Chief Financial Officer, JETBLUE AIRWAYS CORP
JetBlue CFO Ursula Hurley on Chief Future Officer
Chief Financial Officers now play a critical role in shaping corporate strategy and positioning organizations to meet future ...
About Ursula Hurley
Ursula Hurley, Chief Financial Officer of JetBlue Airways, stated that the airline's primary focus is completing its merger with Spirit Airlines, which she described as "transformational for the industry" and a means to create a "truly national low-fare, high-quality airline." She noted that JetBlue has contingency plans for both outcomes of the merger, and that the biggest obstacle to its organic growth plan is delivery delays from supply chain problems and engine shortages. Hurley also said that pilot salaries are set to rise by 35 to 40 percent, which she called "insane and not sustainable," and that the airline has committed to delivering $150 to $200 million in structural cost savings by the end of 2024. Hurley emphasized the importance of liquidity and conservative financial decision-making for the airline. She identified resiliency as the key skill for CFOs over the next decade, citing the need to manage industry volatility and inspire teams. She also advised new CFOs to build an exceptional team, dive into business details, and manage stakeholders effectively. In earlier remarks, Hurley discussed asset management, stating that assets include crew members and that productivity and process improvements are critical to margin growth and asset strength.
Transcript (74 segments)
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Narrator0:02
Attention passengers, this is your captain speaking. From the day JetBlue launched more than two decades ago, it's cast itself as a refreshing alternative to legacy airlines.
Hey, look out the window, we're on TV! JetBlue has become the sixth largest US carrier, and while it has ambitious plans to grow, it stayed true to its disruptive roots.
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Robin Hayes0:24
One of the coolest things about JetBlue is that kind of startup spirit, right? That's a differentiator, the smallness of it in a sense. Do you keep that as you grow bigger? It won't be easy. We're 25,000 people today. It was already harder than when it was a thousand at the beginning.
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Narrator0:42
It helps to have leaders on board who've been there for the long haul, like CFO Ursula Hurley. Ursula joined JetBlue as an intern.
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Ursula Hurley0:49
I came home for the summer and needed a summer job, and JetBlue — at the time I was like 'Jet who?' because JetBlue was literally three years old back then — had posted a summer internship at my university job board. They gave me flight privileges, so I was allowed to fly across the country if there were seats available on any flight at any point in time. Now fast forward 20 years later, I haven't left.
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Narrator1:17
Working in finance roles across the company, she's developed a broad portfolio of skills and a unique depth of knowledge.
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Robin Hayes1:23
I think curiosity is a great skill in business, particularly in our business which is so challenging. Ursula is not just a number CFO. She understands the whole business. When someone's in front of her asking for more money, Ursula knows whether it's going to work or not, and she can ask the right questions. That's a great skill.
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Narrator1:46
A CEO who's made a name as an instigator and a CFO with passion and perspective will lead JetBlue on the next leg of its journey.
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Ursula Hurley1:54
Robin has always been a very strong advocate of mine. We collaborate together. There are times when we don't agree, there are times when we do agree, and I believe that that's healthy and we end up in a better position for JetBlue. So there's puts and takes. We push back on each other. There are points in time where we need to take risks, and we need to do those in a measured way. So we try to be thoughtful about where we place our bets, and we do that in a responsible way in order to create a product offering that customers really value.
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Narrator2:47
As much as JetBlue has grown, it's still fighting an uphill battle for market share. The big four airlines — United, American, Delta, and Southwest — control most of US domestic passenger traffic.
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Robin Hayes3:00
We have a two-tier system where we have the haves and the have-nots. Seriously, you have four airlines that are about 72 to 75% market share. There's this enormous gap between four and five.
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Narrator3:15
In July 2022, JetBlue agreed to purchase Spirit Airlines in a $3.8 billion deal. In March 2023, the US Department of Justice sued to block the merger on antitrust grounds. Until the court battle is resolved, the shape and scale of JetBlue's future remains in limbo.
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Interviewer3:36
So you have to, in a sense, make two plans and go along two paths until you know what the outcome is. How stressful is that, and how does Ursula help you?
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Robin Hayes3:46
Our number one priority right now is to get the Spirit merger done. We think it's transformational for the industry. We think it's going to create a truly national low-fare, high-quality airline to challenge the big four. So obviously Ursula has been really involved in that, as early as last year actually convincing Spirit shareholders to take our deal versus another inferior deal that was on the table, but also running the business day to day.
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Interviewer4:13
How hard is it to deal with forecasting and planning years out with two very different outcomes?
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Ursula Hurley4:21
Yeah, we have fantastic teams who are building plans for both scenarios. The benefit of Spirit is it's going to allow us to turbocharge our organic growth plan. If Spirit doesn't happen — which I feel very confident that it will — we have opportunities that we can continue to implement in order to bring the JetBlue experience to more customers. So I'm excited in general about growth.
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Narrator4:48
JetBlue's growth plan begins with modernizing and expanding its fleet, replacing older aircraft with Airbus A220s that add passenger capacity while increasing cost efficiency, and adding Airbus A320s to support long-haul routes. But delivery delays caused by supply chain problems are proving to be headwinds.
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Ursula Hurley5:08
We will need to get creative on how we source airplanes in order to continue the JetBlue growth trajectory. We have a very big order book of new airplanes, but they're all coming late. On top of that, there are some engine issues, and so we actually have airplanes on the ground today with no engines because there isn't enough engines to support them. I would say right now that is the biggest inhibitor to that organic plan.
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Narrator5:37
A potential growth driver is the addition of transatlantic routes. Since 2021, JetBlue has begun service to London, Paris, and Amsterdam.
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Ursula Hurley5:45
It's still early days. It's still a relatively small part of our network, but it will grow. Leisure travel to Europe has spiked in 2023, with airlines adding capacity to meet demand that's far exceeded 2019 levels. JetBlue's global expansion has helped offset a decline in domestic passenger traffic. One of the benefits these large airlines have — not only are they large, but they also have a lot of hedging due to the fact they fly to so many different markets. So we don't have that. We're very focused on domestic and Caribbean and Latin America. The hedging, or having access to more geographic diversity, will actually help us. So we are actually flying to Europe with the Airbus A321 long-range aircraft, so it's actually a narrowbody aircraft. There is a way in which we can pivot that asset to more domestic flying if we have to, if the demand environment in Europe cools.
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Narrator6:40
JetBlue's revenues have bounced back from the troughs of COVID, but the pandemic's long tail has created an uncomfortable new normal on the expense side.
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Ursula Hurley6:49
In general for the industry, revenues are back to 2019 levels, but costs are over 2019 levels by about 18 or 19%. We're operating in a very volatile environment. JetBlue has a very large presence here in New York, and there are air traffic control challenges, so we've had to pull back on overinvestment as the operating environment around us stabilizes. To give you an example, we have about $1 million more of reserve or standby pilots in 2023 than we had in 2019 just to fly the same schedule, because the infrastructure is still more brittle.
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Narrator7:41
Pilots' salaries are about to soar. New labor contracts are building in raises that will add significant labor costs to every airline's ledger. With a shortage of qualified pilots looming, their leverage should continue to grow.
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Robin Hayes7:54
Pay is going up by 35 to 40%, which is insane. I've seen this movie before, and this is not sustainable in my opinion.
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Ursula Hurley8:02
We've certainly seen since COVID a lot more pilot attrition. We saw a lot of retirements during COVID, and that then created this kind of gap of pilots once business returned. The pilot shortage has been an issue for years, and I do believe we are on a — I hate to use the term 'crash course' — for even bigger issues in the future.
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Robin Hayes8:27
Nobody has problems hiring; it's retaining that's the problem. The flight attendants are negotiating for a contract, and let's just give them a smaller increase? I just look at all these costs that are going onto the industry, and I don't see the revenue offset.
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Narrator8:42
The pressure is on Ursula Hurley's team to trim costs in an inflationary environment.
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Ursula Hurley8:47
We've committed to deliver $150 to $200 million in structural cost savings by the end of 2024. It's a team effort. A CFO, however capable they are, can't do it all by themselves. Part of it is to bring the whole organization together, and I think Ursula's strength, because she's worked here for so long, is that she knows how to do that.
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Narrator9:12
In a capital-intensive industry, rising interest rates are another concern.
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Ursula Hurley9:15
Liquidity is the lifeblood of an airline. We make very conservative decision-making about when we raise funding and how we raise funding. We try to diversify our sources, and we're always very focused on the actual rates, and we like to build in flexibility in these financing structures so that we have an opportunity to prepay debt when appropriate, so that we can continue to optimize the overarching rates that we're paying.
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Narrator9:42
It's been a turbulent year for JetBlue shares, one more example of the volatility that Ursula Hurley is determined to stabilize.
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Interviewer9:50
You worked in investor relations on the way to this chair. As a result of that, are you extremely sensitive in terms of the stock price, in terms of analyst ratings?
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Ursula Hurley9:59
I am. I mean, that's the core of what I do and what my teams are responsible for. I probably check the stock price way too many times a day. We have three stakeholders: we have our customers, we have our crew members, and we have our shareholders. So those are the lenses that we look through when we make any type of decision. We need to be balanced, but at the end of the day, it's all about returning for our shareholders.
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Narrator10:27
Coming up: you can't get passengers in the air without a strong operation on the ground. Ursula Hurley shows me what it takes at JFK.
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Ursula Hurley10:37
When you think about a person booking a flight to getting them to their destination and home from their destination, it takes an army of things to go right.
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Narrator11:00
Since JetBlue began flying in February 2000, the airline has prided itself on offering a high-end customer experience at a moderate price. It pioneered amenities like free Wi-Fi on every flight and live TV at every seat. Airfares have risen in the last two years as demand has recovered, but Robin Hayes insists JetBlue's low-cost philosophy will not change.
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Robin Hayes11:21
People want low fares. Our model has always been offering low fares with great service to stimulate additional trips. I think given the pivot from the industry away from business travel to leisure travel, when you're talking about someone's leisure travel, you're not just competing with other airlines, right? You're competing with 'Am I going to get a new car?' So you're competing for people's share of wallet. I think what we have to do is make sure that travel is a compelling choice for people.
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Narrator11:51
A compelling travel experience starts well before a customer boards the aircraft. Ursula Hurley walked me through Terminal 5 at New York's John F. Kennedy Airport, where the complexity of the business she oversees really comes into focus.
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Ursula Hurley12:05
We operate 1,000 flights a day, we serve over 100 destinations, and we transport about 40 million customers per year. When you think about a person booking a flight to getting them to their destination and home from their destination, it takes an army of things to go right. As we were coming through the depths of COVID, the labor market was very, very challenging. You had people leaving the company to do life changes, and so we had to very quickly hire thousands of crew members to staff back up because the demand for air travel came back so quickly. Attrition has stabilized, so we're always monitoring the hiring metrics, how long it takes to get them through training, and what the job market looks like for each of these specific work groups.
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Narrator13:00
Of course, premium products help airlines relieve margin pressures. I got to sample JetBlue's revamped Mint experience.
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Ursula Hurley13:09
This is the new Mint. This is our premium business class offering.
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Interviewer13:15
What's the process like? You order the plane from Airbus, and then do you fit it out yourself? How does this work? How do you make a Mint?
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Ursula Hurley13:22
It's a multi-year process. We work with our JetBlue product team and my fleet team, and collaborate with business partners to define and create what we want the experience to look like. We stress test it, we make sure that we're doing it in a cost-conscious way. We optimize the seating configuration on every airplane to drive margin. On this aircraft, we have 160 seats in total: we have 16 Mint seats, and then we have 144 core seats in the back of the airplane.
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Interviewer14:01
What kind of growth are you expecting from Mint?
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Ursula Hurley14:03
We have 46 Mint aircraft today, and we have over 20 more aircraft on order that will be configured in Mint that can fly to Europe. So we're really excited to spread the JetBlue brand throughout more European destinations.
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Interviewer14:23
Oh, I'm spoiling myself. Wow, that's really flat, and I fit. Oh, look at that.
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Narrator14:33
There's change on the way at JFK. Ground has been broken on a new Terminal 6. It will connect with Terminal 5 and add capacity for up to 10 gates. JetBlue joins a consortium of companies managing the $4.2 billion project, helping define its design and guide its construction towards completion in 2028.
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Ursula Hurley14:53
I think that what people want these days is an easy, quick experience through the airport. We need to have better technology at all points throughout the journey. We need to embrace biometrics. Consumers hate standing in lines. There is biometric technology that can help cut security lines and check-in lines in a third. We're still in the design phase for Terminal 6, but we leverage what other airports have done and what we've seen throughout the world, quite frankly, and we're going to pick the best of everything to really elevate the game. Technology is going to be at the backbone of that journey. We want to be able to create and give customers experiences where they can self-serve as much as possible across the travel ribbon, whether it's checking in, checking your bag, going through security, boarding a flight. We want everyone to be able to do that seamlessly and be able to do that with your own handheld technologies.
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Interviewer15:57
Also, I'm just going to say, for JetBlue, you need to have a lounge. JetBlue has T5, which is great, but for premium travelers, especially now that flights are delayed so much, you don't want to wait in the terminal. There's no VIP lounge here, is that right? No specific JetBlue VIP lounge. Is that going to change with the new terminal?
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Ursula Hurley16:16
It could. There could be a potential where we're evolving the Mint and premium customer offering. We need to make sure that we're building out our customer offerings in a cost-conscious way.
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Narrator16:33
Up next: the future of aviation, JetBlue style. It looks a lot more diverse, from the boardroom to the cockpit.
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Ursula Hurley16:40
We have made great strides in increasing the number of women in our pilot work group. And yes, artificial intelligence will play a role. We can utilize AI to make better decisions. We can also utilize AI to help us gather and analyze information.
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Narrator17:11
Chief Financial Officer Ursula Hurley has spent her entire professional career at JetBlue. Her rise from college intern to the C-suite is rare for an industry that is still male-dominated at the highest levels.
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Ursula Hurley17:23
We don't have a lot of diversity in the C-suite. We have a lot of diversity below that level, and airlines are working on improving it. They have goals for their boards, they have goals for management, but what they have to do is attract and retain.
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Narrator17:40
But JetBlue bucks the trend. It's the only airline among 123 global carriers tracked by Bloomberg with 50% gender parity among executives.
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Ursula Hurley17:49
Diversity drives innovation. At the end of the day, innovation provides stronger returns. I also am president of our JetBlue Foundation, and the mission of the foundation is to promote access to STEM and aviation to young girls of color and to young girls who don't have access to experiences.
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Narrator18:13
The company's diversity goals include getting more women into the cockpit.
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Ursula Hurley18:17
Pilots are tough. Historically, in the US, we've been about 95% men, 5% women. That's clearly a significant imbalance. We have made great strides in increasing the number of women in our pilot work group. We have what are called our Gateway programs. The diversity is very impressive. You see a lot more women, and you also see a lot more women of diverse race as well.
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Narrator18:44
Along with plans to make the future of aviation more inclusive, JetBlue has taken steps to make it more sustainable. In the last two years, it signed agreements with suppliers for millions of gallons of sustainable aviation fuel, or SAF.
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Ursula Hurley18:56
We have committed to net zero by 2040, and we have also committed to fly 10% of our fuel consumption on SAF by 2030. Today, we actually consume SAF in three of our airports that are based in California, and so we're on a path to achieve that 10%. There is not enough SAF out there for consumption, and so we're encouraging producers, financiers, as well as other airlines to help push this forward and provide us opportunities to achieve our sustainability goals.
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Narrator19:31
Like many companies, JetBlue is exploring the potential of artificial intelligence.
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Ursula Hurley19:36
We can utilize AI to make better decisions. We can also utilize AI to help us gather and analyze information. A number of years ago, we set up JetBlue Ventures, which is one of our subsidiaries that really is at the intersection of technology and the travel industry. Tomorrow.io, which is our weather forecasting company, one of our initial investments in JetBlue Ventures, uses a lot of really cool technology including AI to more accurately predict weather and decide what flights to cancel and delay, or what runways to land on, or how much fuel to load based on a more accurate forecast. Using AI and other technology is a game changer for us. I think that we're going to continue to see that across more aspects of our company.
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Narrator20:30
JetBlue fights off the DOJ lawsuit and pulls off the Spirit merger. Robin Hayes will lead the company into a new era of size and scale. He believes customers will benefit.
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Robin Hayes20:42
We have four large airlines today that have about 20% of the market each. A JetBlue-Spirit combination will put us at between 8 to 9%, so we'll still be a distant number five. We'll still be less than half the size of these big four. But it's not sustainable to have this bifurcated industry where you have four big players at 20% and everyone else is sharing 20% of the market between them. So we feel passionately that one of the best things that can happen for consumers is the JetBlue-Spirit deal, because it will give customers a truly more national choice than just flying on the big four.
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Narrator21:21
In any future scenario, Ursula Hurley will have a lot on her plate. She'll play a key role as JetBlue continues to innovate and grow. I asked her what she sees when she looks ahead.
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Interviewer21:31
What are you most excited about for the next 10 years of JetBlue?
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Ursula Hurley21:38
I'm really excited to see JetBlue continue to grow. At the end of the day, we view ourselves as a disruptor and a maverick in the aviation industry, and we want to bring more of the JetBlue experience to more customers across the country. I'm really excited to play a meaningful role in that growth journey.
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Interviewer21:59
So what's the biggest challenge over the next 10 years that keeps you up at night?
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Ursula Hurley22:05
The biggest challenge is just managing the volatility of the industry that we live in. There are many inputs into our business, and we're thrown many curveballs. So it's just having the agility and, quite frankly, the resiliency to power through it and look for ways in which we can deliver for our customers, our crew members, as well as our shareholders.
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Interviewer22:29
What is one skill set or knowledge area that you think every CFO is going to have to develop or have over the next 10 years?
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Ursula Hurley22:36
Just resiliency. The dynamic of the world that we live in, you need to be able to power through. You need to be able to see through the trees. You need to identify opportunities and push people. You really need to inspire and bring people along with you in order to be successful.
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Interviewer22:57
And what advice would you give someone who is promoted to CFO today?
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Ursula Hurley23:01
You have to have an exceptional team around you in order to be successful. You also need to dive into the details. Knowing and understanding the analytics and the drivers of the business will allow you to push back and, quite frankly, create more value. And then I would also tell people you need to manage your stakeholders effectively. Whether that's a shareholder, the board, a customer, a crew member, taking in their feedback and implementing their thoughts to make JetBlue an even better company than we are today. So at the end of the day: hire a fantastic team, dive into the details, and ensure that you're managing your stakeholder base as effectively as possible.
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Narrator23:50
I'm Matt Miller. This is Bloomberg.