Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Jet Blue planning to expend its first class offerings in
Speaker 2: twenty twenty six as passengers continue to pay up for
Speaker 2: premium options. The carrier also cutting capacity to increase fares
Speaker 2: and focus on East Coast leisure destinations. Joining us now
Speaker 2: to discuss is the Jet Blue CEO Joanna Garretyanna, good
Speaker 2: to see you.
Speaker 3: Thanks thanks for having me.
Speaker 2: The demand for premium is through the roof and a
Speaker 2: lot of people are trying to provide the capacity for it.
Speaker 2: What gives you the impression the confidence that that demand's
Speaker 2: going to stick around?
Speaker 4: I mean, Jet Blue has been doing premium for ten years.
Speaker 4: We introduced our Mint product ten years ago. This is
Speaker 4: just continuing to round out the suite of products that
Speaker 4: we have. We have a great coach experience, we have
Speaker 4: even more space Mintlifelat and now more of a domestic
Speaker 4: Mint and domestic business class seat that we're going to
Speaker 4: be introducing in twenty twenty six. Very excited to bring
Speaker 4: it to customers and leisure markets.
Speaker 2: Food is best in class. Say on your behalf, I've
Speaker 2: done the flight in Mint to California and to London
Speaker 2: as well. Where does that come from. How expensive is
Speaker 2: it to provide that kind of product?
Speaker 4: Yeah, I mean, we really look to provide a differentiated
Speaker 4: experience and we lean in on certain areas. So food
Speaker 4: has been an area that we focus on. Comfort is
Speaker 4: another area that we spend a lot of time with.
Speaker 4: We have a great, a great partnership with Tought and Needle,
Speaker 4: and as we think about our new domestic first class,
Speaker 4: comfort is going to be the area that we lean
Speaker 4: in on there as well, with some interesting features of
Speaker 4: our seat product that provide a bit more comfort to customers.
Speaker 1: How difficult is it to thread a needle with the
Speaker 1: likes of business class Given the fact that Jet Blue
Speaker 1: traditionally has been an airline that caters to pleasure travel,
Speaker 1: sure to the idea of traveling with the family to
Speaker 1: warm places in the winter time. How much does that
Speaker 1: kind of create a conflict for you?
Speaker 4: You know, we don't think it creates a conflict because
Speaker 4: everybody's a leisure customer and when you think about what
Speaker 4: you like to do on a vacation, sometimes you want
Speaker 4: an elevated travel experience as well. So we want to
Speaker 4: make sure that we have an offering for every type
Speaker 4: of leisure customer. One of the things we have done
Speaker 4: recently is kind of retrenched in the Northeast, really focusing
Speaker 4: on serving the best leisure markets out of the Northeast Europe,
Speaker 4: the West Coast down in the Caribbean, and there's a
Speaker 4: real market for that premium seat.
Speaker 1: I guess another way to say this is businesses are
Speaker 1: willing to pay more on their expense accounts than individuals,
Speaker 1: especially when they're going on vacation. How difficult is it
Speaker 1: to charge the rates that make it worthwhile given the
Speaker 1: fact that as people going on vacation and they typically
Speaker 1: have bledgets.
Speaker 4: We're not focused on charging rates at are akin to
Speaker 4: what a business customer and a business would charge. We
Speaker 4: really want to make the premium experience affordable to leisure customers.
Speaker 4: When we introduced min ten years ago, we did just that.
Speaker 4: We reduced fares to the West Coast, we introduced a
Speaker 4: better product, a better service, and that's what we're looking
Speaker 4: to do here. It's really important for jet Blue to
Speaker 4: make sure that we have affordable fares and that all
Speaker 4: of our products are accessible to the leisure customers. So
Speaker 4: that's the customer that we're targeting. Somebody willing to pay
Speaker 4: a bit more, but not at the size that you
Speaker 4: would for a business.
Speaker 1: You've been tasked with turning around the balance sheet of
Speaker 1: jet Blue, and you've made progress in that front. You
Speaker 1: just reported earnings that were positive and really pointed toward
Speaker 1: progress in that How much.
Speaker 3: Are you able to.
Speaker 1: Raise prices at a time where you see increasing consumer pushback,
Speaker 1: but at the same time there seems to still be
Speaker 1: that ongoing demand for travel.
Speaker 4: There's very healthy demand in the peak and that's where
Speaker 4: leisure travel is great. So as we think about, you know,
Speaker 4: the holidays, we think about the summer time frame. You know,
Speaker 4: that's where I think Jet Blue does its best because
Speaker 4: we fly to some of these great destinations. Troughs are
Speaker 4: definitely more challenging. We've seen some pricing pressure in the troughs.
Speaker 4: We've reduced a lot of flying in the trough So
Speaker 4: it's really about balancing out that year and making sure
Speaker 4: that you know, when demand is high, you're focused on
Speaker 4: trying to capture your share of that demand and in
Speaker 4: the troughs, really reducing the losses.
Speaker 1: So do you expect to increase fares this year?
Speaker 4: We're hopeful that we can keep fares affordable that reflect
Speaker 4: the costs of service. It's more expensive to travel now
Speaker 4: because there are costs. Airport costs have gone up, labor
Speaker 4: costs have gone up, so there's meaningful inflationary pressure for
Speaker 4: the airlines as well. Our great food comes at a cost.
Speaker 4: When you start seeing the grocery costs go up, that
Speaker 4: means the food in an aircraft is going to go
Speaker 4: up too. So we're really trying to balance it and
Speaker 4: make sure that relative to the other travel out there,
Speaker 4: that Jet Blue is an affordable fare for customers, inaccessible
Speaker 4: for a leisure customer.
Speaker 5: Well, there's also been other constraints on the air industry
Speaker 5: when it comes to getting the parts they need, comes
Speaker 5: to actually getting the planes they need to fly. And
Speaker 5: then next year a lot of people are talking about,
Speaker 5: well we might get tariffs and potentially that might impact
Speaker 5: the supply chain.
Speaker 3: How are you preparing for all of that?
Speaker 4: Yeah, I mean jeb Blue has a unique situation with
Speaker 4: Pratt and Whitney. Right now, we have a number of
Speaker 4: aircraft sitting on the ground that we're paying for, but
Speaker 4: we're not able to fly because they're due for an
Speaker 4: engine inspection and there's not enough capacity to do those inspections.
Speaker 4: So that's definitely a headwind for Jet Blue as you
Speaker 4: think about tariffs, it's a bit too soon to tell.
Speaker 3: I think the good news for Jebl's.
Speaker 4: We take a lot of our aircraft from Alabama, but
Speaker 4: you know, depending on how tariffs get put in. We
Speaker 4: do have exposure in Europe and in Canada because some
Speaker 4: of our aircraft come from there.
Speaker 5: Of course, the Jet Blue Spirit Airlines potential merger was blocked.
Speaker 5: Are you potentially thinking about going at it again in
Speaker 5: the next four years in this space more mergers and
Speaker 5: acquisitions because there might be a lighter regulatory touch in.
Speaker 3: Washington, d C.
Speaker 4: We're really focused on delivering our new plan, Jet Forward.
Speaker 4: We want to see Jet Blue thrive as a successful
Speaker 4: standalone company. We have a brand that customers love, We've
Speaker 4: got a great product, a great service. We're focus on
Speaker 4: flying in the places that people know us. So we're
Speaker 4: really focused on our standalone plan Jet Forward right now.
Speaker 5: Okay, so you might not dip your toes back into
Speaker 5: that space, but do you think that this is going
Speaker 5: to be a more welcoming administration when it comes to
Speaker 5: things like mergers and acquisitions.
Speaker 4: It's hard to speculate because we don't know exactly what
Speaker 4: the complain's going to be, but it's hard to see
Speaker 4: an administration that's going to be worse than the administration
Speaker 4: we had around antitrust.
Speaker 1: In the meantime, you have announced a number of changes
Speaker 1: in terms of the jet Forward, including closing down certain
Speaker 1: operations in a number of cities.
Speaker 3: I believe that they are.
Speaker 1: Going to cut You're going to cut some fifty routes.
Speaker 3: Correct. Is it done?
Speaker 1: Are there more to come?
Speaker 4: The network is always something that's evolving. So the majority
Speaker 4: of the changes are done. But you know, we're not
Speaker 4: going to rest on our laurels. If a particular market
Speaker 4: is not producing results, then we're going to take a
Speaker 4: good hard look at it see if we can improve it,
Speaker 4: and if not, then we're going to point those planes
Speaker 4: to a place where we can make money.
Speaker 3: We've got to become.
Speaker 4: Profitable, and part of that has made maybe need to
Speaker 4: make some tough to say decisions.
Speaker 2: I've got to follow up. Have you spoken too the
Speaker 2: incoming administration.
Speaker 3: We have not spoken to an incoming administration.
Speaker 2: Planet to go down to marri Lanka anytime soon, like
Speaker 2: the pilgrimage.
Speaker 4: Right now, I'm focused on holiday travel. We have one
Speaker 4: hundred and fifty thousand customers a day.
Speaker 3: Flying is a great place over the holiday, the sun
Speaker 3: for the holiday.
Speaker 2: You can combine the two.
Speaker 3: What do we call that?
Speaker 4: Work?
Speaker 2: Patience, leisure, pleasure? Leisure pleasure? Yeah, leisure, Okay, Leizia. You
Speaker 2: seeing a lot of pleasure.
Speaker 3: We see a lot of leisure. We see a lot
Speaker 3: of leisure over the holidays too.
Speaker 4: Though. We're just really happy to be a part of
Speaker 4: connecting people with their families.
Speaker 3: Over over the whole.
Speaker 2: What does it only look like that one hundred.
Speaker 4: And fifty thousand people a day over the Christmas holiday,
Speaker 4: we've got about a thousand flights a day, and you know,
Speaker 4: it's amazing when you think what airlines do and the
Speaker 4: magic that we can deliver to customers, reuniting their families
Speaker 4: and making that great experience. It'll be busy, it'll be tough,
Speaker 4: and my hope is that everybody can be patient and
Speaker 4: a little kinder.
Speaker 2: If you're asking for patients, does that mean they're going
Speaker 2: to be delays? How does this snack cut?
Speaker 4: Oh, you've teed that one up perfectly delays. I wish
Speaker 4: this administration would focus more on air traffic control and
Speaker 4: that it's definitely been a meaningful pressure to Jet Blue
Speaker 4: to all airlines. When we think about this next administration,
Speaker 4: that is a real focus area for JetBlue.
Speaker 2: What would you like to see change?
Speaker 3: What would they do to.
Speaker 4: See more hiring. I'd love to see better technology and
Speaker 4: ultimately improving the amount of delays that come out of
Speaker 4: the air traffic control system in New York in particular,
Speaker 4: which is the hardest hit.
Speaker 2: We don't like to say the same thing now one
Speaker 2: what's delays? Did they pram up?
Speaker 1: You're talking to the choir I've had? Well, okay, Honestly,
Speaker 1: going to Florida is the hardest though. I have to
Speaker 1: be honest, because there's always weather. There are winds that
Speaker 1: come up. There's a random storm that comes up, and
Speaker 1: some people get delayed for a long period of time
Speaker 1: and they sit there and then their complane gets canceled
Speaker 1: and they take go on vacation with the family.
Speaker 3: CEOs can't control the weather, though.
Speaker 5: But what is interesting is we have here an airline
Speaker 5: CEO saying they want the FAA to hire more. The
Speaker 5: incoming administration is talking about dog deifying the government.
Speaker 2: It's true, Well, hopefully do not.
Speaker 3: Talking about air traffic controllers. We are grossly.
Speaker 4: Understaffed, and at the end of the day, those delays,
Speaker 4: even with weather, we should be able to have a
Speaker 4: more resilient aviation air traffic control system with weather.
Speaker 3: That is just something that we have to deal with.
Speaker 1: Just pause for a second. Are you saying that all
Speaker 1: those delays it's not because of weather.
Speaker 4: It's just some of the delays are definitely because of weather,
Speaker 4: but they are exacerbated because we are significantly understaffed among
Speaker 4: air traffic I.
Speaker 2: Never trust the excuse. You've got a problem with trust
Speaker 2: as well. I never trust it. I never trust it.
Speaker 3: They know it's actually going on.
Speaker 1: And actually, to Joanna's point, there is a problem.
Speaker 3: With their traffic.
Speaker 2: The stuff's missing.
Speaker 5: I think you can actually see how bad the weather
Speaker 5: is and you're thinking show and it's the weather.
Speaker 2: But sometimes you look outside the sky is blue, the
Speaker 2: sun is shining, and they're.
Speaker 3: Like air traffic control blazing.
Speaker 2: Yeah, that's a problem. The pilots missing went out the
Speaker 2: night before.
Speaker 3: Who knows, that's jan but that does not happen.
Speaker 2: That doesn't have to checks. Just to be very clear, okay, Joanna,
Speaker 2: it's going to say thank you, appreciate time. Thank you