JetBlue Airways Corporation (NASDAQ:JBLU) Q2 2024 Earnings Call Transcript

JetBlue Airways Corporation (NASDAQ:JBLU) Q2 2024 Earnings Call Transcript July 30, 2024

JetBlue Airways Corporation misses on earnings expectations. Reported EPS is $ EPS, expectations were $-0.16.

Operator: Good morning. My name is Brittany, and I would like to welcome everyone to the JetBlue Airways’ Second Quarter 2024 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 like to turn the call over to JetBlue’s Director of Investor Relations, Koosh Patel. Please go ahead, sir.

Koosh Patel: Thanks, Brittany. Good morning, everyone, and thanks for joining us for our second quarter 2024 earnings call. This morning, we initiated our earnings release and a 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 Geraghty, 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 third quarter and full year 2024 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 financial targets, our strategy, plans for future operations, and 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 provided in these statements. Please refer to our most recent earnings release as well as our fiscal year 2023 10-K and other filings for a more detailed discussion of 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 of corresponding GAAP measures, please refer to our earnings release, a copy of which is available at our website on sec.gov. And now I’d like to turn the call over to Joanna Geraghty, JetBlue’s CEO.

Joanna Geraghty: Thank you, Koosh. Good morning, everyone, and thanks for joining our second quarter 2024 earnings call… [Technical Difficulty]

Operator: Please stand by. We are experiencing a technical difficulty. Once again, we ask that you please stand by. And once again, we are experiencing a technical difficulty. We ask that you please continue to stand by.

Joanna Geraghty: Good morning. So, some technical difficulties. Apparently, our cost pillar is in full swing. We’ve only paid the phone bill for one of our conference rooms in the office. So, I will start over. Good morning, everyone, and thank you for joining our second quarter 2024 earnings call. I’m happy to report that we generated adjusted $34 million of pre-tax income for the second quarter. This performance would not be possible without our 23,000 crew members, and I would like to thank them for delivering a safe and reliable operation and for living our JetBlue values every day. Turning to Slide four for a few remarks on our second quarter performance. Our team has been hard at work ensuring we deliver the best experience for our customers over the busy summer travel season.

As part of our refocused long-term strategy, which I will touch on later in my remarks, we’ve made significant investments to improve our reliability and deliver more of our customers to their destinations on time despite summer challenges from weather and persistent air traffic control staffing issues. Though we still have room to improve, we are off to a solid start and for the first six months of the year, we’ve exceeded our 2023 performance for key operational metrics. This improvement helped us beat or exceed our second quarter guidance ranges. In addition to reliability, our second quarter performance was aided by continued strength in our premium product offerings with even more space unit revenue up double digits year-over-year. We are also pleased with the progress of our 300… [Technical difficulty] …realized approximately $140 million of top-line benefit in the first half of this year.

We also delivered strong progress from our cost savings programs in the second quarter, while fuel prices continued to moderate and as a result, we were able to keep costs low in order to generate a positive pre-tax profit for the quarter. Moving to Slides five through seven. As I mentioned last quarter, even as we were implementing these near-term performance improvement initiatives, our full new leadership team coalesced around refining our long-term strategy and we are now pleased to share additional details with you. With more announcements still to come in the second half of the year, our plan is rooted in thorough analysis of the near and longer-term competitive landscape as well as extensive customer research. As a result, we feel confident in our refocused strategy which we are calling JetForward and are confident it’s the right framework to position JetBlue for success.

JetForward at its core is a back-to-basics strategy to be loved and to be profitable again in order to deliver value to our customers, our crew members, and our owners. This framework is designed to enhance our inherent strengths and effectively overcome the current challenges of our business and industry. Our challenges are clear. The Pratt & Whitney engine-related aircraft groundings which are significantly impeding our growth rate and pressuring our profitability as well as industry-wide cost inflation and persistent air traffic control issues, all of which are headwinds we are working hard to overcome. At the end of the day, our revenue growth has not been enough to outpace our cost challenges and we need to fix that which is why the goal of our strategy is set a foundation to lead us back to generating positive operating margin in the near term and driving sustainable earnings over the long term.

We believe achieving these targets and executing on our strategy will be rooted in enhancing our strengths and focusing on what we can control. We have high-value geographies, a unique culture with a trusted brand, a low-cost structure, and a differentiated product and service that has set JetBlue apart from its peers, all of which we believe can be enhanced to drive even more value. And delivering that value is our ultimate goal. Turning to Slide 8, we expect JetForward to deliver an incremental $800 million to $900 million of EBIT contribution in 2027 versus year-end 2024, helping to guide our path back to sustained profitability. We expect to realize this benefit evenly over 2025 to 2027 with incremental upside beyond 2027 as several underlying initiatives ramp to their full potential.

The $800 million to $900 millions of EBIT contribution in 2027 is in addition to the $300 million of revenue initiatives we’ve already announced for 2024. We plan to turbocharge our strengths with four priority moves, which you can see on slide 9, all designed to drive our path forward. They are, number one, delivering reliable and caring service. Number two, building the best East Coast leisure network. Number three, offering products and perks that customers value. And number four, a secure financial future enabled by maintaining our cost advantage and restoring our balance sheet. These four moves may sound familiar, given we began actioning on them back in the first quarter, and we’ve already seen encouraging results from several underlying initiatives in the first half of the year.

In particular, our investments to deliver reliable service are showing early indications of driving value across the airline. Operational reliability is essential to the success of our strategy, and it’s a top priority for our customers. We’ve lagged our peers in on-time performance, partially driven by our high concentration of flying in some of the most crowded airspaces in the world and our outside exposure to air traffic control issues. While we are always working to improve on-time performance and recognizing the reality of our particular airspace, we are aiming to significantly improve our relative ranking in the coming years. This will be a multi-year initiative with many phases of investment, and we’ve already begun taking action on optimizing the operability of our fleet, delivering a reliable product and service, and providing a consistent customer experience.

Initiatives we rolled out this year include adding more scheduled time for maintenance, scheduling greater buffers for VFR flights, and introducing new tools such as automated turn tracking and enhanced customer facing self-service and disruption management tools. We expect that over time, these investments will improve customer satisfaction and save on costs, helping to contribute about $100 million of incremental EBIT in 2027. Next, we are refocusing our network to build the best East Coast leisure network. Our network sits in some of the most valuable geographies in the world. We have a leading position in three of the five largest markets on the East Coast, including New York City, which is the highest GDP producing metro area in the United States.

We’ve already taken significant action in the first half of the year to refocus our network around our core strengths in these geographies, leisure, VFR, and Transcon, especially along the East Coast and in Puerto Rico, where JetBlue is a household name for many customers. As we’ve emphasized, our actions are guided by our focus on profitability, and we expect these changes will drive close to $175 million of incremental EBIT contribution in 2027. Marty will provide more specifics on our actions. JetBlue has a long history as a beloved brand in our core geographies. Our attractive value proposition, offering an affordable yet differentiated experience, is well known by customers. We recognize that to be profitable and loved, we need to meet the evolving preferences of our customers, including an increased desire for premium experiences.

Our strategy is more focused than ever on offering customers the products and the perks they value today. We believe that delivering on that brand promise will also enable us to ensure our customers feel rewarded for their loyalty. This, in turn, would help us specifically expand our share of premium customers, customers who want a higher quality experience but may feel forgotten by our competitors. In addition to the product changes we’ve already implemented this year, including adding new loyalty partners and products and enhancing our Blue Basic offering, we plan to announce additional exciting improvements to our product later this year, so stay tuned. While the financial benefits of our product changes will take time to realize, we expect them to contribute over $400 million of incremental EBIT benefit in 2027, with additional upside into the remainder of the decade.

Finally, touching on our last priority move, a secure financial future. While we believe this will be an output of our efforts, we must also better manage what is in our control, and this starts with maintaining our cost advantage. It is imperative we keep our costs low so we can continue offering customers the most value when they fly. However, our Pratt & Whitney GTF engines continue to challenge our ability to plan our business over the long term, and we now expect aircraft on the ground to significantly increase in 2025. Ursula will provide more detail on this. In order to be profitable in this uncertain environment, we must transform our cost base in an aggressive manner, similar to the approach we’ve taken with our network changes. We’ll be biased towards action and making bold decisions required to get our business back to profitability, and through investments in data science and staffing optimization, we expect cost savings will contribute about $175 million worth of incremental EBIT through 2027.

Restoring our balance sheet health is also critical to a secure financial future and returning to profitable growth. We simply cannot continue to invest in capital-intensive assets that must be financed upon delivery and that are subsequently unable to produce a return because they have to be parked due to required maintenance and lengthy wait times. With that in mind, we’ve come to an agreement with Airbus to defer 44 A321neo aircraft, which are the fleet most impacted by the Pratt & Whitney GTF issues. This will reduce our upcoming capital expenditures by $3 billion, helping us to improve our free cash flow outlook and restore our balance sheet health. While many parts of our business will be evolving with JetForward, maintaining our unique culture is core to its success.

In the second quarter, we checked in with our entire organization through a poll survey, which showed a number of improvements that indicate crew members are optimistic about our refreshed strategy. Our people are critical to the execution of our strategy, and we will continue investing in them to ensure our success. As we navigate through the remainder of 2024 and beyond, you can expect a number of additional announcements that will help fill in the remaining gaps in our strategy. And we will regularly share updates on the progress towards our $800 million to $900 million EBIT target. With that, over to Marty, to provide more detail on our commercial progress.

Marty St. George: Thank you, Joanna. I would like to extend a thanks to our crew members for their service and dedication to JetBlue. The amount of change we’ve implemented in my first six months has been significant, and I appreciate crew members for supporting our rollout of JetForward. At the beginning of this year, we announced a package of initiatives that we expected to drive $300 million of incremental revenue in 2024. We are pleased with the progress of those initiatives thus far, and remain on track to achieve the $300 million this year. These initiatives captured an additional $100 million of revenue in the second quarter, and have now generated a total of $140 million of top-line benefit in the first half of 2024.

With JetForward, we will continue this high rate of activity and progress through 2027 and beyond. While the JetForward priority moves include the 2024 revenue initiatives, the $800 million to $900 million EBIT we expect JetForward to generate in 2025 to 2027 is entirely incremental to the $300 million we announced earlier this year. Refocusing our network is one of the key priority moves of JetForward. And as Joanna mentioned, we’ve made significant network changes this year in support of building the best East Coast leisure network, which we expect will drive about $175 million of incremental EBIT uplift between 2025 and 2027. So far in 2024, we’ve announced four tranches of network changes, collectively driving 15 Blue City closures and over 50 route closures and redeploys.

Every route and station needs earn its way into our network, and our push for profitability has lessened our patience for underperforming routes. Our focus now is squarely on what we call our core franchises. These have long been the profit engine for JetBlue, Leisure, VFR, and Transcon routes, to and from our core East Coast geographies that know and love JetBlue, like New York, New England, Florida, and Puerto Rico and the Caribbean. Our value proposition resonates well with customers in these geographies, given our long history serving those areas and deep entrenchment on the East Coast. Many of the changes we’ve made to our network are driven by the stronger recovery and quicker ramp of leisure travel. As a result, and specifically in New York, we’ve shifted capacity out of corporate-focused routes and into leisure and VFR routes.

In New England, we remain committed to being the number one value carrier, serving leisure and business customers alike, and continuing to grow our presence across the region. Across our other core geographies, such as Florida and the Caribbean, our strategy remains the same. We’ll continue to invest in high-value leisure destinations and expand our product offering to ensure our customer value proposition remains attractive to the full spectrum of leisure customers. For example, we recently announced adding a complimentary carry-on bag to our Blue Basic offering for travel beginning September 6. Our changes to Blue Basic have allowed us to remain competitive, and since launching about a month ago, we’ve seen promising early results. Not only is this a meaningful addition to the value proposition of our most affordable fare option, we believe it’s a necessary step on our path to profitability.

Stay tuned in 2024 for additional announcements on JetForward’s plan to offer more products and perks at our customers’ value, including enhancements to our premium offerings. Shifting to our second quarter performance on Slide 11. Second quarter capacity finished down 2.7%, higher than the midpoint of our revised guidance of down 3%. Completion factor was 98.8% for the quarter, one full point better than 2023, driven by our investments in reliability and better managing weather-related disruptions. Revenue was down 6.9%, meeting the midpoint of our revised guidance by about one point. This was supported by strength at our premium offerings, with even more space in RASM continuing to grow double digits, and mid-unit revenue growth up close single digits on about 30% more capacity.

We saw troughs performing slightly better than expectations, with peaks in line and in-month bookings improving over the course of the quarter. Unit revenues remain challenged in our Latin leisure markets, where industry supply increases continue to weigh in performance. However, as we look to the third quarter, we are optimistic about the capacity evolution we have seen take shape since the start of the year, as competitive capacity and our overlap markets has come down modestly and is now two points lower than the second quarter. As we predicted, it’s still elevated compared to demand growth, but it is coming more into balance. We are also taking self-help measures and reducing trough capacity to better match supply and demand. As we’ve optimized our network to focus more on our leisure geographies, our exposure to leisure travel has increased, prompting us to adjust capacity to a seasonality curve with more pronounced peaks and troughs than we’ve historically flown.

Accordingly, we’ve reduced trough flying throughout the second half of 2024. But most significantly in September, where we are scheduled to fly about 10% fewer ASMs year-over-year. We are also reducing aircraft utilization during peak months, as part of our efforts to improve reliability. As a result of these efforts, we expect third quarter capacity be down 6% to down 3% year-over-year. Our capacity contraction provides constructive backdrop for unit revenue to improve year-over-year. And we forecast year over year revenue growth to be down 5.5% to down 1.5% in the third quarter. At the midpoint of our ranges, we are expecting positive year-over-year RASM and healthy sequential improvement. We expect a unit revenue trajectory will be supported by competitive capacity improvements in our Latin leisure markets, the continued ramp of our revenue initiatives, and a lapping of the wind down of the Northeast Alliance in the third quarter of 2023.

For the full year, we expect revenue growth to be down 6% to down 4% on 5% to 2.5% less capacity. In closing, with JetForward, we built a solid strategic framework that we are focused on and excited about. And though we’ve seen initial improvements to our business as a result of the strategy, there is still work to do to deliver on our multi-year targets, including ensuring our crew members understand how pivotal they are to its success. Our product is not truly differentiated without the incredible service they provide our customers. And I want to thank them again for their service to JetBlue, especially as they support JetForward’s path to profitability. With that, over to you, Ursula.

Ursula Hurley: Thank you, Marty. And thanks again to our crew members for helping to deliver a profitable second quarter. We delivered on our targets this quarter with revenue beating the midpoint of our original and revised guidance ranges, and CASM outperforming the low end of our revised range, which was 0.5 point better than our original guidance. While we generated $34 million of adjusted pre-tax profit for the quarter, it won’t be enough to offset projected losses generated in the other three quarters, and we remain steadfast in our urgency to return to full year profitability. With JetForward, we are setting our financial priorities for the coming years, with the goal to restore profitability as soon as possible. A secure financial future, one of our four priority moves, is underpinned by sustaining our cost advantage, driving operating margin improvement, restoring our balance sheet health, and practicing capital discipline so we can generate positive free cash flow.

We are taking steps to achieve each of these priorities, and meeting our $800 million to $900 million EBIT target will be key to our strategy success and overcoming our challenges. Before I get into the details from the quarter, I want to provide an update on the status of our Pratt & Whitney GTF engines. We take full responsibility for addressing and overcoming challenges within our control, and we recognize the need to address and plan for even those outside of our control, like weather and ATC staffing. The magnitude and multitude of availability challenges we are experiencing with the GTF engine are something we are working hard to mitigate, but they continue to have a significant impact on our business and on our long term planning ability.

In addition to powder metal related inspections challenging our engine availability, we’ve experienced a number of other unscheduled engine maintenance visits that are resulting in GTF engines coming off wing much sooner than anticipated, some after just a year of flying. In fact, a majority of the 11 average aircraft grounded this year are due to inspections outside of powder metal. Based on the latest numbers provided by Pratt & Whitney, we are now expecting the average number of grounded aircraft in 2025 to be in the mid to high teen with greater uncertainty in 2026 and beyond. This will drive roughly flat year-over-year capacity in 2025. In order to reach flat growth, we’ll need to continue investing to extend the lives of our A320 fleet.

While it comes at a cost to buy out leases and extend the lives of aircraft, the return profile is more attractive than investing in new aircraft. At this stage, we simply can’t afford to continue taking delivery of costly new aircraft that may need to be parked due to engine availability issues, especially if we must raise financing to support these deliveries. Our focus going forward will be on driving greater returns from our existing asset base so we can improve our free cash flow outlook. As a result, we’ve come to an agreement with Airbus to defer 44 A321neo aircraft from our current order book to 2030 and beyond, reducing our 2025 to 2029 planned capital expenditures by approximately $3 billion, and reducing Airbus aircraft commitments over the next five years from $5.3 billion to approximately $2.3 billion.

This, along with the capital light extension of approximately 30 A320s, allows us to efficiently reduce our capital expenditures and get us closer to our free cash flow goals. Turning to the second quarter cost performance on Slide 13. Our investments in reliability resulted in solid operational performance, allowing us to complete more flights than planned and helping to spread our fixed costs over more capacity. Second quarter CASM ex fuel grew 3.7% year-over-year, beating our revised guidance midpoint by more than two points, driven by one point of incremental cost savings from our structural cost program, one point from completion of additional flights and operational efficiencies, and a timing shift of expenses to the second half of the year.

Our current cost savings programs are on track to hit our previously communicated targets of $175 million to $200 million for our structural cost program and $100 million of cost avoidance from our fleet modernization program. Our structural cost program realized an additional $45 million of benefit this quarter, resulting in cumulative realized benefits of $145 million. When this program hits full run rate, expected at the end of this year, we’ll transition our focus to a cost transformation program as part of JetForward, which I will touch on shortly. Through our fleet modernization program, we’ve avoided $83 million of costs to date due to continued optimization of engine maintenance. This program will continue until our E190s are fully retired in 2025.

We also benefited from the moderation of fuel prices over the quarter, as we saw an $0.18 decline in fuel prices between mid-April and the end of the quarter. We’ve remained opportunistic with our fuel hedging strategy, and as a result, we have entered into hedges for 20% of our volume in the third quarter and 20% in the fourth quarter. In the third quarter, we expect CASM ex fuel to grow 6% to 8%, primarily resulting from wage rate step-ups in our labor agreement, impacting CASM ex fuel by two points in each the third and fourth quarter, and a shift of expenses from the first half into the second half worth an additional half a point of impact to each quarter. Since we communicated our initial full-year CASM ex fuel guidance of up mid to high single digits in January, we’ve faced several headwinds, including the change in Pratt & Whitney compensation recognition, a reduction in scheduled trough capacity, and unplanned investments in the extension of our A320 fleet, all of which pressured our unit costs by 2.5 points for the full year.

Despite these challenges, we’ve solidly executed on our controllable costs, and we expect to maintain our guidance of up mid to high single digits with CASM ex fuel up 6.5% to 8.5%. Now, turning to Slide 14, as we implement our four priority moves, we believe sustaining our cost advantage, especially when faced with flat growth in 2025, is imperative to our success. It’s important we make transformational changes to the way we plan our business, and we’re taking it back to basics with our approach as we ask ourselves, how would we structure JetBlue today if we were just starting an airline. We will evaluate all cost categories, though we see specific opportunity in data science-driven planning optimization and better aligning our business to peaks and troughs.

The focus of our structural cost program has evolved over the years. Our 2018 program drove savings from business partner contracts while our current program focuses on enterprise-wide efficiencies. JetForward cost transformation will focus on implementing next-generation technology across the airline and we’ll continue to build on the learnings from our past structural cost programs to sustain our cost advantage and transform our cost structure. We forecast this transformation will add about $175 million to EBIT in 2027 through cost savings, and we look forward to revealing more of our long-term plan for cost over the next few quarters. Transitioning now to fleet and our balance sheet. Slide 15 provides an update on our fleet plans. In the second quarter, we took delivery of six aircraft, and we expect to take delivery of six aircraft in the third quarter, driving $365 million of forecasted CapEx for the third quarter.

For the full year, we plan to take a total of 27 deliveries and expect full year capital expenditures to remain around $1.6 billion. As announced this quarter, we are deferring 44 A321neos into 2030 and beyond that were previously scheduled to be delivered between 2025 and 2029. We now expect to take 60 deliveries during that timeframe, down from 104 previously with 56 of the remaining deliveries being A220. We continue to prioritize reinvesting in our current asset base and to date, have successfully extended the lives of 12 A320s of the 30 aircraft we have been evaluating. These aircraft will remain in our fleet and provide capacity backfill, particularly in 2025 when we expect the remaining E190s will officially leave the fleet and when Pratt & Whitney related availability challenges increase.

Moving to Slide 16, we ended the second quarter with $1.6 billion in liquidity, excluding our $600 million undrawn credit facility. Year-to-date, we have secured $1.3 billion in committed financing to support our capital expenditures. We continuously seek opportunities to strengthen our liquidity position in order to fund our CapEx needs for the next 12 to 18 months, refinance our short-term debt maturities, including addressing as quickly as possible our convertible notes that will become current in April of 2025 and to generally provide us with additional liquidity which will better position us to execute our strategy discussed today. An example of our strength and liquidity is the amendment and extension of our revolving credit facility, which will now mature in 2029.

In addition, we may opportunistically execute on future financing transactions, including in the capital and syndicated loan markets which may be structured to be secured by a portion of our unencumbered assets, which are currently valued at approximately $11 billion. Our most significant unencumbered asset is our customer loyalty program, which is valued at about half of our current unencumbered asset base. Of course, any future financings are subject to market conditions, and there is no guarantee we will be able to execute on them. Before I hand it back to Joanna to close out the call, I would emphasize how focused we are on making year-over-year margin improvement and getting back to positive operating margin again. Through JetForward, we believe we have a clear and actionable strategy to deliver $800 million to $900 millions of incremental EBIT in 2027 and a strong foundation off of which we can return to our historical earnings power.

Joanna, over to you.

Joanna Geraghty: Thank you, Ursula, and thank you all for joining us. I want to close by reiterating our commitment to building value for our owners, starting with a return to profitability. I’d like to thank the team for all of the good work behind the JetForward Plan. We have been and are taking aggressive action on every front, and strongly believe that the focus of our attention has to be on the execution of JetForward. Given this and coupled with the longer-term planning uncertainties from the Pratt & Whitney engine issues, we’ve decided to communicate more about our strategy now rather than hold an Investor Day in the fall. Our team is fully committed to ongoing outreach and two-way communication with all of you. And we look forward to continuing to discuss our plans as we roll out additional strategic initiatives through the remainder of the year.

With clarity on our path forward, we are energized and moving forward with resolve and determination. I’m incredibly confident in the outlook of our business as we turbocharge our strengths and execute on our four priority moves to return JetBlue to profitability and deliver for all of our stakeholders. Thank you. And with that, we will take your questions.

Q&A Session

Operator: [Operator Instructions] We will take our first question from Dan McKenzie with Seaport Global. Your line is now open.

Dan McKenzie : Good morning. Thanks guys. I guess first question is for Joanna. Setting aside the fourth quarter this year, so looking ahead to 2025 it looks like from JetForward in the $1 billion plus in initiatives, you’re most likely penciling in summer profitability. But is the punch line really that JetBlue can get to profitability in each of the quarters? Or is it just given the Pratt & Whitney challenges, is the goal simply to get to breakeven in the seasonally softer periods? So just — I’m not looking for a forecast. I’m just trying to get a sense of what’s aspirational versus realistic in the medium term here from where you sit?

Joanna Geraghty: Sure. Thanks, Dan. I appreciate the question. So maybe just headline, we are so focused on trying to get to profitability as soon as possible. We’ve actually kicked off our 2025 planning season earlier this year with a goal to build a plan that will deliver a breakeven operating margin for the full year of 2025. That said, it’s much thrilling the planning cycle to commit to that. We traditionally haven’t provided that kind of guidance so early, but we are very focused on trying to get there for next year. This obviously assumes sort of the mid- to high teens for Pratt & Whitney and a competitive macro backdrop, but that’s how we’re thinking about things for next year.

Dan McKenzie: Yes. Understood. Okay. And then given 11 parked aircraft each month, is there — can you share what the loss year-to-date is from the Pratt & Whitney issue or the challenges? And the reason I’m asking is I’m just trying to separate out the temporary earnings impediment to the story here versus the structural impediments to getting back to the financial targets.

Joanna Geraghty: Yes, it’s a great question. So we’re not going to break out specifically the Pratt & Whitney item. I can say it’s incredibly frustrating maybe even more so by I think some of the announcements RTX made yesterday. We are focused on trying to resolve the situation with Pratt & Whitney that reflects the nature of the damages that we’re experiencing. This is ultimately a transitory issue that should cycle through over the next few years, but we are entering a more impactful stage for JetBlue, hence the mid- to high teens. AOG count that we will have for 2025. It’s been challenging to forecast exactly what the AOG impact will be in outer years, which is why we’re not communicating any targets out that far. But we are taking, I think, all the necessary steps to try to mitigate as much as possible the impact of Pratt, whether that’s keeping older aircraft flying longer.

And some of the deferrals, frankly, that we’re doing will have a positive impact on our AOG count because these aircraft come and the engines are taken off within a year, 1.5 years. And so that’s not a particularly good use of capital. So it is ultimately a transitory issue, but it will be with us for the next several years.

Dan McKenzie: Okay. Thanks for time again.

Operator: We’ll take our next question from Mike Linenberg with Deutsche Bank. Your line is now open.

Mike Linenberg : I have a question for Marty and then Ursula. Marty, the comment that you made about — you talked about Mint RASM being up low single digits on — I think I heard 30% ASM growth. So the question is, who’s driving that? And sort of I’m asking that within the context of you indicating that you’re going to pivot away from corporate out of New York. I would think that you’d probably do carry a decent amount of price sensitive corporate. So can you square that with the success that you’re seeing right now with Mint?

Marty St. George: Sure, Mike. Thanks for the question. Here’s what I would say, I mean, first of all, yes, we — when we said we’re pivoting away from corporate, we will continue to carry corporate customers. There’s no walking away from the corporate market. I think the better way to describe it is we’re not really designing the network for corporate like we once did. And if you look at some of the changes we’ve made in New York, some of the routes we pulled, I think it’s very consistent with what we’ve seen as far as a slower recovery of corporate travel in New York. With respect to the — excuse me, with respect to the Mint results. I think it’s clear to say that the cabin on our airplanes may not look exactly like the cabin on some of the legacy airlines, we carry a lot of high-end leisure customers, both in the Transcon market and the European market.

And I think it’s — I think it is not up for debate. This is the best premium product that’s offered by U.S. flight carrier across Atlantic or Transcon. So we’ve attracted a lot of customers. And yes, we absolutely have business customers, especially in New York and we have a lot of high-end leisure too. So to a certain extent, I think the product speaks for itself, and that’s how customers are responding to it.

Mike Linenberg: Absolutely. And the numbers back it up. Ursula, just a question on the CapEx. The $3 billion, just looking at the new fleet plan, it does look like it’s back-end loaded. How should we think about how CapEx — it’s $1.6 billion this year what’s the right number for next year, knowing that just the movement with PDPs and the fact that the deferrals are for airplanes that come later in the decade. Is it a similar number? Is it just a little bit lower? I’m trying to get a sense of where that free cash — where cash flow could be next year? Thank you.

Ursula Hurley: Thanks for the question, Mike. So this year, we’ve got 27 deliveries and our CapEx is $1.6 billion. Next year, we actually only take 24 aircraft. So directionally, you should expect total CapEx to be a few hundred million lower year-over-year.

Mike Linenberg: Perfect. Thank you.

Operator: We’ll take our next question with Jamie Baker from JPMorgan. Your line is open.

Jamie Baker : Fair enough. How do we square the order deferral against your international ambitions? At a minimum, it suggests you won’t be making any major incremental push from here into Europe. Would it be fair to at least wonder if you intend a European retreat? Just trying to tie your transatlantic ambitions to the fleet changes?

Joanna Geraghty: Thanks, Jamie. Thanks, Jimmy Baker. It’s a great — it’s a great question. Sorry, I couldn’t help. So I think you should think of transatlantic as it’s done nicely this summer. We continue to optimize the transatlantic markets to reflect the seasonality of that geography. It’s an important part of the JetBlue network. We’re pleased with what it does seasonally and what it does as contributions to our loyalty program. Obviously, the deferrals for the XLR will have an impact on growth in that market, but it’s by no means a retreat. It’s a, I think, further, further learning how to best ensure that those routes are profitable and driving earnings for the business.

Jamie Baker: Excellent. I’ll take back or over any reference to bunny slopes, Joanna. And then for Marty, and this echoes a question I asked to Alaska. You cited even more space RASM being up double digits, I guess, two parts. One, how does that compare to prior quarters? Has there been a noticeable inflection? And second, relative to, I guess, Blue or Blue plus, what’s the approximate premium you collect on even more space, thanks in advance?

Marty St. George: Jamie, thanks. So first thing, this has been a medium-term trend as far as the performance of the RASM for even more space. Customers are very much responded to it, and they continue to find value in it. I think it’s worth noting that as we measure the RASM growth, we really talked about the incremental. The sort of the buy up over the core fare. As a reminder, we don’t sell the cabin, we sell it as an add-on. So the RASM is basically the incremental revenue from the upsell. So it’s sort of a little bit — we look at that revenue sort of decoupled from the core. And as far as the value of that product versus the core, I mean, it’s as of now, the way we sell it and that may change in the future. But as of now, the way we sell it, as an add-on, it’s still — there are still customers who are fundamentally buying into the JetBlue value proposition and just wanted to upgrade to get a little bit more.

And frankly, that’s very much what we’re seeing as far as Mint, too. I mean these are not all dramatically new customers for JetBlue. These are our current customers who are finding more value in the product offering that we have.

Jamie Baker: But does that change your total collected yield? Does it improve it by 10%? Does it improve it by 60%? Just order of magnitude there would be helpful.

Marty St. George: Actually, I don’t know that number exactly. So we get back to you on that one. It’s about 25%. The total premium cabins between Mint and even more cabins about 25% of ASMs. So you can almost sort of back into it, if you want, and I could do it now on the phone, but we’ll get back to you later, the numbers front.

Jamie Baker: No, no, no. I’ll see the floor to others. Thank you everybody.

Operator: We’ll take our next question from Savi Syth with Raymond James. Your line is open.

Savi Syth : Good morning. And just on the unit cost, the exit rate here is high, but I realize that there is some kind of timing issues and the capacity declining. How should we think about what type of trend we should expect in 2025 given capacity is flat, but you also have a lot of cost initiatives here?

Ursula Hurley: Yes. Thanks, Savi, for the question. So historically, when we were growing mid-to high single digits pre-COVID, we were targeting a flattish unit cost growth. And conceptually, if we’re not growing again next year, which we highlighted today on the call, you would target a mid-single-digit number. Clearly, with JetForward, we have aspirations to put a 2025 plan together that is hopefully even better than that.

Savi Syth: That’s helpful. I appreciate that, Ursula. And just following up on that business network change question. I was curious in terms of business demand today, what you were seeing. And with the network changes, do you expect it to account for less than that 20% of revenue that you saw historically? Or is it still around the same ballpark given that you’re retaining that business customer?

Marty St. George: Savi, this is Marty. Thanks for the question. I’ll take that one. The one number I will report is if you look at the contracted corporate customer business revenue, we’re still up, so I’d say, very high single digits. So it continues to grow. And I’d say frankly, with the retreat that we have been doing over the last three quarters at LaGuardia. I think that was a bit of a pleasant surprise for us because obviously, those are much higher business share markets when we flew those. So I think the trend continues. With respect to going forward, even if you look at some of the business routes, and I’ll pick one out just because it’s a great example of like Minneapolis, even though Minneapolis, Boston was a pretty strong business route, it was still — instead of 20% corporate, it was 25%, 30% corporate.

It was more corporate, but I guess I would say it was not more corporate enough, so to speak. So as far as 1,000 flights a day, I don’t think it’s going to dramatically move that number from where it is now.

Savi Syth: That’s helpful. Thank you.

Operator: We’ll take our next question from Duane Pfennigwerth with Evercore ISI. Your line is open.

Duane Pfennigwerth: Hey, thanks for the time. On the network benefits bucket that you expect cutting loss-making routes and increasing your East Coast focus, can you talk a little bit about how you increase your East Coast focus with constraints in the New York market? And then just given the timeline here, 2025 to 2027, why would it take very long to realize that? It seems like you could start to see some of those benefits in the second half of this year. So I guess, why aren’t those benefits dropping more quickly?

Joanna Geraghty: So maybe I’ll take it and I’ll throw it to Marty. So I think you have to look at what we’ve announced versus when these are effective. And we laid that out in the back of the earnings presentation, which shows exactly when some of these markets are closing. So there’s a large that closed in October. And I think this was some of the confusion on the last call where I think the announcements get confused with effective date. And so we’ll see full year run rate next year for all of the markets that we’ve announced so far. And I think it’s just a matter of understanding the timing of the announcements versus when this actually takes place.

Marty St. George: Yes. The only thing I’d add is as difficult as it is for us to make some of these decisions for closing markets and closing routes and the impact it has on our own crew members, which we do not take lightly. At the core, our goal is to move to profitability as quickly as we can. And frankly, we’re very excited about where we have moved airplanes to take advantage of opportunities right away, especially with our focus on the — being the best leisure airline in the East Coast. I think about the growth we’ve seen in places like obviously, Boston, which has always been a growth focus, but growth report into Providence, Bradley, opening up Islip, opening up Manchester. I think we are establishing ourselves even more so as the best leisure choice for our customers.

I’m not taking any victory laps right now as far as this network transformation. But I think we’re very, very optimistic about these moves. And yes, we are starting to see benefits. But as you’ll see in that chart that’s in the back of the deck, they do roll out. Some of them just happened last month, and they continue the rest of the year.

Duane Pfennigwerth: Thanks for that detail. And then just for my follow-up on the convert, how are you thinking about addressing that. I think you alluded to in basically financing options, but how are you thinking about addressing it and kind of your willingness to let that go current early next year? Thank you.

Ursula Hurley: Yes. So thanks for the question, Duane. We obviously have a healthy unencumbered asset base to the tune of $11 billion. About half of that is attributed to our loyalty program. So we’re currently assessing all markets and to see the most effective and the most constructive in terms of all-in cost of funding. We do not intend and to let the convert go current. So I mentioned in my prepared remarks, we’re opportunistically looking across markets.

Duane Pfennigwerth: Okay. Thank you.

Operator: We’ll take our next question from Conor Cunningham with Melius Research. Your line is open.

Conor Cunningham : Everyone, thank you. Marty, I was — you mentioned the strength in Mint and even more, but that kind of highlights just the core weakness that’s happening in the core cabin right now. There’s been a ton of discussion this quarter about overcapacity and all that stuff and not really around a demand problem. I’m just curious on how you view the current demand environment right now? Thank you.

Marty St. George: Conor, thanks for the question. First of all, with respect to the bigger question about the premium cabins versus the core coach cabin, my view is this is why we have a spectrum of customers who we carry in a spectrum of products. We’ve talked a little bit about our tier customer. We’ve done a ton of research in the last year or so trying to understand how the market has changed, and the market has clearly changed in 2024 versus what we saw in the world pre-COVID. And we’ve got a wide spectrum of customers who we carry. Well over half of our customers are 100% price sensitive, and they will go fly ULCC to save $5. And that is a big chunk of every airplane. But luckily, we have a lot of ASMs out there in the premium cabins and a lot of customers were buying up to Blue or higher fare products.

And to me, it’s a spectrum of everything we carry. With respect to the demand environment overall, I’d say if I look specifically at second quarter, in general, I’d say that the trough held up a little bit better than we expected. I think the peak performed as expected. I think the real news as far as what’s happening with demand is actually supply, which as we called out in the last earnings call, where supply has gotten a little bit misaligned with where demand was. And I said at the time, ultimately, water seeks its own level, and we will eventually have supply get back to more equilibrium. It has happened. We’ve made our own changes as far as where we move supply. We’ve seen other changes in the industry. And I think, ultimately, we all have owners and we all have the goal to be profitable.

So ultimately, things work out in the end when it comes to that.

Conor Cunningham: Okay. I appreciate that. And then you mentioned the GTF issue outside of the powder metal problem. I was hoping you could flesh out that comment a little bit more. Is it that the oil consumption issue that someone already mentioned? I was just curious, is that new? Or is that something new and it was just over — somewhat overshadowed by the powder metal problem that’s been out there for a while? Thank you.

Joanna Geraghty: Yes, I’ll take that. Yes, thanks. Sure. It’s nothing new. I mean, obviously, these engines have certain maintenance inspection cycles, various things trigger it. So while powder metal is ultimately what caused the significant challenges with throughput. So that’s what backed everything up. There are a number of other maintenance issues that we’re working through because it’s a new engine. And so that just exacerbates the situation with the shop capacity and then supply chain. I will say incredibly frustrating. We are working with Pratt on reaching a settlement that we believe reflects the extent of the impact to JetBlue, but it is definitely a frustrating situation. And that’s why I think going back to the deferrals, it makes a lot of sense to defer the 321 new aircraft, not just because it offsets our capital commitments in the near-term but also because nobody wants to take a brand new aircraft and then ground it after 1 year, 1.5 years.

Conor Cunningham: Appreciate it. Thank you.

Operator: We’ll take our next question from Scott Group with Wolfe Research. Your line is open.

Scott Group: Thanks, good morning. I want to ask a near-term one and then a longer-term one. So on the RASM front, so low single-digit increase this year, is that — I’m sorry, in Q3, is that sort of dependent on like a September inflection like other airlines have talked about? Or are you guys already there? So just sort of thoughts on like the cadence of RASM throughout the quarter and then any initial thoughts around Q4, if you have them.

Marty St. George: Scott, thanks for the question. And yes, I listened to the commentary from other carriers. I’m not sure I fully understand what they’re saying. Our view is we’re looking at the trends as they exist right now. We’ve got basically two-thirds of the third quarter on the books, but one-third not in the books as of today. And there’s no real inflection seen in there. I mean, frankly, I mentioned in my prepared remarks that we undertook a lot of self-help in September. I mean, our ASM was down 10% in September. And again, I think as investors, and frankly, as crew members and customers, we’ll be seeing more and more of that going forward as we pivot a little bit more towards leisure. We’re going to be much more respectful of not flying on productive flying during the trough. So my view is — I’d say September is better than it would have been, but it’s solely based on self-help. There’s no inflection in our forecast.

Scott Group: Okay. And then sort of a move at the Analyst Day, maybe I’ll ask a longer-term capacity one. So you guys are deferring planes. But at some point, the GTF issue gets better, right? So as you’ve got this like planning now out to ’27, I understand capacity is flat next year, but any thoughts on like the multiyear capacity outlook in this plan? And then ultimately, does this mean that free cash flow, do we inflect positive on free cash? Is it more likely ’26, ’27 than ’25? Do you have any thought there?

Joanna Geraghty: Yes. Maybe I’ll touch on capacity and then Ursula can touch on free cash flow. So we’ve gone out with flat capacity for next year. We’re not guiding beyond that. The Pratt & Whitney GTF issue is volatile. And we are working with them on forecasting. And obviously, we’re hopeful that there are improvements there, and we’re taking as many self-help measures as we can to try to offset that capacity impact, but we’re not in a position given all of the variables to guide to any kind of capacity or share any capacity projections out past 2025. On the free cash flow point, Ursula, you want to grab that?

Ursula Hurley: Yes. Listen, Scott, like priority number one is getting the business back to consistent profitability. Priority number two has been delivering positive free cash flow. I do believe that with the deferral that we announced today, it does start to lay the groundwork to help us get there. We’ve got to execute and we will execute on the $800 million to $900 million EBIT. And then obviously, you’ve got to layer in the macro backdrop assumptions. But ultimately, profitability and then free cash flow and that free cash flow will go to delevering the balance sheet.

Scott Group: Okay. Thank you.

Operator: We’ll take our next question from Brandon Oglenski with Barclays. Your line is open.

Brandon Oglenski: Good morning. Marty, I guess I want to come back to the 3Q RASM guide, though, because if I look at it, it appears maybe even unseasonably weak for you guys, and I know seasonality is hard to judge here post-pandemic. But I guess — and I hear you guys on when you announced route changes, but you have done a lot of network reconfiguration since June. And as you stated, you are pulling down trough capacity in September. So I guess, is it incremental softness you’re seeing in your markets even with these changes that have already been implemented?

Marty St. George: Brandon, thanks for the question. It’s funny. I don’t look at it as a soft guide. We do not look at this as like, oh, it’s something wrong in the third quarter. I think we guide based on what we’re seeing right now in the bookings. I think if you look at sort of sequentially, the past from second quarter to third quarter, I feel like we’re more or less on track to where we’ve been historically. We control what we can control and we control our capacity. We control our pricing. And then obviously, we want to deliver — we want crew members delivering a great experience every day. So my view is we’re fundamentally looking at this as a guide that we’re very happy with. I mean, obviously, we always want more, but we are positive year-over-year, which I think a lot of our competitors are not.

And from that perspective, I’m somewhat surprised with the question. I mean, I frankly, I’m — my take is we just — we’re putting our heads down and just moving forward with the path we’re following. I do want to stress again, if you look at that slide in the back of the deck, so many of these network changes are back loaded. So I would not attribute too much of the RASM in the third quarter to like big inflection from the network changes because it just takes longer than that.

Brandon Oglenski: Okay. I mean, Marty, maybe as a point of clarification, but I think it’s down a few points sequentially quarter-to-quarter. And I get it that it’s up year-on-year because you do have a pretty easy comp from last year. I guess that’s what we’re observing.

Marty St. George: Okay. Thank you.

Brandon Oglenski: And then Joanna, just — that’s fine. Joanna, I guess just on the bigger picture and maybe coming off to Scott’s question to us since we don’t have an Investor Day. We appreciate the outlook on 2027 EBIT improvement, the $800 million to $900 million. But I guess maybe looking backwards on structural cost improvement, even the revenue initiatives this year, they’ve only been able to offset so much of industry headwinds and macro, what have you. So can you give us a better idea of like the baseline, where do you expect to see the improvement from? Is this like a breakeven basis and then add $800 million to $900 million to it? Or how should investors think about that long-term?

Joanna Geraghty: Yes. So I would think about it in those trends. It’s a breakeven basis and add $800 million to $900 million to it. I think when you look at what we’ve done this year against a challenging first half, we were cycling against pent-up COVID demand and then elevated industry capacity, particularly in the Latin region. Much of what we did this year offset some of those challenges. And so as I think about the path forward, given the uncertainty with Pratt beyond 2025, while we would have loved to going out with longer-term targets, we’re just not in a position to do that. But really proud of what we’ve executed to so far, whether that’s the significant network adjustments, the preferred seating, changes at Blue Basic, deferral of the aircraft, all, I think, contributing to some nice momentum this year going into next year.

But the $800 million to $900 million, teams got to execute to that and everybody is focused on delivering those numbers over the next three years.

Brandon Oglenski: Thank you.

Operator: We’ll take our next question from Andrew Didora with Bank of America. Your line is open.

Andrew Didora : Hi, good morning everyone. Most of my questions have already been answered. But one conceptually for Marty. I guess we’ve heard a lot of other kind of domestic airlines speaking about growing their premium seats as well. So there’s certainly more capacity coming here. How do you think about some of this premium RASM growth that the industry has been seeing? How do you — do you think it gets competed away at all? How does JetBlue kind of stay away from that?

Marty St. George: Andrew, thanks for the question. It’s funny. We — obviously, with the results we’re seeing in our premium revenues, we’ve spent a lot of time looking at this market overall. And I think what — there are people who are attributing this to a sort of a post-COVID bump. Is this something that’s just a flash in the pan? We can go back and track this change back to the early teens. And we’ve sort of seen a persistent move since the early teens as far as more and more customers buying up. And frankly, I think that what we’re seeing is a longer-term segmentation of the market, where we’ve got a big chunk of customers who are like they’ll do anything for — to save $1 on a fare. We’ve got other customers who are willing to buy up to have a better experience.

And frankly, this is what excites me so much about the JetBlue business model is that this company has always been structured around customers who are willing to pay a little more to get a lot more. So from that perspective, I think we couldn’t be better positioned for this versus some of our competitors.

Andrew Didora: That’s all I have. Thank you.

Operator: We’ll take our next question from Tom Fitzgerald with TD Cowen. Your line is now open.

Tom Fitzgerald : Hi, everyone. Thanks very much for the time. Just a quick one for me. What’s the cadence of the E190s retirements for next year? And then would you talk just defining a little bit on the A220s, I think you’ve been operating those for about 3.5 years now. So just curious how you’re liking the asset? I mean, obviously, you’re keeping the deliveries, but any [indiscernible] problems, things like that? Thanks very much.

Marty St. George: Tom, it’s Marty. Thanks for the question. With respect to the 190s, we said publicly that they will be retired by the end of 2025, and that’s the cadence that we’re on right now. With respect to the 220, I think we are a very happy 220 customer. We have had some reliability issues, which we’ve heard from others in the industry and we share the same. Although the 220 does have GTF engines, it is not being affected nearly as much as the 320neo family is. So with respect to 220, we are very happy customers.

Ursula Hurley: Tom, and congrats on your role. And maybe just to put some numbers to it, we currently only have 22 E190s in the fleet. And I believe that will end this year 2024 with 15. And to Marty’s point, those 15 will be retired by the end of next year.

Tom Fitzgerald: Got it. Thanks very much, everyone.

Operator: We’ll take our next question from Stephen Trent with Citi. Your line is now open.

Stephen Trent: Good morning, everyone. And thanks very much for taking my question. I was intrigued to hear about — you mentioned the Latin overcapacity, but the big build out you guys have in Puerto Rico. Are you able to tell us whether the airport authority in San Juan give you guys any incentives in terms of volumes and maybe some discounts on airport fees and that kind of thing?

Joanna Geraghty: Yes, I’ll take that. So I’m really proud of the work around Puerto Rico, largest carrier there. Important part of our network, tremendous support from our crew members locally and the airport authority. We’re not going to get into what, if any, incentives or otherwise, we may or may not have gotten from the government or from the airport authority, but we have a long partnership with the community, with the airport authority. We’re excited to open a crew base for pilots and in flight as well down in that area and I think continue to be the carrier of choice in Puerto Rico for that community.

Stephen Trent: Okay. I understand, and I definitely appreciate that. And just one more very quick housekeeping question. Looking at your full year ASM guide in 3Q. And I thought I heard Marty say September ASMs are already down 10%. Is it sort of unreasonable to consider 4Q ASMs the implication down somewhere in the low teens? Or am I thinking about that the wrong way? Thank you.

Ursula Hurley: No.

Marty St. George: No, no, no. They’re not down. I don’t have the exact numbers.

Ursula Hurley: They’re not down low teens. Mid-single digits down.

Stephen Trent: Very helpful. I wanted to make sure. It looks like I was not thinking about that correctly. So appreciate that. Thank you.

Ursula Hurley: No problem.

Operator: And we’ll take our final question from Chris Stathoulopoulos from Susquehanna International Group. Your line is open.

Chris Stathoulopoulos : Thank you. Good morning, everyone. I just want to say Joanna, Ursula, Marty and team, the urgency and focus here is clearly evident, and so congrats on this plan. The $400 million in EBIT here, I realize that there is more to come here, but given that you’re not holding an Investor Day and there are more Blue dots on the map here relative to the other initiatives. At a high level, should we think about this as more additive or a wholesale change? So for example, rebranding or introduction of a new fare class. And then also, I don’t think I heard you discuss any initiatives around vacation packages and products.

Joanna Geraghty: I can take that. It’s great. So to be clear, the blue dots do not reflect specific initiatives. They are illustrative only. I assume you’re referring to the $400 million in products and perks that consists of a number of things. I’d say some of which build on what we’ve already announced around Blue Basic and preferred seating, but the majority of which are actually new initiatives. And they cover everything from gaps in our product offering to things like a new revenue management system to enhancements in our loyalty program and continued deepening of the offerings we have for JetBlue Travel Products, which remains a very important part of the business and one which we think will be a significant driver in the JetForward plan to creating an even greater level of stickiness with our leisure customers.

Ursula Hurley: And I would just reiterate, Chris that the $400 million includes initiatives that we haven’t yet announced. But you will hear more as we progress through the year.

Chris Stathoulopoulos: Right. Okay. And my second — so on the competitive overlap and the route exits that you’ve done year-to-date, you’ve outlined some of those in the slides, in the appendix, thank you. Are we done here as we think about year-end? And so for those that want to do this analysis, if at year-end or early next year, if we were to rank order your routes based on RASM, should we expect at that point, for example, first and second quartiles based on RASM to account for the majority of your routes. So meaning two-thirds or perhaps closer to 70%, 75%. Just wanted to understand, as you talked about, Marty, you talked about getting back to your core focus no longer accepting routes that meet your profitability standards, how we should sort of ultimately see that shake out on the Form 41 data?

Joanna Geraghty: Yes. Maybe I’ll take the higher level one, and I’ll throw it to Marty for a bit more detail. So in terms of whether we’re done with network announcements, I don’t think you’re ever done. At the end of the day, we need to make sure that the network and where demand is, reflects that we’re driving as much profitability as possible. I’d say we’ve made a large number, the most actually ever in our history. We may have some more modest ones to come, but you should not expect this level of network changes kind of ongoing. Marty, do you want to take the second part?

Marty St. George: Yes. Thanks, Chris. I mean my view is the — there’s a lot of science in network planning. And we obviously have force ranked the entire network as far as RASM as the producers right now and also what we see the upside to be. And then we compare that to what the growth opportunities are. I think the good news is, as we’ve laid out the pillar of having the best East Coast leisure network, we have a lot of growth opportunities in that world. I think what’s very good is that we’re not talking about busting into a new territory and building a hub in Kansas City or something like that. I mean, we’re fundamentally looking at coming back to the bread and butter of the big East Coast markets that we’re focused on. So from that perspective, we see a lot of really good opportunities for growth.

At the same time, we — I think we did the math last night. Some number over 40 airplanes had been canceled and redeployed in the last three or four months on an active fleet of 270, 280, something like that. So it’s a lot of change at the same time. You have noticed and you’ll see again in that last page, that page in the back of the deck. We have sort of phased things out, mostly based on change in the slot portfolio, seasonality, things like that. It is a very, very deliberate process. But absolutely, yes. The roots at the bottom of that force ranking that we don’t see upside in are the ones that have gone away. Again, I think it’s important to go back to Joanna’s point, the majority of the changes have happened, but it never ever ends.

Chris Stathoulopoulos: Okay. Thank you.

Operator: Thank you. I’ll turn the call back over to Koosh Patel for any additional or closing remarks.

Koosh Patel: That concludes our second quarter 2024 conference call. Thanks for joining us, and have a great day.

Operator: And again, that will conclude today’s conference. Thank you for your participation. You may disconnect at any time.