JetBlue Airways Corporation · NASDAQ:JBLU
JetBlue Airways — Investor Day (December 2016)
75 slides from JetBlue Airways's investor day presentation, Dec 13, 2016
Slide 1: JetBlue Investor Day December 13, 2016
JETBLUE INVESTOR DAY DECEMBER 13, 2016
Slide 2: Safe Harbor
SAFE HARBOR the meaning of the Private Securities cee Reform Act of 1995, Section 27A of the ‘Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Pre ee oe cee ial sed cere ete oe Se ‘vents, When used i See aad dene
Slide 3: Why Invest in JetBlue?
!"#$%&'()*+&,&!"#$%&#'( WHY INVEST IN JETBLUE? ROBIN HAYES PRESIDENT & CEO 3
Slide 4: Why Invest in JetBlue?
WHY INVEST IN JETBLUE? 4
Slide 5: Improve the JetBlue Experience
IMPROVE THE JETBLUE EXPERIENCE 5
Slide 6: Focus on Execution
FOCUS ON EXECUTION 6
Slide 7: Build on Strength
BUILD ON STRENGTH LA Basin San Juan BostonNew York Fort Lauderdale Orlando 7
Slide 8: Developing Our Toolkit
DEVELOPING OUR TOOLKIT MARTY ST. GEORGE EVP COMMERCIAL AND PLANNING 8
Slide 9: We're Delivering on 2014 Return Initiatives
WE’RE DELIVERING ON 2014 RETURN INITIATIVES CABIN RESTYLING FARE OPTIONS MINT CREDIT CARDS 9
Slide 10: Fare Options Exceeding Original Expectations
FARE OPTIONS EXCEEDING ORIGINAL EXPECTATIONS $65m $200m $100m $260m 2015 2016E 2017E 2014 Expectations ($m) Actual (2015) & Current Expectations ($m) $280m+ FARE OPTIONS EARNINGS BENEFIT Opportunity to evolve Fare Options further through pricing and bundled offerings 10
Slide 11: Credit Card Also Exceeding Expectations
CREDIT CARD ALSO EXCEEDING EXPECTATIONS INCREMENTAL CREDIT CARD EARNINGS BENEFIT 2016E 2017E 2018E 2019E 2020E 2021E 2022E ~$60m run-rate by mid 2019 ~$80m run-rate by 2022 11
Slide 12: Growing TrueBlue Partnerships
GROWING TRUEBLUE PARTNERSHIPS 12
Slide 13: Ancillary Contribution Expected to Exceed $25 per Customer
2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E ANCILLARY CONTRIBUTION EXPECTED TO EXCEED $25 PER CUSTOMER IN 2016 ANCILLARY PER CUSTOMER CAGR = +6% 13
Slide 14: Cabin Restyling: Expanding New Core Product to the A320
CABIN RESTYLING: EXPANDING NEW CORE PRODUCT TO THE A320 14a
Slide 15: Cabin Restyling: Expanding New Core Product to the A320
CABIN RESTYLING: EXPANDING NEW CORE PRODUCT TO THE A320 14b
Slide 16: Cabin Restyling: $100M Earnings Benefit
0% 20% 40% 60% 80% 100% Year 1 Year 2 Year 3 Year 4 CABIN RESTYLING: $100M EARNINGS BENEFIT A320 PROGRAM ADDS TO 2017 A321 BENEFIT PERCENT OF A320 FLEET CONVERTED ILLUSTRATIVE A320 ASM IMPACT - Y/Y GROWTH* Expected start to ‘Year 1’ is Fall 2017 * Assumes capacity growth, reflecting only A320 fleet
Slide 17: Mint: Surprising & Delighting
MINT: SURPRISING & DELIGHTING 16
Slide 18: Mint: Originally Designed to Solve a Specific Network Problem
+17 June 2014 TTM June 2015 TTM June 2016 TTM +18 October 2014 TTM October 2015 TTM October 2016 TTM MINT: ORIGINALLY DESIGNED TO SOLVE A SPECIFIC NETWORK PROBLEM Mint Launch Mint Launch JFK-LAX MARGIN VS. SYSTEM (pre and post Mint Launch) JFK-SFO MARGIN VS. SYSTEM (pre and post Mint Launch) 17
Slide 19: Mint: Margin Benefits Extend Beyond Mint Seats
JFK-LAX FREQUENCY AND MARGIN 5 5 7 10 Q3 2013 Q3 2014 Q3 2015 Q3 2016 Core Daily Margin (gap to system) MINT: MARGIN BENEFITS EXTEND BEYOND MINT SEATS JFK-LAX Mint Launch 18
Slide 20: Mint: Boston Markets Following NYC Success
Q2-14 Q1-15 Q4-15 Q3-16 BOS MINT ROUTES PERFORMANCE: TTM MARGIN GAP TO SYSTEM MINT: BOSTON MARKETS FOLLOWING NYC SUCCESS BOS-SFO Mint Launch BOS-LAX Mint Launch )*+,-./012/$31456/ -67+8059/::/78-.41 19
Slide 21: Mint: With Room to Grow
BOS JFK LAX SFO MINT: WITH ROOM TO GROW Current 20a
Slide 22: Mint: With Room to Grow
BOS JFK LAX SFO MINT: WITH ROOM TO GROW Current 2017 Start SAN FLL 20b
Slide 23: Mint: With Room to Grow
BOS JFK LAX SFO MINT: WITH ROOM TO GROW Current 2017 Start Announced SAN LAS SEA FLL 20c
Slide 24: We're Delivering on 2014 Return Initiatives
WE’RE DELIVERING ON 2014 RETURN INITIATIVES CABIN RESTYLING FARE OPTIONS MINT CREDIT CARDS 21
Slide 25: Growing Our Network
GROWING OUR NETWORK SCOTT LAURENCE SVP AIRLINE PLANNING 22
Slide 26: Applying Our Toolkit
APPLYING OUR TOOLKIT DIVERSE NETWORK PRODUCT PROFITABLE FOCUS CITIES AMPLE GROWTH
Slide 27: We've Developed a Strong, Defensible Network (2007)
WE’VE DEVELOPED A STRONG, DEFENSIBLE NETWORK… Fort Lauderdale LA Basin Orlando San Juan 2007 7% 6% 8% 2%4 11 Source: Diio Note: ASMs as a percent of total JetBlue network 24a 56% New York 14% Boston
Slide 28: We've Developed a Strong, Defensible Network (2017)
WE’VE DEVELOPED A STRONG, DEFENSIBLE NETWORK… Fort Lauderdale LA Basin Orlando San Juan 2017 42% New York 14%21% Boston 7%15% 6%8 8% 2% Source: Diio Note: ASMs as a percent of total JetBlue network 24b
Slide 29: Strong Margins in Each Focus City
+ 24 pts + 34 pts + 10 pts + 15 pts + 24 pts + 28pts NYC BOS FLL MCO SJU LA Basin MARGIN BY FOCUS CITY: THEN AND NOW …THAT GENERATES STRONG MARGINS IN EACH FOCUS CITY Q3 2006 TTM Q3 2016 TTM Boston Fort Lauderdale Orlando San JuanNew York 25
Slide 30: Differentiated by Focus on Large Local Markets
DIFFERENTIATED BY OUR FOCUS ON LARGE ‘LOCAL’ MARKETS 0% 10% 20% 30% 40% 50% 60% 70% System Domestic International PERCENT CONNECTING TRAFFIC JBLU “Big 3” LUV Source: US DOT OD1B, T100 26
Slide 31: Toolkit Also Includes 200-Seat A321
JFK-FLLJFK-MCO 5 10 500 1,000 1,500 2013 2014 2015 2016 5 10 500 1,000 1,500 2013 2014 2015 2016 TOOLKIT ALSO INCLUDES 200-SEAT A321 Frees up 1 JFK slot pair Frees up 2 JFK slot pairs Seats/Day JFK Slots Seats/Day JFK Slots 27
Slide 32: Boston: Ample Opportunity Remains
0% 20% 40% 60% 80% 100% BOSTON: AMPLE OPPORTUNITY REMAINS SEAT SHARE IN TOP 20 US METRO AREAS #1 seat share carrier #2 seat share carrier #3 seat share carrier Source: Diio 28
Slide 33: Boston: Margins Have Improved as We've Grown
(9.0) (6.0) (3.0) 0.0 3.0 6.0 9.0 12.0 15.0 ($300) ($200) ($100) $100 $200 $300 $400 $500 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Gap to SystemP&L (M) 31 32 35 42 45 48 51 58 61 BOSTON: MARGINS HAVE IMPROVED AS WE’VE GROWN RELEVANCE Nonstop Markets: TTM Profit BOS vs System (ex-BOS) BO
Slide 34: Boston: In 39 of Top 50 Destinations
JFK SAN LAS SEA SFO DEN FLLRSW MCO TPA PBI RDU CLT PHX PIT RIC SJU AUS IAD BUF CUN AUA BOSTON: WE ARE IN 39 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS 2007 30a
Slide 35: Boston: In 39 of Top 50 Destinations
JFK SAN LAS SEA SFO DEN FLLRSW MCO TPA PBI RDU CLT PHX PIT RIC SJU AUS IAD BUF CUN AUA BOSTON: WE ARE IN 39 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS 2007 EWRCLE MSY LAX ATL ORD SLC DFW DTW BWI DCA PHL LGA BNA PDX HOU JAX 2017E 30b
Slide 36: Boston: In 39 of Top 50 Destinations
JFK SAN LAS SEA SFO DEN FLLRSW MCO TPA PBI RDU CLT PHX PIT RIC SJU AUS IAD BUF CUN AUA BOSTON: WE ARE IN 39 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS 2007 EWRCLE MSY LAX ATL ORD SLC DFW DTW BWI DCA PHL LGA BNA PDX HOU JAX 2017E Not Currently Served DUB CDG LHR CMH MSP KEF STL IND MCI MKE
Slide 37: South Florida: An Underserved Market
SOUTH FLORIDA: AN UNDERSERVED MARKET SEAT SHARE IN TOP 20 US METRO AREAS Source: Diio 0% 20% 40% 60% 80% 100% #1 seat share carrier #2 seat share carrier #3 seat share carrier 31
Slide 38: Fort Lauderdale: Strong Revenue Premium with Local Focus
82% 75% 74% 39% 0% 20% 40% 60% 80% 100% B6 WN NK AA (MIA) RASM (top 3 carriers) Source: US DOT OD1B, T100, Form 41 for YE2Q16 FORT LAUDERDALE: WE GENERATE A STRONG REVENUE PREMIUM WITH A LOCAL FOCUS PERCENT LOCAL TRAFFIC (top 3 carriers) 5.00 7.00 9.00 11.00 13.00 B6 WN NKJBLU LUV SAVE JBLU LUV SAVE
Slide 39: Fort Lauderdale: Margins as Expected for This Stage
-10 -5 0 5 10 1 4 7 10 13 16 19 22 25 28 31 34 M ar gi n Pt s vs In du st ry Growth Program Age (Quarters) FORT LAUDERDALE: MARGINS AS EXPECTED FOR THIS STAGE OF DEVELOPMENT Boston Margins vs. Industry Ft. Lauderdale Margins vs. Industry FT. LAUDERDALE VS. BOSTON MARGINS BY QUARTER Source: Company r
Slide 40: South Florida: Top 50 Destinations
EWR JFK HPN LGA BUF 2007 SOUTH FLORIDA: WE ARE IN 29 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS 34a
Slide 41: South Florida: In 29 of Top 50 Destinations
EWR JFK HPN LGA BUF LIM ORD BOS RDU PIT CLE MSY DTW BWIDCA PHL BNA LAS SFO LAX BDL PVD BOG MEX SJU CUN PAP SDQ NAS 2007 2017E SOUTH FLORIDA: WE ARE IN 29 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS 34b
Slide 42: South Florida: In 29 of Top 50 Destinations
EWR JFK HPN LGA BUF LIM ORD BOS RDU PIT CLE MSY DTW BWIDCA PHL BNA LAS SFO LAX BDL PVD BOG MEX SJU CUN PAP SDQ NAS 2007 2017E Not Currently Served SOUTH FLORIDA: WE ARE IN 29 OF THE TOP 50 DOMESTIC AND INTERNATIONAL DESTINATIONS SEA DEN TPA CLT PHX ATLDFW MSP STL CVG ACY HOU GRU EZE LHR YYZ YUL PTY
Slide 43: 2017 Capacity Guidance
2017 CAPACITY GUIDANCE Region % of Total Capacity ASMs Low High Transcon 30% 11.5% 13.5% Latin 29% 4.5% 6.5% Florida 28% 4.5% 6.5% East 6% 17.5% 19.5% Central 4% 4.5% 6.5% West 3% 15.5% 17.5% System 6.5% 8.5% 35
Slide 44: Applying Our Toolkit
APPLYING OUR TOOLKIT DIVERSE NETWORK PRODUCT PROFITABLE FOCUS CITIES AMPLE GROWTH
Slide 45: Questions
jetBlue | questions
Slide 46: Break
jetBlue | sreax
Slide 47: Improving the JetBlue Experience
!"#$%&'()*+&,&!"#$%&#'( IMPROVING THE JETBLUE EXPERIENCE JOANNA GERAGHTY EVP CUSTOMER EXPERIENCE JEFF MARTIN EVP OPERATIONS 39
Slide 48: Product & Service Matter
PRODUCT & SERVICE MATTER Source: DOT OD1B, T100 REVENUE PREMIUM 40 NPS VS. RELATIVE REVENUE PERFORMANCE
Slide 49: Investments Allow Us to Focus on Customer Experience
INVESTMENTS ALLOW US TO FOCUS ON CUSTOMER EXPERIENCE 41
Slide 50: Improving Operational Process to Match Product and Fleet Evolution
IMPROVING OPERATIONAL PROCESS TO MATCH PRODUCT AND FLEET EVOLUTION JBLU 42
Slide 51: Enhancing Reliability in a High Utilization Model
ENHANCING RELIABILITY IN A HIGH UTILIZATION MODEL Aircraft Utilization Technical Dispatch Reliability *A321 YE aircraft totals: 2014 – 13; 2015 – 25; 2016 – 37 1 2016 YTD Aircraft Utilization data as of 10/31/2016 2 2016 YTD TDR data as of 11/14/2016 Note: “Aircraft Utilization” as publicly reported
Slide 52: We Operate in the Most Complex U.S. Airspace
WE OPERATE IN THE MOST COMPLEX U.S. AIRSPACE 0 5 10 0% 50% 100% Ice Storm (Feb '07) Ice Storm (Dec '10) Sandy (Oct '12) Hercules (Jan '14) Matthew (Oct '16) Major Storm Comparison Completion Factor (lhs) # of Days impacting operations (rhs) 0% 20% 40% 60% 80% 100% JBLU UAL AAL DAL ALK LUV % of Depar
Slide 53: Safety: Our Number One Value
SAFETY: OUR NUMBER ONE VALUE OJI "TOTAL RECORDABLE" CASE RATE PER 200,000 HOURS WORKED – YTD 3Q16 0 1 2 3 4 5 6 7 8 A4A-1 A4A-2 A4A-3 JBLU A4A-7 Total Recordable Case Rate Industry Average OJI, on the job injury Source: A4A. NOTE: Industry data provided by A4A, current through September 2016; A4A ca
Slide 54: Financial Summary & Outlook
!"#$%&'()*+&,&!"#$%&#'( FINANCIAL SUMMARY & OUTLOOK JIM LEDDY SVP TREASURER & CHIEF FINANCIAL OFFICER (INTERIM) 46
Slide 55: JetBlue Approach Finding Traction: Growth vs. Peers
JETBLUE APPROACH FINDING TRACTION, FOCUS ON SUSTAINING RELATIVE MARGIN GAINS RASM GROWTH VS. PEERS COST GROWTH VS. PEERS Seat Miles (CAGR) RASM(CAGR) CASM ex-Fuel, P/S(CAGR) 0.4% -2.4% 0.0% -4.4% 2011-2016E 2014-2016E 7.5% 9.1% 1.9% 3.3% 2011-2016E 2014-2016E 2.4% 0.7% 1.7% 1.4% 2011-2016E 2014-2016
Slide 56: Focus on Sustaining Relative Margin Gains
JETBLUE APPROACH FINDING TRACTION, FOCUS ON SUSTAINING RELATIVE MARGIN GAINS * Peers include: AAL, ALK, DAL, LUV, SAVE, UAL 0% 5% 10% 15% 20% 2011 2012 2013 2014 2015 2016E PRE-TAX MARGINS JBLU PEERS Peers include AAL, ALK, DAL, LUV, SAVE, UAL and VA. 1. In 2014, JBLU had a pre-tax gain of $241 mill
Slide 57: 2017 Guidance
2017 GUIDANCE Metric Guidance Range Capacity 6.5 – 8.5% CASM excluding fuel 1 – 3% Capex (aircraft) $1.05bn - $1.2bn Capex (non-aircraft) $150m – $200m Other Income/(Expense) ($95m) – ($105m) 49
Slide 58: Stage Length, Labor and Maintenance Are Primary CASM ex-Fuel Pressures
STAGE LENGTH, LABOR AND MAINTENANCE ARE PRIMARY CASM EX-FUEL PRESSURES 2017 CASM EX-FUEL HEADWINDS AND TAILWINDS ~1.5pts ~0.5pts ~0.0pts 2.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Stage Length Salaries, Wages & Benefits, MM&R and Profit Sharing All Other 2017 (Midpoint of Guidance) 20 17 C AS M e x- Fu el Y
Slide 59: Medium Term Financial Goals
MEDIUM TERM FINANCIAL GOALS Metric 2017-2020 Capacity High Single Digit CAGR CASM excluding fuel 1-3% in 2017Flat to 1% CAGR 2018-2020 Capex Average of ~$1.3bn 51
Slide 60: Structural Cost Initiatives
!"#$%&'()*+&,&!"#$%&#'( STRUCTURAL COST INITIATIVES STEVE PRIEST VP STRUCTURAL PROGRAMS 52
Slide 61: Committed to $250-$300M in Structural Savings by 2020
COMMITTED TO $250-$300M IN STRUCTURAL SAVINGS BY 2020 Maintenance Planning Crew Resourcing Model Parts Optimization Crew Resourcing Model Corporate Automation Customer Self-Service Capex Governance Tech Ops Airports Corporate TOTAL Distribution Channel Strategy Digital Offering COST CATEGORY EXPECTE
Slide 62: Tech Ops: $100-$125M Opportunity
TECH OPS: $100-$125M OPPORTUNITY 54
Slide 63: Corporate: $75-$90M Opportunity
CORPORATE: $75-$90M OPPORTUNITY Source: XXXXX 55
Slide 64: Airports: $55-$65M Opportunity
AIRPORTS: $55-$65M OPPORTUNITY 56
Slide 65: Distribution: ~$20M Opportunity
DISTRIBUTION: ~$20M OPPORTUNITY JBLU 57
Slide 66: Committed to $250-$300M in Structural Savings by 2020
COMMITTED TO $250-$300M IN STRUCTURAL SAVINGS BY 2020 AIRPORTS TECH OPS CORPORATE DISTRIBUTION 58
Slide 67: Capital Allocation
!"#$%&'()*+&,&!"#$%&#'( CAPITAL ALLOCATION JIM LEDDY SVP TREASURER & CHIEF FINANCIAL OFFICER (INTERIM) 59
Slide 68: Maintain a Strong Balance Sheet to Support Future Growth
MAINTAIN A STRONG BALANCE SHEET TO SUPPORT FUTURE GROWTH THROUGH THE CYCLE 1 97 169 227 2011 2016E -!".$%-&/%*%0/1#*!*2&34**5 $%0!*(+*2&4$6/$2$5)&4*7*!+ !*2/0*2&4*7*!(-* Unencumbered Total 27% 14% 1% 25% 6% 2011 2016E Cash + STI Unencumbered Aircraft 70% LTV Revolver As % of TTM Revenue 5.9x 1.2x $2
Slide 69: Investing in Network Growth While Supplementing with Accelerator Capital
INVESTING IN NETWORK GROWTH WHILE SUPPLEMENTING WITH ‘ACCELERATOR CAPITAL’ CAPITAL EXPENDITURE Aircraft Non-Aircraft 2017E $1.2bn - $1.4bn 2018E $1.1bn - $1.2bn Non-Aircraft Capital Efficiency Focused Network Growth, Mint & Aircraft Capital Efficiency IT Infrastructure Tech Ops Planning Customer Fac
Slide 70: Maturing Approach to Capital Allocation as Leverage Reaches Target
MATURING APPROACH TO CAPITAL ALLOCATION AS LEVERAGE REACHES TARGET Substantial progress in de-risking balance sheet < Targeting lower end of 30-40% range Continuing to invest in the medium and long term JetBlue vision and growth Measured capital return to shareholders: Increased authorization to $50
Slide 71: Questions
jetBlue | questions
Slide 72: Building on Success
!"#$%&'()*+&,&!"#$%&#'( BUILDING ON SUCCESS ROBIN HAYES PRESIDENT & CEO 64
Slide 73: UMAR
UMAR Bag a olga h lan — 3, SOR . - _ ens ra SiOy
Slide 74: Questions
jetBlue | questions
Slide 75: Thank You
jetBlue |tHank ou es i