JetBlue Airways Corporation

Operator: Good morning. My name is Krista, and I would like to welcome everyone to the JetBlue Airways fourth quarter 2025 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. I would now like to turn the call over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir. Koosh Patel: Morning, everyone, and thanks for joining us for our first quarter 2026 earnings call. This morning, we issued our earnings release and the presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and on the SEC's website at www.sec.gov. In New York, to discuss our results are Joanna Garrity, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer. During today's call, we will make forward-looking statements about our outlook, strategy, and future performance. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release and SEC filings for information about factors that could cause those differences. We may also discuss certain non-GAAP measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings materials and on our website. And now I'd like to turn the call over to JetBlue's CEO. Joanna Garrity: Thank you, Koosh. Good morning, and thank you for joining JetBlue's first quarter 2026 earnings call. I want to begin by thanking our crew members for their continued [inaudible] during what has been another challenging start to the year. And I also want to recognize the TSA agents for their commitment during this shutdown. This first quarter included multiple winter storms and TSA disruptions, but through it all, we are grateful our teams remained focused on delivering a safe and reliable service for our customers. The conflict in the Middle East and its impact on fuel prices is the most significant headwind we face as an industry since COVID. Given the sharp increase in the price of fuel and the expectation for elevated prices throughout this year, we are suspending our prior full-year guidance as we aggressively adjust to the evolving macro backdrop. I want to be clear: suspending our full-year guidance reflects external factors alone and not a change in the strong progress of Jet Forward. We have taken immediate action to offset fuel costs with our ultimate focus on minimizing the financial impact and preserving our liquidity position. The three primary levers available to us are adjusting fares to better align with input costs, moderating unproductive capacity, and pursuing additional cost savings opportunities. We recognize that customers expect strong value from JetBlue, and we're continuing to carefully balance our path to restoring profitability with meeting those expectations. Importantly, demand remained strong. This backdrop allows us to recover some of the increase in fuel costs, and as such, we've adjusted fares along with the industry over the last two months. Bookings have remained resilient amidst these changes, which is an encouraging sign. However, the first quarter was already over 90% booked before fuel prices suddenly spiked, reducing the opportunity to immediately recapture the impact of this significant fuel increase. We expect 30% to 40% fuel recapture in the second quarter and plan to achieve 100% recapture by early 2027. Given the broader cost environment, we've also made targeted updates to ancillary fees such as checked bags. This allows us to better cover costs while keeping our base fares competitive. We will continue looking for additional ways to strengthen revenue performance throughout the rest of the year. At the same time, we are aggressively reducing capacity, targeting adjustments in off-peak and shoulder periods. We've acted quickly, reducing capacity by nearly one point versus close-in expectations in the second quarter, with plans to reduce the second half by at least two to three points. While we are able to reduce capacity closer in, as we've done, these decisions are more beneficial when made at least 60 days in advance to take even greater advantage of cost savings opportunities. And with demand continuing to remain strong, it's important we take a flexible approach, trimming capacity as we head into the peak summer season. We plan to closely monitor market conditions and expect to reduce additional capacity after the summer peak, assuming fuel prices remain elevated. In addition to managing capacity, we have opportunities to reduce other expenses and better align our cost profile with capacity. This includes efforts to reduce controllable spending and hiring, and in a lower capacity environment, we also expect savings on maintenance and other variable costs such as landing fees. As we meaningfully adjust capacity to address higher fuel, we are committed to pulling all levers available to mitigate potential upward pressure on unit costs. Alongside these efforts, we believe Jet Forward remains the right strategy to navigate us forward. Across each of our priority moves—reliable and caring service; best East Coast leisure networks; products and perks customers value; and a secure financial future—we are seeing clear evidence that our strategy is working. We remain on track to drive $310 million of incremental Jet Forward EBIT in 2026 and $850 million to $950 million in 2027. And as a reminder, we have transformational initiatives launching this year, including domestic first class, continued implementation of our Blue Sky collaboration, and our second Blue House, which are expected to drive significant value for years to come. In closing, demand remains intact. Our Jet Forward initiatives are performing, and we are actively managing levers within our control. I remain confident we have the right strategy and the right team to navigate yet another challenging year for the sector, even in the face of these macro factors. As we gain greater visibility into fuel and its impact on the macro environment, we will plan to provide an updated view on full-year expectations. I'll now turn it over to Marty. Marty St. George: Thank you, Joanna, and thanks again to our crew members. We delivered strong RASM performance, a positive 6.5% in the first quarter, in line with our revised guidance and exceeding the midpoint of our initial RASM range by 4.5 points. The Caribbean airspace closure in January and winter storms Fern and Orlando combined to reduce capacity by nearly four points, which benefited RASM performance by two points. The remaining 2.5 points of our RASM beat is a reflection of demand strength and the effectiveness of our Jet Forward initiatives. Demand trends strengthened as the quarter progressed, and importantly, that momentum has carried into the second quarter. We saw strength across the booking curve, both close-in demand and further out, with improvements in both peak and trough periods. Premium continued to outperform core, with year-over-year premium RASM better than core by nine points in the first quarter. We are encouraged by improvements in core demand and RASM, which is now strongly positive year over year, reflecting a more balanced demand environment across our offerings relative to what we experienced last year. Delivering the differentiated JetBlue experience across each unique customer offering meant even more in core remains a priority, reinforcing our commitment to all customers, not just select segments, even as fuel costs remain elevated. Lastly, while we saw strength in both domestic and international bookings, domestic has recovered meaningfully, and year-over-year RASM outperformed international. First quarter RASM was also benefited by about 1.5 points from a shift of outbound Easter traffic into late March. This was a historic quarter for our loyalty program, highlighting the investments we've made in our product and operation. Loyalty cash remuneration grew 19% year over year, driven by double-digit growth in spend on the JetBlue card. In addition to record levels of spend and a 45% increase in card acquisitions, we achieved all-time highs for TrueBlue active members and attach rates in our non-focused city geographies. Blue Sky is also driving co-brand sign-ups, reflecting the broader reach the collaboration brings to our loyalty program. We continue to add utility and value for our members in other ways this quarter, including the ability to use points for ancillary purchases, which is off to a very strong start. We also launched Family Tiles, an industry first that allows parents to earn status faster when traveling with their children. Finally, customers are responding exceptionally well to our Blue House at JFK, with NPS trending well above expectations and driving premium credit card sign-ups beyond our initial targets. We believe the opening of our next lounge in Boston later this summer will be a further catalyst for premium growth, alongside the launch of domestic first class, expected in the second half. As these products and perks ramp, and both new and existing members deepen their loyalty engagement, we expect meaningful sequential growth in loyalty revenue throughout the year. Strong customer response to our strategic growth in Fort Lauderdale drove first quarter RASM growth of 5% even with capacity growth of 23%. In late March, we announced another round of additional service from Fort Lauderdale—one new destination to Cleveland, and added frequencies on nine routes—where customers want more choices where they fly. With the addition of Cleveland, JetBlue will have launched nonstop service to 21 cities and increased frequency on over 20 high-demand markets in Fort Lauderdale over the past year, further strengthening our investment in building depth and connectivity in Florida's biggest premium market. Through our recent growth and competitive reductions, we've been able to take advantage of newly available gate space to build a schedule with four connecting banks beginning this summer, up from two banks previously. This provides our customers in the Northeast significantly more opportunities to connect to our growing portfolio of destinations in the Caribbean and Latin America. We remain excited about the long-term opportunity in this focus city, and continue to view it, in addition to key leisure destinations throughout the state of Florida, as an essential component of our network strategy. We've now grown to 11 destinations in Florida, following the launch of service to Destin-Fort Walton Beach from both New York and Boston in the first quarter. Blue Sky reached a new milestone in the first quarter with the launch of interline flight sales with United. We are encouraged by the early results we're already seeing and are excited by the new opportunities we expect this collaboration to bring to our customers. This quarter, reciprocal loyalty benefits across Mosaic and MileagePlus tiers are expected to turn on, in addition to sales of rental cars through our Paisley platform. For the second quarter, we expect continued strength in RASM supported by sustained demand trends and progress from our Jet Forward initiatives. This quarter is anchored by peak periods in early April, late May, and late June. The Easter outbound shift represents a second quarter headwind of about 1.5 points of RASM. As a result, we expect RASM to grow 7% to 11% year over year on 1.5% to 4.5% more capacity. Our investments in Fort Lauderdale now comprise all of our second quarter capacity growth. We are taking a similar approach to guiding RASM as we have in the past—guiding to what we see today, which points to a sustained level of strong yields and loads for the remainder of the quarter. As we progress through the quarter, we plan to monitor the demand environment for opportunities to continue optimizing yields to help offset fuel costs. As of today, over two-thirds of the quarter's revenues are on the books, and as mentioned, our second quarter RASM guidance implies we recaptured 30% to 40% of the fuel cost increases versus our initial plan for the quarter. We are encouraged by the demand trends we're seeing, and believe we are well positioned to generate significant RASM growth this quarter as we head into the summer peak travel season. Now I will turn it over to Ursula. Ursula Hurley: Thank you, Marty. As Joanna mentioned, the start to 2026 was marked by a dynamic operating environment and macro backdrop. The industry climate seems to be evolving every day, and we are responding quickly to position JetBlue to our financial priorities. For example, we've actioned several capacity reductions across the second quarter and plan to stay nimble in the second half of the year. At the same time, we are prioritizing capacity investments in our Fort Lauderdale focus city where customer response has been strong and the resulting RASM is performing extremely well. Our underlying business is clearly improving, with a roughly five-point spread between RASM and CASM ex-fuel expected at the midpoint of our guidance ranges this quarter. We haven't seen a gap like this in years, and it reflects strong demand for our product, better cost discipline, and real momentum from our Jet Forward initiative. During the first quarter, CASM ex-fuel growth finished up 6.6%, four points of which was due to close-in capacity reductions from the operational disruption. Without these impacts, CASM ex-fuel would have finished up 2.5%, or two points better than our initial midpoint. One point of this beat was due to cost-saving efforts, while one point of spend is expected to shift into the remainder of the year. For the second quarter, we expect CASM ex-fuel to increase in the range of 3% to 5% year over year. We continue to expect CASM ex-fuel growth to moderate down during the second half of the year, with over two points less unit cost growth than the first half, although this remains subject to how the price of fuel evolves in the coming months and our final capacity levels. Average fuel price for the first quarter was $2.96, 26% higher than the midpoint of our initial guidance. We expect second quarter fuel price to be in the range of $4.13 to $4.28, with the midpoint 75% higher year over year, which is derived from the forward Brent curve as of April 10. As a reminder, every 10¢ increase or decrease in fuel price is the equivalent to about $85 million of expense for the full year. To help offset a portion of fuel costs, we continue to focus on our fuel efficiency programs, with 30% of our second quarter capacity powered by more fuel-efficient new engine technology, supporting a targeted 5% fuel-efficiency improvement over the last three years. With oil and crack spreads expected to remain elevated for a sustained period, we are actioning incremental cost reductions beyond capacity cuts to mitigate the impact. These include reducing spend across both OpEx and CapEx and slowing hiring in some work groups to better align with our capacity expectations. At the same time, we are executing on our structural cost initiatives under Jet Forward, including rolling out new technology and AI to support improved planning for our crew and operation, launching a sourcing center of excellence to further optimize contract spend with business partners, and implementing more efficient insourcing and outsourcing opportunities across the business. Taken together, we expect our near-term cost reduction efforts and our Jet Forward cost initiatives to support strong cost control this year. While we did suspend our full-year CASM ex-fuel guidance, we expect its historical relation to capacity to continue this year, which implies roughly flat CASM ex-fuel on mid- to high-single-digit capacity growth. Turning to our fleet and capital expenditures, in the first quarter, capital expenditures totaled $141 million, $59 million lower than our initial guidance due to timing shift of deliveries. Looking ahead, we expect approximately $275 million of capital expenditures in the second quarter and approximately $800 million in 2026. There has been a slight shift to our A220 deliveries, and we now expect 12 total aircraft deliveries this year, down from our January guidance of 14 aircraft. And as previously discussed, we expect CapEx to remain below $1 billion annually through the end of the decade. Shifting to our balance sheet, we believe our unencumbered asset base and liquidity help us successfully manage through industry shocks like these, and I am pleased with the runway we've built for JetBlue. We raised over $3 billion back in 2024 to secure our financial future and give Jet Forward a runway to perform, and the cash we have on hand as a result is a valuable cushion in this volatile high-fuel environment. We ended the quarter with $2.4 billion of liquidity, or 26% of trailing twelve-month revenue, above our liquidity target of 17% to 20%. This excludes our $600 million undrawn revolving credit facility. Earlier this month, we raised $500 million secured by aircraft collateral, with an accordion feature that allows us to upsize to $750 million. We plan to reassess our funding needs as the year progresses. We also recently repaid the remaining $325 million of our 2021 convertible notes. Lastly, following this month's capital raise, our unencumbered asset base remains over $6 billion, with approximately a quarter in tangible collateral. Our priority remains maintaining a strong liquidity position and ensuring Jet Forward has the runway to perform. To wrap up, the environment we are operating in is challenging and volatile. We are focused on taking swift action and executing on our Jet Forward strategy to put JetBlue in a position to restore operating profitability when the environment has normalized. We have taken meaningful action across the three main levers we control—fares, capacity, and cost—and we are pleased with the early results of these actions. We remain encouraged by the underlying performance of the business and are confident that Jet Forward is the right plan to navigate this challenging environment and deliver value for our shareholders. With that, we will now take your questions. Operator: Thank you. If you would like to ask a question, please press [inaudible]. We also ask that you limit yourself to one question and one follow-up. For any additional questions, please requeue. And your first question comes from Mike Linenberg with Deutsche Bank. Please go ahead. Analyst: Mike Linenberg, Deutsche Bank: Yeah, hey, two questions here. With respect to your domestic first class, have you actually started selling that for the back part of the year? And if you are, can you just give us a sense of what the initial uptake looks like? Okay, great. And then just my second question probably to you, Joanna. There appears to be, like, a subset of the industry that, among other things, is requesting a suspension of the ticket tax, and given that that is a user fee to fund the system, could we be in a situation where half the industry is, I don't know, subsidizing the use of the system for the benefit of the other? Is something like that even possible? I'm just curious about your thoughts about that. Thanks for taking my question. Marty St. George: Hi, thanks. Good question, Mike. We have not begun selling it yet. We want to wait until we understand fully the implementation timeline. As we said, it was gonna come in 2026, and we're still on track for that to happen, but we will announce the open sales date when we know the first plane is to be out there for sale. We're currently going through the certification process. On the ticket tax question, I'd also add the ticket tax is viewed by the industry as a very unfair tax because we way overpay versus private aviation. I would love for it to be reformed for other reasons, but I'm not sure this is the reason. Joanna Garrity: Yeah, not entirely sure maybe which fee you're speaking about, but if it were to apply to one carrier, it would presumably need to apply to everybody. The numbers associated with that—we looked at that early on—aren't significant. Every dollar counts, but it ultimately was somewhere in the area of $2.025 billion annually. Operator: Your next question comes from the line of Conor Cunningham with Melius Research. Please go ahead. Analyst: Conor Cunningham, Melius Research: Hi, everyone. Thank you. I'm trying to understand the comment that you were 90% booked in 1Q when jet fuel started to move up and just what that means to sequentials. Again, I realize you expect 30% to 40% recapture, but I would think that the fact that—I think there's been, what, six industry fare increases—that the uplift in revenue would have been a little bit better in 2Q. So if you could just talk about what's going on there in a sequential step-up? I realize the capacity is stepping up with it, but just any thoughts. And then, Ursula, maybe you could—I think you have $6 billion of unencumbered assets. I realize you probably don't want to touch that quite yet, but if you could just talk about the accordion that you have within that current structure, what scenarios you would see yourself looking to tap that $250 million, just in general? Thank you. Joanna Garrity: We were 90% booked in 1Q because, remember, fuel spiked in early March. We were already 90% booked for the quarter. So you aren't able to recapture with those fare increases for the bookings already on the books because they were booked in January and February at a lower price. Everybody would have been largely in the same position as us—there were already bookings that had taken place for 1Q. So headline, there's no news there. It's just saying we weren't able in 1Q to take advantage of the fare increases because people already bought fares at the lower prices. Going forward, once those fares started going in, very different story. Ursula Hurley: Thanks for the question, Conor. We're certainly pleased with where we ended the quarter in terms of liquidity. Our target is 17% to 20%. We ended the quarter at 26%, so we still have a cushion. Our original 2026 plan assumed that we would raise $500 million this year. We executed a deal utilizing aircraft to lock that in. We've drawn on a portion of that already, and we'll draw on a second portion later this year. We obviously built in flexibility in the accordion, so we do have an incremental $250 million that we can draw on. Given the magnitude of the fuel price impact that we're seeing in the business, we will most likely draw down on that in order to maintain our 17% to 20% liquidity target. Operator: Your next question comes from the line of Dan McKenzie from Seaport Global. Please go ahead. Analyst: Dan McKenzie, Seaport Global: Oh, hey. Good morning. Just, Ursula, following up on that last question, what additional cash could potentially be raised from extracting equity from deliveries or just aircraft financing? And under what scenarios might you want to raise additional capital beyond that accordion? And second question here, maybe for Dave or Marty: going back to the script here, two points of RASM beat from stronger-than-expected demand and demand that sort of accelerated at the end of the quarter. What's driving that? How sustainable is it? And at what point would you expect demand to be more elastic? Ursula Hurley: Thanks for the question, Dan. Our target is 17% to 20% liquidity, so I feel comfortable staying within that range. The aircraft that are purchased this year—there are 12 of them coming—we're assuming we purchase those with cash. So if we are at risk of falling below our liquidity level, we could decide to lever up those new deliveries. We also currently have a healthy unencumbered asset base of $6 billion—about 30% of that is aircraft and engines that we currently have on property. And then we also have our slots, gates, and routes, our brand, and incremental loyalty that we can do. So we have options, and if we're at risk of falling below our liquidity target, we'll assess all markets and look at all of our collateral and decide what would be the most effective. Marty St. George: Dan, thanks for the question. I'd say two things. In the fourth quarter, when we did our fourth quarter call three months ago, we called out that we had RASM performance accelerating through 2025. So what we saw in early 2026 is consistent with what we've seen in general. The revenue environment has been extremely robust even in the face of pretty high fare increases. Air travel is still a really good value. A4A put out a document looking at price changes from 2019 to 2026 across 20–30 different commodities—air travel was the only one where prices are actually down from 2019. Eggs up 96%, air travel down 3%. It's very common that you can fly, for example in June, from Orlando to JFK for cheaper than it takes to take an Uber from JFK to Midtown. With the quality of JetBlue, demand has held up very well for us. Even with the price increases, we still see economy demand strong and positive unit revenue in the economy cabin. Maybe I'll just add our Jet Forward initiatives are contributing to this—product, loyalty, merchandising—driving stronger engagement and yield performance. Our co-brand acquisitions are up, so elements of the strategy are also contributing to this stronger environment specific to JetBlue. Operator: Your next question comes from the line of Jamie Baker with JPMorgan. Please go ahead. Analyst: Jamie Baker, JPMorgan: Hey, good morning, everybody. So, Marty, JetBlue ordinarily generates less revenue in the third quarter relative to the second quarter, and of course there's a positive Easter benefit in this year's second quarter, making the comparison even tougher. But there's significant yield momentum right now. Fuel recapture improves over time. What probability would you ascribe—the third quarter revenue being higher than that of second quarter? Or is that simply off the table? And second, Joanna, you're not a member of this association for value airlines, but I've seen varying press reports that maybe you did participate in the recent $2.5 billion bailout request. Can you clarify and bring us up to speed in general on your thoughts as to selective government bailouts? Marty St. George: We've not guided third quarter and we're not going to guide third quarter. Based on what we're seeing in the demand environment right now, we remain optimistic that as the year progresses we will continue to recover more and more of the increased price of fuel. We need to recover more than that because many of our other inputs have gone up, but we feel very optimistic about demand. For the last month of the third quarter, we've talked about capacity cuts—internally, we've taken two to three points out of our second half supply, very much focused on the September through December period. We're assuming fuel prices at the current curve, and because of that, there's certainly capacity that we think will not be economical. That's also contributory to a good revenue environment. I won't give a probability, but as of now, we're very happy with the demand environment we're seeing in both premium and coach. Joanna Garrity: Thanks. High level, it's no secret that the last administration contributed to a disadvantage in the industry, whether it's Spirit–JetBlue's proposed merger or the blocking of the NEA, contributing to a sector that is less resilient compared to some of the larger carriers. We're in a different position because we have a healthy unencumbered asset base and strong liquidity. Never say never—we're open to anything and everything, assuming the terms would make sense for JetBlue. But at this point, we're focused on executing Jet Forward, continuing to control the pieces of the business that we can control to offset the impact of elevated fuel prices, and we'll watch like you're watching to see how that shakes out with Spirit and the value carriers and whether anything comes their way. Operator: Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead. Analyst: Duane Pfennigwerth, Evercore ISI: Thanks. Maybe just a follow-up right there. Joanna, in the scenario where Spirit gets support but nobody else does, would this influence your thinking about consolidation? And then, Marty, as you think about dialing down your schedule in the second half, what is your focus? What types of flights are most under the microscope? Joanna Garrity: No. There are enough people out there commenting on every little piece of the business right now. We're focused on executing the plan. Even in a potential Spirit bailout scenario, we’re going to continue to execute our Fort Lauderdale strategy. As was mentioned, our Q1 ASMs were up 23%, RASM is up 5%. Customers are clearly picking JetBlue—it’s a better product and better service, and we’re going to fly. We have a great plan regardless of the outcome at Spirit. I feel for their people—we’re hiring a number of them to try to make sure they have a soft landing. But it's a really tough situation. There continues to be an imbalance of scale in the industry. We’re doing what we can with Blue Sky. It is full steam ahead in Fort Lauderdale, and we look forward to continuing to bring the great JetBlue product and service there. We’re now the number one carrier at Fort Lauderdale compared to pre-COVID, and we look forward to continuing to grow. Marty St. George: Thanks. That's a simple one. We are assuming the fuel price for the rest of the year will match what the forward curve is saying, and at that level, there are certainly a small percentage of flights that we believe will not be accretive during that time period. The economics of reducing capacity are very much biased towards reducing it further out in advance because you can save a lot of expense when you do that. We did a little bit of pulling from the May schedule; it's much less effective that close-in because crews are already bid. But when we make decisions early for the fall, it's very effective to save significant expense. Where the pulls are happening is generally off-peak periods—Tuesdays, Wednesdays—nothing unusual. Although we are seeing good strength in the troughs, they're still troughs compared to peaks. It's a math exercise rather than a strategic exercise. Our goal is to get to the best top line we can, and if we see stuff that won't contribute, we will take action. Operator: Your next question comes from the line of Savi Syth with Raymond James. Please go ahead. Analyst: Savi Syth, Raymond James: Hey, good morning. Marty, on Fort Lauderdale, given all the changes you’ve done and the significant investment there over the last years, post this summer rebanking, where are you in the innings of really building up Fort Lauderdale, outside of maybe the opportunity if you get more gate? And as a follow-up, on New England strength—where are you on that front? Marty St. George: Great question. The real question is what happens with our biggest competitor there. We have added significant capacity; we're double the size of our next biggest competitor. We did not go into this with any expectation of Spirit going away. We've taken advantage of gate availability with some of their pull-downs to add more service and have a more formal bank structure, which we're excited about. To the extent they keep pulling down, we will backfill that capacity. Adding roughly a quarter of our capacity and still having RASM about one point off system RASM is outstanding performance. The JetBlue value proposition resonates in South Florida. We're extremely excited about the arrival of the domestic first class product later in 2026. Success should breed success, and we’ll continue to build Fort Lauderdale as capability allows. When we first talked about Fort Lauderdale, we said our goal was to get to the size of Boston. As capability happens, we will be at that point—a third leg of the stool. A lot depends on gate availability. On New England, I’m comfortable with what we’ve done. The addition of service in places like Bradley and Providence, in addition to Boston, is performing well. Airplanes will follow demand. We’re on year two of the ramp and generally ahead of where we expected, in some cases way ahead. Summer is somewhat lower demand for Fort Lauderdale; once we get to the fall, we should expect significant additional growth in Fort Lauderdale to the extent we have gates. Operator: Your next question comes from the line of Michael Golding with BMO Capital Markets. Please go ahead. Analyst: Michael Golding, BMO Capital Markets: Good morning, and thank you for the question. You're seeing healthy card spend and acquisitions. Can you unpack this by region? Is this really JFK-driven right now? And how does that influence your thinking for the opening of Boston, as well as how things are trending with Fort Lauderdale? And then on Paisley and Blue Sky, can you talk about the pipeline and initiatives to add additional partners to scale this platform, over and above United? Marty St. George: Hi Michael, thanks for the question. I wouldn’t say there are significant regional differences in card spend. There are regional differences in where the cards are—New York, New Jersey, New England account for the majority. One focus in 2026 is to increase our base in South Florida. We’ve done well with the credit card but are under-indexed in South Florida. As we add capacity there, plus United’s capacity and Blue Sky redemption opportunities—customers can fly anywhere in the world with TrueBlue points—we’re bullish about building a broader offering from South Florida that will translate into credit cards. Given the location of the Blue House, New York and Boston are focal points for the card business. We are looking to find space for a Blue House facility in Fort Lauderdale. Terminal 3 is tough for lounge space, but we’re working with Broward County Aviation to find a solution—no news to report yet. On Paisley, we’ve talked to a single-digit number of other partners—some airlines, some non-airline. We’re in the RFP process with one partner now and are very excited. Nothing to report on details, but we expect to be competitive. We are starting to get some United content independently. Today, you can buy a JetBlue Vacations package that has United air in it, and JetBlue Vacations has sold packages to United destinations. Rental cars are coming very soon, hotels at the beginning of the third quarter, and we’ll continue with packages, cruises, etc., later in the year. The relationship with United has been very strong, and we’re excited to get their customer base to experience Paisley. Operator: Your next question comes from the line of Tom Fitzgerald with TD Cowen. Please go ahead. Analyst: Tom Fitzgerald, TD Cowen: Hi, thanks for the time. Sticking with Blue Sky, I think on this call a year ago you talked about a TrueBlue person who might need to go to, you know, Omaha or Boise, and the value prop for them. Are you seeing the response from those customers that you hoped for? And what's the early response from MileagePlus customers onto your own network? And as a follow-up for Ursula: lessons learned on pulling controllable spend closer in than expected, and levers you're looking to pull in the back half of the year? Marty St. George: Great question, and we watch this closely. We have a forecast of where we would expect United customers to book on us, and it's exactly what we expected—LA–New York, Boston–New York, LA–New York, San Francisco–New York, San Francisco–Boston. Surprisingly good results at DCA—DCA to Florida and DCA to Boston—given United’s large customer base. This is exactly what we hoped for: JetBlue flights within the United distribution channel help us in places where we don't have the same share of mind, like Washington or the West Coast. We’re working on mixed-metal connections—flying JetBlue into, for example, New York–Houston in United’s banks and then connecting on United to secondary destinations. No date yet; it’s a tech challenge, but we’re optimistic. At its core, this is like our other 50-something interline relationships, just with a very big airline with strong distribution that complements our network. I’ll just add, the whole point is not to give customers any reason to choose anyone but JetBlue, particularly in Boston and New York. We’ve heard investor anecdotes where, because of United connectivity through Blue Sky, they booked via JetBlue to Asia, earned TrueBlue points, and chose us over a Boston-based competitor. Ursula Hurley: Thanks, Tom. I’m super proud of the team and how they’ve managed controllable costs. We pulled a significant amount of capacity out of the network last year given the lack of demand, and the team found $40 million that allowed us to maintain our full-year guide. We get creative—better aligning hiring, revising maintenance schedules, reducing discretionary spending. Great progress on fuel efficiency initiatives—about 5% savings over the last three years. We’re advancing Jet Forward cost initiatives: creating a sourcing center of excellence, leveraging data science and AI to build tools for better operating efficiency and planning. We’ve simplified the fleet by exiting the E190. Q1 is the high watermark, also impacted by disruptions. As Jet Forward cost initiatives ramp through the rest of the year and as capacity grows slightly in the second half, we’ll continue to see efficiencies. We’re going to do everything we can on controllable costs to come as close as possible to the original full-year guide. Operator: Your next question comes from the line of Brandon Oglenski with Barclays. Please go ahead. Analyst: Brandon Oglenski, Barclays: Hey, good morning, and thank you for taking the question. Joanna, it’s another frustrating year with volatility in oil markets and potentially another year of not turning a profit. You mentioned the lack of scale versus larger competitors with better balance sheets and profitability. How do you structurally address the lack of scale relative to competitors? Is there something you need to think about strategically? Joanna Garrity: Thanks for the question. Starting with Jet Forward: we are seeing it work and drive underlying performance. If you look at our operating margin for Q1 and adjust for fuel, it would have actually been five points better than the actual operating margin, and three points better than implied guidance—so negative five if you adjust for fuel versus an implied negative eight. Year over year, there was a three-point expansion when you adjust for fuel. We’re seeing gains in NPS—we’re back at the top of the industry; nice progress in Fort Lauderdale; a five-point RASM–CASM spread in Q2, the most we’ve seen since the start of Jet Forward. It’s a big year for Jet Forward: Blue Sky implementation, lounges, domestic first, and more. The strategy is working; the challenge is the macro environment and volatility. While macro factors impact the timing of our return to profitability, the goal is, when those subside, we’ll see all the benefits of Jet Forward come to fruition. On scale, we recognize its importance—that’s why we tried the NEA and Spirit merger. We’ve pivoted to Blue Sky, and early points show we’re giving more utility and relevance to customers even if we don’t serve a particular destination. We continue to raise concerns in Washington about imbalance, but we’re focused on what we control—our network, our loyalty platform—and accelerating relevance where people know and love our brand: the Northeast and Fort Lauderdale. Scale will continue to be a challenge for midsize and small carriers, but Blue Sky is an important part of helping with that. Paisley is the other piece—a low-capital business that should drive earnings over time and give us an independent revenue stream to help propel us back to profitability over time. When the macro subsides, the plan should produce; early signs show it is producing, masked by macro headwinds. Analyst: Brandon Oglenski, Barclays: I appreciate that. And Ursula, as you think about capital needs, is taking potentially more debt the right path here as well? Ursula Hurley: I’m cognizant that the balance sheet isn’t where we want it to be; it’s been strained post-COVID. Our number one priority is maintaining adequate liquidity to navigate volatile times. We acknowledge interest expense is material, so we don’t take debt raises lightly. We need to maintain our 17% to 20% liquidity target and be thoughtful. Our priorities are: positive operating margin, delivering free cash flow, and delevering the balance sheet. We’ll focus on execution and, if there’s risk we fall out of our 17% to 20% target in the back half, we will assess all markets—we have $6 billion of unencumbered assets—so we have flexibility in how we raise, on a go-forward basis. Operator: Your next question comes from the line of Atul Makharia with UBS. Please go ahead. Analyst: Atul Makharia, UBS: Good morning. Thanks for taking my question. I want to circle back on the second quarter recapture rate of 30% to 40%. It seems a little lower than some larger peers who are about 10 points ahead on recapture. Your booking curve is probably shorter than theirs since you have more domestic business, implying more of 2Q would be booked at higher fares for you. Any color on why the lower recapture rate versus legacy peers would be helpful. And as my second question, on the capital raise plan—the $750 million in total—what fuel recapture and demand scenarios did you use to come up with that number? Just trying to assess whether you might need to raise more capital later in the year. Marty St. George: Thinking about what we heard on other calls, I don’t think we’re dramatically lower. Recapture rate is different at different fare levels. A big focus of Jet Forward is improving penetration in the premium market. Airlines selling $6,000 business class fares to Asia may have a different recapture profile than we do. That will get better as we finish Jet Forward over the next 18 months. Our internal calculations and timing—late 2026 or early 2027 for 100%—are similar to what we’ve heard from others. If there’s a slight difference, it may be premium and corporate mix, which we’re addressing through Jet Forward and first class launching at the end of the year. Ursula Hurley: At the highest level, our original 2026 budget assumed Brent at $63. Clearly, we’re in a severely elevated environment. The original budget assumed we would raise $500 million this year to maintain our 17% to 20% liquidity target, so we locked that in. We have an accordion for an incremental $250 million. It’s too early to tell, given the volatility of oil in the back half, what the impact will be—part of why we pulled full-year guidance. We will assess as we progress if we need to raise more liquidity to maintain that 17% to 20% target. We are planning for multiple scenarios at different fuel prices and maintaining flexibility to time transactions and leverage our unencumbered asset base in the most favorable way possible. Operator: Your next question comes from the line of Chris Stathoulopoulos with SIG. Please go ahead. Analyst: Chris Stathoulopoulos, SIG: Good morning, everyone. I’ll keep it to one. As we think about response to demand elasticity or potential demand destruction, could you frame potential resiliency around yields? You have Blue House JFK and Boston, domestic first class, Blue Sky. Could you speak to that in a scenario where we start to see pushback from more price-sensitive travelers—how you think about yield resiliency? Joanna Garrity: First and foremost, we’re not seeing meaningful elasticity. Demand is strong across the booking curve. We are focused on yields, consistent with broader industry trends. Load factor is holding up well, and we are cutting flights that don’t make economic sense in the current fuel environment. Our VFR customers are an extremely resilient part of the franchise. We’re also increasing premium share—which is more resilient when inflation goes up—through domestic first and Even More Space, where we’ve seen nice progress. Fort Lauderdale growth targets the largest, more premium market in Florida. We’re happy with our focus on more resilient customers. Inherently, our model has a strong VFR component—loyal customers traveling to see family and friends—who are quite resilient. Marty St. George: We’ve already taken action to reduce capacity in the second half. When we hit windows of making significant cost commitments, we’ll relook at the demand environment. If it makes sense to pull additional capacity, we will. Our number one goal is to get our performance back where we want it, and being flexible on capacity is an important part. Operator: Your next question comes from the line of Catherine O’Brien with Goldman Sachs. Please go ahead. Analyst: Catherine O’Brien, Goldman Sachs: Hey, good morning. You noted a strong 45% increase in credit card acquisitions, and it sounds like Blue House is a driver. Can you give color on how much the JetBlue Premier card growth was within that? And is there a notable difference in annual spend between the Premier card and some of your other cards? And then for Ursula, with suspended full-year guidance and multiple moving pieces, based on capacity cuts versus the original plan and 1Q actuals, it looks like capacity will be up low single digits as of now. If that’s correct, is it reasonable to assume that on low single-digit capacity growth, your CASM ex would be mid-single-digit range for the year based on your commentary on the relationship between capacity and CASM? Anything to be aware of on cadence over 3Q and 4Q? Marty St. George: Hey Katie, a couple of things. We only lapped the Premier card in the first quarter, so for half the quarter there was no base to compare to. For the first year, we put what I’d call a prudent forecast in, knowing the lounge wasn’t open until later in the year, and we significantly exceeded that. The 45%—the Premier account is a contributor, but a lot of that is the base card we offer every day. The secret sauce of Blue Sky is utility: the value of TrueBlue points dramatically changed when you could earn and burn anywhere in the world on the United network. Later this year, we will have full elite benefits between the two airlines as well—Mosaic 3 and 4 will have an experience on United similar to JetBlue. Our goal is that customers can go anywhere they want within TrueBlue, which we’ve not had for a while. The acceleration we’re seeing is without any change in approval rates; it’s just more interest in JetBlue. Also, our core customer base—New York, New Jersey, New England—is generally more affluent and high-spending, so spend going up on the base card is a huge positive, and better than what some competitors have discussed. Ursula Hurley: Thanks, Katie. The historical relationship between capacity and CASM ex-fuel still stands. If capacity is mid- to high-single digits, ex-fuel would be roughly flat. Your example of low single digit capacity growth implying mid-single digit CASM ex-fuel is in the ballpark. As mentioned, we expect CASM ex-fuel growth to moderate in the second half—over two points less in 2H versus 1H—based on what we know today, including pulling two to three points of capacity in 2H. All of this is dependent on the oil backdrop. If we get relief or further pressure, we will adjust capacity as necessary. The team has historically done a great job executing on controllable costs, and I’m confident we can get as close as possible to the prior guide given what we know today. Operator: Your next question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead. Analyst: Madison for Ravi Shanker, Morgan Stanley: Hi, thanks for taking the question. More color on international in light of potential fuel shortages in Europe and resource allocation across the company—is there an opportunity to cut back there, or do you need to defend the spots you have? Joanna Garrity: We serve eight countries in Europe. Our frequency this summer will be about 14 daily flights. It’s only 6% of our ASMs as we navigate through the summer, so exposure is small. There are supply concerns in Europe; we’re watching closely and working with A4A and peers to advocate for operating procedures to consume as much fuel as possible. We’re hopeful that long-haul flying will be more protected versus short haul. We’re engaged and involved, but exposure is minimal for us. Operator: Your next question comes from the line of John Godyn with Citigroup. Please go ahead. Analyst: John Godyn, Citigroup: Hey, thanks for taking my question. I want to better understand the philosophy behind capacity cuts in the back half. Great that you’re making changes in response to fuel. Across the board, companies have been reluctant to cut to levels that directly offset fuel. What is your guiding light as you contemplate 2% to 3% being appropriate and maybe the next cut behind it? Is it trying to get to 100% pass-through? It doesn’t seem to be free cash flow. It’s not margin neutrality. When you’re running scenarios, what output are you managing to? And just as a follow-up: the curve implies a large embedded tailwind by year-end. It seems like you could hit pass-through numbers you’re describing even if demand doesn’t improve—does that framework resonate? Marty St. George: Our goal is to maximize EBIT and free cash flow with the assets we have. To the extent we make decisions early, we can save more expenses. With the fuel price we’re assuming for the rest of the year and expected demand—especially in trough periods—it’s important to take action soon to maximize EBIT. I’ve seen more talk of capacity cuts than action elsewhere. We are taking action. Pre-war, our goal was positive operating margin this year; we’ve suspended that guidance, but our goal is to get as close as possible. Given the fuel curve, it would be imprudent to make decisions that aren’t profit-maximizing. We do have constraints with slot usage at JFK—this is a long-term asset, and we won’t risk slots. This is transitory; we expect to get back to normal. We’re very happy with Fort Lauderdale, so there will be fewer cuts there. With fuel up materially, there will be flights that are not cash contributors, and those flights have to go. On the curve implying a tailwind: we also wonder how realistic it is. When we hit windows for making cost commitments—like pilot bidding—we will re-evaluate the capacity plan. If the curve improves, maybe we put points back; if it worsens, we’ll pull more. It’s prudent business to maintain flexibility. Joanna Garrity: We will maintain as much flexibility as possible. If you could tell me where fuel will be in September, I could tell you closer to what capacity will look like. Given demand and our investments in Fort Lauderdale and New York slots, we want to be mindful but aggressive on capacity cuts if fuel remains highly elevated. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.