JetBlue Airways Corp Q4 2015 Earnings Call Transcript - Thomson StreetEvents

JetBlue Airways Corp Q4 2015 Earnings Call Transcript

JetBlue Airways Corp Q4 2015 Earnings Call Transcript - Thomson StreetEvents
JetBlue Airways Corp Q4 2015 Earnings Call Transcript
Published Jan 28, 2016
Published Jan 28, 2016
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Abstract:

Edited Transcript of JBLU earnings conference call or presentation 28-Jan-16 3:00pm GMT

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Savi Syth - Raymond James & Associates, Inc. - Analyst : My question was, on those fare options, could you provide a little more color on what's been achieved so we have an understanding of what you're thinking the incremental contribution could be in 2016? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Savi Syth - Raymond James & Associates, Inc. - Analyst : Okay. And just a question on Mint, bear with me, when Mint was first announced, there seemed to be a very unique trans-con opportunity to address the high paid load factor in those markets. And also maybe to JetBlue's detriment, where maybe some of the competitors were possibly using the strength in the premium cabins to discount the main cabin. So I got that and then the extension to Boston made sense, given the similar type of passenger, but now you're starting to see more leisure markets, not just seasonally, like year round getting it? Are you coming to the realization maybe that your customer base would maybe need a premium cabin? I know one of your competitors has a small premium cabin and just wondering as you rollout more and more Mint aircraft, you're also increasing the complexity of the fleet and the product? Would like your latest thinking on Mint.


Question: Savi Syth - Raymond James & Associates, Inc. - Analyst : Got it. Good to hear. Thank you.


Question: Darryl Genovesi - UBS - Analyst : Maybe first on the A320 cabin retrofit program, some carriers that have added seats to their aircraft through similar retrofit programs historically, at times have had a little trouble with the scheduling as the retrofit airplanes came back into the fleet, which created a little bit of a unit revenue headwind for the first few quarters of the program. Have you thought through that? Is that something that could be an issue for you, too, as the A320s ultimately come back?


Question: Darryl Genovesi - UBS - Analyst : Okay. Thanks for that. And then, I guess, Mark, it looks like the share repurchase was a little bit bigger than we'd expected. Just wondering, it sounded like last time we talked about this issue, it sounded like most -- that you were thinking about 2017 as the year when you would embark on a meaningful share-repurchase program. Can you provide some updated thoughts there?


Question: Darryl Genovesi - UBS - Analyst : Great. Thanks very much, guys.


Question: Michael Linenberg - Deutsche Bank - Analyst : Two questions here, just when I look at your cost guidance for the year, and you can see, it starts at where you have declines and then those moderate to what looks like unit costs, ex fuel increases by year end. Is that just all in line with the movement in capacity, or is there anything timing, maybe maintenance-wise or anything else that drives it a little bit higher the latter part of the year?


Question: Michael Linenberg - Deutsche Bank - Analyst : Great.


Question: Michael Linenberg - Deutsche Bank - Analyst : Great. Second question, this is probably for Marty, just on some of the headlines that we're reading about Zika, I'm just curious if you're seeing any noticeable decline in bookings to Latin or Caribbean markets? Anything on that front would be fine. Thanks.


Question: Michael Linenberg - Deutsche Bank - Analyst : Marty, on the point about re-deployable ASMs, I know earlier you did mention that I think you were going to see probably the highest growth rate at Fort Lauderdale this year. How quickly can you adjust? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call Some airlines can tell you that they can do a significant adjustment of the schedule a month out; some will tell you that they can't change the schedule for six or nine months. What's -- how nimble can you be?


Question: Michael Linenberg - Deutsche Bank - Analyst : Great. Thanks, Marty.


Question: Duane Pfennigwerth - Evercore ISI - Analyst : Can you just help us with how you view the comps for the rest of the quarter and if there's any way to back into PRASM for January from this guidance? I'm just wondering how we should think about the trajectory for February and March relative to this down 3% that you've given us for January.


Question: Duane Pfennigwerth - Evercore ISI - Analyst : So sorry to pass through here, but would you say that we're dependent upon if we get more weather, going forward. But would you say that January is likely to be the worst print of the quarter and March should be the best, or any color like that?


Question: Duane Pfennigwerth - Evercore ISI - Analyst : Okay.


Question: Duane Pfennigwerth - Evercore ISI - Analyst : Okay. I think in the past you actually have given directional color on months but maybe I'm mistaken. Thanks for taking the questions.


Question: Jamie Baker - JPMorgan - Analyst : The 900 canceled flights aren't necessarily relevant in the quarter unless that's all that you budgeted for and we have another storm. So generally speaking, is there a level of quarterly IROPs that you're -- just sheer cancellations that you budgeted for that you can share us with, or share with us, that way we can assess the impact of any incremental weather?


Question: Jamie Baker - JPMorgan - Analyst : As it relates to the quarter, though, could you put the 900 in perspective? Does that use up 100% of your budget or is that half of the typical weather disruption that you plan for? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Jamie Baker - JPMorgan - Analyst : Sure. Second question, the industry wage bar for aviators is rising at a much faster annual clip than when your pilots first voted to unionize. And whether -- I'm curious whether this haste in management's resolve to get something done sooner rather than later or if we should just assume that your mark to market is a, I don't know, give or take, a 2018 event? Also for new hires, what's -- new pilot hires, what's the estimated time before one achieves a captaincy? I'm just curious how that's changed over time because it doesn't seem like it would quite be the carrot that you used to be able to dangle in front of new hires in hopes of maintaining a below industry average pay scale.


Question: Jamie Baker - JPMorgan - Analyst : And the transition time to the left seat?


Question: Jamie Baker - JPMorgan - Analyst : Okay. Thank you very much, gentlemen.


Question: Helane Becker - Cowen and Company - Analyst : Just a couple of questions, with respect to the fourth quarter, specifically sales and marketing expenses up quite a lot year over year, and I'm just wondering if that's a trend that we should expect to continue? And that was my first question.


Question: Helane Becker - Cowen and Company - Analyst : Okay. And then my other question was actually with respect to the maintenance costs. So now they're up much less than they had been. And that's another question that I was thinking about, especially relative to the rest of the year. Right? So is that our new level of how we should think about it?


Question: Helane Becker - Cowen and Company - Analyst : Right. Very good. Thank you. Thank you very much. Those were really my questions.


Question: Hunter Keay - Wolfe Research - Analyst : Marty, can you talk about the 2016 ASM growth in the context of stage, gauge, and new markets? And maybe in the new markets you're going to add, can you give us a sense of, at a high level, about the competitive dynamic? Are the new markets going to be added because they're un-served or because they're overpriced? Generally? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Hunter Keay - Wolfe Research - Analyst : Okay. Can you maybe just (inaudible) I'll take it up a level, how much of the 9.5 percentage points are gauge and stage, let's just, why don't we just do that?


Question: Hunter Keay - Wolfe Research - Analyst : Okay.


Question: Hunter Keay - Wolfe Research - Analyst : Okay. Cool. And then maybe also, Marty, can you talk about maybe some fare pressures you might be seeing, particularly on the East Coast, sort of the north-south stuff as some of the larger airlines get a little more aggressive selling connecting fares? Have you seen a lot of that recently pick up over the last couple quarters?


Question: Hunter Keay - Wolfe Research - Analyst : Anything that's connecting traffic? Go ahead, sorry. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Hunter Keay - Wolfe Research - Analyst : Thanks, Marty.


Question: David Fintzen - Barclays Capital - Analyst : Question I guess for Marty. I think, Mark, you may have mentioned or, Marty, you mentioned, that Easter would be more muted in terms of the shift. Can you just put some numbers around that?


Question: David Fintzen - Barclays Capital - Analyst : Okay. I mean, just to help us sort of play through the months, when you say muted, does that mean we really shouldn't be thinking about much, if any, sort of shift between March and April or is it typically like, I think, historically, it's what, 2% to 3%? Should we be thinking half of that? I'm just, just from a pure arithmetic standpoint, is there anything you can help with? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: David Fintzen - Barclays Capital - Analyst : Okay. All right. No, that's helpful. Mark, just given the kind of free cash flow you're now generating, and with the debt repayments that are coming up, can you talk a little bit about what's sort of the ideal net debt balance that you'd like to get to eventually? How do we think about how far you want to go with balance sheet? Even if it's not 2016, just over the next few years?


Question: David Fintzen - Barclays Capital - Analyst : (Laughter) okay.


Question: David Fintzen - Barclays Capital - Analyst : Okay. All right. Appreciate the color. Thanks.


Question: Rajeev Lalwani - Morgan Stanley - Analyst : Just a question on the RASM guide, what's the impact of the credit card there? And then also how much is competitive -- how much are competitive dynamics coming into play as far as what you're guiding to in January and just your commentary the rest of the quarter? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Rajeev Lalwani - Morgan Stanley - Analyst : Yes. Just some of the noise and weakness you're seeing. How much of that is attributable to, say, competitive dynamics and competitive capacity as opposed to what you were describing in terms of calendar-type dynamics and storm stuff from last year?


Question: Rajeev Lalwani - Morgan Stanley - Analyst : Correct. Just whether or not from --


Question: Rajeev Lalwani - Morgan Stanley - Analyst : Yes. No, that's why I was asking. Thank you, gentlemen. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call


Question: Julie Yates - Credit Suisse - Analyst : On other revenue, clearly exceeded expectations, are you able to parse out what the underlying growth in Even More was? Just to help us think about the actual outperformance from fare options?


Question: Julie Yates - Credit Suisse - Analyst : Okay. Got you. And then, now that you are charging for bags with fare options, is there more of a priority for load factor versus yield in order to capture that incremental fee revenue?


Question: Julie Yates - Credit Suisse - Analyst : Okay. Understood. Then is there any change or update you can give us in terms of how you're thinking about dynamically pricing fare options at some point?


Question: Julie Yates - Credit Suisse - Analyst : Okay. And then just one last one for Mark, has there been any change in hedging tactics or strategy? I saw you added some for the second half of the year.


Question: Julie Yates - Credit Suisse - Analyst : Okay. Thank you very much.


Question: Andrew Didora - Bank of America - Analyst : First, I just wanted to ask a question with regards to Boston. When we look at a lot of your key markets, Boston is the one that stands out in terms of having some higher capacity growth heading into 2016 relative to last year. And based on what we've been able to see, it doesn't seem like it's coming from any one particular carrier. Can you maybe talk about the competitive environment you're seeing up in Boston? And maybe what you saw from a pricing perspective in 4Q?


Question: Andrew Didora - Bank of America - Analyst : Okay. And then I know you in your investor update you gave RASM by quarter in 2015. Any chance we could get the RASM by month for 1Q 2015, just so we can compare going forward?


Question: Andrew Didora - Bank of America - Analyst : Okay. Thank you.


Question: Joseph DeNardi - Stifel Nicolaus - Analyst : Marty, I'm wondering if you could just provide a breakdown of your ASM growth this year, domestic versus international?


Question: Joseph DeNardi - Stifel Nicolaus - Analyst : Okay. And then, Mark (multiple speakers) -- Sorry. Go Ahead.


Question: Joseph DeNardi - Stifel Nicolaus - Analyst : Just on the -- just based on kind of what you're planning for debt payments throughout the year, is there any way you could help us just kind of think about what interest expense could look like by the end of the year, just based on what you have planned right now?


Question: Andrew Didora - Bank of America - Analyst : Okay. Oh for two.


Question: Andrew Didora - Bank of America - Analyst : Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JANUARY 28, 2016 / 3:00PM, JBLU - Q4 2015 JetBlue Airways Corp Earnings Call

Table Of Contents

JetBlue Airways Corp Q2 2016 Earnings Call Summary – 2016-07-26 – US$ 54.00 – Edited Brief of JBLU earnings conference call or presentation 26-Jul-16 2:00pm GMT

JetBlue Airways Corp Q1 2016 Earnings Call Summary – 2016-04-26 – US$ 54.00 – Edited Brief of JBLU earnings conference call or presentation 26-Apr-16 2:00pm GMT

JetBlue Airways Corp Q1 2016 Earnings Call Transcript – 2016-04-26 – US$ 54.00 – Edited Transcript of JBLU earnings conference call or presentation 26-Apr-16 2:00pm GMT

JetBlue Airways Corp at JPMorgan Aviation, Transportation & Industrials Conference Transcript – 2016-03-08 – US$ 54.00 – Edited Transcript of JBLU presentation 8-Mar-16 3:15pm GMT

JetBlue Airways Corp Q4 2015 Earnings Call Summary – 2016-01-28 – US$ 54.00 – Edited Brief of JBLU earnings conference call or presentation 28-Jan-16 3:00pm GMT

JetBlue Airways Corp Q3 2015 Earnings Call Summary – 2015-10-27 – US$ 54.00 – Edited Brief of JBLU earnings conference call or presentation 27-Oct-15 2:00pm GMT

JetBlue Airways Corp Q3 2015 Earnings Call Transcript – 2015-10-27 – US$ 54.00 – Edited Transcript of JBLU earnings conference call or presentation 27-Oct-15 2:00pm GMT

JetBlue Airways Corp Q2 2015 Earnings Call Summary – 2015-07-28 – US$ 54.00 – Edited Brief of JBLU earnings conference call or presentation 28-Jul-15 2:00pm GMT

JetBlue Airways Corp Q2 2015 Earnings Call Transcript – 2015-07-28 – US$ 54.00 – Edited Transcript of JBLU earnings conference call or presentation 28-Jul-15 2:00pm GMT

JetBlue Airways Corp at Bank of America Transportation Conference Transcript – 2015-05-14 – US$ 54.00 – Edited Transcript of JBLU presentation 14-May-15 3:20pm GMT

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Thomson StreetEvents. "JetBlue Airways Corp Q4 2015 Earnings Call Transcript" Jan 28, 2016. Alacra Store. Nov 15, 2018. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2015-JetBlue-Airways-Corp-Earnings-Call-T5903933>
  
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