JetBlue CEO Joanna Geraghty Talks Travel Demand, Prices

**SPEAKER_1** (0:02)
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**Lisa Abramowicz** (0:07)
We're here in Rio de Janeiro, and I am here with the CEO of JetBlue, Joanna Geraghty, here live at the annual IATA meeting. Joanna, great to see you. Thank you so much for being with us.

**Joanna Geraghty** (0:16)
I think we were last in our lounge together.

**Lisa Abramowicz** (0:17)
I know, and that's a big part of the whole story. I want to start with demand for the lounge, but more broadly from customers, whether you've seen it really hang in there the way that we've heard from some of the other airlines, despite some of the concerns and the higher costs that we're seeing.

**Joanna Geraghty** (0:31)
Yeah, I mean, we're very pleased with the demand environment. Customers are still flying. I think it speaks to the importance of air travel, and particularly going to the summertime, customers still want to have that vacation, and so we're very pleased with that. Obviously, the fuel environment is very challenging. We're passing on about 40 percent of the cost of fuel right now within the ticket price, which isn't great. Obviously, you want customers to really see affordable air travel, but we're seeing demand strong. We're hoping it keeps up through the summer and to the end of the year.

**Lisa Abramowicz** (0:54)
With the 40 percent increase to customers, are you seeing any pushback or are people pretty okay with it? Does demand kind of hang in there?

**Joanna Geraghty** (1:01)
I think everybody understands, given the current environment where fuel prices are, that air fares are going to be a bit higher. Since 2019, before the fuel crisis, air fares really hadn't kept up with the cost of inflation. And so there's a little bit of catch up happening, and then you add the increased fuel price on top of things. And I think we've got to make sure that we're covering our costs. Spirit is a great example of an airline that just couldn't cover its costs. Everybody loves $29 fares, but when your costs, your input costs are a lot more than $29 a customer, you know, it makes it challenging.

**Lisa Abramowicz** (1:28)
At this point, is it sustainable with 40% passed on to customers if the prices of oil stay where they are currently, or even inflect higher for a prolonged period of time?

**Joanna Geraghty** (1:38)
We need to continue to see prices stay where they are so that we can ensure that the full cost, the incremental fuel costs are being passed on.
As we think about this year, I mean, it's close to a billion dollar incremental expense to JetBlue fuel. So we're really focused on how do we make sure that we're driving great value for customers in the product offering and the service we provide, but also making sure that we recapture those fuel costs.

**Lisa Abramowicz** (2:00)
You talked about Spirit. Have you seen any pick up in business that you've taken on from Spirit as a result of the bankruptcy?

**Joanna Geraghty** (2:07)
We're definitely seeing some positive trends in Fort Lauderdale. It's one of the opportunities for JetBlue. Spirit obviously had a big footprint down there. We're the largest carrier down there now. We look forward to continuing to serve South Florida.
We're adding flights this summer. We'll be up to 130 flights in Fort Lauderdale this summer, hopefully growing to 150 through the peak next year. And customers are responding very well to our product, to our service down there. And we look forward to continuing to serve that market.

**Lisa Abramowicz** (2:32)
A lot of people said it was a mistake. Retroactively, post facto, it was a mistake that the antitrust officials did not sign off on the merger between JetBlue and Spirit. I'm sure this is like a dagger through your heart. You don't want to revisit this in any way. That was incredibly painful. There is a feeling though that there would be a more kind of openness to consolidation in the sector going forward.
Would you want to try again with something or are you just like absolutely not putting that aside?

**Joanna Geraghty** (2:59)
We're publicly traded companies, so we're always going to do what's in the best interest of our shareholders.
You know, with that said, companies need to focus on the organic plan. And when we think about all the time we spent with Spirit trying to get that transaction done, we have a great plan. Our Jet Forward plan is working. We're looking forward to bringing first class on by the end of the year across our domestic, our domestic fleet, we've got our lounges opening up, we've got our great partnership with Blue Sky. So you can obviously never say never as a publicly traded company, but we really need to be focused on getting JetBlue healthy again and all the moves we're making are working in the right direction. Now we just need the macro environment to cooperate with us.