JetBlue's CEO Warns Air Travel Near 'Tipping Point' on Government Shutdown
With the government shutdown 33 days in, airline CEOs continue to sound the alarm about how the closure is affecting the aviation industry.
In its fourth quarter 2018 earnings call Thursday morning, JetBlue's CEO sounded off on the growing concern the airline has regarding the government shutdown.
"We are increasingly concerned about the shutdown's consequences for convenient and efficient air travel and for the economy overall," said JetBlue CEO Robin Hayes. "We are close to a tipping point as many of these employees [TSA/FAA/CBP] are about to miss a second paycheck."
However, Hayes did say that the airline has not seen a significant impact to its operations or bookings, but still issued warnings about the long term effects the shutdown will have on air travel.
"Our crew members and customers are likely to face extended security lines, flight delays and even cancellations. The longer this goes on, the longer it will take for the air travel infrastructure to rebound," said Hayes. "Our nations leaders must find a resolution to this stalemate today."
While Southwest's CEO Gary C. Kelly said today that his airline has lost $10-$15 million because of the shutdown, JetBlue appears to be in a better place for now.
"With regards to the government shutdown, to date we have seen very modest impact on demand, at this point we have not seen a material impact," said Marty St. George, JetBlue’s EVP Commercial and Planning.
Aside from shutdown woes, it's been a good day for JetBlue which significantly beat earnings estimates. It recorded quarterly earnings of $.50 per share, whereas the Zacks Consensus Estimate put the earning estimate at $0.42 per share.
A rise in the price of fuel and labor negotiations had led to a serious drop in profits for the first three quarters of 2018. But due to lower oil costs in Q4, cost-cutting measures the airline had implemented over the last two years, and the implementation of tax reform, the airlines profits have started to rebound. It grew revenue by 12% year over year, from $1.76 billion in fourth quarter of 2017 to $1.97 billion in Q4 2018. Adjusted net income grew by 50% from $103 million to $155 million.
Basic Economy Rollout, A321Neo Delays and A220s to Europe?
JetBlue announced last year that it will follow in the footsteps of other airlines and roll out basic economy style fares. Now, new fare categories are expected to roll out in the fourth quarter of 2019, said Marty St. George.
It also expects to have 70 A320s outfitted with the new cabin interiors by the end of the year — that means new seats and larger, upgraded IFE screens.
The ever present question looms, will JetBlue jump into the transatlantic market with flights to Europe? The answer is still unclear, but it sounds like the airline will make a decision this year if it were to start flights to a destination like London or Paris from its hubs in Boston and New York JFK.
"Ultimately what will guide us is margin. When we talk about our transatlantic faults... some of these European markets like London are now some of the largest markets from Boston we don't serve," said Hayes. "During the course of the year we will communicate a decision."
Hayes added that if JetBlue were to launch any transatlantic routes, it would be able to offer a very strong premium offering (it's Mint business class product) at much lower fare. Hayes caveated that if these new flights would remain a very small part of the airline's overall ASM and cost structure.
The airline will be taking delivery of its first A220 in 2020 and with the imminent ETOPS certification of the aircraft, it's possible the A220 could become a jet that ferries passengers across the ocean. However, it sounds like that won't be the case for JetBlue, at least anytime soon.
"The primary role of the A220 is to replace the E190, that is the focus. Most of our thinking around a potential European expansion from our focus cities of Boston and JFK have really been around the A321LR platform, beyond that there may be a lot of different opportunities that may emerge," said Hayes. "That's so far out into the future that it's not something we are spending a lot of active time considering right now."
The A220 delivery schedule has shifted with just one coming in 2020, that's down from the anticipated five — this is to "ensure we have selected the best business partners for the aircraft interiors from an economic and customer experience standpoint."
That isn't the only hold up, instead of taking 13 A321neos this year JetBlue will only get six because of delays on Airbus' end — JetBlue has orders for 85 A321neos and 60 A220s. Note that the delivery schedule chart below does not include the delays to the A321neo.
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Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
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- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.