Insider: JetBlue CEO discusses COVID-19′s impact on airlines
Airlines are starting to see a slight rise in bookings, but air travel remains down about 90%, prompting speculation about which carriers might go under.
JetBlue Airways CEO Robin Hayes admits he doesn’t know how quickly air travel will recover from the coronavirus outbreak, and no matter what, his will be a smaller airline.
Hayes, however, is confident that all large airlines in the U.S. will survive. He talked recently with The Associated Press about making passengers feel safe while flying, what types of trips people will take first, and how COVID-19 will bring permanent changes to the airline business.
Answers have been edited for length.
Q. How are bookings now?
A. The low point in terms of demand was around the middle of April when the U.S. domestic air system was carrying about 2% to 4% of what they normally carry. In the last four weeks, that sort of moved up to I’d say between 9% to 10%, but still a tiny fraction of what we had expected it to be. So we are still in a very critically grave situation. We have seen that in the last week or so that bookings have outpaced cancellations for the for the first time.
Q. How much flying will JetBlue do in June and July?
June actually we are going to be flying about 25% to 30% of our normal schedule. We haven’t taken it beyond June yet, but obviously the summer will be significantly less flights than last summer.
Q. What are you doing to make people comfortable about flying?
A. (We are) making sure our crew members are healthy when they come to work. Secondly, really focusing on clean air and surfaces, for example, cleaning and sanitizing and disinfecting airplanes frequently. Thirdly, more space and fewer touch points ... and also continuing with our commitment of offering flexibility so if your plans change and you need to cancel your flight, you can change that and we rebook that at no cost within a 2-year period.
Q. What are you doing to maintain social distancing on flights?
A. We committed that no one will sit next to you on an airplane that you don’t know or aren’t traveling with through to July 6. We’re actually capping flights currently at about 60% (occupancy) because we are also blocking rows around our in-flight crew members to protect them and our customers.
Q. How long can you keep blocking lots of seats?
A. It’s not sustainable for an extended period of time, but it’s important for people right now. The break-even load factor (or occupancy level) for an airline is usually around 75% to 80%. My view is that once people fly and they see all the things that we’ve put in place it will feel to them no different than a trip to the grocery store or something else that they may be doing, and they get more comfortable with it.
Q. What else should airlines or the government do?
A. No one thing that you do in itself protects you from the threat that you are trying to mitigate, but it’s a series of things that you do together that have that protective effect. And so, we were the first airline to mandate face coverings for both crew members and customers. (We are) disinfecting and sanitizing airplanes more frequently. Making sure people have a seat next to them that’s open. We do support temperature checks being performed in the U.S. by the TSA. We think that should be performed as a government function. so it’s consistent across how that is performed. I think all of these things add together to keep aviation safe.
Q. Do you expect leisure travel to return before business travel?
A. I do. I think JetBlue’s network is well-positioned relatively to recover quickly. We are 70% domestic, and of our international flights they are Caribbean or Central and Latin America, and I think these international markets will recover more quickly than longer-haul markets.
Q. How fast are you burning through cash?
A. It’s about it’s about $10 million a day. That assumes zero revenue. Our plan is to reduce that down to between $7 million and $9 million a day in the third quarter because we do expect to see some improvement — small improvement — on the revenue front.
Q. JetBlue got $935 million in federal aid under the CARES Act to help cover payroll costs. Will there be layoffs when that runs out in October?
A. We will emerge as a smaller airline for sure. We have not furloughed a crew member in our 20-year history. We’re very proud of that record. We think that’s very important to our culture and our business model, but equally, we’ve never faced something as grave or as serious as this. So our intent is to manage it through voluntary means (employees opting for unpaid leave) and only move to involuntary furloughs if we have to.
Q. The CEO Boeing says that most likely a major U.S. airline will go out of business later this year. Is he right?
A. No one knows for sure because no one knows how long this is going to go on for. If we continue on this L-shaped recovery that we’re planning for, I don’t foresee any U.S. airlines going into bankruptcy. The CARES Act gives the U.S. airline industry time to wait for the recovery and come out the other side.
Q. How many of your employees have contracted COVID-19, and how many have died from it?
We haven’t shared how many have tested positive. We have lost six crew members to COVID-19-related illness. Our crew members have been incredible through this. They are our heroes. They have been on the front line carrying doctors and nurses and other medical people around, and they do that out of a great sense of service and dedication.