jetblue airways (jblu) earnings report: q3 2015 conference ... · good morning. my name is denisius...

CompanyName:JetBlueAirwaysCorpCompanyTicker:JBLUSector:ServicesIndustry:T ransportat ion

EventDescription:Q32015EarningsCallMarketCapasofEventDate:7.86BPriceasofEventDate:25.36

©2014TheStreet,Inc.Al l R ightsReserved Page1of21

JetBlueAirways(JBLU)EarningsReport:Q32015ConferenceCallTranscriptThefollowingJetBlueAirwaysconferencecalltookplaceonOctober27,2015,10:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

KevinCrissey;JetBlueAirways;Director-IRRobinHayes;JetBlueAirways;PresidentMartySt.George;JetBlueAirways;EVP-CommercialandPlanningMarkPowers;JetBlueAirways;CFO

OtherPart icipants

JulieYates;CreditSuisse;AnalystJosephDeNardi;StifelNicolaus;AnalystJaredShojaian;WolfeResearch;AnalystDavidFintzen;BarclaysCapital;AnalystMichaelLinenberg;DeutscheBank;AnalystTomKim;GoldmanSachs;AnalystAndrewDidora;BankofAmericaMerrillLynch;AnalystJamieBaker;JPMorgan;AnalystHelaneBecker;CowenSecuritiesLLC;AnalystRajeevLalwani;MorganStanley;AnalystSaviSyth;RaymondJames&Associates,Inc.;AnalystDanielMcKenzie;BuckinghamResearchGroup;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

Goodmorning.MynameisDenisiusandIwouldliketowelcomeeveryonetotheJetBlueAirwaysthird-quarter2015earningsconferencecall.Asareminder,today'scallisbeingrecorded.

(OperatorInstructions)

IwouldnowliketoturnthecallovertoJetBlue'sDirectorofInvestorRelations,KevinCrissey.Pleasegoahead.

KevinCrissey(Director-IR):

Thanks,Denisius.Goodmorning,everyone,andthanksforjoiningusforourthirdquarter2015earningscall.JoiningushereinNewYorktodiscussourresultsareRobinHayes,ourPresidentandCEO,MartySt.George,EVPCommercialandPlanning,andMarkPowersourCFO.

Thismorning'scallincludesforwardlookingstatementsaboutfutureevents.Actualresultsmayvary--maydiffermateriallyfromthoseexpressedintheforward-lookingstatementsduetomanyfactorsandthereforeinvestorsshouldnotplaceunduerelianceonthesestatements.Foradditionalinformationconcerningfactorsthatcouldcauseresultstodifferfromtheforward-lookingstatements,pleasereferto




ourpressrelease,10-QandotherreportsfiledwiththeSEC.

Alsoduringthecourseofthecallwemaydiscussseveralnon-GAAPfinancialmeasures,forareconciliationofthesenon-GAAPmeasurestoGAAPmeasures,pleaserefertothetablesattheendofourearningsrelease,acopyofwhichisavailableonourwebsite.

AndnowI'dliketoturnthecallovertoRobinHayes,JetBlue'sPresidentandCEO.

RobinHayes (President):

Goodmorning,everyone,andthankyouforjoiningus.Earliertodaywereportedourresultsforthethirdquarter2015.

Inthequarter,netincomewas$198millionor$0.58perdilutedshare.Onayear-over-yearbasis,ournetincomemorethandoubled,andoverthelast12monthswehavedeliveredareturnoninvestedcapitalof11.7%.

Thesestrongresultswouldnothavebeenpossiblewithouttheterrificjobperformedbyourover18,000crewmembersduringaverypeakbusysummerseasonwhilewecarriedarecord9.2millioncustomers.

Totalrevenuesgrew10%year-over-yearinthequarter,reflectingsolidunderlyingdemandinallofourgeographies,executionofournetworkstrategyandsuccessfulimplementationoffareoptions.Operatingexpensesdecreased2%year-over-year,drivenbyalowerfuelpriceenvironment.Ascomparedtothirdquarter2014,ourrealizedaveragefuelpriceof$1.85wasdown39%.

Operatingmargininthethirdquarterwas20.8%,animprovementofmorethan10percentagepoints.Ournetworkmaturitycontinuestodrivesuperiorunitrevenueincreases.89%ofourcapacityisnowallocatedtoroutesstartedlessthanthreeyearsagoascompared--atleastthreeyearsago,ascomparedtoonly84%whenmeasuredatthecloseofthethirdquarter2013.

Wecontinuetofocusonourgrowthinhigh-valuegeography.Nearly98%ofJetBlue'sthird-quarterASMsstartedorendedinoneofoursixfocuscities.Marginsareexpandingacrossthenetworkevenaswegrowcapacityfasterthantheindustryaverage.Infact,weclosedthethirdquarterwithourmostprofitableSeptemberinJetBlue'shistory.

WecontinuetobeextremelypleasedwithallaspectsofMint'sperformance,fromcustomersatisfactiontoitsbottomlinecontribution.ThistremendoussuccessledtoourdecisiontoexpandMint'sfootprint.

ThispastSundaywestartedadditionalMintfrequenciesfromNewYorkJFKtoLosAngelesandfromNewYorkJFKtoSanFrancisco.Lookingforward,weareveryexcitedabouttheupcomingMintexpansiontotheCaribbeanandBoston.Nextweek,onNovember7,wewilllaunchMintseasonalservicebetweenNewYorkJFKandArubaandNewYorkJFKandBarbados.

In2016,MintcomestoBostonwithuptothreedailyroundtripstoSanFranciscoandLosAngelesandseasonalservicetoBarbados.Mint'sbestinclassproduct,lowfaresandunderpinnedbytheamazingjobourcrewmembershavedoneindelivery--deliveringtheproject--productcontinuestodoverywell.

Letmenowhighlightouroperationalperformance.Mostmajoroperatingmetricsimproveyear-over-year.

On-timeperformancemeasuredbysystemsarrivalswithin14minutesofscheduledtime,otherwiseknownasA14,improved1.4percentagepointsto77.98--77.8%.Completionfactorimproved0.5percentagepointyear-over-yearto99.3%,drivingefficientcapacitygrowth.

Anotherstrongexecutionstoryisourplanningandrollingoutoffareoptions.Whilewearestillintheearlystagesofthisinitiative,we'rehappytosharethatourtechnologyandtraininginvestmentare




payingoffwithpromisingthird-quarterresults.Martywillprovideadditionalcolorontherevenueimpactshortly,butwebelieveweareonpacetoexceedourinitialtargetof$65millionincrementaloperatingincomein2015.

Fareoptionswasmuchmorethantheimplementationofafirstcheckedbag.ItwasasignificantchangeforJetBlue,impactingtheentirecompany,includingouroperation,technologyandculture.

Iamparticularlyproudofourcrewmemberswhowereabletominimizeitsimpactonouroperatingperformanceandcustomersentimentthroughthepeaktravelseason.Torecognizeourcrewmembersincrediblecontributiontoourstrongresultssofarin2015,Iampleasedtoreportthatwewillmakeitearlypartial2015profit-sharingpaymentof$50million.Martinwillprovideyouadditionalinformationonthisafinancialimplication.

Inclosing,wearehappywithourresultsinthethirdquarterandremainlaserfocusedonexecutinginitiativeswehadpreviouslyoutlinedtoimprovereturns.Wearestillintheearlyinningsofourmulti-yearself-helpplanoutlinedatourlastinvestorday,November2014.Weanticipatethisplanwillimproveourannualbottomlineby$450million,independentofGDPgrowth,industrycapacityorthepriceoffuel.

Andwiththat,IwouldliketoturnthecallovertoMartytodiscussourrevenueresultsingreaterdetail.

MartySt.George (EVP-CommercialandPlanning):

Thankyou,Robin.Goodmorning,everyone,andthanksforjoiningustoday.

Overall,demandinthethirdquarterwassolid.PassengerunitrevenueorPRASMdecreased6/10ofapercentoncapacitygrowthof10.4%.BasedonAforAdata,unitrevenueacrossourcombineddomesticandLatinnetworksoutpacedtheindustrybyfivepercentagepointsinthethirdquarter,whilewesimultaneouslygrewASMsmorethan5percentagepointsfaster.

Ourstrongrelativerevenueperformancecontinuestobetheresultofthematurationofournetwork,ourlimitedexposuretothesofterglobalmarketsandafavorablecurrencyexchangerates,strongexecutionofournetworkandrevenueinitiativesand,ofcourse,terrificexecutionbyourcrewmemberswhodeliveranoutstandingJetBlueexperienceeveryday.

Lookingatourperformanceonaregionalbasis,wesawPRASMstrengthacrossbothourdomesticandinternationalnetworks.LatinAmericaandCaribbeanmarketswerestrongestduetolowerrelativecapacitygrowthandeasiercomparisons.

Onthedomesticside,thetrans-conregionperformedverywell,whileFloridasawsomeyieldpressureduetoadditionalJetBlueandindustrycapacity.SeptemberPRASMdidsoftentowardstheendofthemonthascloseinyieldswerelowerthanexpected.Otherrevenueincreased19%year-over-yearinthethirdquarter,reflectingthefairoptionsrevenuetailwind.

AsRobinhighlighted,welaunchedfairoptionsonJune30andarepositiveaboutitsinitialrevenueimpact.Inthethirdquarterwerecognizedfareoptionsrevenueofabout$40million.Wenowexpecttheincrementaloperatingincomebenefitoffareoptionsin2015tobeatleast$80million.Thisisaheadofourinitialtargetof$65million,andreflectsahighernumberoffareupsellsandmorefirstcheckedbagsthanoriginallyforecasted.

Asareminder,thefareoptionsinitiativeimpactsbothpassengerandotherrevenue.Farespurchasebycustomersforanyoftheoptionsarereportedaspassengerrevenue,additionalbagchargesprimarilypaidattheairportcontinuetobereportedinotherrevenue.

IanticipateyoumayasksomequestionsaboutthesplitbetweenPRASMandotherrevenue.Whilewe




recognizeyourneedtorefineyourmodelsforfareoptions,wearenotpreparedtosharethatinformationatthistimeduetoitscommercialsensitivity.

Asrevenuefromafareoptionsgrows,werecognizethattotalRASM,orTRASM,isbecomingamoremeaningfulindicatorofourrevenueperformance.Whilewe'renotpreparedtoannounceanychangesinourguidanceprocess,wearereviewingouroptionsforfuturedisclosures.

NowontoFly-Fi,ourindustry-leadingfreehigh-speedbroadbandWi-Fiproduct.JetBluehasrecentlycompletedtheinstallationofFly-FiacrossourentireAirbusfleet,consistingofmorethan150combinedA320andA321aircraft.

Inaddition,ourfirstFly-FienabledEmbraer190aircraftmadeitsinauguralcommercialflightearlierthismonth.WeplantocompleteFly-Fiinstallationonall60ofour190sbythefallof2016,atwhichpointwewillbeofferingfreeFly-FiserviceontheentireJetBluefleet.WhilemostofourcompetitorschargeforonboardWi-Fi,ourabilitytoofferabetterexperienceforfreeisdrivenbyrevenuegeneratingagreements,suchasourpartnershipwithAmazon,whichweannouncedearlierthisyear.

We'realsoexcitedtofinallysharesomeadditionalinformationaboutourco-brandedcreditcardrelationship.Beginninginthefirstquarterof2016,wewilllaunchanewco-brandcreditcardpartnershipwithBarclaycardontheMastercardcardnetwork.Atthattime,ourcurrentagreementwithAmericanExpresswillend,andexistingcardholderswillbeconvertedfromAmericanExpresstoaBarclaycard.

AmericanExpresshasbeenavaluedco-brandpartnersince2005,andwethankthemfortheirpartnership.Whilewecannotpubliclysharemanyspecificdetailsaboutthenewagreementyet,weareexcitedaboutthenewchoicesthiscardwillprovideforourcustomersandit'slikelypositivefinancialimpactforJetBlue.Wewillhavemoredetailsforyouabouttheagreementinfuturequartersaspermittedunderthetermsoftheseagreements.

Withthat,I'llturnthecallovertoMarktoprovidefurtherdetailsonthequarter.

MarkPowers (CFO):

Thanks,MartyandRobin,andgoodmorning,everyone.Thanksforjoiningustoday.

Thismorning,wereportedthird-quarteroperatingincomeof$351million,morethantwicetheoperatingincomeofthesamequarterlastyear.Pre-taxincomeinthequarterwas$322million,upfrom$132millionlastyear.Pre-taxmarginwas19.1%,that'sanimprovementofmorethan10percentagepoints.

Totalrevenuegrew10.4%,oncapacitygrowthof10.4%.Yieldimproved0.5%whileloadfactordecreased0.9percentagepoints.Astocosts,excludingfuelandprofitsharing,year-over-year,third-quarterunitcostsincreased2.4%.That'sconsistentwithourJulyquarterlyguidancerangeof1%to3%.

Inthequarter,year-over-year,unitcostpressurecameprimarilyfromsalaries,wagesandbenefits,maintenancematerialsandrepairsandotherexpensesrelatedtothelaunchoffareoptions.Specifically,aportionofourplannedmaintenanceexpensesshiftedfromthefourthquartertothethirdquarter.Whiletheshifthadanegativeimpactonthethird-quarter,wedon'texpectittomeaningfullyaffectourfull-yearcostperformance.

Executingonourstrategicinitiativesisakeyelementofoursuccess.Inthequarter,wemadeinvestmentsintrainingandtechnologytoensurethesuccessfulrolloutoffareoptionsandtominimizeitsimpactonouroperationandcustomersentiment.

Turningtofuel,inthethirdquarter,14%ofourfuelconsumptionwashedgedusingjetfuelswapsandcolors.Includingtheimpactoffuelhedgingandtaxes,ourfuelpriceinthethirdquarterwas$1.85which




isdownfromlastyear'spergallonpriceof$3.05or39%.

Ourhedgepositionsremainunchangedsinceourlastguidancewhenwereportedsecond-quarterearnings.Asoftoday,wehavehedgesinplaceforabout15%ofourexpectedfourth-quarter2015fuelconsumptionandnohedgesinplacefor2016andbeyond.BasedontheforwardcurveasofOctober16,weexpectourfourth-quarterfuelpricepergallon,includingtheimpactoftaxesandhedges,tobeapproximately$1.77.

Giventhatwehavenohedgesinplacefor2016,there'snoneedtoprovideadditionalguidance.FormorespecificdetailsregardingourhedgepositionspleaserefertoourinvestorupdatewhichwasfiledwiththeSECandmadeavailableontheInvestorRelationssectionofourwebsitepriortothestartofthiscall.

Asforprofit-sharing,asRobinmentioned,ourstrongresultsdroveourdecisiontorecognizecrewmembersterrificworkbymakinganearlypartialprofitsharingpaymentof$50million.ThepaymentwillbemadeinNovemberwiththebalanceoftheannualprofitsharingpaidearlynextyear.

Pleasenotethisactionwillnotincreaseoftheoverallsizeofour2015profitsharing.It'ssimplyanaccelerateduseofcashthatwouldotherwisebepaidin2016.Inprioryears,theprofitsharingroutewasmoremodestandpaidentirelyinthefirstquarterofthefollowingyear.

Movingtothebalancesheet.Weendedthequarterwith$1.1billionincashandshort-terminvestments.Duringthethirdquarterwemadescheduledofdebtpaymentsandcapitalleasepaymentsof$54million.

Strengtheningourbalancesheetandmanagingriskscontinuestobeapriorityandwebelievewearemakinggoodprogress.Overthelast12months,whileaddingtoourassetbase,wehavereducedournetdebtbynearly$800million,drivingasignificantimprovementinournetdebttoEBITDAratio,whichwasdownfrom2.8timesayearagoto1.1timestoday.Reflectingthecontinuousimprovementofourcreditmetricsoverthelastthreeyears,JetBlue'sunsecuredcreditratingwasupgradedbytwonotchesbyMoody'sinthequarter.

Givenourstrongliquidity,wecontinuetolookforopportunitiestoreduceourdebtandusecashtolowerfutureoperatingexpenses.AgoodexampleofthelatterisourplantobuyouttheleasesonsixA320aircraftwearecurrentlyoperatingbyyearend.Althoughweexpectthisdecisiontoincreaseour2015CapExbyabout$110million,webelievewewillsaveabout$12millionperyearinleasepayments.

Inaddition,thisbuyoutwillreducemaintenanceexpensesrelatedtothereturnconditionsrequiredinthosecurrentleases.Withrespecttosharerepurchases,onSeptember15JetBluecloseditspreviouslyannouncedacceleratedsharerepurchaseprogram.Intotal,JetBluepurchased6.8millionsharesataweightedaveragepriceof$22.06.Inaddition,inSeptember2015JetBlueenteredintoaRule10b5-1tradingplanagreementaspartofitssharebuybackprogramannouncedin2012.Thisprogramcoverspurchasesofupto3millionsharesbetweenOctober30,2015throughtheendoftheyear.

Withrespecttocapitalandfleet,JetBlueendedthequarterwith211aircraftincluding138320s,60E-190sand21A321s.WepurchasedittwoA321aircraftinthethirdquarterwithcashandexpecttotakedeliveryoffourmoreA321sinthefourthquarterofthisyear.Giventhestrengthofourcashfromoperations,thecurrentpresumptionisthatwewillpaycashforallofourupcomingfourth-quarterdeliveriesandpossiblymostofthe102016deliveries.

InordertosupportourrecentlyannouncedMintexpansionplan,we'veconvertedfiveofthe10A321deliveriesscheduledfor2016fromthehigh-densityconfigurationtothelowerdensityMintconfiguration.Inthefourthquarter2015weprojecttotalCapExbetween$345millionand$365million.That'sapproximately--ofwhichapproximately$315millionrelatestoaircraft,includingtheleasebuyoutsI




previouslymentioned.

Forthefullyear,2015,wenowexpectnon-aircraftCapExof$120millionto$140millionwhichisdownfrompreviousguidanceof$150millionto$200million.Wenowexpecttotalcapitalexpendituresin2015ofapproximately$900millionto$920million.

Turningtocapacity,weplantogrowASMsinthefourthquarteryear-over-yearbetween8.5%and10.5%.Weplantogrowourfull-yearcapacityby8.5%to9.5%upslightlyfromthepreviousguidancewhichisatthehighendofa7%to9%range.The0.5%increasetothehighendofourfull-yearcapacityguidancerangeisafunctionof,one,theadditionalMintservicedrivenbyhigherutilizationofourMintfleetandtwo,ourcontinued,betterthanexpectedcompletionfactor.

Forthefullyear2016weforecasthighsingledigitpercentageASMgrowthwhichissimilarto2015'sgrowth.Weexpectcapacitygrowthtobefasterearlyintheyearasweannualized2015growth.

Turningtotherevenueoutlook,wecontinuetoseedemandresilienceacrossournetwork.WeexpectOctoberpassengerRASMtodecreasearound2%peryear--year-over-yearrevenue.

AlthoughwedonotprovidequarterlypassengerRASMguidanceonearningscalls,weexpectNovemberpassengerunitrevenuegrowthtoperformbetterthanOctoberPRASM.IwouldalsonotethattheMondayafterThanksgivingfallsinNovemberthisyearversusDecemberlastyear.Inaddition,thetimingofChristmasDaythisyearcompressesthepeakholidayperiod.WeexpectholidaytimingtobenefitNovemberandsoftenDecember.

Movingontocosts.Inthefourthquarter,weexpectCASM,excludingfuelandprofit-sharing,toincreasebetweena0%and2%year-over-year.Lookingatthefull-year2015weareloweringthetopendofourguidance.WenowexpectCASM,excludingfuelandprofit-sharing,toonlyincreasebetween0%and1%versuspriorguidanceofbetween0%and1.5%.

Inclosing,weareclearlypleasedwithourthirdquarterresults.Ourcrewmembersremainhighlyengaged.We'reexcitedtokeepdeliveringonourplansfor2015andbeyondandwiththat,operator,we'rereadytotakequestions.


Thanks,Denisius,canyoupleasepreparetheanalystsforQ&A?

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

OurfirstquestioncomesfromJulieYatesofCreditSuisse.Pleasegoahead.

Julie Yates (Analyst-CreditSuisse):

So,justtrying--Iknowyouguysaren'tgoingtoprovidenecessarilyabreakoutofthefarefamilycontributionandtheunderlyingPRASMbutitcertainlyseems,uppingthecontributionfromfarefamilieswithOctoberbeingdown2%,thatthere'sanunderlyingdeterioration,perhapsintheyieldenvironment.

SocanyouspendalittlebitmoretimetalkingaboutwhathappenedinlateSeptember,whatyou'reseeinginOctoberandmaybewhatthedriversare,ifthat'samorecompetitivecapacitycominginorifsomeofthisindustryyieldweaknessisjustcatchingupandimpactingtheJetBluemarketsnow.





HiJulie,it'sMarty.Letmetakethatone.Ithinkyousortofgavehalftheansweralready,Imean,andwereportedearlier,wesawsortofaone-timeblipinthatsecondhalfofSeptember,thefirsthalfofOctober.We'vedefinitelyseenabouncebackinthelastfewweeks.

So,wereallythinkitwasatemporaryissueanditwasn'tloadfactorofanissuebutitwasmoreclose-endyieldsforthatsortofendofSeptember,beginningofOctoberperiod,butthathasbouncedback.Wedidjust,MarkjustguidedthatwewereforecastingNovembertobeobviouslybetterthanOctoberandhonestly,there'salotofchoppinessthisyearwithholidaysasfaraswhatmovesbetweenNovemberandDecember.

Thecombined,NovembertoDecember,bothlookbetterthanOctobersowereallythinkit'saone-timeissue.


Okay.Andyou'reseeingaffirmationthatit'saone-timeissuebasedonyourforwardbookingsfortheholidaysandsuch?


Iwouldsay,well,ImeanIcan'tgivetomuchguidancemorethanwhatwesaidalready,butI'dsay,basedonthelastcoupleofweeksofbookingswe'veseen,we'veseenitreallycomebacktowhereitwasbeforethatsoftness.


Okay.Andthenjustonthecreditcard,Irealizethere'ssomeconstraintswithyournewpartnerbutyou'vegiventhe$60millionnumber,IbelievewithInvestorDaylastyear,is--inthatcontextcanyouprovidewhetheritwasinline,betterorworsethanwhatyouhaveprovideduslastyear?


Yes.We'renotinapositiontogiveanydifferentguidancethanwhatwegaveduringInvestorDay.

Youknow,IwillmakeacommentthatIthinkImadeonthelastinvestorcallwhichis,aswe'velookedat--youknowweknowourdealobviously,aswe'velookedattheannouncementsfromsomeofourcompetitorswhohavealsocameoutwithreviseddeals,there'sawiderangeofstructureasisfarashowthosecashflowsgoand,youknow,theoperatingincomeaccretionthatwereportedatInvestorDayisbasedonthecontractthatwesigned.Youknow,obviously,asresultscomeinwe'llbeupdatingthatbutwehavenochangeinguidancerightnow.


Okay.Thankyouverymuch.

Operator :

OurnextquestioncomesfromJosephDeNardiwithStifel.

JosephDeNardi(Analyst-StifelNicolaus):

Thankyou.Goodmorning.

Justonthecapacityoutlookfornextyear,Ithinkwestartedthisyearoffacouplepointslowersoasthe,




andweendedupalittlebithigher,isthebiastogrowmoreassumingthismarginperformancecontinuesasyougointonextyear?


Hi.Goodmorning,Joseph.

Listen,ifyoulookattheguidancethatwelaidoutfor2015,wetookitupbasicallyfortworeasons,onewasthatwiththedepartureofoneofourcompetitorsoutofNewYorktotheWestCoastandourMintmarketswesawtheopportunitytoaddcapacitythere,andsecond,weareperformingfromacompletionfactorperspectivesignificantlybetterthanwehadoriginallyguided,andyouknow,really[freely]forecastedatthebeginningoftheyearandIthinktiestogreatexecutionbyourteam.

Withrespectto2016,ifyoulookattheguidancethatwebasicallyjustgave,itisverysimilartotheguidancefor2015.We'vetalkedbothatInvestorDay,inindividualinvestormeetingsandoncallsthatthishighsingle-digitrangeisaboutthesweetspotforJetBlue.

Ithinkthemostimportantthingis,thegrowththatwe'retalkingabout,theincrementalMintcapacitywehadinthefourthquarterof2015iscomingwiththesameassetbaseandit'sabsolutely,positivelymarginaccretive.

JosephDeNardi(Analyst-StifelNicolaus):

Okay.Thankyou.

Operator :

AndournextquestioncomesfromthelineofHunterKeaywithWolfeResearch.

JaredShojaian (Analyst-WolfeResearch):

Hi,goodmorning.ThisisactuallyJaredShojaianinforHunter.Thanksfortakingmyquestions.

Mark,Iwantedtoaskyouaboutthefuelhedgesorlackoffuelhedgesand2016.Ithinkatthispointhistoricallyyouhadmorehedgesfortheupcomingyearthanyoudonow.Soisthisachangeinstrategy?Ordoyouplantolayeronsomemorehedgesatalaterpointoftime?Andifitisachange,canyouhelpusunderstandyourthoughtprocess?

MarkPowers (CFO):

Butit'saneasyquestionbecausethere'snochangeinmythoughtprocess.Icontinuetolookatitasawaytomitigaterisk.Westillconsiderhedginginourtoolkit.

AndJimLeddyandhisteamcontinuetolookattheenvironmentandwhatwelookattheenvironment,welookatwhatotherairlinesaredoing.Thepricingofthevariousproducts,asweconsiderourfutureoptions.Butthere'sreallynophilosophicalchangeyet.


Okay.Thankyou.

Andthen,questionforRobinorMarty.SoImean,itfeelslikewiththatOctoberPRASMguidance,itfeelslikeyou'reRASMoutperformanceisreallystartedtoslowhere.Isthereanythingabnormalaboutthefirsthalfofthisyear,somespecifictailwindsthatwearestartingtolapthataren'tcontinuingintothesecondhalfofthisyear?




AndImeanisthereanyreasonwhynextyear'sRASMperformance,aswelookforward,can'tbejustasstrongonanoutperformancebasistotheindustry?Oragain,Imeanaretheresomespecifictailwindsthatyoustartedtolaphere?Thanks.


Letme--maybeI'lltakethefirstpartofthat,Marty,andthenyoucantakethesecondintermsofnextyearandthanksforthequestion.Goodmorning.

No.Oneofthethingsweverytrack,trackverycarefullyisourrelativerevenueperformancetotheindustryandwe'veactuallyseenthatcontinuethroughSeptemberataprettysimilarratetowhatwe'veseentherestoftheyearsowedon'tbelievethattherevenueoutperformancehasstartedtoslow.Obviouslywedon'thaveOctober'sdatayet,butIdon'tthinkthere'sanythinginOctoberthatwethinkwouldbestructurallydifferenttoSeptember.

So,no,Ifeel,westillfeelverygoodabouttherelativerevenueperformance.

WeusetheAforA,sortofacomparativeset,andifwelookatsortofthedomesticperformance,then,really,betweenMay/JunethisyearandSeptember,we'vebeenrunningasortofhigh2%to3%outperformanceandthathasn'treallychangedmuch,infactthelowestmonthofrelativeoutperformancewasJuly.


Andwithrespectto2016,IthinkhonestlyRobinansweredmostofthequestionwhichis,ifyoustartwiththeassumptionthatthere'saslowing,it'sareasonablequestion.Onarelativebasisversustheindustry,Idon'tthinkwe'reseeingthat.

Ithinkifyoulistentotheguidancethatwe'veheardfromourcompetitorsearlieronduringthisearningsseason,andthenyoulookatwhatwe'retalkingabout,Ithinkwefeelverycomfortablethatwe'remultiplepercentagepointshigherinRASMgrowththanourcompetitors.

SofromaJetBlueperspective,I'mnotsureIagreewithyourpremiseandthesecondthingI'llmentionisformuchof2016,we'llbelappingthe--wewon'tbe,excuseme,wewon'tbelappingtheadoptionoffareoptionsuntilthreequartersofthewaythroughtheyearmoreorless,andwealsohaveourcreditcardkickingin,soinadditiontowhatwe'reseeingasfarasthesecularJetBlueperformanceversustherestoftheindustry,wealsothinkyoulayerontopofthattheinitiativesthatweoutlinedatinvestorDayandweareactuallyverybullish.


Okay.Thankyou.

Operator :

OurnextquestioncomesfromthelineofDavidFintzenofBarclay.

DavidFintzen (Analyst-BarclaysCapital):

Hey.Goodmorning,everyone.

Onthesortof,thegapinthethirdquarterbetweenPRASMandRASM,andIknowMartysaidyouguysaren'tgoingtotalkalotindetailaboutthis,butisitfairtoassumethatyouleavethequarterwithamuchbiggerthan60basispointgapbetweensortof,asthebackseatintheairportarespooling,orisitthatsomethingthatcomesinandthenisfairlystable?





Iam--goodmorning,Dave.I'mnotsureIfullyunderstandthequestiontoanswercorrectlysolet'sfollowupafterwards.


Rephrasethequestion.


Yes,couldyoutrytorephraseitmaybe?


No,justyouroperatingRASMoutperformedPRASMby60bps,obviouslythere'sachunkofthebagoffeescomingintoother,whatI'mtryingtokindofgaugeiskindofwhereweleftthequarterandrunrate.

AtleastI,youknow,itcouldgetbetter,itcouldgetworse.Igetthat.It'sstilldevelopingbutatleasttosortofhavesomethingtoframeitintoQ4andkindofplugthatholeinthemodel.


Okay.Thatmakessense.[Again]Iapologizeforthatthefirsttime--


No,Ididn'tphraseitverywell.


ButtheonethingIwouldsayisthat,aswelookattheperformanceoftherelativebundleswithinfareoptionsandthealacartepurchase,we'reseeing,youknow,we'rejustnowstartingtounderstandthetrendsasfarasatwhatperiodsdopeoplebuybundles,atwhatperioddopeopletrytobuyalacartandalsothepenetrationofourBluePlusfare,excuseme,theBlueFlexfare,whichhasthenochangefees,andwhatwe'reseeingisthatthere'ssomeprettydramaticdifferenceinperformancebetweenthepeakperiodsandtroughperiods.

SoIthink,ifwecansortofbookmarkthatquestionforafutureearningscallbecauseIkindofwanttogothroughacoupleofmorepeakperiods,youknowsortofaThanksgivingtoChristmas,sothatIcanreallygiveeffectiveandunequivocalguidanceforthatperformancebecausewe'rereallyseeing--we'reseeingdifferencesbetweenpeaksandtroughs.It'snotunexpectedbutIdon'tthinkwehaveenoughdatapointstotrulycomeupwithalong-termtrend.


Okay.No.That'sfair.

That'sactuallyveryhelpfulasastartingpointandthenmaybeaquickoneforMarkontheleasedaircraftyouarebuyingout,isthatsomethingyoudidunderthesortofnaturaltermsofthosedeals,orareyoufindingopportunitiestokindofbuytheseleasedaircraftearlyfromthe[one]source?

MarkPowers (CFO):

Butalittlebitofboth.Itmakesalotofsensebecausetheseareairplanesthatweclearlywouldputinourdensityprogram.




Sowewouldliketoputsomeinvestmentsintheaircraft.Ithinkthe--ifIcorrect--correctlyrecall,theleasesonthoseplaneswereupshortlysoitwasreallyaquestionofdoweextendtheleasesorbuytheaircraftand,frankly,consideringtheinvestmentwe'regoingtoputintheaircraft,buyingtheaircraftwasjustmuchmoreshareholderfriendly.


AndIwouldtakeitthat'sgottobesomeofyourhighestimplicitinterestrate,isthatsomethingyouthinkyoucandomoreofin2016?

MarkPowers (CFO):

Iwon'tcommentontheleaseratebutIdon'tthinkit's--weweren'tcherrypickingthehigher-pricedleasesbutweare--wewillcontinuetolookat,particularlyaswegearuponthedensityprogram,we'llcontinuetolookatotheropportunitiestodoearlybuyoutsoftheseleasesthatwehaveinplace.


Okay.Makesalotofsense.Allright.Thanksforallthecolor.

MarkPowers (CFO):

Thanks.

Operator :

OurnextquestioncomesfromthelineofMichaelLinenbergfromDeutscheBank.

MichaelLinenberg (Analyst-DeutscheBank):

Yes.Iguessacouplequestionshere.

Marty,youhighlightedsomeofthepositivetailwindsin2016.Youtalkedaboutthecreditcarddealandreallygetting,youknow,amuchfullerbenefitofthefareoptions.Howdoesthe,youknow,addingtheadditionalseats,theseatingdensificationprogram.Doesthatgetstartedwhat?Midyear?Andhowdoesthatstarttoflowthrough?

Imean,Iguessit'srevenueaccretivebutmaybeitnegativelyimpactsRASM?AndhowquicklycanyousellthoseadditionalseatsbecauseIknowinitiallyyoumayonlyhaveafewshellsflyingaroundwiththeadditionalseatssometimesit,sometimesyouhavetocarrythatdeadweightandyouhavetospoolupintoasufficientnumberofaircraftbeforeyoucanactuallysellthemwithintheschedule.

Canyoujusttalkaboutthat?


Sure,Michael.Thankyou.Goodmorning.


Goodmorning.


Theseatdensificationprojectstartsinthesecondhalfof2016.





Okay.


Andthegoodnewsisthatwhenyouarebuildingamodelfor2016,weactuallydoneedtobe,keeptrackofthoseplanesseparatelybecausetheydohaveafourthin-flightcrewmemberonboard.Sothey'llberoutedtotheextentwherewefeelcomfortable,we'retryingtogetthatrevenuerelativelyquicklybecausewehavetoschedulethem.Wehavetoschedulethemdifferentlybecausetheyhavedifferentcrewrequirements.

AndIthinkaswegetcloserinto2016,Ithinkwecangiveyoumorecolorasfaraswhattheshapeoftheyearisgoingtolooklikebutweare,aswesaidduringInvestorDay,we'reverybullishaboutthebenefitsofthedensityimprovement.Andagain,it'saproductthatourcustomersunderstandrightnowandloveontheA321andwe'reexcitedaboutbeingabletobringthatproductto320whilealsoimprovingourrevenueperformance.

Wethinkintheworldofvery,verylowcapitalintensiveprograms,fareoptionsanddensity,wethinkarebothextremelyROICfriendly.


Okay.Great.

Andthenjustasecondonehere.IsawsomewherethatIguesswhatJetBlueisgettingoutofthecargobusiness,sopresumablyit'smargindiluted,maybeit'sevenlossmakingbutwhat'sthattheP&Limpact?

Imean,arewegoingtosee,youknow,lessrevenue?Lesscost?ItobviouslywillhavesomeimpactonRASMIguessbutitwillalsohelpCASM.Imean,howshouldwethinkaboutthatandwhendoesthathappen?Whendogetoutofthecargobusiness?


So,we'reofficiallyoutofthecargobusinessasof,Ithink,aboutaweekagoso--.


Okay.


We'regoingtoactuallystartreflectinginourresultsgoingforward.Andtheimpactsonthebottomlinewillbedeminimus.

Thedrivertomakethatdecision,youknow,itwasamarginallyprofitableprogramsowhatwealsorecognizewasthatasseatdensificationcame,thechallengeswehaverightnowwithgettingcargoonairplanes,onanarrowbodyfleet,itjustgetssignificantlyworsewhenweaddtheseatsontheairplanebecause,ourchallengerightnowiswedon'tdo,runrelativelyhighloadfactorsinsomeofthebestcargomarketsandputtingtheextraseatsontheAirbus,wesortoflookedaroundthecornerandsaidtoourselves,ourabilitytomaintainthisbusinessprofitablywasgoingtobeseriouslystretched.


IfI,IjustwanttoaddacoupleofthingsifIcould.Imean,firstofall,it'snotlostwith,onusthatwehadanumberofcrewmemberswhoaredirectlyimpactedbythischange.




Imeanthattheyhavedoneanamazingjobbuildingourcargobusinessandwe'reverygratefulandthankfulforeverythingthey'vedoneandobviouslyworkingwiththosecrewmembersonotheroptionsintheCompany.

ButIthink,inadditiontoMarty'spoint,forustoreallydocargosuccessfullyandgrowthemarginsandbuildthebusiness,itwould'verequiredsomesignificantcapitalinvestmentaswell.AndIthinkwhenwethinkabouthowweprioritizecapitalspendandhowwelookatthethingsthatwilldrivethebestreturns,wejustcouldn'tgetthereintermsofbuildingthisbusinessandsowetookthedecisiontorestructureitandjustmythankstoEdMcDonaldandthecargoteamforeverythingthey'vedonetotakeuswherewearetoday.


Okay.Great.Thanks,guys.

Operator :

OurnextquestioncomesfromthelineofTomKimofGoldmanSachs.

T omKim(Analyst-GoldmanSachs):

Thanksforthetimehere.MarkorMarty,IwantedtofollowonMichael'squestiononseatdensification.Irealizeit'skindofearlybutcanyougiveusyour,atleastyourinitial,expectationsaroundwhereCASM,exfuel,exprofitshare,shouldbefornextyear?

MarkPowers (CFO):

Twoquestionshere.Idon'tthinkwereactuallygoingtostartguidingCASMnextyear.Again,densificationwillhave,obviously,aterrificimpact,inagoodway,onourCASMstructurebutIdon'tthinkwe'reinapositiontoreallygetaheadofourselvesonCASMnextyear.


Yes.WenormallyofferthatflavorintheJanuarycallandIthinkwillcontinuetodothatbutappreciatethequestion,Tom.

T omKim(Analyst-GoldmanSachs):

Allright.Thanksalot.

Operator :

OurnextquestioncomesfromthelineofAndrewDidoraofBankofAmerica.

AndrewDidora(Analyst-BankofAmericaMerrillLynch):

Goodmorning,everyone.

JustwantedtoaskanotherquestiononkindoftheyieldsoftnessthatyousawattheendofSeptemberbeginningofOctober.Wasthiskindof--wasthismoresystem-wideyieldsoftness,wasitspecificmarketsthatmaybeyoucancommenton?Andasyouhaveseenthatkindof,asyou'veseenthosebookingsbounceback,hasthatalsobeeninthosemarketsormoresystemwide?

Thanks.





IthankAndrew,forthequestion.Imean,wedidnotreallyseeanyspecificmarketsanditwasreallyaclosed-endyieldstory.

It's--itwasmoreorlessacrossoursystemandit'scomebackacrossthesystemsonoIdon't.I'veheardsomeofourcompetitorsgiveguidanceonmarketslikeOrlandowedon'tseeOrlandobeanybetterorworseoranythingelseandit'sheldupverywell.

AndrewDidora(Analyst-BankofAmericaMerrillLynch):

Okay.Thanks.

Operator :

OurnextquestioncomesfromthelineofJamieBakerofJPMorgan.

JamieBaker (Analyst-JPMorgan):

Hey.Goodmorning,everybody.Questionnumberthreeondensification.

Couldyougiveusanestimateastohowmanyadditionalflightattendantsyouaregoingtorequireoncetheentire320fleetisdensified.Obviouslytryingtonaildowntheincrementallaborexpense.Alsoontheincremental15seats,howdoyouthinktheaveragefareonthosecomparestowhatyourcurrentaveragefareis?Areyoumodelingforittobe5%loweror50%lower?

MarkPowers (CFO):

I'lldothelabor,theflightattendantpiecefirstwhichistosimplysaythatyouclearly--thatwillbeoverthetermofthismulti-yearprogramanincrementalcostoffsetbytherevenuethatMarty'sgoingtotalkaboutbutIwouldsaythatin2016theflightattendanthiringisprobablygoingtorepresentlessthan0.5pointofourfull-yearCASM.


And--onaheadcountbasis?Justsowecouldkindofworkupsomeofthenumbersourselves?

MarkPowers (CFO):

ButIdon'tthinkwe'regoingtogothere--


Or--sorry,goahead.

MarkPowers (CFO):

IdorecallyourpieceandIdon'tthinkwe'reactuallygoingtoidentifythespecificsofthatCASMnumber,whichisfranklyafairlysmallnumberin2016.


Okay.Fairenough.Andthesecondpartofthequestion?

MarkPowers (CFO):

IstoMarty.





Withrespecttotherevenue,youknowlisten,I'vedonethesecalculationsmanytimes,you'vedonethesecalculationsmanytimesinyourpreviouslife.Ithinkit'sasortofastandardexpectationasfarashowyouwoulddoastillmodelandtrytofigureoutwhattheincrementalrevenueisgoingtobe.

IwilltellyouwhywethinkthisisveryleveragedforJetBlue,specificallybecause,aswetalkedaboutbefore,wearestillacompanyasit,withoutthestrongleisureorientationthathasgotextremelyhighpeaks.Soduringthosepeakholidayperiods,theschoolvacations,Easter,Thanksgiving,Christmas,wehavetimeswhenthere'saclosetoinfinitedemand.

Soduringthosetimeperiods,weareverybullishaboutthebenefitoftheincrementalseatsandwe'realsobullishaboutthebenefitjustonthenormalcourseofbusiness.ImeanwedoruninourleisuremarketsespeciallysomeoftheCaribbean,transcon,Floridamarkets,wetendtorunprettyhighloadfactorssowe'reveryexcitedaboutit.Ican'tgetintomoredetailotherthantheguidancewegaveonInvestorDay,though.


No.Thoseareallgoodpoints.Iappreciateyoumakingthem.Thanksalot.


Thankyou.

Operator :

OurnextquestioncomesfromthelineofHelaneBeckerofCowenCompany.

HelaneBecker (Analyst-CowenSecuritiesLLC):

Excuseme.Thanksverymuchoperator.Thanksforthetime,guys.Justaquestionhereon--sorry.Idon'tknowwhymyvoicedoesthatbutitdoeseveryonceinawhile.

Onsalesandmarketingexpense,it'sup16%morethanitwasupinninemonths,forthequarter.AndI'mjustkindofwondering,IwouldthinkthatnumberwouldgodowninQ3andmaybeupinQ4.Soistheresomethinggoingonthatweshould--thatwillhavethosenumbersincreasingatthishigherrategoingforward?


Yes.Imean,thanksHelene.Goodmorning.

Ithinkonethingthat'simportantaboutthatisthatmost--again,we'renotchangingourannualexpectationsforthatlineitemagoodbitofit'stimingandtheonethingIwillsayissalesin,salesin--revenuegeneratingactivitiesinQ3areactuallydrivingQ4demand.SowhenwegoouttherewithsomeofourmarketingexpenseinQ3,itactuallyisspecificallymovedtowardsfillingseatsinSeptember,October,soit'sactuallymorenormalcourseofbusinessandit'smoretimingthananythingelse.

HelaneBecker (Analyst-CowenSecuritiesLLC):

Okay.Thanks.Mostofmyotherquestionswereaskedandanswered.

Operator :

OurnextquestioncomesfromthelineofRajeevLalwaniofMorganStanley.

RajeevLalwani(Analyst-MorganStanley):




Time.Firstquestionwasjustoncompetitivecapacity.Areyouguysseeingafairamountasyoulookoutattheschedules?Justgiventhestrengththatyou'veseeninyournetwork?


Hi,Rajeev.It'sMarty.Goodmorning.Ifyoulookatthebalanceof2015we'renotreallyseeinganychangeintrendsincompetitivecapacity.

WeareseeingalittlebitinBostoninearly2016butIthink,giventhepracticeswe'veseenoftheindustryasfarasloadingschedulesthatfarout,Ithinkit'stooearlytosortofcalltheballastowhetherthat'storealornot.We'rereallyfocusedonourcapacitygrowth,weknowwhatourresultswerelastyear.Wegotoplacesweneedmorecapacityandthat'sreallyhowwemanage,wedon'tspendalotoftimefocusingonwhatourcompetitorsaredoingmonthtomonth.


Okay.Andjustanotherquestionasitrelatestolabor,anycolorthereonthepilotandnon-pilotside,justgivenwhatwe'veseenintheindustryandhowthatkindofmakesitswaytoyouremployees,Iguess?


Sure.No.Appreciatethequestion.Goodmorning.

Intermsofthe,onthepilotside,weobviouslyhaveanegotiationunderwaywithALPA.Iwouldsayweareintheearlystagesofthat.Idon'twanttosortofmakeapredictionofhowlongitwouldtake,butthat'snotsomethingsortofIwouldsaywe'resortofimmediatelyclosetofinalizing.Intermsoftherestofourcrewmembergroups,maybeI'lljusttakeasecondtoexplainhowitworks.

Wehaveavaluescommitteesthatadvocateforthosecrewmembersandwehaveaprocessthatreallylooksacrossthelandscapeandlooksatwhat'shappeningwithequivalentworkgroupsinotherairlinesandoversortofatwoyearcycle,weworkthroughasortofapayandcompensationreviewtomakesurethatourcrewmembersarepaidsortofapuremarketrate.

That'snotobviouslysomethingtheyhavetobargainornegotiate.Thatsomethingtheygetanditreflectswhatotherairlinesaredoingandsoclearly,aslabor,laborratesgoupatotherairlines,thenthatwillcreatesomeupwardpressureforourcrewmembersbecausewewanttomakesurethatwepayfairlyandpaycompetitivelybecauseourcrewmembersdoanincrediblejob.


Andhowdoesthattwoyearcycleplayout?Meaningarewegoingtoseeitnextyear?Isitjustdifferentforthevarioustypesofemployees?


Itsongoingsowehaveourcustomersupportcrewmembers,airports,in-flight,efforts,oursystemsoperationsteamandourtechnicaloperationsandmaterialsteamsowehavethosesixgroupsthatwereviewandtheyarestaggeredsortoffairlyevenlyoveratwo-yearcycle.Butthepointisit'smuchmoreofacontinuouschangeratherthanthetraditionallabormodelwherenothinghappensforyearsandyearsandyearsandthenthere'sacontractandabigreset.

Soasthingschangewekindofkeepupgraduallyandthat'showwe'vealwaysworked,howwe'vedoneitforthelastseveralyearsandthat'showwillcontinuetodoittomakesureourcrewmembersarereceivingamarket-ratecompensationpackage.





Veryhelpful.Thankyou,gentlemen.

Operator :

OurnextQuestioncomesfromthelineofSaviSythfromRaymondJames.

SaviSyth (Analyst-RaymondJames&Associates,Inc.):

Goodmorning,justafewfollow-upquestions.Onthefareoptions,Ithinkthecontributionwas$40millioninQ3.

AndI'mkindofsurprisedthatis$80millionin2015,anddefinitelybetterthanexpectations,butIwouldexpectmaybeQ4tobebetterthanQ3butmaybethereissomeseasonalityinthereandIwonderifyoucanelaboratealittlebit.


Hi.Thanksforthequestion,Savi.Goodmorning.

IthinkthebiggestreasontoexpresscautiononincrementalmoneyabovethatisthatyourememberwelaunchedfareoptionsonJune30,atthatpointallrevenueonthebooksonJune30wasnotsubjecttothefirstbagfeeandasyougetintothepeakperiods,ThanksgivingandChristmas,wehadagoodnumberofcustomersonthebooksduringthattimeperiod.Sointerestinglyenough,sofarthehighestpercentageofcustomerswhoaresubjecttofareoptionshasbeeninSeptember.

Novemberisactuallylowernumberbecausewehavesomuchonthebooks,soagainaswesortofworkoffthepreviousreservationsofpeoplepriortofareoptions,therewillbealittlebitofnoiseinthere.AndagainlikeImentionedearlier,intheconversation,IthinkwithDave,aboutthesplitbetweenthefareoptionsrevenueinRASMandPRASMandthingslikethatthere'sstillalotofchoppinessintherebasedonthepeak-and-troughelementofthetimeperiodasfaraswhatwesee.

AndIthink,honestly,I'mgoingtogobacktotheoriginal[sourcesfrank]thatwementionedwhatwetooktheguidanceupto$80million.Wehadforecastedabiggerdecreaseinfirstbagcheckedthanhasactuallyhappened.

We'venotreallyseenthebehaviorchangethatwehadoriginallyexpectedsoIwanttomakesurethatwe're,we'vegotsortofafullpeak-and-troughperiodunderourbeltsbeforewesortofcallanythinghigherthanthenumberwe'vegivenalready.


Allright.Thanksthat'shelpful.

ThanksMarty.Andonthefollow-upontheseatdensity,IwaswonderingifonthetimingbetweentherevenuegenerationandthecostgenerationIknowyou'renotreadytoprovidekindofcostcolorbutwhat'sthetimingdifferencebetweensomeofthosecostsrampingupbeforetherevenueisstartingtoshowup?


Yes.I'lljusttakeastabatthatonlybecauseitis,again,amulti-yourprogramsoit'snotgoingtobesortofa--you'renotgoingtoseeaoneforone.It'sgoingtotake,asweknow,ayearplusbeforewehaveenoughdensityofdensity,ifyouwill,thatwe'llbeabletosortofseeitinasignificantwayonthe




P&L.


IthinkwhatIwouldsayiswearetryingtobeverythoughtfulabouthowwelayerinthecostandthenseetherevenuebenefitsandsoonehastotradethatwithoperationalcomplexitybutwedowanttomakesurethatwearethoughtfulabouthowweaddcosttothingslikeflightattendantsandwhenweseetherevenuebenefits.


Okay.That'shelpful.

Thanksandthenjuston2016,andIknowyou'renotprovidingguidance,butIthinkyouprovidedalittlebitofitbutjustmaybesomeoftheheadwindsandtailwindsaswekindofthinkabout2016Ithinkyouhaveupdatingthathelps.Maybehigherlaborcostsaregoingagainstitbutwonderifyoucanjustprovidealittlebitmorecolor,justinitialcolor,on2016.


Sure.Iwouldappreciatethequestionandgoodmorning.

IthinkreallygoingbacktotheplanwelaidoutatourInvestorDayin2014,Ithinkwearestillveryfocusedonfareoptions,asMartysaid,we'rereallyinthefirstinningsofthatandwehaven'ttalked,eventalkedabout,someofthedynamicpricingcapabilitiesthatfareoptionswillgiveuslongerterm,onceweunderstanditabitbetter.

We'vegotthecreditcardMartytalkedabout,veryexciting,weareveryclosetobeabletolaunchthatearlynextyearandtheinvestmentinthe320cabinswhichIknowthefocusisonthedensificationbutit'sactuallyabetterproduct.

It'sanewseat,anewlightTVsystemandaswe'reseeingona321,weactuallythinkitwillleadtoanincreaseinourcustomersatisfactionlevels.Goingfrom3to4flightattendantsisalsogoingto,youknow,allowformorepersonalizedserviceonboardsoIthinkwehaveallofthat.

Wecontinuetoseethebenefitsofupgaugingasthe321scomeonlineand,notwithstandingmycommentsaboutcostpressures,weoutlinedthecommitmentattheNovember2014InvestorDayofmakingsureourexfuelCASMincreasesstayedunderthe2%.Weareoncoursetomovingthatthisyearandweremaincommittedtothatnextyearaswell.


Allright.That'sveryhelpful.Robin,thankyou.

Operator :

OurnextquestionscomesfromthelineofDanMcKenzieofBuckinghamResearch.

DanielMcKenzie (Analyst-BuckinghamResearchGroup):

Twoquickfollow-upquestionsandthenjustageneralquestion.Ontheoutlookfor2016,whatpercentofthecapacitynextyearissimplytheannualizationofflyingintroducedthisyearversusactualnewASMsbeingintroducednextyear?





Idon'tthinkwe'veguidedanythingmorethanwhatwesaidaboutthehighsingle-digitnumber.

MarkPowers (CFO):

It'srunninglow.That'sallwe'vesaid.


Ithinkthat'sall,that'stheonlyguidanceIcangive.


Isee.Okay.Andthenjustanotherquickhouse-cleaningquestionhereonfarefamilies.

TowhatextentdoyouguyshavetheflexibilitytovariablypricethebagfeeandwhatI'mgettingatisthatI'mseeingthesame$15feefortransconflyingasIamonshorterhaulflightsbutI'mguessingthecostisprobablynotthesameandI'mjustwonderingifthere's,ifthat'ssomethingyoucanjusttalkaboutintermsofITcapability.


Thanks,Dan.I'lltakethat.Goodmorning,it'sRobin.Goodday.IgavethatanswertoSavibutImentionedveryquicklyandglossedoveritsoweappreciateyougivinganopportunitytoelaborate.

Whenwebuiltthetool,webuiltitwiththeflexibilityandtheplan,theabilitytodynamicallypriceandsowehavesomethingthatisveryflexibleandIdon'twanttotalkaboutsortofourintentinthearenaofpricingbutwebuiltatool,Ithinkwehad,we'vehadgreatsuccessovertheyearswithevenmoredynamicallypricingandIdothinkaswethinkaboutthefareoptionsgoingforward,thenthatdynamicpricingisabsolutelysomethingwebuilttheproducttobeabletodo.


Understood.

Andthen,justonegeneralquestionhere,justonbusinesstravel,I'mwonderingwhatyou'reseeingontheMintmarketsversusthenon-Mintmarkets,eitherinlast-minutebookingsorhoweveryoumeasureit,butI'mjustwonderingwhatyoucancommentonintermsofwithwhatyou'reseeingingeneralandbasicallyhowisthatchangedrelativetothis,tolastyear?


Thanksforthequestion,DanImeanI'dsaytwothings.Firstis,obviouslywiththose16seatsatthefrontoftheMintcabin,itisadifferentcustomerbase.Manyofthecustomer,differentcustomerbase,thanwe'veseenhistorically.

WhatweareseeinginMintisahigherpercentageofrepeatcustomersthanwehaveacrossthesystem.Andalsoamuchstrongerclosed-endbookingcurve.SoIthinkbothofthosearehighlyindicativeofthefactthatwe'redoingagoodjobofpenetratingthebusinesscustomerbase.Icanspeakfortherevenuemanagementteamandthesalesteam.

Wearehavingconversationswithcorporatetravelmanagerswhowe'venevertalkedtobeforeaboutwhetheritmakessenseforthemtogetMintintotheircorporatetravelprogramwhichweareveryexcitedabout.

Iwouldsayontheyear-over-yearbasis,there'sreallybeennosignificantchangeinwhatwe'reseeingasfarasclosed-endbookings.Theonethingthathaschangediswehavetakentwo,Ithinksinceyearover




year,wetakentwoadditionalfareincreasesinthosemarketsversuswhatwe'veseenhistorically.WhatwehadlastyearandIthinkit'sbecauseofthatclosed-endstrength.Aswetalkedtoourcustomers,oneofthepiecesoffeedbackthatIthinkthemost--afterpeoplelovingtheserviceandtalkingabouthowgreatourin-flightcrewmembersare,thenextpieceoffeedbackis:IkeeptryingtobuyitandIcannotgetonbecauseit'ssoldout.

Wehavemultipleflights,certainflightsanddaysoftheweek,wherethreeorfourdaysoutwearesoldoutandthat'ssomethingwe'rehopingwillbeabletoamelioratewiththeadditionalcapacitythatweaddedearlierthismonthbecausewereallyseeanopportunitytheretoservemorecustomerswithagreatproduct.


Great.Iappreciatethat.JustapercentofbusinessrevenuethatbusinesstravelspendmayaccountforJetBlue'snetwork,istheresomekindof,canyouhelpsizewherewe'reattoday?


Wedon'treportitandoneofthereasonswedon'treportitisbecausetherearealotofdifferentwaystodefineitandIthinkifweweretogiveyouanumberwe'dhavetospendthenextfiveminutesexplainingtoyouthethreedifferentwaysyoucouldlookatitandwhywehaveitbutit'snotanumberwereportpublicly.


Isee.Okay.Thanksforthetimeyouguys.

Operator :

Atthistimetherearenofurtherquestions.


Terrific.Thankyou.Thanks,everybodyforjoiningourthird-quarterconferencecall.Welookforwardtotalkingtoyousoon.Haveagreatday.

Operator :

And,again,thatwillconcludetoday'sconference.

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