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

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Ursula Hurley: Good morning, Helane. We have a significant CapEx commitment this year. We have $1.3 billion. We also have approximately $130 million associated with the Spirit prepayment. And then in addition to that, we have regular scheduled debt payments. So it’s actually a pretty meaningful cash outflow this year. And given that, we’re pivoting our strategy to go from purchasing aircraft with cash to financing. So the intent is to fund the business, but also build a healthy cushion to help support the purchase and the integration of Spirit as well. So at this point in time, we’re not looking at potential debt paydowns. I would also note, our weighted average cost of debt is extremely competitive. And given where rates are today, we’re actually probably in a more beneficial place than paying down low-cost debt. So the answer to your question is no, we’re going to fund the business this year and prepare for the integration.

Helane Becker: That’s helpful. Thanks, Ursula.

Operator: Thank you. And the last question comes from Chris Stathoulopoulos at Susquehanna International Group. Please, go ahead.

Chris Stathoulopoulos: Good morning, everyone. So, Joanna or Ursula, on the capacity guide for 2023, could you break out the moving pieces there, so departure, stage engage? I know you spoke about utilization driving a big piece of that. And then it also sounds like, again, I think you said this on the — or you suggested this on your last call, but clearly calling it out this time is that, it sounds like the ASM guide for this year is essentially derisked as it relates to delays in aircraft. So am I interpreting that correctly?

Ursula Hurley: Sure, so maybe I’ll start. So the full year guide is 5.5% to 8.5% so midpoint of 7%. The majority of this, as I noted in my script, is driven by utilization. So utilization is going to be up compared to 2022 as well as 2019. As Joanna highlighted, utilization will not yet get back to 2019 levels, given we are planning conservatively. In relation to the aircraft deliveries that we’re taking this year, the planning assumption is 19. I’ll note, they’re very back weighted, so we take five in the first half of this year and then the remainder in the second half of this year. So my commentary in the script is even if some of those deliveries in the back half of this year end up slipping, we don’t view our full year capacity guidance at any risk.

So that’s generally how to think about the full year guide. In terms of gauge and stage, stage is coming down slightly on a full year basis year-over-year, and gauge is going up slightly on a year-over-year basis. So all-in-all, we feel extremely confident in the full year guide.

Chris Stathoulopoulos: Okay. Thank you. And then on my follow-up, again, Ursula or Joanna. So the planning more conservatively with respect to the scheduling, and you talked about flying out of points there, emphasizing where their crew base is and to drive operational stability integrity. So is this part of what the transition plan, if you will, for this year, or is this the new go-forward operating plan? And if so, and I think Robin was implying to this in the comment from two questions ago, contemplated with how you’re thinking about your long-term RASM and CASM ex-assumptions? Thank you.

Joanna Geraghty: Yes, so I’ll take it and then I’ll flip it to Dave on the RASM assumption. So this is contemplated in our longer-term planning view. Unless there is a step change in capabilities that we see within the airspace that we fly. Two-thirds of the delays in the US, in the national aerospace in the US are largely in JetBlue’s network. And so these planning assumptions contemplate that it stays relatively the same with like modest improvements, but nothing substantial because we just don’t see a step change in capabilities coming in the next few years. Dave, on the RASM?

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