JetBlue Airways Corporation (JBLU) Earnings Call Transcript & Summary

Good evening from London to all of our listeners from around the world, and welcome to our webinar series focused on the COVID-19 crisis and its wider impact on the aviation and travel industry. My name is Daniel Boyle, and I'm the Director of transport here at Terrapinn U.K. We launched a series to really help keep the industry up to date with what is an, obviously, constantly evolving and unprecedented situation, bringing together industry experts from various parts of the business, and from different regions, who can update you guys on the state of play in the aviation and travel industry. Today, we are delighted to be hosting an exclusive interview with Joanna Geraghty, President and COO of JetBlue. Joanna is going to be joining Guy Johnson from Bloomberg very shortly to explore the state of play in the U.S. and the global standards needed to guide us out of this crisis. Just to note that Tuesday session that we hosted with Mastercard, and all of our previous webinars are now available online at the World Aviation Festival website. If you missed any of the previous sessions, just go to the website and click on the webinar tab to gain access. These are currently still free to download. Next week, we have 2 fantastic webinars lined up. The first takes place next Tuesday, and we'll be looking at sustainable aviation fuels, looking to understand more about their current status. Obviously, the impact that's had from the crisis and the future potential for SAF. And then next Thursday, we'll be run in conjunction with our partners at IATA and we're going to be welcoming their Chief Economist, Brian Pearce. Brian is going to join us and give his insight on the outlook for global aviation in 2021. And so some fantastic sessions coming up. Registrations are open, so do go online to the World Aviation Festival site and sign up. Okay. So let's get started. We want to make this as interactive as possible. So please submit your questions during the session. And we'll try to get as many as possible to Joanna. Just please make sure that you leave your name and company name when posting those questions. Okay. So let me introduce our host, Guy Johnson from Bloomberg TV. A big welcome to you, Guy.

Daniel, thank you very much indeed. Look, I think we all understand that the industry has been hit with a shock that I think is absolutely unprecedented. And I think the question we're all trying to understand now is where we are and ultimately, how the industry comes back from it. And in what shape it comes back, how different will this sector look as a result of what is happening with COVID-19. Joanna is incredibly well placed to be able to answer many of those questions.

So let's bring her into the conversation, get a sense of where JetBlue is and where it is going. Joanna, thank you very much for your time this evening. We greatly appreciate it. The question that I'm going to ask first up is a fairly straightforward one. How is the business?

The business has been through a lot. It's been rocked to its core. We saw demand bottom out, I'd say, in mid-April, and we are hopefully starting to see some small signs of recovery as we think about June, July and into the summer. From JetBlue's perspective, and remember, we're largely a domestic carrier with a large leisure base. We are starting -- we should expect about 50% of the capacity that we had last summer to be in place for July and perhaps slightly more than that for the August time frame. But at the end of the day, what we know is certain is that there is a lot of uncertainty. And every week brings more information that enables us to be more specific with our future plans.

So just kind of thinking about that, what have been the challenges to get the business to this point that you can start thinking about kind of the future rather than kind of managing the day-to-day minute-to-minute?

It's a great question. I mean in environments like this, you have to be focused very much on protecting the core, making sure your people feel safe, making sure customers feel safe when they're flying. Obviously, we've flown throughout this event. So we've been very focused on safety and cleanliness and health. But you also have to keep your eye on the future and the opportunities that situations like this present. And I do think we now have a very -- a good structure for our safety protocols, our health protocols. I think we've gotten our arms around what our crew members are going to expect of us going forward. And now it's really a matter of focusing on how do we rebuild customer confidence in traveling again as this isn't going to go away tomorrow. And so we're going to need to manage through this event and make sure that our customers feel confident and safe and healthy when they're flying us.

Joanna, just from a technical point of view. Can I ask you to accept the request to reengage your webcam, and then we'll be able to see you.

Hello.

There you go. Fantastic. I want to come on and talk about London a little bit later on. But let's carry on the conversation about kind of where the business is right now. Just walk me through the process you had to go through when this first started. Just you are sort of knee-deep into the operations of what happens at JetBlue. Can you just kind of just give us an understanding of the nature of the challenge and the mountain that you have to climb?

Sure. I mean demand and revenue went to nearly 0 overnight. And the first and most important thing was to make sure there are people felt taken care of. It's scary when you're working through an event like this. You're nervous and we're in New York City. You're nervous that you're going to catch the coronavirus. You don't understand the circumstances under which you catch it. There's a lot of misinformation out there. And making sure that our crew members understood that we were there for them, making clear that we had sick leave policies, that we had contact tracing policies for when somebody did come down with the coronavirus and who we would notify that they may have come into contact with them. So that was really, I'd say, the first several weeks was standing all of that up and making sure that our crew members knew the resources that were available and that people would show up for work because we were still operating but at a much-reduced level. And then the focus simultaneously became around how do we make sure that we're putting safety protocols and health protocols in place for our customers. So everything from reducing onboard service to putting more disinfectant in our terminals, whether it's hand sanitizer or cleaning, increasing our cleaning protocols on the aircraft on turns, taking flights down, parking aircraft. We have over 160 aircraft parked right now. So there was a massive effort around safety, health and then taking the operation down to a level that really reflected only essential travel.

Have you planned, how do you walk into anything like this?

Yes, we have. I mean we do drills all the time for accidents. And then for other scenarios, whether there's a large IT outage, an aircraft grounding. And so we took many of the same principles and the same team to really stand up a command center to focus on our safety and health measures, but also taking the airline down. If you recall early on, at least in the United States, there was a rumor that the U.S. airline industry may be grounded. And so we were running drills around if we have to ground the aircraft, how quickly could we take it down, how would we address customers that are displeased, we've got international locations closing on a moment's notice, closing their borders, how do we make sure that we can repatriate customers. So we walked into a lot of this, and then we're able to use a lot of those same plans for this event. However, the magnitude and time frame of this was, frankly, much larger, I think, than anybody expected and then the just the sheer overnight drop in revenue and the focus on our finances and making sure that we were reducing our cash burn and ensuring that we are protecting our financial future as well as very much a large part of this.

Let's pick up on that a little bit. What was it like dealing with Washington?

Washington is apolitical place. But what I can say is that the administration, in particular, Secretary Mnuchin have been incredibly supportive of this industry. The airline industry is critical to our economy, critical to the global economy. And I think that was very much reflected in the CARES Act and the safety net that, that provides for our crew members and for payroll dollars through the end of September.

What happens then? At the end of September, come the first of October, you are, in some ways, unshackled from the limitations that the CARES Act money sort of provides. What does JetBlue look like going forward from that point?

I think JetBlue will look smaller. But at the end of the day, we have a very long history, 20 years of never furloughing a crew member. And our focus right now is on doing everything we can to protect jobs. We recently launched a number of voluntary programs. In fact, we launched that this week. And we're really encouraging crew members to take time off if they can afford to, to consider, the time is right to change careers -- to consider changing careers. We know we'll emerge smaller, but we really want to protect the culture that we've built here and protect the fact that we haven't furloughed in 20 years. And when you do that, you keep your culture intact and you do, I think, emerge a stronger organization because we've all come through this together as one company.

You say smaller, how much smaller? Do you have an idea of that? I guess it's almost impossible to say at this point, you don't have an idea of kind of how the virus is going to evolve, but kind of do you have a sort of set up parameters? Do you think there are kind of -- could it be as sort of almost as big as you are now? Or could it be half-sized? Do you have an idea of the scale that you're looking at?

It's really challenging to say now. I mean, right now, we are seeing some demand coming back in our leisure markets. And so every week brings far more information. So I think I'd be irresponsible to kind of project out what we think the fall is going to look like because there's just so much uncertainty in what the pandemic is bringing to us. What I can say is, for the summer, we expect to be about half of the capacity that we were last summer. And we are seeing some pent-up demand for travel among the leisure customer base, which is frankly, nice to see.

What's breakeven? What do you need in terms of a load factor to breakeven? Is there a point you get to over the summer when you stop bleeding cash when the business stabilizes?

Yes. Right now, with the Payroll Act support, the breakeven load factor is much lower. It's typically, I'd say, in the 70, 80 percentile in terms of breakeven load.

Okay. But at the moment, you're nowhere near that.

No, we're nowhere near that. I'd say our network reflects very different things in different geographies. So obviously, in the United States, similar to Europe, how the coronavirus is working its way across the country is very different. So you have New York, we're in Phase 1 of reopening. There's still a quarantine in place in Florida for customers that fly from New York to Florida, and you would have to quarantine for 14 days. Massachusetts also quarantine. Texas, other states are very different. So across our network, we have very different types of flights. So our Florida to the Northeast flights tend to be a bit fuller. Our short-haul business markets tend to be a lot less full.

Do we want full flights?

When I say full, I'll just make a point. We're actually blocking the middle seats on our airbus fleet, and we're actually blocking the aisle seats on our 190 fleet. And so as we think about physical distance, we think at least in the short term, that's going to be an important piece of regaining customer confidence. It's very expensive to continue to do that for the longer term, but we're committed to doing that through the end of July, and we're constantly reevaluating what customers are most focused on to get them back on to aircraft.

So the middle seat does have a future?

It has a future at JetBlue at least through the end of July, but I think we are trying to understand what is important to customers because it is an expensive investment to make. We know customers are most focused right now on facial coverings and on cleanliness, social distancing in terms of our 6 feet, 2 meters is something that we also know they're focused on, but not as important as cleanliness and as facial coverings right now.

Do you think -- you talk about how expensive it is to put some of these things to work. And the middle seat is the most obvious example of that. Do you think fares may ultimately have to rise to reflect the extra precautions that are necessary?

Fares are largely a function of supply and demand. And as long as demand starts coming back, I would expect that fares will stay reasonable. JetBlue has a long history of lower fares and we're a low-cost carrier, and making sure we have fair fares is an important part of our legacy and our future. And so we're very much focused on how do we ensure that as we exit this crisis and under the new normal that we can continue to deliver fair fares to our customers.

But in terms of what they are asking for, presumably, the demand for customers has gone up, has increased. They no longer just want a seat. They want all kinds of other things as well. They want to be protected basically. And I'm wondering how that equation works.

I don't think being protected and offering a clean and healthy experience and high fares go hand-in-hand. I think you can offer a clean, healthy experience and also offer low fares. Customers, before the coronavirus pandemic, were focused on in-flight entertainment and service. The needs have changed. And as we think about those needs, I'm confident we can still offer very fair fares and still address customer needs.

You and I spoke on Bloomberg Television a few minutes ago, and you talked about your recent experience on a plane. Just kind of walk me through how different that is?

Sure. I think the biggest difference is probably facial covering. Wearing facial coverings onboard an aircraft for the duration of the flight is definitely not the most comfortable feature of flying, but it's something from our perspective that is necessary. It's the new flying etiquette. It's more about protecting others from any illness that you may have. And just giving a sense of kind of confidence in that we're all in this together. And I think flying is going to be a team sport for the foreseeable future, whether it's maintaining a level of physical distancing between yourself and another customer, whether it recognizing that some of the amenities that historically were provided, drink service, snacks. That's different nowadays. We now provide a sealed bag with a water and chips as opposed to the higher touch service that JetBlue is known for. I think customers overall were very polite. There was no rushing the gate. Everybody was maintaining a level of physical distancing behind them. I can tell you the flight was incredibly pleasant. And I look forward to flying again in next in the next few weeks. But I also recognize that there are some customers that might be nervous about flying. And so our focus has been on putting all those precautions into place, whether it's reduced touchpoints, whether it's facial coverings, whether it's blocking the middle seat, increased cleanliness, all of these layers contribute, we believe, to an overall healthier travel experience. And our hope, when our customers fly us is that they see that healthier experience play out in their experience flying JetBlue.

The advantage of the system we're now working with is that I can start to see some of the questions that are coming in and one of them kind of is relevant right now. So let me just bring it in. In terms of backdrop, in terms of the experience in the terminal, how is that going to change?

Sure. From our perspective, I think you'll have far fewer touchpoints. So we have self-bagging and self-tagging. We have hand sanitizer dispensers at all of our kiosks. We're also trialing a UV technology at our kiosk to kill germs that may be present. So a lot of reduced touchpoints. In many of our airports, we have self-boarding gates. I can say, customer adaptation to self-service has increased threefold overnight, which I think is a good thing for everybody. But I'd say reduced touchpoints in the airports and physical distancing are kind of the 2 themes throughout the airport environment.

Does that slow the turnaround times around down, sorry?

It doesn't slow the turnaround times down at this point. Again, in terms of the demand that's coming back, it's still off of a very low base. And so we're confident that we can do all these things for the foreseeable future. And we're also looking at, in the new norm, if there is a vaccine or a therapeutic treatment, and air travel comes back in the short term in a much greater amount. We'll adjust our turnaround times, and we'll adjust our schedules to reflect that.

As you say, you're business, you are -- sorry, you're not business, you're leisure and visiting friends and relatives. Does the business -- does this business come back? Everybody's trying to figure out whether or not corporations are going to allow their people to fly. I guess you're probably kind of having that argument internally as well, slightly different one from your point of view, but certainly from the companies that I've been speaking to, they're still debating this. And I'm curious as to know, do you see any forward bookings at this point? Do you expect them any time soon?

We're not seeing a lot in the way of forward bookings for business. As a leisure carrier, I think we're happy that we're seeing some bookings on the leisure side of the house. We're staying in very close contact with our corporate customers, really trying to make sure that when their travel policies evolve, that we're aware of that evolution and what our corporate customers are going to need to fly again. We think many of the same protocols we have in place will equally apply to corporate starting to fly again. I think everybody is asking around the globe, Zoom, Microsoft Teams, what's the new world look like, you still have to have meetings in person. I think many of us that have been working on Microsoft Teams in our organization see the tremendous benefits, but also single limitation. And at the end of the day, from my perspective, airlines connect people, and connections are what makes our society just so wonderful. People want to see their friends, they want to see their family, they want to see their colleagues. So we do think at some point, that will come back because there are limitations in terms of what you can do via Skype or Zoom. But we think there's still going to be some time before that happens.

Some time. Just kind of how long? Again, I come back to kind of where we started. But you don't seem to fear that ultimately demand is going to be structurally lower for kind of a long period of time. Do you think passengers, do you think customers, once the world starts opening up again, they are going to return to their kind of pre-COVID behavior quickly? Do you think kind of -- what is your sense of the long-term damage that could be caused by this?

Yes. I mean we're looking at 2021 before we see demand at the levels of 2019, whether it's the first half or the second half, it's really anybody's guess at this point. We're looking at each week where we do see -- at least in the case of leisure demand returning, we're looking at each week as a real indicator of what the future may bring. I mean, it's remarkable what you can learn in just 1 week. And if you were to ask me, and most of the industry 1.5 months ago, whether July would look like what it's looking like, I think most would probably say no. And now as we look at July, we're looking at capacity, at least at JetBlue, at about 50%. And so that's better, I think, than what most probably would have predicted even 2 months ago.

Is there a generational difference in terms of tolerance of flying?

We haven't seen that. The customer surveys that we've been doing, and we've been doing a lot of them. And all of the different indicators, we're seeing a fairly consistent response among customers in terms of what will get them flying again. And it's really focused around all the safety measures and all the health measures that we're putting into place.

So millennials kind of the same as the older generation. I would have thought the younger generation would be more tolerant to flying at the moment.

Right now, our data is showing that you need to have the same protocols in place. I mean, I'm not a millennial, but if I were a millennial, I want a clean aircraft just like somebody who maybe of baby boomer. And that's what our data is showing us. And I think as you look at perhaps 9/11 and what happened during 9/11 and how security in the United States, the transportation security administration came about, reinforce cockpit doors came about, there are certain things, I think, that will stay with us even after the coronavirus. And I think aircraft cleanliness, clean air, I think those are some of the things that customers are now saying, this actually matters. Health in flying matters, health in restaurants, health in going to a grocery store. All these things matter and a far greater focus, I think, for all generations on that.

So what is the -- does the inside of the plane change? Does the type of seats that you're going to put on planes change? Does the bathroom change? How do you reconfigure an aircraft to make it feel cleaner? Do you need to?

I don't think you need to reconfigure an aircraft to make it feel cleaner. I think that if you think about HEPA filters onboard the aircraft, 97% of the air onboard the aircraft is recirculated every 3 minutes. HEPA filters filter out all sorts of viruses, including the coronavirus. I think understanding that and sharing that with customers has been an important focus of ours and of the industry and of aircraft manufacturers. I think greater knowledge about what carriers do in terms of their cleaning protocols, greater knowledge about the service touchpoints, greater knowledge about wearing facial coverings. I think those are the things that are going to last. I don't believe carriers are fundamentally going to reconfigure their aircraft to address the coronavirus. My hope is when there is a vaccine and/or a therapeutic treatment or both that we'll largely go back to pre-COVID era. But I do think, as I've mentioned, cleanliness on an aircraft, I think, is going to be with us to stay.

Am I going to pay more to get on the plane last? Am I going to pay more to get on the plane differently? How does the nature of boarding and deboarding the aircraft change? Because, presumably, I want to spend as little time as possible on that aircraft. I spoke to you earlier. You were talking about the fact that you -- the way you board aircraft has changed. Is that something that changes -- that kind of stays with us as well?

I don't think long term, the way we board an aircraft is necessarily going to stay with us. Right now, customer -- our focus is on making sure customers don't pass one another in the aisle. But we are still making exceptions for our mid-customers, which is our most loyal customers and for customers with special needs. And so I think for the time being, maintaining physical distancing is what matters. But I think longer term, I don't believe the boarding process will change longer term.

One of the questions that's come in, it kind of relates a little bit to this. A lot of people may, particularly in the United States, prefer to drive this summer. Is that the major competitor now? And kind of how sticky do you think that could be?

I think for the summer, I think many people will choose to drive over perhaps taking a flight to go to a vacation destination. But again, within the Northeast, where we have a lot of flights. Over the summer, I think people are going to maybe have shorter fall vacation destinations. But in the winter, as you start thinking about the future, I mean, moving from one climate to another. Warmer climate in the wintertime is going to remain a really important thing for our customers and I think for vacationers. People love to travel. People want to experience different things. Driving a couple of hours, I think, is great. And I think there's a lot of things you can do there. But at the end of the day, people want to fly to Europe. People want to go to Asia. They want to go down to the Caribbean. They want to visit their family, their relatives in other parts of the United States. And so I do think that the airline industry is indispensable. It has opened up tremendous opportunities for so many people, whether it's exposure to different cultures, whether it's seeing your friends, so I don't think there is a replacement for air travel. While I do think in the short term, we may see more people choosing to drive to their destinations. I mean at the end of the day, people are going to want to fly because the experiences that you can have when you fly are, in many cases, second to none.

Do you worry about a second wave? What are you planning for?

So we're planning for all scenarios. We've got a revenue scenario that plans for a more conservative possible recovery, and then we also have an operational plan that contemplates a more conservative recovery. Again, I think because there is so much uncertainty, I wish I could tell you the fall is going to look like this. But nobody really knows. And so we are planning for all sorts of different scenarios and really being prepared. One of the big constraints that JetBlue had along with many carriers was supply chain challenges around disinfecting supplies, PPE. So that is one area where we're planning on how do we build the stockpile in case there is a second wave because we don't want to be faced with supply chain constraints similar to what we saw early on. And I think every carrier is probably doing that.

You're obviously investing a lot of money at the moment in trying to figure out how to make the planes safer and feel safer. You talked about the kind of the touchpoints earlier on. You talked about kind of some of the UV technology that you're using. You have JetBlue Technology Ventures. Kind of how do you see that playing a role in how you resolve this problem?

JetBlue Technology Ventures has been a tremendous asset for us. It allows us to see beyond the horizon and allows us to see all these new technologies. And what we've been able to do during our response to COVID has actually been to deploy a portion of JetBlue Technology Ventures on new ventures around cleanliness, disinfection, far disinfections, thermographic imaging, all sorts of things that may potentially contribute to safety and health onboard the aircraft or even for our own crew members. And so we've been able to actually redeploy a portion of that team to focus on many of these new emerging technologies, which has been an absolute benefit for JetBlue.

And how does it work going forward?

Yes. So I think we'll continue to look at these opportunities and invest in early-stage startups as the case may be. JetBlue is really a lab for many of these startups. And as we step into some of these new technologies, we're vetting them, but we're also looking at ways we can pare and partner with them. Right now, we're trialing a UV technology at our kiosks that was vetted through our JetBlue Technology Ventures team. And I think we're going to have a lot more opportunities. I can tell you, my inbox is inundated with individuals selling PPE, new technologies, antimicrobial treatments. And what's been great is for those that seem really interesting and potentially an application in the aviation space, we're able to deploy our JTV JetBlue technologies team to investigate that and kind of run the tracks for us.

Is this going to be a competitive advantage that certain airlines have? My plane is cleaner than your plan, and our services is better as a result.

The industry really tries hard not to compete on safety. I think there are certain things some carriers may choose to do because they believe it's an important component of their service offering, for example, not every airline is blocking the middle seat or blocking the aisle seats in their smaller aircraft. We've chosen to do that, a few other carriers have as well. We think that is something that's important to the JetBlue customer based on the data that we see. But I do think some of these core things such as aircraft cleanliness, healthy air, ensuring your crew members are healthy, no customer wants to be served by a crew member that's coughing and sneezing, and I think that's an important part. I think there are certain things that will be just foundational that every carrier does. And I think many carriers, if not most, if not all, are already doing these things, then there will be those few things that airlines think is something unique that sets them apart because of their specific customer research or because it's something that they want to invest in.

That kind of leads on to another question that you've been asked. And you talk about the crew members serving. What is the future of food onboard an airplane?

I still think there's a future of food. Right now, we are looking at under what conditions would we return and bring service back at a higher level than what we're doing now. I think in our Mint product, our food and our drink program is so critical and important in terms of how we've been able to differentiate our first class on our premium service. And so as we think about bringing food back, how do you do it in a way that's as sanitary as possible, how do you do it in a way that customers feel that we've taken every precaution necessary. And I do think there's a way to do that. I think restaurants are probably struggling with many of the same things that we're looking at. And we'll follow the right protocols in place to make sure when we do bring it back, it's done so in a way that gives customers confidence that we're taking all necessary measures. In the core product, right now, we're offering a sterilized bag with a bottle of water and 2 snacks. And that's been incredibly well received. And I think we'll continue to evaluate that and see whether customer sentiment is changing. And again, I think we're really trying to be led by data. We all have views and opinions on what it's like to travel. But our customers, and we have them traveling every day, are telling us in our survey data what's important to them and what's working and what's not working. And we look at that week over week, and things do change. And I think as more and more customers start traveling again, we're going to learn a lot more about what they need to fly again with JetBlue.

Just kind of what kind of data are you collecting at the moment? How much can feedback you get? I'm curious to kind of get a sense of the depth of that.

Sure. So on every flight, we survey customers, and I can tell you that more customers are filling out the surveys than ever before. And we ask them a whole series of questions around what's important to them in traveling. And then we're also on our website and through other polling asking the traveling public, including customers who have flown JetBlue and other airlines, what are their priorities? Is their priority social distance? Is their priority temperature checks? Is their priority a vaccine? Is their priority cleanliness? Is their priority review service touchpoints, clean air? And we actually look at all of those week-over-week and rank them based on order of importance. And it's been actually really interesting to see because I think you hear anecdotally, this is going to be very important for customers to sort of flying again, and then you actually look at the data, and it may not be as important as you thought.

You've got the poster behind you. I'm assuming it's there not by accident. So let's talk a little bit about the transatlantic offering. How has -- how have your plans been affected by COVID-19?

So our plans have definitely been delayed somewhat, but we're still looking at a launch into next year. I'm very excited about that. Actually, I have a team downstairs that came today to start working on the service model for our long-range core cabin, which is very exciting. When you're building these models, you actually have to test them over and over again, do time studies, make sure that doesn't take too long to bring a drink to a customer, et cetera. So they're actually restarting all of that work today, which is very exciting. But I think there are so many great opportunities for JetBlue as we start to bring our model across the Atlantic. As you all well know that it's a very right now -- well, not now, but before coronavirus, it was very expensive to fly from New York to London, from Boston to London. We think we can bring the same great JetBlue experience we brought to the West Coast in the United States to Europe and do it for less money and at a higher level of service and a fantastic product.

Where am I going to land?

It's a question everybody wants to know. We have not chosen the city yet. And I think that's actually been a really great decision to hold off and wait because our focus is on the right airport, at the right cost and making sure that it fits our model. I do think that COVID has potentially created a number of opportunities for JetBlue in Europe, whether it's slot availability or gate availability. And we are closing in, hopefully, in the coming months on a decision.

I look forward to hearing about it. Do you think people are going to have a problem flying on a narrow-body? This is partly a COVID question as well. A narrow-body is a very different experience than a wide-body and a wide-body feels more spacious, and you maybe have the potential for a greater degree of separation. Do you think the narrow-body-wide-body argument is being affected by COVID-19?

I don't think it is. We haven't seen anything that would even suggest in our data that it is. I mean we'll have our mid-service in the front. And if you look at what we've been able to deliver to the West Coast, customers are incredibly happy with that service and with our seat offering. And then as you think about the back of the aircraft, there's fewer customers onboard a narrow-body, and I think that may actually give customers a bit more comfort that there's less people that are actually onboard the aircraft at that time. So I'm confident that the narrow-body experience will be almost like a private jet experience. I can say that we actually have seen our charter business increased tremendously during these times. And as you think about flying a narrow-body over the Atlantic, it's a similar -- it's a much more private experience than what you would get on a wide-body.

Is it going to be a leisure business? Is it going to be a business? What kind of mix are we looking at?

So from our perspective, we look very much at Mint. When we started Mint, we started that with an eye towards the leisure customer and perhaps the small business owner. And because the product was so strong and the price point was right, we stimulated and generated a lot of corporate clients that wanted access to Mint. And so as we think about stepping across the Atlantic, we've got a strong customer base in New York, a strong customer base in Boston. We think leisure will definitely like it because the price point will be affordable for leisure customers who may not have been able to otherwise tap into a first-class experience at a legacy carrier. But we do think that for the small business, they're going to be equally interested. JetBlue does extremely well when prices are high and service is mediocre or not so great. And I think coming in and disrupting that very market, which is really high prices and mediocre service is our sweet spot, and I think we'll be able to do that in a great way.

If London works, what's next?

If you look at the aircraft, I mean, it's obviously a narrow-body aircraft, so you can determine the range and where the opportunities are. I think there's a number of opportunities, whether it's Dublin or other points in Europe. But right now, our focus is on London. We are incredibly excited about the opportunity, and I can't wait to be on that first flight.

Do you -- is it going to be similar to the West Coast flight? Is that basically the experience that we can -- if anybody has ever flown it that they can basically see that being replicated?

No. So I think that experience has enabled us to better understand the needs of the premium customer. But we also are very cognizant of what the current transatlantic offering looks like for every other airline out there. We've studied it extensively. We know what works. We know what doesn't work, both in the front of the cabin and in the core, our coach experience. And I think the JetBlue offering will be unique, uniquely JetBlue, just as we uniquely created our mid-service to the transatlantic, but with the international flare that it's going to need to have.

How do you think -- you talked about the legacy carriers. What do you think competition on that North Atlantic is going to look like? Do you think some of the carriers that are currently operating won't be there? Do you think that we will see others changing their offering as well? How do you see that market evolving that you're ultimately going to have to slot into?

Sure. I mean, I think there's a lot of opportunity in the transatlantic market for JetBlue. And specifically for the offering at the price point that we intend to enter. I do think carriers are going to react to it. They reacted to our mid-service out on the West Coast. The JetBlue effect, it stimulates demand, it drives prices down, and it forces everybody to raise their game, and that's fundamentally good for the consumer. And so if we get the same reaction that we got on the West Coast, which is more like flat seats, better service in the front of the cabin and lower prices, I think net-net, the consumer will benefit. And while we are a business and we want to do a great job delivering a great product and service, our focus has always been on doing something great for the consumer and something that resonates with our customers. And I think the JetBlue effect will drive that across the industry across the Atlantic.

What do you make of what has happened in Europe? This is less of an issue for London, but it's an issue on the continent that effectively we're seeing government takeovers of airlines. And Lufthansa is going to be run very differently as a result of being effectively state-owned. Air France-KLM is going to run very differently as a result. Do you see a level playing field in dealing with some of those carriers?

From our perspective, I think competition is competition. And every country has its own set of laws and regulations that support their carriers, whether it's the United States, whether it's Europe, whether it's the Middle East. And we all have to work within that framework. And we all have to ensure that we're providing the best product, the best service at the best fare. And so from our perspective, we're just going to go into these markets and do what we do best, and that's continue to focus on the customer and focus on providing a great fare.

Have you had any conversations with any of the low-cost carriers in Europe about syncing up? You're not going to compete, but if you are flying into London, it might be interesting together on an easyJet or a RyanAir flight that could potentially take me elsewhere? Is there a feed of possibility each way?

Sure. I mean JetBlue has over 50 airline partners, and so we're in constant communication with them around opportunities, whether it's beyond London potentially or other parts of the world. So partners are very much part of our playbook. But right now, we're focused on the core JetBlue experience, transatlantic, and working with partners to the extent that they can help us with that service.

Let's talk about one of the other effects of all of this. And I've kind of referenced it obliquely a little bit in terms of what has happened with France and Germany, but consolidation looks like it could emerge. Do you expect consolidation? The U.S. market is already pretty heavily consolidated. Do you expect more consolidation? How does the market change?

Sure. I mean the U.S. market, as you pointed out, is quite heavily consolidated, a bit different than Europe. I think right now, things are just so volatile. It would be difficult to see any further consolidation in the short term. In the long term, could this change? That's really anybody's guess at this point. But in terms of the short-term and the volatility that we're seeing, we would not expect at this point any further consolidation.

Do you see any aircrafts, do you see any carriers going under?

The U.S. industry -- airlines in the U.S. industry have been fairly strong. We do think with the support from the U.S. government, that CARES Act funding, every airline is focused on raising liquidity. The industry as a whole is pretty strong. So we don't see in the short term any possible bankruptcies in the U.S. specifically, but I do know Europe is quite different in that regard. We've already seen a couple of bankruptcies there.

Yes. We talked about the Atlantic. Norwegian obviously competes on those routes, Virgin obviously competes on those routes. Do you see winner over the herd?

That's hard to predict. I mean, again, right now, as we think about London, we have a few priorities. Our focus is on access. We want access. That's a big impediment to carriers like JetBlue trying to go into some of these markets, whether it's London or other places around Europe. And then just getting the LR launched and delivering on our product, our service and disrupting that transatlantic market.

Got a nice Airbus behind you, what about the little ones? What about the C Series? Where are you going with the 220?

Yes, the 220. So we're on track for delivery in December. It's being assembled down in Mobile, Alabama. We have a lot of pictures. We're very excited. We think that the C Series is going to be a great complement to the JetBlue fleet. Right now, the plan is to put the C Series largely out of Boston. It's a replacement for our EMBRAER 190 fleet. But I cannot wait to see beautiful aircraft, and I cannot wait to see that enter the JetBlue fleet later this year.

The economics are very different. Again, as you try and think about how you use that aircraft in a COVID world, like are you making any changes to how you bring that aircraft in? Are you making any changes in the way it's configured, the density or anything like that in terms of the way you bring that aircraft in?

No. I mean, we're sticking with our plan. I think our plan works in terms of what the configuration is that we're going to bring in. Again, we're going to put it in Boston. There'll obviously be some markets that we'll be able to reduce some of the frequencies. It's a plan that's got more seats. So we'll be able to reduce some frequencies in certain markets. But it will also open a number of different markets to us as well, given the range, given the fuel savings, that we see on that aircraft. I mean, it is truly a game-changer for JetBlue. And we're really looking forward to introducing it into the fleet.

Just in terms of the way you're going to -- does it change the way you staff? Does it change? Just sort of within the company as you bring it in, how does it change the way you operate?

Yes. I mean we do require an additional in-flight remember onboard. So we're in the midst of beginning training for that. Obviously, pilot training takes place as well for the A220, and that's well underway. But in terms of the integration, it's an Airbus aircraft and we're well versed in how we bring a new aircraft type in. We bought the 190s in as the first operator, the E190s. We're documenting the same policies and provisions that we did as we introduced that aircraft into the fleet, and we feel good about delivery in December.

Just kind of as we kind of start to wrap up this conversation, this has clearly been a huge shot to this industry. The industry was prepared, but not for the magnitude of the hit that it has taken. What are the long-term lessons as a business, not necessarily as this sort of airline, that you have learned, the need for a strong balance sheet, the need for kind of just some more robustness maybe in the way that the business is set up?

From our perspective, we entered this crisis with the second strongest balance sheet in the industry. And so we were and have been for the past several years, very, very focused on that. I think any airline that's gone through 9/11, gone through 2008 economic recession recognizes how critical it is to have a strong balance sheet. And that's an area where I've been incredibly proud of the team in terms of what they've been able to deliver there. I think the other -- probably most important thing is just the confidence of your people and the confidence of your crew members. This rocked our people because they're scared about catching the coronavirus and not knowing under what conditions you can get it. And so making sure that we have a very clear -- and we did, and we continue to have a very clear and robust sick policy in the United States. It's a bit different than Europe. But I think a very clear sick and time-off policy, we've augmented ours specifically for the coronavirus, given the length of time that you wouldn't need to be out if you get the coronavirus. But I think those are some of the things as we think about the future, making sure that everybody is aware of what the benefits are that you have, what the policies and protocols are in place for when you get sick, tracing, CDC guidelines, a lot of focus there. There's been so much discussion even before coronavirus, the future of pandemic, but frankly, not a lot of planning for a pandemic that made its way into companies, the government. And so I think a lot of lessons learned there. Just preparation for something of this magnitude.

Again, kind of thinking about how we go further forward in terms of the way the industry needs to be prepared, has this been a -- or do you think this will become a catalyst for change when we think about the sustainability of fleets that are operated? There have been some that have said that maybe government sort of put more pressure on the airline industry to become -- that some of the milestones should have been related to sustainability. How do you change as a result of this? And do you think sustainability and the way we think about it within the airline sector will change as a result?

I think there will continue to be a very strong focus on sustainability. While it may not be at the front -- the forefront right at this moment because there's so many other things going on. Our focus continues to be reducing emissions where we can and offsetting where we can't. We have a very comprehensive program, and we are completely committed to delivering on that. Things will change. There will be a vaccine. There will be a therapeutic treatment and what we want to make sure is that we don't lose several years of progress around sustainability because we've been so focused on the coronavirus pandemic. And so we continue to make sure that we're making progress there. And so when we do emerge, our plan for sustainability is intact.

Do you think government could have done more on that front? There have been some suggestions that we could have seen incentives to retire older aircraft and programs like that.

Yes. I don't -- this is an area where I think, frankly, the airlines joining together are doing a fairly good job trying to build sustainability plans. I wouldn't advocate for the government forcing retirement of aircraft. I think that's fundamentally the decision of a company based upon their own personal or their own company needs.

And the final question, I guess, this kind of comes back to what I do on a daily basis. Has your relationship with the financial markets changed? The roller coaster has been incredible. And trying to kind of judge how financial markets are treating airlines on a day-to-day basis is incredibly difficult, but you require the liquidity of the financial markets provides. You require the ability to be able to raise debt, you require the ability, obviously, to have equity. Has that changed as a result of this, do you think?

Yes. I don't think it's changed necessarily. I think we've been very focused, as you mentioned. We're currently out in the public and private market right now looking to raise another $750 million. It's all about communicating your plan. Making sure that our investors and the analysts know what we're seeing. It's been a very volatile environment, obviously. And so for us, it's been about staying close to our investors and staying close to analysts and making sure that we're executing to our plan as best we can and that we're being flexible and nimble as conditions change.

Joanna, it's been a great pleasure. Thank you for so much of your time today. We greatly appreciate it. Joanna Geraghty, the President and COO of JetBlue. Daniel, I'm going to hand things back to you.

Thank you, Guy. Thank you, Joanna. That was a fascinating session, looking at the current crisis and future plans for JetBlue. A big thank you also to all of our audience for joining us. For those of you that have been asking, yes, we have recorded the webinar, and you can watch it back. Those recordings will be available on our website and through other channels in the coming days. So please look out for those messages. Also, make sure that you sign up for next Tuesday session. We will be hosting a webinar on the future of sustainable aviation fuels. And then next Thursday, we have a presentation from the Chief Economist of IATA, Brian Pearce, on the outlook for 2021. The registrations for all those are open, so do go online and sign up. Again, a huge thank you to Guy and to Joanna, and we look forward to you all joining us again next week in the state of play series. Thank you very much.