JetBlue CEO Robin Hayes sent a letter to employees this week warning of rough times ahead. The Long Island City-based airline, like all other airlines, have seen a dramatic drop in travel and paying passengers during the coronavirus pandemic.
In April and possibly in May, only 7,000 customers are projected to fly the airline each day compared to the 120,000 it would typically expect.
Last year on a typical day in April, JetBlue took in about $22 million from bookings and ancillary fees. This month, the airline is now bringing in just $1 million per day (and another $2 million per day is being issued in cash refunds, pushing the company into negative territory). Additionally, JetBlue is still issuing $11 million per day of travel bank credits for canceled bookings.
JetBlue is also spending far more on running the airline than it is making in revenue and, as a result, is burning through over $10 million of savings each day. The company is cutting pay for officers (VPs and above), introducing voluntary time off programs, reducing capacity, re-negotiating Business Partners agreements, and stopping or pausing 75% of major infrastructure, technology and real estate projects.
Hayes said that many of the world’s airlines will fail without government intervention and support. The CARES Act passed by the federal government will give $25 billion to airlines and support their payroll thru September 30, 2020. JetBlue has already submitted its application to the Treasury Department.
Preserving cash is now the company’s top priority according to Hayes and the company will:
- Reduce its April schedule by at least 70%.
- Park over 100 aircraft: Just a few weeks ago, JetBlue couldn’t get new aircraft fast enough to hit its growth plans. Now, it will park over 100 planes in the Arizona desert and at cities around the country.