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Speaker 1: I am so pleased. So today I am sitting down

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Speaker 1: with someone who really has seen quite a transformation. Joanna Garrity,

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Speaker 1: who is the CEO of Jet Blue joining us here,

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Speaker 1: and you've been at this company for almost two decades.

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Speaker 1: You became CEO in February. You previously were chief operating officer.

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Speaker 1: This has been a company that's gone an incredible transformation.

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Speaker 1: Can you just describe what that transformation of identity has

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Speaker 1: been like?

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Speaker 2: You know, thanks for the question. You know, Jeff Blue,

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Speaker 2: our mission has always been about bringing humanity back to

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Speaker 2: air travel, and I think we continue to do that

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Speaker 2: to this day. We've definitely had a number of challenging

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Speaker 2: items over the last few years of field transaction, actually

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Speaker 2: filed two transactions, but we're focused on getting back to

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Speaker 2: the core, our roots. What makes jef Blue unique special

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Speaker 2: being that carrier for so many different customers who want

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Speaker 2: to fly to leisure out of the Northeast, into the Caribbean, Florida,

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Speaker 2: you name it. But really remembering that at the heart

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Speaker 2: of what we do is delivering great service. We've got

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Speaker 2: great people and that's what sets jeff Blue apart.

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Speaker 1: The reason why I ask is because you made some

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Speaker 1: news to you talked about opening lounges at JFK in

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Speaker 1: New York City as well as in Boston's Logan Airport,

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Speaker 1: some plans to potentially open up others in Orlando, in

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Speaker 1: Fort Lauderdale, and it made me think the idea of

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Speaker 1: lounges caters to a premium, well healed customer, how does

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Speaker 1: that fit into the transformation?

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Speaker 2: Yeah, I think most probably don't realize that, Jeff Blue.

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Speaker 2: Actually it's about twenty five percent of our seats are premium,

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Speaker 2: between our even more space seats and our Mint product,

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Speaker 2: and this has been something that customer has been asking

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Speaker 2: for for quite some time, and so we're dipping our

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Speaker 2: toe into the water Boston JFK. The lounges are going

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Speaker 2: to be designed around a more bespoke personal experience, play,

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Speaker 2: live work, and really focusing on how do we address

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Speaker 2: what our customers have asked for. Transatlantic customers will be

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Speaker 2: able to go into the lounges as part of their

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Speaker 2: ticket our mosaic for customers, so some of our most

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Speaker 2: loyal will also have access along with our customers who

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Speaker 2: are going to sign up for our new Premier card

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Speaker 2: that we're launching later this year. But We're focused on

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Speaker 2: making sure there's no long lines and it's something that

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Speaker 2: customers actually want to joy before they fly.

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Speaker 1: Okay, let's just talk about how many lounges you're talking

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Speaker 1: about building out. I mean, is it's the beginning of

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Speaker 1: fifteen lounges all around the world. You're talking about London,

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Speaker 1: You're talking about New York. Are you talking about Let's

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Speaker 1: see how it goes?

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Speaker 2: Ye, how it goes. I think if you look at

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Speaker 2: what we did with Mint when we introduced it across

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Speaker 2: the United States, you know, about years ago, we were

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Speaker 2: very thoughtful about how we stepped into it. We want

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Speaker 2: to make sure that it's what customers want, but we

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Speaker 2: also want to make sure it's affordable. And lounges are

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Speaker 2: expensive to build them out, to operate them. So we've

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Speaker 2: got to be very thoughtful because low fares are an

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Speaker 2: incredibly important part of what JetBlue delivers to customers, and

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Speaker 2: we need to keep it that way.

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Speaker 1: Well, that's what I was going to ask. I think

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Speaker 1: about lounges and premium seats as often catering to a

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Speaker 1: corporate customer. How do you cater to the leisure customer

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Speaker 1: with these types of perks that cost money at a

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Speaker 1: time when you're really known for care catering to value

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Speaker 1: for people like myself who have gone to the islands

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Speaker 1: with the kids and pack it all up and it's exhausting,

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Speaker 1: but they can get sunships, so everybody's happy.

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Speaker 2: Sure. I think what most don't realize is our loyalty

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Speaker 2: program and becoming a Mosaic four is actually quite accessible.

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Speaker 2: So unlike some of the larger carriers where you have

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Speaker 2: to be a true road warrior to take advantage of

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Speaker 2: some of the perks, that's not the case at JetBlue.

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Speaker 2: You book a couple of vacations a year on Jet

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Speaker 2: Blue and depending on the flight spend, you might actually

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Speaker 2: qualify as a Mosaic four and that gives you a

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Speaker 2: rite into a lounge, which I think is unique and

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Speaker 2: sets us apart. There's this huge population of people who

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Speaker 2: fly a lot, but not enough to probably qualify to be,

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Speaker 2: you know, the top, top top tier at some of

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Speaker 2: the other airlines, and we want to be there for them.

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Speaker 2: We know we can do it. In terms of the

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Speaker 2: on board service, we do it today, free Wi Fi.

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Speaker 2: We've been doing it for ten years. You can stream,

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Speaker 2: you can play games, snacks, you know, great leg room,

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Speaker 2: and I think we're uniquely situated to do this.

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Speaker 1: You know, since the pandemic, people have talked about how

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Speaker 1: a lot of airlines that have catered to a wealthier

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Speaker 1: individual have been more resilient. They've been actually been able

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Speaker 1: to withstand some of the turmoil post pandemic. During the

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Speaker 1: pandemic has been a surprising trend that has stuck that

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Speaker 1: people are willing to spend money to go have extra

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Speaker 1: leg room, for a premium seat, even slightly better food.

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Speaker 1: How resilient is that trend? Is that here to stay and.

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Speaker 2: Why we've been seeing the premium trend for the last

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Speaker 2: ten years. It's why we introduced Mint several years ago.

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Speaker 2: But we want to be careful about it because we

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Speaker 2: don't have the road warrior customer, but we know we

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Speaker 2: have a high value leisure customer. And so when I

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Speaker 2: think about the girls trip to Caribbean, you know you

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Speaker 2: want a special experience. You want you know, a fun drink,

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Speaker 2: you want a little extra leg room, you want to

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Speaker 2: be able to stream on your phone. Those are things

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Speaker 2: that we can offer and there's a great customer demographic

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Speaker 2: to do that. But we also have to remember some

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Speaker 2: customers don't want those perks and low fares are a

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Speaker 2: real priority, so we want to balance it all. You know,

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Speaker 2: an aircraft is a tube, and we think that there's

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Speaker 2: a whole bunch of different things we can offer within that.

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Speaker 2: But you know, you have to be mindful of how

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Speaker 2: many customers, how many customers you're going to cater to

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Speaker 2: in each section of the aircraft.

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Speaker 1: How expensive are these lounges.

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Speaker 2: So we haven't gotten into costs. You know, we're not

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Speaker 2: talking about that publicly, but we're going to do it

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Speaker 2: in a very affordable way and it's very much tied

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Speaker 2: to our train Atlantic service, our co brand partner, as

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Speaker 2: well as customers who want to pipe by day passes

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Speaker 2: that are part of our mosaics.

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Speaker 1: You mentioned the credit card that you're going to be unrolling,

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Speaker 1: and I've seen this with Delta and United and how

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Speaker 1: the credit card has been the key component of a

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Speaker 1: lot of resilience and profitability. Do airlines now have to

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Speaker 1: be credit card companies to survive?

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Speaker 2: I don't think they need to be credit card companies

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Speaker 2: to survive, but it definitely helps. Listen to credit card

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Speaker 2: that is associated with an airline keeps the brand top

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Speaker 2: of mind when you take it out to buy a

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Speaker 2: meal and you get points on Jet Blue. That's something

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Speaker 2: that reminds you that those points are there to earn

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Speaker 2: travel for your next experience. And so from our perspective,

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Speaker 2: we have a great credit card program, a great partner

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Speaker 2: in the form of Barclays and MasterCard, and it's something

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Speaker 2: that we know we have opportunity to continue to grow.

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Speaker 2: Tied to our loyalty program, we also get points on

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Speaker 2: vacations with Jet Blue and that's something unique avis as

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Speaker 2: well rental cars. So we like how we've designed the

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Speaker 2: program really around the leisure customer and the perks that

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Speaker 2: they want as part of that program.

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Speaker 1: So you haven't transformed any of the locations that Jet

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Speaker 1: Blue flies to in terms of spreading out beyond just leisure.

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Speaker 1: Is that really still the focus?

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Speaker 2: So right now we're focused on really trying to make

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Speaker 2: sure that we're growing our points of strength. So our

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Speaker 2: focus is being the best East Coast leisure network Boston,

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Speaker 2: New York, the surrounding cities down to Florida, the Caribbean.

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Speaker 2: We've got some great transatlantic flights. We definitely have to

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Speaker 2: make sure in this world where we're not growing as

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Speaker 2: much that the places that we fly earn their way

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Speaker 2: into the network, so we've moved some unprofitable flying out.

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Speaker 2: We've actually pivoted pretty significantly back into the Northeast and

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Speaker 2: really doubling down and offering a great schedule and great

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Speaker 2: network for customers here.

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Speaker 1: There have been a number of changes. In February, carl

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Speaker 1: Icon took a ten percent stake or just under that

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Speaker 1: in jet Blue and it has two board seats that

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Speaker 1: he has filled. How many of these changes are coming

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Speaker 1: with his urging, So.

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Speaker 2: This is very much a plan that Jet Blue has

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Speaker 2: had in place. We've been working it for the last

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Speaker 2: year as we were kind of cycling through the Spirit transaction.

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Speaker 2: The carl Icon board members have been very construc and

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Speaker 2: we all feel very strongly that we need to become

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Speaker 2: profitable again, and we need to remember that we have

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Speaker 2: these tremendous strengths that we need to drive more value

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Speaker 2: out of.

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Speaker 1: You mentioned that Spirit deal. You mentioned a couple of

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Speaker 1: deals that have fallen through. We did see Alaska and

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Speaker 1: Hawaiian tie up. Are you still out there looking to

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Speaker 1: consolidate or are you just basically saying that's enough, We're done.

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Speaker 2: We've got a great brand we've got a great organic plan.

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Speaker 2: We're focused on delivering the organic plan. Going through a

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Speaker 2: transaction can take its toll on an organization. It also

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Speaker 2: creates a level of distraction, and so we're very much

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Speaker 2: focused on executing our Jet Forward plan and bringing Jet

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Speaker 2: Blue back to what it was when we were founded

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Speaker 2: around bringing humanity back to air travel.

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Speaker 1: Is there a certain critical mass, so a certain economy

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Speaker 1: of scale that's required in a world where the overhead

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Speaker 1: is getting more fickle and more volatile, and frankly, a

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Speaker 1: lot of people, the staff actually are a lot more expensive.

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Speaker 2: I think scale matters. We're trying to build that scale

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Speaker 2: with art within our core geography. So again, if you

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Speaker 2: look at what we're doing in the Northeast, it's building

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Speaker 2: scale and schedule in depth in the Northeast, in the Caribbean,

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Speaker 2: in Florida, And that's our focus is if we can't

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Speaker 2: build scale on a national level, let's build scale and

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Speaker 2: the geographies where there are high populations of people, where

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Speaker 2: our brand is well known, where customers love the experience,

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Speaker 2: and where we can deliver a great leisure offering to customers.

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Speaker 1: There's a question right now about how long we can

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Speaker 1: remain in this cycle where people can really lean into

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Speaker 1: the Instagram moment, and I'm wondering how much you see

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Speaker 1: ongoing spending or whether some of the new offerings really

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Speaker 1: reflect the fact that spending has been strong in the

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Speaker 1: upper income tier and has been tapering off in people

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Speaker 1: who are looking more for just value.

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Speaker 2: You know, customers definitely look for value, and we need

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Speaker 2: to be there for them, which is why low fares matter.

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Speaker 2: But we also know customers value experiences too, and we're

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Speaker 2: continuing to see strength in interests in those experiences and

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Speaker 2: we want to be the airline to do it for

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Speaker 2: the leisure customer.

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Speaker 1: Do you need to increase prices significantly to keep up

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Speaker 1: with the pace of how much things are increasing, especially

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Speaker 1: given you know some of the renewed contracts and how

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Speaker 1: you know the overhead costs have reportedly gotten significantly more expensive.

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Speaker 2: We're definitely seeing labor costs increase, and it's important we

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Speaker 2: want to pay our people for the service they deliver.

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Speaker 2: They're an important part of the Jet Blue product. They're

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Speaker 2: what differentiates us. But we also have to be mindful

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Speaker 2: that we have to keep our costs in check, and

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Speaker 2: that's always been a key priority for Jet Blue. Because

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Speaker 2: low costs drive lower fares. We're focused on how do

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Speaker 2: we do that through data science running a more efficient operation.

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Speaker 2: We've seen great progress this summer in terms of better

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Speaker 2: operational performance and that drives costs out of the business.

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Speaker 1: Do you see demand sort of level picking up? How

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Speaker 1: would you characterize it?

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Speaker 2: I'd say demand, as we communicated in our last update,

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Speaker 2: is solid. You know, the fall troughs are definitely more challenging.

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Speaker 2: The troughs are a bit deeper for the leisure customer

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Speaker 2: now than they were pre COVID, So we're focused on

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Speaker 2: rationalizing capacity during those troughs to drive the best results

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Speaker 2: for jet Blue.

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Speaker 1: What's your favorite route of That's a tough one.

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Speaker 2: They're all my favorite, Oh for.

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Speaker 1: All, My children are my favorite children. Joanna Garritty, thank

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Speaker 1: you so much for being with us. Joeta Garrity, the

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Speaker 1: CEO of jet Blue,