fi relative to the competition is performing. We're obviously keeping a close eye on customer preference and the other opportunities that are out there and we'll continue to make sure that we stay very competitive in this space. Maybe Urs on just the

[Joanna Geraghty, CEO at Jetblue Airways]

CapEx?

[Ursula Hurley, CFO at Jetblue Airways]

So maybe just some color on the CapEx. So we had $1,600,000,000 in CapEx in 2024. So we're actually stepping down in 2025. So the guide is $1,400,000,000 About 85 percent of that $1,400,000,000 is associated with aircraft.

[Ursula Hurley, CFO at Jetblue Airways]

So not only do we have the 24 deliveries, but we also are investing in extending the A320s and we're also investing in the ramp up of domestic first class. So that's all embedded in the guide. The remaining 15% of the CapEx is associated with non aircraft. So, Tom, to your point, thanks technology, thanks airports, ground equipment, those are where those dollars are going.

[Operator]

Your next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

[Scott Group, MD & Senior Analyst at Wolfe Research]

Hey, thanks. Good morning. I just want to make sure I heard right. Is it that with the GTF issue that aircraft on the ground goes up in 'twenty 6 and then potentially up again in 20 27. Is that right?

[Scott Group, MD & Senior Analyst at Wolfe Research]

And then any idea like when this is fully behind us as an issue?

[Ursula Hurley, CFO at Jetblue Airways]

Yes. So thanks for the question, Scott. We tried to give you guys some color just on how burdensome that this is to JetBlue financially, which we've highlighted all the math on Slide 15. As a reminder, we had 11 aircraft on the ground in 2024. In the guide that we're providing for 2025 today, we have mid to high teens.

[Ursula Hurley, CFO at Jetblue Airways]

And as I mentioned in my prepared remarks, we believe we are likely approaching the peak in the next year or 2. So we continue to work constructively with Pratt and Whitney to gain further color quite frankly on 20 26 beyond. Obviously, there are a lot of inputs that can materially impact the number of aircraft that we have on the ground, everything from Pratt and Whitney supply chain to their shop capacity. So it does continue to remain pretty fluid. But the next year or 2, we believe that we'll be approaching the peak.

[Scott Group, MD & Senior Analyst at Wolfe Research]

Okay. And then I'm guessing you can't say too much, because you haven't announced anything yet, but any thoughts on timing, for an NEA replacement? And just is that part of Jet Forward? Or would that be incremental Jet Forward? Just how you think about NEA?

[Joanna Geraghty, CEO at Jetblue Airways]

Thanks for the question. So we're having conversations with a number of carriers right now to discuss the potential for future partnerships. The judge in Massachusetts obviously laid out a framework that would be acceptable under at least the prior administration. So that's what we're looking at, but there's nothing to announce now. In terms of what's in JetFold, there's a very small amount of money associated with potential partnership, but nothing in a very meaningful way.

[Scott Group, MD & Senior Analyst at Wolfe Research]

Thank you, guys. Appreciate it.

[Operator]

Your next question comes from the line of Michael Linenberg with Deutsche Bank. Please go ahead.

[Michael Linenberg, Managing Director at Deutsche Bank]

Yes. Hey, good morning. Just Marty, you withdrew from 15 cities, you redeployed 20% of your capacity. How have you seen the mix change, corporate versus discretionary as a result of those changes? And has there been a meaningful change to the booking curve, given the fact that maybe a large percentage or a greater percentage of your customers are now booking further out?

[Michael Linenberg, Managing Director at Deutsche Bank]

Can you just talk about some of the dynamics around your mix and maybe how you sell the product?

[Marty St. George, President at Jetblue Airways]

Hey, Mike. Thanks for the question. First thing I'll say is, on a macro level, it is getting tougher and tougher to do business leisure mix post COVID because we have the great mix of leisure in the middle who are customers who say they're on business, they pick it like they're on leisure more so. So it's less clear than it once was. What I will say is, we've seen no significant change to the business mix that we have.

[Marty St. George, President at Jetblue Airways]

And frankly, I think that's part of the reason why the city that we've closed actually weren't working for us because we're carrying a lot of great leader customers in places like Minneapolis, San Antonio, and we really weren't penetrated the business market. So we've seen no significant change to the booking curve or to the business leisure mix to that.

[Joanna Geraghty, CEO at Jetblue Airways]

I think I'd just add as well. If you look at Q1 RASM, as a leisure carrier, we obviously experienced a different sort of period given the trough that it is even when you adjust for that Easter shift. In the deck, we also have the slide that lays out the timing of the network announcements. And there was a number of really meaningful Northeast changes made in the late October, November timeframe from a capacity standpoint. These are all in early ramp.

[Joanna Geraghty, CEO at Jetblue Airways]

And as I mentioned, this isn't a linear plan and it's going to take some time for these markets to mature.

[Michael Linenberg, Managing Director at Deutsche Bank]

Great. And then just my second, as we think about timing around 1st Class, Ursula, I think I heard you that some of the CapEx this year is going to be tied to the installment of 1st Class. Will JetBlue be in a position to start selling late 2025 First Class? Or is that Q1 2026 when you can start selling the First Class product? Thanks for taking my questions.

[Marty St. George, President at Jetblue Airways]

Hey, Mike, I'll take that one. So there's some CapEx coming this year, which is basically the beginning of the process through seat design certification, etcetera. But the 1st install is actually going to be in 2026. So there'll be no revenue benefit to speak of in 2025. And by the way, that is exactly how it's laid out in the phasing of JetFoord.

[Michael Linenberg, Managing Director at Deutsche Bank]

Great. Thank you.

[Operator]

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

[Catherine O'Brien, Vice President at Goldman Sachs]

Hey, good morning, everyone. Just wanted to follow-up on some of the corporate commentary. We've been hearing that corporate trends are seeing a bit of a pickup again this fall. One of your competitors know that Tuesdays, Wednesdays are looking better. I know you're focusing your network on your leisure DNA, but are you seeing any pickup out of New York, TransCon or the traditionally more corporate leaning flights like your New York to Boston flights?

[Catherine O'Brien, Vice President at Goldman Sachs]

Just any color there?

[Marty St. George, President at Jetblue Airways]

So what I'd say is, if you look at our corporate demand right now, the last 2 or 3 quarters we've been setting records as far as the amount of money we're getting from our corporate accounts. That being the case, corporate is still a really small part of JetBlue's revenue base. So we're talking 9 digit number and a low 9 digit number. So it's not a gigantic number. We are seeing great numbers.

[Marty St. George, President at Jetblue Airways]

But I think, again, looking at our network and looking at where we fly and I think looking at our frequencies, with the network as it exists, we don't see ourselves as being a big corporate carrier. And I don't think it's been big enough for us to draw a significant difference on Tuesdays and Wednesdays.

[Catherine O'Brien, Vice President at Goldman Sachs]

Got it. And then maybe just Ursula, if you don't mind, one more on the GTF. I just want to confirm, I don't think you're baking in any kind of compensation from Pratt into your outlook. But when do you think you'll reach a settlement on those 2024 damages or however you want to put it? And what form does that take?

[Catherine O'Brien, Vice President at Goldman Sachs]

Is it going to be something we're going to be able to notice on the cash flow statement? And then I know you've already fielded a couple of questions on this, but and I don't want to get too myopic. But when you're saying 1 to 2 years from now on the peak, does that imply the peak is sometime January 28, 2026 or later? Just any color on the GTF questions there would be really helpful. Thanks.

[Ursula Hurley, CFO at Jetblue Airways]

Yes. Good morning, Katie. So the situation with Pratt and Whitney continues to be pretty fluid. Obviously, as we've highlighted today, it's a very material impact to our business. So the settlement negotiations are taking a while quite frankly because of the materiality to the business.

[Ursula Hurley, CFO at Jetblue Airways]

We want to ensure that we settle with something that is fair and acceptable. So I don't have any timing on that. It's a work in progress. In regards to your last question just about the peak, I mean, when I say within the next year or 2, I mean, that means that we hit peak quite frankly between now and 2027. And so again we work consistently and fluidly with Pratt.

[Ursula Hurley, CFO at Jetblue Airways]

And so there are things that could accelerate this. And so we're watching it very closely.

[Catherine O'Brien, Vice President at Goldman Sachs]

Thanks. Totally appreciate the moving target.

[Operator]

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

[Ravi Shanker, Managing Director at Morgan Stanley]

Great. Thanks. Good morning, everyone. Some of your mainline peers obviously highlighted strength in transatlantic demand in the Q1, which as you pointed out is kind of seasonally weak period. Can you just talk about kind of what you guys are seeing there and potential for upside through the summer as well?

[Marty St. George, President at Jetblue Airways]

Sure. Thanks, Ravi. I'd say, first of all, the Atlantic is still in ramp for us. I mean, we added new cities in 2024. We've announced new cities for 2025, new routes for 2025.

[Marty St. George, President at Jetblue Airways]

So I think I look at our growth in Atlantic as partially being strengthened and partially being ramped. So I don't want to get too aggressive as far as how we describe it. Most important thing for us is continued growth of yields in mid cabin. If you look at the configuration of the airplanes, we are very heavily mid focused. It is absolutely a fantastic product.

[Marty St. George, President at Jetblue Airways]

I really think it's the best product across the Atlantic. And from that perspective, that's where we like to see the growth and we're really seeing great growth as far as net yields. So, we're very optimistic about the results as the network exists right now. I'll also say that we deferred almost all of our 321 deliveries transatlantic between deliveries into 2,030. So I'd say you have more or less roughly what you see is what you get right now.

[Marty St. George, President at Jetblue Airways]

We'll continue to treat that network and continue to move planes between the Atlantic and domestic summer to winter. But we're really happy with the choice to fly there. We're happy with our results and we think it's going to be a nice profit source for us.

[Ravi Shanker, Managing Director at Morgan Stanley]

Got it. Great. Thanks for the color. And maybe as a follow-up, I just want to confirm the $95,000,000 outperformance in revenue capture initiatives for 2024, is that all just go forward from future periods, which obviously is also very impressive? Or are you seeing pockets of potential strength or upside, which may end up even kind of upsizing the target over time?

[Marty St. George, President at Jetblue Airways]

So as far as how we look at it right now, it does look all to be move forward. We'll always keep watching that going forward. But we've got pretty good visibility as far as things like preferred seating and the Blue Basic. And it does look like move forward. I'm not saying at some point that won't grow.

[Marty St. George, President at Jetblue Airways]

And hopefully as we grow, we'll see that grow in general. But fundamentally, we're very excited that this has come forward as it has. And frankly, I'm optimistic about all the initiatives that get forward, not just the ones that we've already launched in 2024. So we're actually very excited, again, with even more just launching today. So we're actually very excited about that.

[Ravi Shanker, Managing Director at Morgan Stanley]

Very good. Thank you.

[Operator]

Your next question comes from the line of Savi Syth with Raymond James. Please go ahead.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Hey, good morning. Marty, can I ask, you mentioned pressure in the Northeast and Florida, but I think to Tom's question, you also kind of noted Florida capacity is down year over year as competitive capacity? And it seems like that's the case in Orlando too. I was wondering if you could provide a little bit more color, which cities or routes you're seeing kind of competitive pressures that you called out in like the Northeast and Florida?

[Marty St. George, President at Jetblue Airways]

I'm not going to give a lot of color on that. And then clearly from a competitive capacity perspective, the most competitive capacity pressure has been in Boston. But in general, I'm not yes, in Waterville, in Orlando, the trends are actually good. I think some of the other cities, Palm Beach, Tampa, not as good. But I don't look at any of them as really sticking out, like significantly other than Boston.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Got it. That's helpful. Thank you. And just on the kind of fleet plan, Ursula, it looks like some of the A220s that you would thought might come in 2026 are shifted out. I was curious what kind of drove that.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

And just on that investment question, is the investment in premium products on the CapEx meaningful? Or is that just part of the kind of aircraft and not really meaningful?

[Ursula Hurley, CFO at Jetblue Airways]

Yes. Good morning, Savi. The aircraft order books have been really fluid with delays and such. So we just adjusted our delivery schedule to reflect the most recent timing information from Airbus. So to your point, there were a few puts and takes between 202526.

[Ursula Hurley, CFO at Jetblue Airways]

I will mention as you look at the overarching JetBlue aircraft order book, we've talked a lot about Pratt and Whitney today and within the next 1 to 2 years hitting the peak AOG. And I do just want to remind everyone at some point this situation will become a tailwind and we will get airplanes back. And as you look at our order book in 20 27 and beyond, it actually lines up pretty well in terms of when we think we're going to get aircraft back due to the AOG issue. In regards to your last question around CapEx, the investment into domestic 1st class, that investment is going to be approximately $400,000,000 over the next few years. And a small portion of that is included in the 2025 guide as Marty mentioned just for the start up of the ramp of the program.

[Ursula Hurley, CFO at Jetblue Airways]

But I do want to remind everyone, I mean between the domestic first class as well as the A320 extensions, I mean these are very accretive ROI positive and in a timely manner. So I feel good about the investments that we're making.

[Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial]

Makes sense. Appreciate the color. Thank you.

[Operator]

Your next question comes from the line of Tom Wadewitz with UBS Financial. Please go ahead.

[Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC]

Yes. Good morning and thanks for the question. I wanted to circle back a little bit to, I think where Jamie kicked off the Q and A just asking about RASM. It seems to me that one of the big concerns is just, your 1Q RASM outlook looks a fair bit weaker than the industry. Marty, what's the framework?

[Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC]

Would you expect like 2Q or second half for the RASM performance for JetBlue to kind of get back in line with what we see for the broader industry? Or how do you think about the framework for that to be the case?

[Marty St. George, President at Jetblue Airways]

Well, Tom, thanks for the question. So first, let's talk about the sequential numbers that we're flashing right now. Again, we're very happy with the Q4 over performance, and we talked about that being very focused on really good results in the peak. As you sequence into Q1, if you look at the historical trend of Q4 to Q1 RASM, and you go we've got 12 years' worth of this data. We're actually above that normal trending.

[Marty St. George, President at Jetblue Airways]

So what we're producing in Q1 of 2025 is actually higher than you would normally see for that time period. And I attribute a lot of that to JetFoRd. I will say versus the rest of the industry, we do face a competitive capacity headwind.

[Marty St. George, President at Jetblue Airways]

I think if you look

[Marty St. George, President at Jetblue Airways]

at the big four, they're all facing competitive capacity numbers that are under 1%, some of them like 0.3%, 0.4%. You had it actually negative. Our competitive capacity number is 3%. So I think looking at the headwinds that we're seeing in Q1, I feel great about where we stand as far as RASM given all the things working against us. And I give a lot of credit that to Jeff Ford, the issues we've laid out already.

[Marty St. George, President at Jetblue Airways]

With respect to the improvements across the rest of the year, obviously, the headwind we get in Q1 from Easter comes right back to the tailwind in Q2. So that 1.5 bad guy in the first will come back as a 0.5 good guy in the second. And I think I want to be clear as we go through the year, we're not making any big assumption about competitive capacity coming down. There's no I'd back to the point I said to Jamie at the very beginning, there's no sort of a secret assumption that competitive capacity goes back down to 1 percent or 0.5%. Well, I think the industry is at 0.4% right now.

[Marty St. George, President at Jetblue Airways]

We're basically looking at the industry as it stands right now. A lot of this is just execution of the plan as we've laid it out. And I think what we've seen so far as far as the ramping of Jet Forward, how we've seen the network changes take. And I think we were especially happy with what happened in the Q4, with places like Islip where, with the demand we're able to drive during the peak in the market. Islip is a market that was 25 years served by one of our big competitors to Florida, and we had success there very, very quickly, especially in the peak.

[Marty St. George, President at Jetblue Airways]

So I feel very bullish about Jet 4 as it goes forward. I just want to stress there's no there are no numbers games as far as we need some sort of a big industry change to get to 3% to 6%. That is core of stuff we can control.

[Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC]

Okay. Yes, great. Thanks. And for the follow-up question, just wanted to ask about how we think about the kind of key levers and potential timing to get to free cash breakeven. It would seem like this year, potentially next year, you'd still be looking at a fairly significant use of cash.

[Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC]

So wanted to see if you could kind of multi year offer any thoughts about is that more so driven by a CapEx reduction that might come in 2026, 2027 or is it just a matter of kind of keep going on jet forward and get the operating margin up? Thank you.

[Ursula Hurley, CFO at Jetblue Airways]

Thanks for the question, Tom. So we executed an aircraft deferral last year. It paves the way for us to execute on Jet Forward and get the business healthy again and get us to consistent profitability, which is the number one priority. Number 2 is then getting the free cash flow positive. And I do feel like with the deferral and the way the order book lays out and just with the expected progression of JetFoWrd, there is a means to get to positive free cash flow within the timing of the JetFoWrd program.

[Ursula Hurley, CFO at Jetblue Airways]

Priority number 3 will then be to start delevering the balance sheet. So make no mistake, we don't like where our metrics lie today and we want to get back down to more competitive reasonable balance sheet metrics. So, but to continue executing on Jet Forward, get to consistent profitability, before, we can talk about taking steps to delever the balance sheet.

[Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC]

Great. Thank you.

[Operator]

Your next question comes from the line of Steve Trent with Citi. Please go ahead.

[Steve Trent, Managing Director at Citi]

Good morning, everybody, and thanks very much for taking my questions. If I could follow-up on the alliance question, I think Scott Group maybe asked earlier. Great color on what you said for how you're thinking about the U. S. But what about potential alliances overseas sort of existing ones that are in place and maybe any new opportunities given some of the Latin American Airlines today are going through some gyrations?

[Marty St. George, President at Jetblue Airways]

Hi, Steve. Thanks for the question. Well, first, I think it's worth mentioning, we have 52 either 52 or 53 Alliance Partners across the world, including a lot of international carriers. I think we're especially lucky that New York is a very, very important gateway for international carriers and we provide a lot of connecting lift there. So if you're not aligned with one of the other airlines there, we're great partners as far as getting access to the interior U.

[Marty St. George, President at Jetblue Airways]

S. Where the fares, excuse me, tend to be higher. And we continue to grow that portfolio even as we negotiate with domestic carriers. We just added British Airways in the, I think, Q3 of this year, a limited partnership that's actually continued to grow. I think there's opportunities there.

[Marty St. George, President at Jetblue Airways]

We're certainly not taking your eye off the ball on that type of partnership, while we work on what might make sense for us on a domestic partnership.

[Steve Trent, Managing Director at Citi]

Okay. Appreciate it, Marty. And for my follow-up, I recall you guys are offering some early exits for some of your older pilots. I'm guessing this is kind of a fairly small piece of the pie in terms of your labor costs and there would not be a significant cash event on the back of these packages that you'd offer? Thank you.

[Joanna Geraghty, CEO at Jetblue Airways]

No, thanks. Obviously, looking forward to offering some early retirements from our pilots, I think it's a win win for JetBlue and for some of our pilots who are ready to pursue something after they retire. So it continues to be a focus on how do we manage some of our elevated labor costs in a world where we have as many aircraft on the ground that we have right now with the Pratt and Whitney issue.

[Ursula Hurley, CFO at Jetblue Airways]

And there will be no major cash outflow, not material.

[Operator]

And ladies and gentlemen, that does conclude our question and answer session. And I will now turn the call over to Joanna for closing comments.

[Joanna Geraghty, CEO at Jetblue Airways]

Thanks for joining us today. Very happy to answer your questions. When we launched Jet Forward in July, we came out with a commitment to a 2025 year where we were breakeven or better from an operating margin perspective. And I'm so pleased that the team is maintaining those commitments that we set out to do. We've got great momentum, really great progress on reliability, beat costs every quarter in 2024 last year.

[Joanna Geraghty, CEO at Jetblue Airways]

And since launching Jet Forward, we've outperformed on our revenue guidance as well. This is a multi year strategy. It is not linear. And many of these programs start ramping in 2025, whether that's even more, which launched today, the Premier card, which is launching at the end of the month, or even our domestic first class, which launches next year. So we have a lot happening, and there'll be a number of puts and takes through the quarter.

[Joanna Geraghty, CEO at Jetblue Airways]

So our focus is on the long term. Our focus is on hitting that annual expectation of breakeven or better, and we are off to a promising start. If you look at the midpoint of our 2025 guide of 0.5 point, you can expect another 5 to 6 points of margin from JetFWD in 2026 and 2027. And then we've got the Pratt and Whitney headwind of 3 points, which will become a tailwind as we cycle through that particular situation. So all in all, when you look at Jet Forward, coupled with Pratt and Whitney, you should expect 9 points of operating margin improvement from 2025 on.

[Joanna Geraghty, CEO at Jetblue Airways]

So I'm pleased with the program and how we're executing to it and keeping our eye on the ball, which is the annual guide of breakeven or better for operating margins. Thanks for your time today and we look forward to talking with you on the next call.

[Operator]

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

Participants

Executives

• Ursula Hurley, CFO

Analysts

• Koosh Patel, Director of Investor Relations at Jetblue Airways
• Joanna Geraghty, CEO at Jetblue Airways
• Marty St. George, President at Jetblue Airways
• James Baker, Managing Director & Investment Specialist at JP Morgan
• Daniel McKenzie, Equity Research Analyst at Seaport Research Partners
• Duane Pfennigwerth, Senior MD at Evercore
• Tom Fitzgerald, VP - Equity Research at TD Cowen
• Scott Group, MD & Senior Analyst at Wolfe Research
• Michael Linenberg, Managing Director at Deutsche Bank
• Catherine O'Brien, Vice President at Goldman Sachs
• Ravi Shanker, Managing Director at Morgan Stanley
• Savanthi Syth, MD - Airlines & Advance Air Mobility at Raymond James Financial
• Tom Wadewitz, Senior Equity Research Analyst at UBS Securities LLC
• Steve Trent, Managing Director at Citi