Good morning. My name is Cody and I would like to welcome everyone to the JetBlue Airways Second Quarter 2022 Earnings Conference Call. As a reminder, today’s call is being recorded. [Operator Instructions] I would now like to turn the call over to JetBlue’s Director of Investor Relations, Joe Caiado. Please go ahead, Joe.

Thanks, Cody. Good morning, everyone and thanks for joining us for our second quarter 2022 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and have been filed with the SEC. In New York to discuss our results are Robin Hayes, our Chief Executive Officer; Joanna Geraghty, our President and Chief Operating Officer; Ursula Hurley, our Chief Financial Officer. And also joining us for Q&A are Dave Clark, Head of Revenue and Planning; and Andres Barry, President of JetBlue Travel Products. This morning’s call includes forward-looking statements about future events. All such forward-looking statements are subject to certain risks and uncertainties, and actual results may differ materially. Please refer to our most recent earnings release and our most recent Form 10-Q or 10-K for a more detailed discussion of the factors that could cause the actual results to differ materially from those contained in our forward-looking statements, including among others, the COVID-19 pandemic, fuel availability and pricing, the outcome of the lawsuit filed by the DOJ related to our Northeast Alliance, the occurrence of any circumstances that could give rise to the right of JetBlue or Spirit Airlines or both to terminate the merger agreement, failure to obtain applicable regulatory or Spirit’s stockholder approval in a timely manner or otherwise and the potential financial consequences thereof, failure to satisfy other closing conditions or failure of the parties to consummate the proposed transaction and the possibility that JetBlue maybe unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all and to successfully integrate Spirit’s operations with those of JetBlue. The statements made during this call are made only as of the date of this call and 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 several non-GAAP financial measures. For a reconciliation of 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’d like to turn the call over to Robin Hayes, JetBlue’s CEO.

Thanks, Joe. Good morning, everyone and thanks for joining us today. I’d like to start with my thanks to our more than 24,000 crew members for their tremendous work and dedication to delivering the award-winning JetBlue Experience to our customers as we marked some significant milestones in our recovery this summer. This morning, we reported a record breaking absolute revenue results for the second quarter and we are on pace to top it again here in the third quarter and drive our first quarterly profit since the start of the pandemic. Turning to Slide 5. Before we dig into our financial results and outlook, I’d like to take a moment to discuss our recently announced agreement to acquire Spirit. I am very pleased we found the path forward with Spirit and we can’t wait to welcome the incredible 10,000 team members to JetBlue as we create a true national, low-fare high-quality challenger to the dominant Big Four airlines. Together, we will expand our uniquely disruptive combination of award-winning service and competitive low fares to more customers across the country as we combine the best of both airlines. You have heard me say it before this transaction turbocharges our strategic growth plan. It will diversify and expand our network for customers, create new jobs and opportunities for crew members and expand our foundation for profitable growth, unlocking sustained long-term value for all of our stakeholders. We remain highly confident in our ability to obtain regulatory approval no later than the first half of 2024. We expect the transaction to be accretive to EPS in the first full year following closing and to deliver $600 million to $700 million in annual net synergies once integration is complete. You can find more information about this transaction and the many stakeholder benefits on our…

Great. Thank you, Robin. I’d also like to add my thanks to our great team. Earlier this year, we made a number of operational decisions to better set us up for the summer. And while the summer has not been without its challenges, these investments are providing relief and we are pleased that our completion factor is now back above 98%. We would like to thank our team as we know it has been a particularly challenging operating environment. I’d also like to thank our industry partners at the FAA for their continued support and importantly, their transparency as we all work to bring flying back to the level and quality of the pre-pandemic environment. Turning to capacity on Slide 9. As Robin mentioned, we actually began moderating our capacity plans back in March. And following a challenging few weeks in April, we moved quickly to reset our full year growth plan. The reality is that almost no airline has been immune to operational challenges this year as the industry quickly ramped back up and it’s clear that what we experienced has now been felt by all of our peers. Frankly, it just hit us earlier given our network footprint. And therefore, we were able to reset earlier. On our last call, we announced we were taking decisive action to reduce our full year capacity plan by 10 points to build greater resiliency into the operation. And today, we are tightening that capacity range. In fact, the incremental investments for the summer partially delayed in anticipated productivity benefit into the fourth quarter. As an example, in June, we had 16% more active pilots, but 8% fewer block hours compared with 2019. We are also carrying elevated reserve levels. As we move beyond the peak summer, we expect some of these…

Thank you, Joanna. I’d also like to thank our incredible crew members for their commitment and hard work to ensure that we deliver for our customers, our fellow crew members and our owners as we lay the foundation to build back our margins beyond pre-pandemic levels and create sustainable long-term value for all of our stakeholders. I will start on Slide 12 with a brief overview of our financial results for the quarter. Revenue was a record $2.4 billion, up 16.1% year over 3. Cost per available seat mile was up 34.7% year over 3. CASM, excluding fuel and special items, was up 14.5% year over 3. And our GAAP loss per share was $0.58 and adjusted loss per share was $0.47. I am very pleased with the team’s execution this quarter to position us to return to sustained profitability in the back half of the year. Despite the operational headwinds in April, the subsequent operational investments we made and the sharp rise in fuel prices throughout the quarter, we exited Q2 with an adjusted pre-tax profit for the month of June and we look forward to carrying this momentum into Q3 and beyond. Turning to Slide 13, during the second quarter, CASM ex-fuel increased 14.5% versus 2019, below our original guidance, driven by efficiencies tied to a better operation. As you have heard, the reliability investments we made for this summer are yielding much improved operational results and have helped to derisk this summer, but they are weighing on our margin recovery. For the third quarter, we are forecasting CASM ex-fuel to increase 15% to 17%. We do expect this heightened investment to ease once we get beyond the summer peak. As a result, we expect to see some productivity improvement in the fourth quarter and into 2023. We…

Thanks, everyone. Cody, we’re now ready for the question-and-answer session with the analysts. Please go ahead with the instructions.

Absolutely. [Operator Instructions] We will take our first question. Caller, please go ahead.

This is Duane Pfennigwerth from Evercore ISI. Just on the timing of the debt raise to support the Spirit acquisition. How do you think about the timing of that? Are there sort of regulatory hurdles you want to clear before that happens and if you could comment at all on estimated cost of capital on that debt raise?

Good morning, Duane, so we currently have a 364-day bridge facility in place for $3.5 billion. We envision that staying in place until we receive regulatory approval. And then once we receive regulatory approval, we will then take out that bridge. We will assess the various markets at that point in time and focus on all-in cost of funding, and we will determine appropriately which assets and which markets to utilize in order to take out that bridge. The cost of debt in regards to the bridge at the moment is around 6%. Given the time frame in which the bridge stays in place, there are some step-up fees along the way. So that could slightly increase depending on the length of the regulatory approval. Obviously, the cost of debt when we take out the bridge facility, that could be the end of next year or early 2024. So the financing markets at that point in time could look very different than what they look like today. But you should envision us playing a keen focus on all-in cost of funding when we take it out.

Thanks. And then just for my second, there was a competitor where an extension of basically credit balances impacted revenue trends or their outlook for the third quarter. And then going through that post that call it looks like JetBlue does have some policies of sort of COVID credits that expire at the end of September. Can you comment on how many points of revenue growth or how many points of revenue are from credit balance breakage?

Duane, this is Dave Clark. I can take that one. Regarding the credits since the pandemic began, we’ve seen a higher cancellation rate and thus more credits being issued. This is especially too early in the pandemic when customers were canceling the flights in pretty high numbers. And we’ve been forecasting usage rates of the credits and recognizing increased breakage revenue since Q3 of 2020, so this is 2 years into the process for us. It’s a relatively smooth ramp for us with no large lump sort of as we go up or down. The highest breakage revenue recognition was actually the past three quarters from Q4 of ‘21 and to Q2 of ‘22, and we’re starting to normalize right now. And this is all sort of fairly low numbers, low single digits on the way up. And it will normalize at a higher rate than it was because customer cancellation behavior has changed with the removal of most change cancel fees. So on the way down, it’s roughly a 1 point headwind, but all pretty smooth and low numbers for us.

Thanks. And just to put a finer point, that 1 point headwind would be like a 4Q relative to 3Q? Is that the right way to think about it or next year versus this year?

Correct. Think starting 4Q and throughout the first few quarters of 2023.

Okay, thank you.

Thank you. We will now move on to our next question. Caller, please go ahead.

It’s Savi Syth from Raymond James. I’m just kind of curious, keeping CASM ex flattish versus kind of 2020, which, let’s say, it’s around 12.5% above 2019 on kind of mid to high single digits, that seems a little bit disappointing given that in 2020 you were supposed to have a step-down because of the first structural cost program. And you have had some kind of one-time items this year. So could you talk about what’s the incremental costs you’re seeing in 2023 that requires a new program to kind of maintain this flattish level?

Sure. Thanks for the question, Savi. So maybe just to walk forward, so the midpoint of our guide this year is 12.5%. If you take out the spring disruption costs as well as the summer investments, you get down to an underlying CASM ex of 8.5% for 2022. So next year, if you think about us growing capacity mid- to high single digits next year, that’s historically what we said is the sweet spot. You would expect us to drive, to your point, a flattish CASM ex-fuel. However, we have also highlighted that we do have some headwinds next year, one of those being we will have a small incremental impact due to the NEA. And this is really because we moved into new terminal space in La Guardia this year as well as Newark. So you’ll have the full year effect of that increase in 2023. We also have an aging fleet. So we’ve highlighted that we have a level of maintenance investment that will need to take place. And then we also have some in-flight rate increases from our new contracts that are effective in January as well. So essentially, [Technical Difficulty] our structural cost program that we rolled out today is going to help offset those headwinds. And essentially, we intend to deliver a flattish, if not better, CASM ex fuel next year.

That’s super helpful. Thank you. And can I just ask on the capacity to kind of start going back to that mid to high single-digit growth level, especially step up from third quarter to fourth quarter, what you can expecting on the resource side or expect on the operations side that’s going you confidence – you can kind of meet that level? I know you mentioned that – it sounds like the pilot soft times are coming down. But I’m just kind of curious, given the issues that the industry has been having on kind of restoring capacity, where the confidence comes from for the fourth quarter and beyond?

Yes. Thanks, Savi. I’ll take that. It’s Joanna. So we’re confident with the investments that we’ve made into the summer that we’re now in a position where we are ramped up to handle that level of capacity. We teased out some of the investments we made with pilots and additional reserves. We expect to continue some of those investments as we move forward just to ensure a level of operational reliability. Yes, there are some shorter-term summer investments that will peel off, but there is some, given the more fragile aviation ecosystem, that will stay. And we will continue to invest there. And we feel that we’re adequately staffed to handle that capacity adjustment. Obviously, the talent landscape is challenging, but the underlying infrastructure to support all of that, whether it’s training, hiring is fully ramped, and we feel good about that.

Okay, thank you.

Thank you. We will take our next question. Caller, please go ahead.

It’s Scott Group from Wolfe Research. So I just want to clarify just one thing on that CASM point about flattish. Are you talking – are you guys guiding flattish versus the up 12.5% this year or versus what you tried to talk about the more normalized underlying plus 8% for this year?

Yes, Scott. So it’s against the 12.5% midpoint of our 2022 guide.

Okay. Okay. Perfect. Okay. I just want to clarify. Can you guys share some color on the monthly sort of TRASM trajectory throughout second quarter and as you look out throughout third quarter? And Robin, I know you had some, I don’t know, cautious or maybe uncertain comments around fall and what business travel could look like. Any updated thoughts or color there?

Hey, maybe I will take that and flip it to Dave to give you some color, additional color. So as we think about Q2 into Q3, we are seeing many of the same trends that were present in Q2 carry into Q3, ultimately broad strength across most of our geographies. Transcon actually outperformed most of the geographies. And then as we look at VFR and international, the removal of the inbound testing requirements provided some nice lift there. Domestic Mint is also significantly performing. If you look at load factors, we’re back to 2019 levels, and then fares and yields for Q2 both above 2019 levels. So we’re pleased with what we’re seeing. Obviously, cautiously optimistic about the fall and seeing these trends carry into the fall. Dave, you want to add any color?

Sure. Thanks, Joanna. And this is Dave. As you mentioned, the trends continue. We’ve actually been remarkably steady throughout the quarter, ramped up really well during Q2 and then just more or less plateaued and stayed relatively flat as we move through the third quarter with the leisure bookings that we’ve taken so far into September and October remaining very strong and indicating that leisure travel should be resilient through the fall. And then in terms of corporate, corporate continues to progress. We progressed about 10 points in the recovery during the second quarter. We’ve seen that continue here for the first month of the third. We expect to see another step up in the fall driven by continued return to work after Labor Day, and there is certainly high traveler willingness to be on the road. We see that in the surveys and with all of our discussions with corporate customers. So we think the recovery will continue as we head through the fall.

Okay, thanks you, guys for the time.

Thank you. We will now take our next question.

Hi, good morning. It’s Jamie Baker at JPMorgan. Robin, we didn’t speak last week, so I did want to offer my congratulations on getting the deal announced. A question on the regulatory process. A second data request has already been made. You disclosed that. What happens from here? I mean, in the case of Alaska Virgin, they pushed back their closing date to give them more time to work with Justice, which essentially disclosed the fact that they were talking. Do you envision providing color in this regard? Are you even permitted to do so? Would a third data request be disclosed, for example? I’m just trying to think through how to monitor from the outside?

No. Thanks, Jamie, and I appreciate the comments and the thoughts about getting the Spirit transaction closed. We’re extremely pleased with that. I think we have laid out a – on the regulatory front, right through this process. I think we’ve laid out a sense that we expected this to take a fair amount of time. Obviously, we’re not in control of the time line although we are active participants in the process. And we’re going to continue to engage with both DOJ and DOT as well as we work through the process. Jamie, I don’t know at this point what will exactly say and when. I do obviously understand people want to know where we are in the process. But equally, I think it’s a process that is going to take some time, and we want to be respectful of the regulators’ view and rights to review this transaction.

Okay. That’s fair. Thanks, Robin. And second, how do you think a U.S. recession plays out for JetBlue? As a public company, you’ve only experienced a single downturn, so not a huge history to call on. But that’s exactly why I’m interested in asking the question. Thanks.

Thanks, I’m going to ask Joanna to pick that.

Hi, Jamie. How are you? So you mentioned our history. So if you take a look at how we performed during the 2008, 2009 cycle, we actually performed better in ‘09 versus ‘08. Obviously, a lot has changed. Hopefully, we don’t see a recession. But if we do, we have taken a hard look at our business model and its resilience during what we believe could happen. And we have changed quite a bit since then, I think for the good in terms of building additional resilience in. we have continued to evolve our customer segmentation strategy. As you know, premium leisure tends to be more resilient during economic downturns. We now have our Mint product, which we did not have back in the ‘08, ‘09 crisis. We also carry a higher mix of VFR traffic, which also tends to be resilient. And we saw this as – even in the face of the pandemic when there were barriers to travel, this customer segment continued to fly to see their friends and family. And then as you think about segments potentially choosing to go down sort of the segmentation ladder, the introduction of our price-sensitive product, Blue Basic, is also, I think bodes well for us. And then finally, ancillary revenue, this has only grown over the last decade. And this tends to be much stickier during the recession. So, we do think there are inherent advantages in our business model. But we also recognize that recessions bring about a lot of change and not just on the demand side, but also it could include lower input costs as well. That said, as you think about the levers that we have to pull, capacity, we have demonstrated, I think all airlines have demonstrated their ability to book full capacity in a challenging environment. And so we could slow our growth rate and obviously right-size to the demand environment. Labor, that continues to be an opportunity as we think about what JetBlue was able to accomplish during COVID with voluntary programs and crew members taking advantage of those. And then, obviously, our fleet. We do have an aging fleet, so there could be opportunities to retire aircraft early. So, again, inherent advantages in our business model we think will serve us well during a recession. But not looking at that through rose-colored glasses and recognizing that we do have these additional levers in our toolkit that we could pull if we needed to do.

You have obviously put a lot of time and thought into it. Thank you, Joanna. Appreciate it. Take care.

We will now move on to our next question.

Okay. Good morning everyone. Mike Linenberg, Deutsche Bank. Robin, just a follow-up on Jamie’s question. Obviously, it is going to be – it seems like it’s going to be a long regulatory process. But what can you do before you have gotten the full approval? Can you initiate code-sharing, frequent flyer reciprocity? Can your fleet people talk to their fleet people? I know that there are things that you can do, some of them may need DOT approval. Can you just talk about maybe some of the things that you could do or planning to do in the near-term?

Yes. Hi. Michael, yes, no, thanks for the question. Obviously, many airlines have been through this many times. So, we have a lot to learn from what others have done. And yes, it is true. There are a small number of things that you are able to sort of talk about in that period. But we are going to take a very cautious approach to that. We are going to follow our legal advice and make sure that we are doing nothing to jeopardize to close the transaction or to give concern to our regulators who are reviewing it. And so I think work is all underway in terms of some of the internal planning that we do. Right now, our focus in addition to obviously the regulatory process, which is underway, is to make sure we get the shareholder approval – Spirit shareholder approval for the transaction.

What is the data that, Robin? Have you come out with a date on the Spirit shareholder?

No. My best estimate, Michael, is sort of 60 days to 90 days, and we have to get the proxy completed with Spirit, then we have to see if there is any SEC comments on that. And then it’s got to – we have got to publish a meeting date. So, don’t have the exact date yet, but we will know more on that soon.

Okay, great. And then just my second question, Joanna, getting from a 90% completion factor to 98%, obviously a step in the right direction. But I suspect 98% is not still where you want to be, probably 99.2%, 99.3%. You did call out operational challenges for not just you, but the industry in the near and medium-term. What – how do we get to 99% plus? Do we get there by year-end? Is that a 2023 phenomenon? Every point of completion factor is probably the old saw was worth a point of margin, and I am not sure if that’s still applicable to you or not. But it does seem like there is some upside there, but it may take some time, if you can comment on that? Thank you. Thanks for...

Yes, sure. Obviously, weather and then continued ATC disruptions are what will stand in the way of improving completion factor. I will say we are nearing historical levels. And so I think we are really pleased with where we are now. The teams have done a really nice job. But at the end of the day, weather and ATC challenges continue to be sort of the impediment to getting it up above 98%.

Yes. Michael, let me just add to that. If we take July, Joanna mentioned this, but if we were to take our completion factor in July 2022 and compare it with 2019, it is extremely close. I mean I think it’s like 0.2% away. So, I think the biggest driver of completion factor during the summer period is just the amount of ATC programs that are getting put in place, primarily those are weather-connected. So, on a good day here, we will have a completion factor, I hope of as close to 100% as we can. But because of the jobs here in the Northeast and just number of ATC programs that we see on a day when you sort of a three-hour to four-hour ground delay program is pushed into New York, you are going to see the industry with a completion factor somewhere probably between 90% to 95%. And so when you average those, you kind of get to that sort of 98%, 99% summer completion factor, which I think means that we are basically completing every – almost every flight other than those that are directly impacted by an ATC program or weather.

Okay. Great for the details. Thanks everyone.

Thank you. We will then move on to our next question.

Okay. Good morning. Dan McKenzie from Seaport here. A couple of things. It’s great to see the messaging that reiterates the prior objective of achieving the same or better margins versus pre-pandemic levels. The growth in cost commentary is helpful. On the balance sheet side, it looks like the plan is for lower leverage on the standalone and/or merger scenario. And on this point, are there free cash flow targets that you can share once back to normalized levels of profitability?

Good morning Dan. Good to hear from you. So, we did highlight that post transaction, we expect to end up at 3x to 3.5x of leverage, which is below the median within the industry. Obviously, the joint combined company, we intend to generate meaningful cash flow right out of the gate. And so the focus will be on de-levering the balance sheet to get it back to an even more acceptable level to JetBlue based on our historical performance and the way in which we manage the balance sheet. So, we do believe that, that could be a fairly quick de-levering exercise once the two combined companies come together. What I will say is the synergies obviously ramp up over a multi-period timeframe. So, it will take us a few years. But the goal, obviously, will be, as I mentioned, to get even lower than the 3x to 3.5x.

Understood. On the corporate trends, I am wondering if you can just put a finer point on some of the prior Q&A questions. I guess with respect to the operational challenges, to what extent did they impact the corporate trends in the second quarter? Is there an impact on corporate demand heading into third quarter? So, I am just trying to get a better read on what’s behind the revenue outlook. And is there some pent-up corporate demand here? And when can the volumes and revenue really surpass 2019 levels?

Thanks Dan for the question. This is Dave. We saw just a little pressure, I would say at the beginning of the second quarter, more of a blip as we had the difficult first half of April slightly on the corporate side, some on the leisure side as well. But as we move through the second quarter and improved and got back towards our targets and at or above where our peers were, any of that has dissipated away. We have seen corporate sentiment continued to rebound as the operation has improved. And it’s clear that corporates are the travelers themselves, the individuals already get on the road, all the surveys show that. As return to office continues, that will help enable more trips. Certainly, corporate customers are excited to get back in front of their customers and to do face-to-face revenue-generating meetings as well as some internal work and conference work that’s been suspended for the last couple of years. So, a lot of different pieces there. The NEA is really helping to add more options for these customers in the Northeast. As our seamlessness continues to ramp up, we have seen increasingly positive sentiment from our corporate customers. And about two-thirds of them now have the NEA code-share benefits in their corporate contracts. So, things continue to improve. We don’t have a final date yet on when we will reach fully recovered. This trend, we are probably looking late this year or over the winter, but we will see how that progresses and it could happen sooner.

Thanks for the time guys.

Thank you. We will now move on to our next question.

Good morning. Thanks for taking my questions. This is Chris Stathoulopoulos, Susquehanna Financial Group. So, Ursula, or Robin, I just want to dig into this – the buckets here, you have outlined on Slide 14. The range of these numbers here, are these independent of the high-single digit ASM guide you put out, meaning if we are in a recessionary scenario and that high-single digit is perhaps 4 to 5, can you still hit these targets? And then b, how much of this, because the maintenance piece was in tech ops, if I remember, was a big focus in the last plan. So, how much of this is sort of identified during the pandemic versus a natural evolution of the plan that you envisioned as you were coming – exiting 2019?

Thanks for the question, Chris. So, first and foremost, half of the program that we have laid out is tied to enterprise planning. So, when I think of network and crew planning, we are essentially redesigning our processes to improve operability, which should result in improved cost performance. And the way in which our network has evolved given COVID, it’s the pertinent time to actually ensure that we are iterating past performance and identifying, quite frankly, the optimal intersection between network operability and quality of life for our crew. So, the ranges take into consideration the capacity growth. In regards to end-of-life maintenance optimization, the structural cost program 1.0 that we delivered on, that was really focused in tech ops on airframe and engine contracts. This program is putting technology in place to optimize, quite frankly, end-of-life retirements for aircraft and engines. This program also is focused for maintenance on operational improvements, so given how the network has evolved, having the right tools, parts and processes in place to deliver from an operability perspective. And so from a maintenance perspective, these initiatives are very different than the first structural cost program. So, all-in-all to summarize that, we feel confident in delivering the $150 million to $200 million in structural cost savings by the end of 2024 and the ranges do take into account a small capacity range.

Okay. And the flattish – my follow-up CASM ex guide through 2024, that is on a guessing on a sustained high-single digit ASM base, does that – just remind us if that includes any labor deals? And on that high-single digit ASM base, if you could any color you could break out in terms of how you are thinking about gauge, stage lengths or new markets or building out depth of schedules? Just want to understand the buildup into that ASM guide? Thank you.

So, we are technically not providing 2023 and 2024 capacity guidance. However, historically, we have provided those guardrails around mid to high-single digits being the sweet spot for JetBlue in delivering superior margins. So, that’s how I would think about the next few years. Actually, forget the second part of…

Labor.

Oh, labor. Yes. I am not going to comment on labor at this point in time. We are in discussions with our pilots, but I am not going to comment on that today. Over to you, David, any color on stage and gauge over the coming years?

Sure. I think we will see roughly what we are seeing today. Obviously, with the retirement of the E190s and bringing in the A320s, there is a bit of a gauge increase that’s well known as part of that. But in general, we will see the same sort of trends that we have had for the last couple of years.

Thank you.

Thank you. We will now take our next question.

Hi team. It’s Helane Becker from Cowen. Thank you for the time. So, just on the question of moving later, I guess did you say later this winter-fall into a new Terminal A at Newark and then new operations or new terminal at Orlando. As you think about the cost of doing that versus the benefits, can you just talk about, I don’t know, whether it’s a cost savings that you would experience with those two or maybe include La Guardia in there airports, of those three airports?

Yes. So, thanks for the question, Helane. Obviously, moving into new terminals will have an impact on the cost structure. However, we are growing in high-value geographies. So, we expect the margin production to heavily offset the infrastructure investments that are taking place. Dave – it is an enhanced customer experience for our customers, and so there are benefits there. Dave, anything else to add?

Sure. Thanks, Ursula. And hi Helane, this is Dave. In addition to the superior customer experience, there are some efficiencies as well. I think in La Guardia Terminal B, we are reducing from two terminals that we are operating before down to one. That creates efficiencies. We are also co-locating with American, which provides the efficiencies in terms of customer connections within the Northeast Alliance. So, we feel really good about that one. New York has also been a real challenge in the old terminal. There wasn’t enough space, security room, hold room space. We are pushing departures across multiple terminals as well. So, there is a lot of efficiency in just getting the customer experience to an acceptable level and then to a very good level that we are excited about there. So, certainly some benefits that come with simplifying operations into one terminal across various cities.

Thanks for that. And then just for a follow-up question on – as you think about – Ursula, since you mentioned geographies and operating in high-value geographies. Is there a way for you over maybe the next year or 3 years to move some of that capacity to other geographies that maybe are less impacted by air traffic control?

Hey Helane, this is Joanna. I will take it and then Robin, I am sure, wants to chime in. So, as you look about the Spirit transaction, that’s in part what it is about, is the ability to grow more quickly and diversify our network outside of the Northeast. If you look at the divestitures that we put out there, it’s really keeping the Northeast growth kind of in line with where it is today and growing outside of that geography. I think the piece I will point out is New York has historically been a great sort of margin-building engine for JetBlue, and it’s not fully recovered yet. And so as you think about potential upside even in the Northeast geographies, New York is one of those places where whether it’s moving to the new terminal in Newark or LaGuardia, these are long-term investments. By the way, Newark, they are tearing it down. So, there is not an option there. But these are investments we think are more than appropriate given where New York has historically been and where we think it’s going to return to over the medium-term.

Thank you very much. Thank you.

Thank you. And we will take our final question. Please go ahead.

Hi. It’s James Hollins from BNP Paribas. Just my first question, just on staffing levels. It looks like they have probably take just above 20,000. I am just wondering if that’s kind of the right number through the rest of ‘22? And maybe what the – where you would expect to be in 2023 as you look to grow what sounds like mid to high-single digit. Thank you.

Yes. I think the staffing number is around 24,000. Though I will say, roughly in line, I mean at this point, we are really hiring for just that sort of mid-single digit growth. And so part of what you saw from kind of 2020, ‘21 through today was really ramping up. We also obviously have had some elevated levels of attrition, so we will continue to hire there. But it’s largely backfilling and then just small incremental growth associated with our capacity growth.

Thanks again. And I expect I know the answer to this, but does your Atlantic strategy changed at all with the Spirit deal being landed and also in mind of the ramp-up in Heathrow costs? Thanks.

No, it’s unchanged. I mean our – as we think about Europe, it’s really flying to the markets in Europe that are most important to New York and Boston, so for example, London and others to follow. We are really looking at the Spirit transaction to help grow our footprint outside of the Northeast. To Helane’s point, we like our Northeast geography. It’s very important that JetBlue stays relevant in these markets in order to drive long-term margin success. As Joanna mentioned, despite the very strong revenue guide into New York is still ramping up. We added a lot of capacity over the summer. And as we all know, as you add that, it takes some time to ramp up. So, I think good legs on that still. And whilst Heathrow cost increases have gone up, it is a very small part of our network. And as we add Boston, it will be two departures and arrivals a day, and so sort of de minimis really in terms of the overall impact.

Appreciate it. Great. Thanks Robin.

James, go ahead, did you have a follow-up?

No, that was it.

Great. Well, that’s going to conclude our conference call for today. So, thank you so much for joining us, and have a great day.

Thank you. That does conclude today’s call. Thank you all for your participation. You may now disconnect.