JetBlue Provides Update Related To Coronavirus
18 March 2020 - 10:35PM
Business Wire
JetBlue (NASDAQ: JBLU) today issued the following message to its
23,000 crewmembers.
Dear Crewmembers,
It has been a very tough few weeks. We are so proud to see once
again how the JetBlue culture brings us together during times of
crisis. Thank you for continuing to serve our Customers and deliver
the JetBlue experience, particularly when your own lives are being
disrupted in so many ways.
With safety our #1 value, we continue to take the measures
necessary to protect your health. But as it relates to our
business, we are not going to sugarcoat it. Demand continues to
worsen, and the writing is on the wall that travel will not bounce
back quickly.
We’d like to give you some color on what we are seeing. Last
year on a typical day in March we took in about $22 million
from bookings and ancillary fees. Throughout this March, our sales
have fallen sharply and in the last several days we have taken in
an average of less than $4 million per day while also
issuing over $20 million per day of credits to Customers for
canceled bookings. This is a stunning shift, which is being driven
by fewer new bookings, much lower fares, and a Customer cancel rate
more than 10 times the norm. If you do the math, $4 million per day
does not come anywhere close to covering our daily expenses. It is
hard to predict how long these conditions will last and how much
more challenging the environment may become.
We are not alone. Virtually every major carrier is taking
actions that were almost unthinkable a few weeks ago, making huge
schedule reductions and parking significant portions of their
fleets.
Even though we entered this from a position of strength with a
strong balance sheet and cash in the bank, because of the dramatic
fall-off in bookings, we need to reduce our spending immediately so
that we can continue to fund JetBlue’s operations and ensure your
jobs are protected. We have already announced an initial
capacity reduction, pay cuts for our officers (VPs and above),
voluntary time off programs, re-negotiated Business Partners
agreements, and other spending reductions.
We’ve taken swift and decisive actions to protect you, but we
must do more and do so quickly to weather this storm.
Reducing our flying to reflect demand We are reducing our
capacity in the coming months, with a reduction of at least 40% in
April and May. We also expect substantial cuts in June and July,
and given the unpredictability of this event, we will ground some
of our aircraft. We know this is not an easy move – it will impact
hours for many frontline Crewmembers, but it is also essential that
we reduce capacity in the face of dramatically falling demand.
We will be notifying Customers of their specific cancellations
in a phased approach so that we do not overwhelm Customer Support
as they continue to receive exponentially more calls than they ever
have before.
Reviewing our fleet plan One of our most substantial
capital expenses is the purchase of new airplanes. In collaboration
with Airbus, we are looking at our order book for opportunities to
slow deliveries and reduce aircraft pre-delivery payments (PDPs).
We will also defer the four previously used airplanes that we
announced earlier this year.
Cutting our capital and operational spending We will
reduce spending wherever we can to preserve our cash, and both of
us will be taking a 50% pay reduction during this crisis.
We entered the year with a list of major initiatives to invest
in our infrastructure, technology and real estate. As of today, we
have paused or stopped more than 75% of these projects and will
continue to stand down work wherever we can.
Increasing our cash reserves The dramatic loss of revenue
in recent days means we will have to start dipping into our cash
savings. Although we came into this with about $1.2 billion, our
expenses total millions of dollars each day. The good news is we
have secured a new liquidity facility – an extra credit line –
which allowed us to borrow $1 billion. This is not free money –
it’s a band-aid solution that holds us over and we have to pay it
back with interest. Even with these cash reserves we, like the rest
of the industry, will need significant government support to help
us through these losses.
Calling for government intervention The governmental
warnings and actions taken to manage this health crisis have hit
both domestic and international travel hard. We have been
coordinating with Airlines for America (A4A) and other U.S.
airlines to ensure government leaders understand the threat to our
global economy if air travel is not supported. When this pandemic
passes – and it will – air travel will play a major role in getting
life back to normal and supporting economic recovery. We are going
to need significant government help to do that. This is not a
position we’d like to be in, but government assistance will help us
protect our 23,000 Crewmembers who are our most important priority
as we navigate these turbulent times.
From the beginning we have faced many challenges and, against
all odds, we have thrived through some incredibly difficult events.
Now we are faced with what is by far the biggest challenge our
company and our industry has ever seen. While we know this is an
incredibly difficult time for all of you as you work to juggle your
own concerns around coronavirus, we have come through other
challenges in our 20 year history and we can – and will – come
through this together.
The next few months won’t be easy, but please know that all the
steps we’re taking today are focused on protecting the health and
safety of our Crewmembers and Customers and ensuring JetBlue
remains a great place for you to work well into the future.
Regards,
Robin Hayes Chief Executive Officer
Joanna Geraghty President & COO
View source
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Media: JetBlue Corporate Communications +1.718.709.3089
corpcomm@jetblue.com
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