Speaker 1: As then in your dad, speaking.
Speaker 2: From the day jet Blue launched more than two decades ago.
Speaker 2: It's cast itself as a refreshing alternative to legacy airlines.
Speaker 1: Hey hey, look out the window, world, maybe hey over.
Speaker 2: Jet Blue has become the sixth largest US carrier, and
Speaker 2: while it has ambitious plans to grow, it stayed true
Speaker 2: to its disruptive roots. One of the coolest things about
Speaker 2: jet Blue is that kind of startup spirit, right. That's
Speaker 2: a differentiator, the kind of the smallness of it in
Speaker 2: a sense, do you do you keep that as you
Speaker 2: grow bigger?
Speaker 3: It won't be easy. With twenty five thousand people today,
Speaker 3: you know, it's already HoTT than when it was a
Speaker 3: thousand that at the beginning.
Speaker 2: It helps to have leaders on board who've been there
Speaker 2: for the long haul, like cfo Ursula Hurley Well.
Speaker 3: Ursler joined Jet Blue as an intern.
Speaker 4: I came home for the summer and needed a summer
Speaker 4: job and Jet Blue, who at the time, I was
Speaker 4: like jet who, because Jet Blue was literally three years
Speaker 4: old back then, had posted summer internship at a university
Speaker 4: pot board. They gave me freight privileges and so I
Speaker 4: was allowed to fly across the country if there were
Speaker 4: seats available on any flight at any point in time.
Speaker 4: Now fast forward twenty years later, I haven't.
Speaker 2: Left working in financial roles across the company. She's developed
Speaker 2: a broad portfolio of skills and a unique depth of knowledge.
Speaker 3: I think curiosity is a great skill in business, particularly
Speaker 3: in our business, which is so challenging. US is not
Speaker 3: just a number CFO. Urse understands the whole business. When
Speaker 3: someone's in front of her asking for more money, US
Speaker 3: knows whether that's going to work or not, and she
Speaker 3: can ask the right questions and that's a great skill.
Speaker 2: A CEO who's made a name as an instigator and
Speaker 2: a CFO with passion and perspective will lead Jet Blue
Speaker 2: on the next leg of its journey.
Speaker 4: Robin has always been a very strong advocate of mine,
Speaker 4: and we collaborate together. There are times when we don't agree,
Speaker 4: there are times when we do agree, and I believe
Speaker 4: that that's healthy and we end up in a better
Speaker 4: position for Jet Blue. So there's puts in takes. We
Speaker 4: push back on each other. There are points in time
Speaker 4: where we need to take risks and we need to
Speaker 4: do those in a measured way, and so we try
Speaker 4: to be thoughtful about where we place our bets, and
Speaker 4: we do that in a responsible way in order to
Speaker 4: create a product offering that customers really value.
Speaker 2: As much as Jet Blue has grown, it's still fighting
Speaker 2: an uphill battle for market share. The big four airlines
Speaker 2: United American, Delta, and Southwest control most of US domestic
Speaker 2: passenger traffic.
Speaker 5: We have a two tier system where we have the
Speaker 5: haves and the have not. Seriously, you have four airlines
Speaker 5: that are about seventy two to seventy five percent market share.
Speaker 5: There's this enormous gap between four and five.
Speaker 2: In July twenty twenty two, Jet Blue agreed to purchase
Speaker 2: Spirit Airlines and a three point eight billion dollar deal.
Speaker 2: In March twenty twenty three, the US Department of Justice
Speaker 2: sued to block the merger on antitrust grounds. Until the
Speaker 2: core battle is resolved, the shape and scale of Jet
Speaker 2: Blue's future.
Speaker 6: Remains in limbo.
Speaker 2: So you have to, in a sense, make two plans
Speaker 2: and go along two paths until you know what the
Speaker 2: outcome is.
Speaker 6: How stressful is that and how does ursula help you?
Speaker 3: So our number one prior toy right now is to
Speaker 3: get the Spirit merger done. We think it's transformational for
Speaker 3: the industry. We think it's going to create a truly
Speaker 3: national lo fare, high quality airline to challenge the big
Speaker 3: So obviously Ursula has been really involved in that as
Speaker 3: early as last year, actually convincing Spirit shareholders to take
Speaker 3: out deal versus another inferior deal that was on the table,
Speaker 3: but also running the business day to day.
Speaker 2: How hard is it to deal with you forecasting and
Speaker 2: planning years out with two very different outcomes.
Speaker 4: Yeah, we have fantastic teams who are building plans for
Speaker 4: both scenarios. Right that the benefit of Spirit is it's
Speaker 4: going to allow us to turbocharge our organic growth plan
Speaker 4: if Spirit doesn't happen, which I feel very confident that
Speaker 4: it will, and we have opportunities that we can continue
Speaker 4: to implement in.
Speaker 6: Order to bring Jet Blue the Jet.
Speaker 4: Blue experience to more customers. So I'm excited in general
Speaker 4: about growth.
Speaker 2: Jet Blue's growth plan begins with modernizing and expanding its fleet,
Speaker 2: replacing older aircraft with Airbus A two twenties that add
Speaker 2: passenger capacity while increasing cost efficiency Airbus A three twenties
Speaker 2: to support long haul routes, but delivery delays caused by
Speaker 2: supply chain problems are proving to be headwinds.
Speaker 4: We will need to get creative on how we source
Speaker 4: airplanes in order to continue the Jet Blue growth trajectory.
Speaker 3: We have a very big order book of new airplanes,
Speaker 3: but they're all coming late. On top of that, there
Speaker 3: are some engine issues, and so we actually have airplanes
Speaker 3: on the ground today with no engines because there isn't
Speaker 3: enough engines to support them. I would say right now,
Speaker 3: that is the biggest inhibitor to that organic plan.
Speaker 2: A potential growth driver is the addition of transatlantic routes.
Speaker 2: Since twenty twenty one, Jet Blue has begun service to London,
Speaker 2: Paris and Amsterdam.
Speaker 3: It's still early days, right, It's still a relatively small
Speaker 3: part of our network, but it will grow.
Speaker 2: Leisure travel to Europe has spiked in twenty twenty three,
Speaker 2: with airlines adding capacity to meet demand that's far exceeded
Speaker 2: twenty nineteen levels. Jet blues global ex bansion has helped
Speaker 2: offset a decline in domestic passenger traffic.
Speaker 3: One of the benefits these large airlines have not only
Speaker 3: are they large, but they also have a lot of
Speaker 3: hedging due to the fact they fly to so many
Speaker 3: different markets. So we don't have that. You know, we're very,
Speaker 3: very focused on domestic and Caribbean and Latin America. The
Speaker 3: hedging I call it, or the having access to more
Speaker 3: geographic diversity will actually help us.
Speaker 4: So we are actually flying to Europe with the Airbus
Speaker 4: A three twenty one long range aircraft, so it's actually
Speaker 4: a narrow body aircraft. There is a way in which
Speaker 4: we can pivot that asset to more domestic flying if
Speaker 4: we have to, if the demand environment in Europe pools.
Speaker 2: Jet Blues revenues have bounced back from the troughs of COVID.
Speaker 2: The pandemic's long tail has created an uncomfortable new normal
Speaker 2: on the expense side.
Speaker 5: In general for the industry, revenues are back to twenty
Speaker 5: nineteen levels, but costs are over twenty nineteen levels by
Speaker 5: about eighteen or nineteen percent.
Speaker 4: We're operating in a very volatile environment, so Jet Blue
Speaker 4: has a very large presence here in New York, and
Speaker 4: there are air traffic control challenges, so we've had to
Speaker 4: over invest in hiring access crew members and building flexibility
Speaker 4: into our planning process. Over time, we hope to wean
Speaker 4: some of those investments back as the operating environment around
Speaker 4: us stabilizes.
Speaker 3: So I mean to give you an example, we have
Speaker 3: about one hundred million dollars more of reserve or standby
Speaker 3: pilots in twenty twenty three than we had in twenty
Speaker 3: nineteen just to fly the same schedule. Because the infrastructure
Speaker 3: is still more brittle.
Speaker 2: And pilot salaries are about to sort. New labor contracts
Speaker 2: are building in raises that will add significant labor costs
Speaker 2: to every airline's ledger. With a shortage of qualified pilots looming,
Speaker 2: their leverage would continue to grow.
Speaker 5: Hey, it's going up by thirty five to forty percent,
Speaker 5: which is insane. I've seen this movie before and this
Speaker 5: is not sustainable in my opinion.
Speaker 3: We've certainly seen since COVID know a lot more pilot attrition.
Speaker 3: We saw a lot of the time as during COVID,
Speaker 3: and that then created this kind of gap of pilot's
Speaker 3: once business return.
Speaker 1: The pilot shortage has been an issue for years, and
Speaker 1: I do believe we are on a I hate to
Speaker 1: use the term crash course for you know, even bigger
Speaker 1: issues in the future.
Speaker 5: Nobody has problems hiring, it's retaining that's the problem. The
Speaker 5: flight attendants are negotiating for contract and let's you know,
Speaker 5: just give them a smaller increase. I just look at
Speaker 5: all these costs that are going onto the industry and
Speaker 5: I don't see the revenue offset.
Speaker 2: The pressure is on Ursula Hurley's team to trim costs
Speaker 2: in an inflationary environment.
Speaker 6: We've committed to.
Speaker 4: Deliver O one hundred and fifty to two hundred million
Speaker 4: dollars in structural cost savings by the end of twenty
Speaker 4: twenty four.
Speaker 3: You know, it's a team effort, right as CFO, however capable,
Speaker 3: they are kind of do it all by themselves.
Speaker 6: You know.
Speaker 3: Part of it is to kind of bring the whole
Speaker 3: organization together. And I think you know, Ursules's strength, because
Speaker 3: she's worked here for so long, is that she knows how.
Speaker 2: To do that in a capital intensive industry. Rising interest
Speaker 2: rates are another concern.
Speaker 4: Liquidity is the lifeblood of an airline. We make very
Speaker 4: conservative decision making about when we raise funding and how
Speaker 4: we raise funding. We try to diversify our sources and
Speaker 4: we're always very focused on the actual rates and we
Speaker 4: like to build an inflexibility in these financing structures so
Speaker 4: that we can we have an opportunity to prepay debt
Speaker 4: when appropriate so that we can continue to optimize the
Speaker 4: overarching rates that we're paying.
Speaker 2: It's been a turbulent year for Jet Blue shares, one
Speaker 2: more example of the volatility that Ursula Hurley is determined
Speaker 2: to stabilize. You worked in investor relations on the way
Speaker 2: to this chair. As a result of that, are you
Speaker 2: extremely sensitive in terms of the stock price, in terms
Speaker 2: of analyst ratings?
Speaker 6: I am.
Speaker 4: I mean, that's the core of what I do and
Speaker 4: what my teams are responsible for. I probably checked the
Speaker 4: stock price way too many times a day. We have
Speaker 4: three stakeholders. We have our customers, we have our crew members,
Speaker 4: and we have our shareholders, and so those are the
Speaker 4: lenses that we look through when we make any type
Speaker 4: of decision, and so we need to be balanced. But
Speaker 4: at the end of the day, it's all about returning
Speaker 4: for our shareholders.
Speaker 2: Since Jet Blue began flying in February two thousand, the
Speaker 2: airline has prided itself on offering a high end customer
Speaker 2: experience at a moderate price. It pioneered a meddies like
Speaker 2: free Wi Fi on every flight and live TV at
Speaker 2: every seat. Airfares have risen in the last two years
Speaker 2: as demand has recovered, but Robin Hayes insists Jet Blues
Speaker 2: low cost philosophy will not change.
Speaker 3: People want low fares. Our model has always been offering
Speaker 3: low fares with great service to stimulate additional trips. I mean,
Speaker 3: I think given the pivot for the industry away from
Speaker 3: business travel to leisure travel, when you're talking about someone's
Speaker 3: leisure travel, you're not just competing with other airlines, right,
Speaker 3: You're competing with am I going to get a new car?
Speaker 3: So you're competing for a people's show of wallet. And
Speaker 3: I think what we have to do is make sure
Speaker 3: that travel is a compelling choice for people.
Speaker 2: A compelling travel experience starts well before a customer boards
Speaker 2: the aircraft. Ursula Hurley walked me through Terminal five at
Speaker 2: New York's John F. Kennedy Airport, where the complexity of
Speaker 2: the business she oversees really comes into focus.
Speaker 4: We operate one thousand flights a day, we serve over
Speaker 4: one hundred destinations, and we transport about forty million customers
Speaker 4: per year. When you think about a person booking a
Speaker 4: flight to getting them to their destination and home from
Speaker 4: their destination, it takes an army of things to go right.
Speaker 4: As we were coming through the depths of COVID, the
Speaker 4: labor market was very very challenging. You had people leaving
Speaker 4: the company to do life changes, and so we had
Speaker 4: to very quickly hire thousands of crew members to staff
Speaker 4: back up. Because the demand for air travel came back
Speaker 4: so quickly, attrition has stabilized, so we're always monitoring the
Speaker 4: hiring metrics, how long it takes to get them through training,
Speaker 4: and what the job market looks like for each of
Speaker 4: these specific work groups.
Speaker 2: Of course, premium products help airlines relieve margin pressures. I
Speaker 2: got to sample Jet Blues revamped Mint experience.
Speaker 6: This is the new Mint.
Speaker 4: This is our premium business class offering.
Speaker 2: What's the process like you order the plane from air
Speaker 2: Bus and then do you fitted out yourself?
Speaker 6: Or how does how does this work? How do you
Speaker 6: make a Mint?
Speaker 4: It's a multi year process that we work with our
Speaker 4: Jet Blue product team and my fleet team work and
Speaker 4: collaborate with business partners to define and create what we
Speaker 4: want the experience to look like. We stress test it,
Speaker 4: we make sure that we're doing it in a cost
Speaker 4: conscious way. We optimize the seating configuration on every airplane
Speaker 4: to drive margin. On this aircraft, we have one hundred
Speaker 4: and sixty seats in total. We have sixteen Mint seats
Speaker 4: and then we have one hundred and forty four core
Speaker 4: seats in the back of the airplane.
Speaker 6: What kind of growth are you expecting from Mint?
Speaker 4: So we have forty six Mint aircraft today and we
Speaker 4: have over twenty more aircraft on order that will be
Speaker 4: configured in Mint that can fly to Europe. So we're
Speaker 4: really excited to spread the jetbou brand throughout more European destinations.
Speaker 6: I'm spoiling myself. Wow, that's really it's really flat and
Speaker 6: I fit look at that.
Speaker 2: There's change on the way at JFK ground has been
Speaker 2: broken on a new Terminal six. It will connect with
Speaker 2: Terminal five and add capacity for up to ten gates.
Speaker 2: Jet Blue joins a consortium of companies managing the four
Speaker 2: point two billion dollar project, helping definance, design, and guide
Speaker 2: its construction towards completion in twenty twenty eight.
Speaker 3: I think that what people want these days is an easy,
Speaker 3: quick experiments through the airport.
Speaker 1: We need to have better technology at all points throughout
Speaker 1: the journey. We need to embrace biometrics. Consumers hate standing
Speaker 1: in lines. There is biometric technology that can help cut
Speaker 1: security lines and check in lines.
Speaker 4: In a third, we're still in the design phase for
Speaker 4: Terminal six. But we leverage what other airports have done
Speaker 4: and what we've seen throughout the world, quite frankly, and
Speaker 4: we're going to pick the best of everything to really
Speaker 4: elevate the game, and technology is going to be at
Speaker 4: the backbone of that journey. We want to be able
Speaker 4: to create and give customers experiences where they can self
Speaker 4: serve as much as possible across the travel ribbon. So
Speaker 4: whether it's checking in, whether it's checking your bag, going
Speaker 4: through security, boarding a flight, we want everyone to be
Speaker 4: able to do that seamlessly and be able to do
Speaker 4: that with your own handheld technologies.
Speaker 1: Also, I'm just going to say, for Jet Blue, you
Speaker 1: need to have a lounge. Jeff Blue has you know,
Speaker 1: the T five is great, but for premium travelers, especially
Speaker 1: now that flights are delayed so much, you.
Speaker 2: Don't want to wait in the terminal, there's no VIP
Speaker 2: lounge here.
Speaker 6: Is that right? No specific Jet Blue VIP lounge. Is
Speaker 6: that going to change with the new terminal?
Speaker 4: It could there could be a potential where we're evolving
Speaker 4: the mint and premium customer offering. We need to make
Speaker 4: sure that we're building out our customer offerings in a
Speaker 4: cost conscious way.
Speaker 2: Chief financial Office Ursula Hurley has spent her entire professional.
Speaker 6: Career at Jet Blue.
Speaker 2: Her rise from college intern to the c suite is
Speaker 2: rare for an industry that's still male dominated at the
Speaker 2: highest levels.
Speaker 5: We don't have a lot of diversity in the c suite.
Speaker 5: We have a lot of diversity below that level, and
Speaker 5: airlines are working on improving it. They have goals for
Speaker 5: their boards, they have goals for management, but what they
Speaker 5: have to do is attract and.
Speaker 2: Retain the Jet Blue bucks the trend. It's the only
Speaker 2: airline among one hundred and twenty three global carriers tracked
Speaker 2: by Bloomberg with fifty percent gender parity among executives.
Speaker 4: Diversity drives innovation. At the end of the day, innovation
Speaker 4: provides stronger returns. I also am president of our Jet
Speaker 4: Blue Foundation, and the mission of the foundation is to
Speaker 4: promote access to STEM and aviation to young girls of
Speaker 4: color and two young girls who don't have access to experiences.
Speaker 2: The company's diversity goals include getting more women into the cockpit.
Speaker 3: Pilots are tough. I mean, historically, you know in the
Speaker 3: US we've been about ninety five percent men five percent women.
Speaker 3: That's clearly a significant imbalance.
Speaker 4: We have made great strides in increasing the number of
Speaker 4: women in our pilot work group. We have what are
Speaker 4: called our gateway programs. The diversity is very impressive, so
Speaker 4: you see a lot more women, and you also see
Speaker 4: a lot more women of diverse race as well.
Speaker 2: Along with plans to make the future of aviation more inclusive,
Speaker 2: Jet Blue has taken steps to make it more sustainable.
Speaker 2: In the last two years, it signed agreements with suppliers
Speaker 2: for millions of gallons of sustainable aviation fuel or SAFF.
Speaker 4: We have committed to net zero by twenty forty and
Speaker 4: we have also committed to fly ten percent of our
Speaker 4: fuel consumption on SAFF by twenty thirty and so today
Speaker 4: we actually consume SAFF in three of our airports that
Speaker 4: are based in California, and so we're on a path
Speaker 4: to achieve that ten percent. There is not enough staff
Speaker 4: out there for consumption, and so we're encouraging producers, financiers
Speaker 4: as well as other airlines to help push this forward
Speaker 4: and provide us opportunities to achieve our sustainability goals.
Speaker 2: Like many companies, Jet Blue is exploring the potential of
Speaker 2: artificial intelligence.
Speaker 4: We can utilize AI to make better decisions. We can
Speaker 4: also utilize AI to help us gather and analyze information.
Speaker 2: It's already invested in AI tools to improve its operations.
Speaker 3: A number of years ago, we set up Jet Blue Ventures,
Speaker 3: which is one of our subsidiaries that really is at
Speaker 3: the intersection of technology and the travel industry. Tomorrow Io,
Speaker 3: which is our weather forecasting company, one of our initial
Speaker 3: investments in Jet Blue Ventures, and they use a lot
Speaker 3: of really cool technology, including AI to more accurately put
Speaker 3: weather and deciding what flies to cancel and delay, or
Speaker 3: what run ways to land on, or how much fuel
Speaker 3: to load based on a more accurate forecast. Using AI
Speaker 3: and other technology is a game changer for us. So
Speaker 3: you know, I think that we're going to continue to
Speaker 3: see that across more aspects of our company.
Speaker 2: Jet Blue fights off the Dog lawsuit and pulls off
Speaker 2: the Spirit merger. Robin Hayes will lead the company into
Speaker 2: a new era of size and scale. He believes customers
Speaker 2: will benefit.
Speaker 3: We have four large airlines today that have about twenty
Speaker 3: percent of the market each. A Jet Blue Spirit combination
Speaker 3: will put us between eight to nine percent, so we'll
Speaker 3: still be a distant number five we'll still be less
Speaker 3: than half the size of these Big four, but it's
Speaker 3: not sustainable to have this bifurcated industry where we have
Speaker 3: four big players at twenty percent and everyone else is
Speaker 3: showing twenty percent of the market between them. So we
Speaker 3: feel passionately that one of the best things that can
Speaker 3: happen for consumers is the Jet Lo Spirit deal because
Speaker 3: it will give customers a truly more national choice than
Speaker 3: just flying on the Big Four.
Speaker 2: In any future scenario, Ursula Hurley will have a lot
Speaker 2: on her plate. She'll play a key role as Jet
Speaker 2: Blue continues to innovate and grow.
Speaker 6: I asked her what she sees when she looks ahead.
Speaker 2: What are you most excited about for the next ten
Speaker 2: years of Jet Blue.
Speaker 4: I'm really excited to see jet Blue continue to grow.
Speaker 4: At the end of the day, we view ourselves as
Speaker 4: a destructor and a maverick in the aviation industry, and
Speaker 4: we want to bring more of the Jet Blue experience
Speaker 4: to more customers across the country. And I'm really excited
Speaker 4: to play a meaningful role in that growth journey.
Speaker 2: And So, what's the biggest challenge over the next ten
Speaker 2: years that keeps you up at night?
Speaker 4: The biggest challenge is just managing the volatility of the
Speaker 4: industry that we live in. And I mean there are
Speaker 4: many puts into our business and we're thrown many curveballs,
Speaker 4: and so it's just having the agility and quite frankly,
Speaker 4: the resiliency to power through it and look for ways
Speaker 4: in which we can deliver for our customers, our crew
Speaker 4: members as well as our shareholders.
Speaker 2: What is one skill set or knowledge area that you
Speaker 2: think every CFO is going to have to develop or
Speaker 2: have over the next ten years.
Speaker 4: Just resiliency, just the dynamic of the world that we
Speaker 4: live in. You need to be able to power through.
Speaker 4: You need to be able to see through the trees.
Speaker 4: You need to identify opportunities and push people. You really
Speaker 4: need to inspire and bring people along with you in
Speaker 4: order to be successful.
Speaker 2: And what advice would you give someone who is promoted
Speaker 2: to CFO today.
Speaker 6: You have to have.
Speaker 4: An exceptional team around you in order to be successful.
Speaker 4: You also need to dive into the details. Knowing and
Speaker 4: un understanding the analytics and the drivers of the business
Speaker 4: will allow you to push back and quite frankly, create
Speaker 4: more value. And then I would also tell people you
Speaker 4: need to manage your stakeholders effectively. So whether that's a shareholder,
Speaker 4: whether that's the board, a customer, a crew member, taking
Speaker 4: in their feedback and implementing their thoughts to make Jet
Speaker 4: Blue an even better company than we are today. So
Speaker 4: at the end of the day, hire a fantastic team,
Speaker 4: dive into the details, and ensure that you're managing your
Speaker 4: stakeholder base as effectively as possible.
Speaker 6: I'm Matt Miller, this is Bloomberg