Support Skift’s Independent Journalism

More travel professionals get their industry news from Skift’s trusted editors and reporters than any other source.

As it plans for a possible L-shaped recovery, with a slower rebound that does not not begin until the third or fourth quarter, JetBlue Airways is pausing aircraft cabin updates and delaying plans to expand to London. But even as it conserves cash, the airline still expects to take its first delivery of Airbus’ newest narrow-body jet, the A220-300, later this year, barring last-minute changes.

It makes some sense. At most airlines, the 2010s were all about aircraft size, with carriers taking a bigger-is-better mentality. They could pack in seats, lowering their unit costs, and watch their profits grow. JetBlue joined this game midway through the decade, racking up big margins with its 200-seat, all-coach Airbus A321s.

But the A220 might be the right airplane for the 2020s, at least in the early part of the decade. It is both an ultra-modern, fuel efficient jet, and on the smaller side for an aircraft with coast-to-coast range, seating 140 passengers in JetBlue’s configuration. That might be a sweet-spot in a world in which fewer people fly.

“We all look at business travel, and we know it is going to take some time to come back,” CEO Robin Hayes told analysts Thursday on the airline’s first quarter earnings call. “An airplane like the A220 could be really helpful for that.”

The L-shaped recovery that JetBlue executives anticipate is a much slower recovery, possibly in years, versus the so-called V-shaped recovery of a quick snapback, and the U-shaped recovery with a slower bottom trough and then an accelerated upswing.

Get the Latest on Coronavirus and the Travel Industry on Skift’s Liveblog

Other carriers have been slightly more bullish. The discrepancy could be because JetBlue, based in New York City, the epicenter of the U.S. Covid-19 outbreak, has seen a bigger hit to its business than some competitors. JetBlue’s revenues in April were down 95 percent, year-over-year, and load factors last month were less than 15 percent. JetBlue is betting it hit bottom in April, but President Joanna Geraghty said business has not improved much since.

“We envision this environment of very limited demand will continue into at least the short-, if not medium-term,” she said.

Big Changes to Save Money

JetBlue is facing many of the same cash-burn challenges as its competitors. The airline burned through $18 million per day as recently as late March, but said it is now spending roughly $10 million. By July, it said it could cut burn to between $7 and $9 million per day.

It is cutting in predictable ways. The airline has grounded about 170 aircraft, a significant portion of its roughly 260-jet fleet. It also has rapidly condensed its schedule to focus on two types of flights — connecting key cities in its network, and satisfying conditions of the CARES Act, which requires airlines to fly at least a few flights a week to most cities they served before the crisis.

JetBlue has also suspended its cabin restyling program, saying it no longer makes sense to update seats and television screens amid a collapse in demand. JetBlue has completed only about half its Airbus A320s, so amore than 60 airplanes will retain an antiquated interior for awhile.

“We appreciate the related impact on customer experience, but we do not anticipate resuming our efforts until demand improves,” CFO Stephen Priest said.

Then there’s London. About a year ago, JetBlue announced, to great fanfare,  it would begin serving Europe in 2021 with London first, followed by other European capitals.

JetBlue has postponed the plan, Hayes said, saying the airline must play “defense” by  paying back debt and repairing its balance sheet before disrupting transatlantic air travel. Still, he said, London remains a priority.

“I don’t want to be tone death to what’s going on right now,” Hayes said. “We know most of what we’ve got to do is play defense. We know we’re going to emerge as a smaller airline. But as you ask me about London, we still see that opportunity, albeit probably shifted back a little bit in terms of time.”

What Recovery Looks Like to JetBlue

As some U.S. states re-open, a few airline executives have expressed optimism that travelers soon could return in real numbers. But JetBlue executives took a more caution tone, repeatedly speaking about consumer confidence.

Like other airlines, JetBlue has already introduced several new safety measures, including blocking seats, requiring masks for passengers, and cleaning aircraft more frequently. But executives suggested it may take more to get customers to return, with Geraghty saying the industry still faces more “uncertainty.”

“I think at the end of the day, recovery is going to be dependent on customers being confident … and crew members feeling safe to work,” she said.

The airline has made some assumptions about what early recovery might look like, based on experiences with Zika and civil unrest in some of its markets, Geraghty said. Historically, she said, the airline has found travelers flying to visit friends and relatives tolerate the most risk to health and safety and return first, before travelers flying for pure leisure.

JetBlue expects both groups to return before business travelers. Since about 80 percent of JetBlue’s network is leisure-focused, Geraghty said it is set up well for any recovery.

The Numbers

JetBlue lost $354 million in the first quarter, a big swing from last year, when it made a $58 million profit.

Executives said the first two months of the year were strong, but the airline was crushed in March, when revenue fell 52 percent.

The current quarter likely will be worse, since JetBlue has very little revenue coming in. On the bright side, expenses should be far lower than in the first quarter.

Photo Credit: JetBlue Airways is among the many U.S. carriers not planning for quick recovery. JetBlue Airways