Motley Fool Money: Episode Summary - "JetBlue Has Jet Lag"
Release Date: January 28, 2025
Hosts: Dylan Lewis, Ricky Mulvey, Mary Long
Guest: Captain Jason Moser

Introduction

Mary Long opens the episode with a welcoming note, introducing Captain Jason Moser as a guest expert on stock picking. The primary focus of the episode revolves around recent earnings reports from JetBlue and General Motors (GM), alongside a discussion on developments at X (formerly Twitter) involving a partnership with Visa.

JetBlue Airways: Navigating Turbulent Skies

Stock Performance and Current Challenges
JetBlue’s stock has plummeted over 25% in a single morning despite surpassing Wall Street’s revenue and earnings per share expectations. The decline is attributed to a bleak forecast for the upcoming quarter. Over the past five years, JetBlue’s stock has suffered a significant downturn, dropping more than 70%.

Jet Forward Strategy
JetBlue’s management has introduced the Jet Forward strategy aiming “to be loved and be profitable” [00:30]. The strategy focuses on addressing long-standing operational challenges, including:

• Engine Issues: Grounded aircraft due to Pratt and Whitney engine problems.
• Air Traffic Control (ATC) Shortages: Understaffing leading to inefficient resource use.
• Failed Alliances: Attempts to merge with Spirit Airlines and form an alliance with American Airlines were blocked by courts.
• Inflation Impact: Value carrier revenue struggling to keep pace with inflation.

Jason Moser elaborates, “[...] they have addressed some challenges that they’ve been trying to deal with over the last several years” [01:25].

Competitive Landscape
Mary Long highlights the contrasting outlooks among airlines, noting that competitors like Delta and United have optimistic revenue guidance and forecasts. Moser explains the divergence by emphasizing JetBlue’s position as a value-focused carrier with less scale compared to larger airlines. He states, “The bigger that you are, the larger your network, the more airports that you serve...” [03:04].

Customer Belovedness and Service Excellence
The “beloved” component of Jet Forward echoes the customer-centric approaches seen in airlines like Southwest. Mary Long shares her affinity for Southwest’s customer service ethos, which JetBlue aims to emulate. Moser agrees, highlighting the importance of creating a pleasant travel environment: “customer service, free bags, anything that you can do really, to make the customer feel like they’re valued” [05:07].

Investment Perspective
When discussing investment opportunities, Moser expresses caution regarding airlines, citing historical underperformance against the S&P 500. He advises investors to consider airlines as value buys during downturns but remain prepared to divest if necessary: “When you hang on to these airlines for really long periods of time, it doesn’t really always work out very well” [06:15].

General Motors: Steering Through Financial Headwinds

Earnings Report Overview
GM reported quarterly revenue of nearly $48 billion, marking an 11% increase from the previous year. However, the company posted a net loss of approximately $3 billion, influenced by:

• Non-cash restructuring charges.
• Impairment interests in certain China joint ventures.
• Half a billion in charges related to discontinuing the Cruise robotaxi business.

China Joint Ventures and Market Presence
Moser discusses GM’s significant write-downs in China, stemming from declining market share and intensified competition. GM’s presence in China, while valuable, is not deemed crucial, allowing the company to pursue restructuring aimed at profitability by next year. He notes, “GM has been losing share in China over the last several years” [07:34].

Robo-Taxi Business and Future Growth Engines
The decision to exit the robotaxi sector through Cruise is expected to save GM around $1 billion annually. However, Moser clarifies that GM remains committed to autonomous vehicle (AV) technology for consumer markets, targeting L4 and L5 autonomy levels. Potential growth avenues include:

• Return to China: If restructuring succeeds.
• Consumer AV Investments: Continued development and potential partnerships or acquisitions in AV technology.

Policy Environment and Economic Factors
GM’s 2025 guidance assumes a stable policy environment, which Moser addresses by acknowledging potential disruptions such as:

• Material Tariffs: Increased costs for manufacturing vehicles.
• EV Tax Credits: Possible removal could hinder GM’s electric vehicle (EV) sales and strategy.

He emphasizes the importance of supply chain management, particularly for EV critical minerals, and the need for sustainability and human rights considerations in sourcing: “there is just increasing scrutiny of sustainability and human rights implications” [10:57].

X and Visa Partnership: A New Frontier in Digital Payments

Digital Wallet and Peer-to-Peer Payment Services
X has partnered with Visa to launch a digital wallet and peer-to-peer (P2P) payment service akin to Venmo and Zelle. This initiative allows users to transfer funds from bank accounts to digital wallets and facilitate payments among peers.

Market Viability and Consumer Adoption
Moser expresses skepticism regarding consumer migration to X’s new service, given the established presence of Venmo and Zelle. He speculates that while the service may appeal to content creators on X’s platform, the broader market might not transition due to existing reliable alternatives: “the overwhelming masses are going to take a big pass on this one” [12:49].

Risk Assessment for Visa and X
Moser assesses the minimal downside for Visa, citing their massive transaction volumes ($15.7 trillion in 2024) which make X’s venture insignificant financially. For X, the partnership represents an experimental growth avenue with limited risk: “there's not really any downside for Visa” [13:41].

Conclusion

Mary Long wraps up the episode by reminding listeners that investment decisions should not be based solely on podcast discussions. She encourages adhering to Motley Fool’s editorial standards and personal financial judgment.

Key Takeaways

• JetBlue is facing significant operational challenges despite beating earnings expectations. Its Jet Forward strategy aims to restore profitability and enhance customer loyalty but must navigate fierce competition from larger airlines.

• General Motors is dealing with substantial financial losses driven by restructuring in China and exiting the robotaxi market. However, GM continues to invest in autonomous vehicle technology and maintains potential growth through EVs and possible market re-entry in China.

• X’s partnership with Visa to introduce a digital wallet faces skepticism regarding widespread adoption, though it may benefit content creators within the platform. The initiative poses minimal risk to Visa but represents a strategic gamble for X.

Notable Quotes:

• Mary Long [00:27]: "Oh, captain of stock picking."

• Jason Moser [01:25]: "The strategy behind Jet Forward, they have addressed some challenges that they’ve been trying to deal with over the last several years."

• Mary Long [03:04]: "Why are we seeing such, such a divergence here?"

• Jason Moser [05:07]: "Customer service, free bags, anything that you can do really, to make the customer feel like they’re valued."

• Jason Moser [06:15]: "When you hang on to these airlines for really long periods of time, it doesn’t really always work out very well."

• Jason Moser [07:34]: "GM has been losing share in China over the last several years."

• Jason Moser [10:57]: "There is just increasing scrutiny of sustainability and human rights implications."

• Jason Moser [12:49]: "The overwhelming masses are going to take a big pass on this one."

• Jason Moser [13:41]: "There’s not really any downside for Visa."

This episode provides a comprehensive analysis of JetBlue's financial struggles and strategic efforts to regain profitability, GM's challenges and future directions in the automotive industry, and the potential impact of X and Visa's new digital payment initiative. Listeners gain valuable insights into the dynamics of these major companies and the broader market implications for investors.