Jetblue Airways (JBLU) Q3 2026 earnings call transcript

Thanks, Jillian. Good morning, everyone. And thank you for joining us for our third-quarter 2026 earnings call. Yesterday, we issued our earnings release and a presentation that we will reference during this call. All of those documents are available on our website at investor. jetblue. com and on the SEC's website at www. scc. gov. In New York, discuss our results, our join-a-guarity, our Chief Executive Officer, Marty St. George, our President, and Ursula Hurley, our Chief Financial Officer. During today's call, we'll make forward-looking statements about our outlook, strategy, and future performance. These statements are based on our current expectations and our subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release and SEC filings for information about risk factors that could cause those differences.

These statements speak only as of today and we undertake no obligation to update them. We may also discuss certain non-GAP financial measures. Reconciliation to the most directly comparable GAP measures are included in our earnings materials and are available on our investor relations website. And now, I'd like to turn the call over to Joanna Garrity, Deputy CEO.

Thank you, Kush. Good morning, everyone, and thank you for joining us today. I want to start by reinforcing the bigger picture and the progress that we are making. Despite significant fuel headwinds and a challenging summer operation, our revenue performance is among the strongest in the industry, with unit revenue of 18.4% in the third quarter and further acceleration expected in the fourth. Customer demand remains resilient and we are seeing jet forward benefits compounding with some of our largest opportunities still ahead. Importantly, we are already expanding margins year over year despite elevated fuel prices. We remain focused on operating profitability in 2027 and see multiple paths to at least $1 an earnings per share and positive free cash flow in 2028.

Importantly, our liquidity and financing flexibility provide an important bridge as these benefits build. The fuel challenges the industry faces are real, but so is our progress. JetBlue has a strong brand, a high value network, customers who are loyal to our differentiated offering, great crew members, and a clear strategy to achieve sustained profitability. We are confident in our plan and focused on delivering the results that this airline is capable of achieving.

Turning to the third quarter, I'm very encouraged by the strength we saw in the underlying business this quarter. Revenue materially exceeded our initial expectations and strengthened as the quarter progressed, with momentum continuing into the fourth quarter. For me, two highlights stand out from the quarter.

First, demand remained resilient, even as industry fairs moved higher in response to elevated jet fuel costs. This revenue strength helped us recapture a higher fuel faster than initially expected, and we achieved 87% recapture in the third quarter versus our initial expectation of 70 to 80%.

Second, Fort Lauderdale continues to demonstrate the strength of our network strategy, delivering strong unit revenue performance even as we significantly expanded our operation. At the same time, the quarter was impacted by an unusually challenging summer operating environment. Severe weather and air traffic control constraints across our court, northeast geographies reduced our completed capacity and increased our disruption in crew costs. Through it all, our crew members worked tirelessly to care for our customers and recover our operation, and I want to thank them for their tremendous dedication throughout such a demanding summer.

Even with elevated fuel prices and the air traffic control pressures we faced this summer, we still expect to deliver year over year adjusted operating margin expansion over the second half of this year. We saw modest margin expansion in the third quarter and expect one to two points of further growth in the fourth quarter, even with fuel up 85%.

We know there is still work ahead, particularly given elevated fuel prices and macroeconomic uncertainty, but our third quarter performance provides further evidence that jet forward is delivering results. We've now delivered four consecutive quarters of improving year over year rather than growth and are among the industry leaders for second half revenue expansion.

We remain on track to achieve our 2026 jet forward targets with several important initiatives continuing to build into 2027 and beyond, and we are already seeing that execution translate into revolts in Fort Lauderdale. We expect our seat share to reach approximately 37% in the fourth quarter, 14 points year over year, reflecting the scale that we are building as our operation expands. We are also deepening our engagement with local customers and cobran acquisitions in Broward County increased 55% year over year in the third quarter. These actions are driving strong rise in growth in Fort Lauderdale and illustrate the early success of our strategic capacity growth. Blue first is yet another important driver of our growth, and is our largest jet forward initiative.

Seats are now on sale, and we look forward to welcoming our first customers in early December. We're excited to offer customers a domestic first class experience at an accessible price point. At Runway, we expect Blue first to deliver nearly five points of rather improvement with its revenue and margin contributions building through 2028 and beyond, turning to our financial position. We ended the quarter with 2.2 billion in liquidity and approximately 7 billion in unencumbered assets, including 2.8 billion in aircraft and engines. Together, these resources provide substantial financial flexibility and an important bridge as we execute jet forward and move toward a stronger earnings and cash flow profile. The progress that we are seeing across our business is real.

Our revenue initiatives are delivering. We are beginning to expand margins year over year, and the benefits of jet forward are compounding as existing initiatives mature and new ones come online. With the financial resources to support our plans, our focus is on building on that momentum to achieve sustained operating profitability in 2027 and achieve positive free cash flow and at least $1 of earnings per share in 2028. Let me be clear, that is where our attention is and that is how we intend to create long-term value for our shareholders.

With that, I will turn it over to Marty.

Thank you, Joanna. I also want to thank our crew members for the unwavering commitment to our customers and to JetBlue throughout the summer. Their efforts helped us navigate a challenging operating environment while continuing to deliver strong commercial results. Revenue was a clear highlight in the third quarter, and we are pleased that the strikes we saw through September have carried into the fourth quarter. During Q3, RASM increased 18.4 percent year over year, roughly four points better than the midpoint of our initial guidance. That puts JetBlue among the industry leaders in a year over year, total and unit revenue growth this quarter. We enforce the momentum that we are seeing with my commercial initiatives. Higher yields supported and passed by our investments in revenue management technology drove a majority of this outperformance.

Customer volume remained relatively resilient, and we saw no meaningful signs of elasticity, despite price as we responded to elevated fuel costs. Both premium and main delivered double digit RASM growth, with the strength in main particularly encouraging. Demand strength remained broad-based across both peak and off-peak travel periods, with healthy booking trends continuing into the fall. Turned us for a lot of that, we've seen continued acceleration in RASM growth throughout the year, even as we significantly expanded our operation. In the third quarter, RASM increased nearly 15 percent year of year, on more than 65 percent capacity growth. This performance demonstrates strong customer response as we continue to rapidly build scale in the market. We are expanding travel options for Broward County residents and creating more connecting opportunities for customers through the network by adding destinations and frequencies and optimizing our ruling bank schedule.

With 15 new destinations and increased frequencies to others, we expect peak daily departures to exceed 150 this winter, up 39 percent year-to-year. We recently launched a service to two new destinations in Colombia, bringing our international network from Fort Lauderdale to 18 destinations. Real-bus growth requires close collaboration, and I want to personally thank MacGal and the team at Broward County Aviation Department for their ongoing partnership as we continue to expand our operation. While we plan to continue to grow, we believe the third quarter likely represents our peak year-over-year growth rate in Fort Lauderdale. This should support further RASM expansion as our growth model race and new capacity matures. Turned into the first, our new domestic first-class experience is now on sale across more than 30 routes.

Service begins December 8 between Boston and Fort Lauderdale, and will expand traditional routes in a phase rollout. We prioritize markets with strong premium demand, where blue first can help us capture high yield bookings and improve our revenue effects. We're encouraged by the early response to which suggests that we are capping independent demand for a domestic first-class product among existing customers, particularly on leisure routes from New York and Boston.

Approximately 35% of bookings so far are award reductions, and Bosec members account for nearly a quarter of the seat booked. While still early, this engagement reinforces our confidence and blue first ability to capture more premium travel demand from our existing loyal customer base. We're also pleased with the progress that we're making in modernizing our revenue management technology. We've completed the transition to a new system that improves forecasting and enables more sophisticated revenue optimization across our network, including automated management of mint and connecting actuaries for the first time.

Early results are ahead of our citations, and we're adding capabilities to the diabetic interest-based shift in demand. Respond more quickly to market conditions and support further unit revenue improvement over time. Loyalty continues to deliver strong sequential growth driven by a premium and high-end strategy, with revenue of 20% per quarter, the highest level of growth since 2023. Our conditions of the premier card grew eight full year of year in the third quarter, as customers responded positively to the benefits refreshed, and the opening of our latest blue house in Boston has been remaining robust across our program portfolio, growing double digits, and pulling loyalty cash, remuneration, solemnly attract from mid-teens growth for the year. Our investments in premium products and partnerships are driving deeper philanthropy and engagement, with record levels of active, true blue members, and elite status qualifications as core.

Our newest blue house launch has been met by Ray Reviews in outstanding NPS results since opening in August, and it's just another one of the many investments we are making in the premium customer experience. Our blue sky loyalty collaboration, which improves global access with true blue members, has now passed more than 1.1 billion true blue points redeemed on United Flights since the loyalty last year's launch in February. We're also seeing encouraging progress at Paisley, which delivered its strongest financial results ever in Q3. Further, rental card bookings to mileage plus travel have outpaced United's previous provider on a per-day basis since launch.

We're building on that early traction with plans to introduce additional offerings throughout 26 and the first half of 2027. Paisley is on track to deliver nearly 100 million in operating income this year, with that contribution expected to nearly double by 2028, driven by the maturation of our existing jet-blue business and the continued ramp of planned offerings in the United.

Importantly, this target does not assume any additional partners, which present a potential source of further upside as we expand the platform. Looking forward, we expect fourth quarter rasm to increase 18 to 22 percent year-of-year. This represents further accelerations from the third quarter, despite year-of-year comparisons that are true to three points more challenging as we begin to lap the demand improvement that started life last year. This is expected to be our fifth consecutive quarter of escalating year-over-year razzle growth, which provides further evidence that our jet forward initiatives are delivering results and strengthening our revenue performance.

Based on what our competitors have guided so far, we expect to continue to be among industry leaders in the fourth quarter as well. For the full year, we now expect razzle to increase 13 and a half to 14 and a half percent. Even with this revenue momentum, we remain disciplined without capacity deployment. Fourth quarter growth is concentrated in for a lot of their, with the initial return and substantial opportunity to continue to support additional investment. Capacity and the rest of the network is flat to down. We expect fourth quarter capacity growth of three to four percent and four year growth of 1.5 to 6.5 percent year-of-year. Our fourth quarter capacity guide reflects significant impact of whether an operation of disruptions that reduced completed flying last year.

Excluding the impact of those prior year disruptions, scheduled capacity growth is nearly two points lower. Taking together, continued revenue strength, disciplined capacity deployment, and the growing contributions from our jet forward initiatives give us confidence in our revenue trajectory as it closed up the year and heads the 20-47. And with that, I'll turn it over to razzle.

Thank you, Marty. We're encouraged by the progress we're making on margins. We delivered year-over-year adjusted operating margin improvement in the third quarter and expect further expansion in the fourth. As continued revenue strength is complemented by a meaningful step down in the growth of our TASM excluding fuels. This progression is an important step toward sustained operating profitability in 2027. We are also taking concrete steps to further enhance liquidity and maintain the financial flexibility needed to execute jet forward. On the cost side, third quarter TASM a fuel increase 7 percent year-over-year at the midpoint of our updated September guidance. As previously communicated, our underlying unit cost performance remained consistent with our initial 2.5 percent to 4.5 percent guidance range, excluding approximately four points of pressure from summer operating disruption.

Our third quarter fuel price was $3.91 per gallon, 57 percent higher year-over-year. Looking into the fourth quarter, we expect fuel prices of approximately $4.64 per gallon, with continued revenue strength supporting further progress in recapturing higher fuel costs.

Looking into the fourth quarter, we expect KASM-X fuel between negative 1 percent and positive 1 percent year-over-year. This represents a meaningful step down in unit cost growth and a return to the cost trajectory we guided at the beginning of the year. For the full year, we now expect KASM-X fuel growth of 3.5 percent to 4.5 percent.

Turning to profitability, we now expect a full year adjusted operating margin of negative 4.5 percent to 6.5 percent. The revision primarily reflects higher fuel prices, which created 3.5 points of pressure relative to our July outlock. Stronger revenue performance has helped offset a significant portion of these headwinds. We also expect one to two points of year-over-year adjusted operating margin expansion in the fourth quarter, despite fuel prices expected to be 85 percent higher than last year. This reflects the strength of our revenue initiatives and continued improvements in our underlying cost trajectory.

Turning to liquidity, our position remains strong and we continue to take a disciplined and proactive approach to managing our balance sheet. Our quarter end liquidity was 2.2 billion, including our 600 million undrawn credit facility. We also provided notice to draw the incremental 250 million available under our aircraft-backed financing accordion, with funding expected in the fourth quarter. We've recently completed updated appraisals across our fleet, positioning us well for potential additional aircraft-backed financing.

Higher appraised values, together with 8 A220 aircraft purchased with cash this year through the third quarter, bringing the value of our fully unencumbered aircraft and engines to 2.8 billion, up from roughly 2 billion previously. This brings our total unencumbered asset base to approximately $7 billion. Importantly, our portfolio of unencumbered aircraft and engines includes a similar mix of assets as those we successfully financed earlier this year. Together, with our existing liquidity, our financing options give us confidence that we have the flexibility and runway to navigate a prolonged period of higher field prices while continuing to support our operations and advance jet forward.

Turning to capital expenditures, third quarter capex was $189 million. Below our prior outlook, primarily due to the timing of one aircraft delivery and LGA slot payments shifting into the fourth quarter. Our full-year capex outlook remains unchanged at approximately $850 million. We continue to expect annual capex below $1 billion through the end of the decade, supporting our path towards positive free cash flow and balance sheet improvements.

Looking ahead, we expect the benefits of jet forward to continue compounding as our existing commercial initiatives mature, blue first begins to contribute and cost efficiencies build. That growing contribution supports our goal of achieving operating profitability in 2027 and progressing toward positive free cash flow. Further out, we continue to target at least $1 of earnings per share in 2028. While the mix of drivers may differ from what we outlined in July, our strong revenue performance reinforces our confidence that there are multiple towns to achieving that target, including through stronger unit revenues that could help offset potentially higher fuel costs. Despite the challenging macro environment, we are starting to see financial progress and adjusted operating margin expansion.

We still have plenty of work to do, but the path is becoming clear. We expect positive free cash flow in 2028 and believe we have the liquidity and unencumbered asset days needed to get us there. We will remain focused on disciplined execution and capital management to drive sustainable earnings growth and create long-term value for our shareholders.

With that, we are happy to take your questions. Over to you, Jillian.

Yeah, thanks for the question, Jamie. So we believe we ended the quarter with a really healthy liquidity position at the 2.2 billion, including the revolver. As I mentioned in my script, we are looking to potentially do some incremental aircraft financing in the back half of this year. We are very focused on cost of funding. I mentioned we had our assets reappraise and we have the 2.8 billion in aircraft and engines. However, we do have other levers that can help bridge us to 2028 in terms of liquidity. So, you know, other potentials that exist.

We are focused on cost of funding. So in the immediacy, we're focused on aircraft as we end 2026. And so maybe Joanna over to you if you have any other comments.

Yeah, I mean, I'll just add, I mean, I think Ursula did a nice job. She's laid out sort of the liquidity levers that we have on the debt side. And I think you correctly point out that we do have opportunities beyond traditional debt financing that could drive meaningful value without adding additional, you know, interest. And so I think the broader point I'd like to make is we have multiple avenues to strengthen liquidity beyond the current balance we have and the unencumbered assets to support our plan and bridge us to 2028 where we remain committed to the goal of a dollar of EPS.

And, you know, that includes everything from as you point out, you know, Paisley, we have venture investments. Are there opportunities with the Cobra and Credit Card? You know, we're just not in a position today to kind of further elaborate on those. But I think, you know, point being, we've got, you know, healthy liquidity balance and opportunities beyond what you see on the paper.

Yeah, so extreme with the guide for the fourth quarter on controllable costs, the team has been executing exceptionally well. So the team had executed over $30 million of controllable cost savings in the third quarter. We're really focused on driving efficiencies, whether that's productivity, whether that's just in the technology that we're using, or even how what we source it and procure with this partner. So super proud of the team.

We always knew that this was going to be the trajectory and the cadence of this chasmic field performance this year. As a reminder, last year we did date two points of headwinds. We had some weather. We had the government shutdown. And for those contributed last year, so that is making the pump your rear look a little better. What I will say is we entered 2027. We have provided previous guidance that if we're growing mid single digits, you know, we expect to print a low single digit controllable cost growth next year. So that just speaks to the continued, you know, execution of the team in regards to the Jet Forward cost initiatives.

Appreciate the question, Brandon. So this we launched at Forward. We've used this 17 to 20 percent as a percent of trailing 12 months revenue range as kind of guidance. We thought that this level would provide us the appropriate runway to execute jet forward through a volatile environment. So I would still use that as a reference point. I think as the business continues to improve and we get to consistent profitability that that metric could evolve. Clearly, we're not managing the business to a percent in isolation. To your point, we're definitely managing our uses of cash, including fuel, working capital, obviously our debt obligations, and our capital spending.

I mean, I do find comfort in the fact that, you know, we do have a CAFEX profile that will be below a billion dollars through the end of the decade. And as I mentioned in my prepared remarks, I do believe that we have a very healthy unencumbered asset base, like 2.8 being aircraft and engines that I believe can be a really strong bridge to get us 14 months until 2028 when we're going to deliver the dollar EPS and positive free cash flow. So I feel comfortable about where we're at to get us to a point where the business is generating healthy levels of cash going forward.

Yeah, I mean, at this point, we're focused on driving an operating profit next year and delivering the dollar EPS and a return to free cash flow in 2028. And there are multiple paths to that goal. I think one point just worth mentioning, you know, the fuel assumptions behind those commitments or, you know, those projections. And we assume fuel is slightly above $4 for 2027, which I think is important. And then we assume consensus for 28, which is around $3. So, you know, listen, our focus is on continued execution. We recognize we need to get to a position where we're repairing the balance sheet. You know, fuel obviously presents, you know, a challenging headwind. But again, you know, I think there's a significant disconnect between the narrative and the bond market and what our financial results are demonstrating.

But also the financial flexibility we have over the foreseeable future to bridges to that 2028 EPS goal.

Marta, I just want to say one thing. When we gave that 2028 goal, we were doing that on second quarter 26 revenues. And obviously pricing and volume has changed pretty dramatically since then. So, I think what we're excited about is we have a lot of different paths to get to at least a dollar EPS.

And I'll remind everybody, 2028 is 14 months away. So, this is a bridge, but it's not a very long bridge. Yeah, just the last thing I would add is, when we deliver at least a dollar an EPS in 2028, we're producing a positive free cash flow. The number one priority is going to be delivering the business. And I think it's important to note that we have a very manageable capex profile through the end of the decade, both sub-abillion. So, all positive free cash flow will be going to improve the leverage metrics. I would also highlight that, you know, the most important part is driving margin expansion and helping the business deliver. And in the fourth quarter, we're expanding margins to the tune of one to two points, even with fuel up like 85%.

And so what that tells you is that the underlying initiatives in jet forward are compounding and driving margin expansion, which is going to get us on a path where we're generating significant free cash flows so that we can deliver and improve the credit metrics.

Hey, Mike, thanks for the question. And first of all, I will take credit for leaving the fair increases because we have to get to transitory price. We are still in a situation where prices into prices in 2026 are still lower than the real prices in 2019. We are still not gotten back to 2019 prices on a real basis. Second thing is, don't believe everything you read. I do not consider that fair increase failed. One airline is not coming along on a relative level of number of these. 93% of our seats have been subject to that fair increase. So, yes, 7% of the seats we actually pulled back on because one of our competitors has matched for whatever reason.

By an understanding, I do see recently it's in pricing right now. And again, if you look at the inputs, and let's take a few of them out of it. Let's just talk about, you know, rent the landing fees. Let's talk about labor. Let's talk about maintenance. There are a lot of costs and businesses that have gone up by big numbers in 2019. And we still have not caught up to those increases in real pricing. So, you know, nobody looked at the costs right now. We still have not as an industry caught up to the cost input changes.

Yeah, I appreciate the question, Mike. So, as you mentioned, that is our go forward delivery schedule. You know, we have the two point in unencumbered aircraft and engines today that obviously is going to continue to build as we take deliveries. In reverse to funding the business for 2027, like it's our job to you know, evaluate all markets, all assets and basically run the analysis to say what is the most efficient way to finance the business. Based on where we sit today, I do believe that that's going to continue to be aircraft, but we will do the appropriate analysis at that point in time.

What I will say is that, you know, I have zero concerns about being able to finance in the market. The vintage and age of these aircrafts are similar to what we financed earlier this year. And so I have all the confidence that we have a lot of flexibility and a lot of options as we go forward, but it's our job to make sure we're evaluating, you know, using the entirety of the unencumbered pool, all markets at that point in time. And Joanna also mentioned that, you know, there could be some other non-debt opportunities for us to bring cash on the balance sheet that could also help bridge us to 2028 when we're delivering positive free cash flow.

Thanks, Savvy. Well, first of all, as far as early early learnings, I think by far there's seeing how many of the seats being sold. I think there's a lot of speculation that this is a business model that was predicated on stealing customers for our competitors. And it's just not what we're seeing at all. We're seeing our customers walking to fill these seats. So I think that's actually a very good finding for us, number one. Number two, as far as the pace of installation, we will not be done installing until later in 28th. And frankly, the issue right now is we can absolutely go faster. In fact, I was with Collins on Friday and had a fixation like we would love to get the seats in faster.

But unfortunately, as a situation with so many products in the industry right now, supply chain is a critical pass back. I will gladly take seats back. But the majority of the fleet will be complete in 2020.

So we're not getting into too much detail as far as performance, that's what we're sitting. I would say that I think that we are much more even as far as possibility across cities than we've had historically, and I think we've had a lot of progress as far as right-sized capacity. We have shrunk pretty significantly in Boston, New York, and Orlando temporarily to fund for a lot of them, but we're expected to backfill a lot of that capacity as deliveries come in. You know, overall, I would say that we love where the network has shaken out, and I would go back to the original conversation of the four team initiatives and Jeff Forward, one of which being East Coast, best East Coast leisure network.

We did not forecast for a lot of them becoming available for a significantly larger focus city at a connecting operation when we were to check forward, but at the core, it is completely consistent with what we originally said we wanted to be, which is the best East Coast leisure network. So we're excited that we had that opportunity.

I'm actually very optimistic about what we're seeing in San Juan right now. I think that we have a lot of opportunities across the system, which means a sort of a high-class problem to ask, and it's one of the points I made in the script was we reached a peak year of year growth in Fort Lauderdale, and now I think it's going to normalize the more typical growth, and I think that's going to give us the opportunity to backfill some of the places where we had to take capacity out.

It's a really good question, Atul, and that's kind of what I referenced in my earlier responses. We believe, given the volatility in oil right now, and the business is still on a path to getting to a positive on-partum, you know, 17 and 20 has been the target range. I think as we get the business to consistent profitability and turning out free cash flow, you could see us revise that target to be lower, especially if and when the oil environment settles down. So I think it's just a matter of by which we adjust that target, but we got to get the business to a place where, you know, we're delivering a dollar ETS in 2028 and generating positive free cash flow.

So the 2.8 billion is as of quarter close, Q3. We will obviously that number, there are some puts and takes that will occur in the fourth quarter. So we will fund the 250 million aircraft that are 40 in the fourth quarter, but we will also be taking four incremental aircraft deliveries within the quarter. So I expect at your end the 2.8 to be roughly in the same ballpark that it was at the end of Q3 and another seven aircraft next year. So we're going to continue to that unencumbered asset base.

So right now, great question. Right now for fourth quarter 26, 4% of the system is that less than one year and only 5% less than two years. So it's basically a mature network right now. We're really, really excited about what we're seeing as far as the pace of growth of razzam, even with all the capacity increases, which we're really excited about.

And I think the second issue is, again, we have hit peak growth for a lot of that. So we actually think that's actually a great launching point for continued increase of revenue going forward in Fort Lauderdale. And then finally, we barely stretch the surface as far as what we can do, as far as revenue management capabilities, especially on connecting itineraries. And this is something that we won't end up manually for the history of JetBlue. It's been carried so few connections.

We made this investment in revenue management system before we realized that connecting itineraries would be so important, but we knew that we'd be in a situation where it's good to have that capability. And then, you know, a year later, spirit ends up creating opportunity for a lot of else. So we did prepare ourselves for this and we're just barely starting to take advantage of it.

I actually don't have that exact number, and I'm not going to try to make one up on the spot.

Right now, we're very happy with the ability to put the mint-based product in there. That was something we've been looking at for a while. But we wanted to wait until we had our second lounge open to do that, because we do think that the lounge access is a pretty big hook as far as having people want to get the opportunity to pay a little fair, because we don't have a lounge access.

We just started with a new partner called plus-grade working on an upgrade product, which we are extremely happy with. And, you know, we may eventually build that product ourselves, but given that IT is already constrained as far as, you know, we want to do more that can actually get done, we're very happy to work with a bit of time to give you that force, and it's been very effective so far. And we've got a lot of stuff in sort of in the pipeline, as far as better upgrade performance. Obviously, very important with the blue first, like coming in, as far as, you know, trying to make sure that we optimize unit revenue that can. One thing that I think people are not getting much attention to is we're also using the upgrade product to better fill the even more cabin.

So, you know, overall, you know, we recognize that. It's very important to maximize unit revenue of premium seating, and we've got a lot of initiatives going on to make sure we get that.

So, first of all, I think the big surprise for us in third quarter was actually the strength of the trough. Historically, it just blew forever. We've had a pretty big drop off from August to September when kids go back to school. And I think our original expectation was that we see a similar drop off. But the results we saw in September in the sort of pricing environment where we had some pretty significant fair increases due to the spike in fuel in August, which surprised us a lot. We did not have the expectations of this performance in September. We did. And the one fun fact that I think we all have been very surprised by our average fair in September was higher than our average fair in July, which has never happened in the history of jet blow.

So, I think the overall strength we're seeing, and I think it's one of the results that also in such a great fourth quarter guide, is that we're seeing troughs perform very, very well, which historically we have not seen. So, I think that's actually a very, very good sign of the underlying resilience. I will also say, we have pulled a little bit of capacity out of fourth quarter. Even with strong demand at this higher fuel environment, the marginal flying, there's definitely a marginal flying that's not as creative as we would like it to be. So, we pulled that capacity out.

I'd say for 2027, we gave a guide to flow to mid single digits. Now, we're not guiding 27 as it's called. That'll be next call. But I think you'd expect that number to be more to the low end of the high end of that guide. But again, we'll talk about that three months from now. But overall, I think that the way that the pricing environment has reacted, and the customer demand environment has basically not significantly dropped, I think is giving us an incredible amount of optimism. I would say that we've seen a marginally better performance in international domestic, but it is double-visit basis point. It's not that big. I think part of that is that for a lot of that has been so incredibly strong, and that may be biasing a little bit, because if a lot of the international has been outstanding.

But overall, this is very broad-based, the strength we're seeing right now.

I'll just add a plug for Jet Forward as well. So, I mean, yes, broad-based strength across the network, demand remains resilient, industry pricing is constructive. But at the end of the day, we've also been at Jet Forward for two years, working on a series of initiatives, as you know, that we believe are now driving the compounding effect. With, by the way, blue first really still yet to come. I mean, we just went out for sale two weeks ago, I think. So, whether it's Fort Lauderdale, the new revenue management system, our loyalty program, with lounges and the premier card. I mean, you know, Cobran-Cyanetson, South Florida, up 55%. Paisley, you know, we just launched cars with mileage plots.

We've got all of that yet to come. Just really proud that, you know, this is not just, you know, industry phenomenon. This is Jet Blue's strategy working underneath all of this, and beginning to deliver tangible, tangible benefits with a lot still yet to come.

Yeah, I would fall in the fourth quarter. You know, we are basically at the top of the industry guidance as far as a unit revenue. The other airline in their Southwest, you know, Southwest is still lapping the change in bags and seats. You know, we're producing those numbers without having done bags and seats every year. I think that's a real testimony to just lower.

Let me start. Where's the point capacity where the returns are the strongest? And if you look at where we are today, you know, all the growth is Fort Lauderdale, which is a generational opportunity for us, and so that's where the focus is. We're not actually growing really elsewhere outside of Fort Lauderdale. But at the end of the day, as you think about, you know, an elevated fuel environment, we're always managing capacity for, you know, the strongest returns. So, you know, we're pleased with where demand is. We're pleased with our revenue performance. You know, if you look at 4Q and into next year, the competitive supply environment is constructive overall, and, you know, we'll continue to manage our capacity for we have a growing school in the rest of the industry by pretty good numbers.

So, I think I'm sort of surprised at a question. I think if you look at the network as it's developed, I think we've actually gotten to the point where we got a very well-rounded network, especially with the opportunity we've taken advantage of in Fort Lauderdale. So, you know, obviously we'll continue to adjust the network supply based on the fuel price and the revenue environment. But I look at our unit revenue right now, look at the revenue environment in general, you know, I don't think we're in a situation where significant, you know, hacks at the growth plan would make any sense.

Yeah, thanks, Sean. So, I'll say a couple things. First of all, if you look at the percentage of revenue that we're getting from loyalty versus our competitors, you know, we're actually above multiple of our competitors as far as how much revenue we're generating. We have been very, very well-placed loyalty program as far as its contribution to the entire picture of JetBlue. What we're most excited about is trying to go up to the developer, too. First is the premier card and what the loungers are doing for us. That's an important part of Jet Forward, and we're really happy with them when they're seeing so far with respect to the premier card. He gave some stats about the premier card earlier.

And the second is Blue Sky. We are now in a situation where the JetBlue credit card for, you know, a resident in any one of our cities, it will take you anywhere you want to go in the world without partnership with the United that has been a shortcoming of the program historically. And I think even with that shortcoming, we have, you know, multiple quarters had revenue contribution higher than deltas, even though that is a very competitive credit card. Now that we've taken that, the Blue Sky capabilities of getting Cutters Access worldwide into the card, we're really positive about the future growth going forward. You know, we could not be happy with Barclays as a partner.

I think we benefit by having a partner that does not have their own proprietary credit card because we are fully aligned as far as our objectives versus their objectives. So we're actually very proposed on loyalty. It's been a strong contributor to Jet Forward. And I think, as you know, every other quarter, we update Jet Forward. And I think we'll be talking more about back then going forward in our next update.

It's a great question, Michael. And first of all, I think, yes, there has been, and we said there's been no meaningful increase in elasticity. You know, we have seen a little bit of reductions, and I think the industry is reacted by pulling down capacity, and we pulled down capacity in fourth quarter versus what we've originally loaded in first quarter. So I think the reaction has been very appropriate with what we're seeing. It is very clear that the truly price sensitive, the $39.49 customers on Spirit, a lot of them have disappeared as prices have gone up.

You know, I remind you that Spirit had a negative 40% margin. So those are prices that are nowhere near compensatory with the cost environment of the industry right now. So we actually look at the tradeoff right now as far as price versus demand and supply. It's actually pretty well in equilibrium. We'll continue to adjust our capacity going forward based on customer demand. But so far, you know, I'd say that, again, with prices lower than, you know, real prices lower than 2019, I don't look at the pricing around right now as being specifically problematic.

Yeah, it's a good question. We revisit that question often internally, and we debate it. Obviously, no one in the U. S. actually, in terms of our competitors' hedge, so just one consideration is being at a disadvantage or an advantage, I guess. Number two, you know, right now it's very costly to enter the fuel hedge market. So, you know, we'll continue to evaluate if it's a tool in the toolkit. We want to start utilizing, again, to mitigate volatility going forward.

Hi, Katie. Thanks for the question. So, we gave a very high level guide for 27. We really didn't guide in too much detail. We gave a much better guide for 28. So, I'm going to answer the 28 question and then back into 27. When we originally guided 2028, we were guiding at consensus fuel and also guiding with the pricing environment that we saw in second quarter of 2026. Obviously, the pricing environment has changed dramatically. And this is one of the reasons why, if you look at 2028, you know, we don't know what fuel or the pricing environment are going to be in 2028. But I think if you look at the various paths that we have to get to the $1 VPS, we still remain very confident that we have multiple paths to get there.

I think if you look at what we laid out as far as expectations, as far as, you know, industry capacity, GDP, fuel, et cetera, for 2028, those numbers have certainly changed. But no matter how we look at it, we feel very good about getting the $1 VPS. And I think that's because we are in a very good pricing environment now with respect to the increased fuel, number one. Number two, you know, we have had very, very resilient response to the pricing as it exists. Again, I'm going to keep saying this because people don't fully get it. We do continue to have prices that are real prices that are lower than 2019 as well. So it was the current pricing environment.

Obviously, I think when we get to the next quarter, we get into a full 27 guys and we have updated 2028. We give them more details. Obviously, the unit revenue increases from second quarter to 26, or obsolete. But fundamentally, looking at consensus for 2028 and the current revenue environment, you know, we feel much more confident about the dollar than we even did that and we felt great at the time. So I think we feel a great good as far as we stand right now. I was expecting 27. We're going to react to the environment as we see it right now and the pricing environment. You know, we know we can get to a positive op-match in 2027, even with fuel over $4.

So we feel very good about that. And we're going to give you a better guy for that next quarter as we normally would, our regular cadence for the upcoming year guide. But we are extremely bullish. And I think it's one of the things that if we looked at the, you know, the foolishness of the last week, we just get that much more confused because we look at the underlying business and say, we feel like we're in a fantastic spot.

Yeah, we're absolutely confident of getting the head 27. I'd say even early 27. Frankly, if you look at the original path for 24 to 26, I think the biggest challenge is we had a big fuel increase in August, and we had a lot of revenue on the books. One of the things, I think, as an industry, we are quite aware of, and I think it's endless, you're aware of too now, there's a pretty big lag when you have big spike in fuel prices, because everything you have on the books was priced at the previous fuel. So I don't look at this delay as being anything other than an issue of timing and spikes. So we still feel very confident.

I think you heard earlier, the last fair increase didn't go through with the exception of one airline, which is relatively limited over life with us. So we're actually very confident about the environment that exists right now, and getting 100% next year. And again, we'll have more detail on that in our fourth quarter call.

I absolutely not. You've got a double no on that one. I love it. Pretty emphatic. Thank you for that.

No, and I will say again to our friends at Collins, if they can get us each faster, we'll take them.