Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Thank you so much. Yes, Caroline,
Speaker 1: I am here with Joanna Garrity, the CEO of Jet Blue,
Speaker 1: in the very first lounge. This fashioned like an Art
Speaker 1: Deco New York City apartment from the nineteen forties, thirties, seventies, thirties. Okay,
Speaker 1: I think I got it right, Joanna. Thank you so
Speaker 1: much for being here before the launch later this week.
Speaker 1: I want to start with just how this fits into
Speaker 1: the strategy of Jet Blue right now to make the
Speaker 1: airline truly profitable for a sustainable period of time.
Speaker 2: Yeah, thanks for the question. Great to be here and
Speaker 2: have you in Blue House, jet Blue's first foray into lounges.
Speaker 2: This is very much part of our jet Forward strategy.
Speaker 2: We've been working very hard for the last several quarters
Speaker 2: on really turning towards premium and trying to make sure
Speaker 2: that we're offering more opportunities for customers who want to
Speaker 2: pay a little more, and the lounge is part of that.
Speaker 2: Our transition to a first class product next year, domestic
Speaker 2: first class product, we'll be part of that our Premier
Speaker 2: card or even more as cabin and really excited to
Speaker 2: start seeing all of that come to life in twenty
Speaker 2: twenty six.
Speaker 1: All of the big airlines we've talked about loyalty and
Speaker 1: how important loyalty and premium offerings is to their profitability
Speaker 1: going forward. How is it different for Jet Blue because
Speaker 1: there isn't the sort of obvious business customer that typically
Speaker 1: fuels the loyalty offering.
Speaker 2: I mean, we're a leisure carrier. We tend to get
Speaker 2: you know, a nice share of business customers because they
Speaker 2: love the product. You know, we're back at the top
Speaker 2: for net promoter score, so really proud of that. But
Speaker 2: at the end of the day, this is really designed
Speaker 2: around trying to make sure that customers who travel for
Speaker 2: vacation have a reason to come back again and again,
Speaker 2: providing with a little oasis of peace, and you know, really,
Speaker 2: through our loyalty program, we want to reward people who
Speaker 2: choose Jet Blue because they love the product, the service
Speaker 2: and what we offer.
Speaker 1: You have already offered Mint and other premium rollouts. How
Speaker 1: has it been going.
Speaker 2: It's been great. Mint's been a very strong source of
Speaker 2: revenue for Jet Blue for well over the last decade
Speaker 2: and so we're not new to this. We have a
Speaker 2: brand that you know, definitely associates with more of a
Speaker 2: higher end leisure customer, providing more customers at a very
Speaker 2: reasonable fair. We want to make sure that we offer
Speaker 2: something for everybody across the full spectrum, whether you want
Speaker 2: sort of a dialed down experience, still free Wi Fi
Speaker 2: and great leg room and great snacks and drinks, TVs.
Speaker 2: But then if you want to pay a little more,
Speaker 2: you have the opportunity for a lounge our Mint Class
Speaker 2: for Transatlantic and then when we launched domestic first later
Speaker 2: this year, that's going to be a great product offering
Speaker 2: for customers want a little more.
Speaker 1: So I was shuttled into here through very log security
Speaker 1: lines and lots of people with screaming children trying to
Speaker 1: get to different destinations for their warm holidays. This is
Speaker 1: the busy season. How is it looking in terms of
Speaker 1: demand given the fact that there were some hiccups in
Speaker 1: the past couple of months, but at this point people
Speaker 1: are getting back to what they originally had.
Speaker 2: Yeah, twenty twenty five has been a very tough year,
Speaker 2: whether it was the macro setback or the government shut down,
Speaker 2: or the list goes on and on. We're really looking
Speaker 2: forward to the holiday season. Bookings are coming in strong,
Speaker 2: As we go into twenty twenty six, we're optimistic that
Speaker 2: the consumer is healthy and that we're going to start
Speaker 2: really ramping up the initiatives that we have been working
Speaker 2: really hard for the last year to ex q. Two
Speaker 2: and seeing the benefit as we move through twenty twenty six.
Speaker 1: How long do you think it'll take before you start
Speaker 1: to actually turn profitable and sustain that.
Speaker 2: You know, our goal next year is to break even
Speaker 2: from an operating margin perspective, and that's the first step
Speaker 2: back to profitability. We have a great team here. Everybody's
Speaker 2: pulling for us. We're doing all the right things, whether
Speaker 2: it's our focus on operational reliability, net promoter score, all
Speaker 2: the premium products that we're launching, our laser focus on costs,
Speaker 2: and really trying to make sure that we're we're delivering
Speaker 2: a great product offering for customers. Because Jeff Blue has
Speaker 2: this wonderful brand and this sense of people want to
Speaker 2: love us and they want to see us succeed, and
Speaker 2: twenty twenty six is going to be our year with
Speaker 2: everything we've put into place.
Speaker 1: Because twenty twenty five was not the year for a
Speaker 1: lot of airlines.
Speaker 2: There are a lot of airlines.
Speaker 1: There are a lot of issues. When you talk about
Speaker 1: the government shutdown, this has been a big discussion among
Speaker 1: a lot of the air airlines CEOs where they've said,
Speaker 1: we just can't make up that kind of revenue, so
Speaker 1: there will be some sort of hit. Have you disclosed
Speaker 1: any kind of revenue loss as a result of some
Speaker 1: of the shutdown, You.
Speaker 2: Know, we haven't disclosed any kind of revenue loss. You know,
Speaker 2: we've said that we remain on track for Q four
Speaker 2: and I think we're pleased with what we're seeing in
Speaker 2: terms of bookings coming in for the for the balance
Speaker 2: of the month. We definitely saw some softness obviously during
Speaker 2: the government shut down, but we're recovering coming out of that.
Speaker 2: I think most have shared that, but it was it
Speaker 2: was definitely an impact and unfortunate that the airlines were put,
Speaker 2: you know, right in the middle of that shut down.
Speaker 2: You know, all the great air traffic controllers and the
Speaker 2: TSA workers they need to be you know, cast as
Speaker 2: essential workers. We really need to make sure that, if anything,
Speaker 2: this industry is so essential to our economy. I mean,
Speaker 2: think about all the people who were traveling for weddings
Speaker 2: and funerals or doctors appointments that were displaced because we
Speaker 2: couldn't get on the same page in Washington, d C.
Speaker 2: So we're really hopeful that you know, we've turned a
Speaker 2: page there and that we can move forward, you know,
Speaker 2: looking at that end of January date with you know
Speaker 2: a little bit of nervousness, but I'm confident that DC
Speaker 2: will pull it together and get us get us in
Speaker 2: the back end of that.
Speaker 1: Yeah, somehow, being an airline CEO probably wasn't in your
Speaker 1: bingo car that, if you will, focused on healthcare legislation
Speaker 1: with your fingers crossed you heading into January, I'm wondering
Speaker 1: how much you're hoping to attract a new class of
Speaker 1: customers versus capitalized and the ones that you have that
Speaker 1: might be willing and able to pay a little bit
Speaker 1: more with some of the new offerings.
Speaker 2: It's a little bit of both. We know we have
Speaker 2: customers today that want our first class product, and so
Speaker 2: it's really you know, offering that to them so that
Speaker 2: they can buy up when that opportunity to presents it.
Speaker 2: But it's also making sure that we're competitive with the industry.
Speaker 2: Everybody's moved towards premium. You know, we're going to continue
Speaker 2: to move towards premium because it is a resilient customer segment.
Speaker 2: But we're not going to forget the folks that fly
Speaker 2: in our coach product. I mean, they're just as important,
Speaker 2: and we want to make sure that Jet Blue offers
Speaker 2: something to everyone.
Speaker 1: It really does feel a little bit like the Sharks
Speaker 1: and the Jets when you speak to some of the
Speaker 1: airline industry CEOs where they talk about, you know, it's
Speaker 1: become a game of consolidation, and it's become a game
Speaker 1: of the big fish really dominating the fields in a
Speaker 1: lot of different ways. They say, it's going to be
Speaker 1: very hard to be a more budget focused airline. How
Speaker 1: do you fight back? How do you sort of create
Speaker 1: a viable business model at a time when you do
Speaker 1: see this consolidation of profitability and travel in the biggest airlines.
Speaker 2: I mean, it's definitely hard. We talk about the need
Speaker 2: for a more level playing field. When four carriers have
Speaker 2: eighty percent of the domestic seats, that's a real problem.
Speaker 2: You know, we fight very hard in DC to try
Speaker 2: to make sure that we're heard that the challenges we face,
Speaker 2: whether it's cost pressures, the lack of scale, the lack
Speaker 2: of you know, consolidated purchasing, the you know, inability to
Speaker 2: get access to gates. We just been on a gate,
Speaker 2: a Heathrow, a Heathro slot and we were denied it
Speaker 2: and so you know, we'll maybe understand why it went
Speaker 2: to a legacy larger carrier. Those are little things that
Speaker 2: add up over time, and the smaller carriers really need
Speaker 2: to be given a fair shot to win in this environment,
Speaker 2: and that's not happening right now. So we're focused on
Speaker 2: what we can control. We're focused on a whole series
Speaker 2: of initiatives under our Jet Forward program. It's getting us
Speaker 2: movement in the right direction. I'm excited about what it's
Speaker 2: going to bring. But we do need the government to
Speaker 2: kind of make that a more level playing field so
Speaker 2: smaller carriers can more effectively compete.
Speaker 1: In the meantime, you do have this cooperation with United,
Speaker 1: You've been expanding in a host of different places. Is
Speaker 1: that the template going forward, maybe not consolidation due to
Speaker 1: the recent issue, but in terms of the previous merger
Speaker 1: that was denied, but going forward having some sort of
Speaker 1: partnership with major airlines to expand the roots.
Speaker 2: So we've got fifty airline partners across the globe and
Speaker 2: now we have the Blue Sky partnership with United that
Speaker 2: is most certainly a part of trying to provide more
Speaker 2: utility to our loyalty program and providing a broader global
Speaker 2: network for our customers when eventually in Q one they
Speaker 2: can book a Jet Blue flight on United dot Com
Speaker 2: and vice versa through our interline agreement, and so we're
Speaker 2: excited about what it's going to bring. Does it solve
Speaker 2: the problem fully, No, it doesn't, but it's definitely a
Speaker 2: meaningful revenue initiative that gets us back movement in the
Speaker 2: right direction.
Speaker 1: Do and is a big consolidation at any point in
Speaker 1: your future? Is that sort of on the back burner.
Speaker 2: So that's on the back burner. We're really focused on
Speaker 2: Jet Forward. You know. I'm really excited with the progress
Speaker 2: we're making. We're seeing it. We're seeing improved operational reliability,
Speaker 2: improved customer scores. We have not let the grass grow
Speaker 2: under our feet in twenty twenty five. We've executed a
Speaker 2: whole series of revenue initiatives. We've kept our costs under
Speaker 2: control despite pulling a point and a half capacity this year.
Speaker 2: So twenty twenty six really is the year that we
Speaker 2: sh should reap the benefits of all these initiative that
Speaker 2: we put into place in twenty twenty five.
Speaker 1: Before I let you get back to celebrating the new lounge,
Speaker 1: I do want to just ask you about the recent
Speaker 1: incident with a pilot a for Jet Blue plane that
Speaker 1: was in the route between Krosau and JFK. There was
Speaker 1: a close call within the US Air Force jet Do
Speaker 1: you have any more information about what happened there to
Speaker 1: make sure that it doesn't happen again.
Speaker 2: Yeah, I'm really proud of our pilot. He reported the
Speaker 2: event and we trained them for situations like this. We
Speaker 2: reported the incident to the government. We're waiting to hear
Speaker 2: the results of their investigation. But just please with how
Speaker 2: our pilot handled it and how a traffic control handled it.
Speaker 2: There's a whole series of safety nets in place in
Speaker 2: the air, in the national airspace system, and the pilot
Speaker 2: is the last line of defense and he absolutely did
Speaker 2: his job, did it well. And you know, my hope
Speaker 2: is that doesn't that doesn't happen again.
Speaker 1: Jana Garty, thank you so much for being with us.
Speaker 1: Joanna Guardy, the CEO of Jet Blue,