JetBlue Airways Corporation (NASDAQ:JBLU) Q4 2022 Earnings Call Transcript

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And we’ve got a pretty good understanding of the sequencing of decisions and what decisions we need to take, when to make this process as efficient as we can. So, overall, it’s early. There’s a lot of wood to chop, but I couldn’t be more pleased with the start that we’ve made. And the partnership between the JetBlue and Spirit teams has just been excellent.

Duane Pfennigwerth: Okay. Thank you, very much.

Operator: Thank you. Next question comes from Conor Cunningham at Melius Research. Please go ahead.

Conor Cunningham: Hi everyone. Thank you for the time. Just on Duane’s question on fuel. I’m just curious, 40% of your fuel, I think, has historically been sourced in New York and that market’s been particularly volatile recently. And I think there may be some more volatility coming up. There’s a refinery going offline. I’m just curious, if you’ve thought about how you may source fuel differently in the future. Or is that — is it just a function of where you’re flying out of mostly in ?

Ursula Hurley: Yes. Thanks for the question, Conor. You’re extremely correct in terms of the volatility has been pretty significant. Historically, New York Harbor has ranged anywhere from $0.07 to $0.08. And just here, last year, the average was about $0.48, and in January, we’re sitting at about $0.53. So we actually go through an annual tender process, whereby which we determine which markets and which lines and indexes to purchase fuel on. So there is a potential opportunity for us to shift, if it’s cost effective, some of our purchasing off of New York Harbor, just given that it continues to be extremely volatile. So we do go through an annual process and we’ll evaluate that mid-year.

Conor Cunningham : Okay. Hopefully, it didn’t add too much work for Joe. Just on the cost cadence throughout the year. When we think about — I’m just trying to figure out if there’s any lumpiness in maybe your maintenance schedules or anything like that. Like does it — is it pretty smooth throughout the year? And then is there an offset from the structural cost program that kind of matches up with a lot of that, so it’s, again, like a smooth CASM ex profile? And then just thinking about the exit rate there. Like why — I mean, assuming that not taking account of your pilot deal, but just like assuming how that would trend throughout the year as you think about it into the fourth quarter. I realize there’s a lot there, but if you could just provide some context on it. Thank you.

Ursula Hurley : I think that was about five different questions, Conor.

Conor Cunningham : Right.

Ursula Hurley : In regards to CASM ex in 2023, 1H versus 2H, there’s about a one point step-up in the second half of the year. And that’s driven by two factors. Number one, we do have a pilot CBA pay rate step-up in the fourth quarter. And we also have some lumpiness in regards to the timing of our maintenance spend, which is typical, right? So those are two items that are the main drivers in the one point increase between 1H and 2H. The structural cost program builds pretty consistently throughout the year. So by the end of the year, our intent is to achieve the $70 million in run rate savings. And there’s really not much lumpiness to that. Like I said, it’s pretty consistent between 1H and 2H.

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