Good morning. My name is Levi and I would like to welcome everyone to the JetBlue Airways Fourth Quarter 2019 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. I would now like to turn the call over to JetBlue's Director of Investor Relations, Mr. David Fintzen. Thank you. Please go ahead.

Thanks Levi. Good morning, everyone, and thanks for joining us for our fourth quarter 2019 earnings call. This morning, we issued our earnings release, our investor update and a presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and have been filed with the SEC. Joining me here in New York to discuss our results are Robin Hayes, our Chief Executive Officer; Joanna Geraghty, our President and Chief Operating Officer; Stephen Priest, our Chief Financial Officer. Also joining us for Q&A are Scott Laurence, Head of Revenue and Planning; and Dave Clark, VP of Sales and Revenue Management. This Morning Call includes forward looking statements about future events. Actual results may differ materially from those expressed in the forward-looking statements due to many factors and therefore, investors should not place undue reliance on the statements. For additional information concerning factors that could cause results to differ from the forward-looking statements. Please refer to our press release, 10-Q and other reports filed with the SEC. Also during the course of our call, we may discuss several non-GAAP financial measures for reconciliation these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website. And now, I'll turn the call over to Robin Hayes, JetBlue's CEO.

Thanks Dave. Good morning and thank you for joining us everyone. I'll start with my thanks to our amazing team of almost 23,000 crew members. Next month, we will celebrate our 20th birthday. And I could not be prouder of the accomplishments of the JetBlue family over two decades. Our spirit of teamwork and founding values continue to shine and in 2019 alone, we received 24 domestic and international awards. These include recognition from JD Power and TripAdvisor to name just two. None of this would be possible without our crew members, who deliver our mission to inspire humanity in everything they do. Over 20 years, we have become a force for good in our industry serving customers in some of the most important markets across the United States, the Caribbean and Latin America. We have worked hard to improve our balance sheet, expand and strengthen our network and have made investments in our fleet to improve margins and returns. More recently, we focused our efforts to reset our cost structure and return to our roots as the low-cost airline. Our low-cost structure enables us to continue to offer our differentiated products and service and low fares to our customers. Since our inception as an airline that JetBlue model has had a positive and lasting impact on the US airline industry, raising the bar for improving service while also benefiting customers with lower fares. In 2019, we took further strides towards making JetBlue a better and stronger airline. In bringing this year to a close, I'd like to highlight just a few of the accomplishments of our team. We beat the midpoint of our 2019 initial cost guidance and completed our structural cost program exceeding the original goal we established back in 2016. We rolled out Fare Options 2.0, the…

Thank you, Robin. First, I'd like to also recognize the hard work of our crew members who have delivered a safe and reliable operation this past year. Turning to Slide 6 in our capacity outlook. During the fourth quarter, our capacity grew 6% in the upper half of our guidance range of 4.5% to 6.5%. Our full year capacity grew 6.6% also in the upper half of our original growth plan of 5% to 7%. This was due to improve completion factor and shifting the timing of our cabin restyling program to make up for neo delays. We saw improvements in key operating metrics in 2019. I'd like to highlight our improvement in completion factor, where we are now among the best in the industry. A special thank you to our tech ops team for their tremendous efforts to strengthen our operation. In 2019, we had almost 70% fewer maintenance related cancellations compared to 2018. These are great accomplishments considering our high aircraft utilization model and the fact that almost three-quarters of our operation touches congested airspace more than any other US carrier. Turning to capacity growth. For the first quarter of 2020, we expect our year-over-year capacity growth between 1.5% and 3.5% with a full year capacity guidance range between 5.5% and 7.5%. Quarterly capacity growth in 2020 reflects our current expectations of Airbus deliveries, as well as additional seats from our cabin restyling program. Our forecasted first quarter growth is unusually low for us. And our annual growth is over two points lower than our plan from our 2018 Investor Day. By further controlling costs, we've been able to mitigate most of the impact from lower capacity. We've also identified opportunities to mitigate potential additional aircraft delays and recently signed an agreement to lease used A321 which we…

Thank you, Joanna. I'll start on Slide 9 with some highlights from the fourth quarter. Revenue is $2 billion, up 3% year-over-year. Adjusted pretax margin was 10.9%, up 50 basis points from the fourth quarter of last year. Both GAAP and adjusted earnings per diluted share were $0.56. Our effective tax rate this quarter was 27% and 26% for the full year. Before going to details on our cost execution, I'd like to acknowledge the outstanding job of our crew members, who helped us exceed that cost saving initiatives in 2019. Despite a number of meaningful headwinds, the efforts of our teams over the past couple of years are helping reset our cost base and we'll set up JetBlue to success in 2020 and beyond. This year, we delivered adjusted EPS growth of 23% higher than our peer average. This accomplishment has set us up nicely to deliver even on current consistent estimates, the best EPS growth in our industry in 2020, significantly outperforming our peer groups. Moving to Slide 10, CASM Ex-Fuel for the fourth quarter was flat in line with the midpoint of our guidance range. Our reported figure includes a special bonus for our crew members as an acknowledgment of their outstanding efforts in 2019. If we exclude the bonus expense, our underlying CASM Ex-Fuel declined 0.9% year-over-year beating our guidance. In 2019, CASM Ex-Fuel grew 0.8% beating the midpoint of our initial full-year guidance of 0% to 2%. Again excluding the bonus, CASM Ex-Fuel grew just 0.5% for the year, well ahead of our plan. I could not be prouder of the determination of our crew members and leaders to deliver our cost targets as we return to our low-cost routes. For the first quarter of 2020, we expect CASM Ex-Fuel growth to range between 1.5%…

Thanks everyone. Levi, we're now ready for the question-and-answer session with the analyst. Please go ahead with the instructions.

[Operator Instructions] Your first question comes from Duane Pfennigwerth with Evercore. Your line is now open.

Hey, good morning. Thank you. I wanted to ask you firstly on sort of your revenue forecasting process and how you grade your own execution over the second half of 2019. Can you just let us know how you back tested and to what extent does the revenue forecasting process change based on what you learn along the way?

Sure, Great. I'll have Dave Clark to answer that question for us.

This is Dave. Good morning. Thanks for the question. We've done a lot of work focusing on our guidance accuracy and part of that's been studying the accuracy back to 2017 versus the rest of the industry. Our analysis showed we're doing quite well versus the industry until the summer of 2019. Clearly, we are not satisfied with the forecast performance of the last six months. And we've been putting significant focus on process improvement including how to account for some of the changes our network and our mix of competitors. We're doing some things like adding additional variables and being more granular where we need to. For example, we're no longer treating every ASM of competitive capacity the same. Lastly, we're also running in parallel a new forecast using machine learning. It's not ready for primetime yet but it's something we're working on we envision implementing in the future. So it's been a focus and we look forward to improvement.

Thanks for that color and just for my follow-up. Could you summarize the fee increases or the fee changes that you rolled out in the fourth quarter and how much of this impacted the fourth quarter? In other words when do we hit sort of true run rate on the fee changes you announced? Thanks for taking the questions.

And just for clarity, we rolled out fee changes last week on optimizing bank fees with self-service as well as change cancel service fee. In the fourth quarter, we rolled out Fare Options 2.0 which will ramp significantly during the quarter. We got a little bit of the benefit in the fourth quarter. We'll get a good bit in the first quarter. It's quite a ramp up but then that will continue to progress throughout the course this year. If you look at the initiatives as a whole which might be the most helpful way, we expect three points of RASM during the year, the full year and that breaks down to low to mid two points in the first half and then mid to high three points in the second half of the progression.

Your next question comes from Hunter Keay of Wolfe Research. Your line is now open.

Hey, thanks. It looks like a three more A321 are pushed out of 2020. Obviously, you guys - you know what you know and you give it your best guess based on what you know now. But what's your conviction level, Robin, around actually getting those 11 and if you were to sort of say, hey, 50:50, it could go down. I don't know, how would you kind of bracket and the rest of that? And then just to be clear are you leasing three used A321s or more and is Airbus paying for that? Thanks.

Good morning, Hunter. Thanks the question. Steve is very close to, so I'm going to throw that one over to him.

Hi, Hunter. Good morning. And as you aware from our materials, the Airbus post agreement outlines 14 neos for 2020. You're right with - we're planning the business on 11. And we have, as you can imagine an extensive relationship with Airbus and continue to be in close cooperation with them to understand their production delays. So that we can go forward and understand that. So as it stands at this point in time, we have confidence in the guide that can obviously evolve as things go forward. I reflect back to 2019, we had exactly the same conversations with Airbus. We anticipated a maximum of six aircraft in 2019 and we got six aircraft in 2019. Specifically with regards to additional [prudent] [ph] contingencies that we've put in place, as you heard in our prepared comments, we have gone ahead with an agreement to lease four used aircraft to go forward for 2020 to help us with any contingency plans should things move. I am obviously not going to get into any details of commercial agreements with Airbus, but I'm pleased, (a) with the dialogue we're having with them, (b) the transparency going forward and (c) that we have put good mitigant in place should anything change.

Okay, Steve. Thanks. That's helpful. Sorry, I didn't hear this before if you'd said it. Then just another one on the 321, how are the production delays potentially impacting your expansion plans to Europe? Is there a need, is there potential circumstance where you would need to use those planes domestically? And can you update us and where you are on obtaining slots? Thank you.

Again, I'll pick up the aircraft side of things. And then I'll get Joanna to give an update on the wider perspective with regard to slots. We remain confident in our plans to continue to grow relevance in both New York and Boston with the European expansion. Great amount of planning underway and again because of the close cooperation with Airbus we are confident with the delivery timeframes around the A321. So I'm going to Johanna to give a better perspective in terms of - our perspectives in terms of slots et cetera.

Great. Thanks, Steve. Good morning. We continue to work multiple paths around slots and a number of London area airports were confident that our London plans can work in any number of airports. And we'll update you when we have a bit more information to share.

Your next question comes from Jamie Baker of J.P. Morgan. Your line is now open.

Hey, good morning, everybody. Joanna, I'm sorry to ask modeling question and I know you talked about sequential RASM improvement and revenue initiatives going forward as the year progresses. But the revenue growth rate and I'm shifting from RASM to revenue here. In the first quarter you're guiding to kind of a 4% plus top line outcome. But this rate needs to more than double in the second half to hit $2.50. I know you've seen that sort of revenue growth in the past, but could you better break it down into the buckets that helped you get there? I mean like truly material pickup that's required?

Yes. So I think I'll first start with capacity. If you look at capacity throughout the year, you should expect stronger revenue in the first half naturally because capacity is lower. Capacity coming in the second half will pressure revenue. As you think about the revenue building blocks, so Dave mentioned we have three points of contribution associated with our revenue initiatives. We started off the year strong with good improvement from Q4 into Q1. And as we think about the rest of the year, we have good momentum on those initiatives. Dave mentioned about three points of benefit with low to mid 2s in the first half and then further ramping into the second half of the year with high to mid-3 for a total of - a total of three points. So if you think about that in their broader context, we started strong and we're on track to continue throughout the year to deliver that $2.50 to $3 of EPS.

Okay. That's so - so that implies from revenue growth rate second quarter is your peak year-over-year.

First, I'd say the first half is stronger than the back half of the year.

Okay and Steve just a quick one on the revised guidance standards. How come and don't get me wrong, I'm not critical of the decision. I'm just curious if it was something you heard from your owners. If it's just about kind of going with the flow, just wondering what the thought process was.

Yes. Thank you and good morning, Jamie. I'll just cover a couple of items. The first thing is we've reviewed this as we continue to shift towards an EPS guide as we sort of go through this and considered where we are. The core reason behind this is to drive more alignment in our guidance process with the cadence of the industry. We will obviously continue to bring the same level of transparency to analysts and our owners. And maybe just saw this opportunity just to give a little bit more clarity on the new cadence. You can expect this morning as you've probably noticed, we reformatted our Investor update which includes EPS guide. And we will give an update on RASM in the mid quarter, which is an example may come like for this court in early March. We will continue to give a final update on RASM but with broader investor update for the quarter that is actually closing. So we'll package that up together. So on the following earnings call, we can spend more time thinking about forward-looking guidance. And then as a result of that the overall traffic report ends. But investors and analysts are not losing any information. So primarily, Jamie, it's ensuring alignment with regard to the cadence of the rest of the industry.

Your next question comes from Savi Syth of Raymond James. Your line is now open.

Hey, good morning. Just a first question is just some clarification around the fleet. When did you expect those kinds of A321s that were delayed in kind of 2019 and 2020? Is it going to show up? And also just on the used aircraft is that beyond kind of the fleet plan that you have on the presentation? And are those kind of short-term leases there or should we expect them to be in the fleet for kind of more than a couple of years?

I'll take that. Good morning, Savi. So specifically, we look at this with Airbus on a year-by-year basis. And going to the next level of quarter-by-quarter basis as we walk through this. And so as a reminder we had 85 Airbus neo orders in the other book and we go through our neo progression and so Airbus to continue to deal with their production challenges. But as I said, it's good that we continue to get the visibility and we can forecast accordingly. So for me at the moment is about working this year-by-year versus worrying about when will they ultimately come because obviously certain things are moving to the right. What we've actually done in terms of our plan, as I mentioned in the prepared remarks, we have assumed delivery of 11 of the 14 neos in 2020. But it is right of us to be prudent and look around the corner and think about what's happening and so we have put these agreements in place for the four leased used aircraft which if we see further delays or further challenges to our business, it gives us some contingency as we go forward. So that's really how you should think about that. And I hope that's clear.

And just to - so is becoming the four that coming that's coming that's in addition to what's in the fleet plan in the slide deck, correct?

That is correct.

Okay. And then just say another fleet question just on the cabin refresh. Could you provide an update on how many works completed at the end of 2019 and just how you're thinking about it for the rest of the year?

So as of now we've completed 53 of our cabin restyling plans. As you think about the overall plan, we expect to complete the entire plan by, I'd say, early 2021. The original goal was the end of 2020 but due to the Airbus delays we've had to adjust the restyling schedule to partially backfill those delays so that we can maintain our capacity commitments.

Your next question comes from Brandon Oglenski of Barclays. Your line is now open.

Hey, good morning, everyone and thanks for taking my question. So, Joanna, I want to come back to your response a couple earlier where I think you said first half revenue trends should actually be stronger than second half. Are you referring to RASM or yields or were you talking about top-line?

I was talking about RASM.

Okay. And not to be too nuanced here but it does seem like to hit the EPS range which is significantly higher than your earnings level, let's call it in the first quarter, you do need to see likely favorable yield contribution even with that higher growth. So I think you were talking about three points of tailing in the first half and maybe closer to two points of tailing in the back half. How much contingency have you built in there for delays? It seems like price [Tech Difficulty]

Sorry you were just bringing up a little bit, but I think I copy you were saying, so I think we, I think I'd point you back to the initiatives as we step into 2020. They continue to ramp through the year. You should think about them in terms of the network reallocation which remains on track with benefits continuing to come in. Our Fare Options 2.0 and remember that launched system-wide in early December. So that will continue to ramp through the year and then obviously growth in ancillaries.

Your next question from Catherine O'Brien of Goldman Sachs. Your line is now open.

Hey, everyone. Good morning. So quiet there's another question on the restyling efforts. I guess, obviously, there could potentially be some risk if there were further delays, but I guess how confident are you in that current schedule. And then can you help us frame the benefit of those modifications to CASM Ex-Fuel efficient this year? Thanks.

Hello, Catherine. I'll pick that up. Just to sort of reiterate Joanna's comments earlier. So we are 53 today, we continue to sort of ramp up. We've increased a number of lines that we have on the restyling program, which is great. The other thing I would say is that we consciously decided to try and align the restyling effort with heavy maintenance checks on the airframes as best as we could. And so obviously if you're doing a full heavy check on the aircraft and doing restyling, the amount of mod time is higher. So what we've seen is we cycle through some of that is a physical mod time per restyling effort has reduced and a number of lines that we're pushing through is increased. So we continue to get such a good momentum. I think the one thing I would say about the great work that team has done is we've been reduced, we thought strategically about how we've continued to approach restyling and with the neo delays we've sort of taken a little bit of a pause, a short pause in 2019 as we go forward. And we'll continue to reassess that as we go forward, but we remain confident in the plans we have in place. The momentum that's going because it's great both not only for our customers but also for driving margin for JetBlue. Specifically thinking about CASM Ex and the dynamics of the numbers, you should think about restyling providing about two points of capacity for 2020 when you do - when you look at your models in terms of the ASM so that will provide in addition to the incremental shelves that come into the business.

Great. Thanks. And then is there a point where you will seek compensation some Airbus on the ongoing delivery delays? I guess like if that's true is there any downside risks for CapEx figures? Thanks.

Yes, Catherine, obviously, it'll be inappropriate for me to comment on any sort of commercial discussions that we have with Airbus on an earnings call. We continue to engage them. Our continues priorities is to make sure we maintain the integrity of our schedule. We deliver for our customers and we get the aircraft onto JetBlue property but at the same time obviously this has been an incredible challenge for JetBlue as we've navigated this over the last couple of years. And we continue the commercial discussions with Airbus.

Your next question comes from Helane Becker of Cowen. Your line is now open.

Hey, guys. It's actually Corner calling in for Helane. Just on Puerto Rico, I know it's early days there. Can you talk about a 50 basis point headwind occurring in 1Q? Just curious if your expectation is for that to linger into at least 2Q at this point? I'm just trying to get a sense that for how long it may be impactful. And I know that you talked about making capacity adjustments, just curious on the - their incremental capacity is going? Thanks.

Thanks. So let me just start with Puerto Rico remains an important part of our network. It's been a significant margin contributor and we see these pressures from time to time in Puerto Rico and the rest of the industry. I think if you look at last year and some of the changes we made in Punta Cana, we've demonstrated that we will not shy away from taking temporary capacity adjustments to right size the current market and demand conditions. That said we remain very committed to Puerto Rico. We do expect to make temporary capacity adjustments in the short term. It's difficult to forecast the impact of Puerto Rico. If you look at history with NASA enduring, it would tell you that this could linger. Other examples have these situations coming off much sooner. So we're watching it closely. We're doing our best to forecast what we think the impact is. And taking tactical adjustments to mitigate the demand environment as needed.

Okay. And then just on the network may be able to continue that just so you made a lot of adjustments tonight. And I know you made some more in Long Beach just curious if like if that's been rationalized enough at this point. Or maybe you can kind of talk to your process and to how you adjust your network longer term. Thank you.

Sure. So every city and every route has to earn its way into our network. The reallocations that we have done over the last year and a half are on track. And we continue to see the benefits of those changes coming in. Our focus is on growing out our key focus cities including Boston and Fort Lauderdale. And we will adjust the network to ensure that we are meeting not only our capacity commitments but also our strategic focus city plan.

Your next question comes from Joseph DeNardi of Stifel. Your line is now open.

Yes. Thanks. Good morning. Steve or Robin, you guys have clearly had the earnings guide for this year out there for a while. And you stuck by it despite a lot of changes. Can you just talk about given that we're a little bit closer to it is the high end or the low end more within reach for you all? Thanks.

Yes, Joe. I'll take that as another chance to answer a question yet really. But, no, look, I think that I'm very pleased. There were a lot of skeptics a few years ago about our delivery on our cost commitment. And I think that we have continued to demonstrate that we have laid out exactly what we said was that we were going to do. I think the benefits on restyling and network are on track. Fair Options, it's very early but we're very pleased with what we're seeing and as Dave mentioned, we have a team in revenue management and our data science team who are sort of monitoring that daily to make sure that we are getting all the benefits we expect on Fare Options and more. I'm very pleased with the sequential change in the RASM from Q4 to Q1, actually I hadn't seen a number like that at JetBlue in terms of the change other than the Easter or Passover holiday since 2016. And again, if it wasn't for the Puerto Rico impact which has been very significant, we would be looking at a two point guide into Q1. And we continue to see the revenue initiatives ramped up. And so I think that gives me a lot of optimism. Now obviously there are risks that we don't control or we can do when those risk emerges, do it and we can to mitigate them. I think we talked about that today on some actions that we've taken in Puerto Rico. And I also - we've seen some of our initiative outperform as well. So as we sit here, all of those things together it gives us confidence in the $2.50 to $3 number. There are some tailwinds that will help us. There also some headwinds that could create some pressure. So industry capacity growth has been something that has been talked about. We've talked a lot about the macro revenue environment. I mean, again, there were a lot of question on that on the last call. We believe our revenue initiatives will allow us to deliver positive RASM even if the macro number is negative. But clearly there's a risk there. So as we go through the year and we get a better line of sight on some of those things that we don't control, both the headwinds and tailwinds. We will tighten the range, we will adjust the range to keep everyone sort of up to date. But I'm very confident where we are now and even a consensus which everyone knows is below to $2.50 to $3, we're going to have industry-leading earnings growth in 2020 by some miles. And so everyone here - I can tell everyone here is very, very focused on the $2.50 to $3. And we're giving everything we've got. And I think we've seen that on many of initiatives that we've rolled out today.

That's helpful, Robin. And then maybe just a question for Dave or Scott. If I exclude the revenue initiatives from the first quarter guide, it's pretty weak even with low capacity growth. So why isn't underlying just kind of core pricing power given what seems to be kind of healthy demand. The fact that your own capacity growth is pretty low. Industry growth is relatively modest. It kind of suggests that this underlying presence isn't great or there's some erosion or that the accretion from these initiatives isn't as great as maybe you think.

Yes. I mean, I think I'd just say that there is sequential improvement as you look at Q4 to Q1 and the profits we are making there, and then Q1 into Q2, we're pleased with the improvements and the revenue initiatives just add to that. And as they ramp up through the year they will contribute to that sequential improvement.

Your next question comes from Michael Linenberg of Deutsche Bank. Your line is now open.

Hey. Two quick ones here. I guess maybe, Robin and Steve, I want to say, Robin, it's admirable that JetBlue as a company is planning to be carbon neutral for 2020. And I'm just curious it would seem that there is some cost associated with that. And yet you are maintaining the $2.50 to $3. So one, any sort of a sense that you can give on what the potential cost of being carbon neutral? Even round numbers. And then from a CASM Ex perspective, I presume anything that's tied to carbon fuel et cetera finds its way into the Ex part of the cost equation. Is that equation - is that the right way to look at it?

Hi, Mike. Appreciate the question and I will get to it, but I'd like to just maybe use this as an opportunity to kind of explain what we've done and why we've done it. I mean we do look at sustainability through a lens of long-term shareholder value creation. And I think that but the airline industry this issue presents a clear and present danger, if we don't get on top of it. And I seem to be out ahead of it. We've seen that in other geographies and we should not assume that those sentiments won't come to the US. And so it's very important that airlines get on the front foot of this which is why we did - what we did. And frankly, it's part of sort of our border ESG commitment across many areas. And I talked about some of those in my comments. So that's why we did it. I do think it's going to become a cost of doing business for the industry. In terms of specifically you're at - actual question around the offsets then I'm not going to get into that. I will say that it's fully factored into our EPS guide. And in terms of where it sits in the line, it's treated as part of our fuel cost, so it won't be in the Ex-Fuel CASM line. It'll be in the fuel guidance. So as we roll, continue to roll out quarterly fuel guidance then it will be included in that. But again the cost and the investment of this is factored into the EPS guide that we provided.

Great and then just quick my second question just if you were to sort of characterize how do you think about your relationship with Norwegian? Are they just another sort of inter line partner? Are they something more than that? The reason I ask is because when they announced that they had teamed up with you with a full-page press release lots of superlatives about JetBlue, it looked like it was something big and yet I'm not sure if it is all that big. So I'm just curious about how you characterize that relationship. Thank you.

I like press releases, Mike, that are brought on [Indiscernible]. No, Scott, do you want to take that part of the question?

Sure. This is Scott. So we did move forward with an LOI and we are in discussions about a partnership but we have over 50 partners. And we look forward to working more closely with Norwegian.

Your next question comes from Myles Walton of UBS. Your line is now open.

Thanks. Good morning. Stephen, I think you talked about finalizing the engine contract and I just wanted to be clear is it a full-year benefit to 2020 or is going to be signed sometime in the first half and annualized into 2021?

Yes. Good morning, Myles. Firstly, I wanted to say a big thank you to the team at JetBlue particularly the fleet Treasury and tech op teams who did a magnificent job over the last two and a half years in terms of aligning and renegotiating for the last pending contract. This was the final piece of the jigsaw in terms of both our airframe and engine maintenance contracts to help JetBlue navigate through the next few years. This contract specifically covering half of our engines on our existing co fleet, and will bring benefits throughout 2020 year, and so you should think about that when you're sort of baking in your models.

And just a clarification on the 190 retirement. I guess if not retiring any in 2020 should we think about them ratably retiring though as the 220s come in into 2021?

Yes. I think the way that you should think about this is a sort of one for one replacement as A220 is coming. And based on our discussions with Airbus particularly Airbus Canada and how we take things forward, we remain confident in the delivery of our first A220 at the end of this year. Obviously, it would take a couple of months to get into service. As you saw we go through the first aircraft coming to the fleet, but then you're going to have a short transition time between an A220 coming in and an E190 going out for a number of months. So as they come in, we've shared with you the order book that we have. And you can sort of think of that as a one for one replacement as A220 coming in, the E190 go out.

Your last question comes from Dan McKenzie of Buckingham Research. Your line is now open.

Hi. Good morning. Thanks. Two questions here. First of all, Fare Families 2.0 based on what I'm seeing the segmentation component, it doesn't look like it's being dynamically priced at this point. So the question is, are there IT limitations from that prevent you from doing that?

Sure. Thanks for the question. Maybe I'll just start with Fare Option 2.0 and what we're seeing in terms of the progress so far. So as I mentioned rolled out in December, 95% of the blue basic fare are now available across our network. We are off to a good start. Benefits will continue to ramp and we are, as we see it so far exceeding expectations in terms of the upsell and the buy up rates. It will continue to evolve as we step through the next few months in terms of a variety of factors around just dynamic pricing, but also as we learn more around how Fare Options works in different markets. The team will get smarter in terms of how we offer the different bundles. Dave, is there anything you'd like to add?

Just that we're very pleased with the rollout. And this year the big focus will be how do we optimize all the Bi ops, the BI ops2 Blue Bibler flew extra, all the seat pricing, looking at both traditional and new methods to optimize those as we go through the year.

I see. Okay. And then going back to one of the big revenue drivers for this year is $34 per passenger and so your revenue growing double digits. And please correct me on that but what are the components that are driving that growth exactly? I mean, bag fees of course but what are the other big drivers that are in there?

Yes. Sure. So maybe I'll set these in loyalty is the largest driver behind the double-digit growth then you can think of bag fees. We'll see an increase in bag fee this year largely associated with fare options and the unbundling of bags fees. And then there's a contribution from JetBlue travel products as well into our ancillary revenue numbers. So, overall, very pleased with the growth. Yes, it's 34 customer up 14% year-over-year, we expect as we step into 2020 to see strong growth throughout the year as well.

And that concludes our fourth quarter 2019 conference call. Thanks for joining us. Have a great day everyone.

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