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Good morning, my name is Rob. I would like to welcome everyone to the JetBlue Airways First 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, Koush Patel. Please go ahead, sir.

Thanks, Rob. Good morning, everyone, and thanks for joining us for our first quarter 2025 earnings call. This morning, we issued 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 will 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 second quarter and full year 2025 financial outlook and our future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational and financial targets, our business strategy, and plans for future operations, and the associated impacts on our business. All such forward-looking statements are subject to risks, uncertainties, and actual results may differ materially from those expressed or implied in these statements. Please refer to our most recent earnings release as well as our 2024 10-K and other filings for a more detailed discussion of risks and uncertainties that can cause 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 this call, and other than as may be required by law, we undertake no obligation to update this 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 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 on our website and on SEC.gov. And now I'd like to turn the call over to Joanna Geraghty, JetBlue's CEO.

Good morning, and thank you for joining JetBlue's first quarter 2025 earnings call. During the first quarter, we continued to make progress on JetForward, ran a strong operation, and efficiently managed costs. We have remained focused on controlling what we can and executing on our long-term strategy, while managing the challenges of an uncertain economic backdrop and weakened consumer sentiment. When we guided the first quarter back in January, we saw early indications of softening demand, which was incorporated into our RASM guidance at the time. I'm pleased that RASM for the quarter met our initial guidance. We also finished at the low end of our initial capacity range and firmly beat the midpoint of our CASM ex-fuel guidance, building on our consistent track record of executing on costs. The relatively strong booking trends we saw throughout January deteriorated into February and worsened further in March. As we look to the second half of the year, the outlook remains unpredictable, and given the macroeconomic uncertainty, we are not reaffirming our full-year guidance. We plan to provide a more meaningful update on our full-year expectations later in the year when we have better visibility. We are leaning into our experience successfully navigating the 2008 financial crisis and the COVID-19 pandemic to inform our immediate path ahead and take decisive action. Additionally, we are fully committed to executing our long-term strategy, JetForward, to drive necessary long-term transformational change to our business, and we are confident that this is the right plan. In the first quarter, we saw several proof points that JetForward is working. Turning to Page 4 of the earnings presentation, our efforts to deliver reliable and caring service have led to consistent year-over-year improvements in A14 over the last three quarters. In the first quarter of 2025, A14 was nearly four points better year-over-year, despite significant weather events across our network. We're proud to have entered 2025 with industry-leading net promoter score performance, and for the first quarter, NPS improved double digits year-over-year, marking the fourth consecutive quarter of year-over-year growth. NPS is a strong indicator of customer retention and brand loyalty, which will be important as we navigate through the uncertainty. Encouragingly, we are seeing reassuring signs that the premium segment is holding up better in the current environment, which supports the evolution of our product offering as part of JetForward. Initiatives under our product and perks priority move are advancing nicely, and Marty will go into greater detail on their progress. We've also seen early indications that our network changes are working in the northeast, particularly in markets where JetBlue already holds significant relevance. Lastly, we continue to make progress on our cost transformation program, and we expect savings to ramp during the second half of the year. While our strategy did contemplate a stable economic backdrop, the current macro environment does not change our ultimate goal, break even operating profitability and eventually a return to sustained profitability, which remain our north star. As a reminder, JetForward is a multi-year plan, and as we continue to make progress, we are also acting expeditiously to manage near-term uncertainty. We were the first carrier to make meaningful capacity adjustments in response to changes in the environment, pulling two and a half points of trough capacity from March and making early changes to April. Since then, we've executed similar reductions across the second quarter, and we'll continue to make adjustments to better match supply with demand throughout 2025. Simultaneously, we continue to evaluate all opportunities to reduce costs and return our focus to our core business. This includes efforts to limit discretionary spending and to reduce non-essential hiring. Additionally, in a lower-capacity environment, we also expect savings on maintenance. As we meaningfully adjust capacity to address economic conditions, we are committed to pulling all levers available to mitigate potential upward pressure on unit costs. The actions we are taking are intended to support our business amidst the current macro backdrop and build resiliency against a prolonged economic slowdown. In that scenario, the capital structure decisions we've made over the last 16 months have resulted in a more durable liquidity position to support the near-term demands of our business. Remember that in August of 2024, we raised over $3 billion of strategic financing, primarily backed by our loyalty program. As a result, our total liquidity at the end of 2024, excluding our $600 million revolver, was $3.9 billion, representing 42% of our trailing 12-month revenue, the strongest liquidity ratio in the industry. Last year, we also made the decision to defer $3 billion worth of CapEx, pushing out A321neo deliveries to the 2030s, as we focus on returning to profitability and generating free cash flow again. In addition to a durable liquidity position and a manageable horizon of spend commitments, we hold a healthy unencumbered asset base of more than $5 billion. This provides us with the financial flexibility and liquidity to weather a broad spectrum of economic outcomes. I am confident we have the right long-term strategic plan, and we are taking the appropriate steps to navigate what is ahead and position JetBlue to deliver long-term value for our shareholders. And to our crew members, thank you. Thank you for continuing to deliver a safe and reliable operation over the quarter. The improvements in our customer satisfaction course over a direct testament to the reliable and caring service you continue to provide. Over to Marty for an update on revenue trends and our outlook.

Thank you Joanna. And thank you as well to the best crew members in the industry. So, turning to Slide 7. In late January, we guided to what we were seeing at the time. January bookings were strong, but February and March bookings were showing signs of softness, particularly in the shoulders and troughs. We are pleased with the approach our team took to identify the evolving trends early and take action in response. We ended the quarter as the only airline with year-over-year unit revenue within initial guidance, and RASM increased 1.3% year-over-year on guidance of down 0.5% to up 3.5%. ASMs were down 4.3% year-over-year in the first quarter, within the range of our revised capacity guidance of down 5% to down 4%. During the quarter, peaks were relatively healthy, and unit revenues held up well compared to the troughs. Close-in demand, however, did not materialize at a similar rate to what we saw in the fourth quarter and in January, impacting all bookings, but more acutely affecting trough and shoulder flying. January and February troughs performed better than the trough following President's Day until Easter. And accordingly, we adjusted our network to better match supply to the trends we were seeing, cutting capacity across 20 different markets, centered on off-peak days of week during that period. We saw weakness across our domestic network. However, our international flying delivered relatively stronger performance year-over-year. Transatlantic RASM was up 28% year-over-year on 25% fewer ASMs, benefiting from seasonal optimization. The large majority of our transatlantic bookings come from U.S. point of sale, which has remained stable. Latin also performed relatively better than domestic. And while the region is lapping a weaker first quarter 2024, I am very pleased that unit revenues are up mid-single digits year-over-year. Premium also performed exceptionally well during the period. In late January, we launched our Enhanced EvenMore offering with solid early results, alongside continued year-over-year strength and preferred seeding, both meeting expectations despite customer volumes lower than initial plan. In the first quarter, Premium RASM, including Mint and EvenMore, outperformed Core RASM by high single digits. While other low-cost carriers are just now expanding into Premium, our customers have demonstrated strong demand for our Mint and EvenMore products for over a decade. And now, even in times of relative uncertainty, customers continue to display an appetite for Premium experiences. And the further expansion of Premium offerings is a significant component of our Product to Perks priority move within JetForward. Growing our loyalty program is another component of the JetForward plan. And during the quarter, loyalty revenues grew by 9%, bolstered by new partnerships, additional redemption opportunities, and the launch of our Premium co-branded credit card at the end of January. Our new Premium card is exceeding sign-up goals, a testament to the strength of our loyalty program and the value our customers place on our brand and our product. Co-brand spend also remained robust, up 7% for the quarter. To complement our Products and Perks, we are building the best East Coast leisure network. While our network adjustments are still in the early stages of ramp, we are beginning to see the initial benefits from new BlueCities, primarily secondary cities that are within the catchment area of our Northeast-focused cities. This further reinforces our decision to pursue growth in markets that know and love the JetBlue brand. As we refocus in our core markets, we also recognize the importance of providing customers with more utility for TrueBlue Points and greater connectivity. We are pleased to have announced earn and burn of TrueBlue Points with the Japan Airlines earlier this month. Furthermore, we have made good progress on discussions regarding a domestic airline partnership and are expecting an announcement at some point during the second quarter. In the first quarter, we made solid progress on JetForward and achieved our first quarter EBIT goal, further reinforcing that our plan is working. Our goals have not changed, and though some revenue initiatives may ramp slower due to capacity reductions, many priority moves, especially reliability and cost transformation, are insulated from the macro environment. JetForward remains crucial to building a more competitive and resilient JetBlue. As planned, we look forward to sharing a more detailed update during our second quarter call. Turning to the second quarter. We continue to see the current macro backdrop negatively impact consumer sentiment and travel demand, especially during off-peak travel periods, resulting in a wider spread between trough and peak unit revenues. Looking at March and April performance combined, RASM during peaks was up high single digits, while off-peak RASM declined double digits year-over-year. We saw a particular weakness in domestic markets and on days and times that are generally less attractive to customers. The second quarter's booking curve is more exposed to the uncertain macro environment and associated booking trends, and we expect unit revenues down between 7.5% and 3.5% in the quarter, and capacity down 3.5% to down 0.5%. We continue to manage aggressively our capacity based on the evolution of the demand environment, and the midpoint of our guidance has us flying nearly five point fewer ASMs in the second quarter than initially scheduled at the beginning of the year. We've made efforts to meaningfully reduce trough capacity, especially on Tuesdays and Wednesdays during the worst performing times of the day. We recently decided not to launch our Boston to Halifax Nova Scotia flight as planned, based on advanced booking versus expectations. This was a difficult decision, but we are acting swiftly to meet the demands of the environment. For example, we are reintroducing our Fort Lauderdale to Guayaquil Ecuador route, serving a VFR market with better performance. And as we move through the back half of the year, we will continue to demonstrate a bias towards action when contemplating capacity decisions. While the environment is challenging for top line growth right now, we do see encouraging signs that premium and international bookings are holding up better. TrueBlue member activity and premium related purchases now account for a large majority of our revenue, which creates a strong foundation and builds resiliency against a potential future downturn. Our network strategy continues to build upon the strengths, and our recent growth into regions with high loyalty penetration is producing margins above our system average. The changes we are making to our network, operation, and loyalty program build upon the already strong brand loyalty we have. In the first quarter, loyalty member engagement reached all-time highs, evidence of the enduring and growing strength of our brand. Even in difficult times, we are growing and strengthening our relationship with our customers and building the foundation of our long-term strategy. In closing, I want to reiterate that as we move throughout the year, we have a bias towards action, and we are urgently moving to address evolving trends with a focus on operating margin and cash generation. That said, we remain fully committed to our long-term strategic priorities. JetForward is essential to meeting the needs of our customers and crucial to our long-term success. We have made progress over the first quarter, and we look forward to providing a more thorough breakdown of initiatives during our second quarter call. Thank you, and now over to Ursula for an update on the balance sheet and cost outlook.

Thank you, Marty. Turning to Slide 9. The current macro backdrop remains fluid, but I am confident we are well positioned to weather a range of outcomes. As Joanna mentioned, when we raised funds last August, we had considered the need to provide JetForward the runway to execute, including better insulating our long-term strategy from macro volatility. In the process, we raised $3.2 billion in capital through a combination of loyalty-backed securities and unsecured convertible notes. The initial goals of this raise were threefold. First, we addressed our 2026 convertible note, which we paid down by $425 million, leaving a much more manageable $325 million outstanding due in April 2026. Second, we wanted to pre-fund 2024 and 2025 CapEx. And third, we sought to provide a liquidity runway for 2025 and into 2026 to support JetForward execution and build resiliency against macroeconomic uncertainty. As a result, JetBlue is currently well positioned with ample liquidity, excluding our $600 million undrawn revolver, liquidity at the end of 2024 represented 42% of trailing 12-month revenue, compared to 29% in the fourth quarter of 2007 at the onset of the financial crisis and just 16% in the fourth quarter of 2019 before COVID. Supplementing our strong liquidity position is a robust base of unencumbered assets valued at over $5 billion, primarily consisting of aircraft, engines, and slots, gates, and routes. If the recovery is prolonged, we believe we have the hard assets available to ensure financing flexibility. In 2024, we also took steps to amend our order book and delivery schedule to reduce cash outlay during our transformation. We deferred the majority of our A321neo deliveries to 2030 and beyond, pushing out $3 billion of capital expenditures in the process. In 2025, we now expect 21 deliveries from Airbus, 18 A220s, and three A321s. We had two A220s and one A321neo shift into 2026, and as a result, CapEx for the year is now expected to be about $1.3 billion. With respect to tariff, our aircraft are assembled in the U.S., Canada, and Europe using components from around the world. We do not expect a meaningful tariff impact in 2025, as most of our upcoming aircraft deliveries are assembled in the United States. We continue to evaluate the industry-wide tariff exposure outside of aircraft purchases, focusing on spare parts as well as repairs happening abroad. The situation is fluid, and we plan to be nimble in responding to the changing conditions in how and where we source. Our highly valuable fleet and unencumbered asset base are the biggest levers at our disposal to preserve cash, and given the current demand environment, we are actively exploring adjustments to our fleet plan. As we previously discussed, we have a number of A320 aircraft which we were planning to extend. They remain a great option for capacity planning flexibility, but we are currently reevaluating exactly how many of these aircraft will be extended. Additionally, as we are still on track to exit the E190 fleet at the end of this summer, which will provide incremental costs and maintenance savings. Through our fleet modernization program, we have avoided over a $100 million of costs to date and expect further cost avoidance in 2025. Looking ahead to our contractual obligations over the next three years, other than the $325 million remaining on our 0.5% convertible notes, we have no significant maturities beyond regular amortization and principal payments, reflecting a manageable level of upcoming cash outflows. Turning to Slide 10. In addition to our prudent balance sheet measures and cash preservation efforts, we recognize in this environment it is even more critical we meet our controllable cost goals. The first quarter marks the sixth consecutive quarter that we have met or beat our CASM ex-fuel guidance, and during the quarter we achieved year-over-year unit cost ex-fuel growth of 8.3% better than our initial guidance midpoint of 9%. Capacity reductions we actioned during the quarter pressured unit costs by about one point, but were offset by one point of cost savings from strong controllable cost execution and reliability-driven savings. We also had a little over a half a point of cost shift out of the quarter from the timing of maintenance events and other expenses. We still expect the first quarter to be the peak of year-over-year CASM ex-growth, and for the second quarter we expect CASM ex-fuel to grow 6.5% to 8.5% on capacity down 2% at the midpoint. It should continue moderating into the second half of the year as we lap last year's pilot step-up, the cadence of maintenance events declines, and our cost transformation program continues to ramp. This guidance does not contemplate any potential cost increases from tariff, and we continue to work tirelessly to adapt our cost structure to the macro environment and capacity adjustments. For the full year, while we are not reaffirming our prior cost guidance at this time, our model historically implied mid-single-digit CASM ex-fuel growth on flat year-over-year capacity growth. We are managing our business to this expectation, and we plan to pull all levers at our disposal to offset further potential capacity-related cost pressures. Joanna mentioned several of the cost levers we are working through. We've put in place programs to reduce spend and set targets for corporate budget reductions. We also continue to take steps to better match resources with our flying schedule, and in the first quarter, we implemented measures to better align pilot staffing with our evolving fleet mix and capacity, such as offering a successful early retirement program. In addition to these cost-saving efforts, we are actively working on a number of additional initiatives to optimize our cost structure and focus on our core business. Our cost reductions are intended to be thoughtful and targeted, and given the macro backdrop, we are being careful not to take broad stroke cuts that may jeopardize our ability to continue executing on JetForward. We are in the midst of repositioning JetBlue to deliver value throughout the cycle, and as such, we are continuing investments in high-return projects, and we remain focused on our long-term priorities. To that end, we continue progressing on our cost transformation through JetForward. As we mentioned on our fourth quarter call, savings this year are focused on technology-driven efficiencies in our operational and commercial functions, enhanced planning and sourcing strategies, and cross-functional fuel burn optimization efforts. As a reminder, our fuel hedging program has been opportunistic, and we currently do not have any fuel hedges in place. If fuel continues to moderate alongside suppressed revenue trends, we should fully benefit from the decline in crude prices. In the second quarter, we forecast fuel price per gallon to be $2.25 to $2.40. As we wrap up, one thing is clear. We're navigating uncertain times, but this isn't unfamiliar territory for us. We've faced challenges as a team before, and this time, we are equipped with JetForward to guide our near-term actions and long-term focus. In the first quarter, we saw results that demonstrate JetForward is working, and we remain confident that it will help us restore sustained profitability and deliver long-term value for our shareholders. At the same time, we have taken immediate steps to proactively navigate near-term uncertainty while ensuring JetBlue is prepared to manage through a potential downturn. We are focused on what we can control, and we'll pull all levers to manage through this unpredictable environment in support of our owners, crew members, and customers. Thank you. We will now take your questions. I'll turn it back over to Rob.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from a line of Duane Pfennigwerth from Evercore ISI. Your line is open.

Hey, thanks. Good morning. I wonder if you could just speak to when the change in bookings pattern really started, what adjustments you made to revenue management. Obviously, you're taking some capacity out as well, and how you would characterize bookings patterns now. Some others have spoken to stability. And I guess the most important, what are you assuming with respect to the rest of the quarter and a month like June specifically?

Hey, Duane. It's Marty. Thanks for the question. Let me go back to January. And it's funny, when we did our guide, we definitely had seen bookings slowing down in January. And frankly, when our competitors were guiding higher, we were looking at the data that we were seeing from AHRQ and other sources and thinking, I don't know what they're seeing because it doesn't look that great for us. So, we guided what we guided. We took a hit for it. It turned out we were right. I just want to mention that again. But as far as what we've seen in bookings, we've seen a couple of step-downs since then. And I think that's why we reacted so aggressively with capacity cuts. In February, we were cutting March capacity, and we cut to April capacity at the same time. And again, we've been pretty aggressive at reacting to the bookings we're seeing by pulling down capacity. I would say as far as where we are right now, we're probably three to four weeks at a plateau. And what we're guiding for the second quarter is based on the trends we're seeing today. So, we're not assuming recovery. We're not assuming a further step back. But in general, I think we've had a relative period of stability recently. Hopefully, this is a plateau that we'll count on for a while until we start bouncing back.

And if we just think about your focus origination areas, New York and Boston, do you think there's something going on with those geographies, or maybe it's more a competitive capacity situation for you in those geographies? Because I thought the message was that maybe some of that competitive build was moderating.

Yeah. It's a great question. And obviously, we dig into this in as much detail as we can. We start with the AHRQ data, which many airlines use, but not all, and many airlines are in it, but not all. But that clearly showed from the beginning that this seemed to be a bit of a Northeast-led slowdown of demand, more so than other parts of the country, by multiple points. Again, we like to triangulate with other data. We spent time with our bank partners at Barclays and with MasterCard, our network, and we've got some really, really great data from MasterCard. It is clearly showing that as far as the cut in air travel, it is very much focused on the Northeast, and to a lesser extent, the West Coast. So, I would not do something as simple as to say this is a red versus blue recession, or whatever you want to call it, but it does seem like the coast seems to be impacted a little bit more. Frankly, it's really what's driven our capacity strategy. As we mentioned, we've been pulling pretty aggressively our trough capacity, Tuesdays, Wednesdays, Saturday nights, in the Northeast. We just added some capacity in Fort Lauderdale with new frequencies in the Fort Lauderdale South, the Caribbean, and to Guayaquil. And frankly, we're going to do what we have to do to make adjustments like this. We just canceled, I think last week, the cancellation of Halifax, which I think in history of the company, we have never canceled a city before it opened. But I think of the trends we're seeing in U.S.-Canada demand, and more importantly, what we're seeing in the bookings on the airplane, it was not going to be a creative for us anytime soon, so we figured we'd better rip off the Band-Aid now and move forward.

I appreciate the thoughts, Marty.

Your next question comes from a line of Savi Syth from Raymond James. Your line is open.

Hey, good morning, everyone. I was wondering if you were able to provide a little bit of a range for the second half capacity outcomes, just maybe a realistic upper and lower bound, assuming the current environment continues.

Hey Savi. So, I’d say given -- we've got a couple of scenarios laid out as far as what we're expecting. I would not want to go as far as a guide and number for the year. We will certainly be measurably down from what we'd expected at the beginning of the year based on the trends we're seeing right now, but we're going to be very opportunistic based on the demands that we see. And frankly, I remain optimistic that this is a transitory situation that we're in right now. I've been through so many financial crisis and recessions before. This is different. It's an exogenous factor driving it, and I think that exogenous factor could change relatively quickly, so we're going to remain optimistic. And I think the best guidance I can give you is we will react to the demand we're seeing at the time. Airlines seem to have led it, and my hope is that as things change that airlines will lead us out of it.

That's helpful. Thanks, Marty. And then, you mentioned a domestic partner, Marty, that could be announced in 2Q. Could you remind us what that partnership brings to the table for JetBlue and when we can start to see benefits from such a partnership?

So, partnerships. I need to make sure I reserve my comments based on what we have said publicly. And what we have said is we are talking to multiple airlines about domestic partnerships. I think we're getting very close to making announcement, expecting to make the announcement this quarter. And as far as the benefits that we expect to offer to our customers, then the most important thing is, number one, a significantly higher network opportunity for earn and burn of TrueBlue Points, which we think greatly improves the utility of TrueBlue. And that means, for example, today if you are a customer in the Northeast and you love JetBlue for leisure, but twice a year you have to go to Omaha or Boise, these are places that you can't earn TrueBlue Points on now, and when the partnership goes forward, you will be able to. And the second thing is I'm really excited for just the overall broadening of the network opportunities, not just connectivity, but also just a sort of better opportunity to our customers to fly more places with more frequency. So as far as when the benefits could come, we do have a number in JetForward for partnerships. It is a number that does not assume a partnership of this size. As we said, we'll be updating the progress on JetForward in the next quarterly call. And if we do, assuming we do sign a deal or complete a deal and announce it, if we do need to update that number, we'll do that at the time. But we're really optimistic about what this means for our customers and obviously for our investors.

Thank you.

Your next question comes from a line of Jamie Baker from JP Morgan. Your line is open.

Hey, good morning Marty. So following up on that, my first question is, when you say domestic partnership, does that mean partnership with a domestic airline or providing domestic feed to a non-domestic airline? Given the Omaha example that you gave in response to Saudi, I suspect it's the former, but if I could just confirm that.

Sure. I mean, as a reminder, we already have 48 or 49 partnerships with international carriers at our focus cities…

Exactly.

This is a domestic airline with a larger network. So it's the former.

Okay. Thanks. And then I guess for Joanna, so every downturn, I always wonder which airline franchises might emerge potentially stronger on the other side. And I think United made some fair and accurate comments about Southwest being that airline in the past and harnessing the power of the downturn, all that kind of stuff, however you want to put it. So when I go down the list of U.S. airlines and I get to JetBlue, it's not readily apparent to me whether there might be any silver lining to the current environment. And that's not necessarily a bad thing at all. I guess my question to you is, what areas of your business or maybe the timing of certain initiatives, any aspects of JetForward that might be assisted in some way, shape or form by the downturn?

Yeah. Thanks for the question. I think we're extremely happy with how JetForward is performing. So I think we've got this great long-term strategy, and I want to emphasize long-term because we're not managing JetForward quarter to quarter. It's a long-term strategy that will get JetBlue back on the path to profitability. And then at the same time, we're taking closer in tactical actions to manage the underlying macro environment. So when I look at JetForward, it's the right strategy for JetBlue. It leans into our strengths. And as you look at early proof points, particularly around the first priority move, which is reliable and caring service, I could not be more proud with the progress that we're seeing there. And that's really a leading indicator. We've improved A14 every quarter since we've launched JetForward. We've improved NPS four consecutive quarters in a row. We are at the top of the industry. We're the most improved in the Wall Street Journal in industry leading. And so when you think about what matters most, your brand, customer, reoccurring customers coming back time and time again, these are very early indicators that, and the cost savings that flows from all of that, running a more on-time operation, these are very early indicators that JetForward is working. Then you get into the other pillars. So 20% of the network is currently in ramp. And you will see that continue throughout this year. Products and perks are meeting or exceeding our targets. Our EvenMore product that we launched back in January improved Net Promoter Score by 18 points. The premier card that we launched far surpassed our initial expectations in terms of sign-ups. Loyalty continues to ramp at 12% of our total revenue. We're beating costs six quarters in a row. So when you look at JetForward, it's aligned with the latest industry demand trends, premium, international. And then we've got strong liquidity to enable us to have some runway to execute JetForward, get our first-class product rolled out, but also navigate through some uncertain times. So I think the headline is we've got the right strategy for the long-term. It's working. Obviously, the macro backdrop is challenging, and it may delay some of the JetForward earnings. But these pillars are working. The strategy is working. And so we need a little runway to complete executing it. But at the end of the day, the brand, the product offerings, they're super strong. And that's what drives performance.

Okay. I appreciate the call. Thanks, Joanna. Thanks, Marty. Take care.

Your next question comes from a line of Michael Lindenberg from Deutsche Bank. Your line is open.

Oh, hey. Good morning. Hey, Ursula, I just I wanted to catch up with you on the Pratt & Whitney compensation situation. I think last quarter, you were kind enough to provide us what that headwind was. It was a couple points, I think, direct, and then there's an indirect impact. And that's been building. It does look like that we now have more airplanes on the ground than, say, what we were a year ago. What's the timing around potentially settling that? Is that something that it's better for you to settle it sooner, or does this go on for a few years? Because that margin underperformance, what it impacts you both on a revenue side, a cost side, I mean, it's a real albatross around your neck here. Where are we, and what's the game plan here?

Sure. Thanks for the question, Mike. So, first off, we previously told you guys that we would have the number of aircraft on the ground this year in the mid to high teens. We actually have seen improvement from Pratt & Whitney. So, today, we sit here, and we actually only have 10 aircraft on the ground. So, we have been pleased with the progress that we're seeing from Pratt operationally. So, there are three drivers to that improvement. First, engines are just staying on wing longer, so not having to go in the shop as soon as we anticipated. Number two, Pratt's supply chain is improving. And then, number three, the actual turn time once the engine goes into the shop is slightly improving. So, we're very pleased with the progress that we're seeing. Like, quite frankly, this is happening, we're getting aircraft back at a time when we don't necessarily need capacity. When we do get on the other side of this macro backdrop environment challenges, this will be a tailwind for JetBlue. And to your point, we previously highlighted in January that the Pratt & Whitney constraints that we're under is driving three points of margin degradation. So, again, that will be a tailwind in the future for JetBlue. In terms of the compensation, it continues to remain fluid with Pratt & Whitney. We continue to work with them. I don't have any updates on that today. We want to ensure that we get adequate compensation based on the challenges that we've been facing over the last few years.

Okay, but just to be clear, you're not booking any GTF-related compensation in your P&L right now. I'm only asking because many GTF-impacted operators are all booking it through their P&L. Is that right?

We do not have any Pratt & Whitney assumptions based into our full-year guidance for 2025. So, correct, we are not booking anything.

Okay, great. And then just a second, Marty, just new markets adding service into Guayaquil again. Given just the fact that this is a challenging year, should we expect to see any new dots on the route map this year? Or is all that now on hold because of the very unclear outlook?

You know, it's funny. Actually, no one's asking that question. I'm not sure if we say this stuff. There will be multiple new dots coming later in the year on the route map.

Okay, exciting.

Multiple could be two, but definitely more than one.

More than one. More than one. Good enough.

Your next question comes from a line of Tom Fitzgerald from TD Cowen. Your line is open.

Hey, everyone. Thanks so much for the time. I was just curious if the spread between Premium and core RASM, what your outlook for that is for 2Q and the rest of the year, do you expect that spread to widen?

Hey, Tom. Thanks for the question. So, it's a great question because, honestly, there are two important numbers there, which is what do we expect the coach RASM to do and what do we expect the Premium RASM to do. I think we continue to see progress on Premium RASM going up. We're mid-single digits and climbing right now as far as year-over-year growth in Premium RASM. Our hopes are that with the changes we're seeing in industry capacity and our capacity that coach RASM will continue to go up a little bit. So, I don't expect that gap to widen, but I'm hoping it's because of the bottom of the lower number. In other words, the back of the airplane RASM will continue to go up. So, I'll remain optimistic. We're taking a lot of action ourselves on capacity. Some of our second quarter capacity cuts went in last weekend, and you guys will see them in a couple of days. And, frankly, the industry overall seems to be reacting in a consistent way, which is when demand comes out, capacity comes out, and hopefully that will help shore up what we're seeing in the back of the airplane.

Okay. Thanks. That's really helpful, Marty. And then I'm just curious what you guys are seeing in the VFR markets versus beach markets in LATAM. We had one of the Mexican carriers and some other airlines have just talked about VFR demand being pretty depressed on transporters. So, just curious what you're seeing given your franchise. Thanks again for the time.

Hey, thanks, Tom. And, yeah, trust me, we watch this very closely. I think if you go back to 2008-2009, it was a VFR-led recovering. And, frankly, VFR, the line we use internally is no matter how bad things get, you always want to go see your mom. And we were concerned based on some of the stuff that's happening with foreign arrivals into the U.S. that we'd see that. We have not really seen any significant drops in our VFR traffic so far. So, we're cautiously optimistic that that market's holding up pretty well. Obviously, Puerto Rico is not an issue whatsoever, but, for markets like Jamaica, Dominican, if there were customers who were less likely to go back and forth, we'd just stop seeing it right now.

Your next question comes from a line of Daniel McKenzie from Seaport Global. Your line is open.

Oh, hey, good morning. Thanks, guys. Going back to the Pratt & Whitney overhang, what does your line of sight look like on AOGs in 2026? And, I guess, just given what you've highlighted, I'm wondering if you could be in a better situation next year.

Thanks for the question, Dan. Listen, the situation with Pratt is I don't want to get ahead of our skis. It's pretty fluent. While we are seeing some signs of improvement, we're still working through 2026 and beyond AOGs. So, more to come.

Understood. Okay. And then, bigger picture, the year's taking a turn for the worse. The question is, going back to a prior question on JetForward, the question here is whether there are aspects of JetForward that you could accelerate or bring forward. And it seems like the partnership is one of those areas. Or is it just as simple as things got bad really fast because of macro? And if we could just get rid of tariffs, things would get better really fast.

Yeah, I'll take that, Dan. You know, again, if we could read the tea leaves and tell you things will get better fast if tariffs go away, I think we'd be in a different industry. At the end of the day, I think JetForward's got a very clear set of initiatives, and we're always adding new ones and adjusting as we kind of move forward through the plan. But there's some that might produce early. There's some that might produce later. I think the partnership comment is a good one, which is we think there could be upside with the partnership, but we need to kind of finalize that and get that announced. Honestly, some of the initiatives, particularly around Net Promoter Score and A14, are actually ahead of plan, which is great because it shows that our brand is beloved and is resilient and making nice progress there. So, I think you could see some early wins there. As you look at some of the revenue initiatives, some of those are tied to volume, so they'll have a bit of a drag based upon the economy. But we're looking for ways to offset those and then continue to maintain a level of focus on cost. Loyalty remains very resilient. Revenue is up 9%. Co-brand spends up 7%. So, it's strong and growing, even in an environment where we're seeing air travel take a bit of a step back due to the macro climate. So, we've got a pretty diverse set of revenue streams that we didn't have back in ‘08 through premium and loyalty, and I think that'll continue to be the area where we see progress perhaps ahead of what we're seeing on the airline side due to the macro backdrop.

Thanks for the time, you guys.

Your next question comes from a line of Andrew Didora from Bank of America. Your line is open.

Hi, good morning, everyone. Ursula, just on the $1.3 billion of CapEx this year, I know you raised the liquidity in August, but do you still plan on using kind of current cash to fund this CapEx, or should we think about some other form of financing right now just to preserve certain cash levels?

Yeah, thanks for the question, Andrew. So, we have 21 deliveries this year. Three of them have already delivered, and we did pay for them in cash. Given our liquidity level and the strategic financing that we did last August, if the macro backdrop stays as is through the end of the year, I think we will feel comfortable with our projected year-end liquidity number. As a reminder, we tend to target about 20% liquidity as a percentage of trailing 12 months' revenue. If the macro backdrop deteriorates further, I think we will assess going back to the financing market to help finance the remaining deliveries that we have this year.

Okay, understood. And then, I know there's been questions with regards to the partnership, but just with regards to the American release last night with regards to the lawsuit, what does this relate to? Anything you can discuss on kind of the dollar amount they're claiming? Is it material? Anything you could provide there would be helpful. Thank you.

Yeah, so we can't say much, obviously. We pulled the same lawsuit from the docket that you pulled, and we haven't been served yet. But, what I will say since the court order that terminated the NEA, we've been working with American to wind down the remaining aspects. This is not an unexpected turn and part of just shrewing up any monies owed between the parties. And that's about all we can say at this point.

Understood. Thank you.

Your next question comes from the line of Catherine O'Brien from Goldman Sachs. Your line is open.

Good morning, everyone. Thanks for the time. So you spoke to a couple of cost actions you're taking that sound like they'll ramp as we move through the year, such as the pilot early retirement program. If there is further downside risk to the second half capacity outlook and capacity ends up being down year-over-year, should we think about CASM-ex being somewhere up in the high single digit range, given your comments around mid-single digit inflation on flat capacity, or could it be better than that based on what you've accomplished here to date?

Yeah, good morning, Katie. So in regards to controllable costs, extremely proud of the team. We have a really good track record. We've hit our controllable cost guide for six consecutive quarters. So I have the utmost confidence that the team will continue to deliver. You know, I did mention in my prepared remarks that, our model historically implies a mid-single digit CASM ex-fuel growth on flat capacity. Obviously, we withdrew our full year controllable cost guide this morning. However, our aspiration is to continue to work towards hitting that. We're taking action across the board. So we are obviously reducing capacity to better align with the demand backdrop that is and does put pressure on the cost side of the equation. But we're better aligning our resources to the new levels of capacity. We're reducing all discretionary spend. We've given our leaders cost targets above and beyond the 2025 plan. We're revisiting our fleet plan to assess the ROI on certain fleet investments. So we are actioning, and we will pull all levers that we need to in order to execute on the controllable cost guide. In terms of the sequencing throughout the year, 1H was always expected to be a higher controllable cost part of the year versus 2H. So we do have expectations that our jet forward cost transformation will continue to ramp up in the back half of the year and help contribute to our full year aspiration of the original controllable cost guide.

Got it. Thanks so much for that color, Ursula. Maybe one more on the domestic airline partnership. I know we'll have to stay tuned for the official announcement, but now we know you won't be pursuing the Northeast Alliance as American. I guess, what from that partnership did you learn did not work, and then how is that informing the new proposed partnership? Thanks.

Yeah, I think I'm going to take a hard pass on that. At the end of the day, we're going to be announcing another partner down the road, hopefully in this quarter, and excited to be doing that. We'll let the wind down of the NEA take place as it has been for the past couple of years. But we've been meeting with multiple carriers, and obviously the value that we think of regarding the partner we're announcing drives more for JetBlue than other carriers that may have been in those considerations then.

Fair enough. We'll wait and see. Thanks.

Your next question comes from a line of Brandon Oglenski from Barclays. Your line is open.

Hey, good morning, everyone, and thanks for taking the question. Maybe this one's for Marty or Ursula or maybe both, but Marty, can you talk to the off-peak challenges? Because I know we've heard that for a number of years now, not just at your airline, but others dealing with peak versus non-peak demand post-pandemic. And maybe the challenges that it presents, though, from a variable and fixed cost perspective, because if we're going to dial down utilization, then it throws off your labor efficiency and things like that. So how do you approach off-peak markets and off-peak flying right now?

Hey, Brandon, thanks. So, yeah I mean this is -- I think that every -- you've seen one flow down, you've seen one flow down. They all act differently, and I think they all need their own strategies. I will say this one, we have seen a much more aggressive aversion from peak, excuse me, from troughs than we've seen historically. So this has been a much more trough-adverse demand set than we've seen historically, and it's why we pulled so much trough capacity. I mean, fundamentally, our job is to put capacity where customers want to fly, and what we have seen during the peaks is that we have good demand, we have high RASM, and we'd like to fly the wings off the airplanes during the peaks to make sure that we satisfy that customer demand. But the demand of customers to fly in troughs, there's no upside to flying planes with 60, 70 people on them. I regret not being able to serve the customers who do want to fly in the troughs, but ultimately, it's a business, and our job is to make money. So we have been very, very aggressive with cutting trough capacity, and I think specifically, if you look at what we just said in the script about second quarter, we're down five points from the original guide. I mean, that is very, very heavily trough-focused, so it gives you an idea how much we pull troughs. I'll defer to Urs on the cost front.

Yeah. I mean, listen, we're trying to do this with as much advance notice as possible. I mean, to really capture some of the labor savings, we need like two to three months of notice. So the team is really working on 2H and trying to action further capacity pulls so we can capture as much labor savings as possible. In addition to that, I mean, we are obviously in the trough periods trying to continue to offer R&R programs across some of our work groups. We just executed the pilot early retirement, so we are pulling levers where we can in terms of right-sizing the workforce given the drastic capacity pulls.

Okay. I appreciate the response to both. And then Ursula, on maintenance costs, I think you said you should see some alleviation in cost pressure there as the year progresses, but maybe I misheard. Can you talk to that in the context of potentially extending or not extending some of your older A320s?

Yeah. Great question. So first off, our next generation technology engines, the GTF, those are all on flight hour agreements. So as we pull down capacity, naturally, those flight hours will shift to the right. And so the timing of some maintenance spend is going to continue to shift. The second component of the potential maintenance savings is we did anticipate keeping in the fleet 30 A320 aircraft. We are revisiting that decision. And they obviously need a certain level of investment, whether it be interiors or significant maintenance shop visits. So we are revisiting that decision in light of the capacity backdrop as well as just like cash preservation measures. So more to come on the results of that, but early indications is that we will not do the full 30 and we will scale back. So that will achieve some level of maintenance savings as well.

Thank you.

Your next question comes from a line of Ravi Shanker from Morgan Stanley. Your line is open.

Good morning, everyone. So Marty, a couple of follows from you. First, just on the trend by month, you said step down since January, but just want to confirm that you haven't seen much of a step down since the March update. And just also on the trough commentary, does it also mean that you're seeing peakier peaks? And is that potentially a RASM opportunity?

Hey, Ravi. Thanks for the question. First, as far as the trend, we clearly saw a step back in January. As we went into February, it got worse. I think March was the worst of the trough so far. Luckily, April had a nice peak, 10 to 12 days of peak in there, which helped a lot. And we really took advantage of that. And we had RASM up high single digits during that period. So when people really want to fly during the peak, they're there and we have service to them and we're getting good yields at that point. With respect to the opportunity going forward, it's funny. One of the questions that was mentioned earlier was change of revenue management strategy. And I did hear one of my competitors mention that, which I didn't fully understand when it was said, because the revenue management strategy is very much responsive to demand. And it is very clear that we're in a pattern now where the only time where we have the opportunity to take advantage is during the peak. So the team is very much focused on making sure that we're competitive in the peaks and that we're getting the revenue we can for customers who really want to fly during the peaks. But at the same time, we have very low fares during troughs. So I would love for some of those customers who want to fill in the troughs. It's just less of them seem to be doing that now than have been historically.

Understood. And then maybe as a follow up, I think you mentioned in your prepared remarks that you're seeing a solid step up in demand in secondary cities. Is that a little bit of a surprise given the macro, given this trough weakness, maybe even weakness at the low end of the market? Is that something you'd expect to see in this kind of case?

Yeah, it's funny. The examples we gave are, we sort of talked about internally, are Islip and Manchester. These are two cities where we've had requests for JetBlue to be there for many years. We had not been there. And frankly, two cities that had a very long history of low cost carrier service to Florida. And was a very formidable competitor. So I think we look at that respectfully and said, these markets are well established and there's an incumbent who customers love here. And we learned that they very quickly learned they love JetBlue, and we've been very happy with the book as you've seen in both cities. So from that perspective, it was a great reminder of the power of this brand. And I think going back to Joanna's comment earlier about how we're going into this recessionary type period and how we're going to come out. We've got incredible improvements in NPS. Our crew members are delivering a fantastic quality product. We have a fleet that's either new or being refurbished. I think we're really hitting our stride. And if you look at the value proposition that we have in an Islip or a Manchester or even an Albany versus a Southwest who's been there for 25 plus years, we have a fantastic value proposition. And I think customers are reacting to it. So I did in my remarks, thank the crew members for delivering a great product, but I can't thank them enough. I mean, we're actually killing it out there.

Very good. Thank you.

Your next question comes from a line of Scott Group from Wolfe Research. Your line is open.

Hey, thanks. Good morning. Marty, just quick follow up to that last question about, I think we're talking about, I guess, Easter, spring break, you had 10 days or so you had high single-digit RASM. Does that suggest that May and June RASM deteriorate relative like that to the midpoint of that 5.5% down guidance for the full quarter?

Well, I mean, I think if you look at our guide of second quarter versus first quarter, I think it sort of speaks for itself as far as how second quarter works on a relative basis. And I fundamentally recognize that, we had a tough first quarter. We also had a very good January. So, you know, it's been very, very choppy month by month. We do have a nice peak in May around Memorial Day. This year, the vacations in the Metro New York schools are getting out almost the very end of June, about a week later than it has been historically. So the stuff we watch extremely closely, again, we're a leisure airline. When kids are out of school is when we really make, sort of really make hay. So we watch it closely. But in general, it's a pretty troughy quarter this year.

Okay. And then just one follow up for Ursula. I know Marty said a comment earlier, hey, that we're not giving a full year guide, but the results are worse than we initially thought from like an earnings standpoint. I guess, is there a, what is the cash flow implications of that? Is there any way to like, think about like a cash, a range of cash burn we should expect this year? Or is it, is the things hit on a one for one basis of cash flow? Are there any offsets? Just trying to understand the puts and takes of cash flow.

So let me start with this, Scott, and I'm going to give it to Ursula. I mean, one thing I want to stress is, we recognize it is really important to get capacity out fast. And the quicker we get it out of our selling schedules, the quicker that we have the opportunity to get the cost out with our operating teams. So I own the first piece of that responsibility was making sure that we're moving fast on this one. And I'll leave it to Urs for the second half.

Yeah, listen, Scott. I mean, we didn't affirm our full year guide today. I mean, clearly we do have the 1.3 billion in capital expenditures this year. What I will say is, if the macro backdrop stays as is, I will still feel comfortable with our year-end liquidity. So as a reminder, we target the 20% trailing 12 months. We will be healthier than that. And so we're obviously watching it closely. We're trying, we discussed today a lot of the levers that we're looking to pull to mitigate the burn. So it's our number one priority is to reduce the burn and ensure that we continue to maintain a healthy balance of liquidity and unencumbered assets.

Thank you, guys.

Your next question comes from the line of Stephen Trent from Citigroup. Your line is open.

Good morning, everybody. And thanks for taking my question. I thought, I wasn't sure, but I heard you mentioned that when you were talking about RASM, for example, that LATAM was up mid-single digits year-on-year. I wasn't sure if you had any color regarding whether we could sort of bifurcate what's happening in Puerto Rico versus the rest of that region, for example. Are the trends much different or fairly similar?

I'd say the trend, and it's a good question to say, I think the trend in Puerto Rico is not quite as high. And that's mostly because there's a lot of competitive capacity coming in. But I will say at the same time, back to my comment about Iceland-Manchester, our value proposition is very, very, very good compared to our biggest competitor there. And they've been pretty aggressive in pulling out capacity, which I think is a testimony to the success we've had in that market. So, we remain really bullish on Puerto Rico. We've actually got an answer coming up hopefully relatively soon about another move in Puerto Rico. And it's a really, really important market for us. So I would say that I would not hold up Puerto Rico as an outlier as far as our Latin performance.

Great. I appreciate that, Marty. And just one really real quick follow-up. You've given very helpful color on capacity. And when we think about tariffs some of your competitors have sort of outright said that they would just not pay any tariffs. And I know you talked about U.S. production for the stuff you're sourcing. Are you sort of willing to draw the line on your tolerance for tariffs or lack thereof? Or it's something you feel that we can kick the can down the road to next year maybe?

Yeah, listen, we have 18 aircraft deliveries remaining. The vast majority of those are made in the U.S. We only have three aircraft that are coming from Germany. And we're essentially exploring all of our options on how to mitigate that impact. So more to come.

Okay. Thanks, Ursula. Appreciate that.

And your final question comes from the line of Tom Wadewitch from UBS. Your line is open.

Good morning. This is Atul Maheswari on for Tom Wadewitch. Thanks a lot for taking my question. Granted that the demand backdrop is less than ideal currently, but if we go by your second quarter guidance, it would seem that you'd continue to underperform relative to both domestic as well as the network peers. And this is despite all of the solid, great progress on JetForward. So the question really is, are all the gains from JetForward fully incremental? Or as a result of JetForward, maybe you're slipping in areas of the business not touched by JetForward. And that's what's showing up on the P&L on in your guidance with respect to your underperformance relative to your peers. So just some thoughts here would be helpful.

Hey, Atul. Thanks for the question. I will point you back just so you can flip open or flip to it while I'm talking at the Page 5 of the deck. Because we've laid out on Page 5 what we've actually captured in JetForward so far, I say in first quarter of ‘25 versus what we're laying out. So the JetForward is phasing in over a time period, and that's actually part of the guidance we laid out. I would say in general as far as underperformance. Absolutely, I would love to see a better progression from first quarter to second quarter. I think as we look at what we're hearing from the industry with respect to the drivers of demand right now, we're very much underexposed international. Currently, we're underexposed in premium, although that's going to get much better going forward when we issue the install of domestic first-class product. And from a business model perspective, we also have a lot of capacity to transition right now. Also mention that some of the demand challenges are being sort of heavier in the northeast than they are elsewhere. So my view is you play the cards you're dealt. The cards you're dealt are this is the business model as it is right now. It'll be much better if you enter JetForward. This is the demand environment we're in right now. What do we do about it? We address capacity as quick as we can. We get it up fast so that the entire team can get the cost out more aggressively so we can be cash flow positive as we pull things like this. None of this changes our long-term goal. We know that JetForward is the right plan to transition the company. We're making the progress we expect to make on it right now. Last time we reported, we said we're forwarding ahead. We sort of reiterated that today. We're in a great spot with respect to where we stand. I'd rather not be in the demand environment that we're in. I don't think anyone says otherwise as lying. This is not our preference. But I think we have the right tools to be successful and to move forward the plan as we laid it out.

That's helpful. And as a quick follow-up, can you give us some sense of what portion of May and June are booked at this point?

Yeah, May is like 70-something percent booked right now and June is just under 50. So we're pretty heavily booked at this point. And again, all built into the guide that we will perform at the levels we're seeing right now as far as bookings.

Understood. Thanks for that and good luck with the rest of the year.

Thank you.