Bloomberg Audio Studios, podcasts, radio news. Thank you so much. Yes, Caroline, I am here with Joanna Garrity, the CEO of Jet Blue, in the very first lounge. This fashioned like an Art Deco New York City apartment from the nineteen forties, thirties, seventies, thirties. Okay, I think I got it right, Joanna. Thank you so much for being here before the launch later this week.
I want to start with just how this fits into the strategy of Jet Blue right now to make the airline truly profitable for a sustainable period of time.
Yeah, thanks for the question. Great to be here and have you in Blue House, jet Blue's first foray into lounges. This is very much part of our jet Forward strategy. We've been working very hard for the last several quarters on really turning towards premium and trying to make sure that we're offering more opportunities for customers who want to pay a little more, and the lounge is part of that.
Our transition to a first class product next year, domestic first class product, we'll be part of that our Premier card or even more as cabin and really excited to start seeing all of that come to life in twenty twenty six.
All of the big airlines we've talked about loyalty and how important loyalty and premium offerings is to their profitability going forward. How is it different for Jet Blue because there isn't the sort of obvious business customer that typically fuels the loyalty offering.
I mean, we're a leisure carrier. We tend to get you know, a nice share of business customers because they love the product. You know, we're back at the top
for net promoter score, so really proud of that. But at the end of the day, this is really designed around trying to make sure that customers who travel for vacation have a reason to come back again and again, providing with a little oasis of peace, and you know, really, through our loyalty program, we want to reward people who choose Jet Blue because they love the product, the service and what we offer.
You have already offered Mint and other premium rollouts. How has it been going.
It's been great. Mint's been a very strong source of revenue for Jet Blue for well over the last decade and so we're not new to this. We have a brand that you know, definitely associates with more of a higher end leisure customer, providing more customers at a very reasonable fair. We want to make sure that we offer something for everybody across the full spectrum, whether you want sort of a dialed down experience, still free Wi Fi and great leg room and great snacks and drinks, TVs.
But then if you want to pay a little more, you have the opportunity for a lounge our Mint Class for Transatlantic and then when we launched domestic first later this year, that's going to be a great product offering for customers want a little more.
So I was shuttled into here through very log security lines and lots of people with screaming children trying to get to different destinations for their warm holidays. This is the busy season. How is it looking in terms of demand given the fact that there were some hiccups in the past couple of months, but at this point people are getting back to what they originally had.
Yeah, twenty twenty five has been a very tough year, whether it was the macro setback or the government shut down, or the list goes on and on. We're really looking forward to the holiday season. Bookings are coming in strong, As we go into twenty twenty six, we're optimistic that the consumer is healthy and that we're going to start really ramping up the initiatives that we have been working really hard for the last year to ex q. Two and seeing the benefit as we move through twenty twenty six.
How long do you think it'll take before you start to actually turn profitable and sustain that.
You know, our goal next year is to break even from an operating margin perspective, and that's the first step back to profitability. We have a great team here. Everybody's pulling for us. We're doing all the right things, whether it's our focus on operational reliability, net promoter score, all the premium products that we're launching, our laser focus on costs, and really trying to make sure that we're we're delivering
a great product offering for customers. Because Jeff Blue has this wonderful brand and this sense of people want to love us and they want to see us succeed, and twenty twenty six is going to be our year with everything we've put into place.
Because twenty twenty five was not the year for a lot of airlines.
There are a lot of airlines.
There are a lot of issues. When you talk about the government shutdown, this has been a big discussion among a lot of the air airlines CEOs where they've said, we just can't make up that kind of revenue, so there will be some sort of hit. Have you disclosed any kind of revenue loss as a result of some of the shutdown, You.
Know, we haven't disclosed any kind of revenue loss. You know, we've said that we remain on track for Q four and I think we're pleased with what we're seeing in terms of bookings coming in for the for the balance of the month. We definitely saw some softness obviously during the government shut down, but we're recovering coming out of that.
I think most have shared that, but it was it was definitely an impact and unfortunate that the airlines were put, you know, right in the middle of that shut down. You know, all the great air traffic controllers and the TSA workers they need to be you know, cast as essential workers. We really need to make sure that, if anything,
this industry is so essential to our economy. I mean, think about all the people who were traveling for weddings and funerals or doctors appointments that were displaced because we couldn't get on the same page in Washington, d C. So we're really hopeful that you know, we've turned a page there and that we can move forward, you know, looking at that end of January date with you know a little bit of nervousness, but I'm confident that DC will pull it together and get us get us in
the back end of that.
Yeah, somehow, being an airline CEO probably wasn't in your bingo car that, if you will, focused on healthcare legislation with your fingers crossed you heading into January, I'm wondering how much you're hoping to attract a new class of customers versus capitalized and the ones that you have that might be willing and able to pay a little bit more with some of the new offerings.
It's a little bit of both. We know we have customers today that want our first class product, and so it's really you know, offering that to them so that they can buy up when that opportunity to presents it. But it's also making sure that we're competitive with the industry. Everybody's moved towards premium. You know, we're going to continue to move towards premium because it is a resilient customer segment. But we're not going to forget the folks that fly
in our coach product. I mean, they're just as important, and we want to make sure that Jet Blue offers something to everyone.
It really does feel a little bit like the Sharks and the Jets when you speak to some of the airline industry CEOs where they talk about, you know, it's become a game of consolidation, and it's become a game of the big fish really dominating the fields in a lot of different ways. They say, it's going to be very hard to be a more budget focused airline. How
do you fight back? How do you sort of create a viable business model at a time when you do see this consolidation of profitability and travel in the biggest airlines.
I mean, it's definitely hard. We talk about the need for a more level playing field. When four carriers have eighty percent of the domestic seats, that's a real problem. You know, we fight very hard in DC to try to make sure that we're heard that the challenges we face, whether it's cost pressures, the lack of scale, the lack of you know, consolidated purchasing, the you know, inability to
get access to gates. We just been on a gate, a Heathrow, a Heathro slot and we were denied it and so you know, we'll maybe understand why it went to a legacy larger carrier. Those are little things that add up over time, and the smaller carriers really need to be given a fair shot to win in this environment, and that's not happening right now. So we're focused on what we can control. We're focused on a whole series of initiatives under our Jet Forward program. It's getting us
movement in the right direction. I'm excited about what it's going to bring. But we do need the government to kind of make that a more level playing field so smaller carriers can more effectively compete.
In the meantime, you do have this cooperation with United, You've been expanding in a host of different places. Is that the template going forward, maybe not consolidation due to the recent issue, but in terms of the previous merger that was denied, but going forward having some sort of partnership with major airlines to expand the roots.
So we've got fifty airline partners across the globe and now we have the Blue Sky partnership with United that is most certainly a part of trying to provide more utility to our loyalty program and providing a broader global network for our customers when eventually in Q one they can book a Jet Blue flight on United dot Com and vice versa through our interline agreement, and so we're
excited about what it's going to bring. Does it solve the problem fully, No, it doesn't, but it's definitely a meaningful revenue initiative that gets us back movement in the right direction.
Do and is a big consolidation at any point in your future? Is that sort of on the back burner.
So that's on the back burner. We're really focused on Jet Forward. You know. I'm really excited with the progress we're making. We're seeing it. We're seeing improved operational reliability, improved customer scores. We have not let the grass grow under our feet in twenty twenty five. We've executed a whole series of revenue initiatives. We've kept our costs under control despite pulling a point and a half capacity this year.
So twenty twenty six really is the year that we sh should reap the benefits of all these initiative that we put into place in twenty twenty five.
Before I let you get back to celebrating the new lounge, I do want to just ask you about the recent incident with a pilot a for Jet Blue plane that was in the route between Krosau and JFK. There was a close call within the US Air Force jet Do you have any more information about what happened there to make sure that it doesn't happen again.
Yeah, I'm really proud of our pilot. He reported the event and we trained them for situations like this. We reported the incident to the government. We're waiting to hear the results of their investigation. But just please with how our pilot handled it and how a traffic control handled it. There's a whole series of safety nets in place in the air, in the national airspace system, and the pilot is the last line of defense and he absolutely did
his job, did it well. And you know, my hope is that doesn't that doesn't happen again.
Jana Garty, thank you so much for being with us. Joanna Guardy, the CEO of Jet Blue,