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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Thank you so much. Yes, Caroline,

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Speaker 1: I am here with Joanna Garrity, the CEO of Jet Blue,

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Speaker 1: in the very first lounge. This fashioned like an Art

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Speaker 1: Deco New York City apartment from the nineteen forties, thirties, seventies, thirties. Okay,

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Speaker 1: I think I got it right, Joanna. Thank you so

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Speaker 1: much for being here before the launch later this week.

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Speaker 1: I want to start with just how this fits into

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Speaker 1: the strategy of Jet Blue right now to make the

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Speaker 1: airline truly profitable for a sustainable period of time.

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Speaker 2: Yeah, thanks for the question. Great to be here and

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Speaker 2: have you in Blue House, jet Blue's first foray into lounges.

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Speaker 2: This is very much part of our jet Forward strategy.

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Speaker 2: We've been working very hard for the last several quarters

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Speaker 2: on really turning towards premium and trying to make sure

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Speaker 2: that we're offering more opportunities for customers who want to

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Speaker 2: pay a little more, and the lounge is part of that.

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Speaker 2: Our transition to a first class product next year, domestic

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Speaker 2: first class product, we'll be part of that our Premier

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Speaker 2: card or even more as cabin and really excited to

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Speaker 2: start seeing all of that come to life in twenty

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Speaker 2: twenty six.

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Speaker 1: All of the big airlines we've talked about loyalty and

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Speaker 1: how important loyalty and premium offerings is to their profitability

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Speaker 1: going forward. How is it different for Jet Blue because

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Speaker 1: there isn't the sort of obvious business customer that typically

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Speaker 1: fuels the loyalty offering.

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Speaker 2: I mean, we're a leisure carrier. We tend to get

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Speaker 2: you know, a nice share of business customers because they

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Speaker 2: love the product. You know, we're back at the top

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Speaker 2: for net promoter score, so really proud of that. But

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Speaker 2: at the end of the day, this is really designed

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Speaker 2: around trying to make sure that customers who travel for

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Speaker 2: vacation have a reason to come back again and again,

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Speaker 2: providing with a little oasis of peace, and you know, really,

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Speaker 2: through our loyalty program, we want to reward people who

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Speaker 2: choose Jet Blue because they love the product, the service

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Speaker 2: and what we offer.

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Speaker 1: You have already offered Mint and other premium rollouts. How

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Speaker 1: has it been going.

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Speaker 2: It's been great. Mint's been a very strong source of

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Speaker 2: revenue for Jet Blue for well over the last decade

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Speaker 2: and so we're not new to this. We have a

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Speaker 2: brand that you know, definitely associates with more of a

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Speaker 2: higher end leisure customer, providing more customers at a very

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Speaker 2: reasonable fair. We want to make sure that we offer

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Speaker 2: something for everybody across the full spectrum, whether you want

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Speaker 2: sort of a dialed down experience, still free Wi Fi

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Speaker 2: and great leg room and great snacks and drinks, TVs.

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Speaker 2: But then if you want to pay a little more,

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Speaker 2: you have the opportunity for a lounge our Mint Class

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Speaker 2: for Transatlantic and then when we launched domestic first later

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Speaker 2: this year, that's going to be a great product offering

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Speaker 2: for customers want a little more.

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Speaker 1: So I was shuttled into here through very log security

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Speaker 1: lines and lots of people with screaming children trying to

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Speaker 1: get to different destinations for their warm holidays. This is

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Speaker 1: the busy season. How is it looking in terms of

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Speaker 1: demand given the fact that there were some hiccups in

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Speaker 1: the past couple of months, but at this point people

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Speaker 1: are getting back to what they originally had.

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Speaker 2: Yeah, twenty twenty five has been a very tough year,

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Speaker 2: whether it was the macro setback or the government shut down,

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Speaker 2: or the list goes on and on. We're really looking

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Speaker 2: forward to the holiday season. Bookings are coming in strong,

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Speaker 2: As we go into twenty twenty six, we're optimistic that

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Speaker 2: the consumer is healthy and that we're going to start

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Speaker 2: really ramping up the initiatives that we have been working

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Speaker 2: really hard for the last year to ex q. Two

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Speaker 2: and seeing the benefit as we move through twenty twenty six.

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Speaker 1: How long do you think it'll take before you start

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Speaker 1: to actually turn profitable and sustain that.

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Speaker 2: You know, our goal next year is to break even

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Speaker 2: from an operating margin perspective, and that's the first step

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Speaker 2: back to profitability. We have a great team here. Everybody's

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Speaker 2: pulling for us. We're doing all the right things, whether

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Speaker 2: it's our focus on operational reliability, net promoter score, all

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Speaker 2: the premium products that we're launching, our laser focus on costs,

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Speaker 2: and really trying to make sure that we're we're delivering

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Speaker 2: a great product offering for customers. Because Jeff Blue has

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Speaker 2: this wonderful brand and this sense of people want to

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Speaker 2: love us and they want to see us succeed, and

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Speaker 2: twenty twenty six is going to be our year with

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Speaker 2: everything we've put into place.

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Speaker 1: Because twenty twenty five was not the year for a

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Speaker 1: lot of airlines.

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Speaker 2: There are a lot of airlines.

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Speaker 1: There are a lot of issues. When you talk about

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Speaker 1: the government shutdown, this has been a big discussion among

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Speaker 1: a lot of the air airlines CEOs where they've said,

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Speaker 1: we just can't make up that kind of revenue, so

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Speaker 1: there will be some sort of hit. Have you disclosed

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Speaker 1: any kind of revenue loss as a result of some

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Speaker 1: of the shutdown, You.

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Speaker 2: Know, we haven't disclosed any kind of revenue loss. You know,

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Speaker 2: we've said that we remain on track for Q four

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Speaker 2: and I think we're pleased with what we're seeing in

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Speaker 2: terms of bookings coming in for the for the balance

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Speaker 2: of the month. We definitely saw some softness obviously during

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Speaker 2: the government shut down, but we're recovering coming out of that.

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Speaker 2: I think most have shared that, but it was it

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Speaker 2: was definitely an impact and unfortunate that the airlines were put,

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Speaker 2: you know, right in the middle of that shut down.

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Speaker 2: You know, all the great air traffic controllers and the

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Speaker 2: TSA workers they need to be you know, cast as

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Speaker 2: essential workers. We really need to make sure that, if anything,

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Speaker 2: this industry is so essential to our economy. I mean,

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Speaker 2: think about all the people who were traveling for weddings

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Speaker 2: and funerals or doctors appointments that were displaced because we

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Speaker 2: couldn't get on the same page in Washington, d C.

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Speaker 2: So we're really hopeful that you know, we've turned a

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Speaker 2: page there and that we can move forward, you know,

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Speaker 2: looking at that end of January date with you know

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Speaker 2: a little bit of nervousness, but I'm confident that DC

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Speaker 2: will pull it together and get us get us in

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Speaker 2: the back end of that.

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Speaker 1: Yeah, somehow, being an airline CEO probably wasn't in your

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Speaker 1: bingo car that, if you will, focused on healthcare legislation

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Speaker 1: with your fingers crossed you heading into January, I'm wondering

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Speaker 1: how much you're hoping to attract a new class of

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Speaker 1: customers versus capitalized and the ones that you have that

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Speaker 1: might be willing and able to pay a little bit

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Speaker 1: more with some of the new offerings.

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Speaker 2: It's a little bit of both. We know we have

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Speaker 2: customers today that want our first class product, and so

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Speaker 2: it's really you know, offering that to them so that

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Speaker 2: they can buy up when that opportunity to presents it.

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Speaker 2: But it's also making sure that we're competitive with the industry.

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Speaker 2: Everybody's moved towards premium. You know, we're going to continue

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Speaker 2: to move towards premium because it is a resilient customer segment.

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Speaker 2: But we're not going to forget the folks that fly

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Speaker 2: in our coach product. I mean, they're just as important,

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Speaker 2: and we want to make sure that Jet Blue offers

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Speaker 2: something to everyone.

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Speaker 1: It really does feel a little bit like the Sharks

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Speaker 1: and the Jets when you speak to some of the

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Speaker 1: airline industry CEOs where they talk about, you know, it's

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Speaker 1: become a game of consolidation, and it's become a game

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Speaker 1: of the big fish really dominating the fields in a

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Speaker 1: lot of different ways. They say, it's going to be

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Speaker 1: very hard to be a more budget focused airline. How

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Speaker 1: do you fight back? How do you sort of create

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Speaker 1: a viable business model at a time when you do

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Speaker 1: see this consolidation of profitability and travel in the biggest airlines.

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Speaker 2: I mean, it's definitely hard. We talk about the need

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Speaker 2: for a more level playing field. When four carriers have

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Speaker 2: eighty percent of the domestic seats, that's a real problem.

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Speaker 2: You know, we fight very hard in DC to try

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Speaker 2: to make sure that we're heard that the challenges we face,

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Speaker 2: whether it's cost pressures, the lack of scale, the lack

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Speaker 2: of you know, consolidated purchasing, the you know, inability to

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Speaker 2: get access to gates. We just been on a gate,

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Speaker 2: a Heathrow, a Heathro slot and we were denied it

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Speaker 2: and so you know, we'll maybe understand why it went

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Speaker 2: to a legacy larger carrier. Those are little things that

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Speaker 2: add up over time, and the smaller carriers really need

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Speaker 2: to be given a fair shot to win in this environment,

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Speaker 2: and that's not happening right now. So we're focused on

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Speaker 2: what we can control. We're focused on a whole series

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Speaker 2: of initiatives under our Jet Forward program. It's getting us

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Speaker 2: movement in the right direction. I'm excited about what it's

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Speaker 2: going to bring. But we do need the government to

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Speaker 2: kind of make that a more level playing field so

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Speaker 2: smaller carriers can more effectively compete.

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Speaker 1: In the meantime, you do have this cooperation with United,

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Speaker 1: You've been expanding in a host of different places. Is

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Speaker 1: that the template going forward, maybe not consolidation due to

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Speaker 1: the recent issue, but in terms of the previous merger

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Speaker 1: that was denied, but going forward having some sort of

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Speaker 1: partnership with major airlines to expand the roots.

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Speaker 2: So we've got fifty airline partners across the globe and

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Speaker 2: now we have the Blue Sky partnership with United that

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Speaker 2: is most certainly a part of trying to provide more

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Speaker 2: utility to our loyalty program and providing a broader global

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Speaker 2: network for our customers when eventually in Q one they

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Speaker 2: can book a Jet Blue flight on United dot Com

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Speaker 2: and vice versa through our interline agreement, and so we're

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Speaker 2: excited about what it's going to bring. Does it solve

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Speaker 2: the problem fully, No, it doesn't, but it's definitely a

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Speaker 2: meaningful revenue initiative that gets us back movement in the

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Speaker 2: right direction.

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Speaker 1: Do and is a big consolidation at any point in

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Speaker 1: your future? Is that sort of on the back burner.

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Speaker 2: So that's on the back burner. We're really focused on

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Speaker 2: Jet Forward. You know. I'm really excited with the progress

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Speaker 2: we're making. We're seeing it. We're seeing improved operational reliability,

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Speaker 2: improved customer scores. We have not let the grass grow

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Speaker 2: under our feet in twenty twenty five. We've executed a

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Speaker 2: whole series of revenue initiatives. We've kept our costs under

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Speaker 2: control despite pulling a point and a half capacity this year.

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Speaker 2: So twenty twenty six really is the year that we

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Speaker 2: sh should reap the benefits of all these initiative that

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Speaker 2: we put into place in twenty twenty five.

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Speaker 1: Before I let you get back to celebrating the new lounge,

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Speaker 1: I do want to just ask you about the recent

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Speaker 1: incident with a pilot a for Jet Blue plane that

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Speaker 1: was in the route between Krosau and JFK. There was

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Speaker 1: a close call within the US Air Force jet Do

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Speaker 1: you have any more information about what happened there to

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Speaker 1: make sure that it doesn't happen again.

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Speaker 2: Yeah, I'm really proud of our pilot. He reported the

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Speaker 2: event and we trained them for situations like this. We

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Speaker 2: reported the incident to the government. We're waiting to hear

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Speaker 2: the results of their investigation. But just please with how

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Speaker 2: our pilot handled it and how a traffic control handled it.

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Speaker 2: There's a whole series of safety nets in place in

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Speaker 2: the air, in the national airspace system, and the pilot

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Speaker 2: is the last line of defense and he absolutely did

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Speaker 2: his job, did it well. And you know, my hope

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Speaker 2: is that doesn't that doesn't happen again.

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Speaker 1: Jana Garty, thank you so much for being with us.

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Speaker 1: Joanna Guardy, the CEO of Jet Blue,