JetBlue Airways Corporation (JBLU) Earnings Call Transcript & Summary

So welcome to the next session of our UBS Industrials and Transportation Conference. I'm Myles Walton, and I'm the aerospace, defense and airlines analyst here at UBS. It's a pleasure to continue the conference this morning with the Chief Financial Officer of JetBlue, Stephen Priest. Steve, welcome.

Hi, Myles. Thanks very much for having me, sir.

Thanks for joining us. Let's first set the stage, the stage that I think everybody who used to fly is familiar with, which is that there's very little flying going on. But your airline was previously flying 1,000 flights a day. I think in early May, you were suggesting it's 100 flights a day. What does it look like today? What's the shape of demand that you're seeing here at the bottom? And I think you had previously talked about bookings troughing in mid-April. So maybe just that near-end look if you can offer that to just kick us off.

Yes. Of course, Myles. And good day. Good morning, everyone. It's a pleasure to be with you this morning, albeit remotely. So you're right, Myles. So coming into pre-COVID, operating about 1,100 flights a day, think about May bouncing around that 100-flight mark in terms of the capacity. We're very aggressive and very, very quick to bring our capacity down. Obviously, with regards to the CARES Act, there was certain restrictions to the DAP, in terms of flying. But our view was, what is the best and quickest way to reduce cash burn when demand is in such a low point? And therefore, we are aggressive at pulling capacity back. If I think about the bottom, that was probably -- from our perspective anyway, the bottom was sort of mid-April when you saw demand sort of minus 95% versus last year. We look very, very closely at TSA data. I think it's a very good proxy in terms of what's going on. And if you now fast forward to where we are today, it's roughly about minus 85%. So we're still seeing a sort of precipitous drop, but we've certainly continued to see some movements off the bottom. I think the other factor that we've sort of taken into account is we're assuming an L-shape recovery, and we can obviously get into that. I can get deeper if you want to in terms of your line of questioning. What we're starting to see is pretty much in line with that. And the big question on everyone's lip is what does the gradient of the L look like as it sort of continues to go upwards? In terms of loads, which is the other sort of key measure that we look at, is having on flights sort of Memorial Day weekend. We sort of saw our loads touch 40% that weekend. So we're starting to sort of see some relatively green shoots off, albeit a very low base, in terms of sort of demand and loads. But we have a very long way to go. I think everyone will appreciate that. But that, I suppose, sums up the current landscape in terms of where we are at the moment.

And I guess, an L through one lens looks like a U through another lens. So maybe you can broaden what the contour of the L that you're thinking about actually looks like and maybe however you want to describe that?

Yes. So we say L versus U because we've seen that sort of real steep precipitous drop that we saw, which is the left-hand side of, if you like, whether it's the U or the L, where it literally fell off a cliff over a very short period of time. I think about another investor conference that I was sitting at on February 27 and got questions. "Are you seeing any impacts on COVID?" And I can honestly say at that point, and we did a public webcast, we weren't seeing anything whatsoever. And in fact, we were very happy in terms of what we have seen in terms of revenue momentum coming into the year. And then a couple of short months later, we are where we are. And so the reason it's not sort of a U versus an L from our perspective is that you don't sort of see the very steep grading going all the way back up the other side. It's going to be a more measured recovery that will take time for the industry. I think our perspective is leisure's going to come back quicker than business. Domestic aspects, including that short-haul international with the Caribbean, is going to come back quicker than sort of transatlantic sort of trans-Pacific. And so we are sort of -- and, obviously, depending on shelter-in-place getting lifted in terms of certain geographies within the United States that will also define, on a regional level, what that recovery looks like. But we're expecting it to be sort of long in duration and steady in duration. And so as we sort of exit sort of 2020 and get to 2021, we do not expect us to be back at sort of 2019 levels. In fact, I think it's probably fair to say that our full year, the earliest we're going to see like a full year of sort of 2019 revenues, for example, I would expect to be 2022.

Okay. And I guess, against that backdrop of achieving full year revenues, and, sure, we'll kind of come back to this over time, but while we're here, when you achieve the full year 2019 revenues, do you think you'll need more capacity to effectively achieve the same objective of revenues? Or will you be able to get the same load that the industry was relatively high performing and the highest performing it's ever been in 2019? So do you think you'd all be all the way back there from a load perspective?

I think it's easy. And we're in a very challenged position at the moment. I think it's easy to sort of reflect the goal. It's never going to be the same or it's going to be so much difficult. I mean I reflect back, I've been in the industry a good few decades. And when I look back, I think about 9/11 and the awful events of 9/11, I think about 2007, and commentators would say it's never going to be the same again. And travel has been impacted forever. And we've come out the other side. It's a very resilient industry. I think when demand ultimately comes back, again, it might take some time. It might require a vaccine, but we will get through this and come out the other side. I think what I'm sort of encouraged with is the sort of continued evolution of the airline industry, the sort of automation that takes place, the rigor around the cost structure. I mean we were coming into 2020 with our sort of Fare Options sort of system setup, a building block for the airline. So you know what? I don't have a complete crystal ball, but I think the momentum that we were sort of showing was good. I think there will be a pent-up demand for quite a while. And so when the recovery finally comes, then customers will ultimately come back. I think it's a factor of time, Myles, rather than necessarily a complete reshaping of the industry as we go forward.

It makes sense. So maybe to bring the lens back into the near end in kind of which types of consumers are coming back in? You mentioned leisure and domestic and maybe short-haul, international. But when you look at the bookings that are coming in, are you seeing pickups sort of across the board from a timing perspective? Or are you seeing more of the last minute deal hunters? Or are you seeing a balance between themselves and far out planners?

Right. I'll give you a bit of color in various lenses. So the first thing, I'd step back and say, I feel fortunate from a JetBlue standpoint. We're 80% leisure, 20% business. And of that leisure, a significant proportion of that is like relatives -- visiting friends and relatives. We call it VFR traffic. And again, if you think about customers, who want to go and see family members, that sort of pent-up demand, I fully, as I say, expect and we see leisure coming back more swiftly than business. So from an overall perspective, that's what we're seeing. It's certainly leisure. We're not seeing any sort of corporate travel as it were. It's really predicated on leisure that you gain from a relative standpoint. Once we start seeing the wheels turn in the northeast, I think that is a good reference point. The second thing, in terms of geography, the brightest spots are northeast of Florida. Certainly, the shelter-in-place coming out of Florida, we are seeing that as one bright spot. The other is sort of Latin, including, particularly Puerto Rico, where we do -- as a focus, we do see a lot of traffic between Florida and Puerto Rico and the Northeast and Puerto Rico. That's coming back again for the visiting friends and relatives. And albeit with a smaller capacity footprint, we are sort of seeing transcon with sort of relative strength compared to the rest of the network. What is actually hurting more than anything else is the very short-haul-type business. Think about the sort of New York to Rochester, New York to Syracuse. Customers are driving versus flying. And so I think some of that short -- very short-haul business will be the sort of -- along with overall business, business, will take a while to sort of come back. And then the third lens to look through is the shape of the booking curve. Your point was right. I mean we started going back 6 weeks or so with customers either needing to travel tomorrow or the next day. It's generally absolutely essential travel. And then other bookings are really predicated at the back end of the year. Think Thanksgiving, thinking about the December holidays. What we've seen now over the last couple of weeks is starting to approach more of a normalized booking curve and as you would sort of see with customers starting to think about summer travel and full travel. So all of the dynamics are changing, but I would say, again, we're coming off an extremely low base. But the shapes are certainly moving, and, again, certainly, leisure versus business.

That makes sense. And maybe just to follow up on that short-haul comment where maybe they're driving versus flying. Do you see that as a behavioral shift or simply a manifestation of the lack of capacity and frequency, so they're doing what they need to do?

I think it's a combination of two. There's a schedule challenge, right? So if you're looking at some of these markets where you maybe have been doing 6, 7, 10 shuttles a day for certain markets, and because you all focus on cash burn, demand's not there. You prune it back. When you might find a customer who flies up in the morning, but neither wanting to come back early afternoon and there's not a scheduled flight until late in the evening. There's that element. But there's also, I think, this concept that we're very focused on is sort of having customers having the confidence to fly. And we've been quite a leader in terms of thinking about, how do we get the public flying again? And when they do fly again, they want to travel with an airline who they trust. And we do think about trust in a big way at JetBlue. And so we launched this philosophy a couple of weeks ago. We've been very proactive in terms of media with regards to safety from the ground up. Think about things like JetBlue as the first airlines to come out and say you must wear a facial covering to get onboard an aircraft. If you're not wearing one, you're not getting on the plane. The other thing is the middle seats. Up until the 6th of July, it's not our best endeavors. It's like a guarantee. If you buy a JetBlue ticket and you want to get on a flight, unless you're with your family or someone you want to sit next to, you're not going to be sitting next to anyone. So we're thinking very much about sort of changing that dynamic as customers in the airline space, and then, obviously, thinking about normal life, get more comfortable, confident in doing things. And that's a big part for us. So a bit of a combination of both, but I think getting the momentum, getting the confidence back is critical to all of us.

That makes sense. And maybe to stick with your safety and getting the public comfortable flying again, and you mentioned that blocking the middle seat, how long of a restriction do you think you'd have? I understand it's currently through July 6, and given the load factors and where they are, it's probably not terribly disruptive to your operations. But clearly, as you move into 3Q and 4Q, that would be a pretty major shift. And so how do you move someone from you're guaranteeing a blocked seat to, in September, you're not?

Yes. I mean I think public perception -- I mean, I can't predict what's going to happen with COVID. But I think having like you and all of your listeners on the phone are sort of living through this and the dynamic changes, and you generally get more -- as data comes out, you get more and more comfortable by doing things. And I think the customers that are flown, our NPS scores are higher than they've been in years because customers go on the aircraft and realize, "You know what? It continues to be safe to fly. I have confidence in flying. It's not as painful as I thought it was going to be." And it's really getting that momentum back. Obviously, in the medium to long term, it's not sustainable to only be flying around a certain level of capacity, particularly when demand returns. And this is why we've purposely put a stake in the ground and so to help retain some of that confidence then. That's going to be the position until July 6, and we'll continue to review it. Think of it like school closings in Connecticut. The educational authority put a stake in the ground and says, "Until this day, this is what the situation's going to be. But it continues to be under review." And I think the key thing for us is to have the integrity that says, "This is what it's going to be like until this date," and then we'll continue to assess it as we go forward. But I'm pleased that this is the approach we're taking, as you say, particularly with the current demand environment. And we've just got to get the wheels of the industry moving again. And I think as the shelter-in-place kind of get lifted, as most of the dynamics of the virus continue to evolve, I think we'll -- in the medium term, I think you're going to sort of see a much improved environment.

Okay. And you've previously laid out your cash burn trajectory given where you're able to take your costs in the near term. Can you give us a color as to the progress against those? Everything is kind of on track, as you stated in the last call. Are there big needle movers that are -- more discrete items that we need to do more work to achieve those step-downs?

Yes. Great question, Myles. And I feel for you guys as analysts and also as your investors are trying to compare apples with apples. I think having listened to all of the earnings calls, and we have the benefit of being towards the back of the pack this time, it was clear that it is difficult to assess what's included, what's excluded from the cash burn, particularly with the CARES Act, et cetera. So we decided as ever to be very transparent. So it includes everything: cash revenue coming in, cash refunds going out, OpEx, CapEx, cost of financing, you name it. So at the back end of March, we were burning about $18 million a day. We brought that down to $10 million from May, and we're sort of pretty much in line with where you'd expect us to be. And really -- I mean, that, as I said, was based on negative -- slightly negative passenger revenue because refunds for the month were out, outpacing inflows of cash revenue. And so really, it's a cost plan. And we've taken a really, really deep look and a really deep focus on our cost reduction. I'm delighted with the engagement of our 23,000 crewmembers. They're doing an incredible job. We had the backdrop of the structured cost program that we've been running for 2.5 years, which has really increased the cost consciousness across the organization and be it taking a knife to our sort of fixed cost structure, stopping projects, deferring CapEx, engaging well with the work groups in terms of ensuring we've got flexibility. Over 60% of our crewmembers have stepped up to take some form of sort of voluntary time off in some shape or form, has meant that we've managed to sort of get our cost structure down to that level. Now going forward, we talked about Q3 being sort of between $7 million and $9 million. Again, most of that is predicated on the cost front. We are expecting to see some improvement in the revenue environment. but we've continued to be quite conservative, and as we sort of think about the dynamics of the cash revenue coming in, and there are incremental opportunities as we go forward with the benefits of time with regards to additional unpaid time-off programs with our crewmembers, additional benefits from our business partners and continuing to look at the business. So I'm pleased with the progress we've made. We continue to be on track. And the #1 financial goal that we have is to really wrestle with this cash burn and get it down as low as possible. But like everybody else, it's predicated on the revenue coming into the business in order to take that thing down to the lowest level.

Okay. That makes sense. And I guess, one of the things I've been surprised by, covering both the aerospace and the airlines, is the lack -- or, excuse me, the presence of seemingly aircraft delivery flexibility with the OEMs, both yourself as well as others. And I'm just curious. As you look at your own flexibility with respect to Airbus and them as a partner, just how much flexibility over the next 2 to 3 years do you have to manage your delivery stream, given the uncertainty of kind of how the recovery looks?

No. It's a really great question. And we have an industry, and this is what makes it so interesting. One, it's got a very sort of high fixed cost structure, which adds to its challenge. And secondly, the CapEx decisions you're making are very sort of long lead. The other point I would make, and it's interesting, I read an article last week pertaining to CFOs and talked about relationships matter. And I have to say, some of our biggest partners, the likes of the Airbus, the likes of our engine OEMS, et cetera, Pratt & Whitney, the relationships we have with these entities at the sort of our need have been really, really telling. And so despite the fact you might not have relatively short-term flexibility on contracts because some of these aircraft are in the production line, the OEMs are really stepping up. And so our immediate focus was really around 2020 and rationalizing the order book. As we mentioned on our earnings call, we've reduced our CapEx forecast by $1.3 billion between now and the end of 2022. It's been a sort of fantastic start. It's given us the wiggle room we need to continue to manage liquidity. But we continue to have productive discussions with the OEMs in terms of going forward. Once you sort of get beyond the sort of 18-month, 2-year time frame, Myles, you get obviously much more flexibility in these contracts. I'm not going to get into our specificity of the -- obviously, the JetBlue deals. But the way I sort of think about it, it's making sure you've got the right relationships, and you can work together for a win-win solution as we've gone through that. And we've certainly seen that as we've managed our sort of 2020 and immediate cash burn alleviation measures. So I'm pleased with where we are.

Yes. I mean it's interesting. I mean I'm not sure who's got the bigger crisis to deal with, the airlines or the OEMs trying to juggle their own cost structure. I would -- which would you rather be? A CFO of, today, an airline or an aircraft OEM?

I don't know. They're both fantastic roles. I'd take either of them, to be honest. I love the industry. It's very interesting. They've both got their pros and cons. It's -- and let's not forget. The industry ebbs and flows, right? It goes from being the best at overnight. This is completely unprecedented. We've never seen anything like this. I've not seen anywhere near this in my sort of 23, 24 years in the industry. But it will come back, right? And it goes back to the sort of the relationships thing. I think there will be a time in the medium term where things are booming again. And the OEMs are sitting there, they can't make aircraft and engines quick enough. And so it's about maintaining those long-term relationships as you get through it. And that -- but you're better off, in some respects, having partners that you can do some good business together versus safer partners where you're sort of ripping up contracts in front of each other at a time of a very difficult need. So I'm pleased with where we are, and we'll ultimately get through this with the right partnerships.

So looking at your fleet, obviously, the 190 was going to be -- or is going to be replaced by the 220 over time. And I see a lot of other airlines that are pulling forward retirement plans into the present. And I would imagine right now it's a little bit of a balance where 190s probably have a low trip cost and maybe have certain utility. And so an accelerated retirement there may not make as much sense. But I guess, is there an opportunity to pull forward that overall retirement strategy on the 190 even if the 220s don't fully offset over the next few years?

Yes. It's a very good point. It's something we're looking at. I mean the focus, as you can imagine, that I've talked about is really around the cash burn and liquidity. But we are pivoting and have been pivoting our views to sort of, what does the future size and shape of JetBlue look like, particularly as we come out of this crisis as a small airline? And it's going to take some time to get back to the sort of 1,000, 1,100 flights a day that we need. So we are looking at the fleet. We are looking at the opportunities retirement of some of the older aircraft and what is our need in terms of the footprint. So you're spot on. It's something that we're wrestling with and giving some thoughts to in terms of our existing contracts, the cost of operating, et cetera. I am really excited about the A220. It's a game-changer for JetBlue. And I'm not anticipating anything in terms of accelerating CapEx to bring them in sooner, but there's certainly a good opportunity into the future to do that. But you're right, in the short to medium term, we're going sort of deep, looking at the fleet and looking about the odds of the possible. So you collectively will be hearing from us in due course as we sort of finish our overall review of the company as we sort of think about what this '21 and beyond look like.

Okay. And I guess, fleet-related, but as you think about the London route in '21, update us on what specific maybe demand signals and gates you want to see before you commit to that and then maybe when it would start to be inserted into schedules? So that we understand like what the specifics will likely evolve from that.

Yes. Just as a sort of reminder for everybody, this is a New York and Boston strategy. And I know we're going through this sort of inflection industry at the moment, but our commitment to Boston and New York and Fort Lauderdale is unwavering. And it's -- they are critical focus cities to us, and the European aspirations in London is a critical part of that. Again, a bit like the A220, we see the economics associated with that as a real great opportunity for JetBlue. And unfortunately, for the industry, some of the -- sort of the changes that have been going in Europe, which I'm sure you've been very focused on and you've been seeing, has got to a position where more sort of gate slot facilities have opened up. There are like slot use it or lose it slot restriction waivers that are actually in place, but we've certainly been watching that very closely. The other thing we've been watching closely is the outcome of the sort of Competition and Marketing Authority, the CMA, competition authority in the U.K. which took a deep, long hard look at the transatlantic joint business with American and British Airways and sort of awarded some sort of slot alleviation for new entrants. And so you're not going to see JetBlue pay exorbitant fees for slots. We wouldn't have done that before. We wouldn't do that now. But certainly, the environment is even more compelling for us to be thinking about narrowbodies. In terms of timing and what do we need to see, you're right. I mean we want to sort of start seeing some of that demand coming back. And so we have actually said that we would expect some nudging to the right, some form of delay. But we are still committed to the strategy and the opportunity that, that provides in one or more than one London airport. We won't, obviously, be tipping our hand to the competition and getting ahead of that, but we are continue to be excited about the opportunity and see it's a very accretive use of capital for our owners as we go forward. I mean this isn't like a very short term that -- these are sort of longer-term decisions that you're sort of generally going forward with. So no, we're pleased to have that on the docket.

Makes sense. And maybe to bring it back to the U.S. In terms of reconstituting the network, how do you think about in putting the pieces back together? What's kind of the first parts and parcels? And then, just walk us through as an operator or as a fleet planner, CFO, how you reconstitute what you had. And also, as you put revenue back into the system, maybe from a CFO perspective, should we think, from a modeling view, for every $0.50 of revenue, that's going to go towards a reduction in your cash burn? Is it $0.60 reduction? Just maybe a rule of thumb, if you will.

Okay. So with regards to the sort of capacity, it's really a case of, where is the demand, what we're seeing? And how do we point the aircraft to where the money is and where the customers want to fly? And again, I'd say size is our advantage. So we can be incredibly nimble. And you'd sort of look in the rearview mirror and say size -- that bigger is better from an airline perspective. But that's -- in this current environment, having the flexibility to move things around, I think, really adds to our advantage. We're not going to get ahead of things. As I said, we've seen some green shoots, but it's still off a very low base. And so you're not going to see us, all of a sudden, throw in a crazy amount of capacity just because we've seen a few green shoots. We're going to be very measured about that because, obviously, to your sort of point on cash burn, it's really sort of key for us to think about how we bring that back in a sort of gradual level. And then it's the case of where the market is. We've talked about Boston. We've talked about New York. We've talked about Fort Lauderdale as our key biggest sort of focus cities. I think you'll continue to bring frequencies back in a measured way, in line with the demand that's going forward and so to support that. And then the other question is like what opportunities this could spring? Back in 2009, we saw as an opportunity, as things came off the financial crisis, for us to build our Caribbean franchise, and particularly Puerto Rico, which has been very profitable for us. And also the transcon network. I mean before COVID, we were the biggest carrier, believe it or not, between New York and L.A. in terms of flying business class seats -- air traffic business class seats, up to sort of 11, 12 shelves a day. So it's incredible how times and things that impact the industry will bring opportunities for us to exploit. And so back to our thoughts around, what does it look like coming out of this? Not only is it about our fleet, but it's also what network opportunities might sort of present themselves, particularly for an airline that has a low sort of cost structure and better group profitability in certain rigs that we compete on. With regards to your question about revenue and demand and how that sort of comes forward, to me, Myles, it's really a cost play. And so the way we sort of think about it is more about what our fixed and variable costs are. And I know it's just a bit on about the revenue side, but I know in a steady state situation, you're like 50% fixed, 50% variable from a cost standpoint. Obviously, that dynamic has changed to lower the capacity. So you've sort of taken an ax to your fixed cost structure. With the CARES Act and with where we are at the moment with that sort of fixed cost structure, we're focused on flying where we're sort of generating cash and making sure that we can do that. But as you go forward, it's that dynamic of thinking about, as you really start to go deep on your fixed cost structure, how you can make sure that the flights continue to contribute to the network, and it's all naturally predicated on demand. So that's how we're sort of really thinking about everything.

Okay. And maybe just -- maybe a slight clarification. So as -- just on the incremental side, is your variable cost even at this low capacity level -- as revenue comes back, is your variable fixed cost ratio still 50-50? Or is it a different ratio than that?

Well, it's a different ratio at the moment. You can imagine, if you have the steady state, and I'll make it up, you're flying 1,000 flights a day when you've got enough notice with your contracts, et cetera, on labor. But in terms of scheduling, in terms of the rosters, it's about 50% fixed, 50% variable. That's a couple of months out. In this scenario, and let's just say you're flying around 300 flights a day. Guess what? You've still got things like D&A, et cetera, which you're not going to be able to sort of ratchet those fixed costs down base spread over 300 flights versus 1,000 flights. So inevitably, the dynamic between fixed and variable has changed pretty significantly. And that's why it's imperative for us to go really, really deep, but focused on getting fixed cost structure out. Because once we get beyond the sort of cash breakeven position and we start pivoting more to P&L-type metrics, it's really, really important for us to start to get fixed costs out of the company. And we won't be alone on that in terms of an industry trying to do that.

Of course not, no. And then you did touch on load factors at 40% of Memorial Day, and actually, Southwest has pointed at 40% load factors for the month of June potentially. I mean is that what you're seeing at the lower cost leisure end of the spectrum that you guys are going to get to that sort of sustainable load factor in short order?

Yes. I mean the geographies are very different. I mean you think about shelters-in-place. You think about sort of Dallas compared to New York. You think about different geographies. So that was memorial weekend. The load factors are starting to ramp up, but I think what you're going to sort of start to see as that the shelter-in-place lift, particularly in the Northeast, then you're going to have more and more recovery and better lives. But obviously, that's also a function of the capacity that you fly, and it's not getting ahead of it. The one interesting point, Myles, and I'm not sure if I've hit this at the start of the call, what's been interesting is the demographic, of the traffic that we've seen. And there has been -- when I think about New York to Florida, has been a brighter spot. There's just about 2/3 of that booking profile come out in the Northeast, with customers sort of with a bit of cabin fever wanting to get out of the Tri-state area. So I think that, again, gives me cause for some very, very cautious optimism. The pent-up demand is there. And once customers get over this sort of confidence in flying again, that's going to be helpful to start seeing increased loads.

That makes sense. And maybe -- there's only a couple of minutes left, but a couple of final questions. One, on the corporate or business travel side, are -- what are you seeing from a green shoots perspective there? I imagine road warrior-type bookings are probably starting to show up in some marginal sense. And then how much are you guys internally thinking about as sort of permanent cannibalization of corporate travel from a higher productivity, from a lack of travel being realized?

Yes. I mean again, I'm very pleased from a savvy standpoint. And we're 80% leisure and 20% business. And we don't have to sit there worrying, from a JetBlue standpoint, "Oh, my God, if businesses are still working from home, what happens to our business model?" We're not seeing that. I mean I'll be brutally honest. The corporate side, I think, is very, very quiet. We're obviously staying very close to our corporates and sort of talking to their travel managers, et cetera. But it's the corporate travel. And you can probably assess this from your listeners, who are probably all calling in from their homes, and there's not an awful lot corporate travel happening. It'd be interesting to see what happens over the summer and whether there's a view that, like post-Labor Day, things start moving again. Again, I'm specifically talking about the Tri-state area versus beyond the maybe sort of Massachusetts because I know other parts of the country are slightly different. But leisure's certainly the one that's coming back, Myles, and we've seen the green shoots. We're not currently seeing that in corporate travels.

Yes, that makes sense. And anything -- realizing you're 80% leisure, you would still be impacted by any changes in sustainability dynamics over time certainly, and you've tried to be a leader at JetBlue on this topic. Is there a risk or an opportunity to, out of this, present yourselves or the industry to present itself as a much more sustainably-oriented industry with a younger fleet? Can you kind of -- can you address the stigma head on, on the back of this?

Yes. And I think, I mean, it's interesting how ESG is like a really, really important principle. And pre-COVID, it was getting an incredible amount of momentum. And I think about -- if you think about the environmental impacts associated with the grounding of a lot of activities or the stocking of a lot of activities on traffic and carriers respected responses in terms of doing the right thing as we navigate through this, we certainly have been a proponent in the ESG space, be it from everything in terms of the environmental impact, the community impact that we have and then as simple as ESG investing. But certainly, it's at the forefront of our thinking in terms of the investors that come forward. And I would naturally expect that a lot of the investment has -- are thinking about those companies that are leaders in the ESG world with the sort of dynamics of society change going forward. So you'll certainly see JetBlue in that position.

Maybe one last one as it relates to the maintenance side and your overall MRO. You had a number of cost initiatives over the last several years, and not the least of which was getting your engines under new contracts and kind of also the E190 fleet over time. But maybe give us some higher-level picture of your aircraft maintenance, your engine maintenance. What opportunity is still left? How low do you think maintenance will be year-on-year in 2020 versus, say, a baseline rate of 2019?

Yes. I mean joking apart, we never sort of stopped talking about and negotiating these maintenance contracts. And with COVID, with the change in dynamic of the fleet, with the NEOs coming on stream, with the 220s coming on stream, we're currently thinking about it. Because after sort of labor, obviously, oil is oil. But after labor, this is probably the next biggest cost item that we're very, very focused on. We have completed a lot of the contracts on the existing fleet. Sort of coming into this year, we were at the latter stages of contracting for the last tranche of the V25 engines. We sort of continue to work through that, and I'm pleased with the partners that have, again, really stepped up as we've gone through this crisis. But when you think about you're flying less, you've grounded certain fleets, you're looking at the sort of the engines, those are carriers that are thinking more about the lifetime costs associated with these engines and cannibalization of parts, sort of particularly to your point earlier, if you decide to start doing any retirements, how do you manage the engine maintenance on the remaining aircraft and what cost-saving opportunities that I have? So I always feel like our work is never done when it comes to maintenance because, as a CFO, just on this cost. But if you're not focused on the cost item, then you're really not doing your job properly. So more to come. And again, I'm really pleased with the partnerships that we've created over the last couple of years with these OEMs and MROs to make sure that we get into the right space.

Great. Well, that was a good discussion. Thanks so much, Steve. I really appreciate it. And I hope everyone in the line enjoys the rest of the conference over the next 2 days. Thanks, Steve.

Thank you, Myles, and thanks, everyone. It's a pleasure to have spoken to you, especially this morning. Thanks again. Bye-bye.

Bye-bye.