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5 days ago
- Business
- Yahoo
The only analyst on Wall Street who has a ‘sell' on Nvidia says the AI chipmaker's great run is over
Every analyst who covers Nvidia, the semiconductor company that has beat Wall Street's projections for eight consecutive quarters, has a positive or neutral outlook on the stock. That is, every analyst except Jay Goldberg of Seaport Research Partners. 'Nvidia's had a great run, and nothing lasts forever,' say Goldberg, who has a sell rating on the $3.3 trillion market cap stock, as Wall Street prepares for the chipmaker's highly anticipated quarterly earnings report on Wednesday. Goldberg, who covers semiconductors for the equity research firm, believes that Nvidia's growth is plateauing. 'This is a heavily scrutinized stock. We know what the upside is; there's not much of it left,' he told Fortune after publishing a note to investors Wednesday that re-iterated his 'Sell' rating. 'In contrast, there's a lot of things that can go wrong to drive downside—there's all the snafus and supply chain.' Goldberg, believes that TSMC, the world's largest contract chip manufacturer, has maximized its capacity to produce Nvidia chips, and that this fact is already priced into Nvidia stock. He also believes that volatile trade policy and tensions with international trade partners pose extreme headwinds for Nvidia. This is why he's put a $100 price target on Nvidia, which was trading around $136 per share ahead of its fiscal Q1 earnings report on Wednesday Nvidia, whose pricey chips help power the popular AI large language models by OpenAI, Anthropic, Meta, xAI and more, has become a key company impacted by President Trump's evolving trade policies. In April, the California-based company warned that it would report a $5.5 billion writedown to inventory after President Trump said that the company would need a license to export its H20 chip to China and some other countries. The financial reality of this threat will become clear during Wednesday's earnings report. Still, analysts, except Goldberg, have positive expectations for the chipmaker as they anticipate net income to increase by 31% to $19 billion, with revenue growing 66% year-over-year to $43 billion, per Bloomberg. Goldberg is fine being the black sheep. 'US government chip policies are, at best, chaotic, and at worst, extremely disruptive and counterproductive and destructive to American industry,' he says. 'The past Administration's policies weren't great, but this current trajectory we're on of everything changing every week is also extremely destructive.' Rather than Nvidia, Goldberg's top semiconductor stock pick is Broadcom. He believes that Broadcom will play an integral role in helping hyperscalerslike Google, Amazon and Microsoft design and manufacture proprietary alternatives to Nvidia chips. 'In a very high level context, the AI chip market is very much a contest between Nvidia and Broadcom. I think the Broadcom side of it is not fully priced-in or well-understood by the Street.' This story was originally featured on
Yahoo
07-05-2025
- Business
- Yahoo
Is NVIDIA Corporation (NVDA) the Best Dow Stock?
We recently published a list of The Best and Worst Dow Stocks. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other Dow stocks. The Dow Jones Industrial Average is a benchmark index of the top 30 companies in the US. It represents the strength of the US economy and carries great historical significance as well. It also acts as a reference point for analysts and investors. However, not all stocks within this elite group of companies perform equally. While some thrive on innovation and economic boom, others struggle due to various setbacks and economic trends. We decided to break down the index and find out the best and worst stocks, looking at what was making them perform unexpectedly this year. Methodology In order to come up with our ranking of the best and worst Dow stocks, we first assigned a rank to each stock based on the number of hedge funds holding the stock. We then looked at the short interest in each stock and assigned the top rank to the company with the least short interest. We then combined the two ranks to see which stock was the best on average. The list is in ascending order, with the best stock taking the number one spot. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Is NVIDIA Corporation (NVDA) the Best Dow Stock? A close-up of a colorful high-end graphics card being plugged in to a gaming computer. NVIDIA Corporation (NASDAQ:NVDA) Number of Hedge Fund Holders: 223 Short Interest as of Apr 30, 2025: 1.12% NVIDIA Corporation (NASDAQ:NVDA) is a technology company that develops graphic processing units (GPUs) and also provides networking and computing solutions. It operates through two main segments: the computing & networking segment and the graphics segment. The company recently received a sell rating from an investment bank and research firm, Seaport Research Partners, as it started coverage on the stock. The firm also assigned a price target of $100 to the semiconductor company. Goldberg noted that Nvidia's increasingly complex systems present supply chain challenges. However, Morgan Stanley increased its estimates for NVIDIA Corporation's (NASDAQ:NVDA) 2026 revenue, citing strong demand for artificial intelligence chips. Analyst Joseph Moore thinks that macro and supply chain risks are not as significant as they appear.
Yahoo
30-04-2025
- Business
- Yahoo
Nvidia Slammed With "Sell" Rating on Overvaluation and Supply Constraints
Seaport Research Partners issued a rare "Sell" rating on Nvidia (NASDAQ:NVDA) in a new coverage note released Wednesday, flagging concerns over stretched valuation and bottlenecks in its supply chain. The research firm, known for its cautious stance, initiated coverage with a $100 price target, well below Nvidia's current trading range. Analyst Jay Goldberg said the chipmaker remains a top beneficiary of AI-driven demand, but argued that the bullish outlook is already fully priced in. Warning! GuruFocus has detected 3 Warning Signs with NVDA. Nvidia's Blackwell chips are sold out for the year, but that's more a reflection of limited packaging capacity at Taiwan Semiconductor (NYSE:TSM) than runaway demand, Goldberg wrote. He also highlighted growing complexities in Nvidia's systems and uncertainty around returns on enterprise AI investment. While Goldberg acknowledged the long-term promise of AI, he said the technology's real-world value could take years to materialize. This doesn't look like a bubble, he wrote, but Nvidia may lag behind its peers as the market recalibrates. Shares of Nvidia remain down 2% on Wednesday trading. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
22-02-2025
- Business
- Yahoo
Q4 2024 Federal Agricultural Mortgage Corp Earnings Call
Jalpa Nazareth; Equity Investor Relations Contact Officer; Federal Agricultural Mortgage Corp Bradford Nordholm; President, Chief Executive Officer; Federal Agricultural Mortgage Corp Aparna Ramesh; Chief Financial Officer, Executive Vice President; Federal Agricultural Mortgage Corp Zachary Carpenter; Executive Vice President, Chief Business Officer; Federal Agricultural Mortgage Corp Marc Crady; Senior Vice President, Chief Credit Officer; Federal Agricultural Mortgage Corp William Ryan; Analyst; Seaport Research Partners Bose George; Analyst; KBW Gary Gordon; Analyst; Wall Street Operator Good morning ladies and gentlemen, and welcome to the Farmer Mac Fourth Quarter 2024 Earnings Results Conference Call. (Operator instructions) I would not like to turn the conference over to Jalpa Nazareth. Jalpa Nazareth Good morning and thank you for joining us for our fourth quarter and full year 2024 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac. As we begin, please note that the information provided during this call may contain forward-looking statements. About the company's business strategies and prospects, which are based on management's current expectations and assumptions. These statements are not a guarantee of future performance and are subject to the risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to Farmer Max 2024 annual report on Form 10k filed with the SEC today for full discussion of the company's risk factors. On today's call, we will also be discussing certain non-GAAP financial measures. Disclosures and reconciliations of these non-GAAP measures can be found in the 2024 Form 10K and earnings release posted on Farmer Mac's website under the financial Information portion of the investors section. Joining us from management this morning is our President and CEO, Brad Nordholm, who will discuss 2024 business and financial highlights and strategic objectives, and Chief Financial Officer, Aparna Ramesh, who will provide greater detail on our financial performance. Select members of our management team will also be joining us for the question and answer period. At this time, I'll turn the call over to President and CEO, Brad Nordholm. Bradford Nordholm Thanks, Jalpa. Good morning, everyone, and thank you for joining us. We delivered another year of strong financial results, building upon our record performance over the last few years. Our 2024 performance was highlighted by record net effective spread and core earnings driven by consistent loan growth, effective asset liability management, and funding execution. And coupled with well managed operating expense control. We also successfully closed to $300 million farm securitization transactions supporting our commitment to being a regular issuer in the market. This is the first time we have completed two issuances in one year. All these factors have allowed us to execute in a manner that is consistent with our long-term strategic growth objectives, and it showcases the resiliency of our business model against market volatility and a changing credit environment. This morning we also announced our 14th consecutive annual dividend increase. Beginning in the first quarter of 2025, we will be increasing our quarterly common stock dividend by $0.10 per share to $1.50 which represents a 7% increase from the quarterly common stock dividends paid in 2024. This increase is a tangible indication to our shareholders of our ongoing commitment to provide a dividend payout that balances previous and expected future earnings growth while maintaining an adequate level of capital to exceed regulatory and market requirements and support our expectations for future business volume growth. Our total revenues in 2024 improved to $362 million compared to $349 million in 2023, primarily due to higher net effective spread. This reflects the compositional shift of new business volume towards higher spread businesses that we have seen over the last few years and the continuing effectiveness of our proactive management of our balance sheet and funding levels. Core earnings year-to-date improved to $172 million modestly exceeding our prior year record. Reflected in 2024 results is the recognition of the renewable energy investment tax credits of $2.6 million is a benefit to income taxes from two dairy renewable natural gas projects. We are actively looking at these types of renewable energy credit opportunities in 2025 as we continue to be a significant participant in the renewable energy project finance market, which gives us unique insights into the value of these credits. Turning to volume in fourth quarter of 2024, we introduced a new segment reporting construct that provides for clear insight into the various contributing components of our portfolio's net effective spread and our overall bottom line profitability. A partner will cover this in more detail, but we're now showing you more granular information on each segment's direct allocation to operating expense. We've also rebranded our rural utility segment to power and utilities and introduced a new broadband infrastructure segment to more crisply communicate the core areas of focus. The power and utility segment includes loans to rural electric generation and transmission cooperatives and distribution cooperatives, as well as advantage securities secured by those types of loans. The broadband infrastructure segment includes loans to rural fiber, cable broadband, Tower wireless, local exchange carriers, and data center projects which were previously held in the former rural utility segment. Rural cell communication and data connectivity has proven to be a vital economic importance in the last decade, especially in rural America, as more households and agricultural enterprises require more data and connectivity to thrive. We have strategically expanded our footprint in this market over the last several years, positioning us well for the expected growth in digital technologies that is expected to require significant more computing and storage capabilities, as well as investment in additional fiber network capacity. This new segment reporting construct aligns better with how we actually manage our business and provides better transparency into the economics of our portfolio and the overall value creation of our operations. In 2024, we purchased $7 billion in gross volume with farm and ranch and renewable energy alone purchases significantly outpacing the prior year. After repayments and several large maturities and farm and ranch and power utilities advantage volume, we grew $1.1 billion ending the year at $29.5 billion. Our infrastructure finance line of business grew over $1 billion in 2024, largely driven by long purchase volume within the renewable energy segment. As of year end, we have nearly $1.5 billion in total renewable energy volume, reflecting the continued strong demand for renewable energy power generation and storage and the dedication and commitment from our organization to grow this segment in alignment with our long-term initiatives. We introduced this segment in 2020 and have successfully doubled our volume in this segment every year since then. We believe that the growth in renewable energy generation and deployment of energy storage technologies has the potential to continue to deepen Pharmamax's relationships with existing customers through new business opportunities. Our 2025 pipeline within the renewable energy segment remains strong. As a robust efforts and investments to grow this portfolio remain one of our top priorities over the foreseeable future. The broadband infrastructure segment grew over $300 million or 60% year-over-year. We expect to continue to see an increase in financing opportunities for other telecommunication providers in rural areas with fiber line expansion, wireless broadband deployment, industry consolidation and efficiency through mergers and acquisitions. And data processing center buildouts are increasingly important to real economic opportunity in the constant connectivity required by the food and agricultural businesses. Within the agricultural finance line of business, corporate egg finance saw net growth of about $200 million during 2024, reflecting our continued efforts to support larger, more complex agribusiness focused on businesses that span the food supply chain. While volume tends to be lumpy on a quarter by quarter basis, opportunities in the segment are generally more creative than farming rash loans, is evident in our new segment construct. We closed over $1.5 billion of new farm and ranch loan purchases in 2024 compared to a total of $780 million in 2023. That loan growth included $179 million of two pools of loans purchased from a single agricultural lender, underscoring our secondary market track record of providing agricultural lenders solutions for their capital planning and our expansive product set to support customers of all sizes throughout market cycles. We expect to see this positive momentum continue in 2025 as tightening bank liquidity and an adjustment to higher rate environment takes hold. While the USDA expects an increase in cash farm income in 2025 due to potential increases in government support payments for the American Relief Act, the ongoing uncertainty and forecasted volatility in commodity prices is expected to drive more loan volume as producers navigate current market dynamics. Farm and ran segment is core to our mission, and we remain committed to bringing our customers' products and solutions that fit their profiles as they continue to navigate industry change and the economic cycle. Offsetting farm and ranch purchase growth in 2024 was over $2 billion in scheduled maturities with several large farm and ranch advantage counterparties driven by slower market loan growth for them and tightened market credit spreads it resulted in less liquidity and diversification needs for these counterparties. We successfully closed two armed securities transactions in 2024, the second of which closed in November and was structured similarly to our earlier deal in April 2024. Since our initial farm securitization in 2021, our execution has significantly improved, leading to better financial results due to better spreads and reduced transaction and administrative costs. Looking ahead to 2025, we're planning to continue our target deal sizes of approximately $300 million consistent with the size of our prior deals. As we are continuing to explore the opportunity to introduce new securitization products and asset classes, including renewable energy for our customers while continuing to build liquidity in the farm securitization program. As we look ahead, we are confident that our underlying business model, strong capital position, and uninterrupted access to the debt capital markets will continue to uniquely position us to partner with our customers to help them grow and manage any capital and liquidity risks they may might face in the future, including risks related to ongoing market uncertainty and potential regulatory policy change. Our ability to navigate industry changes and economic cycles while growing earnings positions us well to continue to create more opportunities for enhanced shareholder value through mission fulfillment. And now I'd like to turn the call over to Aparna Ramesh, our Chief Financial Officer, to discuss our financial results in more detail. Aparna Ramesh Thank you, Brad, and good morning everyone. Our 2024 results once again highlight our consistent financial and operational execution coupled with proactive management of our balance sheet and funding sources. Our diversified streams of business revenue and our funding and hedging capabilities stemming from our disciplined approach to asset liability management allow us to continue to fulfill our mission and generate consistent shareholder returns across market cycles while staying in alignment with our long term strategic initiatives. Net volume growth in fourth quarter 2024 was $1.1 billion and this was primarily driven by strong loan purchase volume in the farm and ranch, renewable energy, and broadband broadband infrastructure segments. Offsetting loan purchase volume growth in the fourth quarter was $255 million of farm and ranch advantage that matured without refinancing. As we saw throughout the year, changes in the quarterly advantage securities volume are primarily driven by the larger transaction sizes for the product, scheduled maturity amounts for a particular quarter, the liquidity and loan growth opportunity needs of farmer advantage counterparties, changes in the pricing and availability of wholesale funding, and the relative value of our wholesale financing product versus other funding alternatives. Based on these factors, we expect advantage business volume in both lines of business to continue to be volatile as we navigate the evolving needs of our stakeholders and as the yield curve sequence and interest rates stabilize. Positive momentum that we saw in the farm and ranch, renewable energy and broadband infrastructure business segments included strong loan purchase volume, which is generally more accretive and higher spread relative to the advantage product. The shift in business composition to higher spread business has been one of the drivers of the increase in net effective spread quarter over quarter. We believe that our pipeline and the overall compositional shift positions us well heading into 2025. Turning to 2024 results, four earnings were $171.6 million or 15.64 per diluted share in 2024 and $43.6 million or 3.97 per diluted share in fourth quarter 2024. Our full year core earnings results reflect modest growth over our record breaking 2023 financial performance, and this is largely due to our proactive debt funding strategies, disciplined asset liability management approach that is designed to minimize earning volatility over the medium to long term, coupled with opportunistic debt issuances that have allowed us to accretively fund new asset opportunities as they've arisen. Net effective spread improved $12.6 million year-over-year, and this is largely due to a shift in volume to more higher yielding assets. In percentage terms, net effect is spread compressed year-over-year by 3 basis points to 115 basis points due to loans moving into non-accrual status, which has resulted in a decrease in interest income, and that has been coupled also with a more volatile funding environment. This dynamic was partially offset by our diversified revenue streams and opportunistic funding and hedging of our balance sheet for the use of callable debt securities. Poor earnings in fourth quarter 2024 declined sequentially by $1.4 million and this was primarily due to an increase in operating expenses and credit expenses. These factors were partially offset by an increase in net effective spread, a decrease in preferred stock dividends, and the previously mentioned renewable energy investment tax credits. That effective spread in dollar terms improved quarter over quarter to $87.5 million from $85.4 million. This improvement was driven by several factors, and this includes a proactive equity capital allocation strategy where we are laddering and layering duration to minimize balance sheet and earnings volatility, the opportunistic redemption and reissuance of fixed rate callable debt at lower market interest rates. A modest improvement in floating rate funding levels relative to SOFA and the expanded yield from volume growth in the renewable energy and broadband infrastructure portfolios. As we mentioned on prior calls, our treasury and funding desk opportunistically takes advantage of favorable market conditions, and this coupled with our disciplined asset liability management positions us very well in changing credit environments to deliver consistent spreads across all business cycles. In percentage terms, net effective spread was unchanged sequentially at 116 basis points. Operating expenses increased 18% sequentially, largely due to an increase in licensing fees, infrastructure technology costs, and higher transactional legal fees that were associated with our broadband infrastructure and renewable energy portfolio. Brad mentioned, we introduced new segment level reporting in fourth quarter 2024. That reporting framework includes the breakout of our broadband infrastructure portfolio, which previously was cited within the rural utilities portfolio and provides the direct operating expenses within each of our new segments. These enhanced segment disclosures reflect our commitment to providing transparency into our portfolios from both a volume and profitability perspective. Operational efficiency was 30% for fourth quarter 2024, and it was 28% for full year 2024. Both are in line with our long-term strategic plan targets, and this is a reflection of our disciplined approach to expense management and we'll continue to monitor and manage expense growth as we've done proactively against incoming revenue streams. As we discussed on our last call, we are very proud of the on-time and in budget completion of our multi-year technology investment which modernized our Treasury infrastructure, positioning us well to mitigate risk, increase efficiency, and enhance deal flow. As we look ahead, we remain committed to bringing cutting edge technology and new capabilities to our customers and continuing to invest in ways to build innovative systems that accelerate growth while closely monitoring and managing our efficiency ratio. We expect that ratio to remain at or below a long run average of 30% through our disciplined approach to keeping our efficiency ratios in line with our growth expectations. Turning to credit, our performance with respect to credit was largely driven by large loans with borrower-specific headwinds, as the nature of our credit events in charge of has historically tended to be idiosyncratic. For example, in 2024, we incurred an aggregate economic loss of $2.5 million and this was related to a single $14.5 million agricultural storage and processing borrower exposure. A portion of this was sold in the second quarter 2024, and the remainder is currently under contract to be sold. Our total allowance for losses was $25.3 million as of December 30, 2024, and this reflects a $3.4 million dollar increase from September 30th, 2024. The increase was primarily attributable to new volume in the infrastructure finance line of business and a single renewable energy loan that was downgraded to substandard during the quarter. Based on our analysis, the issues involved with this substandard loan are borrower specific and are not indicative of any broader systemic risk in our portfolio. Overall substandard asset volume increased this quarter to $440.7 million from $402 million as of September 30, 2024, primarily due to credit downgrades. Substandard assets represented approximately 1.5% of our total outstanding business volume as of year end 2024 compared to 1.4% of our total portfolio as of September 30, 2024 and 0.8% as of year 2023. 90 day delinquencies with 37 basis points across our entire portfolio as of December 30, 2024 compared to 51 basis points at the end of September. The decrease in the fourth quarter is a seasonal pattern of Farmer Mac 90 day delinquencies with higher levels generally observed at the end of the first and third quarters and lower levels generally observed at the end of the second and fourth quarter of each year. This seasonal pattern is due to the annual and semiannual payment dates on the majority of farm and ranch loans. Although we had credit expenses in 2024 that were above historical levels, we have outperformed our peers in how we have navigated a slowing down in the agricultural cycle, which reflects a strong underwriting and credit discipline. We believe that our total portfolio of loans is well diversified. Our credit profile remains strong overall, and that we are well buffered given our strong levels of capital. Let me turn to capital now. Farmer Mac $1.5 billion of capital as of December 30, 2024 exceeded our statutory requirement by $583 million or 64%. Our tier one capital ratio was 14.2% as of December 30, 2024 compared to 14.2% as of September 30, 2024 and 15.4% as of December 31, 2023. The year-over-year decrease in core capital was primarily due to the redemption of the CDC preferred stock in 3rd quarter 2024, along with an expansion into more accretive lines of business such as renewable energy. These lines of business do consume additional capital. This was offset by the efficiency that we gained from executing successfully on two securitization transactions in 2024. Our strong capital position has allowed us to continue to grow and diversify our revenue streams, remain resilient in volatile credit environments, and allow us to offer a source of low cost liquidity for our customers and borrowers even in difficult times. As you read in this morning's press release, we are very pleased to announce a $0.10 per share increase in our first quarter, 2025 common stock dividends to $1.50 representing a 7% increase from the quarterly dividends paid in 2024. We believe that our strong earnings and consistent capital position support this dividend increase and our overall strategy to achieve a targeted payout that balances a reasonable growth of both previous and future earnings and our expectations for future business volume growth. We are also very pleased with the execution of our fifth farm series transaction in November, which is for the first time, our 2nd transaction in a year. We received more than 3 times the demand for this latest offering, which is really a testament to Farmer's reputation with institutional investors as well as the overall market appetite for the underlying agricultural asset class. Not only was demand strong, but we were once again able to successfully expand our investor base in both branches. The consistent farm series issuances every year for the last four years have not only built a strong foundation for future market liquidity but also led to continually improved execution economics and greater efficiency of servicing for the agricultural mortgage backed securities market. The securitization program remains an important strategic initiative for Farmer Mac as it allows us to diversify our funding, enhance, and optimize the balance sheet by efficient deployment of capital. Securitization also enables our growth strategy by targeting new asset opportunities that we might include in our conduit. We are very pleased with the tremendous support we've seen from our customers and investors for this program, and we remain committed to being a regular issuer in the market. Our liquidity and capital positions remain well in excess of all regulatory requirements. Our projections show minimal change in our profitability, with limited exposure to movements and interest rates, but the market rates go up or down. As of year in 2024, Farmer Mac had 264 days of liquidity, and we held approximately $1 billion in cash and other short-term instruments in our investment portfolio. We expect to be well positioned in the medium term as we move into the anticipated easing cycle, and we're confident in our resiliency against potential short and medium term market disruptions. Once again, our team delivered strong, consistent quarterly results, maintaining key metrics that we highlight on each call while staying within our credit framework, which emphasizes loan to value and cash flow metrics, notably, we delivered a 16% return on equity this quarter and an efficiency ratio of 30% both in line with our strategic target of 30% and within the range for return on equity. We believe that our balance sheet is well positioned for market uncertainty, and we are more optimistic than ever to deliver on our long-term strategic plan objectives. And with that, Brad, let me turn it back to you. Bradford Nordholm Thank you very much, Aparna. As I hope you've heard, we are very pleased with our 2024 results and believe that we're well positioned to deliver on our multi-year strategy as we head into 2025 with good momentum, strong liquidity and capital levels, a diversified business mix, highly effective risk management practices, and most importantly, a talented team of dedicated professionals. Before I turn to your questions, I do want to comment on the change in administration here in Washington DC. Is a publicly traded financial services firm and a government sponsored enterprise? We are crystal clear on our enduring mission to increase the accessibility of financing to provide vital liquidity for American agriculture and rural infrastructure, essential parts of the US economy. We closely monitor regulatory and statutory developments and messaging and as of right now we do not anticipate material changes to our business as a result of the change in administration. We will continue to strive to deliver on our mission throughout the agricultural economic cycles as reflected by our financial results over the last several years. Our lone pipeline and capital base are strong and growing. And our revenue is well diversified, providing capacity for further growth and creating more opportunities for us to enhance shareholder value. Put another way, we are optimistic about our future and we will maintain our singular focus on fulfilling our mission efficiently, innovatively, and profitably as we navigate the backdrop of a broader market uncertainty attributable to interest rates, regulation, and policy change. This is how we believe we can continue to differentiate ourselves and deliver value to our customers and the borrowers of rural America. And now operator, I'd like to see if we have any questions from anyone on the line today. Operator (Operator instructions) Your first question comes from Bill Ryan with Seaport Research Partners. William Ryan Thank you. Good morning, Brad and Aparna. A couple of questions, one starting off at a high level and then one more numbers specific, but last quarter you sort, you mentioned that there might be a transformational securitization product coming out and I think we kind of, figured out it might be some form of a mortgage conduit. Could you maybe provide us an update on where that stands right now, how you see the TAM, what the interest level is in the product as well, and what kind of fee structure it might have? Bradford Nordholm Yeah, good morning, Bill, and very nice to hear from you. We're always looking at opportunities to develop new uses for the securitization machine that we've really built at Farmer Mac. I think during the last call we were suggesting that we were working on the possibility of securitizing loans that look a lot like our farm and ranch loans but might be originated by others, and that exploration work, that feasibility work continues with market participants being the primary focus of that work. We also are doing some exploration of the feasibility of securitizing some of our renewable energy loans. At the end of the day, in all cases, we're going to look at the impact on notional profitability as well as return on allocated equity capital and making any final decisions. And so stay tuned. It's something that you'll continue to hear. About during 2025, but there are no pending announcements. And why don't I turn to Aparna to address your second question. Aparna Ramesh Hi, good morning, Bill. I think you said you had a numbers related question as well. William Ryan Just a number of questions in terms of the [GNXenses] it's obviously a little bit elevated this quarter, and you talked about deployment of the treasury cash management system and some transactional legal fees. Is this, could you talk about maybe unpack it a little bit like what were the specific components and is this a new level that we should think about going forward? Aparna Ramesh Yeah, I think you're right in that, we did have an elevated level of operating expenses in Q4 when you compare that to the price quarters also resulted in a slightly elevated level of efficiency ratio, although staying within our target of 30%. I think it's important to just look at our operating expenses given. Some seasonality that we see, particularly in the first and fourth quarters. I think looking at it annually is probably a better metric, but very specifically, and as we did have an elevation in our GNA expenses in particular, and one big factor associated with that had to do with our exception into some of these newer lines of business. Especially our telecom, as well as our renewable energy, as we continue to grow in these segments, we, at least at the status level, we did experience some additional legal fees. I wouldn't say that that is expected to be an endemic level, but you could expect a little bit of volatility there. So that was one of the drivers. I would say the vastly larger driver, which I think will moderate over time, has to do with the culmination of our stars program as we announced in Q4, we successfully completed our SARS initiative. Accompanying that with some what I would call one time or lumpy expenses that were associated with the completion of that program that we have to pay contractors for. So these were the two singular drivers of a slightly elevated what I would call general and administrative expenses. But what I would note though is all the compensation expenses went up just a tad bit and again that is associated with some level of seasonality. We've actually held our headcount as well as our operating expenses as it pertains to compensation at extremely manageable levels, including our headcount for Q4. William Ryan Okay, thank you. I'll get back in the queue. Operator Your next question comes from Bose George, KBW. Bose George Hey everyone, good morning. Actually I wanted to ask first just about the outlook for this for spreads and assuming it looks like rates have hopefully found a range here and the Fed might be on hold, and if that is, what happens with rates, can you just talk about what you'd expect for spreads this year? Bradford Nordholm Yeah, good morning, Bose, and again, very nice to you too. I'll offer a few high-level comments and then ask both a partner from a funding standpoint and Zach Carpenter from a business segment standpoint to provide some additional color, but my observation is that as we're going into 2025, we're seeing a little bit of a, of almost like a competition between the rate of growth on a notional basis of some of the wider spread businesses segments such as renewable energy, and what we're seeing is some accelerated growth in our farm and ranch products, which is lower capital consuming but also a bit lower in spread. I think in past years we have provided some caution about net effective spread, being sustained in the high 10s, 115% to 120%. I think we've suggested that it could drop down into the 112, 113. You kind of see that it's held up remarkably well and that's been because in that competition, those higher margin segments, experienced a lot of growth this last year. But, Zack, maybe you can comment on just how kind of how you're saying the development of that between a farm and ranch and these other segments going into '25. Zachary Carpenter Yeah, absolutely happy to, first and foremost in farm and ranch, the one thing I will note is two things farmers are getting used to the higher rate environment. Maybe there was an expectation heading to '24 that the rates would come down. Clearly, given the economic environment, that's not the case, coupled with a tight agricultural economy, farmers are needing additional liquidity and And they've gotten a little bit used to the higher rate environment and needing to support working capital and potential growth. And so we're seeing that increased demand in farmer ranch, even though I'd say overall rates remain higher than 21 and 22, and we think that's going to, keep pace in 2025. I say in our newer lines of business we had significant growth in the fourth quarter across corporate ag, broadband infrastructure, and renewable energy. Those spreads and the businesses maintained and in many instances increased in the fourth quarter. And given that growth and given the pipeline that we see in these newer lines of business, we anticipate those spreads to, maintain, around those levels plus or minus a couple basis points here or there. But we don't see any deterioration in the creativeness of those newer lines of business heading into 2025. The one thing I would comment on. Pertains to advantage, credit spreads for investment grade counterparties continue to be extremely tight, which is part of the reason we've seen some, declines in volumes in 2024. We've seen some widening and out recently, but nothing significant. So unless we see some more market volatility, we'd anticipate the credit spreads and manage to remain relatively tight and could be volatile to volumes heading into 2025. Bradford Nordholm Yeah, apart of anything at funding or how we're managing our balance sheet that has implications for the NES in response to Bose's question. Aparna Ramesh Well, let me just tackle your question a little bit retrospectively, but also prospectively. So you've noted, just how we manage the balance sheet and our net effect of credit on the funding standpoint, I'll just highlight a couple of things that we think will persist in terms of just how we strategically optimize our balance sheet. Over the past year, we've certainly seen a very interesting yield curve environment, something a little bit more typical in Q3 that allowed us to redeem some of our callable issuances, and that really helped us to actually smoothen out our net effective spread. That was offset by some volatile floating rate funding that we experienced in the first quarter of this year. But again, I highlight these two dynamics because it gives you a sense of just how well hedged our funding strategies are. And as we head into 2025, I think the markets were certainly expecting a more rapid easing cycle than what has been communicated by the Fed as we head into 2025, but perhaps, one rate cut scheduled for the second half of the year. So as we think about our funding strategy, we mirror that very closely with how our businesses and our business segment outlook and you just heard that from Zack. We expect to be able to deploy a number of the tools that we have at our disposal, whether it's our fixed rate callable instruments. So let's just say we see an easing. A faster easing than anticipated that should actually give us a little bit of an asymmetric benefit relative to rates staying flat or trend a little bit higher, and that has to do with the fact that we took advantage and cropped off a little bit of net effective spread while rates remained high by bringing in more fixed rate cost. So as we head into a what I would call a medium term easing cycle, you should really start to see our net effective spread, everything else remaining equal benefit from that hedging strategy that arises from a fixed rate callable strategy. The only other point that I would make, and I think you alluded to this initially, is what happens if rates stay pretty high, I would say that, assuming a flat to perhaps 100 basis point shock on our existing portfolio. You can expect the effect on our net effective spread coupled with just how we think about our loan portfolio to result essentially in a flat net effective spread projection. Bose George Yeah, that's great. That's very good detail. I appreciate that. And then actually in terms of on the credit side, you're moving into higher product spread over time. Is there a way to think about the impact of that on credit over time? The credit loss content, relative to your historic content on the farm and ranch, course. Has obviously been minimal, is there kind of a way to think about what's, I mean you've noted that a lot of this stuff is idiosyncratic, but is there a way to think about, where the run rate could be versus your core farming ranch where you know the run rate is so close to 0? Bradford Nordholm With the credits that we're focused on right now that require a bit more attention, substandard, it continues to be pretty idiosyncratic. I think on prior calls last year we were talking about some of the stresses with permanent crops and specifically almonds in California. Well, we have a situation where actually almond prices have rebounded quite nicely. That will kind of play through the system. Over the next year, it doesn't immediately result in a pickup because of contracts and other factors. And another one and Aparna mentioned this, we have a renewable energy project that requires some additional attention that had to do with some failure of equipment during construction. It's a situation where we expect that between insurance and contractors, it'll get back on track just fine, but in an abundance of caution we have downgraded that and of special provisions. So that's a situation where we could see some reversal. So it continues to be very difficult to project a systemic or sector, credit problem for us. It tends to be kind of one asset at a time. And while the numbers say that we're in a more challenging part of the credit cycle. Both 96 day delinquencies as well as sub standards are up. At the same time, the situations that we see continue to be kind of related to very special situations. So I'm reluctant to provide any guidance on how that very favorable historic experience, will be trending up in the future. There's not current evidence to say, yes, we're going to have a problem here or there, it tends to be one at a time. Bose George Okay, that's definitely helpful. Sorry, go ahead. Aparna Ramesh And if I might just add one comment to what Brad said, which will likely help you if you think about this, and you know it does point to the fact that we tend to have a more conservative outlook in terms of credit, and this has to do with the way our expected loss models work. So when we start to see volume shifting towards more creative lines of business that also draws more expected loss estimates of projections, and so that tends to smooth out over time. So that's just something to keep in mind as you're thinking about, modeling some of this, but it sort of all gets booked at once and then you don't have to worry about it get the volume in. There's a little bit of. Bose George Okay, great. Thanks. And then actually one political question, obviously a lot of noise and things happening in DC, but specifically in terms of the renewable renewable energy business. The Inflation Reduction Act provided a lot of funds for that. Is there any indication that, there could be changes in sort of how the level of support for projects there or just any color in terms of what could be changing in DC relative to that? Bradford Nordholm Sure, a couple of thoughts on that. First of all, you've had some reports, for example, of grants being frozen by USDA for renewable energy projects and those things. The projects that we're financing are really not grant dependent. They're more investment tax credit dependent. And so it's important to start off by making that distinction. Where exactly the administration and Congress, because it'll take a change in tax law, because the tax benefits associated with these projects remains to be seen. But a couple of points. First, the projects that we have financed, those credits are locked in and their credits, they're not grants. Second, that when you look at congressional support. For the tax credit elements of the inflation Reduction Act, particularly as it relates to some of the projects, for construction of new energy infrastructure and certain types of renewable energy. A lot of that money has been spent in traditional Republican districts and it's quite popular. So I think we're taking a wait and see attitude. We are very much comforted by the fact that what we have on our books is locked in, and if things change, we can adjust our origination accordingly. The final point I would make is that these remained huge addressable markets for us. So when you look at the increase in our renewable energy segment on a percentage basis, it's, pretty impressive. On a notional basis, it's becoming quite impressive. But relative to the addressable market, it's still but a drop. And so, we're going to continue to be very disciplined in what we originate. We're going to continue to leverage the relationships that our key professionals have with other industry players to focus on quality projects and if there are changes in tax law, we will adjust accordingly. We're not in a position where we can't make those adjustments in a nanosecond, if we see something unexpected or negative coming out of tax legislation, for example. Bose George Okay, great. Thank you. Operator (Operator instructions) Your next question comes from Gary Gordon. Gary Gordon So I had several questions. Most are asked, just one last one on the loan loss reserve, so you described the the credit issues last year as idiosyncratic. And those were dealt with with specific reserves and charge offs. Overall though, the the reserve was up by about $7 million. So the question is where do we go from here? Are there This introduce a period of, steadier increases or not, so I guess maybe I? But the question is, since you've discovered some idiosyncratic issues, is the expectation that's part of your business going forward, or was this sort of a catch up in the reserve to reflect that things can happen? Just trying to think about the extent of the reserve build up last year and what that means going forward. Bradford Nordholm Yeah, I'm going to turn to Marc Crady to give you some additional color on this. But let me just first start by saying that for a $30 billion dollar balance sheet of $7 million dollar additional reserve is nothing compared to other financial institutions. And it kind of sticks out because, it's maybe a bit more for us, but relative to other institutions and relative to our credit, our capital, pardon me, relative to our capital. It's extremely minimal. And I also know that it's very difficult to provide, more specific because these situations do continue to be pretty idiosyncratic, but let me just turn to Mark. Marc, maybe you can come off mute and let me turn to you to provide a little bit more color to help address Gary's question. Marc Crady Good morning, Gary. First off, I would say, the increasing allowance did not reflect, any sort of catch up. I'll talk about the allowance in terms of the entire year of 2024, so the allowance increased by about $11 million. $2 million was a farm and ranch loan we talked about in the second quarter. Third quarter we increased the allowance by about a million dollars on another farm and ranch loan. And then earlier in the opening remarks and Brad mentioned the renewable energy loan that we took a 14 provision in the fourth quarter. So those three together represented $6.5 million of the $11 million dollar increase for the year. And the remainder, represented, various other downgrades, primarily the results of the agricultural cycle and then volume growth, we had significant volume growth in our in our new corporate segments which kind of required a bit more capital than farm and ranch. So again, I'll just sort of, emphasize it wasn't a catch up in in 2024, really, continue to be sort of idiosyncratic, loans that we saw during the year. If we got let's say 0 idiosyncratic issues this year, presumably the reserve wouldn't have to change materially. Bradford Nordholm I think that's right. Keep in mind, Gary, that, loan growth is one of that. The other thing though that I want to mention in response to your question of whether this is catch up, there was a time in my career a long time ago when management had significant discretion on how those alls were funded. That is not the case today, these allowances are highly challenged and scrutinized by both our auditors, and our regulators, and so we follow very strict formulas that are aligned with the classifications of the loans and the models that we use for allocating allowances when we do new business. And there's very little discretion in there, so what you see is what you get. And if something reverses, we suggest that you could see a reversal in this renewable energy alone, for example, if something reverses, it'll go down and if something comes on, it'll go up, but we can always point to very specific situations that are the cause of that. Gary Gordon Okay, thank you. Operator There are no further questions at this time. I will now turn the call over to Brad Nordham for closing remarks. Bradford Nordholm Thank you, operator, and thank you all for participating. I really do appreciate it. We, learned something hearing the questions and what's on your mind. And to that end, if there are follow-up questions, please reach out to Java. We want to be very transparent and thorough and to you. We will host our next regularly scheduled call in May. At that time we'll be reporting our first quarter 2025 results, and as I said earlier in my comments, we are very optimistic about 2025 and for that reason look forward to having that call with you. In the meantime, all the best for a little bit warmer weather for most of you, and thanks again for your participation. Operator Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in FA please disconnect your lines. Sign in to access your portfolio
Yahoo
29-01-2025
- Business
- Yahoo
Q4 2024 JetBlue Airways Corp Earnings Call
Koosh Patel; Director of Investor Relations; JetBlue Airways Corp Joanna Geraghty; Chief Executive Officer, Director; JetBlue Airways Corp Martin St. George; President; JetBlue Airways Corp Ursula Hurley; Chief Financial Officer; JetBlue Airways Corp Jamie Baker; Analyst; J.P. Morgan Daniel McKenzie; Analyst; Seaport Research Partners Duane Pfennigwerth; Analyst; Evercore ISI Tom Fitzgerald; Analyst; TD Cowen Scott Group; Analyst; Wolfe research LLC Michael Linenberg; Analyst; Deutsche Bank Catherine O'Brien; Analyst; Goldman Sachs Ravi Shanker; Analyst; Morgan Stanley, Research Division Savi Syth; Analyst; Raymond James Tom Wadewitz; Analyst; UBS Securities LLC Steve Trent; Analyst; Citi Operator Good morning. My name is Christa, and I will be your conference operator today. I would like to welcome everyone to the JetBlue Airways fourth-quarter 2024 earnings conference call. As a reminder, today's call is being recorded. (Operator Instructions) I will now like to turn the conference over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir. Koosh Patel Thanks, Christa. Good morning, everyone, and thanks for joining us for our fourth quarter 2024 earnings call. This morning, we issued our earnings release and the presentation that we will reference during this call. All of those documents are available on our website at and on the SEC's website at 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. 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 1995. Such forward-looking statements include, without limitation, statements regarding our first quarter and full year 2025 financial outlook and our future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational and financial targets, our business strategy and our plans for future operations and the associated impact on our business. All such forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from those 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 a 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 this 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 the 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 a reconciliation to the corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website and on And now I'd like to turn the call over to Joanna Geraghty, JetBlue's CEO. Joanna Geraghty Good morning, and thank you for joining JetBlue's Fourth Quarter 2024 Earnings Call. Before I begin, I want to take a moment to express our sympathy and support to those affected by the devastating wildfires in Los Angeles, especially several of our crew members who have experienced tremendous loss. We ended the year with momentum, and I am pleased to announce, for the fourth quarter, we generated a positive adjusted operating margin of 0.8%, over 2 points better than in 2023. 2024 was a period of transition for JetBlue. And at the onset of the year, we introduced a new leadership team who worked expeditiously to launch our stand-alone strategic plan, JetForward, last July. This plan is fundamental to achieving our goal of returning to sustained profitability. Though we weren't profitable for the year, we made progress in 2024, with operating margin expansion during the second half of the year. I'm very proud of the achievements so far, and believe that the early results bear evidence that we are taking the right steps towards profitability. Turning to Pages four and five of the earnings presentation. At the start of 2024, we knew we had big challenges to tackle, including evolved customer preferences, ongoing issues with Pratt & Whitney, air traffic control and costs growing faster than revenues. JetForward was designed to leverage our strengths to combat these challenges and put us back on a path to profitability. With great urgency, we announced and implemented over a dozen different strategic initiatives and made progress in every facet of our business, including customer satisfaction, crew member engagement and operational performance. We launched a multiyear investment to improve operational reliability, and we are seeing benefits across nearly all the metrics that we track. For example, on-time performance was 6 points better in 2024 than in 2023. Net Promoter Score improved by nearly 10 points. And we ranked 6th place overall in Wall Street Journal's 2024 Airline Rankings, improving three spots from last place overall in 2023. We closed 15 Blue Cities and redeployed over 20% of our network, realigning our network into our core strengths on the East Coast. We refocused our LAX footprint and boosted flying across New England and the Caribbean. We reinvested in our core Florida franchises and expanded our San Juan focus city, with the addition of a crew base and more flying. We also further seasonalize our transatlantic line in the winter, creating new destinations for Mint aircraft. Many of these changes are now in their early stages of ramp. We also announced and implemented a variety of changes to our products and perks to ensure we are evolving our offering to deliver the experience our customers want. We rolled out preferred seating, added multiple loyalty and distribution partners and enhanced our Blue Basic offering by adding back a complementary carry-on bag. This initiative has outperformed our expectations, and our data shows we are attracting incremental customers to JetBlue. To secure our financial future, we deferred $3 billion of capital expenditures to 2030 and beyond, and raised significant strategic financing to provide runway for JetForward. These moves strengthened our liquidity position and will ensure we have the runway in place to achieve the benefits of JetForward. Alongside implementing these changes, we announced additional initiatives, which launched this year and next, such as EvenMore, domestic first class, lounges, a premium co-branded credit card and a new cost transformation program. JetBlue has gone through immense change, and feedback from our customers has been positive. Crew member sentiment on the strategy has also been encouraging, with crew member engagement scores up year-over-year, demonstrating better alignment across the organization in support of executing JetForward. Importantly, even as we take steps to evolve our offerings to meet the needs of customers today, I'm proud that our core product offering was once again rated best in the industry. In 2024, we were awarded the Best Economy Class across US Airlines by the Points Sky for the fifth time, boosted by our changes to Blue Basic and the personalization efforts we've implemented. The progress we made during 2024 combined with robust fourth quarter results strengthens the confidence we have and our ability to deliver on our commitments in 2025. Now shifting to Slide 6 to review fourth quarter performance. For the fourth quarter, we outperformed across all metrics relative to our updated guidance, enabling us to generate adjusted operating income of $18 million. We saw benefits from our continued investments in reliability as we persevered through and quickly recovered from inclement weather and ATC challenges over the holiday period. The operation delivered a completion factor of 99% in the quarter, and on-time performance improved 5 points year-over-year despite navigating more air traffic control programs than in the fourth quarter of 2023. The improved operational performance also benefited our fourth quarter CASM ex fuel growth, which finished better than the low end of our revised guidance range. Revenue beat our revised guidance midpoint by 1.4 points, aided by a healthy November and December holiday season and the performance of our 2024 revenue initiatives. These initiatives drove $395 million of revenue for the year, $95 million over our target of $300 million. Encouragingly, this was quicker ramp than we anticipated, and was originally part of the forecast we expect for JetForward in 2025. As a result, we are pleased to say we've already captured $90 million of our $800 million to $900 million target for incremental EBIT through 2027. Going forward, we plan to provide biannual updates on the progress of JetForward, with our next update scheduled for our July 2025 earnings call. We finished 2024 with a higher operating margin than we expected in July when we launched JetForward. This strong performance, combined with benefits from lower fuel, resulted in 2024 operating margin 3.5 points higher than what was implied by our July guidance. Turning to Page 7. In 2025, we plan to build an even more reliable and resilient operation as we continue refining our schedules to further improve on-time performance, enhancing the tool set in our system operations center and investing in technical dispatch reliability to reduce controllable cancels. Marty and Ursula will provide more detail on what to expect from our other priority moves this year. In all, we believe JetForward is on track to deliver about $200 million of incremental EBIT contribution in 2025. As a result, we expect to achieve a full year positive adjusted operating margin ranging from 0% to 1%. We recognize, however, there is still significant room to grow and close the gap to our industry peers. The Pratt & Whitney aircraft groundings have been and will continue to be a significant impediment to margins in the near term. We believe the groundings had a direct negative impact on operating margin of approximately 2.5 points in 2024, and we estimate that direct impact will grow to 3 points in 2025, as AOGs are expected to increase to the mid- to high teens. Ursula will expand on the breakdown of this impact. This is a pivotal year for JetBlue, but also for the industry. With a new administration's in Washington focused on efficiency, there is a real opportunity to structurally improve the FAA and fix the air traffic control challenges our industry has been plagued with. This could represent a clear benefit to the traveling public and another tangible tailwind if a focused effort is undertaken. We look forward to partnering with the new leaders at the DOT and FAA to help make this happen. I'm excited about the opportunity in front of us. And as we approached the 25th anniversary of JetBlue's first flight in February, I am confident we are executing on the right plan to usher in the next 25 years of flying. JetForward positions us to lean into our historic strengths, adapt to a changing industry and meet our commitments to our shareholders, customers and crew members. The first commitment of which is to run a sustainably profitable business, and we will continue to work with absolute urgency to get there. As we close the chapter on 2024, I would like to share a heartfelt thank you to our crew members who continue to deliver exceptional customer service, while managing immense change. I would also like to recognize the efforts of those that stepped up during the holidays. Without your commitment, meeting our goals would not be possible. We have incredible momentum coming out of 2024, and I'm excited to build on it in 2025. Over to Marty for a commercial update and outlook. Martin St. George Thank you, Joanna. I echo your thanks to our crew members. Thank you all for delivering the JetBlue experience to our customers day in and day out, especially over the busy holiday season. Turning to Slide 9. Fourth quarter revenue performance was solid, with unit revenue growing 3.2% year-over-year on 5% less capacity. Close-in demand was strong in the November and December holiday peaks, and helped to drive about 1.5 points of unit revenue improvement versus our initial guidance. Unit revenue was strong across many geographies. On the transatlantic front, we saw unit revenue ramp nicely as the region continues to mature, particularly as we enter our first winter with a more seasonal schedule. In our Latin leisure and VFR flying, we are pleased with the RASM improvements we saw in the first half -- excuse me, in the second half, which recovered sequentially as competitive capacity growth slowed from the first half. Our transcon franchise continued to produce healthy year-over-year RASM, supported by strong Mint performance. Across Mint and EMS, unit revenues were up in the high single digits year-over-year in the fourth quarter. The success of Preferred Seating in 2024 is another testament to the strength of the premium leisure customer segment. It is healthy and growing, and we are enhancing our suite of products to better serve those customers. Loyalty also drove strength during the quarter, now accounting for 12% of our total revenue, which is a multipoint improvement from where we were in 2019. Spend was up high single digits year-over-year and active TrueBlue members were up low single digits, exemplifying that, while the core airline may not be growing, our customers are driving outsized loyalty growth through their positive responses to the JetForward strategy and the enhancements to our program. Fourth quarter benefited from our 2024 revenue initiatives, which generated $395 million of top line benefit for the year. The breakdown of these initiatives can be found on Slide 10 of the earnings presentation. Our revised the Blue Basic carry-on baggage policy and preferred seating were the key contributors to quicker revenue capture in 2024. The progress of these revenue initiatives is only the beginning, and it provides us with significant momentum headed into 2025. Turning to our first quarter and full year outlooks. First quarter capacity is planned to be down 5% to down 2% year-over-year. And for the year, capacity growth will be roughly flat compared to 2024. In the first quarter, we expect year-over-year RASM in the range of down 0.5% to up 3.5%, with the shift of Easter back into the second quarter expected to be a roughly 1.5 point headwind. As a reminder, the first quarter is historically slower period of flying for leisure airlines, with many trough weeks. We've also redeployed about 20% of our network and much of it is in the early innings of its ramp. In the first quarter, we are seeing elevated competitive capacity in many of these markets, particularly in the Northeast of Florida. We expect competitive capacity will continue to ebb and flow, and we remain committed to competing in these geographies, core to our JetForward strategy. As we look to the rest of the year, the continued execution of our JetForward plan is expected to propel unit revenue growth, higher than first quarter level. For the full year, we expect RASM to increase 3% to 6%. In May, we will launch new daily nonstop service to Madrid and Edinburgh from Boston as part of our efforts to expand and further seasonalize our transatlantic flying. Earlier this month, we made an additional network announcement, adding even more summer seasonal destinations in support of flying the best East Coast leisure network. And as we continue to take a hard look at group profitability across our network, we will plan to remain nimble and dynamic in our network optimization efforts. In 2025, our Products and Perks will also take a step forward, complementing changes to our network. In addition to the merchandising changes to EvenMore announced last quarter, we are updating the onboard experience to elevate the offering. EvenMore will now include dedicated overhead bin space and soft product enhancements, among other perks. These updates go live today and position us well to compete with the premium economy our domestic peers offer. We also recently added a new way for customers to pay for their flights using Venmo, demonstrating our commitment to enhancing customer experience on every step of the travel journey. Over the course of the year, several JetForward initiatives announced last year are also scheduled to go live, including our premium co-branded credit card, which began accepting applications very soon, and our lounge JFK Terminal 5 set to open in the fourth quarter. Unlocking incremental margin accretive revenue is crucial to the success of our plan and the progress for the shareholders. Between the momentum we have from the 2024 revenue initiatives, the improvement in customer satisfaction as a result of a better operation, the ramp of our network changes and our 2025 JetForward initiatives, I am confident we have all the right pieces in place to generate meaningful unit revenue growth and achieve positive operating margin. Now I hand it over to Ursula for a financial update. Ursula Hurley Thank you, Marty. In the early months of 2024, we refocused JetBlue on a path to profitability, which we have moved quickly to execute against. We exceeded our revenue initiative forecast of $300 million by $95 million, delivered on all of our commitments since launching JetForward, concluded our structural cost program, delivering $190 million of benefit at the top end of our forecasted range, beat our CASM ex fuel guidance four quarters in a row and delivered full year 2024 CASM ex fuel in line with our initial January guidance. Encouragingly, we ended the year delivering positive operating margin for the second half, a significant improvement from our July expectations. We also acted quickly to secure our financial future, deferring CapEx and raising over $3 billion of strategic financing, helping to provide JetForward the runway it needs to generate meaningful benefits. Our new leadership team delivered on our refocused commitments in 2024, and we aim to do the same in 2025. Now turning to Slide 14. For the full year, 2024 CASM ex-fuel grew 6.6% year-over-year, firmly within our initial guidance of up mid- to high single digits year-over-year. Through the combined benefits of controllable cost reductions as well as reliability-driven cost efficiencies, we were able to offset about 1 point of headwind from the Pratt & Whitney compensation accounting change and 0.5 point of headwind from targeted capacity reductions in the second half. For the fourth quarter, unit cost increased 11%, which beat our revised guidance of 12.5% to 14.5%, driven again by operational efficiency, controllable cost reductions and year-end adjustments. With our performance over the year and in the fourth quarter, we have sustained momentum on controllable costs heading into 2025. Looking to this year, we expect aircraft on the ground from the GTF engine issue to rise to the mid- to high teens, resulting in flat capacity and CASM ex fuel up 5% to 7%. And with the help of strong unit revenue growth, we are forecasting positive operating margin in 2025, in line with the goal we first stated back in July. As Joanna mentioned, the AOG has represented a significant headwind to our operating margin performance in 2024, and we estimate that impact will increase to about 3 points of drag to operating margin in 2025. We've broken down this impact on Slide 15 of the earnings presentation. The direct impact includes the variable profit and staffing efficiencies we lose by not flying all of our available aircraft, and also the net cost from extending our A320 fleet. It does not include the indirect impacts to JetBlue, such as impacts to our market share and gate utilization. This situation is fluid, but ultimately transitory, and the margin headwind is expected to resolve as the grounded aircraft count begins to decrease, which is expected to occur in the next year or 2. In the meantime, we plan to continue employing creative growth and cost optimization strategies to offset as much of the impact as possible. We expect CASM ex-fuel growth to remain slightly elevated in the first quarter of 2025, driven by the strategic capacity reductions during the trough, lapping against our 2024 pilot wage rates step up and the timing of maintenance. As a result, we anticipate CASM ex fuel to be up 8% to 10% in the first quarter. Over the course of the year, CASM ex is expected to moderate down from first quarter levels. In 2025, we expect to begin realizing benefits from the $175 million 2027 JetForward cost transformation target, with capture weighted more to the back half of the year. Cost savings include technology-driven efficiencies in our operational and commercial functions, enhanced planning and sourcing strategies and savings from a cost functional fuel burn optimization effort. Turning to our balance sheet on Slide 16. In 2025, our financial priorities remain the same. First and foremost, achieving sustained operating profitability is critical, which will set us on a path to generate free cash flow and pay down debt in the coming years. One of the first steps towards securing our financial future was our $3.2 billion strategic capital raise last August. We ended 2024 with $3.9 billion of total liquidity, excluding our undrawn $600 million revolving credit facility. The incremental liquidity is expected to fund all aircraft deliveries in 2025 with cash, adding to our existing unencumbered asset base of about $5 billion. Our CapEx forecast for 2025 is approximately $1.4 billion and $270 million for the first quarter. We anticipate ending 2025 with a healthy liquidity buffer. Turning to our fleet plan on Page 17, which has a number of puts and takes this year. In 2025, we expect 24 deliveries, 20 A220s and four A321neos. We've also been working to extend the lives of our A320 fleet. And thus far, we've taken steps to extend 14 aircraft through a combination of lease extensions, lease buyouts and changes to the retirement dates of owned aircraft. The capacity benefits from these actions are expected to phase in over several years. Finally, in 2025, we plan to retire the remaining E190 aircraft after the summer peak, fully replacing them with a more fuel efficient and customer-friendly A220s. In closing, the culmination of our efforts from 2024 into 2025 is expected to result in positive operating margin for the year, a big milestone for JetBlue and a commitment we made in July. By the end of 2025, we are forecasting nearly $300 million of total incremental EBIT generated from our JetForward program, growing to $800 million to $900 million by the end of 2027. One constant in our industry is that it never stands still, and we know we can't control every change or challenge. However, with JetForward, JetBlue is relentlessly focused on outpacing our challenges and hitting our commitments for our shareholders, crew members and customers. Thank you, and we will now open it up to questions. Over to you, Chris. Operator (Operator Instructions) Jamie Baker, JP Morgan. Jamie Baker Oh, hey, good morning, everybody. Probably a couple for Marty. So if we look at the implied revenue guide in the first quarter and compare it to the full year guide, it's clear that you're modeling for several points of acceleration. Basically, Slide 12 is what I'm referencing. But how should we think about each of those buckets of improvement? So for example, let's just pick a round number, you're modeling for 5 points of revenue acceleration. How much of that is rising tide? How much is idiosyncratic to JetForward? Maybe there's some corporate in there. You did call out the Easter shift. Yes, that's my first question. Martin St. George Sure. Thanks, Jamie. Thanks for the question. Well, obviously, the first easy chunk is Easter because it's 1.5 points move from first quarter to second quarter. And frankly, the rest of the improvement is basically the continued implementation of JetForward and the continued phasing of the benefits from all the things that we promised already and started delivering. There was no assumption in here about a dramatic change in competitive capacity. It is basically us managing what we can manage ourselves and delivering on all those commitments. So there's no sort of exogenous factor that's driving the numbers we're seeing. It's basically our forecast of the baseline JetBlue and putting on top of that, all the things that we're doing. Obviously, we look at the normal factors, GDP, CPI, competitive capacity, things like that. But we're not expecting any direction change from sort of consensus numbers out there right now. Jamie Baker Okay. And then as a follow-up to that, Marty, just looking at forward schedules, you've got some double-digit growth going on in Boston. You called out two international markets. But relative to that full year revenue aspiration, is it fair to characterize Boston as a likely RASM drag? And if so, could you quantify that? Martin St. George I mean, obviously, with the growth that it's getting, I'd say RASM growth in Boston is less than we're seeing elsewhere. I think I said the mathematical question more than anything else. I would say we're still not back to the peak we were in Boston pre-NEA. And frankly, I think what we realize in the entire Northeast, and I think that was one of the things we talked about during the communication of the JetForward plan is that we had basically given up a lot of leisure lift when we moved airplanes from Northeast leisure into basically LaGuardia to cover business back at the NEA. So we finally finished unwinding LaGuardia growth in 2024, and those ASMs are being now redeployed back into where they originally were, which was Northeast Asia. Jamie Baker Okay. Very helpful. Thanks for taking my questions. Operator Daniel McKenzie, Seaport Research Partners. Daniel McKenzie Oh, hey, good morning guys. Thanks for the time. So setting aside today's stock price, it looks like you are giving us the first -- kind of given us your -- how you're thinking about normalized earnings longer term. So given us the first piece, sorry. So if all goes according to plan, should investors simply add $650 million to their 2025 EBIT outlook to get to some semblance of normalized earnings if they want to discount back to today? Joanna Geraghty Yes. Thanks, Dan. Appreciate the question. I think maybe just pulling up a notch. Really proud of the team and the momentum that they're delivering under JetForward. We announced it back in July, and have consistently met all of our guidance metrics were outperformed in many cases. As you think about this year, we should end this year with [$200 million to $300 million] of EBIT, and you should think of '26 and '27 at similar amounts. So as we look at exiting JetForward of the commitment to $800 million and $900 million of EBIT that obviously sits on top of a constructive macro backdrop, and we're cycling against some of the Pratt headwinds. So yes, you're thinking about it absolutely in the right way. I think, frustratingly, we would love to have, I think, even faster ramp, but this is a multiyear strategy, and it's not linear, and we're focused on the long-term here in getting JetBlue back to sustained profitability. So it's going to take a little time. But really, really pleased with the progress so far. The implied guide when we launched JetForward for full year '24 was negative 4.5% op margin. We ended the year with negative 1%. So a 3.5 point improvement. This year, we're meeting our commitment to go out with a breakeven or better op margin, and that will be a 5-point improvement since we launched JetForward. So I think really good progress there and just continuing to focus on executing for the long term. Daniel McKenzie Understood. Terrific. And then, Ursula, second question on unit cost, CASM ex, the CASM ex cadence in particular. I'm wondering how that trends throughout the year? And does it imply as we exit 2025, some CASM ex directionally as we head into 2026? Or is there some perspective you can share on Pratt & Whitney groundings that could potentially impact that? Ursula Hurley Yes. Dan, thanks for the question. So I'm really proud of the team delivering on 2024 controllable cost guide that we laid out last January, despite Pratt & Whitney headwinds and also some capacity that we pulled down in the trough. Here in 2025, we're delivering exactly what we've been telling you guys, with roughly flat capacity expecting a mid-single-digit unit cost growth. Q1 is very elevated, and it's the most elevated throughout the whole year. That's really driven by timing of maintenance as well as the pilot wage rates step up that we executed last August. So CASM ex will come down in the quarters to come, and I have a lot of confidence the team will deliver on the 5% to 7% full year guide. As we look beyond 2025, the Pratt & Whitney scenario does continue to be really fluid. I do think that we will hit the peak AOG within the next one to two years, I mentioned that in my prepared remarks. If we sit here in 2026 with a roughly flat capacity number, for example, I would yet again expect that mid-single-digit range in terms of controllable costs. We do continue to see inflationary pressures. But with the launch of our new cost transformation program as part of JetForward, that is to offset the inflationary pressures. Daniel McKenzie Thanks so much for the time you guys. Operator Duane Pfennigwerth, Evercore ISI. Duane Pfennigwerth Hey, thank you. So just a follow-up on Dan's question. One of the questions we're getting earlier this year is that bridge from the March quarter cost outlook to the rest of the year and 2Q specifically. So I wondered if you had any early thoughts on the shape of 2Q CASM relative to the first quarter? Ursula Hurley Yes. Thanks for the question, Duane. As I said, Q1 is the most elevated. I do expect there to be a step down as we head into the second quarter. We're not guiding here today, but I would expect a different capacity layout as well, which you can probably tell from the forward schedules that are already posted. So I do envision us being in a slightly positive capacity environment, which should also help support the step down in Q2. As a reminder, the pilot wage rate step up what we granted last August, so that doesn't lap until we hit August. So Q2, we'll see a headwind associated with that as well. Duane Pfennigwerth Got it. And then just, Marty, can you expand a little bit on what you're seeing in Caribbean and Latin, and maybe taking the Easter shift off the table. What sort of improvement are you seeing there and -- relative to the rest of the system and maybe just talking sequentially 4Q to 1Q or 4Q to 1Q adjusted for Easter shift? Martin St. George Sure, Duane. Thanks. I'd say, consistent with what we've heard about fourth quarter results and first quarter outlook, International is a strong point for us. Latin has actually fully recovered from what we had seen at the beginning of 2024 and Latin has actually been strong for us. A little bit of pressure in San Juan, it's mostly capacity driven, but we're maintaining our customer base very well. And also transatlantic has done very well. So again, I think, consistent with what we've heard, International is a strong point. I'd say, on a relative basis, transatlantic is really not big for us at all enough to move the needle, and San Juan is a relatively big part of Latin. So overall, I think the fundamental demand profile for Latin is very strong right now. We're happy. Duane Pfennigwerth Thank you. Operator Tom Fitzgerald, TD Cowen. Tom Fitzgerald Thanks so much. Would you mind just touching on the competitive capacity in Fort Lauderdale and what you're seeing there? Martin St. George Yes. I mean it's funny. When we had gone through the process of Spirit's bankruptcy, there are a lot of conversations at the time about opportunities that may represent in Fort Lauderdale. I think if you look at the reorganization plan, they put a stake in the ground that a lot of that is important to them. And frankly, it's exactly what we had expected because a lot of those were important to us, too. Overall, competitive capacity is still down in Fort Lauderdale. So we're actually in a very a very good environment, but I don't think we're expecting any significant pull down from Spirit down there. And frankly, we're very happy with how Fort Lauderdale is performing right now. Tom Fitzgerald Okay. That's really helpful. And then I'd love to get your perspective on non-aircraft CapEx and in-flight entertainment, Wi-Fi, your mobile apps, just given kind of the arms race across the industry and making investments there. Just kind of curious how you're thinking like the size of investments you're thinking and any focus areas, love your thoughts. Joanna Geraghty Tom, thanks. It's Joanna. I can let Urs touch on the CapEx question in general. But from a Wi-Fi perspective, we've got a fully outfitted fleet of Wi-Fi partner, and it's free, and we've had that for 10 years. And we're the only carrier that can make that claim. And we continue to be very pleased with how that Wi-Fi, relative to the competition, is performing. We're obviously keeping a close eye on customer preference and the other opportunities that are out there, and we'll continue to make sure that we stay very competitive in this space. Maybe, Urs, on just the CapEx? Ursula Hurley So maybe just some color on the CapEx. So we had $1.6 billion in CapEx in 2024. So we're actually stepping down in 2025. So the guide is $1.4 billion. About 85% of that $1.4 billion is associated with not only do we have the '24 deliveries, but we also are investing in extending the A320s. And we're also investing in the ramp-up of domestic first class. So that's all embedded in the guide. The remaining 15% of the CapEx is associated with non-aircraft. So Tom, to your point, I think technology, I think airports ground equipment, those are where those dollars are going. Operator Scott Group, Wolfe research. Scott Group Hey, thanks, good morning. I just want to make sure I heard right. Is it that with the GTF issue that aircraft on the ground goes up in '26 and then potentially up again in '27? Is that right? And then any idea like when this is fully behind us as an issue? Ursula Hurley Yes. So thanks for the question, Scott. We tried to give you guys some color just on how burdensome this is to JetBlue financially, which we've highlighted all the math on Slide 15. As a reminder, we had 11 aircraft on the ground in 2024. In the guide that we're providing for 2025 today, we have mid- to high teens. And as I mentioned in my prepared remarks, we believe we are likely approaching the peak in the next year or two. So we continue to work constructively with Pratt & Whitney to gain further color, quite frankly, on '26 and beyond. Obviously, there are a lot of inputs that can materially impact the number of aircraft that we have on the ground, everything from Pratt & Whitney supply chain to their shop capacity. So it does continue to remain pretty fluid. But the next year or two, we believe that we'll be approaching the peak. Scott Group Okay. And then I'm guessing you can't say too much because you haven't announced anything yet, but any thoughts on timing for an NEA replacement? And just is that part of JetForward? Or would that be incremental to JetForward? Just how do you think about NEA? Joanna Geraghty Thanks for the question. So we're having conversations with a number of carriers right now to discuss the potential for future partnership. The judge in Massachusetts obviously laid out a framework that would be acceptable under at least the prior administration. So that's what we're looking at, but there's nothing to announce now. In terms of what's in JetForward, there's a very small amount of money associated with potential partnerships, but nothing in a very meaningful way. Scott Group Thank you, guys. Appreciate it. Operator Michael Linenberg, Deutsche Bank. Michael Linenberg Oh, yeah. Hey, good morning. Just, Marty, you withdrew from 15 cities, you redeployed 20% of your capacity. How have you seen the mix change, corporate versus discretionary as a result of those changes? And has there been a meaningful change to the booking curve, given the fact that maybe a large percentage or a greater percentage of your customers are now booking further out? Can you just talk about some of the dynamics around your mix and maybe how you sell the product? Martin St. George Hey Mike, thanks for the question. The first thing I'll say is, on a macro level, it is getting tougher and tougher to do business leisure mix post-COVID because we have the great mix of leisure in the middle to high customers who say they're on business, they take it like they run leisure more so. So it's less clear than it once was. What I will say is we've seen no significant change to the business mix that we have. And frankly, I think that's part of the reason why the city that we closed actually weren't working for us because we're carrying a lot of great leisure customers in places like Minneapolis, San Antonio, and we really weren't penetrated in the business market. So we've seen no significant change to the booking curve or the business leisure mix to that. Joanna Geraghty I think I'd just add as well, if you were at Q1 RASM, as a leisure carrier, we obviously experienced a different sort of period given the trough that it is even when you adjust for that Easter shift. In the depth, we also have the slide that lays out the timing of the network announcements, and there was a number of really meaningful Northeast changes made in the late October, November time frame from a capacity standpoint. These are all in early ramp. And as I mentioned, this isn't a linear plan and it's going to take some time for these markets to mature. Michael Linenberg Great. And then just my second, as we think about timing around first-class, Ursula, I think I heard you that some of the CapEx this year is going to be tied to the installment of first class. Will JetBlue be in a position to start selling late 2025 first class? Or is that first quarter 2026 when you can start selling the first-class product? Martin St. George Mike, I'll take that one. So there's some CapEx coming this year, which is basically the beginning of the process through seat design, certification, et cetera. The first install is actually going to be in 2026. So there will be no revenue benefit to speak up in 2025. And by the way, that is exactly how it's laid out in the phasing of JetForward. Michael Linenberg Great. Thank you. Operator Catherine O'Brien, Goldman Sachs. Catherine O'Brien Hey, good morning everyone. Just wanted to follow up on some of the corporate commentary. We've been hearing that corporate trends are seeing a bit of a pickup again this fall. One of your competitors know that Tuesdays, Wednesdays are looking better. I know you're focusing your network on your leisure DNA, but are you seeing any pickup out in New York, transcon or the traditionally more corporate leading sites like your New York to Boston flights? Just any color there? Martin St. George So what I'd say is if you look at our corporate demand right now, the last two or three quarters, we've been setting records as far as the amount of money we're getting from our corporate accounts. That being the case, corporate is still a really small part of JetBlue's revenue base. So we're talking a 9-digit number, a low 9-digit number. So it's not a gigantic number. We are seeing great numbers. But I think in looking at our network and looking at where we're flying and I think looking at our frequencies with the network as it exists, we don't see ourselves as being a big corporate carrier. And I don't think it's been big enough for us to do a significant difference on Tuesdays and Wednesdays. Catherine O'Brien Got it. And then maybe just, Ursula, if you don't mind, and more on the GTF. I just want to confirm, I don't think you're baking in any kind of compensation from Pratt into your outlook. But when do you think you'll reach a settlement on those 2024 damages or however you want to put it? And what form does that take? Is it going to be something we're going to be able to notice on the cash flow statement? And then I know you've already filled in a couple of questions on this, and I don't want to get too myopic, but when you're saying one to two years from now on the peak, does that imply the peak is sometime January 28, 2026 or later? Just any color on the GTF questions there would be really helpful. Ursula Hurley Yeah, morning. Catie, so the situation with Pratt & Whitney continues to be pretty fluid. Obviously, as we've highlighted today, it's a very material impact to our business. So the settlement negotiations are taking a while, quite frankly, because of the materiality to the business, we want to ensure that we settle with something that is fair and acceptable. So I don't have any timing on that. It's a work in progress. In regards to your last question, just about the peak, I mean, when I say within the next year or two, that means that we hit peak, quite frankly, between now and 2027. And so again, we work consistently and fluidly with Pratt. And so there are things that could accelerate this. And so we're watching it very closely. Catherine O'Brien Thanks. Totally, appreciate the moving target. Operator Ravi Shanker, Morgan Stanley. Ravi Shanker Great. Thanks morning everyone. Some of your mainline peers obviously highlighted strength in transatlantic demand in the first quarter, which, as you pointed out, is kind of seasonally weak period. Can you just talk about kind of what you guys are seeing there and potential for upside through the summer as well? Martin St. George Sure. Thanks, Ravi. I'd say, first of all, the Atlantic is still in ramp for us. I mean we added new cities in '24. We've announced these cities for '25 -- new routes for '25. So I think I look at our growth in the Atlantic is partially being strength and partially being ramped. So I don't want to get too aggressive as far as how we describe it. Most important thing for us is continued growth of yields and mid-cabin. If you look at the configuration of the airplanes, we are very heavily net focused. It is absolutely a fantastic product. I really think it's the best part across the Atlantic. And from that perspective, that's where we would like to see the growth, and we're really seeing great growth as far as net yield. So we're very optimistic about the results as the network exists right now. I will also say that we deferred almost all of our [321] deliveries (inaudible) deliveries into 2030. So I'd say you're more or less roughly what you see is what you get right now. We'll continue to treat that network and continue to move plans between the Atlantic and domestic, summer to winter, but we're really happy with the choice to fly there. We're happy with our results, and we think it's going to be a nice profit source for us. Ravi Shanker Thanks for the color. Got it. Great. And maybe as a follow-up, I just want to confirm, the $95 million outperformance in revenue capture initiatives for 2024, is that all just go forward from future periods, which obviously is also very impressive. Or are you seeing pockets of potential strength or upside, which may end up even kind of upsizing the target over time? Martin St. George So as far as how we look at it right now, it does look all to be moved forward. We'll obviously keep watching that going forward. But we've got pretty good visibility as far as things like preferred seating and the Blue Basic, and it does look like move forward. I'm not saying at some point that won't grow. And hopefully, as we grow, we'll see that grow in general. But fundamentally, we're very excited that this has come forward as it has. And frankly, I'm optimistic about all the initiations of JetForward, not just the ones that we've already launched in '24. So we're actually very excited. Again, with EvenMore just launching today. So we're actually very excited about that. Ravi Shanker Very good. Thank you. Operator Savi Syth, Raymond James. Savi Syth Hey, good morning. Marty, you mentioned pressure in the Northeast and Florida. But I think to Tom's question, you also kind of noted Florida capacity is down year-over-year as competitive capacity. And it seems like that's the case in Orlando, too. I was wondering if you could provide a little bit more color, which cities or routes you're seeing kind of competitive pressures that you called out in like the Northeast and Florida? Martin St. George I'm not going to give a lot of color on that. And then clearly, from a competitive capacity perspective, the most competitive capacity pressure has been in Boston. But in general -- yes, in Lauderdale, in Orlando, the trends are actually good. I think some of the other cities, probably (inaudible) not as good. But I don't look at any of them as really sticking out like significantly other than Boston. Savi Syth Got it. That's helpful. Thank you. And just on the kind of fleet plan, Ursula, it looks like some of the A220s that you had thought might come in 2026 are shifted out. I was curious, what kind of drove that? And just on that investment question, is the investment in premium products on the CapEx meaningful? Or is that just part of the kind of the aircraft and not really meaningful? Ursula Hurley Yeah. Good morning, Savi, the aircraft order books have been really fluid with delays and such. So we just adjusted our delivery schedule to reflect the most recent timing information from Airbus. So to your point, there were a few puts and takes between '25 and '26. I will mention, as you look at the overarching JetBlue aircraft order book, we've talked a lot about Pratt & Whitney today. And within the next one to two years, hitting the peak AOG. And I do just want to remind everyone, at some point, this situation will become a tailwind. And we will get airplanes back. And as you look at our order book in '27 and beyond, it actually lines up pretty well in terms of when we think we're going to get aircraft back due to the AOG issue. In regards to your last question around CapEx. The investment into domestic first class. That investment is going to be approximately $400 million over the next few years. And a small portion of that is included in the 2025 guide, as Marty mentioned, just for the start-up of the ramp of the program. But I do want to remind everyone, I mean between the domestic first class as well as the A320 extensions, I mean, these are very accretive ROI positive and in a timely manner. So I feel good about the investments that we're making. Savi Syth Makes sense. Appreciate the call. Thank you. Operator Tom Wadewitz, UBS Financial. Tom Wadewitz Yeah. Good morning and thanks for the question. I wanted to circle back a little bit to, I think, where Jamie kicked off the Q&A, just asking about RASM. It seems to me that one of the big concerns is just your 1Q RASM outlook looks a fair bit weaker than the industry. Marty, what's the framework? Would you expect like 2Q or second half for the RASM performance for JetBlue to kind of get back in line with what we see for the broader industry? Or how do you think about the framework for that to be the case? Martin St. George Well, Tom, thanks for the question. So first, let's talk about the sequential numbers that we're fleshing right now. Again, we're very happy with the fourth quarter overperformance, and we talked about that being very focused on really good results in the peak. As you sequence in the first quarter, if you look at the historical trend of fourth quarter to first quarter RASM, and we've got 12 years' worth of data. We're actually above that normal trending. So what we're producing in first quarter of '25 is actually higher than you would normally see for that time period, and I attribute one of that to JetForward. I will say, versus the rest of the industry, we do face a competitive capacity headwind. I think if you look at the big 4, they're all facing competitive capacity numbers that are under 1%, some of them like 0.3% 0.4%. United is actually negative. Our competitive capacity number is 3%. So I think looking at the headwinds that we're seeing in the first quarter, I feel great about where we stand as far as RASM, given all the things working against us. And I give a lot of credit on that to JetForward, the initiatives we've laid out already. With respect to the improvements across the rest of the year, obviously, the headwind we get in the first quarter from Easter comes right back as a tailwind in second quarter. So that 1.5 points bad guy in the first will come back at the 1.5 points good guy in a second. And I think I want to be clear, as we go through the year, we're not making any big assumption about competitive capacity coming down. Back to the point I said to Jamie at the very beginning, there's no sort of a secret assumption that competitive capacity goes back down to 1% or 0.5%. I think it is at 0.4% right now. We're basically looking at the industry as it stands right now. A lot of this is just execution of the plan as we've laid it out. And I think what we've seen so far as far as the ramping of JetForward, how we've seen the network changes take. And I think we were especially happy with what happened in the fourth quarter with places like [Guayaquil] where with the demand we're able to drive during the peak in the market, (inaudible) the market that was 25 years served by one of our big competitors to Florida, and we had success there very, very quickly, especially in the peak. So I feel very bullish about JetForward as it goes forward. I just want to stress, there are no numbers games as far as we need some sort of a big industry change to get to [3 to 6]. That is core of stuff we can control. Tom Wadewitz Okay. Great. And for the follow-up question, just wanted to ask about how we think about the kind of key levers and potential timing to get to free cash breakeven? It would seem like this year, potentially next year, you'd still be looking at a fairly significant use of cash. So I wanted to see if you could kind of multi your offer, any thoughts about is that more so driven by a CapEx reduction that might come in '26 '27 or is it just a matter of kind of keep going on JetForward and get the operating margin up? Ursula Hurley Thanks for the question, Tom. So we executed in aircraft deferral last year, and it paves the way for us to execute on JetForward and get the business healthy again and get us to consistent profitability, which is the number one priority. Number two is in getting the free cash flow positive. And I do feel like with the deferral in the way the order book lays out and just with the expected progression of JetForward, there is a means to get to positive free cash flow within the timing of the Jet Forward program. Priority number three will then be to start delevering the balance sheet. So make no mistake. We don't like where our metrics lie today and we want to get back down to more competitive reasonable balance sheet metrics. So we got to continue executing on JetForward, get to consistent profitability before we can talk about taking steps to delever the balance sheet. Tom Wadewitz Great. Thank you. Operator Steve Trent, Citi. Steve Trent Good morning everybody and thanks very much for taking my questions. If I could follow up on the alliance question, I think as Scott Group maybe asked earlier, great color on what you said for how you're thinking about the US. But what about, potential alliances overseas, sort of existing ones that are in place. And and, and maybe any new opportunities given, some of the Latin American Airlines today are going through, you know, some gyrations. Martin St. George Steve, thanks for the question. Well, first, I guess, worth mentioning, we have 52 or 53 alliance partners across the world, including a lot of international carriers. I think we're especially lucky that New York is a very, very important gateway for international carriers, and we fly a lot of connecting lift there. So if you're not aligned with one of the other airlines there, we're a great partner as far as getting access to the interior US, where the fares tend to be higher. And we continue to grow that portfolio even as we negotiate with domestic carriers. We just added British Airways in I think the third quarter of this year, a limited partnership that actually continues to grow. I think there's opportunities there. We're certainly not taking your eye off the ball on that type of partnership, while we work on what might make sense for us on a domestic partnership. Steve Trent Okay. Appreciate it, Marty. And for my follow-up, I recall you guys are offering some early exits for some of your older pilots. I'm guessing this is kind of a fairly small piece of the pie in terms of your labor cost and there would not be a significant cash event on the back of these packages that you'd offer? Joanna Geraghty No, thanks. Obviously, looking forward to offering some early retirements from our pilots, I think it's a win-win for JetBlue and for some of our pilots who are ready to pursue something after they retire. So it continues to be a focus on how do we manage some of our elevated labor costs in a world where we have as many aircraft on the ground that we have right now with the Pratt & Whitney issue. Ursula Hurley And there will be no major cash outflow. Operator And ladies and gentlemen, that does conclude our question-and-answer session and I will now turn the call over to Joanna for closing comments. Joanna Geraghty Thanks for joining us today. Very happy to answer your questions. When we launched JetForward in July, we came out with a commitment to a 2025 year where we were breakeven or better from an operating margin perspective, and I'm so pleased that the team is maintaining those commitments that we set out to do. We've got great momentum, really great progress on reliability, beat costs every quarter in 2024 last year. And since launching JetForward, we've outperformed on our revenue guidance as well. This is a multiyear strategy. It is not linear. And many of these programs start ramping in 2025, whether that's EvenMore, which launched today, the premier card, which is launching at the end of the month or even our domestic first class which launches next year. So we have a lot happening. And there'll be a number of puts and takes through the quarter. So our focus is on the long term. Our focus is on hitting that annual expectation of breakeven or better, and we are off to a promising start. If you look at the midpoint of our '25 guide of 0.5 point, you can expect another 5 points to 6 points of margin from JetForward in '26 and '27. And then we've got the Pratt & Whitney headwind of 3 points, which will become a tailwind as we cycle through that particular situation. So all in all, when you look at JetForward, a couple with Pratt & Whitney, you should expect 9 points of operating margin improvement from 2025 on. So I'm pleased with the program and how we're executing to it and keeping our eye on the ball, which is the annual guide of breakeven or better for operating margin. Thanks for your time today, and we look forward to talking with you on the next call. Operator Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect. Sign in to access your portfolio
