JetBlue Provides Update Related the Coronavirus Aid, Relief and Economic Security (CARES) Act
04 April 2020 - 7:21AM
Business Wire
JetBlue (NASDAQ: JBLU) today issued the following message to its
23,000 crewmembers:
Dear Crewmembers –
As the coronavirus crisis deepens, so too does its impact on our
business. If anyone tells you that they’ve seen anything like this
before – don’t believe them. We’ve shared with you in the past
weeks the unprecedented decline in demand for travel, and the
situation continues to deteriorate. The numbers are staggering:
- Just 7,000 Customers are likely to fly us each day in
April and possibly May, compared to the 120,000 we would
typically expect.
- Last year on a typical day in April, we took in about $22
million from bookings and ancillary fees. This is now just
$1 million per day (and another $2 million per day is being
issued in cash refunds, pushing us into negative territory).
Additionally, we are still issuing $11 million per day of travel
bank credits for canceled bookings.
- We are spending far more on running the airline than we are
making in revenue and, as a result, we are burning through over
$10 million of our savings each day. Despite our position of
financial strength, this is simply not sustainable. We are leaving
no stone unturned, cutting pay for officers (VPs and above),
introducing voluntary time off programs, reducing capacity,
re-negotiating Business Partners agreements, and stopping or
pausing 75% of our major infrastructure, technology and real estate
projects.
We are by no means alone in the pressures we are facing; it is
clear that without government assistance, or mass furloughing and
restructuring, that many of the world’s airlines could fail.
Taking action by reducing our network, parking our
fleet
Preserving cash is our top priority and we’ve had to make
decisions we never dreamed we’d make. We must continue to make
sacrifices where needed so that we can emerge from this
unprecedented challenge.
- 70% April schedule reduction: We’ve reduced our April
schedule by at least 70%.
- Parking over 100 aircraft: Just a few weeks ago, we
couldn’t get new aircraft fast enough to hit our growth plans. Now,
we are taking steps to sit down the aircraft we have. This month,
we will park over 100 in the Arizona desert and at BlueCities
around the country.
Payroll support for Crewmembers
Last Friday I shared some very good news about the CARES Act,
which sets aside $25 billion in payroll support for airline
employees through Sept. 30, 2020. In the week since the law was
signed, our nation’s leaders have moved with incredible speed to
start the process of getting that money into the hands of
Crewmembers. I want to again thank President Trump, his
administration, and Congress – especially our very own Senator
Schumer – for their bipartisan support.
Today we submitted our application for payroll support funds to
the Treasury department and we now enter negotiations with the U.S.
Government. I hope things can move quickly, and we are available
this weekend so we can conclude an agreement next week, as time is
of the essence. For reasons I am sure you understand we won’t be
commenting while we are in these discussions. We may not get enough
to cover pay and benefits at the level you see when we are flying
at full capacity. Also, as a growth carrier, we have a disadvantage
as the funds are based on last year’s payroll costs. With fewer
hours for everyone to work and far fewer flights, total pay is
likely to go down for both salary and hourly Crewmembers. The good
news is this law keeps paychecks coming and it buys us time.
Securing jobs, even at reduced total pay, is my priority right
now.
Every dollar of the payroll assistance funds will be passed to
Crewmembers, with the exception of JetBlue Officers who will not be
funded by the Government and the leadership team have all taken
significant pay cuts. We are in this together. The government is
providing these funds as recognition to us to make sure we are in
position to serve the flying public, support the country, and
kickstart the economy again when the crisis is over.
Even if we get the payroll support, we still need to raise
additional money to pay our other operating expenses. We will be
talking to the government and other lenders in the coming weeks. We
have thoughtfully managed our finances over the past 10 years, and
thankfully we now own many aircraft and other assets we can borrow
money against.
One requirement of accepting payroll support is that we continue
to provide a reasonable level of service across our domestic
network. With dramatically fewer Customers, we have to take a hard
look at our schedule to meet those requirements while also pulling
down further flying. We expect more clarity on this from the
Department of Transportation soon.
Inspiring Humanity and looking ahead
I take great pride in knowing that we can help others even when
we need a little help ourselves. Customers choosing to fly during
this difficult time are, for the most part, doing so because they
need to, not because they want to. With our mission to Inspire
Humanity in mind, we are transporting medical professionals and
supplies to the places where they are needed, and helping get
students home.
While every day right now feels endless, this will not last
forever. We are already thinking about what the world will look
like when we come out of this. Just like after 9/11, some things
will go back to normal and others will change for good and we need
to prepare for that. With our incredible team, disruptive brand,
low fares, and low-cost structure, I think JetBlue can do some
great things in this new reality.
I’d like to end this update on a personal note. So many of you
have reached out to me and I feel terrible I have not been able to
personally get back to everyone like I normally do. I want you to
know that I’ve read your comments and suggestions and have shared
the themes with the right leaders. I know it is a scary time. The
multiple stresses of work, finances, and personal health can take a
toll. Take care of each other, and don’t hesitate to reach out to
your leader if you need support. Thanks for all you’re doing. We
will get through this.
Best wishes,
Robin Hayes Chief Executive Officer
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200403005511/en/
JetBlue Corporate Communications Tel: +1.718.709.3089
corpcomm@jetblue.com
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