Good morning. My name is James. I would like to welcome everyone to the JetBlue Airways' First Quarter 2024 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. I would now like to turn the call over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir.

Thanks, James. Good morning, everyone. And thanks for joining us for our first quarter 2024 earnings call. This morning, 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.sec.gov. In New York, to discuss our results, are Joanna Geraghty, our Chief Executive Officer; Marty St. George, our President; and Ursula Hurley, our Chief Financial Officer. Also joining us for Q&A, is Dave Clark, our former Head of Revenue and Planning and newly appointed Head of Financial Planning and Analysis, Investor Relations and Strategy. During today's call, we will make forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1985. Such forward-looking statements include without limitation statements regarding our second quarter and full year 2024 financial outlook, and our future results of operations and financial position, industry and market trends expectations with respect to headwinds, our ability to achieve our operational and financial targets, our business strategy and plans for future operations and the associated impacts on our business. All such forward-looking statements are subject to risks, and uncertainties. And actual results may differ materially from these expressed or implied in these statements. Please refer to our most recent earnings release as well as our fiscal year 2023 10-K and other filings for more detailed discussion of the risks and uncertainties that could cause the actual results to differ materially from those contained in our forward-looking statements. The statements made during today's call are made only as of the date of the call. And other than, as may be required by law, we undertake no obligation to update this information. Investors should not place undue reliance on these forward-looking statements. Also, during the course of our call, we may discuss certain non-GAAP financial measures. For an explanation of these non-GAAP measures and reconciliation to the corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website and on sec.gov. And now, I'd like to turn the call over to Joanna Geraghty, JetBlue's CEO.

Thank you, Koosh. Good morning, everyone. And thanks for joining us today. It's been a busy start to the year. With the Spirit transaction now resolved, we are moving quickly to execute on our refocused standalone plan. Our first quarter beat demonstrates our sense of urgency. And while we are adjusting our full year guidance to reflect headwinds in our Latin flying associated with continued elevated capacity in the region, our early progress supports our confidence that we are building the right plan to create long-term sustainable value for our owners and all of our stakeholders. As always, the success of our efforts depends on our crew members, and they are stepping up for JetBlue every day. I would like to thank each of them, first and foremost, for running a safe operation and ensuring a strong safety culture. I'd also like to thank them for supporting one another and our customers as they strive to deliver an outstanding experience every day. Their actions contributed to our better first quarter performance, which included generating an adjusted pre-tax profit for the month of March. In my first two months in this role, building the right senior leadership team has been a top priority. We've been able to appoint several seasoned leaders into key roles, including attracting great outside talent, giving us an ideal mix of expertise and skills at a pivotal time for JetBlue. In addition to Warren's promotion to Chief Operating Officer in January, we welcomed Marty St. George back to JetBlue in February as our new President. It's great to have Marty back here and on the call with us today. In addition, last week we announced that Daniel Shurz has joined JetBlue as our new Head of Revenue Network and Enterprise Planning. Daniel has an impressive track record…

Thank you, Joanna. Let me start by saying how thrilled I am to be back at JetBlue at such a pivotal moment for our business. I see so much opportunity ahead. JetBlue has an exceptional brand, incredibly high value geographies, and a strategy that I'm excited to execute on. Most importantly, we have the industry's best crew members. It's been great to reconnect with so many of our talented crew members over the past several weeks. And I'd like to echo Joanna and adding my thanks for all that you do for our customers and for each other. Turning to Slide 5 for the first quarter, capacity contracted 2.7% exceeding our guidance, as we continued focus on operational liability drove a strong completion factor of 98.7% exceeding plan. This reflects the strong execution by the team and the planning we have done to position our operation to respond more effectively to operational disruptions. Looking ahead, we expect second quarter capacity to be down 2% to 5% year-over-year, driven primarily by the continued headwinds we face related to the GTF engine issues. First, we'll provide more detail on that front. And as you will hear, we are actively seeking opportunities to drive near-term capacity growth, including extending the life of our A320 fleet. As Joanna mentioned, we remain focused on rebalancing our network to ensure we are allocating aircraft support both our operational and financial goals. We are making modular creative network changes, changes targeted at our core customers and geographies, redeploying capacity from underperforming markets, and doubling down on proven leisure and VFR markets. As part of this work, we have closed a handful of Blue cities. And we're also scaling back our flying in Los Angeles and in a number of underperforming intra-West Coast international markets as we prioritize…

Thank you, Marty. As Joanna and Marty have noted, the swift actions we took in the first quarter allowed us to exceed our Q1 financial commitments, one early indicator of our ability to advance towards our goal of generating positive returns again. And though we weren't profitable in the first quarter, our operating margin exceeded our expectations, supported by our improving operational reliability, solid peak period demand, and continued execution on controllable costs. Starting on Slide 7, we delivered better than expected CASM ex-fuel in the first quarter, with unit costs increasing by 7.1%, beating the better end of our revised March outlook. This was partially driven by improved operational performance as our continued focus on driving reliability allowed us to complete more flights than planned, resulting in cost efficiencies. Additionally, we saw a shift in the timing of certain expenses, primarily maintenance-related to later in the year. Also benefiting our cost performance is our structural cost program and fleet modernization program. In the first three months of the year, our structural cost program delivered $30 million in incremental savings, driven by more efficient management of disruption costs and optimizing mid to end-of-life maintenance spend. With to-date savings of $100 million, we remain on track to deliver run rate savings in the range of $175 million to $200 million by the end of the year, and we expect savings to ramp significantly throughout this year, driven by productivity improvements. Our fleet monetization program is coming to fruition, as we continue to replace our E190 fleet with the margin accretive A220s, which deliver a 20% improvement in ex-fuel unit cost economics versus the E190s. By the end of the month, we'll have reached a milestone on our fleet transition with more A220s in active service than E190s. We'll continue to replace…

Thanks, everyone. We are now ready for the question-and-answer session. James, please go ahead with the instructions.

Thank you. [Operator Instructions] And we'll take our first question today from Dan McKenzie with Seaport Global.

Thanks. Good morning, guys. I guess, Joanna, following up on the steps that you outlined to restore earnings and feel free to emphasize those steps again. But what normalized margins are you targeting at this point? And what does that trajectory look like? And I guess, what I'm getting at is should investors view the changes as a gradual ramp up to normalized earnings say two years from now maybe three or -- one of the steps you've outlined is there some low-hanging fruit that could really move the dial near-term?

Hi, Dan thanks for the question. I'm not going to put a time line around when we start to see meaningful margin accretion. I think our focus right now is about returning to profitability and that is where all of our priorities are focused. We've talked about our unique position in the industry. Obviously, coming out of COVID leisure is a strong point for JetBlue. We've got great geographies, some of which obviously are a bit impaired at this point in time but we do think they will become a tailwind. We've got a good product. We know there's gaps. We're working to fill those. Our brands, our cost structure, our focus right now is executing what we can control and I think you're seeing that in many of the steps that we have undertaken in the last several weeks including the network redeployment, some of the changes to ancillary fees and revenue, doing some nice work around driving that $300 million of revenue initiatives, our reliability initiatives and early wins there stronger completion factor in Q1 and improved A14 compared to Q1 of 2023. Obviously loyalty and JTP are doing well and then our cost initiative. I'll be frank the Pratt situation is a challenge. We'd like more certainty there and we're working toward having that. But the team is focused on executing and really focused on returning to profitability. The challenge in the Latin region that will cycle through. We hoped that we would see acceleration into Q2. We're not seeing that. But again we view that as transitory in nature. In terms of what could provide real acceleration? Honestly, the network changes as we look at those and the $300 million of revenue initiatives many of those network changes haven't actually layered in yet. So they're announced but you're not seeing the benefit of those. So again, focused on making sure that we're executing quickly and with haste to return to profitability.

Yes. Very good. I guess on that point, I guess the second question is for Marty. On the network announcement, is there an adjustment period as the new flying ramps up? Or as you -- or is it typically a move-up in RASM as you lop off the unprofitable flying? And my thought is maybe it's the latter, just given your expectation for RASM acceleration in the back half of the year, but if you could just clarify a little bit more on sort of where you -- if there's more to do and how that would impact how you're thinking about revenues in the back half of this year into 2025? Thanks for taking the questions.

Sure. Hi, Dan. Thanks for the question. Well, first, I'd say that our expectations as far as the accretion due to the network changes, our -- of the $300 million we've already communicated as our expectation for 2024. So that's actually built in there. And I think to make a point that I reiterate a point that Joanna made the first city closure actually isn't until next week. So we haven't really seen a lot of the benefits going forward. I would say as far as redeploying our aircraft, we're coming into the third quarter. I think we had identified some very desirable places to redeploy. And that, again, it all reflects the numbers that we saw. I have to say that some of the network changes were directly related to aircraft shortfalls due to our situation with Pratt. So it's one of the reasons why we thought the best way to communicate this would be just explain the $300 million number. And again, that's the number we'll be getting by the end of the year. So that's sort of how we should view the accretion of the network changes. And I will also say that there are more network changes to come. And back to the point that Joanna made about the postponing of Investor Day. I think these things are all tied together as far as making sure that we have rolled out all the changes that we want to do with respect to the opportunities that be the case, the next tranche is in the $300 million, but I think it's fair to say we are not done as far as continue to fine tune the network.

Thanks so much, guys.

Our next question will come from Jamie Baker with JPMorgan.

Yes. Good morning everybody. So probably for Marty, I know airlines don't like to offer route P&L commentary, but I figured I'd try to ask the question in a way you might answer. So without speaking to individual stations, can you give us some margin commentary on the aggregate of Baltimore or Kansas City, the short-haul L.A. and Latin markets that you are exiting them perhaps a margin basis or maybe just sheer dollars of loss. Just trying to -- any color as to what that reduction in lost production sums to?

Well, listen, I appreciate your efforts in trying to get -- really give you that number. I mean we generally really don't talk about that level of detail. I will just say that the aggregate of those changes and the redeployment of airplanes is all based in the $300 million. So that's really sort of how we look at that and how we communicate it. I feel like given more time and different competitive situations, things may have been different as far as some of the stuff that we chose to exit. But between the stuff you mentioned between the L.A. short haul, and the imperative back to Joanna's point, the imperative of improving profitability now, it was really -- it was time for us to make moves, and we're very excited about the changes. It's always unfortunate, given the situation with our crew members. But we have to prioritize returns right now.

Yes. Okay. And then second, probably for Ursula on liquidity. What's the minimum cash balance that you internally target to run the airline? And also if we set aside brand and loyalty what's the size of the remaining unencumbered asset pool in your estimate?

Thanks for the question Jamie. And I think you're celebrating a birthday this week aren't you?

Robin's legacy lives on. Thank you.

Of course. So, we are targeting somewhere between $1.5 billion and $1.6 billion of cash at any point in time. As a reminder, we also have the $600 million revolving credit facility on top of that. And to your question on the unencumbered asset base, so we've publicly commented that we have about $10 billion and just over half of that is associated with the loyalty and the brand. So, the remaining of that unencumbered asset pool is a combination of floodgate some routes aircraft and engines.

Okay, perfect. Thank you very much.

Our next question will come from Mike Linenberg with Deutsche Bank.

Good morning everyone. Just the downward revision in top line for the year is that entirely Latin America? Or is there a shift in maybe GTF groundings and/or delayed Airbus narrow-bodies. I mean are there other components to that?

Hi Mike, this is Dave Clark. I'm happy to take that. Yes, it is primarily sort of unit revenue related. And as exemplified with the Latin capacity and pressure we're seeing that's causing it to not accelerate as quickly as we expected. There is a little bit of capacity. We're trimming the fall-trough as we look at the latest demand and supply trends and try to better match supply with demand. You don't see that in the capacity guidance because completion factors are running ahead, but it's mostly sort of unit revenue and there's a bit of lower trough capacity in the back half of the year.

And Mike maybe I'll just add. We did see capacity growth coming down slightly in Q2. So, we had expected acceleration from Q1 into Q2. We're just not seeing that. And so as you think about the size of the Latin market to JetBlue and its importance we think this is the most prudent move. As we know capacity comes and goes, this region tends to be quite resilient and performs well for us. We will continue to double down in this area because it is so core to our geographies. But it is frustrating that we aren't seeing that acceleration into Q2 that we thought we would see with capacity growth slightly moderating from Q1 to Q2.

Okay, great. And just a second question. I think I heard you correctly Ursula you said that all of the airplanes maybe or at least the A321neos coming in 2024 and 2025, which I guess are all the airplanes I could be wrong except for A220s are coming with the Mint configuration. Is that the large Mint configuration or small Mint configuration? And I guess also what I'm getting to is should we anticipate additional TransAtlantic cities over the next year or two above and beyond what you've already announced? Thanks for taking my question.

Yes. Thanks Mike. So, as a reminder we have 27 deliveries this year in 2024 seven of them are the A321neos. So, they will be in the 16-seat Mint configuration. And then in 2025, we have 25 deliveries and five of those are A321neos, which will be in Mint.

And then maybe I'll pick up on the TransAtlantic question. TransAtlantic has performed very well for us. We know the summer will be strong, as we've mentioned before. However, as we look at growth there, we are currently serving what we believe are sort of the top underserved markets for JetBlue out of Boston and New York. So we'll look to continue doing this. Further seasonalizing them as appropriate, if you look at Edinburgh and Dublin both seasonal markets doing well for us so far but great contributors right now. On the Mint question, I'll also emphasize premium is doing exceptionally well. 25% of our seats are premium, a combination of mint and even more space. And so between the A220 and the 321s that we're seeing we will see an increase in our premium mix which is great.

Very good. Thank you.

Our next question will come from Duane Pfennigwerth with Evercore ISI.

Good morning. Thank you. I wonder if we could drill a little bit deeper on the Latin trends. Is this primarily, US to Caribbean, I think if JetBlue historically is more of a Caribbean network. Your two largest markets by a very wide margin are Puerto Rico and the Dominican Republic. Can you speak to trends in those two markets specifically, and then if you would, is there any differentiation and trend between Caribbean originating from the Northeast and Caribbean originating from South Florida.

Thanks, Duane. This is Dave. I'll take that. I think the easiest way to think about it is the breakdown between sort of Caribbean beach destinations and Caribbean VFR destinations. The VFR is holding up relatively well. Industry capacity there has been relatively less. So that is still under some pressure but not as much as the beach destinations, where we see increased capacity, really high increased capacity which is driving even higher pressure on the yields. Puerto Rico and Dominican Republic both extremely important markets to us. We are 100% committed to winning, competing and maintaining our leadership in these markets. So we feel very good about them. We have a deep history there a large operation and are working to roll out some enhancements to be performing even better in each. So I'm really committed to these markets. They're under a bit of pressure with competitive capacity that ebbs and flows. But we feel it's transitory in nature and will continue to be a very important and profitable region for us.

I guess of those two, which one is more VFR and which one is more beach?

The Dominican Republic in general is a bit more VFR, especially we have very large operations in Santa Domingo and Santiago, which are almost entirely VFR.

Thanks. And then just for my follow-up on reliability I wonder if you can survey this in any way. But as your reliability has improved, do you think there may be a gap between how customers perceive your reliability and where it stands the improvement you've made? How long of a hangover may exist from past operational perceptions? Thanks for taking the questions.

Yes. Thanks, Duane. So we are in the early stages of our operational reliability initiatives. So we're seeing some nice progress but it's a multiyear initiative and we've got some work to do. So I definitely think there'll be a lag in customer perception. We obviously are also focused on this summer. ATC is going to be a challenge this summer. So despite many of the efforts that we're making, we're still going to have bad weather days and we'll probably be fairly acute in New York. So there's definitely some work to do on the customer perception piece, but we've got to start somewhere, and I'm pleased with the progress that we've made in Q1 and it will be some, I think, incremental progress quarter-over-quarter until we're in a much better place over the next couple of years.

Okay. Thank you.

Our next question will come from Savi Syth with Raymond James.

Hey, good morning. I was just kind of curious on the unit revenue. The guidance seems to be calling for -- going from like down mid-single digits to up mid-single digits and you've kind of called out some of the components that drive that. But I was wondering just generally, how much of that is driven by maybe easier comps in the second half last year versus this year versus kind of the network changes you've talked about? And just maybe the third bucket, how much of that might be coming from just industry capacity moderating in Latin?

Yeah. Thanks, Savi. This is Dave. I'll take that. You hit the big three components right there. There's a few things that help us as we go from the first half to the second half in terms of the continued progress of our sequential unit revenue. The $300 million of revenue initiatives ramping up is clearly the first one. As mentioned, we secured $40 million in the first quarter. That will continue to ramp over the next three to get us to a total of $300 million across all of them. So that's clearly a significant -- significant tailwind, excuse me. And then there is a comp certainly easing coming up. The first half of 2023 had a lot of pent-up COVID demand, especially in our sort of spring break, Florida and Latin geographies that we're still cycling against in this quarter, but that eases as we go through the quarter. So, I think those are the two biggest ones. Capacity right now, it looks to moderate, we'll sort of see if schedules firm up and we go through the year, and that could be sort of the third benefit as well.

Got it. And then if I might, on for Ursula, just on the financing for this year, could you talk about what you're seeing? And just as all of that kind of comes together, what you're kind of expecting in terms of net interest expense?

Yeah. Thanks, Savi. So we had previously communicated, we were targeting to raise $1.6 billion. And so I mentioned in my prepared remarks that, we've have committed financing up to $1.3 billion. So that's a combination of finance leases and just some bilateral bank loans. Obviously, with the adjusted to revenue that we provided today, we'll most likely need to raise some incremental capital beyond the $1.6 billion that we originally targeted. So we will clearly be out in the market later this year. As a reminder, we've got a healthy mix of unencumbered assets. So we can optimize across markets to focus on, quite frankly, the cost of the debt as well as building in some prepayment flexibility because those -- our priorities of ours. In terms of interest expense on a full year basis, in my prepared remarks in January, I provided guidance $320 million to $330 million. We are trending even despite having to raise incremental debt, we're trending slightly below that just given we've been more thoughtful about the timing that we're bringing in cash, but also we've been seeing some relief in terms of rate as well. So hopefully, that gives you a little bit of color.

Very helpful. Thank you.

Our next question will come from Helane Becker with TD Cowen.

Thanks very much, operator. Hi everybody. Just Ursula one point of clarification, in your slide I think on my page it's slide 9, but it might be slide 8. You talk about not having any significant debt due before 2026. So, and maybe you just answered this in Savi's question. I think you also have a $750 million convert that has to be addressed. Are you thinking of refinancing your debt that's coming due? Like how should we think about, I guess maybe replacing debt versus paying down debt?

Yeah. Thanks for the question Helane. So in regards to the comment in the presentation, the significant debt maturity due in 2026 that actually is the convertible debt deal. So that's the next significant maturity that we'll face. We do intend to refinance that. It's quite early at this point but the team is exploring opportunities to refinance that. Again we've got a significant amount of unencumbered collateral and we can target specific markets just through the lens of raising the most cost-effective money. The convertible debt is the most friendly in terms of rate that we have in the capital structure, so in terms of financing we'll do that as close to the maturity as possible. And we got to get the business back to profitability, so that we're actually generating free cash flow so that we can then pivot to actually start paying down debt. That is the goal that we're focused on.

Okay. That's very helpful. Thanks Ursula. And then on the $562 million of special items in the quarter, can you say like what percent was related to Spirit versus opt-out versus the E190 transition. And are all the Spirit costs now behind you?

And so put very simply all of the Spirit costs are behind us. And of the $560 million, $530-ish million were associated with Spirit.

Thanks very much team. Thanks, Ursula.

Our next question will come from Scott Group with Wolfe Research.

Hey, thanks. Good morning. So I understand not breakeven for the year. I'm just wondering, do you see a path back to breakeven in the second half? And then I just want to clarify the second quarter RASM. So I guess given Latin it seems like domestic RASM flat to up slightly year-over-year. Is that right? And I guess why not better just given domestic capacity down over 10%?

Yeah. So I'll take the first part of the question in terms of operating margin. Make no mistake our number one priority is getting this business back to consistent profitability. We were profitable in the month of March and we're focused on driving sustainable long-term profitability. And we were in an environment where we were constrained over the last few years given Spirit. And so I feel confident that we're showing action between the network changes, the revenue initiatives, controllable costs, as well as reducing our fixed costs. I do believe that these actions are going to continue to ramp up and put us on a path to drive accretive value. In terms of the second half of the year, I mean, it's a little early to tell. I mean, it's very dependent on the strength of the peak period demand during the summer and obviously, over the holidays in November and December and fuel. I mean, we can't ignore that the volatility of fuel over the last few weeks has been extremely volatile. So it's challenging to tell whether we're breakeven in 2H, obviously, that's the ultimate goal.

And then Scott, this is Dave. With regards to the second quarter RASM question. So yes, Latin is the entire headwind, right? It's down mid-teens. As we said in the presentation, it's about 35% of our capacity. So that's a big piece. If you look at the rest of our network, excluding -- and it continues to be RASM positive as it was in the first quarter. And then in terms of why not better regardless, given the capacity being down, keep in mind, we're still comping against very significant pent-up demand last year in the first half of the year as especially spring break destinations had pent-up demand that had been sort of built up during COVID. And then secondly, competitive capacity does tick up a bit for us in the second quarter. It's one point higher than it was in the first. So there is a bit of pressure there as well.

Okay. That's helpful. And then just separately, on the cash balance, can you just let us know where the ATL stood at the end of the quarter? And then on the financing side, are there any covenants we need to be aware of just in terms of limits on how much more debt you can raise?

Yes. Thanks for the question, Scott. We'll take the ATL question offline. I'll have Koosh circle up with you. There hasn't been a material change. And then in regards to your covenant question, there's nothing material. I mean, in a few of our agreements, we have a min liquidity target, which we are more than well above. So there's nothing else material beyond that.

Okay. Thank you guys. Appreciate it.

Our next question will come from Chris Stathoulopoulos with Susquehanna International Group.

Good morning. Thanks for taking my questions. So Joanna or Dave, I understand the revised revenue guide primarily due to LatAm and full trough lying, but if you could put a finer detail as we think about perhaps the 0 to 60-day booking window, but then also the second half, when we look at the various segments. So, maybe if you could put a finer detailed domestic leisure business short-haul international long-haul peak, offpeak. And then tying it all together, just kind of what gives you the confidence here that other parts of the network? I know you have the ancillary initiatives in place but that can offset what looks like this persistent LatAm weakness? Thank you.

Yes. Maybe I'll take the kind of second -- Dave for a deep dive on the network by geography. So we're confident that the Latin headwinds are transitory in nature. We've seen capacity while it's still up, it is moderating and it continues to moderate in Latin through the rest of the year. And the reality is this is a very strong market for JetBlue from a margin perspective, and it will continue to be. These headwinds are transitory and we're going to continue to double down in this area, because this is part of our core geography. We're pleased with the progress of domestic that has generated positive unit revenue into Q1 and then into Q2, we expect to see about the same transatlantic. RASM is up 20% against significant capacity adds in that region. So, again, very happy there. So as we think about kind of looking at the full year, this Latin headwind, given the presence of JetBlue in those markets 35% is really the big challenge that we're currently facing. But we've been there before. It will cycle out and JetBlue will win in these geographies. Dave, if you'd like to maybe grab a deeper dive in some of the other areas.

Yes. Thanks. I think you noted there's a lot of different moving pieces as sort of we come out of this COVID period. To address a couple of them. peaks remain stronger than off peaks. That's been consistent for about a year or so now. We are taking those learnings and continuing to plan our trough period a bit differently than we had before in order to try to drive the best financial performance during that. We've already been doing that for the fall trough. As mentioned, we're going to pull a bit more capacity at the fall trough as well. So working hard with those learnings. The comp gets easier as we go through the year as we sort of get away from cycling against this pent-up COVID demand that we've seen in the first half. So that's another piece too. And then lastly, I mean the booking window – we still have customers booking relatively close in. That's where the majority of our revenue comes. It can give us more challenges looking further ahead, which is why we sort of go one quarter at a time generally with our guidance. The booking curve has moved out a little bit, I'd say over the past year as sort of COVID concerns have dissipated and as more and more customers are buying our Blue Fare, which is our main cabin fare and has no change fees. So there's less risk to book further out. But within all those things, we feel really good about the moves we're making about our Latin geography over the long-term as it cycles through this temporary increased competitive capacity and feel that all parts of our network with the moves we're making are going to be contributing meaningfully in the future.

Okay. Thank you. And my follow-up. So on Slide 7 here where you referenced the potential for exploring additional cost savings opportunities. Could you walk us through sort of what areas you're thinking about there, whether it's on maintenance or there's perhaps additional opportunities within these voluntary "opt-out". And within that if you could kind of clarify the work groups that those have been applied to. But also does that opportunity also move with depending on all these – where these full trough capacity revisions are made. Thank you.

Yes. So we have committed given the accounting change due to the Pratt & Whitney GTF compensation. We have to your point committed to offset a good portion of that. And so the team has identified opportunities to better leverage technology to drive better productivity in our frontline workforce and also being more strategic and thoughtful about maintenance, timing, as well as what level of investments take place when, obviously not at the expense of safety. And so these are areas that the team is doubling down on to help overcome the Pratt offset. In terms of the “opt out” that has trended where we thought it would. The areas that we're covered within the “opt out” are support centers so corporate functions as well as some of the frontline work groups – and so we also – so I do think we're pleased with the results. The other area we've been diving into is real estate footprints and downsizing in high-cost cities. And then the third focus continues and always continues in terms of strategic sourcing and just working to be more thoughtful and strategic about the contracts that we enter into, whether it be pricing service expectations as well as variability to move with the business.

Okay. Thank you.

Next question will come from Conor Cunningham with Melius Research.

Hi, everyone. Thank you. As you've made all these network changes, I was wondering how you're engaging your change in relevancy with your core customers. You didn't cite any loyalty numbers or credit card sign-ups. I'm just curious on why the lack of comments there. Is there anything to dive deeper into that? Thank you.

Yeah. Sure. So I think we mentioned in Marty's prepared remarks some loyalty commentary. But I think importantly, the network changes are focused around retrenching into our core strengths, which should drive improvement in relevance for our customers, who tend to be over-indexing in those areas. So I think New York, Boston, South Florida. We're really pleased with loyalty, and we've had strong growth of our True Blue base below mosaic in Q1 versus Q1 2023. Our mosaics continue to grow. We have a much higher tax rate this quarter compared to year-over-year. We've seen healthy growth in customer spend, healthy remuneration from Barclays. So we're very pleased with the trajectory. The majority of our mosaics now hold a JetBlue co-brand credit card. So I think that's a great indicator of the value that they place in the loyalty program and the value that the Barclays Co-brand card drives. The other piece I'll mention is we've introduced a number of new perks this quarter. We will continue to introduce new perks, and we think we've got more opportunity with diversification of the card portfolio products. So overall, I think a lot of great progress there, but we're focused on being highly relevant in our key focus cities. And over the last several years, some of that relevance came at the expense of those focus cities because we paused things for Spirit because the NEA was in place that we had to draw down from certain areas. I'm actually excited by this retrenching because I think it will actually drive even more relevance for our customers in those locations. Marty, you have something to add.

Yeah. Conor, I think if you actually were to look at the schedule patterns that we've had -- most specifically in Boston for a lesser extent in Fort Lauderdale. And you look over the last five years. We've actually done a lot of compromising on the schedules to take advantage of things like the NEA. And frankly, going from 20-something flights to 50-something flights in LaGuardia, those planes came from somewhere and a lot of that came from schedule quality. So I would actually say the exact opposite, which is -- this is actually going to supercharge schedule quality in some markets that we've actually neglected over the years because we were trying to do a lot of things at the same time. And I'm actually very excited about what this is giving us ability to do as far as reclaiming some of the strength that we've had historically.

That's helpful. And then I've heard a lot of talk about Latin America headwinds being somewhat transitory. And I don't I'm trying to understand why you think that. Do you expect the market to shrink? Or do you believe it just takes a little bit of time for it to mature a little bit from here? Just trying to understand the transitory comment there. Thank you.

So, I'll make two comments. First of all, I think if you look at total ASMs to Latin America since short Latin, Caribbean since 2019 they're up 50% to like 60%. Now, to be clear, there has been a permanent shift in the business leisure mix and a lot of those -- or not a lot of those ASMs have actually been absorbed by the marketplace. That being the case, I think if you look at -- go back six or nine months, when the industry was all talking about Florida, and how much capacity is sold into Orlando capacity tends to moderate when RASM is pressured. And frankly this is a period where RASM is pressured. And I think if you look at the way capacity ebbs and flows, it does tend to return to the mean and mostly because there's opportunity cost for every ASM that we fly and every competitor fly. So frankly I think that we're already seeing a bit of that moderation already and we expect to see it continue.

Okay. Thank you.

Our final question will come from Stephen Trent with Citi.

Many thanks everybody, and appreciate squeezing me in. Just one very quick follow-up to Helane's question earlier. When we think about your cash level, do you have a minimum cash balance in mind that you think about maintaining is you're looking at your aircraft needs and the 2026 convert. I would just love your color on that? Thank you.

Thanks Stephen. And, yeah, we target about $1.5 billion to $1.6 billion in cash on hand at any point in time. We actually ended the quarter slightly on the higher end of that. As a reminder, we have a $600 million revolving credit facility. So between cash on hand and the revolver we think that that's a healthy balance. And also as a reminder, we've got a healthy unencumbered asset base as well that we can utilize at any point to raise funding when necessary.

I appreciate that. Thank you.

That will conclude today's question-and-answer session. I will now turn the conference over to Mr. Patel for any additional closing remarks.

And that concludes our first quarter 2024 call. Thanks for joining us and have a great day.

And again that will conclude today's conference. Thank you for your participation.