WEBVTT -  JetBlue CEO Joanna Geraghty Talks Sales, 2026 outlook and holidays

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

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<v Speaker 1>I am here with Joanna Garrity, the CEO of Jet Blue,

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<v Speaker 1>in the very first lounge. This fashioned like an Art

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

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<v Speaker 1>I think I got it right, Joanna. Thank you so

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<v Speaker 1>much for being here before the launch later this week.

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<v Speaker 1>I want to start with just how this fits into

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<v Speaker 1>the strategy of Jet Blue right now to make the

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<v Speaker 1>airline truly profitable for a sustainable period of time.

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<v Speaker 2>Yeah, thanks for the question. Great to be here and

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

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<v Speaker 2>This is very much part of our jet Forward strategy.

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<v Speaker 2>We've been working very hard for the last several quarters

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<v Speaker 2>on really turning towards premium and trying to make sure

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<v Speaker 2>that we're offering more opportunities for customers who want to

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<v Speaker 2>pay a little more, and the lounge is part of that.

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<v Speaker 2>Our transition to a first class product next year, domestic

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<v Speaker 2>first class product, we'll be part of that our Premier

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<v Speaker 2>card or even more as cabin and really excited to

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<v Speaker 2>start seeing all of that come to life in twenty

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<v Speaker 2>twenty six.

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<v Speaker 1>All of the big airlines we've talked about loyalty and

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<v Speaker 1>how important loyalty and premium offerings is to their profitability

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<v Speaker 1>going forward. How is it different for Jet Blue because

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<v Speaker 1>there isn't the sort of obvious business customer that typically

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<v Speaker 1>fuels the loyalty offering.

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

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<v Speaker 2>you know, a nice share of business customers because they

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<v Speaker 2>love the product. You know, we're back at the top

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<v Speaker 2>for net promoter score, so really proud of that. But

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<v Speaker 2>at the end of the day, this is really designed

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<v Speaker 2>around trying to make sure that customers who travel for

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<v Speaker 2>vacation have a reason to come back again and again,

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<v Speaker 2>providing with a little oasis of peace, and you know, really,

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<v Speaker 2>through our loyalty program, we want to reward people who

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<v Speaker 2>choose Jet Blue because they love the product, the service

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<v Speaker 2>and what we offer.

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<v Speaker 1>You have already offered Mint and other premium rollouts. How

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<v Speaker 1>has it been going.

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<v Speaker 2>It's been great. Mint's been a very strong source of

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<v Speaker 2>revenue for Jet Blue for well over the last decade

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<v Speaker 2>and so we're not new to this. We have a

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<v Speaker 2>brand that you know, definitely associates with more of a

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<v Speaker 2>higher end leisure customer, providing more customers at a very

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<v Speaker 2>reasonable fair. We want to make sure that we offer

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<v Speaker 2>something for everybody across the full spectrum, whether you want

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<v Speaker 2>sort of a dialed down experience, still free Wi Fi

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<v Speaker 2>and great leg room and great snacks and drinks, TVs.

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<v Speaker 2>But then if you want to pay a little more,

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<v Speaker 2>you have the opportunity for a lounge our Mint Class

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<v Speaker 2>for Transatlantic and then when we launched domestic first later

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<v Speaker 2>this year, that's going to be a great product offering

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<v Speaker 2>for customers want a little more.

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<v Speaker 1>So I was shuttled into here through very log security

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<v Speaker 1>lines and lots of people with screaming children trying to

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<v Speaker 1>get to different destinations for their warm holidays. This is

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<v Speaker 1>the busy season. How is it looking in terms of

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<v Speaker 1>demand given the fact that there were some hiccups in

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<v Speaker 1>the past couple of months, but at this point people

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<v Speaker 1>are getting back to what they originally had.

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<v Speaker 2>Yeah, twenty twenty five has been a very tough year,

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<v Speaker 2>whether it was the macro setback or the government shut down,

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<v Speaker 2>or the list goes on and on. We're really looking

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<v Speaker 2>forward to the holiday season. Bookings are coming in strong,

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<v Speaker 2>As we go into twenty twenty six, we're optimistic that

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<v Speaker 2>the consumer is healthy and that we're going to start

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<v Speaker 2>really ramping up the initiatives that we have been working

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<v Speaker 2>really hard for the last year to ex q. Two

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<v Speaker 2>and seeing the benefit as we move through twenty twenty six.

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<v Speaker 1>How long do you think it'll take before you start

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<v Speaker 1>to actually turn profitable and sustain that.

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<v Speaker 2>You know, our goal next year is to break even

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<v Speaker 2>from an operating margin perspective, and that's the first step

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<v Speaker 2>back to profitability. We have a great team here. Everybody's

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

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<v Speaker 2>it's our focus on operational reliability, net promoter score, all

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

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<v Speaker 2>and really trying to make sure that we're we're delivering

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<v Speaker 2>a great product offering for customers. Because Jeff Blue has

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<v Speaker 2>this wonderful brand and this sense of people want to

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<v Speaker 2>love us and they want to see us succeed, and

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<v Speaker 2>twenty twenty six is going to be our year with

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<v Speaker 2>everything we've put into place.

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<v Speaker 1>Because twenty twenty five was not the year for a

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<v Speaker 1>lot of airlines.

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<v Speaker 2>There are a lot of airlines.

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<v Speaker 1>There are a lot of issues. When you talk about

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<v Speaker 1>the government shutdown, this has been a big discussion among

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<v Speaker 1>a lot of the air airlines CEOs where they've said,

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<v Speaker 1>we just can't make up that kind of revenue, so

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<v Speaker 1>there will be some sort of hit. Have you disclosed

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<v Speaker 1>any kind of revenue loss as a result of some

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<v Speaker 1>of the shutdown, You.

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

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<v Speaker 2>we've said that we remain on track for Q four

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<v Speaker 2>and I think we're pleased with what we're seeing in

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<v Speaker 2>terms of bookings coming in for the for the balance

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<v Speaker 2>of the month. We definitely saw some softness obviously during

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

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<v Speaker 2>I think most have shared that, but it was it

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<v Speaker 2>was definitely an impact and unfortunate that the airlines were put,

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<v Speaker 2>you know, right in the middle of that shut down.

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<v Speaker 2>You know, all the great air traffic controllers and the

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<v Speaker 2>TSA workers they need to be you know, cast as

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<v Speaker 2>essential workers. We really need to make sure that, if anything,

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<v Speaker 2>this industry is so essential to our economy. I mean,

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<v Speaker 2>think about all the people who were traveling for weddings

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<v Speaker 2>and funerals or doctors appointments that were displaced because we

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

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<v Speaker 2>So we're really hopeful that you know, we've turned a

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<v Speaker 2>page there and that we can move forward, you know,

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<v Speaker 2>looking at that end of January date with you know

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<v Speaker 2>a little bit of nervousness, but I'm confident that DC

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<v Speaker 2>will pull it together and get us get us in

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<v Speaker 2>the back end of that.

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<v Speaker 1>Yeah, somehow, being an airline CEO probably wasn't in your

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<v Speaker 1>bingo car that, if you will, focused on healthcare legislation

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<v Speaker 1>with your fingers crossed you heading into January, I'm wondering

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<v Speaker 1>how much you're hoping to attract a new class of

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<v Speaker 1>customers versus capitalized and the ones that you have that

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<v Speaker 1>might be willing and able to pay a little bit

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<v Speaker 1>more with some of the new offerings.

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<v Speaker 2>It's a little bit of both. We know we have

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<v Speaker 2>customers today that want our first class product, and so

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<v Speaker 2>it's really you know, offering that to them so that

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<v Speaker 2>they can buy up when that opportunity to presents it.

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

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

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<v Speaker 2>to move towards premium because it is a resilient customer segment.

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<v Speaker 2>But we're not going to forget the folks that fly

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

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<v Speaker 2>and we want to make sure that Jet Blue offers

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<v Speaker 2>something to everyone.

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<v Speaker 1>It really does feel a little bit like the Sharks

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<v Speaker 1>and the Jets when you speak to some of the

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<v Speaker 1>airline industry CEOs where they talk about, you know, it's

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<v Speaker 1>become a game of consolidation, and it's become a game

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<v Speaker 1>of the big fish really dominating the fields in a

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

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<v Speaker 1>very hard to be a more budget focused airline. How

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<v Speaker 1>do you fight back? How do you sort of create

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<v Speaker 1>a viable business model at a time when you do

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<v Speaker 1>see this consolidation of profitability and travel in the biggest airlines.

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

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<v Speaker 2>for a more level playing field. When four carriers have

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

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<v Speaker 2>You know, we fight very hard in DC to try

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<v Speaker 2>to make sure that we're heard that the challenges we face,

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<v Speaker 2>whether it's cost pressures, the lack of scale, the lack

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<v Speaker 2>of you know, consolidated purchasing, the you know, inability to

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<v Speaker 2>get access to gates. We just been on a gate,

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<v Speaker 2>a Heathrow, a Heathro slot and we were denied it

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<v Speaker 2>and so you know, we'll maybe understand why it went

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<v Speaker 2>to a legacy larger carrier. Those are little things that

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<v Speaker 2>add up over time, and the smaller carriers really need

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<v Speaker 2>to be given a fair shot to win in this environment,

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

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<v Speaker 2>what we can control. We're focused on a whole series

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<v Speaker 2>of initiatives under our Jet Forward program. It's getting us

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

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<v Speaker 2>going to bring. But we do need the government to

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<v Speaker 2>kind of make that a more level playing field so

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<v Speaker 2>smaller carriers can more effectively compete.

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<v Speaker 1>In the meantime, you do have this cooperation with United,

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<v Speaker 1>You've been expanding in a host of different places. Is

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<v Speaker 1>that the template going forward, maybe not consolidation due to

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<v Speaker 1>the recent issue, but in terms of the previous merger

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<v Speaker 1>that was denied, but going forward having some sort of

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<v Speaker 1>partnership with major airlines to expand the roots.

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<v Speaker 2>So we've got fifty airline partners across the globe and

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<v Speaker 2>now we have the Blue Sky partnership with United that

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<v Speaker 2>is most certainly a part of trying to provide more

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<v Speaker 2>utility to our loyalty program and providing a broader global

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<v Speaker 2>network for our customers when eventually in Q one they

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<v Speaker 2>can book a Jet Blue flight on United dot Com

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<v Speaker 2>and vice versa through our interline agreement, and so we're

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<v Speaker 2>excited about what it's going to bring. Does it solve

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<v Speaker 2>the problem fully, No, it doesn't, but it's definitely a

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<v Speaker 2>meaningful revenue initiative that gets us back movement in the

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<v Speaker 2>right direction.

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<v Speaker 1>Do and is a big consolidation at any point in

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<v Speaker 1>your future? Is that sort of on the back burner.

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<v Speaker 2>So that's on the back burner. We're really focused on

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<v Speaker 2>Jet Forward. You know. I'm really excited with the progress

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<v Speaker 2>we're making. We're seeing it. We're seeing improved operational reliability,

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<v Speaker 2>improved customer scores. We have not let the grass grow

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<v Speaker 2>under our feet in twenty twenty five. We've executed a

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<v Speaker 2>whole series of revenue initiatives. We've kept our costs under

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<v Speaker 2>control despite pulling a point and a half capacity this year.

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<v Speaker 2>So twenty twenty six really is the year that we

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<v Speaker 2>sh should reap the benefits of all these initiative that

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<v Speaker 2>we put into place in twenty twenty five.

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<v Speaker 1>Before I let you get back to celebrating the new lounge,

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<v Speaker 1>I do want to just ask you about the recent

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<v Speaker 1>incident with a pilot a for Jet Blue plane that

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<v Speaker 1>was in the route between Krosau and JFK. There was

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<v Speaker 1>a close call within the US Air Force jet Do

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<v Speaker 1>you have any more information about what happened there to

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<v Speaker 1>make sure that it doesn't happen again.

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

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<v Speaker 2>event and we trained them for situations like this. We

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<v Speaker 2>reported the incident to the government. We're waiting to hear

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<v Speaker 2>the results of their investigation. But just please with how

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<v Speaker 2>our pilot handled it and how a traffic control handled it.

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<v Speaker 2>There's a whole series of safety nets in place in

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<v Speaker 2>the air, in the national airspace system, and the pilot

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<v Speaker 2>is the last line of defense and he absolutely did

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<v Speaker 2>his job, did it well. And you know, my hope

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<v Speaker 2>is that doesn't that doesn't happen again.

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<v Speaker 1>Jana Garty, thank you so much for being with us.

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<v Speaker 1>Joanna Guardy, the CEO of Jet Blue,