Jetblue Airways Corporation · NASDAQ:JBLU
Jetblue Airways — Investor Day (November 2014)
56 slides from Jetblue Airways's investor day presentation, Nov 19, 2014
Slide 1: JetBlue Investor Day November 19, 2014
1 1 JETBLUE INVESTOR DAY NOVEMBER 19, 2014
Slide 2: Forward-looking statements
2 2 This presentation contains statements of a forward-looking nature which represent our management's beliefs and assumptions concerning future events. When used in this document and in documents incorporated herein by reference, the words “expects,” “plans,” “anticipates,” “indicates,” “believes,”
Slide 3: Introduction – Dave Barger, CEO
INTRODUCTION DAVE BARGER CHIEF EXECUTIVE OFFICER
Slide 4: Building a Sustainable Path
ROBIN HAYES | PRESIDENT BUILDING A SUSTAINABLE PATH ROBIN HAYES PRESIDENT
Slide 5: Mission: Inspire Humanity
5 5 MISSION: INSPIRE HUMANITY
Slide 6: Serving the Underserved
6 6 Differentiated Product & Culture Competitive Costs High Value Geography 1 2 3 SERVING THE UNDERSERVED
Slide 7: Differentiated Product & Culture
7 7 DIFFERENTIATED PRODUCT & CULTURE Picture on competitive costs DIFFERENTIATED PRODUCT & CULTURE
Slide 8: Competitive Costs
8 8 COMPETITIVE COSTS COMPETITIVE COSTS
Slide 9: High-Value Geography
9 9 HIGH-VALUE GEOGRAPHY HIGH-VALUE GEOGRAPHY
Slide 10: Winning Over the Next Three Years
10 10 WINNING OVER THE NEXT THREE YEARS FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES UNIT COST CONTROL TARGETED GROWTH FLEET OPTIMIZATION FOCUS ON RETURNS
Slide 11: Margin Expansion Through Differentiated Product & Culture
ROBIN HAYES | PRESIDENT MARGIN EXPANSION THROUGH DIFFERENTIATED PRODUCT & CULTURE MARTY ST. GEORGE SVP COMMERCIAL
Slide 12: Delivering Improved Revenue Results
12 12 DELIVERING IMPROVED REVENUE RESULTS… Industry ex-JBLU JBLU A4A PRASM & CAPACITY 2008 – 2013* -0.8% 5.7% 3.0% 4.3% Capacity CAGR PRASM CAGR Industry ex-JBLU JBLU v EXCEEDING INDUSTRY PRASM GROWTH – WHILE GROWING * A4A PRASM and capacity include domestic and Latin
Slide 13: Through Solid Execution: Even More Revenue
13 13 …THROUGH SOLID EXECUTION EVEN MORE REVENUE v EVEN MORE REVENUE PER CUSTOMER UP ~200% SINCE 2008 * As of 10/23/14 guidance $45M $75M $85M $120M $150M $170M $190M* 2008 2009 2010 2011 2012 2013 2014E Even More ($)
Slide 14: Mint: Solving a Structural Disadvantage
14 14 MINT: SOLVING A STRUCTURAL DISADVANTAGE JBLU JFK-LAX REVENUE PER DEPARTURE BEFORE MINT $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 JBLU OA Competitor Economy Premium 10% deficit Source: US DOT Database 1A
Slide 15: Mint: Surprising & Delighting
15 15 MINT: SURPRISING & DELIGHTING “The seats, the amenities, and most of all the service. Jennel was great. She was so kind and professional with a sincere warmth.” “The food and service was amazing, Angel and Rolando were top notch. I felt like I was dining at a 5 star restaurant and the food was
Slide 16: Mint: Solving a Structural Disadvantage
16 16 MINT: SOLVING A STRUCTURAL DISADVANTAGE JFK-LAX REV/DEPARTURE BEFORE MINT SEPTEMBER YOY ACTUALS* REVENUE: + 24% COST **: + 6% Margin: + 17 pts v MINT EXPECTED TO SIGNIFICANTLY IMPROVE TRANSCON PERFORMANCE * Measured on a per departure basis ** Adjusted for constant fuel price Source: US DOT Da
Slide 17: Fly-Fi: Industry-Leading Connectivity
17 17 FLY-FI: INDUSTRY-LEADING CONNECTIVITY FEATURE SPEED 12-20Mbps/ Customer 3-8Mbps 1-5Mbps TAKE RATE 43% 6% 7% PRICE $0-9 $12-40 $5 PRODUCT COMPARISON MONETIZATION LEVERS Brand sponsorships (4Q14) Digital ad technology (3Q15) TrueBlue acquisition (3Q15) Ecommerce/streaming revenue (4Q15)
Slide 18: ROIC Lever: Fare Families
18 18 ROIC LEVER: FARE FAMILIES UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 19: Fare Families: A Tailored Approach
19 19 FARE FAMILIES: A TAILORED APPROACH Customer Spend ($) Trip Purpose OUR CUSTOMER SWEET SPOT Business Leisure High Value Leisure Mixed Wallets Ultra Price Sensitive Road Warriors
Slide 20: Fare Families: New Merchandising Platform
20 20 FARE FAMILIES: JETBLUE’S NEW MERCHANDISING PLATFORM v EXPECT ANNUAL INCREMENTAL OPERATING INCOME OF >$200M* v Departs Arrives Duration 3:26PM HPN 6:29PM FLL 3h 3m Flight 813 | View Seats | Amenities | A320 Better Even Better Best • Free TV • Free Snacks • Award Winning Service • Most Legroom
Slide 21: ROIC Lever: Cabin Refresh
21 21 ROIC LEVER: CABIN REFRESH UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 22: Cabin Refresh: Most Legroom in Coach
22 22 CABIN REFRESH: OFFERING THE MOST LEGROOM IN COACH… Typical Economy Seat Pitch (inches) 29 30 31 32 33 34 35 2000 2005 2010 2015 JetBlue Other Airlines
Slide 23: Cabin Refresh: Maintains High NPS
23 23 CABIN REFRESH: …MAINTAINS HIGH NPS… v NPS Refreshed Core (A321) vs Traditional Core (A320) JFK LAX JFK ALL DEPARTURES +15 pts TRADITIONAL** REFRESHED* * Includes B/E Pinnacle Seats at 33”, LiveTV4 with 15/1” Mint screen and 10/1” Core screen, In-seat Power ** Includes Weber/Recaro Seats at 34”
Slide 24: Cabin Refresh: Enhancing Margins
24 24 CABIN REFRESH: …WHILE ENHANCING MARGINS AVERAGE FLEET-WIDE SEAT PITCH* v EXPECT ANNUAL INCREMENTAL OPERATING INCOME OF $100M BY 2019 A320 CABIN REFRESH Current A320: 150 Core seats 15 Core seats Future A320: 165 Core seats *Weighted average of anticipated and/or announced fleet-wide narrow bod
Slide 25: ROIC Lever: New & Ongoing Initiatives
25 25 ROIC LEVER: NEW & ONGOING INITIATIVES UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 26: Summary of ROIC Accretive Initiatives
26 26 SUMMARY OF ROIC ACCRETIVE INITIATIVES Fare families Cabin refresh* New & ongoing Initiatives** 1 2 3 2015E 2016E 2017E Run rate >$200M ~$100M ~$150M Timeline & Margin Contribution ~$65M ~$40M * Assumes cabin refresh begins in 3Q16 and is completed over a ~2 year time frame ** Includes expected
Slide 27: Questions
QUESTIONS are jetBlue
Slide 28: Break
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Slide 29: Maintaining Competitive Costs
ROBIN HAYES | PRESIDENT MAINTAINING COMPETITIVE COSTS JEFF MARTIN SVP OPERATIONS
Slide 30: Our Cost Position Imperative
30 30 9 10 11 12 13 14 15 16 17 OUR COST POSITION IMPERATIVE Features & Benefits Network carriers Low High * Mainline stage-length adjusted CASM to 1,000 miles from AAL, ALGT, ALK, DAL, JBLU, LUV, SAVE, UAL for quarter ended September 30, 2014 Source: Company reports CASM SLA* Low cost carriers
Slide 31: ROIC Lever: Unit Cost Control
31 31 ROIC LEVER: UNIT COST CONTROL UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 32: Managing Maintenance Pressures
32 32 MANAGING MAINTENANCE PRESSURES MX SPEND UNDER HOURLY AGREEMENTS 110 123 131 125 151 11 28 28 15 19 90 100 110 120 130 140 150 160 170 180 2014E 2015E 2016E 2017E 2018E Landing Gear Overhaul Heavy Maintenance Checks # of checks HEAVY MX & LANDING GEAR CHECKS * Airbus components covered under ho
Slide 33: Investing in Fleet & Fuel Efficiency
33 33 INVESTING IN FLEET & FUEL EFFICIENCY CASM BENEFIT RELATIVE TO A320CEO* * All figures are compared to A320ceo without sharklets currently in JetBlue’s fleet and does not include benefit from A320 cabin refresh ** Fuel efficiency benefit shown on a per ASM basis Note: Current A320 fleet CASM sta
Slide 34: Improving Operational Efficiency
34 34 96.9 97.0 97.1 97.2 97.3 97.4 97.5 97.6 97.7 97.8 97.9 A320 E190 System 2013 2014 YTD 66% 68% 70% 72% 74% 76% 78% 80% 1Q* 2Q 3Q 2013 2014 IMPROVING OPERATIONAL EFFICIENCY Technical Dispatch Reliability (TDR) On Time Performance (A14) Increased Operational Resources Dynamic Operational Philosop
Slide 35: Committed to Keeping Costs Low
35 35 COMMITTED TO KEEPING COSTS LOW YOY CASM EXCLUDING FUEL & PROFIT SHARING *As of 10/23/14 guidance v TARGETING <2% CASM-EX FUEL 0.9% 3.2% 3.8% 2.5 - 4.5%* ~Sub-inflation 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 2011 2012 2013 2014E 2015E-2017E C ASM e x- Fu el & P rofit Sh ar in g 0.9%
Slide 36: Slide 36
Slide 37: Building a Return-Driven Network in High-Value Geography
BUILDING A RETURN-DRIVEN NETWORK IN HIGH-VALUE GEOGRAPHY SCOTT LAURENCE SVP AIRLINE PLANNING
Slide 38: Driving Broad, Sustainable Profitability
38 38 DRIVING BROAD, SUSTAINABLE PROFITABILITY P&L TTM 3Q14 in JFK, BOS, FLL, MCO, SJU, LGB NYC is JFK, LGA, EWR, HPN. L.A. Basin is LAX, LGB, BUR. New York Boston L.A. Basin Orlando San Juan Fort Lauderdale Margin 0% +
Slide 39: ROIC Lever: Targeted Growth
39 39 ROIC LEVER: TARGETED GROWTH UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 40: Approaches to Return-Driven Growth
40 40 APPROACHES TO RETURN-DRIVEN GROWTH 1. Increased density & gauge 2. Incremental aircraft 3. Aircraft redeployment
Slide 41: Driving Returns Through Gauge & Density
41 41 DRIVING RETURNS THROUGH GAUGE & DENSITY 2008 2010 2012 2014 2016 2018 NYC PROFIT MARGIN* A320 VS A321HD PERFORMANCE RASM: (3)% CASM: (14)% Margin: ~ +10 pts 2017E * TTM as of 3Q 2014 in JFK, LGA, EWR, HPN Note: HD denotes high-density (190 seat all Core configuration)
Slide 42: Driving Returns Through Incremental Aircraft
42 42 DRIVING RETURNS THROUGH INCREMENTAL AIRCRAFT Margin before growth Margin after growth (with estimate) Pre Post San Juan Est. Pre To-date Fort Lauderdale Pre Post Boston
Slide 43: Driving Returns Through Aircraft Reallocation
43 43 DRIVING RETURNS THROUGH AIRCRAFT REALLOCATION TYPICAL MARKET RAMP PERIOD* Breakeven Margin *TTM fully allocated P&L figures ** Reductions greater than (10%) year-over-year Routes with significant ASM reduction or closure** Aircraft unlocked 2010 33 6.0 2011 33 3.5 2012 33 5.5 2013 29 3.0 2014
Slide 44: 2015 Capacity Outlook
44 44 2015 CAPACITY OUTLOOK 2015E YOY Growth* Region % of Total Capacity ASMs Low High Transcon 31% 15% 17% Florida 29% 4% 6% Latin 28% 4% 6% East 5% 4% 6% West 3% 3% 5% Central 4% (5)% (3)% System 100% 6% 8% v 2015 CAPACITY GROWTH DRIVEN BY MINT AND FLL EXPANSION * Scheduled vs scheduled capacity
Slide 45: Questions
jetBlue | questions
Slide 46: Financial Summary – Mark Powers, CFO
ROBIN HAYES | PRESIDENT FINANCIAL SUMMARY MARK POWERS EVP CHIEF FINANCIAL OFFICER
Slide 47: Strengthening the Balance Sheet
47 47 STRENGTHENING THE BALANCE SHEET RIGHT-SIZED LIQUIDITY BALANCE† REDUCED LEVERAGE LARGER PRODUCTIVE ASSET BASE 4.0x 2.8x YE 2011 3Q 14 Net Debt***/EBITDAR 169 199 YE 2011 3Q 14 Fleet size † Calculated as a percentage of trailing twelve month revenue * Includes additional $50M credit revolver cap
Slide 48: ROIC Lever: Fleet Optimization
48 48 ROIC LEVER: FLEET OPTIMIZATION UNIT COST CONTROL TARGETED GROWTH FOCUS ON RETURNS FLEET OPTIMIZATION FARE FAMILIES CABIN REFRESH NEW & ONGOING INITIATIVES
Slide 49: Reducing Aircraft Capital Commitments
49 49 REDUCING AIRCRAFT CAPITAL COMMITMENTS AIRCRAFT DELIVERY SCHEDULE v AIRCRAFT DEFERRAL REDUCES CAPEX BY $900M THROUGH 2018 12 10 10 1 6 15 15 16 (5) (5) (8) 16 2 2015 2016 2017 2018 2019 2020 2021 2022 2023 Airbus ceo deliveries Airbus neo deliveries Change
Slide 50: Reducing Non-Aircraft Capital Commitments
50 50 REDUCING NON-AIRCRAFT CAPITAL COMMITMENTS T5i DCA slots Customer technologies 2014E non-aircraft capex*: $320M 2015E non-aircraft capex: $150 – 200M Major 2014 Projects *As of 10/23/14 guidance
Slide 51: Levers for Margin and ROIC Expansion
51 51 LEVERS FOR MARGIN AND ROIC EXPANSION REVENUE* COST CAPEX • Fare families • Cabin refresh • New & ongoing initiatives • Fleet investments • Fuel efficiency • Operational excellence • Reduced non-aircraft capex • Aircraft deferral ESTIMATED INCREMENTAL BENEFIT * Run rate incremental operating ma
Slide 52: 2015 Outlook
52 52 2015 OUTLOOK Metric Guidance Range CASM excluding fuel & profit sharing <2% Capacity* 6 – 8% Capex (aircraft) ~$675M Capex (non-aircraft) $150 – 200M * Scheduled vs scheduled ASMs Note: Detailed 2015 guidance will be provided in January 2015 on JetBlue’s fourth quarter and full year earnings c
Slide 53: Questions
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Slide 54: Closing Remarks
ROBIN HAYES | PRESIDENT CLOSING REMARKS ROBIN HAYES PRESIDENT
Slide 55: Winning Over the Next Three Years
55 55 WINNING OVER THE NEXT THREE YEARS Competitive Costs Differentiated Product & Culture High-Value Geography
Slide 56: Thank You
jetBlue | THANK you