UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to__________

Commission File Number: 000-49728

JETBLUE AIRWAYS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			87-0617894
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

27-01 Queens Plaza North	Long Island City	New York	11101
(Address of principal executive offices)			(Zip Code)

(718) 286-7900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	JBLU	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~September~~June 30, ~~2021,~~2022, there were ~~318,030,520~~323,854,365 shares outstanding of the registrant’s common stock, par value $0.01.

Table of Contents

JETBLUE AIRWAYS CORPORATION

FORM 10-Q

INDEX


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			3
Consolidated Balance Sheets - ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021			3
Consolidated Statements of Operations - Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021			5
Consolidated Statements of Comprehensive Income - Three and ~~Nine~~Six Months Ended ~~September~~ June 30, ~~2021~~2022 and ~~2020~~2021			6
Condensed Consolidated Statements of Cash Flows - ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021			7
Consolidated Statements of Stockholders' Equity - Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021			98
Notes to Condensed Consolidated Financial Statements			109
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2625
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4443
Item 4. Controls and Procedures			4443

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4544
Item 1A. Risk Factors			4544
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4749
Item 5. Other Information			4849
Item 6. Exhibits			4849

SIGNATURE			50 51

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	2,193	$	1,918	Cash and cash equivalents	$	1,611	$	2,018
Investment securities	Investment securities	1,100		1,135		Investment securities	873		824
Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively.		210		98
Inventories, net of allowance of $23 and $27, at September 30, 2021 and December 31, 2020, respectively.		64		71
Receivables, less allowance (2022-$3; 2021-$3)						Receivables, less allowance (2022-$3; 2021-$3)	291		207
Inventories, less allowance (2022-$26; 2021-$24)						Inventories, less allowance (2022-$26; 2021-$24)	73		74
Prepaid expenses and other	Prepaid expenses and other	123		123		Prepaid expenses and other	146		124
Total current assets	Total current assets	3,690		3,345		Total current assets	2,994		3,247
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT					PROPERTY AND EQUIPMENT
Flight equipment	Flight equipment	11,031		10,256		Flight equipment	11,390		11,161
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	339		420		Predelivery deposits for flight equipment	369		337
Total flight equipment and predelivery deposits, gross	Total flight equipment and predelivery deposits, gross	11,370		10,676		Total flight equipment and predelivery deposits, gross	11,759		11,498
Less accumulated depreciation	Less accumulated depreciation	3,131		2,888		Less accumulated depreciation	3,430		3,227
Total flight equipment and predelivery deposits, net	Total flight equipment and predelivery deposits, net	8,239		7,788		Total flight equipment and predelivery deposits, net	8,329		8,271
Other property and equipment	Other property and equipment	1,199		1,202		Other property and equipment	1,274		1,205
Less accumulated depreciation	Less accumulated depreciation	644		591		Less accumulated depreciation	699		662
Total other property and equipment, net	Total other property and equipment, net	555		611		Total other property and equipment, net	575		543
Total property and equipment, net	Total property and equipment, net	8,794		8,399		Total property and equipment, net	8,904		8,814
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	750		804		OPERATING LEASE ASSETS	739		729
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Investment securities	Investment securities	1		2		Investment securities	120		39
Restricted cash	Restricted cash	59		51		Restricted cash	79		59
Intangible assets, net of accumulated amortization of $392 and $360, at September 30, 2021 and December 31, 2020, respectively.		283		261
Intangible assets, less accumulated amortization (2022-$430; 2021-$405)						Intangible assets, less accumulated amortization (2022-$430; 2021-$405)	269		284
Other	Other	492		544		Other	438		470
Total other assets	Total other assets	835		858		Total other assets	906		852
TOTAL ASSETS	TOTAL ASSETS	$	14,069	$	13,406	TOTAL ASSETS	$	13,543	$	13,642

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	575	$	365	Accounts payable	$	585	$	499
Air traffic liability	Air traffic liability	1,679		1,122		Air traffic liability	1,984		1,618
Accrued salaries, wages and benefits	Accrued salaries, wages and benefits	465		409		Accrued salaries, wages and benefits	489		480
Other accrued liabilities	Other accrued liabilities	348		215		Other accrued liabilities	465		359
Current operating lease liabilities	Current operating lease liabilities	108		113		Current operating lease liabilities	114		106
Current maturities of long-term debt and finance lease obligations	Current maturities of long-term debt and finance lease obligations	391		450		Current maturities of long-term debt and finance lease obligations	428		355
Total current liabilities	Total current liabilities	3,566		2,674		Total current liabilities	4,065		3,417
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,760		4,413		LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,394		3,651
LONG-TERM OPERATING LEASE LIABILITIES	LONG-TERM OPERATING LEASE LIABILITIES	712		752		LONG-TERM OPERATING LEASE LIABILITIES	699		690
DEFERRED TAXES AND OTHER LIABILITIES	DEFERRED TAXES AND OTHER LIABILITIES					DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes	Deferred income taxes	882		922		Deferred income taxes	742		843
Air traffic liability - non-current	Air traffic liability - non-current	618		616		Air traffic liability - non-current	667		640
Other	Other	582		78		Other	530		552
Total deferred taxes and other liabilities	Total deferred taxes and other liabilities	2,082		1,616		Total deferred taxes and other liabilities	1,939		2,035
COMMITMENTS AND CONTINGENCIES (Note 6)	COMMITMENTS AND CONTINGENCIES (Note 6)	0		0		COMMITMENTS AND CONTINGENCIES (Note 6)	0		0
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued	Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—		Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—
Common stock, $0.01 par value; 900 shares authorized, 476 and 474 shares issued and 318 and 316 shares outstanding at September 30, 2021 and December 31, 2020, respectively		5		5
Treasury stock, at cost; 158 and 158 shares at September 30, 2021 and December 31, 2020, respectively		(1,989)		(1,981)
Common stock, $0.01 par value; 900 shares authorized, 482 and 478 shares issued and 324 and 320 shares outstanding at June 30, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value; 900 shares authorized, 482 and 478 shares issued and 324 and 320 shares outstanding at June 30, 2022 and December 31, 2021, respectively	5		5
Treasury stock, at cost; 158 and 158 shares at June 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost; 158 and 158 shares at June 30, 2022 and December 31, 2021, respectively	(1,995)		(1,989)
Additional paid-in capital	Additional paid-in capital	3,018		2,959		Additional paid-in capital	3,095		3,047
Retained earnings	Retained earnings	2,915		2,968		Retained earnings	2,343		2,786
Accumulated other comprehensive income		—		—
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	(2)		—
Total stockholders’ equity	Total stockholders’ equity	3,949		3,951		Total stockholders’ equity	3,446		3,849
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	14,069	$	13,406	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,543	$	13,642

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
OPERATING REVENUES	OPERATING REVENUES									OPERATING REVENUES
Passenger	Passenger	$	1,856	$	445	$	3,913	$	2,126	Passenger	$	2,302	$	1,388	$	3,904	$	2,058
Other	Other	116		47		290		169		Other	143		111		277		174
Total operating revenues	Total operating revenues	1,972		492		4,203		2,295		Total operating revenues	2,445		1,499		4,181		2,232
OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Aircraft fuel and related taxes	Aircraft fuel and related taxes	443		102		973		496		Aircraft fuel and related taxes	910		336		1,481		530
Salaries, wages and benefits	Salaries, wages and benefits	620		482		1,718		1,560		Salaries, wages and benefits	695		577		1,383		1,098
Landing fees and other rents	Landing fees and other rents	182		84		470		258		Landing fees and other rents	149		174		281		289
Depreciation and amortization	Depreciation and amortization	140		127		398		407		Depreciation and amortization	145		133		288		258
Aircraft rent	Aircraft rent	25		23		76		60		Aircraft rent	27		26		53		50
Sales and marketing	Sales and marketing	60		24		130		84		Sales and marketing	78		47		135		70
Maintenance, materials and repairs	Maintenance, materials and repairs	205		111		472		344		Maintenance, materials and repairs	162		164		313		268
Other operating expenses	Other operating expenses	297		167		768		560		Other operating expenses	348		261		683		471
Special items	Special items	(186)		(112)		(841)		(214)		Special items	44		(366)		44		(655)
Total operating expenses	Total operating expenses	1,786		1,008		4,164		3,555		Total operating expenses	2,558		1,352		4,661		2,379
OPERATING INCOME (LOSS)		186		(516)		39		(1,260)
OTHER INCOME (EXPENSE)
OPERATING (LOSS) INCOME										OPERATING (LOSS) INCOME	(113)		147		(480)		(147)
OTHER EXPENSE										OTHER EXPENSE
Interest expense	Interest expense	(42)		(56)		(153)		(121)		Interest expense	(40)		(54)		(77)		(112)
Capitalized interest		3		3		9		10
Gain on equity investments		54		—		54		—
Interest income and other expenses		(11)		(9)		(49)		(10)
Total other income (expense)		4		(62)		(139)		(121)
INCOME (LOSS) BEFORE INCOME TAXES		190		(578)		(100)		(1,381)
Income tax expense (benefit)		60		(185)		(47)		(400)
NET INCOME (LOSS)		$	130	$	(393)	$	(53)	$	(981)
Interest income										Interest income	8		4		12		8
Gain (loss) on investments, net										Gain (loss) on investments, net	(5)		—		(4)		3
Other										Other	(1)		(40)		—		(42)
Total other expense										Total other expense	(38)		(90)		(69)		(143)
(LOSS) INCOME BEFORE INCOME TAXES										(LOSS) INCOME BEFORE INCOME TAXES	(151)		57		(549)		(290)
Income tax (benefit)										Income tax (benefit)	37		(7)		(106)		(107)
NET (LOSS) INCOME										NET (LOSS) INCOME	$	(188)	$	64	$	(443)	$	(183)

EARNINGS (LOSS) PER COMMON SHARE:
(LOSS) EARNINGS PER COMMON SHARE:										(LOSS) EARNINGS PER COMMON SHARE:
Basic	Basic	$	0.41	$	(1.44)	$	(0.17)	$	(3.58)	Basic	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)
Diluted	Diluted	$	0.40	$	(1.44)	$	(0.17)	$	(3.58)	Diluted	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

Three Months Ended September 30,
2021 2020
NET INCOME (LOSS) $ 130 $ (393)
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $(1) in 2021 and 2020, respectively — 1
Total other comprehensive income — 1
COMPREHENSIVE INCOME (LOSS) $ 130 $ (392)


	Three Months Ended June 30,
	2022		2021
NET (LOSS) INCOME	$	(188)	$	64
Changes in fair value of available-for-sale securities, net of reclassifications into earnings, net of taxes of $0 in each 2022 and 2021.	(1)		—
Total other comprehensive (loss)	(1)		—
COMPREHENSIVE (LOSS) INCOME	$	(189)	$	64

Nine Months Ended September 30,
2021 2020
NET LOSS $ (53) $ (981)
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $1 in 2021 and 2020, respectively — (4)
Total other comprehensive income (loss) — (4)
COMPREHENSIVE LOSS $ (53) $ (985)


	Six Months Ended June 30,
	2022		2021
NET (LOSS)	$	(443)	$	(183)
Changes in fair value of available-for-sale securities, net of reclassifications into earnings, net of taxes of $0 in each 2022 and 2021.	(2)		—
Total other comprehensive (loss)	(2)		—
COMPREHENSIVE (LOSS)	$	(445)	$	(183)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	Net loss	$	(53)	$	(981)	Net loss	$	(443)	$	(183)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes	Deferred income taxes	(40)		(351)		Deferred income taxes	(101)		(93)
Impairment of long-lived assets		—		258
Depreciation	Depreciation	365		374		Depreciation	262		238
Amortization	Amortization	33		33		Amortization	26		20
Impairment of long-lived asset						Impairment of long-lived asset	5		—
Stock-based compensation	Stock-based compensation	23		20		Stock-based compensation	18		17
Changes in certain operating assets and liabilities	Changes in certain operating assets and liabilities	1,438		242		Changes in certain operating assets and liabilities	537		1,439
Deferred federal payroll support program grants	Deferred federal payroll support program grants	—		49		Deferred federal payroll support program grants	—		185
Losses on sale-leaseback transactions		—		106
Other, net	Other, net	(11)		27		Other, net	(5)		35
Net cash provided by (used in) operating activities		1,755		(223)
Net cash provided by operating activities						Net cash provided by operating activities	299		1,658
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(770)		(529)		Capital expenditures	(274)		(524)
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	(33)		(67)		Predelivery deposits for flight equipment	(65)		(16)

Proceeds from the maturities of held-to-maturity investments		—		21

Purchase of held to maturity investments						Purchase of held to maturity investments	(85)		—
Purchase of available-for-sale securities	Purchase of available-for-sale securities	(520)		(1,162)		Purchase of available-for-sale securities	(461)		(520)
Proceeds from the sale/maturity of held to maturity investments						Proceeds from the sale/maturity of held to maturity investments	2		—
Proceeds from the sale of available-for-sale securities	Proceeds from the sale of available-for-sale securities	590		944		Proceeds from the sale of available-for-sale securities	405		340
Proceeds from sale-leaseback transactions		—		209

Other, net	Other, net	(2)		(1)		Other, net	(7)		(2)
Net cash used in investing activities	Net cash used in investing activities	(735)		(585)		Net cash used in investing activities	(485)		(722)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	1,010		2,541		Proceeds from issuance of long-term debt	—		1,010
Proceeds from short-term borrowings		—		981
Proceeds from sale-leaseback transactions		—		236

Proceeds from issuance of common stock	Proceeds from issuance of common stock	22		22		Proceeds from issuance of common stock	29		22
Proceeds from issuance of stock warrants	Proceeds from issuance of stock warrants	14		28		Proceeds from issuance of stock warrants	—		14
Repayment of long-term debt and finance lease obligations	Repayment of long-term debt and finance lease obligations	(1,775)		(272)		Repayment of long-term debt and finance lease obligations	(189)		(1,481)
Repayment of short-term borrowings		—		(1,000)

Acquisition of treasury stock	Acquisition of treasury stock	(7)		(167)		Acquisition of treasury stock	(6)		(7)
Other, net	Other, net	(1)		—		Other, net	(35)		(1)
Net cash (used in) provided by financing activities		(737)		2,369
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		283		1,561
Net cash used in financing activities						Net cash used in financing activities	(201)		(443)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH						INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(387)		493
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	1,969		1,018		Cash, cash equivalents and restricted cash at beginning of period	2,077		1,969
Cash, cash equivalents and restricted cash at end of period(1)	Cash, cash equivalents and restricted cash at end of period(1)	$	2,252	$	2,579	Cash, cash equivalents and restricted cash at end of period(1)	$	1,690	$	2,462

SUPPLEMENTAL CASH FLOW INFORMATION						SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest						Cash payments for interest	$	60	$	97
Cash payments for income taxes (net of refunds)						Cash payments for income taxes (net of refunds)	(49)		—

NON-CASH TRANSACTIONS						NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities						Operating lease assets obtained in exchange for operating lease liabilities	$	60	$	—

(1) Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:						(1) Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:

							June 30, 2022		June 30, 2021
Cash and cash equivalents						Cash and cash equivalents	$	1,611	$	2,409
Restricted cash						Restricted cash	79		53
Total cash, cash equivalents and restricted cash						Total cash, cash equivalents and restricted cash	$	1,690	$	2,462

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(unaudited, in millions)~~

Nine Months Ended September 30,
2021 2020
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest (net of amount capitalized) $ 121 $ 37
Cash payments for income taxes (net of refunds) — —
NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities $ — $ 144
Lease modifications and lease conversions $ 40 $ —
(1) Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:
September 30, 2021 September 30, 2020
Cash and cash equivalents $ 2,193 $ 2,453
Short-term restricted cash recorded within prepaid expenses and other — 74
Restricted cash 59 52
Total cash, cash equivalents and restricted cash $ 2,252 $ 2,579

~~See accompanying notes to condensed consolidated financial statements.~~

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in millions)

Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income Total
Balance at June 30, 2021 476 $ 5 158 $ (1,989) $ 3,012 $ 2,785 $ — $ 3,813
Net income — — — — — 130 — 130
Stock compensation expense — — — — 6 — — 6
Balance at September 30, 2021 476 $ 5 158 $ (1,989) $ 3,018 $ 2,915 $ — $ 3,949
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Loss Total
Balance at June 30, 2020 430 $ 4 158 $ (1,981) $ 2,340 $ 3,734 $ (3) $ 4,094
Net (loss) — — — — — (393) — (393)
Other comprehensive income — — — — — — 1 1
Vesting of restricted stock units 1 — — — — — — —
Stock compensation expense — — — — 5 — — 5
CARES Act warrant issuance — — — — 10 — — 10
Balance at September 30, 2020 431 $ 4 158 $ (1,981) $ 2,355 $ 3,341 $ (2) $ 3,717
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income Total
Balance at December 31, 2020 474 $ 5 158 $ (1,981) $ 2,959 $ 2,968 $ — $ 3,951
Net (loss) — — — — — (53) — (53)
Vesting of restricted stock units 1 — — (8) — — — (8)
Stock compensation expense — — — — 23 — — 23
Stock issued under Crewmember Stock Purchase Plan 1 — — — 22 — — 22
Warrants issued under federal support programs — — — — 14 — — 14
Balance at September 30, 2021 476 $ 5 158 $ (1,989) $ 3,018 $ 2,915 $ — $ 3,949
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2019 427 $ 4 145 $ (1,782) $ 2,253 $ 4,322 $ 2 $ 4,799
Net (loss) — — — — — (981) — (981)
Other comprehensive loss — — — — — — (4) (4)
Vesting of restricted stock units 2 — — (7) — — — (7)
Stock compensation expense — — — — 20 — — 20
Stock issued under Crewmember Stock Purchase Plan 2 — — — 22 — — 22
Shares repurchased — — 13 (192) 32 — — (160)
CARES Act warrant issuance — — — — 28 — — 28
Balance at September 30, 2020 431 $ 4 158 $ (1,981) $ 2,355 $ 3,341 $ (2) $ 3,717


	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at March 31, 2022	479	$	5	158	$	(1,995)	$	3,058	$	2,531	$	(1)	$	3,598
Net loss	—	—		—	—		—		(188)		—		(188)
Other comprehensive loss	—	—		—	—		—		—		(1)		(1)
Vesting of restricted stock units	—	—		—	—		—		—		—		—
Stock compensation expense	—	—		—	—		7		—		—		7
Stock issued under crewmember stock purchase plan	3	—		—	—		30		—		—		30
Balance at June 30, 2022	482	$	5	158	$	(1,995)	$	3,095	$	2,343	$	(2)	$	3,446

	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at March 31, 2021	475	$	5	158	$	(1,987)	$	2,975	$	2,721	$	—	$	3,714
Net income	—	—		—	—		—		64		—		64

Vesting of restricted stock units	—	—		—	(2)		—		—		—		(2)
Stock compensation expense	—	—		—	—		9		—		—		9
Stock issued under crewmember stock purchase plan	1	—		—	—		22		—		—		22
Warrants issued under federal support programs	—	—		—	—		6		—		—		6
Balance at June 30, 2021	476	$	5	158	$	(1,989)	$	3,012	$	2,785	$	—	$	3,813

	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2021	478	$	5	158	$	(1,989)	$	3,047	$	2,786	$	—	$	3,849
Net loss	—	—		—	—		—		(443)		—		(443)
Other comprehensive loss	—	—		—	—		—		—		(2)		(2)
Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)
Stock compensation expense	—	—		—	—		18		—		—		18
Stock issued under crewmember stock purchase plan	3	—		—	—		30		—		—		30
Balance at June 30, 2022	482	$	5	158	$	(1,995)	$	3,095	$	2,343	$	(2)	$	3,446

	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at December 31, 2020	474	$	5	158	$	(1,981)	$	2,959	$	2,968	$	—	$	3,951
Net loss	—	—		—	—		—		(183)		—		(183)

Vesting of restricted stock units	1	—		—	(8)		—		—		—		(8)
Stock compensation expense	—	—		—	—		17		—		—		17
Stock issued under crewmember stock purchase plan	1	—		—	—		22		—		—		22
Warrants issued under federal support programs	—	—		—	—		14						14
Balance at June 30, 2021	476	$	5	158	$	(1,989)	$	3,012	$	2,785	$	—	$	3,813

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

JetBlue Airways Corporation, or JetBlue, provides air transportation services across the United States, the Caribbean, ~~and~~ Latin America, Canada, and ~~between New York and London.~~the United Kingdom. Our condensed consolidated financial statements include the accounts of JetBlue and our subsidiaries which are collectively referred to as “we” or the “Company”. All majority-owned subsidiaries are consolidated on a line by line basis, with all intercompany transactions and balances being eliminated. These condensed consolidated financial statements and related notes should be read in conjunction with our ~~2020~~2021 audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, or our ~~2020~~2021 Form 10-K.

These condensed consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission, or the SEC. In our opinion they reflect all adjustments, including normal recurring items, that are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States, or GAAP, have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading.

Due to the ongoing impacts from the coronavirus ("COVID-19") pandemic, seasonal variations in the demand for air travel, the volatility of aircraft fuel prices, and other factors, our operating results for the periods presented herein are not necessarily indicative of the results that may be expected for other interim periods or the entire fiscal year.

Investment Securities

Investment securities consist of available-for-sale investment securities, held-to-maturity investment securities, and ~~held-to-maturity~~equity investment securities. When sold, we use a specific identification method to determine the cost of the securities.

Available-for-sale investment securities. Our available-for-sale investment securities include investments such as time deposits, ~~equity securities of publicly traded companies,~~commercial paper, and convertible debt securities. Our investments in equity securities of publicly traded companies are classified as Level 1 in the fair value hierarchy as their fair values are based on unadjusted quoted prices in active markets for identical assets.

The fair values of ~~our time deposits and convertible debt securities~~these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the fair value hierarchy. We did ~~not~~not record any material gains or losses on these securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 or ~~2020.~~2021. Refer to Note 87 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

Held-to-maturity investment securities.Our held-to-maturity investment securities consist of investment-grade interest bearing instruments, such as corporate bonds and U.S. Treasury notes, which are stated at amortized cost. We do not intend to sell these investment securities and the contractual maturities are not greater than 24 months. Those with maturities of less than twelve months are included in short-term investments on our consolidated balance sheets. Those with remaining maturities in excess of twelve months are included in long-term investments on our consolidated balance sheets. We did ~~not have any held-to-maturity investments as of September 30, 2021 and December 31, 2020. We did not~~not record any material gains or losses on these securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 or ~~2020.~~2021.

Equity investment securities. Our equity investment securities include investments in common stocks of publicly traded companies which are stated at fair value. We recognized a net unrealized loss of $8 million on these securities during the six months ended June 30, 2022. No gains or losses were recorded during the same period in 2021.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The aggregate carrying values of our short-term and long-term investment securities consisted of the following at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in millions):


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Available-for-sale securities
Available-for-sale investment securities						Available-for-sale investment securities
Time deposits	Time deposits	$	1,060	$	1,130	Time deposits	$	795	$	790
Equity securities		36		—
Debt securities	Debt securities	5		7		Debt securities	10		8
Total available-for-sale securities		1,101		1,137
Commercial Paper						Commercial Paper	51		2
Total available-for-sale investment securities						Total available-for-sale investment securities	856		800
Held-to-maturity investment securities						Held-to-maturity investment securities
Corporate bonds						Corporate bonds	120		37
Total held-to-maturity investment securities						Total held-to-maturity investment securities	120		37
Equity investment securities						Equity investment securities
Common stock of publicly traded companies						Common stock of publicly traded companies	17		26
Total equity investment securities						Total equity investment securities	17		26
Total investment securities	Total investment securities	$	1,101	$	1,137	Total investment securities	$	993	$	863

Other Investments

Our wholly-owned subsidiary, JetBlue Technology Ventures, LLC, or JTV, has equity investments in emerging companies which do not have readily determinable fair values. In accordance with Topic 321, Investments - Equity Securities of the Financial Accounting Standards ~~Update ("ASU") 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~,Board Accounting Standards Codification, or the FASB Codification, we account for these investments using a measurement alternative which allows entities to measure these investments at cost, less any impairment, adjusted for changes from observable price changes in orderly transactions for

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

identifiable or similar investments of the same issuer. The carrying amount of these investments ~~which is included within other assets on our consolidated balance sheet,~~ was ~~$67~~$77 million and ~~$40~~$72 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. We ~~recognized a gain of $37 million~~did not record any material gains or losses on these investments during the three and ~~nine~~six months ended ~~September~~June 30, 2021. The gain was triggered by an observable transaction for a similar security issued by a company within the JTV investment portfolio which indicated a change in overall valuation. We estimated the fair value of our investment in the company using third party valuations2022 and considered specific circumstances such as our expectation of a potential exit from the company, prices from previous issuances of equity securities, the rights and obligations of holders of similar securities within the company, and estimates of volatility. Due to the use of significant unobservable inputs, our investment is classified as Level 3 in the fair value hierarchy. In August 2021, we recognized a one-time gain of $17 million in connection with the initial public offering of a company within the JTV investment portfolio. The carrying value of this investment, which is included within short-term investment securities on our consolidated balance sheet, ~~was $36 million as of~~ ~~September 30,~~ 2021.

We have an approximate 10% ownership interest in the TWA Flight Center Hotel at John F. Kennedy International Airport and it is also accounted for under the measurement alternative. The carrying amount of this investment was $14 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Equity Method Investments

Investments in which we can exercise significant influence are accounted for using the equity method in accordance with Topic 323, Investments - Equity Method and Joint Ventures of the ~~Financial Accounting Standards Board (the "FASB") Accounting Standards Codification (the "Codification").~~FASB Codification. The carrying amount of our equity method investments was ~~$33~~$40 million and ~~$34~~$32 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included within other assets on our consolidated balance sheets. In June 2022, we recognized a gain of

~~Recently Adopted Accounting Standards~~

~~New accounting rules and disclosure requirements can impact our financial results and the comparability~~ $2 million on one of our financial statements. The authoritative literature which has recently been issued and that we believe will impact our consolidated financial statements is described below. There are also several new proposals under development. If and when enacted, these proposals may have a significant impact on our financial statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update eliminates, clarifies, and modifies certain guidance~~equity method investments related to its issuance of additional shares upon the ~~accounting for income taxes. We adopted the requirements~~closing of ~~ASU 2019-12 as of January 1, 2021. The adoption of ASU 2019-12 did not have~~ a ~~material impact on our condensed consolidated financial statements.~~

~~In August 2020, the FASB issued ASU 2020-06,~~ Debt —Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ~~("ASU 2020-06")~~. This update simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion feature and for convertible instruments with a beneficial conversion feature. As a result, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, this update amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The treasury stock method is no longer available. Entities may adopt the requirements of ASU 2020-06 using either a full or modified retrospective approach, and it is effective for interim and annual reporting periods beginning after December 15, 2021. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2020. We adopted the requirements of ASU 2020-06 as of January 1, 2021. The adoption did not have an impact on our condensed consolidated financial statements as we did not have any convertible instruments outstanding as of December 31, 2020. As discussed in Note 3 to our condensed consolidated financial statements, in March 2021, we completed a private offering for $750 million of 0.50% convertible notes due 2026. We evaluated the conversion feature of this note offering for embedded derivatives in accordance with ASC 815, ~~Derivatives and Hedging, and the substantial premium model in accordance with ASC 470,~~ ~~Debt~~. Based on our assessment, we concluded that separate accounting for the conversion feature of this note offering is not required. The carrying value of this convertible note was included within long-term debt and finance lease obligations on our consolidated balance sheet as of September 30, 2021.subsequent financing round.

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Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 2— Revenue Recognition

The Company categorizes the revenues received from contracts with its customers by revenue source as we believe it best depicts the nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenues recognized by revenue source for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Passenger revenue	Passenger revenue									Passenger revenue
Passenger travel	Passenger travel	$	1,773	$	420	$	3,717	$	1,973	Passenger travel	$	2,162	$	1,322	$	3,651	$	1,945
Loyalty revenue - air transportation	Loyalty revenue - air transportation	83		25		196		153		Loyalty revenue - air transportation	140		66		253		113
Other revenue	Other revenue									Other revenue
Loyalty revenue	Loyalty revenue	80		38		206		127		Loyalty revenue	95		81		184		126
Other revenue	Other revenue	36		9		84		42		Other revenue	48		30		93		48
Total revenue	Total revenue	$	1,972	$	492	$	4,203	$	2,295	Total revenue	$	2,445	$	1,499	$	4,181	$	2,232

TrueBlue® is our customer loyalty program designed to reward and recognize our customers. TrueBlue® points earned from ticket purchases are presented as a reduction to Passenger travel within ~~passenger~~Passenger revenue. Amounts presented in Loyalty revenue - air transportation represent the revenue recognized when TrueBlue® points have been redeemed and the travel has occurred.

~~In June 2021,~~Loyalty revenue within Other revenue is primarily comprised of the ~~Company entered into an Amended and Restated Co-Branded Card Agreement with Barclaycard~~non-air transportation elements of the sales of our TrueBlue® ~~(the "Co-Brand Agreement"). The Co-Brand Agreement, which amends and restates the existing Barclaycard~~® Co-Brand Agreement, extends the term to 2031 and modifies certain other terms. The terms of the Co-Brand Agreement are effective as of January 1, 2021. The performance obligations such as air transportation; use of the JetBlue brand name, and access to our frequent flyer customer lists; advertising; and other airline benefits are consistent with the previous agreement. We continue to use the accounting method that allocates the consideration received based on the relative selling prices of those performance obligations. The increase in loyalty program revenues are primarily related to brand and non-air transportation elements. In addition, in July 2021, the Company entered into an Amended and Restated Co-Branded Card Agreement with MasterCard® ~~to continue our partnership as network provider under the Co-Brand Agreement.~~points.

Contract Liabilities

Our contract liabilities primarily consist of ticket sales for which transportation has not yet been provided, unused credits available to customers, and outstanding loyalty points available for redemption (in millions):


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Air traffic liability - passenger travel	Air traffic liability - passenger travel	$	1,416	$	964	Air traffic liability - passenger travel	$	1,690	$	1,323

Air traffic liability - loyalty program and deferred revenue		1,473		825
Air traffic liability - loyalty program (air transportation)						Air traffic liability - loyalty program (air transportation)	927		891
Deferred revenue(1)						Deferred revenue(1)	571		613
Total	Total	$	2,889	$	1,789	Total	3,188		2,827

(1) Deferred revenue is included within other accrued liabilities and other liabilities on our consolidated balance sheets.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recognized passenger revenue ~~of $468~~of $973 million and ~~$697~~$371 million respectively that was included in passenger travel liability at the beginning of the respective periods.

The Company elected the practical expedient that allows entities to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets if the contract has an original expected duration of one year or less or if certain other conditions are met. We elected to apply this practical expedient to our contract liabilities relating to passenger travel and ancillary services as our tickets or any related passenger credits generally expire one year from the date of issuance.

TrueBlue® points are combined in one homogeneous pool and are not separately identifiable. As such, the revenue is comprised of the points that were part of the air traffic liability balance at the beginning of the period as well as points that were issued during the period.

1211

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points earned and sold to participating companies for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (in millions):


Balance at December 31, 2021	$	891
TrueBlue® points redeemed	(253)
TrueBlue® points earned and sold	289
Balance at June 30, 2022	$	927

Balance at December 31, 2020	$	733
TrueBlue® points redeemed	~~(196)~~(113)
TrueBlue® points earned and sold	~~308~~186
Balance at ~~September~~June 30, 2021	$	~~845~~

~~Balance at December 31, 2019~~	$	~~661~~
~~TrueBlue~~® ~~points redeemed~~	~~(153)~~
~~TrueBlue~~® ~~points earned and sold~~	~~195~~
~~Balance at September 30, 2020~~	$	~~703~~806

The timing of our TrueBlue® point redemptions can vary; however, the majority of our points are redeemed within approximately three years of the date of issuance.

Note 3—Long-term Debt, Short-term Borrowings and Finance Lease Obligations

During the six months ended June 30, 2022, we made payments of $189 million on our outstanding debt and finance lease obligations.

We pledged aircraft, engines, other equipment, and facilities with a net book value of $6.5 billion at June 30, 2022 as security under various financing arrangements.

At June 30, 2022, scheduled maturities of our long-term debt and finance lease obligations were $163 million for the remainder of 2022, $557 million in 2023, $332 million in 2024, $192 million in 2025, $929 million in 2026, and $1.6 billion thereafter.

1312

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~Note 3—Long-term Debt, Short-term Borrowings and Finance Lease Obligations~~

~~During the nine months ended September 30, 2021, we made payments of $1.8 billion on our outstanding debt and finance lease obligations and issued $1.0 billion of~~ ~~additional debt.~~

~~We had pledged aircraft, engines, other equipment, and facilities with a net book value of $5.9 billion at September 30, 2021 as security under various financing arrangements.~~

At September 30, 2021, scheduled maturities of our long-term debt and finance lease obligations were $130 million for the remainder of 2021, $355 million in 2022, $564 million in 2023, $332 million in 2024, $192 million in 2025, and $2.6 billion thereafter.

The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows (in millions):


		September 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
		Carrying Value		Estimated Fair Value(2)		Carrying Value		Estimated Fair Value(2)			Carrying Value		Estimated Fair Value(1)		Carrying Value		Estimated Fair Value(1)
Public Debt	Public Debt									Public Debt
Fixed rate special facility bonds, due through 2036	Fixed rate special facility bonds, due through 2036	$	42	$	46	$	42	$	45	Fixed rate special facility bonds, due through 2036	$	42	$	43	$	42	$	45
Fixed rate enhanced equipment notes:	Fixed rate enhanced equipment notes:									Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	2019-1 Series AA, due through 2032	547		464		560		440		2019-1 Series AA, due through 2032	518		352		532		442
2019-1 Series A, due through 2028	2019-1 Series A, due through 2028	170		157		174		152		2019-1 Series A, due through 2028	162		128		166		150
2019-1 Series B, due through 2027	2019-1 Series B, due through 2027	101		132		107		139		2019-1 Series B, due through 2027	88		98		94		121
2020-1 Series A, due through 2032	2020-1 Series A, due through 2032	607		675		627		658		2020-1 Series A, due through 2032	566		490		587		634
2020-1 Series B, due through 2028	2020-1 Series B, due through 2028	161		215		170		223		2020-1 Series B, due through 2028	144		159		153		199
Non-Public Debt	Non-Public Debt									Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	Fixed rate enhanced equipment notes, due through 2023	88		89		114		116		Fixed rate enhanced equipment notes, due through 2023	67		65		88		88
Fixed rate equipment notes, due through 2028	Fixed rate equipment notes, due through 2028	675		680		891		1,017		Fixed rate equipment notes, due through 2028	539		458		620		706
Floating rate equipment notes, due through 2028	Floating rate equipment notes, due through 2028	115		111		152		144		Floating rate equipment notes, due through 2028	78		69		103		99
Floating rate term loan credit facility, due through 2024		—		—		702		759
2020 sale-leaseback transactions, due through 2024										2020 sale-leaseback transactions, due through 2024	344		342		347		374
Unsecured CARES Act Payroll Support Program loan, due through 2030	Unsecured CARES Act Payroll Support Program loan, due through 2030	259		224		259		207		Unsecured CARES Act Payroll Support Program loan, due through 2030	259		156		259		219
Secured CARES Act Loan, due through 2025		—		—		104		104
Citibank line of credit, due through 2023		—		—		546		533
2020 sale-leaseback transactions, due through 2024		348		382		352		393
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		124		—		—		Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		85		144		121
Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031										Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		78		132		111
0.50% convertible senior notes due 2026	0.50% convertible senior notes due 2026	735		680		—		—		0.50% convertible senior notes due 2026	737		578		736		673
Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031		132		114		—		—
Total(1)		$	4,124	$	4,093	$	4,800	$	4,930
Total(2)										Total(2)	$	3,820	$	3,101	$	4,003	$	3,982

(1) ~~Total excludes finance lease obligations of~~ ~~$27 million~~ ~~and $63 million at September 30, 2021 and December 31, 2020, respectively.~~

~~(2)~~ The estimated fair values of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. ~~The fair values of our enhanced equipment notes and our special facility bonds were based on quoted market prices in markets with low trading volumes.~~ The fair value of our non-public debt was estimated using a discounted cash flow analysis based on our borrowing rates for instruments with similar terms and therefore classified as Level 3 in the fair value hierarchy. ~~The fair values of our other financial instruments approximate their carrying values.~~ Refer to Note 87 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

~~Table~~(2) Total excludes finance lease obligations of ~~Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

$2 million

and $3 million at June 30, 2022 and December 31, 2021, respectively.

We have financed certain aircraft with Enhanced Equipment Trust Certificates, or EETCs. One of the benefits of this structure is being able to finance several aircraft at one time, rather than individually. The structure of EETC financing is that we create pass-through trusts in order to issue pass-through certificates. The proceeds from the issuance of these certificates are then used to purchase equipment notes, which are issued by us and are secured by our aircraft. These trusts meet the definition of a variable interest entity, or VIE, as defined in ~~the~~Topic 810, ~~Consolidations~~Consolidation ~~topic~~ of the FASB Codification, and must be considered for consolidation in our financial statements. Our assessment of our EETCs considers both quantitative and qualitative factors including the purpose for which these trusts were established and the nature of the risks in each. The main purpose of the trust structure is to enhance the credit worthiness of our debt obligation through certain bankruptcy protection provisions and liquidity facilities, and also to lower our total borrowing cost. We concluded that we are not the primary beneficiary in these trusts because our involvement in them is limited to principal and interest payments on the related notes, the trusts were not set up to pass along variability created by credit risk to us, and the likelihood of our defaulting on the notes. Therefore, we have not consolidated these trusts in our financial statements.

~~0.50% Convertible Senior Notes due 2026~~

In March 2021, we completed a private offering for $750 million of 0.50% convertible notes due 2026. The notes are general senior unsecured obligations and will rank equal in right of payment with all of our existing and future senior unsecured indebtedness and senior in right of payment to our existing and future subordinated debt. The notes will effectively rank junior in right of payment to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all of our indebtedness and other liabilities. The net proceeds from this offering were approximately $734 million.

Holders of the notes may convert them into shares of our common stock prior to January 1, 2026 only under certain circumstances (such as upon the satisfaction of the sale price condition, the satisfaction of the trading price condition, notice of redemption, or specified corporate events) and thereafter at any time at a rate of 38.5802 shares of common stock per $1,000 principal amount of notes, which corresponds to an initial conversion price of approximately $25.92 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events, including, but not limited to, the issuance of certain stock dividends on common stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness or assets, cash dividends and certain issuer tender or exchange offers.

Upon conversion, the notes will be settled in cash up to the aggregate principal amount of the notes to be converted and, at our election, in shares of our common stock, cash or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation.

We are not required to redeem or retire the notes periodically. We may, at our option, redeem any of the notes for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest at any time on or after April 1, 2024 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption to the holders.

As discussed in Note 1 to our condensed consolidated financial statements, we early adopted the provisions of ASU 2020-06. Accordingly, we evaluated the conversion feature of this note offering for embedded derivatives in accordance with ASC 815, ~~Derivatives and Hedging,~~ ~~and the substantial premium model in accordance with ASC 470,~~ ~~Debt. Based on our assessment, separate accounting for the conversion feature of this note offering is not required.~~

Interest expense of $2 million and $4 million were recognized for the three and nine months ended September 30, 2021, respectively. Included within interest expense were $1 million and $2 million of debt issuance costs amortization for the three and nine months ended September 30, 2021, respectively.

~~Floating Rate Term Loan Credit Facility~~

On June 17, 2020, we entered into a $750 million term loan credit facility with Barclays Bank PLC, as administrative agent (the "Term Loan"). The loans thereunder bore interest at a variable rate equal to LIBOR (subject to a 1.00% floor), or at our election, another rate, in each case, plus a specified margin. Our obligations were secured on a senior basis by airport takeoff and landing slots at LaGuardia Airport, John F. Kennedy International Airport, and Reagan National Airport and the right to use certain intellectual property assets comprising the JetBlue brand.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

2022 $3.5 Billion Senior Secured Bridge Facility

On May 16, 2022, we, along with our direct wholly-owned subsidiary, Sundown Acquisition Corp., commenced a tender offer to purchase all of the outstanding shares of common stock, par value $0.0001 per share, of Spirit Airlines, Inc. ("Spirit") at $30.00 per share, upon the terms and subject to the conditions set forth in the Offer to Purchase (the “Offer to Purchase”) and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”), which were included as exhibits to the Tender Offer Statement on Schedule TO filed with the SEC on May 16, 2022.In connection with the Offer, on May 23, 2022, we executed a commitment letter with Goldman Sachs Bank USA, Bank of America, N.A. and BofA Securities, Inc. for a senior secured bridge facility in an aggregate principal amount of up to $3.5 billion, which was amended and restated on June ~~17, 2021,~~11, 2022 to include other lenders that have committed to the ~~Company voluntarily repaid~~facility (BNP Paribas; Credit Suisse AG, New York Branch; Credit Suisse Loan Funding LLC; Credit Agricole Corporate and Investment Bank; Natixis, New York Branch; Sumitomo Mitsui Banking Corporation; and MUFG Bank, Ltd.). The Offer was terminated concurrently with the entry into the Merger Agreement (as defined below).

In connection with the entry into the Merger Agreement, JetBlue entered into a ~~portion~~second amended and restated commitment letter (the "Commitment Letter"), dated July 28, 2022, with Goldman Sachs Bank USA; BofA Securities, Inc.; Bank of ~~its outstanding borrowings under~~America, N.A.; BNP Paribas; Credit Suisse AG, New York Branch; Credit Suisse Loan Funding LLC; Credit Agricole Corporate and Investment Bank; Natixis, New York Branch; Sumitomo Mitsui Banking Corporation; and MUFG Bank, Ltd. (collectively, the ~~Term Loan. On~~“Commitment Parties”), pursuant to which the Commitment Parties have committed to provide a senior secured bridge facility in an aggregate principal amount of up to $3.5 billion to finance the acquisition of Spirit.

As part of the Commitment Letter, we have agreed to pledge, as part of any financing to be provided, certain specified collateral including aircraft and spare engines, rights to certain landing and takeoff slots at Gatwick Airport, John F. Kennedy International Airport, LaGuardia Airport, and Ronald Reagan Washington National Airport; as well as certain assets that comprise the JetBlue brand; and certain rights in the TrueBlue customer loyalty program. As of and for the periods ended June 30, 2021, the Company repaid the full remaining amount of outstanding borrowings under the Term Loan, which, together with its repayment of June 17, 2021, totaled approximately $722 million, plus accrued interest and associated fees. As of June 30, 2021, all obligations under the Term Loan, including all pledges of collateral were terminated in full. As of September 30, 2021,2022 we did not have a balance outstanding or any borrowings under ~~the Term Loan.~~this facility.

Federal Payroll Support Programs

As a result of the adverse economic impact of COVID-19, we have received assistance under various payroll support programs provided by the federal government.

CARES Act –— Payroll Support Program

On March 27, 2020, U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). Under the CARES Act, assistance was made available to the aviation industry in the form of direct payroll support (the "Payroll Support Program") and secured loans (the "Loan Program").

On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the United States Department of the Treasury ("Treasury") governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with a total of approximately $963 million (the "Payroll Support Payments") consisting of $704 million in grants and $259 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until April 23, 2025, and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% thereafter until April 23, 2030. The principal amount may be repaid at any time prior to maturity at par. As part of the agreement, JetBlue issued to Treasury warrants to acquire more than 2.7 million shares of our common stock under the program at an exercise price of $9.50 per share.

Consolidated Appropriations Act – Payroll Support Program 2

On January 15, 2021, we entered into a Payroll Support Program Extension Agreement (the "PSP Extension Agreement") with Treasury governing our participation in the federal ~~Payroll Support Program~~payroll support program for passenger air carriers under the United States Consolidated Appropriations Act, 2021 (the “Payroll Support Program 2"). Treasury provided us with a total of approximately $580 million (the "Payroll Support 2 Payments") under the program, consisting of $436 million in grants and $144 million in unsecured term ~~loans, with funding received on January 15, 2021, March 5, 2021 and April 29, 2021.~~loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until January 15, 2026, and the applicable SOFR plus 2.00% thereafter until January 15, 2031. In consideration for the Payroll Support 2 Payments, we issued warrants to purchase approximately 1.0 million shares of our common stock to Treasury at an exercise price of $14.43 per share.

American Rescue Plan Act – Payroll Support Program 3

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On May 6, 2021, we entered into a Payroll Support 3 Agreement (the "PSP3 Agreement") with Treasury governing our participation in the federal payroll support program for passenger air carriers under Section 7301 of the American Rescue Plan Act of 2021 (the "Payroll Support Program 3"). Treasury provided us with a total of approximately $541 million (the "Payroll Support 3 Payments") under the program, consisting of $409 million in grants and $132 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until May 6, 2026, and the applicable SOFR plus 2.00% thereafter until May 6, 2031. In consideration for the Payroll Support 3 Payments, we issued warrants to purchase approximately 0.7 million shares of our common stock to Treasury at an exercise price of $19.90 per share.

The warrants associated with each of the payroll support programs described above will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time.

The carrying values relating to the payroll support grants were recorded within other accrued liabilities and were recognized as a contra-expense within special items on our consolidated statements of operations as the funds were utilized. The relative fair value of the warrants were recorded within additional paid-in capital and reduced the total carrying value of the grants. Proceeds from the payroll support grants and from the issuance of payroll support warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. Our funding from all payroll support grants ~~were~~has been fully utilized as of September 30, 2021.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

The carrying values relating to the unsecured payroll support loans were recorded within long-term debt and finance lease obligations on our consolidated balance sheets. The proceeds from the loans were classified as financing activities on our condensed consolidated statement of cash flows.

CARES Act – Secured Loan Program

Under the CARES Act Loan Program, JetBlue had the ability to borrow up to a total of approximately $1.9 billion from Treasury. We entered into a loan and guarantee agreement (the "Loan Agreement") with Treasury and made an initial drawing of $115 million under the CARES Act Loan Program on September 29, 2020. In connection with this initial drawing, we entered into a warrant agreement with Treasury, pursuant to which we issued to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share. The warrants will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time.

On September 15, 2021, the Company repaid the full amount of outstanding borrowings under the Loan Agreement, which, together with accrued interest and fees, totaled approximately $118 million. As of ~~September~~June 30, ~~2021,~~2022, we did not have a balance outstanding and all obligations under the Loan Agreement, including all pledges of collateral, were terminated in full.

~~Fixed Rate Enhanced Equipment~~0.50% Convertible Senior Notes

~~2020-1A and B Equipment Notes~~ due 2026

In ~~August 2020,~~March 2021, we completed a ~~public placement~~private offering for $750 million of ~~equipment~~0.50% convertible notes due 2026. The notes are general unsecured senior obligations and will rank equal in right of payment with all of our existing and future senior unsecured indebtedness and senior in right of payment to our existing and future subordinated debt. The notes will effectively rank junior in right of payment to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all of our indebtedness and other liabilities. The net proceeds from this offering were approximately $734 million.

Upon conversion, the notes will be settled in cash up to the aggregate principal amount of ~~$808 million secured by 24 Airbus A321 aircraft. The equipment~~the notes ~~were issued~~to be converted and, at our election, in ~~two series: (i) Series A, bearing~~shares of our common stock, cash or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation.

We are not required to periodically redeem or retire the notes. We may, at our option, redeem any of the notes for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest at any time on or after April 1, 2024 if

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

the ~~rate~~last reported sale price of ~~4.00% per annum~~our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the ~~aggregate principal amount equal~~trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption to ~~$636~~the holders.

We evaluated the conversion feature of this note offering for embedded derivatives in accordance with Topic 815, Derivatives and Hedging of the FASB Codification, and the substantial premium model in accordance with ASC 470, Debt of the FASB Codification. Based on our assessment, separate accounting for the conversion feature of this note offering is not required.

Interest expense recognized during the six months ended June 30, 2022 was $4 million and ~~(ii) Series B, bearing~~included $2 million in amortization of debt issuance costs.During the six months ended June 30, 2021, interest ~~at the rate~~expense recorded was $2 million and included $1 million in amortization of ~~7.75% per annum in the aggregate principal amount equal to $172 million. Principal and interest are payable semi-annually in arrears.~~debt issuance costs.

~~2019-1B Equipment Notes~~Floating Rate Term Loan Credit Facility

~~In August~~On June 17, 2020, we ~~completed~~entered into a ~~public placement of equipment notes in an aggregate principal amount of $115~~$750 million ~~bearing~~term loan credit facility with Barclays Bank PLC, as administrative agent (the "Term Loan"). The loans thereunder bore interest at a variable rate ~~of 8.00% per annum. These equipment notes are~~equal to LIBOR (subject to a 1.00% floor), or at our election, another rate, in each case, plus a specified margin. Our obligations were secured on a senior basis by ~~25 Airbus A321 aircraft, which were included in the collateral pool of our 2019-1 Series AA~~airport takeoff and ~~Series A offerings completed in November 2019. Principal~~landing slots at LaGuardia Airport, John F. Kennedy International Airport, and ~~interest are payable semi-annually in arrears.~~

~~2020 Sale-Leaseback Transactions~~

In 2020, we executed $563 million of aircraft sale-leaseback transactions. Of these transactions, $354 million did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipmentReagan National Airport and the ~~related liabilities~~right to use certain intellectual property assets comprising the JetBlue brand.

On June 17, 2021, the Company voluntarily repaid a portion of its outstanding borrowings under the ~~lease~~Term Loan. On June 30, 2021, the Company repaid the full remaining amount of outstanding borrowings under the Term Loan, which, together with its repayment of June 17, 2021, totaled approximately $722 million, plus accrued interest and associated fees. As a result of this debt repayment, we recognized debt extinguishment expenses of $40 millionduring the six months ended June 30, 2021. These expenses are ~~classified~~included within ~~debt and finance leases obligations. These transactions are treated as cash from financing activities~~other expense on our consolidated statements of cash flows. The remaining $209 million of sale-leaseback transactions qualified as sales and generated a loss of $106 million. The assets associated with these transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our consolidated statements of cash flows.operations.

~~We did not execute any sale-leaseback transactions during the nine months ended September 30, 2021.~~Short-term Borrowings

Citibank ~~Revolving~~Line of Credit ~~Agreement~~

We have a revolving Credit and Guaranty Agreement with Citibank N.A. as the administrative agent, for up to $550 ~~million (the "Revolving Facility").~~million. The term of the ~~Revolving Facility~~facility runs through August 2023. Borrowings under the ~~Revolving Facility~~Credit and Guaranty Agreement bear interest at a variable rate equal to LIBOR, plus a margin. The ~~Revolving Facility~~Credit and Guaranty Agreement is secured by aircraft, simulators, and certain other ~~assets as permitted thereunder.~~assets. The ~~Revolving Facility~~Credit and Guaranty Agreement includes covenants that require us to maintain certain minimum balances in unrestricted cash, cash equivalents, and unused commitments available under revolving credit facilities. In addition, the covenants restrict our ability to, among other things, dispose of certain collateral, or merge, consolidate, or sell assets.

~~We borrowed the full amount of $550 million under this revolving credit facility on April 22, 2020.~~

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~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~We repaid the full balance of this facility in the first quarter of 2021.~~ As of and for the ~~quarter~~periods ended ~~September~~June 30, 2022 and December 31, 2021, we did not have a balance outstanding or any borrowings under ~~the Revolving Facility.~~

~~Short-term Borrowings~~this line of credit.

Morgan Stanley Line of Credit

We have a revolving line of credit with Morgan Stanley for up to approximately $200 million. This line of credit is secured by a portion of our investment securities held by Morgan Stanley and the amount available to us under this line of credit may vary accordingly. This line of credit bears interest at a floating rate based upon LIBOR, plus a margin. As of and for the periods ended ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we did not have a balance outstanding or any borrowings under this line of credit.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 4—(Loss) Earnings ~~(Loss)~~ Per Share

Basic earnings per share is calculated by dividing net (loss) income ~~(loss)~~ by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from restricted stock units, crewmember purchases made under the Company's ~~Crewmember~~crewmember Stock Purchase Plan, convertible notes, warrants issued under various federal payroll support programs, and any other potentially dilutive instruments using the treasury stock and if-converted methods. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were ~~1.9~~1.5 million for the three months ended ~~September~~June 30, ~~2020~~2022. There were no anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts for the three months ended. June 30, 2021. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were ~~3.5~~ 2.2 million and ~~1.7~~3.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~September~~June 30, ~~2020,~~2021, respectively.

The following table shows how we computed basic and diluted earnings per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars and share data in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income (loss) $ 130 $ (393) $ (53) $ (981)
Weighted average basic shares 318.0 272.4 317.3 274.3
Effect of dilutive securities 3.3 — — —
Weighted average diluted shares 321.3 272.4 317.3 274.3
Earnings (loss) per common share:
Basic $ 0.41 $ (1.44) $ (0.17) $ (3.58)
Diluted $ 0.40 $ (1.44) $ (0.17) $ (3.58)

On February 24, 2020, JetBlue entered into an accelerated share repurchase agreement, or ASR, paying $160 million for an initial delivery of 6.6 million shares. The term of the ASR concluded on March 16, 2020 with a delivery of 4.9 million additional shares to JetBlue on March 18, 2020. A total of 11.5 million shares, at an average price of $13.91 per share, were repurchased under the agreement.

~~Our share repurchase program has been suspended since March 31, 2020.~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net (loss) income	$	(188)	$	64	$	(443)	$	(183)

Weighted average basic shares	323.1		317.7		321.9		317.0
Effect of dilutive securities	—		3.8		—		—
Weighted average diluted shares	323.1		321.5		321.9		317.0

(Loss) earnings per common share
Basic	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)
Diluted	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)

Note 5—Crewmember Retirement Plan

We sponsor a retirement savings 401(k) defined contribution plan, or the Plan, covering all of our crewmembers where we match 100% of our crewmember contributions up to 5% of their eligible wages. The contributions vest over three years and are measured from a crewmember's hire date. Crewmembers are immediately vested in their voluntary contributions.

Another component of the Plan is a Company discretionary contribution of 5% of eligible non-management crewmember compensation, which we refer to as Retirement Plus. Retirement Plus contributions vest over three years and are measured from a crewmember's hire date.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Certain Federal Aviation Administration, or FAA, licensed crewmembers receive an additional contribution of 3% of eligible compensation, which we refer to as Retirement Advantage.

~~Effective August 1, 2018 and through December 31, 2020, our~~Our pilots ~~received~~receive a non-elective Company contribution of ~~15%~~16% of eligible pilot compensation per the terms of the collective bargaining agreement between JetBlue and the Air Line Pilots Association ~~or ALPA,~~("ALPA"), in lieu of the above 401(k) Company matching contribution, Retirement Plus, and Retirement Advantage contributions. ~~This non-elective Company contribution was increased to~~ ~~16% beginning on January 1, 2021.~~ ~~Refer to Note 6 to our condensed consolidated financial statements for additional information.~~The Company's non-elective contribution of 16% of eligible pilot compensation vests after three years of service.

Our non-management crewmembers are eligible to receive profit sharing, calculated as 10% of adjusted pre-tax income before profit sharing and special items up to a pre-tax margin of 18% with the result reduced by Retirement Plus contributions and the equivalent of Retirement Plus contributions for pilots. If JetBlue's resulting pre-tax margin exceeds 18%, non-management crewmembers will receive 20% profit sharing on amounts above an 18% pre-tax margin.

Total 401(k) company match contributions, Retirement Plus, Retirement Advantage, pilot retirement contribution, and profit sharing expensed for the ~~three~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020 were $57~~was $125 million and ~~$42 million, respectively, while the total expensed for the nine months ended September 30, 2021 and 2020 were $157 million and $135~~$100 million, respectively.

Note 6—Commitments and Contingencies

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Flight Equipment Commitments

As of ~~September~~June 30, ~~2021,~~2022, our firm aircraft orders consisted of 64 Airbus A321neo aircraft and 6489 Airbus A220 aircraft, scheduled for delivery through 2027. Committed expenditures for these aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits as of ~~September~~June 30, ~~2021~~2022 is approximately ~~$0.2 billion~~$571 million for the remainder of ~~2021, $0.9 billion in~~ 2022, $1.6 billion in 2023, ~~$1.8~~$2.0 billion in 2024, ~~$1.3~~$1.7 billion in 2025, $1.4 billion in 2026, and ~~$1.9~~$1.0 billion thereafter.

The amount of committed expenditures stated above represents the current delivery schedule set forth in our Airbus order book as of June 30, 2022. In February 2022, we received notice from Airbus of anticipated delivery delays for the A220 aircraft. We expect a delivery of a maximum of 9 A220 aircraft in 2022 as a result of the delays.

In October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new commercial aircraft and related parts imported from certain European Union member states, which include aircraft and other parts we are already contractually obligated to purchase, including those noted above. The U.S. Trade Representative increased the tariff to 15% effective March 2020. In March 2021, the U.S. Trade Representative announced a four-month suspension of the tariff that was followed by an announcement in June 2021 that the suspension will be extended for five years. We continue to work with our business partners, including Airbus, to evaluate the potential financial and operational impact of these announcements on our future aircraft deliveries, including after the suspension is lifted. The ~~continued~~ imposition of ~~the~~this or any tariff could substantially increase the cost of new ~~Airbus~~ aircraft and parts.

Other Commitments

We utilize several credit card processors to process our ticket sales. Our agreements with these processors do not contain covenants, but do generally allow the processor to withhold cash reserves to protect the processor from potential liability for tickets purchased, but not yet used for travel. While we currently do not have any collateral requirements related to our credit card processors, we may be required to issue collateral to our credit card processors, or other key business partners, in the future.

As of ~~September~~June 30, ~~2021,~~2022, we had approximately ~~$28~~$41 million in assets serving as collateral for letters of credit relating to a certain number of our leases. These are included in restricted cash and expire at the end of the related lease terms. Additionally, we had approximately ~~$26~~$34 million in assets pledged related to our workers' compensation insurance policies and other business partner agreements, which will expire according to the terms of the related policies or agreements.

~~Amid the COVID-19 pandemic, we reached an Agreement in Principle with ALPA to avoid involuntary furloughs of~~Except for our pilots ~~through at least October 1, 2021 in exchange for short-term changes to the collective bargaining agreement.~~

~~In April 2018, JetBlue~~and inflight crewmembers ~~elected to be solely~~who are represented by the Air Line Pilots Association ("ALPA") and the Transport Workers Union of America ~~or TWU. The National Mediation Board, or NMB, certified the TWU as the representative body for JetBlue inflight crewmembers. In November 2020,~~("TWU"), respectively, our ~~inflight crewmembers voted to reject the tentative collective bargaining agreement between JetBlue and the TWU. The parties have re-engaged in negotiations for a collective bargaining agreement.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Except as noted above, our~~other frontline crewmembers do not have third party representation.

In April 2021, ALPA, on behalf of the JetBlue pilot group, filed a grievance relating to the Northeast Alliance Agreement ("NEA"), an expanded codeshare and marketing alliance between JetBlue and American Airlines, Inc. ("American") at 4 Northeast airports. ALPA claims that in entering the NEA, JetBlue violated certain scope clauses as contained in the pilots’ ALPA collective bargaining agreement. The matter proceeded to arbitration pursuant to the grievance procedure contained in the collective bargaining agreement, which concluded in September 2021, and in January 2022, the parties submitted final, written briefs to the System Board of Adjustment. Shortly after submission of the briefs, the parties agreed to enter into non-binding mediation with the assistance of the arbitrator with a temporary hold on a System Board decision. As a result of the mediation process, the parties agreed to certain changes to the collective bargaining agreement. The agreement, ratified by the JetBlue pilot group in April 2022, included a one-time payment and associated payroll taxes of $32 million, paid and recorded as an expense within special items in the second quarter of 2022, and a 3% base pay increase effective May 1, 2022.

Legal Matters

Occasionally, we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters involving suppliers, ~~(business partners),~~ crewmembers, customers, and governmental agencies, arising, for the most part, in the ordinary course of business. The outcome of litigation and other legal matters is always uncertain. The Company believes it has valid defenses to the legal matters currently pending against it, is defending itself vigorously, and has recorded accruals determined in accordance with GAAP, where appropriate. In making a determination regarding accruals, using available information, we evaluate the likelihood of an unfavorable outcome in legal or regulatory proceedings to which we are a party and record a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

determinations are based on the status of such legal or regulatory proceedings, the merits of our defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to our consolidated results of operations, liquidity, or financial condition.

To date, none of these types of litigation matters, most of which are typically covered by insurance, has had a material impact on our operations or financial condition. We have insured and continue to insure against most of these types of claims. A judgment on any claim not covered by, or in excess of, our insurance coverage could materially adversely affect our consolidated results of operations, liquidity, or financial condition.

On September 21, 2021, the United States Department of Justice ~~(the “DOJ”~~("DOJ"), along with the Attorneys General of each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania, and Virginia, and the District of Columbia, filed a lawsuit in the United States District Court for the District of Massachusetts (the "Court") against JetBlue ~~Airways Corporation (“JetBlue”)~~ and American Airlines ~~Inc. (“American” and, together with JetBlue, the “Carriers”) concerning the Carriers’ previously implemented Northeast Alliance (the “NEA”). The lawsuit asserts and seeks an adjudication~~alleging that the ~~NEA~~North East Alliance (“NEA”) violates Section 1 of the Sherman Act, and asking that the ~~Carriers~~carriers be permanently enjoined from ~~continuing and restrained from further~~ implementing the NEA.

Also on September 21, 2021, the Department of Transportation ("DOT") published a Clarification Notice relating to the agreement that had been reached between the DOT, JetBlue, ~~believes~~and American in January 2021, at the ~~lawsuit is without merit~~conclusion of the DOT’s review of the NEA (the "DOT Agreement"). The DOT Clarification Notice stated, among other things, that the DOT Agreement remains in force during the pendency of the DOJ action against the NEA and, ~~along with American,~~while the DOT retains independent statutory authority to prohibit unfair methods of competition in air transportation, the DOT intends to ~~defend itself vigorously.~~defer to DOJ to resolve the antitrust concerns that the DOJ has identified with respect to the NEA. The DOT simultaneously published a Notice Staying Proceeding in relation to a complaint by Spirit regarding the NEA, pending resolution of the DOJ action described above.

In November 2021, JetBlue and American filed a motion to dismiss the DOJ's lawsuit and on June 9, 2022, the Court denied the motion to dismiss finding that the DOJ met the low pleading threshold needed to survive the motion to dismiss, but also stating that the Court takes no position as to whether DOJ will ultimately prevail on its claims. The trial is scheduled to begin in September 2022. Given the nature of this case, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

Note 7—~~Financial Derivative Instruments and Risk Management~~

As part of our risk management strategy, we periodically purchase over-the-counter energy derivative instruments and enter into fixed forward price agreements, or FFPs, to manage our exposure to the effect of changes in the price of jet fuel. Prices for the underlying commodities have historically been highly correlated to jet fuel, making derivatives of them effective at providing short-term protection against volatility in average fuel prices. We also periodically enter into jet fuel basis swaps for the differential between heating oil and jet fuel, to further limit the variability in fuel prices at various locations. We do not hold or issue any derivative financial instruments for trading purposes.

~~Aircraft Fuel Derivatives~~

~~We attempt to obtain cash flow hedge accounting treatment for each fuel derivative that we enter into. This treatment is provided for under ASC 815,~~ ~~Derivatives and Hedging~~ which allows for gains and losses on qualifying hedges to be deferred until the underlying planned jet fuel consumption occurs, rather than recognizing the gains and losses on these instruments into earnings during each period they are outstanding. When the underlying jet fuel is consumed and the related derivative contract settles, any gain or loss previously recorded in other comprehensive income is recognized in aircraft fuel expense. If a hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in interest income and other. All cash flows related to our fuel hedging derivatives are classified as operating cash flows.

Our current approach to fuel hedging is to enter into hedges on a discretionary basis without a specific target of hedge percentage needs. We view our hedge portfolio as a form of insurance to help mitigate the impact of price volatility and protect us against severe spikes in oil prices, when possible.

~~We did not have any fuel hedging contracts outstanding as of September 30, 2021 or December 31, 2020.~~

~~The table below reflects quantitative information related to our derivative instruments and where these amounts are recorded in our financial statements (dollar amounts in millions):~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Fuel derivatives
Hedge effectiveness losses recognized in aircraft fuel expense $ — $ 2 $ — $ 5
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other — 1 — 6
Hedge losses on derivatives recognized in comprehensive income — — — 11
Percentage of actual consumption economically hedged — % 27 % — % 25 %

Any outstanding derivative instrument exposes us to credit loss in connection with our fuel contracts in the event of nonperformance by the counterparties to the agreements, but we do not expect that any of our counterparties will fail to meet their obligations. The amount of such credit exposure is generally the fair value of our outstanding contracts for which we are in a receivable position. To manage credit risks we select counterparties based on credit assessments, limit our overall exposure to any single counterparty, and monitor the market position with each counterparty. Some of our agreements require cash deposits from either JetBlue or our counterparty if market risk exposure exceeds a specified threshold amount.

We have master netting arrangements with our counterparties allowing us the right of offset to mitigate credit risk in derivative transactions. The financial derivative instrument agreements we have with our counterparties may require us to fund all, or a portion of, outstanding loss positions related to these contracts prior to their scheduled maturities. The amount of collateral posted, if any, is periodically adjusted based on the fair value of the hedge contracts. Our policy is to offset the liabilities represented by these contracts with any cash collateral paid to the counterparties.

~~There were no offsetting derivative instruments as of September 30, 2021 or December 31, 2020.~~

~~Note 8—~~Fair Value

Under ~~the~~Topic 820, Fair Value ~~Measurements and Disclosures~~Measurement ~~topic~~ of the FASB Codification, disclosures are required about how fair value is determined for assets and liabilities and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs as follows:

Level 1 - observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 - quoted prices in active markets for similar assets and liabilities, and other inputs that are observable directly or indirectly for the asset or liability; or

Level 3 - unobservable inputs for the asset or liability, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following is a listing of our assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in millions):


		September 30, 2021									June 30, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,616	$	50	$	—	$	1,666	Cash equivalents	$	1,139	$	—	$	—	$	1,139
Available-for-sale investment securities	Available-for-sale investment securities	36		1,065		—		1,101		Available-for-sale investment securities	—		856		—		856

Equity investment securities										Equity investment securities	17		$	—	—		17

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


		December 31, 2020									December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,330	$	130	$	—	$	1,460	Cash equivalents	$	1,515	$	—	$	—	$	1,515
Available-for-sale investment securities	Available-for-sale investment securities	—		1,137		—		1,137		Available-for-sale investment securities	—		800		—		800
Equity investment securities										Equity investment securities	26		—		—		26

Refer to Note 3 to our condensed consolidated financial statements for fair value information related to our outstanding debt obligations as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Cash equivalents

Our cash equivalents include money market securities and time deposits which are readily convertible into cash, have maturities of three months or less when purchased, and are considered to be highly liquid and easily tradable. The money market securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy. The fair values of remaining instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy.

Available-for-sale investment securities

Our available-for-sale investment securities include investments such as time deposits ~~equity securities of publicly traded companies,~~ and convertible debt securities. Our investments in equity securities of publicly traded companies are classified as Level 1 in the fair value hierarchy as their fair values are based on unadjusted quoted prices in active markets for identical assets. The fair values of ~~our time deposits and convertible debt securities~~these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the ~~fair value~~ hierarchy. We did not record any material gains or losses on these securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Equity investment securities

Our equity investment securities include investments in common stocks of publicly traded companies. The fair values of these instruments are classified as Level 1 in the hierarchy as they are based on unadjusted quoted prices in active markets for identical assets. We recognized a net unrealized loss of $6 million and $8 million on these securities during the three and six months ended June 30, 2022, respectively. No gains or losses were recorded during the same periods in 2021.

2220

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 8—Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) includes changes in fair value of our available-for-sale securities. A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the three months ended June 30, 2022 and 2021 is as follows (in millions):


	Available-for-sale securities(1)
Balance of accumulated income (loss), at March 31, 2022	$	(1)
Reclassifications into earnings, net of taxes of $0	—
Change in fair value, net of taxes of $0	(1)
Balance of accumulated income (loss), at June 30, 2022	$	(2)

Balance of accumulated income (loss), at March 31, 2021	$	—
Reclassifications into earnings, net of taxes $0	—
Change in fair value, net of taxes of $0	—
Balance of accumulated income (loss), at June 30, 2021	$	—

A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the six months ended June 30, 2022 and 2021 is as follows (in millions):


	Available-for-sale securities(1)
Balance of accumulated income (loss), at December 31, 2021	$	—
Reclassifications into earnings, net of taxes of $0	—
Change in fair value, net of taxes of $0	(2)
Balance of accumulated income (loss), at June 30, 2022	$	(2)

Balance of accumulated income (loss), at December 31, 2020	$	—
Reclassifications into earnings, net of taxes $0	—
Change in fair value, net of taxes of $0	—
Balance of accumulated income (loss), at June 30, 2021	$	—

(1) Reclassified to interest income.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 9—~~Accumulated Other Comprehensive Income (Loss)~~

Comprehensive income (loss) includes changes in fair value of our aircraft fuel derivatives which qualify for hedge accounting. A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the three months ended September 30, 2021 and 2020 is as follows (in millions):


	~~Aircraft Fuel Derivatives(1)(2)~~
~~Balance of accumulated income, at June 30, 2021~~	$	—
~~Reclassifications into earnings, net of deferred taxes of $0~~	—
~~Change in fair value, net of deferred taxes of $0~~	—
~~Balance of accumulated income, at September 30, 2021~~	$	—

~~Balance of accumulated (loss), at June 30, 2020~~	$	~~(3)~~
~~Reclassifications into earnings, net of deferred taxes $(1)~~	1
~~Change in fair value, net of deferred taxes of $0~~	—
~~Balance of accumulated (loss), at September 30, 2020~~	$	~~(2)~~

~~A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the nine months ended September 30, 2021 and 2020 is as follows (in millions):~~


	~~Aircraft Fuel Derivatives(1)(2)~~
~~Balance of accumulated income, at December 31, 2020~~	$	—
~~Reclassifications into earnings, net of deferred taxes of $0~~	—
~~Change in fair value, net of deferred taxes of $0~~	—
~~Balance of accumulated income, at September 30, 2021~~	$	—

~~Balance of accumulated income, at December 31, 2019~~	$	2
~~Reclassifications into earnings, net of deferred taxes $(4)~~	7
~~Change in fair value, net of deferred taxes of $5~~	~~(11)~~
~~Balance of accumulated (loss), at September30, 2020~~	$	~~(2)~~

~~(1) Reclassified to aircraft fuel expense.~~

(2) In 2020, we made several capacity reductions in response to the COVID-19 pandemic. These capacity reductions led to the discontinuance of hedge accounting on a number of our aircraft fuel derivatives as the forecasted consumption of aircraft fuel was no longer probable. Losses of $1 million and $5 million that were previously deferred in other comprehensive loss were reclassified to interest income and other during the three and nine months ended September 30, 2020, respectively.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Note 10—~~Special Items

The following is a listing of special items presented on our consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Special Items	Special Items									Special Items
Federal payroll support grant recognition(1)	Federal payroll support grant recognition(1)	$	(186)	$	(332)	$	(830)	$	(636)	Federal payroll support grant recognition(1)	$	—	$	(357)	$	—	$	(644)
CARES Act employee retention credit(2)	CARES Act employee retention credit(2)	—		—		(11)		—		CARES Act employee retention credit(2)	—		(9)		—		(11)
Fleet impairment(3)		—		56		—		258
Severance and benefit costs(4)		—		58		—		58
Losses on sale-leaseback transactions(5)		—		106		—		106
Fleet Impairment (3)										Fleet Impairment (3)	5		—		5		—
Air Lines Pilot Association ratification bonus (4)										Air Lines Pilot Association ratification bonus (4)	32		—		32		—
Spirit Airlines, Inc. proposal expenses (5)										Spirit Airlines, Inc. proposal expenses (5)	7		—		7		—
Total	Total	$	(186)	$	(112)	$	(841)	$	(214)	Total	$	44	$	(366)	$	44	$	(655)

(1) As discussed in Note 3 to our condensed consolidated financial statements, we received assistance in the form of grants and unsecured loans under various federal payroll support ~~programs.~~programs in 2020 and 2021. Funds under these federal payroll support programs were to be used exclusively for the continuation of payment of crewmember wages, salaries and benefits. The carrying values of the payroll support grants (after consideration of the warrants we issued) were recorded within other liabilities and were recognized as contra-expenses within special items on our consolidated statements of operations as the funds ~~are~~were utilized. We utilized ~~$186~~$357 million and ~~$830~~$644 million of ~~the~~ payroll support grants for the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively. Our payroll support grants were fully utilized as of September 30, 2021.

(2) The Employee Retention Credit ("ERC") under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers can qualify for up to $5,000 of credit for each employee based on qualified wages paid after March 12, 2020 and before January 1, 2021. The Internal Revenue Service ("IRS") subsequently issued Notice 2021-23 and Notice 2021-49 which collectively extended the ERC eligibility to cover qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee for the time that the employee is not providing services due to an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. Our policy is to recognize the ERC when it is filed with the ~~IRS.~~Internal Revenue Service. We recognized $9 million and $11 million of ERC as a contra-expense within special items on our consolidated statements of operations for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021. No ERC was recognized during the three months ended September 30, 2021.~~2021, respectively.

(3) Under ~~the~~Topic 320 - Property, Plant, and Equipment ~~topic~~ of the FASB Codification, we are required to assess long-lived assets for impairment when events and circumstances indicate that the assets may be impaired. An impairment of long-lived assets exists when the sum of the estimated undiscounted future cash flows expected to be generated directly by the assets are less than the book value of the assets. Our long-lived assets include both owned and leased properties which are classified as property and equipment, and operating lease assets on our consolidated balance sheets, respectively.

~~Our operations were adversely impacted by the unprecedented decline in demand for travel caused by the COVID-19 pandemic.~~ To determine if impairment exists in our fleet, we grouped our aircraft by fleet-type and estimated their future cash flows based on projections of capacity, aircraft age, ~~maintenance requirements,~~ and ~~other relevant~~maintenance conditions. Based on the assessment, we determined the future cash flows from the operation of our Embraer E190 fleet were lower than the carrying value. For those aircraft, including the ones that are under operating lease, and related spare parts in our Embraer E190 fleet, we recorded an impairment ~~loss~~losses of ~~$56 million and $258~~$5 million for the ~~three and nine~~six months ended ~~September~~ June 30, ~~2020, respectively.~~2022. These losses represent the difference between the book value of these assets and their fair value. ~~We estimated~~In determining fair value, we obtained third party valuations for our Embraer E190 fleet, which considered the effects of the current market environment, age of the assets, and marketability. For our owned Embraer E190 aircraft and related spare parts, we made adjustments to the valuations to reflect the impact of their current maintenance conditions to determine fair value. Our estimate of fair value was not based on distressed sales or forced liquidations. The fair value of our Embraer E190 aircraft under operating lease and related parts was based on the present value of current market lease rates utilizing a market discount rate for the remaining term of each lease. Since the fair value of our Embraer E190 fleet was determined using ~~third party valuations and considered specific circumstances such as aircraft age, maintenance requirements and condition, and therefore~~unobservable inputs, it is classified as Level 3 in the fair value hierarchy. We ~~evaluated~~evaluated the remaining fleet types and determined the future cash flows of our Airbus A320 and Airbus A321 ~~fleet~~fleets exceeded their carrying value as of ~~September 30, 2021.~~

~~No impairment loss was recorded for the three and nine months ended September 30, 2021.~~June

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As30, 2022.

We did not record any impairment loss on our long-lived assets for the ~~extent of the ongoing impact from the COVID-19 pandemic remains uncertain, we will update our assessment as new information becomes available.~~three and six months ended June 30, 2021.

(4) ~~The unprecedented declines~~As discussed in ~~demand and in our capacity caused by COVID-19 has led to a significant reduction~~Note 6 to our ~~staffing needs. In~~condensed consolidated financial statements, we paid $32 million for an ALPA ratification bonus and the associated payroll taxes during the three months ending June ~~2020,~~30, 2022.

(5) As discussed in Note 10 to our condensed consolidated financial statements, we ~~announced voluntary separation programs which allowed eligible crewmembers the opportunity~~incurred and paid $7 million for various expenses related to ~~voluntarily separate from the Company in exchange for severance, health coverage for a specified period~~our proposed acquisition of time, and travel privileges based on years of service. Virtually all of our crewmembers were eligible to participate in the voluntary separation program with the exception of our union-represented crewmembers and crewmembers of our wholly-owned subsidiaries (JetBlue Technology Ventures and JetBlue Travel Products). Separation agreements for the majority of the crewmembers who elected to participate in the voluntary programs were executed in the third quarter of 2020. One-time costs of $58 million, consisting of severance and health benefits, were recorded forSpirit during the three months ended ~~September~~June 30, ~~2020~~2022.

Note 10—Subsequent Event

Entry into Merger Agreement with Spirit

On July 28, 2022, JetBlue entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Spirit Airlines, Inc., a Delaware corporation (“Spirit”), and Sundown Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary of JetBlue (“Merger Sub”), pursuant to which and subject to the terms and conditions therein, Merger Sub will merge with and into Spirit, with Spirit continuing as the surviving corporation (the “Merger”).

As a result of the Merger, each existing share (“Share”) of Spirit’s common stock, par value $0.0001 per share, will be converted at the effective time of the Merger into the right to receive an amount in cash per Share, without interest, equal to (a) $33.50 minus (b) (i) to the extent paid, an amount in cash equal to $2.50 per Share and (ii) the lesser of (A) $1.15 and (B) the product of (1) $0.10 multiplied by (2) the number of Additional Prepayments (as defined below) paid prior to the date of the closing of the Merger (the “Closing Date”) (such amount in subclause (B), the “Aggregate Additional Prepayment Amount”).

Subject to the receipt of Spirit stockholder approval, on or prior to the last business day of each calendar month commencing after December 31, 2022, until the earlier of (a) the Closing Date and (b) the termination of the Merger Agreement in accordance with its terms, JetBlue will pay or cause to be paid to the holders of record of outstanding Shares as of a date not more than five business days prior to the last business day of such month, an amount in cash equal to $0.10 per Share (such amount, the “Additional Prepayment Amount,” each such monthly payment, an “Additional Prepayment”).

The Closing is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (a) receipt of Spirit stockholder approval; (b) receipt of applicable regulatory approvals, including approvals from the U.S. Federal Communications Commission (the “FCC”), U.S. Federal Aviation Administration (the “FAA”) and the U.S. Department of Transportation (the “DOT”); (c) the expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and approval under certain foreign antitrust laws; (d) the absence of any law or order prohibiting the consummation of the transactions; and (e) the absence of any material adverse effect on Spirit (as defined in the Merger Agreement).

Spirit, JetBlue and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement.

The Merger Agreement also contains certain provisions relating to efforts to obtain regulatory approval of the Merger, including to provide that JetBlue and Spirit, in connection with obtainingany necessary approval of a governmental entity (including under the ~~programs. Approximately $39 million of this charge was disbursed during~~HSR Act), will use their respective reasonable best efforts to take, or cause to be taken, all appropriate actions to obtain such approvals, including, to contest, defend and appeal any proceeding brought by a governmental entity challenging or seeking to prohibit the ~~third quarter of 2020. Substantially all~~consummation of the ~~remaining balance has been disbursed~~Merger, provided that JetBlue shall not be required to take any divestiture actions) if such action would or would reasonably be expected to result in a material adverse effect on JetBlue and its subsidiaries (including Spirit and its subsidiaries) after giving effect to the transactions contemplated by the Merger Agreement, taken as a whole, and in no event shall JetBlue be required to agree to any such divestiture action that, in JetBlue’s discretion, would be reasonably likely to materially and adversely affect the anticipated benefits of the parties to the Northeast Alliance Agreement between JetBlue and American Airlines, Inc., dated as of ~~September 30, 2021 with~~July 15, 2020, and the ~~residual amount expected to~~agreements contemplated thereby. Any such divestiture action may be ~~disbursed by mid-2022. Accruals related to~~conditioned upon the ~~voluntary separation programs are primarily recorded in accrued salaries, wages and benefits, and accounts payable on our consolidated balance sheets.~~

(5) In the third quarter of 2020, we executed $327 million of aircraft sale-leaseback transactions. Of these transactions, $118 million did not qualify as sales for accounting purposes. The remaining $209 million qualified as sales and generated a loss of $106 million. These losses represent the difference between the book value of these assets and their fair value. We estimated the fair valueclosing of the ~~related aircraft considering third~~Merger.

The Merger Agreement contains certain customary termination rights for JetBlue and Spirit, including, without limitation, a right for either party ~~valuations~~to terminate if the Merger is not consummated on or before July 28, 2023, which may be extended to January 28, 2024 and ~~considered specific~~to July 24, 2024 in certain circumstances ~~such~~(such date, as ~~aircraft age, maintenance requirements and condition, and therefore classified as Level 3 in~~extended, the ~~fair value hierarchy.~~“Outside Date”) if needed to obtain

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

the required regulatory approvals. Upon the termination of the Merger Agreement under specified circumstances, Spirit will be required to pay JetBlue a breakup fee of $94.2 million. The Merger Agreement also provides the methodology by which certain expenses of JetBlue will be borne by Spirit. In addition, upon the termination of the Merger Agreement by JetBlue because of a material, uncured breach by Spirit of the Merger Agreement, Spirit will be required to pay JetBlue an amount equal to the sum of all amounts paid by JetBlue to the Spirit stockholders prior to the date of such termination.

In the event that the Merger Agreement is terminated due to either (a) a governmental entity issuing an order or taking any other action permanently enjoining or otherwise prohibiting the Merger under U.S. federal competition laws, or (b) the Merger having not occurred by the Outside Date solely to the extent that the closing condition requiring (i) the waiting period applicable to the consummation of the Merger under the HSR Act (and any customary timing agreement with any governmental entity to toll, stay, or extend any such waiting period, or to delay or not to consummate the Merger contemplated by the Merger Agreement entered into in connection therewith) to have expired or been terminated or (ii) that no governmental entity has issued an order or taken any other action (whether temporary, preliminary or permanent) enjoining or otherwise prohibiting the Merger under U.S. federal competition laws, and that no law shall be in effect making the Merger illegal or preventing the consummation of the Merger under U.S. federal competition laws, in either case, has not been satisfied at a time when all other closing conditions to JetBlue’s obligations to consummate the Merger have been satisfied (or are capable of being satisfied if the closing were to occur on such date of termination), then (i) solely to the extent that the Remaining Parent Regulatory Fee (as defined in the Merger Agreement) is greater than zero, (A) JetBlue will pay directly to the stockholders of Spirit as of a record date that is five business days following the date of such termination an amount per Share in cash equal to the Remaining Regulatory Fee Per Share Amount (as defined in the Merger Agreement) and (B) JetBlue will pay to Spirit an amount equal to the Remaining Regulatory Fee Award Amount, in each case, on the second business day following such record date, and (ii) JetBlue will pay Spirit a fee in the amount of $70,000,000 (the “Additional Parent Regulatory Fee”) within two business days following the date of such termination; provided, however, that neither the Remaining Parent Regulatory Fee nor the Additional Parent Regulatory Fee will be payable by JetBlue pursuant to the terms of the Merger Agreement under specified circumstances.

Refer to Note 3 to our condensed consolidated financial statements for further detail of the $3.5 billion Senior Secured Bridge Facility issued to fund the purchase of Spirit.

Prior to the execution of the Merger Agreement, Spirit terminated the Agreement and Plan of Merger (the “Frontier Merger Agreement”), dated as of February 5, 2022, by and among Frontier Group Holdings, Inc., Top Gun Acquisition Corp., and Spirit, in accordance with its terms.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

~~The COVID-19 pandemic continues to have a significant impact on our~~Second Quarter 2022 Results

Our operating ~~revenues and financial position. We began seeing signs of recovery~~results in ~~February 2021 that continued to progress into~~ the ~~third~~second quarter of ~~2021. The length~~2021 and severity of the reduction in travel demand due to the COVID-19 pandemic are uncertain, but with increasing vaccination rates, reductions in infection rates related to new COVID-19 variants and easing of travel advisories and restrictions, we believe customer confidence will continue to grow. We expect widespread vaccinations to result in sustained demand improvement going forward, with recovery of domestic demand outpacing the recovery of international demand in most regions.

~~Third Quarter 2021 Results~~

~~Our third quarter~~ 2020 ~~results~~ were adversely impacted by the COVID-19 pandemic. As a result, comparisons of our ~~2021 results to 2020~~year-over-year performance are inflated and ~~are~~would not necessarily be indicative of our future operating results. In certain cases, we have also provided comparisons of our ~~third~~second quarter ~~2021~~2022 results to our ~~third~~second quarter 2019 results (or year-over-three), which are ~~more~~better reflective of pre-pandemic ~~operations.~~operations, allowing for a better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery.

•~~Third~~Second quarter system capacity increased by ~~134.1%~~20.2% year-over-year and ~~decreased~~increased by ~~0.8%~~2.3% versus the ~~third~~second quarter of 2019.

•Revenue for the ~~third~~second quarter of ~~2021~~2022 increased by ~~300.8%~~63.1%, or $946 million year-over-year, to ~~$2.0 billion and decreased by 5.5% versus~~$2.4 billion. Compared to the ~~third~~second quarter of ~~2019.~~2019, revenue increased by 16.1%, or $340 million.

•Operating revenue per available seat mile ~~(RASM)~~("RASM") for the ~~three months ended September 30, 2021~~second quarter of 2022 increased by ~~71.2%~~35.7% year-over-year to ~~12.20 cents year-over-year and decreased by 4.7% versus the three months ended September 30, 2019.~~14.90 cents. This compares to an increase of 13.5% year-over-three.

•Operating expense for the ~~third~~second quarter of ~~2021~~2022 increased by ~~77.1% year-over-year~~89.2% to ~~$1.8 billion and decreased by 2.9% versus~~$2.6 billion. Compared to the ~~third~~second quarter of ~~2019.~~2019, operating expense increased by 37.8%, or $702 million.

•Operating expense per available seat mile ~~(CASM)~~("CASM") for the ~~three months ended September 30, 2021 decreased~~second quarter of 2022 increased by ~~24.3% year-over-year~~57.4% to ~~11.04 cents and decreased by 2.1% versus~~15.59 cents. This compares to an increase of 34.7% from the ~~three months ended September 30,~~second quarter of 2019.

•Our operating expense for the ~~third~~second quarter of 2022, 2021, and ~~2020~~2019 included the effects of special items. In the third quarter of 2021, we recognized $186 million of contra-expense representing the amount of federal payroll support grants that were utilized during the period. Special items for the third quarter of 2020 included $332 million of payroll support grants under the CARES act recognized as a contra-expense on our consolidated statement of operations, $58 million of one-time costs associated with our voluntary crewmember separation program, $56 million of impairment charges on our Embraer E190 fleet, and losses of $106 million generated by certain aircraft sale-leaseback transactions. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense(1) increased by ~~50.2% year-over-year~~16.0% to ~~$1.5~~$1.6 billion ~~for~~year-over-year. This compares to an increase of 17.1% compared to the ~~third~~second quarter of ~~2021 and 11.8% versus~~2019. Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the ~~third quarter~~end of ~~2019.~~this section for details of the special items.

•Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile ~~(CASM ex-fuel)~~("CASM ex-fuel")(1) decreased by ~~35.9% year-over-year~~(3.5)% to ~~9.39~~9.69 cents ~~for~~in the ~~third~~second quarter of ~~2021 and increased by 12.7% versus~~2022 compared to the ~~third~~second quarter of ~~2019.~~2021.

•Our reported (loss) diluted earnings ~~(loss)~~ per share for the ~~third~~second quarter of 2022, 2021, and ~~2020~~2019 were ~~$0.40~~$(0.58), $0.20, and ~~$(1.44),~~$0.59, respectively. ~~In addition to the~~Excluding special items, ~~described above,~~mark-to-market and certain gains and losses on our ~~results for the third quarter of 2021 also included $54 million of one-time gains on equity investments. Excluding these items,~~investments, our adjusted ~~loss~~(loss) earnings per share(1) for the ~~third~~second quarter of 2022 was $(0.47). Excluding special items, our adjusted (loss) diluted earnings per share~~2021~~(1) for the second quarter of 2021 and ~~2020~~2019 were ~~$(0.12)~~$(0.65) and ~~$(1.75),~~$0.60, respectively.

~~Since February 2021, we have seen a meaningful rebound~~Network

We added two new destinations to our network in the ~~demand for leisure travel. We are encouraged by~~second quarter of 2022:


Destination						Service Commenced
Vancouver, Canada						June 9, 2022
Asheville, North Carolina						June 16, 2022

Following the improving booking trends, and believe the ongoing acceleration in demand will continue, subject to the increase in vaccination rates, reductions in COVID-19 infection rates, including those associated with new variants, and easingsuccess of travel restrictions. We expect to adjust capacity in response to the level of demand. We have taken a number of steps to position ourselves for recovery when demand for air travel returns to pre-pandemic levels.

~~Network~~

~~In August 2021, we launched~~ our inaugural transatlantic service ~~from~~between New York's John F. Kennedy International Airport ~~("JFK") in New York to~~and London, ~~Heathrow Airport. We further expanded our presence in the transatlantic market with services from JFK to London Gatwick Airport,~~ which began in ~~September 2021. We expect to begin services~~August 2021, we began service to London from Boston Logan International Airport ("Boston") on August 4, 2022.

In June 2022, we received permanent slots at London Heathrow Airport for flights starting October 29, 2022, which will help secure our long-term future at the iconic global hub. Permanent slots allow us to retain our presence and visibility at the busiest airport in ~~summer~~the United Kingdom as we continue to grow our base of transatlantic travelers.

Customer Experience

In June 2022, we announced new enhancements and inventory to Paisly by JetBlue ("Paisly"), a travel website that leverages smart technology to provide individually tailored offers to our customers based on their itinerary. We believe that

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

through Paisley we will add breadth to our product offerings, learn more about our customers' preferences, and contribute to future earnings growth. New and improved features on Paisly include:

•24/7 Customer Support: Paisly has introduced around-the-clock support, which will allow Paisly customers to experience even faster response times (less than five minutes) and get answers to their travel questions.

•Proactive Support: Paisly’s helpful humans will now call Paisly customers in the event their flight changes or cancels to check in with them on how they would like to modify their stay, car, or activity reservation to better match their updated flights.

•New Activities: Paisly has added new inventory and is offering thousands of activities to add to customers’ trips (including wine tours, watersports, skydiving, and art classes). In addition, customers can earn TrueBlue® points on purchases of activities.

•Increased Inventory of Stays: Paisly now offers exclusive deals on over 4,000 hotel properties and vacation rentals, giving customers more options to choose from when booking their next stay, and even more opportunities to earn Mosaic qualifying points on hotels and activities.

•Refreshed Look and Feel: Paisly's new website has a brand-new look and feel to make it even easier for customers to browse and book exclusive trip deals.

Environmental, Social, and Governance ("ESG")

We remain focused on continuing to lead in ESG initiatives. Our efforts include:

•We announced our commitment to work with the Science Based Targets initiative to set an interim emissions intensity target for our airline operations, in support of our broader commitment to net zero by 2040.

•In April 2022, we announced the execution of an offtake agreement with Aemetis for 125 million gallons of blended sustainable aviation fuel ("SAF") expected to be delivered to JetBlue over 10 years beginning in 2025.

•In April 2022, JetBlue Technology Ventures ("JTV"), our wholly owned subsidiary, announced its investment as a limited partner in TPG Rise Climate, the climate investing strategy of TPG's global impact investing platform TPG Rise, further continuing its commitment to creating a more sustainable travel industry.

•In June 2022, JetBlue began the office "Safe Spaces" certification process with The Stonewall Inn Gives Back Initiative ("SIGBI"). SIGBI leverages the historic significance of the New York City LGBTQ+ landmark to help other communities that don't have the same LGBTQ+ resources or support. As an original SIGBI donor, we are proud to be named the launch airline partner for the organization's Safe Spaces certification program, which identifies travel companies, entertainment venues, food and beverage locations, stores, businesses and other public venues to serve as a Safe Space for members of the LGBTQ+ community.

Outlook for 2022

We are pleased with the momentum we have seen in demand and revenue trends which accelerated throughout the second quarter. We expect unit revenue for the third quarter of 2022 to increase between 19% to 23% compared to the same period in 2019. For the third quarter of 2022, we expect capacity to decrease in a range between 0% to 3% compared to the same period in 2019. We believe the sequential step-down in capacity in the third quarter is consistent with the revised capacity plan we announced in April and will set us up for success in the third quarter. Full year 2022 capacity is expected to increase between 0% to 3% compared to 2019. Our original expectation for full year 2022 capacity was an increase of between 11% to 15% versus 2019.

Operating expenses per available seat mile, excluding fuel and related taxes, other non-airline operating expenses, and special items ("CASM Ex-Fuel")(1) for the third quarter of 2022 is expected to increase between 15% to 17%. This increase is primarily attributed to the following factors:sequential step-down in capacity, timing of maintenance events, and continued operational investments. We expect full year 2022 CASM Ex-Fuel to increase between 11% to 14% compared to 2019 and to return to profitability in the second half of 2022.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 vs. 2021

Overview

We reported a net loss of $(188) million, operating loss of $(113) million and an operating margin of (4.6)% for the three months ended June 30, 2022. This compares to a net income of $64 million, an operating income of $147 million and an operating margin of 9.8% for the three months ended June 30, 2021. Loss per share was $(0.58) for the second quarter of 2022 compared to $0.20 of earnings per diluted share for the same period in 2021.

Our reported results for the three months ended June 30, 2022 included the effects of special items and certain gains and losses on our investments. Adjusting for these items(1), our adjusted net loss(1) was $(153) million, adjusted operating loss(1) was $(69) million, adjusted operating margin(1) was (2.8)%, and adjusted loss per share(1) was $(0.47) million for the three months ended June 30, 2022.

Our reported results for the three months ended June 30, 2021 included the effects of special items. Adjusting for these special items(1),our adjusted net loss(1) was $206 million, adjusted operating loss(1) was $219 million, adjusted operating margin(1) was (14.6)%, and adjusted loss per share was $(0.65) million for the three months ended June 30, 2021.

On-time performance, as defined by the Department of Transportation, or DOT, is arrival within 14 minutes of scheduled arrival time. In the second quarter of 2022, our systemwide on-time performance was 63.2% compared to 73.8% for the same

period in 2021. Our completion factor decreased by (3.6)% points to 95.6% in the second quarter of 2022 from 99.2% in the same period in 2021.

~~In the third quarter~~Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended June 30,						Year-over-Year Change
	2022			2021			$		%
Passenger revenue	$	2,302		$	1,388		$	914	65.8	%
Other revenue	143			111			32		29.6
Total operating revenues	$	2,445		$	1,499		$	946	63.1	%

Average Fare	$	221.38		$	174.90		$	46.48	26.6	%
Yield per passenger mile (cents)	16.48			12.82			3.66		28.5
Passenger revenue per ASM (cents)	14.03			10.18			3.85		37.9
Operating revenue per ASM (cents)	14.90			10.99			3.91		35.7
Average stage length (miles)	1,233			1,279			(46)		(3.6)
Revenue passengers (thousands)	10,396			7,938			2,458		31.0
Revenue passenger miles (millions)	13,967			10,804			3,163		29.3
Available Seat Miles (ASMs) (millions)	16,405			13,645			2,760		20.2
Load Factor	85.1		%	79.2		%			5.9		pts.

Passenger revenue is our primary source of ~~2021, we also launched seasonal services from JFK to Glacier Park International Airport in Kalispell, Montana,~~revenue, which includes seat revenue and baggage fees, as well as ~~Boise Airport in Idaho.~~

~~Fleet~~

~~We took delivery of three Airbus A220 aircraft and one Airbus A321neo aircraft in the third quarter of 2021, all of which were paid for with cash on hand.~~

~~Sustainability~~

~~We are committed to reducing~~revenue from our ~~contribution to climate change and decarbonizing our operation. We have a clear plan to address our flight emissions, using the following six levers:~~

~~(1) Aircraft Efficiency: Our investments in new aircraft increase fuel efficiency and drive down costs;~~

~~(2) Fuel Optimization: We continuously monitor and adjust our operations to ensure adherence to fuel-savings procedures;~~

~~(3) Sustainable Aviation Fuels: We use sustainable aviation fuels ("SAF") on our existing aircraft reducing lifecycle emissions by up to 80%;~~

(4) Electric Ground Operations: We are converting our Ground Service Equipment to electric and maximizing electric ground power and air systems for our aircraft to minimize our fuel and emissions use on the ramp;

~~(5) Technology Partnerships: Through our subsidiary, JetBlue Technology Ventures, we support and invest in alternative energy aircraft technologies,~~ancillary product offerings such as ~~those developing electric- and hydrogen-fueled aircraft; and~~

~~(6) Offsets: For unavoidable emissions,~~Even More® Space. The increase in passenger revenue of $914 million, or 65.8%, for the three months ended June 30, 2022 compared to the same period in 2021, was primarily driven by the return in demand for travel as we ~~purchase high-quality, verified carbon offsets.~~

In 2020, we became the first major U.S airline to achieve carbon neutrality for all domestic flights, which is achieved through large-scale carbon offsetting. Our target is to achieve net zero carbon emissions by 2040, ten years ahead of the Paris Climate Agreement.

We view the adoption of SAF as the most promising means of rapidly and directly reducing emissions in the aviation industry. Enabled by our recent agreements with SG Preston, Neste, World Energy, and World Fuel Services, we are well ahead of pace to achieve our goal of converting 10% of our jet fuel usage to SAF by 2030.

~~Commercial Partnerships~~

We continue to ~~develop our strategic relationship with American Airlines, Inc. ("American") under~~recover from the ~~Northeast Alliance (the “NEA”).~~COVID-19 pandemic. Revenue passengers increased to 10.4 million for the three months ended June 30, 2022 from 7.9 million for the same period in 2021.

On September 21, 2021, the United States Department of Justice ("DOJ"), along with the Attorneys General of six states and the District of Columbia filed a lawsuit against JetBlue and American concerning the previously implemented NEA. The lawsuit asserts and seeks an adjudication that the NEA violates U.S. antitrust laws, and that we and American should be permanently enjoined from continuing and restrained from further implementing the NEA.

Also on September 21, 2021, the United States Department of Transportation ("DOT") published a Clarification Notice relating to the agreement that had been reached between the DOT, JetBlue, and American in January 2021, at the conclusion of the DOT’s review of the NEA ("DOT Agreement"). The DOT Clarification Notice stated, among other things, that the DOT Agreement remains in force during the pendency of the DOJ action against the NEA and, while the DOT retains independent statutory authority to prohibit unfair methods of competition in air transportation, the DOT intends to defer to DOJ to resolve the antitrust concerns that DOJ has identified with respect to the NEA. The DOT simultaneously published a Notice Staying Proceeding in relation to a complaint by Spirit Airlines, Inc. regarding the NEA, pending resolution of the DOJ action described above.

The NEA was established to unlock capacity growth and customer benefits that could not have been achieved independently by either airline and to better compete in the Northeast market. We believe our partnership with American will create more capacity, seamless connectivity for travelers in the northeast, and offer more choices for customers across the networks of both airlines.

~~The Company believes the DOJ lawsuit is without merit and, along with American, intends to defend this matter vigorously.~~

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Expenses

In detail, our operating costs per available seat mile, or ASM, were as follows:


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2022		2021		$		%		2022	2021	% Change
Aircraft fuel and related taxes	$	910	$	336	$	574	170.7	%	5.55	2.46	125.2	%
Salaries, wages and benefits	695		577		118		20.4		4.23	4.23	0.2
Landing fees and other rents	149		174		(25)		(14.4)		0.91	1.27	(28.8)
Depreciation and amortization	145		133		12		8.4		0.88	0.98	(9.8)
Aircraft rent	27		26		1		5.0		0.17	0.19	(12.7)
Sales and marketing	78		47		31		65.1		0.48	0.35	37.4
Maintenance, materials and repairs	162		164		(2)		(1.3)		0.98	1.20	(17.9)
Other operating expenses	348		261		87		33.6		2.12	1.91	11.1
Special items	44		(366)		410		(112.1)		0.27	(2.68)	(110.0)
Total operating expenses	$	2,558	$	1,352	$	1,206	89.2	%	15.59	9.91	57.4	%

Total operating expenses excluding special items(1)	$	2,514	$	1,718	$	796	46.3	%	15.32	12.59	21.7	%

Aircraft Fuel and Related Taxes

~~Outlook for 2021~~Aircraft fuel and related taxes increased

~~As we continue to navigate through the pandemic, we are optimistic about the future. Based on our current planning assumptions, we expect capacity~~ by $574 million, for the ~~fourth quarter~~three months ended June 30, 2022 compared to the same period in 2021. The average fuel price for the three months ended June 30, 2022 increased by 121.6% to $4.24 per gallon. Our fuel consumption for this period increased by 22.2%, or 39 million gallons, due to the increase in capacity as demand for travel returned.

Salaries, Wages and Benefits

Salaries, wages and benefits increased $118 million, or 20.4%, for the three months ended June 30, 2022 compared to the same period in 2021. The increase was driven primarily by higher total hours worked by our crewmembers as we align our workforce with the increased demand for travel and the need for premium and incentive pay to support our operation. As of June 30, 2022, we have approximately 24,000 crewmembers compared to approximately 20,000 crewmembers at June 30, 2021. The average number of full-time equivalent crewmembers increased by 28.9% compared to the same period in 2021.

Landing Fees and Other Rents

Landing fees and other rents decreased $25 million, or (14.4)%, for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to ~~decline between 4%~~a decrease in rates offset by an increase in departures.

Depreciation and ~~7% percent~~Amortization

Depreciation and amortization increased $12 million, or 8.4%, for the three months ended June 30, 2022 compared to the same period in 2021 primarily driven by the addition of 12 new aircraft that were placed into service since June 30, 2021. The average number of our operating aircraft increased by 5.3% during the three months ended June 30, 2022 as compared to the same period in ~~2019.~~2021.

Sales and Marketing

Sales and marketing increased $31 million, or 65.1%, for the three months ended June 30, 2022 compared to the same period in 2021 principally driven by higher credit card fees and computer reservation system charges, which are directly related to the return in demand as we continue to recover from the COVID-19 pandemic. Revenue ~~is expected to decline between 8% and 13% in~~passengers increased by 2.5 million, or 31.0%, during the ~~fourth quarter of 2021~~three months ended June 30, 2022 as compared to the same period in ~~2019. We expect the demand acceleration which began in February 2021 to continue as larger portions of the U.S. population become vaccinated against COVID-19~~2021.

Maintenance Materials and travel advisories and restrictions begin to ease. We are closely monitoring the developments associated with the COVID variants and the potential impact that continued spread of these variants could have on the demand for air travel.

We plan to continue managing our cost structure, while mitigating near term cost pressures from higher fuel prices, airport rents and landing fees, and labor costs as we return our operations to pre-pandemic levels.

~~RESULTS OF OPERATIONS~~

~~Three Months Ended September 30, 2021 vs. 2020~~

~~Overview~~

We reported a net income of $130 million, operating income of $186 million and an operating margin of 9.4% for the three months ended September 30, 2021. This compares to a net loss of $393 million, an operating loss of $516 million and an operating margin of (104.9)% for the three months ended September 30, 2020. Earnings per diluted share were $0.40 for the third quarter of 2021 and $(1.44) of loss per share for the same period in 2020.

Our reported results for the third quarter of 2021 and 2020 included the effects of special items. In addition to special items, our third quarter 2021 results also included one-time gains on certain equity investments. Adjusting for these items~~(1)~~, our operations broke even with an adjusted net loss of $39 million and an adjusted loss per share of $(0.12) for the third quarter of 2021. This compares to adjusted net loss of $477 million, adjusted operating loss of $628 million, adjusted operating margin of (127.6)%, and adjusted loss per share of $(1.75) for the third quarter of 2020.

On-time performance, as defined by the Department of Transportation, or DOT, is arrival within 14 minutes of scheduled arrival time. In the third quarter of 2021, our system wide on-time performance was 63.5% compared to 88.9% for the same

~~period in 2020. Our completion factor increased by 0.1 points to 97.7% in the third quarter of 2021 from 97.6% in the same period in 2020.~~

Repairs

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Operating Revenues~~

(Revenues in millions; percent changes based on unrounded numbers) Three Months Ended September 30, Year-over-Year Change
2021 2020 $ %
Passenger revenue $ 1,856 $ 445 $ 1,411 317.3 %
Other revenue 116 47 69 145.6
Total operating revenues $ 1,972 $ 492 $ 1,480 300.8 %
Average Fare $ 204.50 $ 206.73 $ (2.23) (1.1) %
Yield per passenger mile (cents) 14.37 15.10 (0.73) (4.8)
Passenger revenue per ASM (cents) 11.48 6.44 5.04 78.2
Operating revenue per ASM (cents) 12.20 7.12 5.08 71.2
Average stage length (miles) 1,320 1,313 7 0.5
Revenue passengers (thousands) 9,075 2,151 6,924 321.8
Revenue passenger miles (millions) 12,913 2,945 9,968 338.5
Available Seat Miles (ASMs) (millions) 16,168 6,905 9,263 134.1
Load Factor 79.9 % 42.6 % 37.3 pts.

~~Passenger revenue is our primary source of revenue, which includes seat revenue~~Maintenance materials and ~~baggage fees, as well as revenue from our ancillary product offerings such as Even More~~repairs ®decreased $2 million, or (1.3)% ~~Space. The increase in passenger revenue of $1.4 billion, or 317.3%~~, for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020, was~~2021, primarily driven by the timing of engine maintenance, offset by an increase in heavy maintenance and power by the hour based maintenance driven by the increase in ~~demand for travel as we gradually recover from~~aircraft utilization.

Other Operating Expenses

Other operating expenses consist of the ~~COVID-19 pandemic. Revenue passengers~~ following categories: outside services (including expenses related to fueling, ground handling, skycap, security, and janitorial services), insurance, personnel expenses, professional fees, onboard supplies, shop and office supplies, bad debts, communication costs, and taxes other than payroll and fuel taxes.

Other operating expenses increased ~~to 9.1~~$87 million, or 33.6%, for the three months ended ~~September~~June 30, ~~2021 from 2.2 million for the same period in 2020.~~

~~Operating Expenses~~

~~In detail, our operating costs per available seat mile, or ASM, were as follows:~~

(in millions; per ASM data in cents; percent changes based on unrounded numbers) Three Months Ended
September 30, Year-over-Year Change Cents per ASM
2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related taxes $ 443 $ 102 $ 341 335.3 % 2.74 1.47 85.9 %
Salaries, wages and benefits 620 482 138 28.6 3.83 6.98 (45.1)
Landing fees and other rents 182 84 98 115.8 1.12 1.22 (7.8)
Depreciation and amortization 140 127 13 9.6 0.86 1.84 (53.2)
Aircraft rent 25 23 2 9.5 0.16 0.33 (53.2)
Sales and marketing 60 24 36 154.4 0.37 0.34 8.6
Maintenance, materials and repairs 205 111 94 85.5 1.27 1.60 (20.8)
Other operating expenses 297 167 130 78.1 1.84 2.43 (23.9)
Special items (186) (112) (74) 67.1 (1.15) (1.61) (28.6)
Total operating expenses $ 1,786 $ 1,008 $ 778 77.1 % 11.04 14.60 (24.3) %
Total operating expenses excluding special items(1)
$ 1,972 $ 1,120 $ 852 76.1 % 12.19 16.21 (24.8) %

~~Aircraft Fuel and Related Taxes~~

~~Aircraft fuel and related taxes increased by $341 million, for the three months ended September 30, 2021~~2022 compared to the same period in ~~2020. The average fuel price~~2021 as we ramped up the level of our operations in response to the return in demand for air travel.

Special Items

For the three months ended June 30, 2022, special items included:

•$32 million relating to an ALPA ratification bonus and associated payroll taxes;

•$7 million relating to our takeover bid for Spirit; and

•$5 million relating to an impairment on our E190 fleet;

Special items for the three months ended ~~September~~June 30, 2021 ~~increased~~included the following:

•Contra-expense of $357 million which represents the amount of federal payroll support grants utilized during the period; and

•Contra-expense of $9 million related to the recognition of Employee Retention Credits provided by ~~69.7%~~the CARES Act.

Six Months Ended June 30, 2022 vs. 2021

Overview

We reported a net loss of $443 million, an operating loss of $480 million and an operating margin of (11.5)% for the six months ended June 30, 2022. This compares to ~~$2.08~~a net loss of $183 million, an operating loss of $147 million and an operating margin of (6.6)% for the six months ended June 30, 2021. Loss per ~~gallon.~~ share was $(1.38) for the six months ended June 30, 2022 compared to $(0.58) for the same period in 2021.

Our ~~fuel consumption increased by 156.4%~~reported results for the six months ended June 30, 2022 included the effects of special items and certain gains and losses on investments. Adjusted for these items, our adjusted net loss(1) was $408 million, ~~or 130~~adjusted operating loss(1) was $436 million ~~gallons, due to increased demand as we recover from~~, adjusted operating margin(1) was (10.4)%, and adjusted loss per share(1) was $(1.27) for the six months ended June 30, 2022.

Our reported results for the six months ended June 30, 2021 included the effects of special items. Adjusting for these special items, our adjusted net loss(1) was $665 million, adjusted operating loss(1) was $802 million, adjusted operating margin(1) was (35.9)%, and adjusted loss per share(1) was $(2.10) for the six months ended June 30, 2021.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Six Months Ended June 30,						Year-over-Year Change
	2022			2021			$		%
Passenger revenue	$	3,904		$	2,058		$	1,846	89.7	%
Other revenue	277			174			103		59.2
Total operating revenues	$	4,181		$	2,232		$	1,949	87.4	%

Average Fare	$	210.20		$	165.93		$	44.27	26.7	%
Yield per passenger mile (cents)	15.68			12.39			3.29		26.6
Passenger revenue per ASM (cents)	12.28			9.05			3.23		35.7
Operating revenue per ASM (cents)	13.15			9.82			3.33		34.0
Average stage length (miles)	1,232			1,278			(46)		(3.6)
Revenue passengers (thousands)	18,573			12,401			6,172		49.8
Revenue passenger miles (millions)	24,893			16,611			8,282		49.9
Available Seat Miles (ASMs) (millions)	31,788			22,734			9,054		39.8
Load Factor	78.3		%	73.1		%			5.2		pts.

~~COVID-19~~ Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More~~pandemic. We expect the year-over-year~~® Space. The increase in ~~fuel consumption to continue as we add capacity back into the system.~~

~~Salaries, Wages and Benefits~~

~~Salaries, wages and benefits increased $138 million,~~passenger revenue of $1.8 billion, or ~~28.6%~~89.7%, for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021, was primarily ~~due to higher total hours worked~~driven by ~~our crewmembers~~the return in demand for travel and a 26.7% increase in fare, as we ~~align our workforce with the increase in travel demand.~~

~~Salaries, wages and benefits in 2020 were lower than usual as a result of various cost saving initiatives taken in response~~continue to ~~the decreased demand for air travel due to~~recover from the COVID-19 pandemic. ~~Beginning~~Revenue passengers increased by 49.8% to 18.6 million for the six months ended June 30, 2022 from 12.4 million for the same period in ~~March 2020, we instituted a company-wide hiring freeze, implemented salary~~2021.

Operating Expenses

In detail, our operating costs per available seat mile, or ASM, were as follows:


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Six Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2022		2021		$		%		2022	2021	% Change
Aircraft fuel and related taxes	$	1,481	$	530	$	951	179.6	%	4.66	2.33	100.0	%
Salaries, wages and benefits	1,383		1,098		285		25.9		4.34	4.83	(10.0)
Landing fees and other rents	281		289		(8)		(2.8)		0.88	1.27	(30.5)
Depreciation and amortization	288		258		30		11.6		0.91	1.13	(20.2)
Aircraft rent	53		50		3		4.6		0.17	0.22	(25.2)
Sales and marketing	135		70		65		93.4		0.42	0.31	38.3
Maintenance, materials and repairs	313		268		45		17.0		0.99	1.18	(16.3)
Other operating expenses	683		471		212		45.0		2.15	2.07	3.7
Special items	44		(655)		699		106.8		0.14	(2.88)	104.8
Total operating expenses	$	4,661	$	2,379	$	2,282	95.9	%	14.66	10.46	40.1	%

Total operating expenses excluding special items(1)	$	4,617	$	3,034	$	1,583	52.2	%	14.52	13.34	8.8	%

Aircraft Fuel and ~~wage reductions of 20% to 50% for our officers,~~Related Taxes

Aircraft fuel and ~~reduced work hours for all other management workgroups. In June 2020, we announced voluntary separation programs to our crewmembers, with most departures having occurred in the third quarter of 2020.~~

~~Landing Fees and Other Rents~~

~~Landing fees and other rents~~ related taxes increased ~~$98~~by $951 million, or ~~115.8%~~179.6%, for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020 primarily~~2021. The average fuel price for the six months ended June 30, 2022 increased by 95.7% to $3.60 per gallon. Our fuel consumption increased by 42.8%, or 123 million gallons, due to ~~increases in departures as well as increases in rates. We expect~~ the increase in ~~landing fees and other rents~~capacity as demand for travel returned. Scheduled departures increased to ~~continue into 2022 as we recover from the COVID-19 pandemic.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization increased $13 million, or 9.6%~~161,848 flights, or 45.4%, for the ~~three~~six months ended ~~September~~June 30, ~~2021 compared to the same period in 2020 primarily due a higher number of operating aircraft. We placed 15 new aircraft into service since the end of the third quarter of 2020.~~

~~Aircraft Rent~~

Aircraft rent increased $2 million, or 9.5%, for the three months ended September 30, 2021 compared to the same period in 2020. We executed a number of aircraft sale-leaseback transactions in the second half of 2020, the majority of which qualified as sales for accounting purposes. The assets associated with these transactions, which qualified as sales, are recorded within operating lease assets for which rent expenses are recognized through the life of the related lease terms.

~~Sales and Marketing~~

Sales and marketing increased $36 million, or 154.4%, for the three months ended September 30, 2021 compared to the same period in 2020 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we recover from the pandemic. Revenue passengers increased to 9.1 million for the third quarter 2021 from 2.2 million for the same period in 2020.

~~Maintenance Materials and Repairs~~

Maintenance materials and repairs increased $94 million, or 85.5%, for the three months ended September 30, 2021 compared to the same period in 2020 primarily driven by an increase in maintenance events as we bring our parked aircraft back into service. We significantly reduced our flying in 2020 as a result of the COVID-19 pandemic and parked a portion of our fleet throughout the year.

~~We expect the increase in expenses relating to maintenance, materials, and repairs to continue as we return our operations to pre-pandemic levels.~~

~~Other Operating Expenses~~

Other operating expenses consist of the following categories: outside services (including expenses related to fueling, ground handling, skycap, security, and janitorial services), insurance, personnel expenses, professional fees, onboard supplies, shop and office supplies, bad debts, communication costs, and taxes other than payroll and fuel taxes.

Other operating expenses increased $130 million, or 78.1%, for the three months ended September 30, 2021 compared to the same period in 2020 due to higher levels of operations in response to the increased demand for travel.

~~Special Items~~2022.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Salaries, Wages and Benefits

Salaries, wages and benefits increased by $285 million, or 25.9%, for the six months ended June 30, 2022 compared to the same period in 2021. The increase was driven primarily by higher total hours worked by our crewmembers as we align our workforce with the increased demand for travel and the need for premium and incentive pay to support our operation. As of June 30, 2022, we have approximately 24,000 crewmembers compared to approximately 20,000 crewmembers at June 30, 2021.

Landing Fees and Other Rents

Landing fees and other rents decreased by $8 million, or 2.8%, for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to a decrease in rates offset by an increase in departures.

Depreciation and Amortization

Depreciation and amortization increased by $30 million, or 11.6%, for the six months ended June 30, 2022 compared to the same period in 2021. This increase was primarily attributed to the addition of 12 new aircraft that were placed into service since June 30, 2021. The average number of aircraft increased by 5.4% during the six months ended June 30, 2022 as compared to the same period in 2021.

Aircraft Rent

Aircraft rent increased $3 million, or 4.6%, for the six months ended June 30, 2022 compared to the same period in 2021.

Sales and Marketing

Sales and marketing increased $65 million, or 93.4%, for the six months ended June 30, 2022 compared to the same period in 2021 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we continue to recover from the COVID-19 pandemic. Revenue passengers for the six months ended June 30, 2022 increased by 6.2 million, or 49.8%, year-over-year.

Maintenance Materials and Repairs

Maintenance materials and repairs increased $45 million, or 17.0%, for the six months ended June 30, 2022 compared to the same period in 2021, primarily driven by a large increase in power by the hour based maintenance associated with an increase in aircraft utilization.

Other Operating Expenses

Other operating expenses increased $212 million, or 45.0%, for the six months ended June 30, 2022 compared to the same period in 2021 as we ramped up the level of our operations in response to the return in demand for air travel.

Special Items

Special items for the six months ended June 30, 2022 included the following:

•$32 million relating to an ALPA ratification bonus and associated payroll taxes;

•$7 million relating to our takeover bid for Spirit; and

•$5 million relating to an impairment on our E190 fleet;

For the ~~three~~six months ended ~~September~~June 30, 2021, special items ~~included a contra-expense~~included:

•Contra-expense of ~~$186~~$644 million, which represents the amount of ~~payroll support grants utilized during the period.~~

~~For the three months ended September 30, 2020, special items included the following:~~

•~~Contra-expense of $332 million, which represents the amount of CARES Act~~federal payroll support grants utilized during the period; and

•~~Impairment charges~~Contra-expense of ~~$56 million on our Embraer E190 fleet;~~

•~~Losses of $106~~$11 million related to ~~aircraft sale-leaseback transactions; and.~~

•~~One-time costs~~the recognition of ~~$58 million, consisting of severance and health benefits, in connection with our voluntary separation programs.~~

~~Nine Months Ended September 30, 2021 vs. 2020~~

~~Overview~~

We reported a net loss of $53 million, an operating income of $39 million and an operating margin of 0.9% for the nine months ended September 30, 2021. This compares to a net loss of $981 million, an operating loss of $1.3 billion and an operating margin of (54.9)% for the nine months ended September 30, 2020. Loss per share was $(0.17) for the nine months ended September 30, 2021 compared to loss per share of $(3.58) for the same period in 2020.

Our reported results for the nine months ended September 30, 2021 and 2020 included the effects of special items. In addition to special items, we also recognized one-time gains on certain equity investments during 2021. Adjusting for these items~~(1)~~, our adjusted net loss was $682 million, adjusted operating loss was $802 million, adjusted operating margin was (19.1)%, and adjusted loss per share was $(2.15) for the nine months ended September 30, 2021. This compares to adjusted net loss of $1.1 billion, adjusted operating loss of $1.5 billion, adjusted operating margin of (64.2)%, and adjusted loss per share of $(4.16) for the nine months ended September 30, 2020.

~~Operating Revenues~~

(Revenues in millions; percent changes based on unrounded numbers) Nine Months Ended September 30, Year-over-Year Change
2021 2020 $ %
Passenger revenue $ 3,913 $ 2,126 $ 1,787 84.0 %
Other revenue 290 169 121 71.6
Total operating revenues $ 4,203 $ 2,295 $ 1,908 83.1 %
Average Fare $ 182.22 $ 194.77 $ (12.55) (6.4) %
Yield per passenger mile (cents) 13.26 15.02 (1.76) (11.8)
Passenger revenue per ASM (cents) 10.06 8.78 1.28 14.5
Operating revenue per ASM (cents) 10.80 9.48 1.32 14.0
Average stage length (miles) 1,293 1,201 92 7.7
Revenue passengers (thousands) 21,476 10,918 10,558 96.7
Revenue passenger miles (millions) 29,524 14,153 15,371 108.6
Available Seat Miles (ASMs) (millions) 38,902 24,209 14,693 60.7
Load Factor 75.9 % 58.5 % 17.4 pts.

~~Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More~~® ~~Space. The increase in passenger revenue of $1.8 billion, or 84.0%, for the nine months ended September 30, 2021 compared to the same period in 2020, was primarily driven~~Employee Retention Credits provided by the increase in demand for travel as we gradually recover from COVID-19 pandemic which began in March of 2020. Revenue passengers increased by 96.7% to 21.5 million for the nine months ended September 30, 2021 from 10.9 million for the same period in 2020.CARES Act.

Operational Statistics

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Operating Expenses~~

~~In detail,~~The following table sets forth our operating ~~costs per available seat mile, or ASM, were as follows:~~

(in millions; per ASM data in cents; percent changes based on unrounded numbers) Nine Months Ended
September 30, Year-over-Year Change Cents per ASM
2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related taxes $ 973 $ 496 $ 477 96.1 % 2.50 2.05 22.0 %
Salaries, wages and benefits 1,718 1,560 158 10.1 4.42 6.44 (31.5)
Landing fees and other rents 470 258 212 82.6 1.21 1.06 13.6
Depreciation and amortization 398 407 (9) (2.2) 1.02 1.68 (39.2)
Aircraft rent 76 60 16 25.7 0.19 0.25 (21.8)
Sales and marketing 130 84 46 54.6 0.33 0.35 (3.8)
Maintenance, materials and repairs 472 344 128 37.5 1.22 1.42 (14.5)
Other operating expenses 768 560 208 37.1 1.97 2.32 (14.7)
Special items (841) (214) (627) 293.8 (2.16) (0.88) 145.1
Total operating expenses $ 4,164 $ 3,555 $ 609 17.1 % 10.70 14.69 (27.1) %
Total operating expenses excluding special items(1)
$ 5,005 $ 3,769 $ 1,236 32.8 % 12.86 15.57 (17.4) %

~~Aircraft Fuel and Related Taxes~~

~~Aircraft fuel and related taxes increased by $477 million, or 96.1%,~~statistics for the ~~nine~~three and six months ended ~~September~~June 30, 2021 compared to the same period in 2020. The average fuel price for the nine months ended September 30, 2021 increased by 21.3% to $1.94 per gallon. Our fuel consumption increased by 61.6%, or 191 million gallons, due to capacity increases as demand for travel grew. 2022 and 2021:


	Three Months Ended June 30,						Year-over-Year Change		Six Months Ended June 30,						Year-over-Year Change
(percent changes based on unrounded numbers)	2022			2021			%		2022			2021			%
Operational Statistics
Revenue passengers (thousands)	10,396			7,938			31.0		18,573			12,401			49.8
Revenue passenger miles (RPMs) (millions)	13,967			10,804			29.3		24,893			16,611			49.9
Available seat miles (ASMs) (millions)	16,405			13,645			20.2		31,788			22,734			39.8
Load factor	85.1		%	79.2		%	5.9	pts	78.3		%	73.1		%	5.2	pts
Aircraft utilization (hours per day)	10.4			8.8			18.2		10.2			7.4			37.8

Average fare	$	221.38		$	174.90		26.6		$	210.20		$	165.93		26.7
Yield per passenger mile (cents)	16.48			12.82			28.5		15.68			12.39			26.6
Passenger revenue per ASM (cents)	14.03			10.18			37.9		12.28			9.05			35.7
Operating revenue per ASM (cents)	14.90			10.99			35.7		13.15			9.82			34.0
Operating expense per ASM (cents)	15.59			9.91			57.4		14.66			10.46			40.1
Operating expense per ASM, excluding fuel(1)	9.69			10.05			(3.5)		9.77			10.92			(10.5)

Departures	83,455			67,253			24.1		161,848			111,302			45.4
Average stage length (miles)	1,233			1,279			(3.6)		1,232			1,278			(3.6)
Average number of operating aircraft during period	283.2			269.0			5.3		282.6			268.0			5.4
Average fuel cost per gallon, including fuel taxes	$	4.24		$	1.91		121.6		$	3.60		$	1.84		95.7
Fuel gallons consumed (millions)	215			176			22.2		411			288			42.8
Average number of full-time equivalent crewmembers									19,868			15,416

We expect our operating results to significantly fluctuate from quarter-to-quarter in the ~~year-over-year increase in fuel consumption to continue as we as add capacity back into the system.~~

~~Salaries, Wages and Benefits~~

Salaries, wages and benefits increased by $158 million, or 10.1%, for the nine months ended September 30, 2021 compared to the same period in 2020, driven primarily by higher total hours worked by our crewmembers as we align our workforce with the increase in travel demand.

~~Salaries, wages and benefits in 2020 were lower than usual as a result of various cost saving initiatives taken in response to the decreased demand for air travel~~future due to the ~~COVID-19 pandemic. Beginning in March 2020, we instituted a company-wide hiring freeze, implemented salary and wage reductions~~uncertainties related to economic conditions, cost of 20% to 50% for our officers, and reduced work hours for all other management workgroups. In June 2020, we announced voluntary separation programs to our crewmembers, with most departures having occurred in the third quarter of 2020.

~~As of September 30, 2021, we have approximately 21,250 crewmembers compared to approximately 20,500 crewmembers at September 30, 2020.~~

~~Landing Fees and Other Rents~~

~~Landing fees and other rents increased by $212 million, or 82.6%, for the nine months ended September 30, 2021 compared to the same period in 2020~~ ~~due to increases in departures as well as increases in rates. We expect the increase in landing fees and other rents to continue into 2022 as we recover~~aircraft fuel, recovery from the COVID-19 ~~pandemic.~~

~~Depreciation~~pandemic, and ~~Amortization~~

Depreciation and amortization decreased by $9 million, or 2.2%, for the nine months ended September 30, 2021 compared to the same period in 2020. This decrease was partially attributed to the impairmentvarious other factors which are outside of our ~~E190 fleet~~control. Consequently, we believe quarter-to-quarter comparisons of our operating results may not necessarily be meaningful; you should not rely on our results for any one quarter as an indication of our future performance.

CONSOLIDATED BALANCE SHEET ANALYSIS

The following is a discussion of the significant changes between June 30, 2022, and related spare parts in 2020. In addition, we also executed a number of aircraft sale-leaseback transactions towards the second half of 2020, the majority of which qualified as sales for accounting purposes. As a result of these sales, we no longer record depreciationDecember 31, 2021.


(in millions)
Selected Balance Sheet Data:	June 30, 2022	December 31, 2021	$ Change	% Change
ASSETS
Cash and cash equivalents	1,611	2,018	(407)	(20.2)	%
Investment securities	873	824	49	6.1	%
Receivables, less allowance (2022-$3; 2021-$3)	291	207	84	40.3	%
Flight equipment	11,390	11,161	229	2.1	%
LIABILITIES
Air traffic liability	1,984	1,618	366	22.6	%
Other accrued liabilities	465	359	106	29.9	%
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,394	3,651	(257)	(7.0)	%

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~expense on the assets. The costs associated with leasing these assets back from the purchaser are included in Aircraft Rent on our consolidated statements of operations.~~

The decreases described above were partially offset by additional depreciation expenses related to 15 new aircraft that have been placed into service since September 30, 2020. The average number of aircraft increased by 3.5% during the nine months ended September 30, 2021 as compared to the same period in 2020.

~~Aircraft Rent~~

Aircraft rent increased $16 million, or 25.7%, for the nine months ended September 30, 2021 compared to the same period in 2020. As discussed above, we executed a number of aircraft sale-leaseback transactions towards the second half of 2020, the majority of which qualified as sales for accounting purposes. The assets associated with these transactions, which qualified as sales, are recorded ~~within operating lease assets for which rent expenses are recognized throughout the life of the related lease terms.~~

~~Sales and Marketing~~

Sales and marketing increased $46 million, or 54.6%, for the nine months ended September 30, 2021 compared to the same period in 2020 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we recover from the pandemic. Revenue passengers increased to 21.5 million for the nine months ended September 30, 2021 from 10.9 million for the same period in 2020.

~~Maintenance Materials and Repairs~~

Maintenance materials and repairs increased $128 million, or 37.5%, for the nine months ended September 30, 2021 compared to the same period in 2020 primarily driven by an increase in maintenance events as we bring our parked aircraft back into service. We significantly reduced our flying in 2020 as a result of the COVID-19 pandemic and parked a portion of our fleet throughout the year.

~~We expect the increase in expenses relating to maintenance, materials, and repairs to continue as we return our operations to pre-pandemic levels.~~

~~Other Operating Expenses~~

Other operating expenses increased $208 million, or 37.1%, for the nine months ended September 30, 2021 compared to the same period in 2020 due to higher levels of operations in response to the increased demand for travel.

~~Special Items~~

~~Special items for the nine months ended September 30, 2021 included the following:~~

•~~Contra-expense of $830 million, which represents the amount of federal payroll support grants utilized during the period; and~~

•~~Contra-expense of $11 million related to the recognition of Employee Retention Credits provided by the CARES Act.~~

For the nine months ended September 30, 2020, special items include a contra-expense of $636 million which represents the amount of CARES Act payroll support grants utilized during the period, impairment charges of $258 million on our Embraer E190 fleet, losses of $106 million related to certain aircraft sale-leaseback transactions, and one-time costs of $58 million, consisting of severance and health benefits, in connection with our voluntary separation programs.

~~(1)~~ ~~Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~The following table sets forth our operating statistics for the three and nine months ended September 30, 2021 and 2020:~~

Three Months Ended September 30, Year-over-Year Change Nine Months Ended September 30, Year-over-Year Change
(percent changes based on unrounded numbers) 2021 2020 % 2021 2020 %
Operational Statistics
Revenue passengers (thousands) 9,075 2,151 321.8 21,476 10,918 96.7
Revenue passenger miles (RPMs) (millions) 12,913 2,945 338.5 29,524 14,153 108.6
Available seat miles (ASMs) (millions) 16,168 6,905 134.1 38,902 24,209 60.7
Load factor 79.9 % 42.6 % 37.3 pts 75.9 % 58.5 % 17.4 pts
Aircraft utilization (hours per day) 10.1 4.2 140.5 8.3 5.5 50.9
Average fare $ 204.50 $ 206.73 (1.1) $ 182.22 $ 194.77 (6.4)
Yield per passenger mile (cents) 14.37 15.10 (4.8) 13.26 15.02 (11.8)
Passenger revenue per ASM (cents) 11.48 6.44 78.2 10.06 8.78 14.5
Operating revenue per ASM (cents) 12.20 7.12 71.2 10.80 9.48 14.0
Operating expense per ASM (cents) 11.04 14.60 (24.3) 10.70 14.69 (27.1)
Operating expense per ASM, excluding fuel(1)
9.39 14.64 (35.9) 10.29 13.40 (23.2)
Departures 76,918 32,124 139.4 188,220 128,315 46.7
Average stage length (miles) 1,320 1,313 0.5 1,293 1,201 7.7
Average number of operating aircraft during period 275.9 262.9 4.9 270.4 261.3 3.5
Average fuel cost per gallon, including fuel taxes $ 2.08 $ 1.23 69.7 $ 1.94 $ 1.60 21.3
Fuel gallons consumed (millions) 213 83 156.4 501 310 61.6
Average number of full-time equivalent crewmembers 16,088 16,004

Historical trends may not continue. The ongoing COVID-19 pandemic continues to cause disruptions in our operations during the nine months ended September 30, 2021. We expect our operating results to significantly fluctuate from quarter-to-quarter in the future due to the uncertainties surrounding the COVID-19 pandemic, its impact on the economy and consumer behavior, and various other factors which are outside of our control. Consequently, we believe quarter-to-quarter comparisons of our operating results may not necessarily be meaningful; you should not rely on our results for any one quarter as an indication of our future performance.

~~(1)~~ ~~Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~CONSOLIDATED BALANCE SHEET ANALYSIS~~

~~The following is a discussion of the significant changes between September 30, 2021, and December 31, 2020.~~

(in millions)
Selected Balance Sheet Data: September 30, 2021 December 31, 2020 $ Change % Change
ASSETS
Cash and cash equivalents 2,193 1,918 275 14.3 %
Investment securities 1,100 1,135 (35) (3.0) %
Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively. 210 98 112 114.9 %
Flight equipment 11,031 10,256 775 7.5 %
LIABILITIES
Air traffic liability 1,679 1,122 557 49.7 %
Other accrued liabilities 348 215 133 61.7 %
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS 3,760 4,413 (653) (14.8) %
Other 582 78 504 642.9 %

Cash and cash equivalents

Cash and cash equivalents decreased by $(407) million, or (20.2)%, to $1.6 billion as of June 30, 2022. Notable outflows during the six months ended June 30, 2022 include: $339 million in capital expenditures inclusive of predelivery deposits for flight equipment, $140 million of net purchases in investment securities, and $189 million in repayment of long-term debt and finance lease obligations. These outflows were partially offset by net cash provided by operating activities of $299 million.

Investment securities

Investment securities increased by ~~$275~~$49 million, or ~~14.3%~~6.1%, primarily driven by ~~$1.8 billion~~the net purchases of ~~cash generated from operations. We received $1.1 billion of funds under various PSP programs in 2021, of~~commercial paper and time deposits which $831 million were classified as operating activities on our condensed consolidated statement of cash flows with the remaining $290 million classified as financing activities. In the first quarter of 2021, we completed the issuance of our 0.50% Convertible Senior Notes due 2026 in the amount of $750 million. Our cash positionhad maturities between three and twelve months at ~~September~~June 30, 2021 also benefited from the initial cash payments associated with our new Co-Branded Credit Card agreements. The increases to cash were partially offset by $1.8 billion of debt repayments and $803 million of capital expenditures.2022.

Receivables, less allowance

Receivables increased by ~~$112~~$84 million ~~as a result of improvements~~, primarily driven by an increase in ~~demand which led~~credit card receivables due to an increase in ~~receivables from our credit card processors.~~sales.

Flight equipment

Flight equipment increased by ~~$775~~$229 million, or ~~7.5%~~2.1%, principally driven by aircraft capital expenditures made ~~during~~in the ~~nine months ended September 2021.~~first half of 2022. Additional information related to our aircraft capital expenditures are provided within our discussion of investing activities under the "Liquidity and Capital Resources" section below.

Air traffic liability

Air traffic liability increased by ~~$557~~$366 million, or ~~49.7%~~22.6%, driven by the improvements in demand as customers ~~begin~~began to gain confidence to travel in the midst of the COVID-19 pandemic and ~~resumed~~resume booking travel further in advance. The cash collected from customers for future travel is recorded on our ~~consolidated~~ balance sheet until the point in time that the customer travels.

Other accrued liabilities

Other accrued liabilities increased by ~~$133~~$106 million, or ~~61.7%~~29.9%, primarily ~~due to the timing~~as a result of ~~passenger tax remittances to governmental authorities. Passenger taxes are collected from customers when tickets are sold and remitted to the authorities at a later date. The~~an increase in passenger tax liability correlates to the increase in demand for travel as we gradually recover from the COVID-19 pandemic. In addition, the initial cash payments received from our new Co-Branded Credit Card agreements are deferred and recognized as revenue over the terms of the related contracts within other accrued liabilities ~~and other liabilities on our consolidated balance sheet.~~

~~(1)~~ ~~Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.~~.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Long-term debt and finance lease obligations

Long-term debt and finance lease obligations decreased by ~~$653~~$257 million, or ~~14.8%~~(7.0)%, ~~primarily~~mainly due to regularly scheduled principal payments made in the first half of 2022.~~$1.8 billion of debt repayments made during the nine months ended September 30, 2021 partially offset by the issuance of our 0.50% Convertible Senior Notes and~~ ~~unsecured term loans received under various federal payroll support programs. We will continue to look for opportunities to reduce our overall debt level as our business continues to recover.~~

~~Other liabilities~~

~~Other liabilities increased by $504 million principally due to the~~ initial cash payments received from our new Co-Branded Credit Card agreements in 2021. Earnings associated with the cash payments are deferred over the terms of the related contracts within other accrued liabilities and other liabilities on our consolidated balance sheets.

LIQUIDITY AND CAPITAL RESOURCES

The airline business is capital intensive. Our ability to successfully execute our growth plans is largely dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business depends on maintaining sufficient liquidity. We believe we have adequate resources from a combination of cash and cash equivalents, investment securities on hand, and available lines of credit. Additionally, our unencumbered assets could be an additional source of liquidity, if necessary.

We believe a healthy liquidity position is a crucial element of our ability to weather any part of the economic cycle while continuing to execute on our plans for profitable growth and increased returns. Our goal is to continue to be diligent with our liquidity, ~~and~~ maintain financial ~~flexibility.~~flexibility, and be prudent with capital spending.

At ~~September~~June 30, ~~2021,~~2022, we had cash, cash equivalents, and short-term investments of approximately $3.3 billion. Our business and operating results for 2021 continue to be impacted by the COVID-19 pandemic and we expect to maintain an elevated level of cash on hand as we navigate through the remainder of 2021. $2.5 billion.

Analysis of Cash Flows

Operating Activities

We rely primarily on operating cash flows to provide working capital for current and future operations. Cash flows from operating activities were ~~$1.8~~ $299 million and $1.7 billion ~~and $(223) million~~ for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~Lower~~Higher losses, principally driven by higher operating ~~revenues coupled~~expenses, along with ~~federal grants received under various payroll support programs, and the initial cash payments associated with our new Co-Branded Credit Card Agreements all~~a significant reduction in air traffic liability contributed to the ~~increase~~decrease in operating cash flows.

~~Investing Activities~~

During the nine months ended September 30, 2021, capital expenditures related to our purchase of flight equipment included $577 million for the purchase of eight Airbus A321neo aircraft, five Airbus A220 aircraft, and the purchases of several spare engines; $97 million in work-in-progress relating to flight equipment; $34 million for spare part purchases; and $33 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $62 million.

~~Investing activities for the nine months ended September 30, 2021 also included $70 million of net proceeds from maturities of investment securities.~~

During the nine months ended September 30, 2020, capital expenditures related to our purchase of flight equipment included $295 million related to the purchase of five Airbus A321neo aircraft, one Airbus A321 lease buyout, and the purchase of several spare engines, $128 million in work-in-progress relating to flight equipment, $8 million for spare part purchases, and $67 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $98 million.

We executed $445 million of aircraft sale-leaseback transactions during the nine months ended September 30, 2020. Of these transactions, $209 million qualified as sales for accounting purpose and were classified within investing activities.

~~Investing activities for the nine months ended September 30, 2020 also included $217 million of net proceeds from investment securities.~~

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Investing Activities

During the six months ended June 30, 2022, capital expenditures related to our purchase of flight equipment included $90 million related to the purchase of three Airbus A220 aircraft and engines, $29 million for spare part purchases, $99 million in work-in-progress relating to flight equipment, and $65 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $56 million. Investing activities also included the net purchase of investment securities of $139 million.

During the six months ended June 30, 2021, capital expenditures related to our purchase of flight equipment included $340 million related to the purchase of seven Airbus A321neo aircraft and spare engines, $59 million related to the purchase of two A220 aircraft and spare engines, $57 million in work-in-progress relating to flight equipment, $27 million for spare part purchases, and $16 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $41 million. Investing activities also included the net proceeds from investment securities of $340 million.

Financing Activities

Financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 primarily consisted of ~~debt repayments~~the following:

•Principal payments of ~~$1.8 billion~~$189 million on our outstanding debt and finance lease ~~obligations which included the following payoffs:~~

•~~$722 million on our Term Loan;~~obligations.

•~~$550 million on our Revolving Facility; and~~Entering into a commitment letter for a Senior Secured Bridge Facility of up to $3.5 billion to finance the potential acquisition of Spirit.

•~~$115 million on our secured loan balance under~~Financing activities for the ~~CARES Act Loan Program.~~

~~These principal payments were partially offset by:~~six months ended June 30, 2021 primarily consisted of the following:

•Net proceeds of $734 million from the issuance of our 0.50% Convertible Senior Notes due 2026; and

•Net proceeds of $276 million and $14 million from the issuances of unsecured term loans and warrants, respectively, in connection with the Payroll Support Program 2 ~~under the Consolidated Appropriations Act~~ and Payroll Support Program 3 ~~under the American Rescue Plan Act; and~~

•~~$22 million of proceeds from the issuance of common stock related to our Crewmember Stock Purchase Plan.~~

~~Financing activities for the nine months ended September 30, 2020 primarily consisted of net proceeds of $2.2 billion from drawdowns of various credit facilities which included the following:~~

•~~$981 million from our 364-day term loan facility with Morgan Stanley Senior Funding Inc. as administrative agent;~~

•~~$717 million from our term loan facility with Barclays Bank PLC as administrative agent, and~~

•~~$550 million from our revolving credit facility with Citibank N.A as administrative agent.~~

~~Also included in financing activities were:~~

•~~Net proceeds of $913 million from the public placements of equipment notes;~~

•~~Net proceeds of $259 million and $19 million from the issuance of unsecured term loan and warrants, respectively, in connection with the Payroll Support Program under the CARES Act;~~

•~~$236 million of aircraft sale-leaseback transactions which did not qualify as sales for accounting purposes;~~

•~~Net proceeds of $105 million and $9 million from the issuance of secured term loan and warrants, respectively, in connection with the Loan Program under the CARES Act; and~~

•~~$22 million of proceeds from the issuance of common stock related to our Crewmember Stock Purchase Plan.~~

These proceeds were ~~partially~~more than offset by ~~the payoff~~principal payments of $1.5 billion on our ~~364-day term loan facility for $1.0 billion, scheduled maturities of $272 million relating to~~outstanding debt and finance lease obligations, $4$550 million of which were associated with ~~scheduled rent payments on sale-leaseback aircraft that did not qualify as sales for accounting purposes, and~~ the ~~acquisitions of treasury shares of $167 million, of which $160 million related to our accelerated share repurchases, or ASR. Our share repurchase program has been suspended since March 31, 2020.~~

In March 2019, we filed an automatic shelf registration statement with the SEC. Under this shelf registration statement, we may offer and sell from time to time common stock, preferred stock, debt securities, depository shares, warrants, stock purchase contracts, stock purchase units, subscription rights, and pass-through certificates. We may utilize this shelf registration statement, or a replacement filed with the SEC, in the future to raise capital to fund the continued developmentpayoff of our ~~products~~revolving Credit and services, the commercialization of our products and services, to repay indebtedness, or for other general corporate purposes. The warrants issued in connection with the various federal government support programs were made, and any issuances of our underlying common stock are expected to be made, in reliance on the exemption from the registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for transactions not involving a public offering.Guaranty Agreement.

Working Capital

We had a working capital deficit of ~~$124 million~~$1.1 billion at ~~September~~June 30, ~~2021~~2022 compared to ~~$671~~$170 million at December 31, ~~2020.~~2021. Our working capital decreased by ~~$547~~$901 million due to several factors, including an overall increase in our air traffic liability which was attributed to the increase in customer bookings asprimarily driven by the return in demand for ~~air travel begins to recover from the COVID-19 pandemic.~~

~~(1)~~ ~~Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

travel.

We expect to meet our obligations as they become due through available cash, investment securities, and internally generated funds, supplemented, as necessary, by financing activities ~~and government assistance,~~ which may be available to us. We expect to generate positive working capital through our operations. However, we cannot predict what the effect on our business might be from future developments related to the ~~COVID-19 pandemic, including the effectiveness~~recovery of the ~~available vaccines and the associated distribution,~~COVID-19 pandemic and its impact on the economy and consumer behavior, the extremely competitive environment in which we operate, or from events beyond our control, such as volatile fuel prices, economic conditions, weather-related disruptions, airport infrastructure challenges, the spread of infectious diseases, the impact of other airline bankruptcies, restructurings or consolidations, U.S. or international military actions, or acts of ~~terrorism.~~

~~Contractual Obligations~~

~~Our contractual obligations~~terrorism, or other external geopolitical events and conditions. We believe there is sufficient liquidity available to us to meet our cash requirements for at ~~September 30, 2021 include~~least the ~~following (in billions):~~

Payments due in
Total 2021 2022 2023 2024 2025 Thereafter
Debt and finance lease obligations(1)
$ 4.9 $ 0.2 $ 0.5 $ 0.7 $ 0.4 $ 0.3 $ 2.8
Operating lease obligations 1.0 0.1 0.1 0.1 0.1 0.1 0.5
Flight equipment purchase obligations(2)
7.7 0.2 0.9 1.6 1.8 1.3 1.9
Other obligations(3)
2.9 0.1 0.3 0.5 0.5 0.5 1.0
Total $ 16.5 $ 0.6 $ 1.8 $ 2.9 $ 2.8 $ 2.2 $ 6.2

~~The amounts stated above do not include additional obligations incurred as a result of financing activities executed after September 30, 2021.~~

~~(1) Includes actual interest and estimated interest for floating-rate debt based on September 30, 2021 rates.~~

~~(2) Amounts represent obligations based on the current delivery schedule set forth in our Airbus order book as of September 30, 2021.~~

~~(3) Amounts include non-cancelable commitments for the purchase of goods and services.~~

As of September 30, 2021, we are in compliance with the covenants of our debt and lease agreements. We have approximately $28 million of restricted cash pledged under standby letters of credit related to certain leases that will expire at the end of the related lease terms.

As of September 30, 2021, we operated a fleet of 130 Airbus A320 aircraft, 63 Airbus A321 aircraft, 21 Airbus A321neo aircraft, six Airbus A220 aircraft, and 60 Embraer E190 aircraft. Of our fleet, 216 are owned by us, 62 are leased under operating leases, and two are leased under finance leases. Our owned aircraft include aircraft associated with sale-leaseback transactions that did not qualify as sales for accounting purposes. As of September 30, 2021, the average age of our operating fleet was 11.5 years.

~~Our aircraft order book as of September 30, 2021 is as follows:~~

Year Airbus A321neo Airbus A220 Total
2021 — 2 2
2022 3 9 12
2023 11 18 29
2024 13 22 35
2025 11 12 23
2026 12 1 13
2027 14 — 14
Total 64 64 128
next 12 months.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Contractual Obligations

Our contractual obligations at June 30, 2022 include the following (in billions):


	Payments due in
	Total		2022		2023		2024		2025		2026		Thereafter
Debt and finance lease obligations(1)	$	4.5	$	0.2	$	0.7	$	0.4	$	0.3	$	1.0	$	1.9
Operating lease obligations	1.0		0.1		0.1		0.1		0.1		0.1		0.5
Flight equipment purchase obligations(2)	8.3		0.6		1.6		2.0		1.7		1.4		1.0
Other obligations(3)	2.5		0.2		0.4		0.4		0.4		0.4		0.7
Total	$	16.3	$	1.1	$	2.8	$	2.9	$	2.5	$	2.9	$	4.1

The amounts stated above do not include additional obligations incurred as a result of financing activities executed after June 30, 2022.

(1) Includes actual interest and estimated interest for floating-rate debt based on June 30, 2022 rates.

(2) Amounts represent obligations based on the current delivery schedule set forth in our Airbus order book as of June 30, 2022.

(3) Amounts include non-cancelable commitments for the purchase of goods and services.

As of June 30, 2022, we believe we are in material compliance with the covenants of our debt and lease agreements. We have approximately $41 million of restricted cash pledged under standby letters of credit related to certain leases that will expire at the end of the related lease terms.

As of June 30, 2022, we operated a fleet of 130 Airbus A320 aircraft, 63 Airbus A321 aircraft, 18 Airbus A321neo aircraft, 11 Airbus A220 aircraft, and 60 Embraer E190 aircraft. Of our fleet, 217 are owned by us, 68 are leased under operating leases, and none are leased under finance leases. Our owned aircraft include aircraft associated with sale-leaseback transactions that did not qualify as sales for accounting purposes. As of June 30, 2022, the average age of our operating fleet was 12 years.

Our aircraft order book as of June 30, 2022 is as follows:


Year	Airbus A321neo	Airbus A220	Total
2022	3	7	10
2023	11	21	32
2024	13	27	40
2025	11	20	31
2026	12	14	26
2027	14	—	14
Total	64	89	153

In February 2022, we received notice from Airbus of anticipated delivery delays for the A220 aircraft. The table above represents the current delivery schedule set forth in our Airbus order book as of June 30, 2022. However, due to delays, we expect a delivery of a maximum of nine Airbus A220 aircraft in 2022.

Expenditures for our aircraft and spare engines include estimated amounts for contractual price escalations and predelivery deposits. We expect to meet our predelivery deposit requirements for our aircraft by paying cash or by using short-term borrowing facilities for deposits required ~~six~~6 to 24 months prior to delivery. Any predelivery deposits paid by the issuance of notes are fully repaid at the time of delivery of the related aircraft.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Depending on market conditions, we anticipate ~~using~~paying in cash ~~on hand to pay~~ for ~~the remaining~~all scheduled aircraft deliveries in ~~2021.~~2022. For deliveries after ~~2021,~~2022, although we believe debt and/or lease financing should be available to us, we cannot give any assurance that we will be able to secure financing on attractive terms, if at all. While these financings may or may not result in an increase in liabilities on our balance sheet, we expect our fixed costs to increase regardless of the financing method ultimately chosen. To the extent we cannot secure financing on terms we deem attractive, we may be required to pay in cash, further modify our aircraft acquisition plans, or incur higher than anticipated financing costs.

In October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new commercial aircraft and related parts imported from certain European Union member states, which include aircraft and other parts we are already contractually obligated to purchase, including those noted above. The U.S. Trade Representative increased the tariff to 15% effective in March 2020. In March 2021, the U.S. Trade Representative announced a four-month suspension of the tariff ~~which~~that was followed by an announcement in June 2021 that the suspension will be extended for five years. We continue to work with our business partners, including Airbus, to evaluate the potential financial and operational impact of these announcements on our future aircraft deliveries, including ~~once~~after the suspension is lifted. The ~~continued~~ imposition of ~~the~~this or any tariff could substantially increase the cost of new ~~Airbus~~ aircraft and parts.

Off-Balance Sheet Arrangements

Although some of our aircraft lease arrangements are with variable interest entities, as defined by ~~the~~ Topic 810, Consolidations ~~topic~~ of the FASB Codification, none of them require consolidation in our condensed consolidated financial statements. Our decision to finance these aircraft through operating leases rather than through debt was based on an analysis of the cash flows and tax consequences of each financing alternative and a consideration of liquidity implications. We are responsible for all maintenance, insurance and other costs associated with operating these aircraft; however, we have not made any residual value or other guarantees to our lessors.

We have determined that we hold a variable interest in, but are not the primary beneficiary of, certain pass-through trusts. The beneficiaries of these pass-through trusts are the purchasers of equipment notes issued by us to finance the acquisition of aircraft. They maintain liquidity facilities whereby a third party agrees to make payments sufficient to pay up to 18 months of interest on the applicable certificates if a payment default occurs.

We have also made certain guarantees and indemnities to other unrelated parties that are not reflected on our balance sheet, which we believe will not have a significant impact on our results of operations, financial condition or cash flows. We have no other off-balance sheet arrangements.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates included in our ~~2020~~2021 Form 10-K.

Forward-Looking Information

~~Forward-Looking Information Statements in this~~This Report (or otherwise made by JetBlue or on JetBlue’s behalf) contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which represent our management’s beliefs and assumptions concerning future events. These statements are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. When used in this ~~Report,~~document and in documents incorporated herein by reference, the words “expects,” “plans,” “intends,” “anticipates,” “indicates,” “remains,” “believes,” “estimates,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “goals,” “targets” and similar expressions are intended to identify forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed, or assured. Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, the ~~coronavirus ("COVID-19")~~COVID-19 pandemic including ~~the effectiveness of the available vaccines, the associated distribution~~new and ~~vaccination rates, the infection rates associated with COVID-19~~existing variants, ~~travel advisories and restrictions~~ and the outbreak of any other disease or similar public health threat that affects travel demand or behavior; restrictions on our business related to the financing we accepted under various federal government support programs such as the ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act, the Consolidated

~~(1)~~ ~~Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Appropriations Act, and the American Rescue Plan Act; our significant fixed obligations and substantial indebtedness; risk associated with execution of our strategic operating plans in the near-term and long-term; the recording of a

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

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PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

material impairment loss of tangible or intangible assets; our extremely competitive industry; volatility in financial and credit markets which could affect our ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances; volatility in fuel prices, maintenance costs and interest rates; our reliance on high daily aircraft utilization; our ability to implement our growth strategy; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on a limited number of suppliers, including for aircraft, aircraft engines and parts and vulnerability to delays by those suppliers; our dependence on the New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology; the outcome of the lawsuit filed by the ~~DOJ~~Department of Justice and certain state Attorneys General against us related to our Northeast Alliance entered into with American Airlines, our being subject to potential unionization, work stoppages, slowdowns or increased labor costs; our presence in some international emerging markets that may experience political or economic instability or may subject us to legal risk; reputational and business risk from information security breaches or cyber-attacks; changes in or additional domestic or foreign government regulation, including new or increased tariffs; changes in our industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; adverse weather conditions or natural disasters; ~~and~~ external geopolitical events and ~~conditions.~~conditions; the occurrence of any event, change or other circumstances that could give rise to the right of JetBlue or Spirit or both of them to terminate the Merger Agreement; failure to obtain applicable regulatory or Spirit stockholder approval in a timely manner or otherwise and the potential financial consequences thereof; failure to satisfy other closing conditions to the proposed transactions with Spirit; failure of the parties to consummate the proposed transaction; JetBlue’s ability to finance the proposed transaction with Spirit and the indebtedness JetBlue expects to incur in connection with the proposed transaction; the possibility that JetBlue may be unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all and to successfully integrate Spirit’s operations with those of JetBlue; the possibility that such integration may be more difficult, time-consuming or costly than expected or that operating costs and business disruption (including, without limitation, disruptions in relationships with employees, customers or suppliers) may be greater than expected in connection with the proposed transaction with Spirit; failure to realize anticipated benefits of the combined operations; demand for the combined company’s services; the growth, change and competitive landscape of the markets in which the combined company participates; expected seasonality trends; diversion of managements’ attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction with Spirit; risks related to investor and rating agency perceptions of each of the parties and their respective business, operations, financial condition and the industry in which they operate; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction with Spirit; and ongoing and increase in costs related to IT network security. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs, and assumptions upon which we base our expectations may change prior to the end of each quarter or year. Any outlook or forecasts in this document have been prepared without taking into account or consideration the proposed transaction with Spirit.

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. You should understand that many important factors, in addition to those discussed or incorporated by reference in this Report, could cause our results to differ materially from those expressed in the forward-looking statements. Potential factors that could affect our results include, those described in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures about Market Risk" in this Report and our recently filed periodic report on Forms 10-K and 10-Q, as well as our other filings with the SEC. In light of these risks and uncertainties, the forward-looking events discussed in this Report might not occur. Our forward-looking statements speak only as of the date of this Report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

Where You Can Find Other Information

Our website is www.jetblue.com. Information contained on our website is not part of this Report. Information we furnish or file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to or exhibits included in these reports are available for download, free of charge, on our website soon after such reports are filed with or furnished to the SEC. Our SEC filings, including exhibits filed therewith, are also available at the SEC’s website at www.sec.gov.

(1) Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.

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REGULATION G RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

We use non-GAAP financial measures in this report. Non-GAAP financial measures are financial measures that are derived from the condensed consolidated financial statements, but that are not presented in accordance with generally accepted accounting principles in the United States, or GAAP. We believe these non-GAAP financial measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. The information below provides an explanation of each non-GAAP financial measure and shows a reconciliation of non-GAAP financial measures used in this filing to the most directly comparable GAAP financial measures.

Operating Expenses per Available Seat Mile, excluding fuel and related taxes, other non-airline operating expenses, and special items ("CASM Ex-Fuel")

Operating expenses per available seat mile, or CASM, is a common metric used in the airline industry. Our CASM for the relevant periods are summarized in the table below. We exclude aircraft fuel and related taxes, operating expenses related to other non-airline businesses, such as JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure.

In ~~2021,~~2022, special items include an ALPA ratification bonus and associated payroll taxes, an impairment on our E-190 fleet, and expenses relating to the proposed Spirit acquisition.

Special items for 2021 include contra-expenses recognized on the utilization of federal grants received under various payroll support programs, ~~and~~ contra-expenses recognized on the Employee Retention Credits provided by the CARES Act.

Special items ~~in 2020~~for 2019 include ~~contra-expenses recognized on~~one-time costs related to the ~~utilization of payroll support grants received under the CARES Act, impairment charges of our~~ Embraer E190 fleet ~~losses generated from certain sale-leaseback transactions, and~~transition as well as one-time costs ~~associated with~~related to the implementation of our ~~voluntary separation programs.~~pilots' collective bargaining agreement.

We believe that CASM ex-fuel is useful for investors because it provides investors the ability to measure financial performance excluding items beyond our control, such as fuel costs, which are subject to many economic and political factors, or not related to the generation of an available seat mile, such as operating expense related to certain non-airline businesses. We believe this non-GAAP measure is more indicative of our ability to manage airline costs and is more comparable to measures reported by other major airlines.

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
($ in millions; per ASM data in cents) $ per ASM $ per ASM $ per ASM $ per ASM
Total operating expenses $ 1,786 $ 11.04 $ 1,008 $ 14.60 $ 4,164 $ 10.70 $ 3,555 $ 14.69
Less:
Aircraft fuel and related taxes 443 2.74 102 1.47 973 2.50 496 2.05
Other non-airline expenses 11 0.06 7 0.10 30 0.07 29 0.12
Special items (186) (1.15) (112) (1.61) (841) (2.16) (214) (0.88)
Operating expenses, excluding fuel $ 1,518 $ 9.39 $ 1,011 $ 14.64 $ 4,002 $ 10.29 $ 3,244 $ 13.40

~~Operating Expense, Loss before Taxes, Net Loss and Loss per Share, excluding Special Items and Gain on Equity Investments~~2022 vs. 2021

~~Our GAAP results in the applicable periods were impacted by credits and charges that were deemed special items.~~


NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM
Total operating expenses	$	2,558	$	15.59	$	1,352	$	9.91	$	4,661	$	14.66	$	2,379	$	10.46
Less:
Aircraft fuel and related taxes	910		5.55		336		2.46		1,481		4.66		530		2.33
Other non-airline expenses	14		0.08		11		0.08		29		0.09		20		0.09
Special items	44		0.27		(366)		(2.68)		44		0.14		(655)		(2.88)
Operating expenses, excluding fuel	$	1,590	$	9.69	$	1,371	$	10.05	$	3,107	$	9.77	$	2,484	$	10.92

In 2021, special items include contra-expenses recognized on the utilization of federal grants received under various payroll support programs and contra-expenses recognized on the Employee Retention Credits provided by the CARES Act. In addition, we also recognized one-time gains on certain equity investments during the period.

In 2020, special items included contra-expenses recognized on the utilization of payroll support grants received under the CARES Act, impairment charges of our Embraer E190 fleet, losses generated from certain sale-leaseback transactions, and one-time costs associated with our voluntary crewmember separation programs.

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PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2022 vs. 2019


NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2019				2022				2019
($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM
Total operating expenses	$	2,558	$	15.59	$	1,855	$	11.58	$	4,661	$	14.66	$	3,652	$	11.60
Less:
Aircraft fuel and related taxes	910		5.55		484		3.02		1,481		4.66		921		2.93
Other non-airline expenses	14		0.08		12		0.09		29		0.09		23		0.07
Special items	44		0.27		2		0.01		44		0.14		14		0.04
Operating expenses, excluding fuel	$	1,590	$	9.69	$	1,357	$	8.46	$	3,107	$	9.77	$	2,694	$	8.56

With respect to JetBlue’s CASM ex-fuel guidance, we are unable to provide a reconciliation of the non-GAAP financial measure to GAAP because the excluded items have not yet occurred and cannot be reasonably predicted. The reconciling information that is unavailable would include a forward-looking range of financial performance measures beyond our control, such as fuel costs, which are subject to many economic and political factors. Accordingly, a reconciliation to CASM is not available without unreasonable effort.

Operating Expense, (Loss) Income before Taxes, Net (Loss) Income and (Loss) Earnings per Share, excluding Special Items and Net Gain (Loss) on Investments

Our GAAP results in the applicable periods were impacted by credits and charges that were deemed special items.

In 2022, special items include an ALPA ratification bonus and associated payroll taxes, an impairment on our E-190 fleet, and expenses relating to the proposed Spirit acquisition.

Special items for 2021 include contra-expenses recognized on the utilization of federal grants received under various payroll support programs, contra-expenses recognized on the Employee Retention Credits provided by the CARES Act.

Special items for 2019 include one-time costs related to the Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement.

We believe the impact of these items distort our overall trends and that our metrics are more comparable with the presentation of our results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the non-GAAP amounts excluding the impact of these items.

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE
EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY INVESTMENTS
Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions, except per share amounts) 2021 2020 2021 2020
Total operating revenues $ 1,972 $ 492 $ 4,203 $ 2,295
Total operating expenses $ 1,786 $ 1,008 $ 4,164 $ 3,555
Less: Special items (186) (112) (841) (214)
Total operating expenses excluding special items $ 1,972 $ 1,120 $ 5,005 $ 3,769
Operating income (loss) $ 186 $ (516) $ 39 $ (1,260)
Add back: Special items (186) (112) (841) (214)
Operating (loss) excluding special items $ — $ (628) $ (802) $ (1,474)
Operating margin excluding special items — % (127.6) % (19.1) % (64.2) %
Income (loss) before income taxes $ 190 $ (578) $ (100) $ (1,381)
Add back: Special items (186) (112) (841) (214)
Less: Gain on equity investments 54 — 54 —
(Loss) excluding special items and gain on equity investments $ (50) $ (690) $ (995) $ (1,595)
Pre-tax margin excluding special items and gain on equity investments (2.6) % (140.1) % (23.7) % (69.5) %
Net income (loss) $ 130 $ (393) $ (53) $ (981)
Add back: Special items (186) (112) (841) (214)
Less: Income tax (expense) benefit related to special items (55) (28) (250) (53)
Less: Gain on equity investments 54 — 54 —
Less: Income tax (expense) related to gain on equity investments (16) — (16) —
Net (loss) excluding special items and gain on equity investments $ (39) $ (477) $ (682) $ (1,142)
Earnings Per Common Share:
Basic $ 0.41 $ (1.44) $ (0.17) $ (3.58)
Add back: Special items, net of tax (0.41) (0.31) (1.86) (0.58)
Less: Gain on equity investments, net of tax 0.12 — 0.12 —
Basic excluding special items $ (0.12) $ (1.75) $ (2.15) $ (4.16)
Diluted $ 0.40 $ (1.44) $ (0.17) $ (3.58)
Add back: Special items, net of tax (0.40) (0.31) (1.86) (0.58)
Less: Gain on equity investments, net of tax 0.12 — 0.12 —
Diluted excluding special items and gain on equity investments $ (0.12) $ (1.75) $ (2.15) $ (4.16)

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PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2022 vs. 2021


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, (LOSS) INCOME BEFORE TAXES, NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS AND NET GAIN (LOSS) ON INVESTMENTS
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2022			2021			2022			2021
Total operating revenues	$	2,445		$	1,499		$	4,181		$	2,232

Total operating expenses	$	2,558		$	1,352		$	4,661		$	2,379
Less: Special items	44			(366)			44			(655)
Total operating expenses excluding special items	$	2,514		$	1,718		$	4,617		$	3,034

Operating (loss) income	$	(113)		$	147		$	(480)		$	(147)
Add back: Special items	44			(366)			44			(655)
Operating loss excluding special items	$	(69)		$	(219)		$	(436)		$	(802)

Operating margin excluding special items	(2.8)		%	(14.6)		%	(10.4)		%	(35.9)		%

(Loss) income before income taxes	$	(151)		$	57		$	(549)		$	(290)
Add back: Special items	44			(366)			44			(655)
Less: Net gain (loss) on investments	(5)			—			(4)			—
(Loss) income before income taxes excluding special items and net gain (loss) on investments	$	(102)		$	(309)		$	(501)		$	(945)

Pre-tax margin excluding special items	(4.2)		%	(20.6)		%	(12.0)		%	(42.3)		%

Net (loss) income	$	(188)		$	64		$	(443)		$	(183)
Add back: Special items	44			(366)			44			(655)
Less: Income tax (expense) benefit related to special items	12			(96)			12			(173)
Less: Net gain (loss) on investments	(5)			—			(4)			—
Less: Income tax (expense) benefit related to net gain (loss) on investments	2			—			1			—
Net (loss) income excluding special items and net gain (loss) on investments	$	(153)		$	(206)		$	(408)		$	(665)

Earnings Per Common Share:
Basic	$	(0.58)		$	0.20		$	(1.38)		$	(0.58)
Add back: Special items, net of tax	0.10			(0.85)			0.10			(1.52)
Less: Net gain (loss) on investments, net of tax	(0.01)			—			(0.01)			—
Basic excluding special items and net gain (loss) on investments	$	(0.47)		$	(0.65)		$	(1.27)		$	(2.10)

Diluted	$	(0.58)		$	0.20		$	(1.38)		$	(0.58)
Add back: Special items, net of tax	0.10			(0.85)			0.10			(1.52)
Less: Net gain (loss) on investments, net of tax	(0.01)			—			(0.01)			—
Diluted excluding special items and net gain (loss) on investments	$	(0.47)		$	(0.65)		$	(1.27)		$	(2.10)

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

2022 vs. 2019


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, (LOSS) INCOME BEFORE TAXES, NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS AND NET GAIN (LOSS) ON INVESTMENTS
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2022			2019			2022			2019
Total operating revenues	$	2,445		$	2,105		$	4,181		$	3,977

Total operating expenses	$	2,558		$	1,855		$	4,661		$	3,652
Less: Special items	44			2			44			14
Total operating expenses excluding special items	$	2,514		$	1,853		$	4,617		$	3,638

Operating (loss) income	$	(113)		$	250		$	(480)		$	325
Add back: Special items	44			2			44			14
Operating (loss) income excluding special items	$	(69)		$	252		$	(436)		$	339

Operating margin excluding special items	(2.8)		%	12.0		%	(10.4)		%	8.5		%

(Loss) income before income taxes	$	(151)		$	236		$	(549)		$	294
Add back: Special items	44			2			44			14
Less: Net gain (loss) on investments	(5)			—			(4)			—
(Loss) income before income taxes excluding special items and net gain (loss) on investments	$	(102)		$	238		$	(501)		$	308

Pre-tax margin excluding special items	(4.2)		%	11.3		%	(12.0)		%	7.8		%

Net (loss) income	$	(188)		$	179		$	(443)		$	221
Add back: Special items	44			2			44			14
Less: Income tax (expense) benefit related to special items	12			1			12			3
Less: Net gain (loss) on investments	(5)			—			(4)
Less: Income tax (expense) benefit related to net gain (loss) on investments	2			—			1			—
Net (loss) income excluding special items and net gain (loss) on investments	$	(153)		$	180		$	(408)		$	232

Earnings Per Common Share:
Basic	$	(0.58)		$	0.60		$	(1.38)		$	0.73
Add back: Special items, net of tax	0.10			—			0.10			0.03
Less: Net gain (loss) on investments, net of tax	(0.01)			—			(0.01)			—
Basic excluding special items and net gain (loss) on investments	$	(0.47)		$	0.60		$	(1.27)		$	0.76

Diluted	$	(0.58)		$	0.59		$	(1.38)		$	0.73
Add back: Special items, net of tax	0.10			0.01			0.10			0.03
Less: Net gain (loss) on investments, net of tax	(0.01)			—			(0.01)			—
Diluted excluding special items and net gain (loss) on investments	$	(0.47)		$	0.60		$	(1.27)		$	0.76

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PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Free Cash Flow

The table below reconciles cash provided by operations determined in accordance with GAAP to Free Cash Flow, a non-GAAP financial measure. Management believes that Free Cash Flow is a relevant metric in measuring our financial strength and is useful to investors in assessing our ability to fund future capital commitments and other obligations. Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, our financial measures prepared in accordance with GAAP.


NON-GAAP FINANCIAL MEASURE	NON-GAAP FINANCIAL MEASURE					NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW	RECONCILIATION OF FREE CASH FLOW					RECONCILIATION OF FREE CASH FLOW
		Nine Months Ended September 30,					Six Months Ended June 30,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Net cash provided by (used in) operating activities		$	1,755	$	(223)
Net cash provided by operating activities						Net cash provided by operating activities	$	299	$	1,658
Less: Capital expenditures	Less: Capital expenditures	(770)		(529)		Less: Capital expenditures	(274)		(524)
Less: Predelivery deposits for flight equipment	Less: Predelivery deposits for flight equipment	(33)		(67)		Less: Predelivery deposits for flight equipment	(65)		(16)
Free Cash Flow	Free Cash Flow	$	952	$	(819)	Free Cash Flow	$	(40)	$	1,118

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PART I. FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except as described below, there have been no material changes in market risks from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our ~~2020~~2021 Form 10-K.

Aircraft Fuel

Our results of operations are affected by changes in the price and availability of aircraft fuel. Market risk is estimated as a hypothetical 10% increase in the ~~September~~June 30, ~~2021~~2022 cost per gallon of fuel. Based on projected fuel consumption for the next 12 months, including the impact of our hedging position, such an increase would result in an increase to aircraft fuel expense of approximately~~$190 million~~ $347 million. . As of ~~September~~June 30, ~~2021,~~2022, we had not hedged any of our projected fuel requirement for the remainder of ~~2021.~~2022.

Interest

Our earnings are affected by changes in interest rates due to the impact those changes have on interest expense from variable-rate debt instruments and on interest income generated from our cash and investment balances. The interest rate is fixed for ~~$4.0~~$3.7 billion of our debt and finance lease obligations, with the remaining ~~$0.2 billion~~$100 million having floating interest rates. As of ~~September~~June 30, ~~2021,~~2022, if interest rates were on average 100 basis points higher in ~~2021,~~2022, our annual interest expense would increase by approximately $1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on our variable rate debt.

If interest rates were to average 100 basis points lower in ~~2021~~2022 than they were during ~~2020,~~2021, our interest income from cash and investment balances would decrease by approximately $1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on the balances of our money market funds and short-term, interest-bearing investments for the trailing twelve month period.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2021.~~2022. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our controls performed during the quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 21, 2021, the United States Department of Justice (the “DOJ”), along with the Attorneys General of each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania, and Virginia, and the District of Columbia, filed a lawsuit in the United States District Court for the District of Massachusetts against JetBlue Airways Corporation (“JetBlue”) and American Airlines, Inc. (“American” and, together with JetBlue, the “Carriers”) concerning the Carriers’ previously implemented Northeast Alliance (the “NEA”). The lawsuit asserts and seeks an adjudication that the NEA violates Section 1 of the Sherman Act, and that the Carriers be permanently enjoined from continuing and restrained from further implementing the NEA. JetBlue believes the lawsuit is without merit and, along with American, intends to defend itself vigorously. Given the nature of this case, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

In the ordinary course of our business, we are party to various legal proceedings and claims which we believe are incidental to the operation of our business. Refer to Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

ITEM 1A. RISK FACTORS

Part I, Item 1A "Risk Factors" of our 2021 Form 10-K, includes a discussion of our risk factors which are incorporated herein. There have been no material changes from the risk factors associated with our business previously disclosed in our Form 10-K, other than the risk factors described below.

In order to complete the Merger, we and Spirit must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions, completion of the Merger may be jeopardized or the anticipated benefits of the Merger could be reduced.

Although we and Spirit have agreed to use reasonable best efforts to make certain governmental filings and obtain the required governmental approvals, including from the FCC, the FAA and the DOT, as well as the expiration or termination of relevant waiting periods under the HSR Act, there can be no assurance that the relevant waiting periods will expire or be terminated or that the relevant approvals will be obtained. The ~~global COVID-19 pandemic has had,~~governmental entities from which these approvals are required have broad discretion in administering the governing laws and regulations, and may take into account various facts and circumstances in their consideration of the Merger. These governmental entities may initiate proceedings seeking to prevent, or otherwise seek to prevent, the Merger. As a condition to approving the Merger, these governmental entities may impose conditions, terms, obligations or restrictions or require divestitures or place restrictions on the conduct of our business after completion of the Merger. As part of the Merger Agreement, we have agreed to take any such required divestiture actions in connection with the consummation of Merger, provided that we are not required to take any divestiture actions if such action would or would reasonably be expected to result in a material adverse effect on JetBlue and its subsidiaries (including Spirit and its subsidiaries) nor are we required to take any action that, in our discretion, would be reasonably likely to materially and adversely affect the anticipated benefits of JetBlue's Northeast Alliance with American. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying or preventing completion of the Merger or imposing additional material costs on or materially limiting the revenues of the combined company following the Merger, or otherwise adversely affecting, including to a material extent, our business, results of operations and financial condition after completion of the Merger. If we are required to divest assets or businesses, there can be no assurance that we will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental entities will approve the terms of such divestitures. We can provide no assurance that these conditions, terms, obligations or restrictions will not result in the abandonment of the Merger.

Failure to complete the Merger in a timely manner or at all could negatively impact the market price of our common stock, as well as our future business and our results of operations and financial condition.

The Merger cannot be completed until conditions to closing are satisfied or (if permissible under applicable law) waived. The Merger is subject to numerous closing conditions, including among other things receipt of Spirit stockholder approval and receipt of applicable regulatory approvals, including approvals from the FCC, the FAA and the DOT, the expiration or early termination of the statutory waiting period under the HSR Act and approval under certain foreign antitrust laws.

The process of satisfying such conditions, including seeking the necessary regulatory approvals, could delay the completion of the Merger for a significant period of time or prevent it from occurring. Further, there can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed.

If the Merger is not completed in a timely manner or at all, our ongoing business may be adversely affected as follows:

•we may experience negative reactions from the financial markets, including investors and rating agencies, and our stock price could decline to the extent that the current market price reflects an assumption that the Merger will be completed;

•we may experience negative reactions from employees, customers, suppliers or other third parties;

•we may be subject to litigation, which could result in significant costs and expenses;

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•management’s focus may have been diverted from day-to-day business operations and pursuing other opportunities that could have been beneficial to us;

•in certain circumstances, if the Merger is not consummated for antitrust reasons, JetBlue will pay Spirit a reverse break-up of $70 million and will pay the Spirit stockholders directly a reverse break-up fee of $400 million, less the aggregate amount of the prepayment of $2.50 per share in cash payable following Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through the earlier of the Closing Date or termination of the transaction; and

•our costs of pursuing the Merger may be higher than anticipated.

If the Merger is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, results of operations and financial condition.

The pendency of the proposed Merger may cause disruption in our business.

On July 28, 2022, we entered into a Merger Agreement with Spirit, pursuant to which we would acquire Spirit.

The preparation for the proposed Merger and the subsequent integration with Spirit’s business is expected to place a significant burden on our management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our business, results of operations and financial condition.

While the Merger is pending, we intend to continue to grow our business which will entail the continued hiring of additional employees, including pilots and other skilled workers, presently in short supply in the airline industry. Any disruption [or perceived uncertainty] may make it more difficult for us to meet our employee retention and hiring goals which could materially impact our business, results of operations and financial condition.

The pendency of the proposed Merger could cause disruptions to our business or business relationships, which could have ~~a material~~an adverse impact on our results of operations. Parties with which we have business relationships, including customers, employees, business partners or suppliers, unions, third-party service providers and third-party distribution channels, may be uncertain as to the ~~travel industry generally~~future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

We will incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, which we expect to continue as we seek regulatory and other approvals to complete the proposed Merger. We may also incur unanticipated costs in connection with our integration with Spirit’s business. The substantial majority of these costs will be non-recurring expenses relating to the Merger, and many of these costs are payable regardless of whether or not the Merger is consummated. We also could be subject to litigation related to the proposed Merger, which could prevent or delay the consummation of the Merger and result in significant costs and expenses.

Our indebtedness following completion of the Merger will be substantially greater than our indebtedness on a stand-alone basis and greater than the combined indebtedness of JetBlue and Spirit existing prior to the announcement of the transaction, which could adversely affect our business flexibility, and increase our borrowing costs. Downgrades in our credit ratings could adversely affect our business, cash flows, financial condition and operating results.

In order to complete the Merger, we expect to incur acquisition-related debt financing of up to $3.5 billion and we will also assume Spirits indebtedness outstanding at the closing. Our substantially increased indebtedness following completion of the Merger may impact, among other things, our flexibility to respond to changing business and economic conditions. In addition, the amount of cash required to service our increased indebtedness will be greater than the amount of cash flows required prior to the Merger. The increased indebtedness could also reduce funds available to engage in investments in our business development, capital expenditures and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.

In addition, our credit ratings impact the cost and availability of our future borrowings, and, as a result, on our ~~business~~cost of capital. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance and ~~results of operations, and these impacts may persist for an extended period of time~~ability to meet our debt obligations or, ~~become more pronounced over time.~~

~~The global spread and impact~~following completion of the COVID-19 pandemic is complex, unpredictable, and continuously evolving and has resulted in significant disruption and additional risks to our business; the travel and hospitality industries; and the global economy. The COVID-19 pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on large gatherings of people, travel bans, border closings and restrictions, business closures, quarantines, shelter-in-place orders, and social distancing measures and vaccination mandates. As a result, the COVID-19 pandemic and its consequences have significantly reduced global passenger air travel and have had a material detrimental impact on global commercial activity across the travel and hospitality industries, all of which has had, and is expected to continue to have, a material adverse impact on our business, operations, and financial results.

~~The extent, duration, and magnitude~~Merger, those obligations of the COVID-19 pandemic's effects will depend on various factors, all of which are highly uncertain, difficult to predict and not controlled by us, including, but not limited to, the impact of the pandemic on global and regional economies, travel, and economic activity, as well as actions taken by governments, businesses, and individuals in response to the pandemic, including vaccination rates in the markets where we operate, and any additional resurgence of COVID-19 and the development of new variants. These factors include the impact of the COVID-19 pandemic on unemployment rates and consumer discretionary spending; governmental or regulatory orders that impact our business and our industry, including mandates that require all passengers on our flights and our crewmembers to be vaccinated; the demand for air travel; levels of consumer confidence; the ability to effectively and widely manufacture and distribute vaccines and broad acceptance of the vaccine by the general population; and the pace of recovery when the pandemic subsides. Moreover, even after shelter-in-place orders and travel bans and advisories are lifted and, vaccines are more widely distributed and available and vaccination rates increase, demand for air travel may remain depressed for a significant length of time, and we cannot predict if and when demand will return to pre-COVID-19 levels. In addition, we cannot predict whether business travel for in-person meetings will decrease over the long-term due to technological advancements in, and consumer acceptance and adaptation to, virtual meetings and/or changes in customer preferences.

~~The COVID-19 pandemic has subjected our business, operations, and financial condition to a number of significant risks:~~

~~Demand, Capacity, Revenues and Expenses~~: With the global spread of COVID-19 beginning in March 2020, the Company began experiencing a significant decline in international and domestic demand related to COVID-19 during the first quarter of 2020, and this reduction in demand has continued through the date of this report and is expected to continue for the foreseeable future. The decline in demand caused a material deterioration in our revenues, resulting in a net loss of $1.4 billion for the year ended December 31, 2020. The Company expects its results of operations for full-year 2021 to be materially impacted. Additionally, the U.S. Congress has considered legislation that would mandate all passengers on our domestic flights to be vaccinated, which could negatively impact demand in certain of our markets. The continued decline in demand, which is expected to continue for the foreseeable future, is expected to have a material adverse impact on our business, operating results, financial condition, and liquidity.combined company. Each ratings

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organization reviews our ratings periodically, and there can be no assurance that our current ratings will be maintained in the future. The ~~COVID-19 pandemic has caused us,~~rating agencies have published reports which indicate that an increase in our consolidated leverage following the completion of the Merger may negatively impact our credit ratings. Further, if interest rates increase, variable rate debt will create higher debt service requirements, which could adversely affect our cash flows.

We may also be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions or other general corporate requirements. Our ability to arrange additional financing will depend on, among other factors, our financial position and ~~could continue to cause us, to incur additional expenses. While governments have~~performance, as well as prevailing market conditions and ~~may continue to implement various stimulus and relief programs, it is uncertain whether and to what extent~~other factors beyond our control. We cannot assure you that we will be ~~eligible~~able to ~~participate~~obtain additional financing on terms acceptable to us or at all.

Although we expect that the Merger will result in ~~or successfully access, such programs, whether conditions or restrictions imposed under such programs will be acceptable,~~synergies and ~~whether such programs will be effective in avoiding or significantly mitigating the financial impacts of the COVID-19 pandemic. Further, we have incurred additional costs related~~other benefits to severance payments and may incur additional expenses related to restructuring activities in future periods. Even after the COVID-19 pandemic subsides, we could experience other short or longer-term impacts on our costs, including, for example, the need for enhanced health and hygiene standards or certifications, social distancing requirements or other precautionary measures in response to the health and safety challenges presented by the COVID-19 pandemic. These effects could impact our ability to generate profits even after revenues improve. The Company has and expects to continue to focus on reducing expenses and managing liquidity. While we lowered our cash burn from an average of approximately $18 million per day at the end of March 2020 to approximately $6.7 million per day in in the fourth quarter ended December 31, 2020,us, we may not ~~be able~~realize those benefits because of required divestitures, difficulties related to ~~continue to reduce cash burn at~~integration and the ~~same rate in the future. Cash burn is calculated as net cash used in operating activities, net cash used in investing activities,~~achievement of such synergies and net cash provided by financing activities adjusted for certain items such as: grant proceeds received under various federal payroll support programs, proceeds from the issuance of long-term debt and finance lease obligations, proceeds of financing arrangements reported within investing activities (such as certain aircraft sale-leaseback transactions), early repayments of our debt and finance lease obligation, cash payments associated with our voluntary separation programs, net purchases of investment securities, and net proceeds from our common stock offerings.other challenges.

~~Operations~~
~~: In response~~

Until completion of the Merger, we and Spirit will operate independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of substantial benefits. Historically, the integration of separate airlines has proven to ~~the significant decline in demand for air travel across our system,~~be more time consuming, costly and require more resources than initially expected. We expect we have taken actions and continue to evaluate spending to manage operating expenses and optimize our financial resources. These actions include a permanent reduction in our workforce across our BlueCities and our support centers, eliminating non-essential spending and corporate initiatives, and reducing costs. We have received, and may continue to receive, demands or requests from labor unions that represent our colleagues, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits, or other terms that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our mitigation plans. Additionally, as a result of a federal government mandate and by virtue of JetBlue being a contractor to the federal government, our crewmembers who do not receive an approved medical or religious accommodation will be required to ~~be vaccinated against~~devote significant management attention and financial and other resources to integrating our two business practices, cultures and operations. If we are not able to successfully integrate our business with Spirit’s, the ~~SARS-Cov-2 novel coronavirus. As a result, we may face staffing shortages as we begin to enforce this mandate that may disrupt our operations. Further, once the effects~~anticipated benefits and operational synergies of the ~~pandemic subside,~~Merger may take longer than expected to be realized or not be realized at all. In connection with the recovery period could be extended and we expect that certain operational changes, particularly with respect to enhanced health and safety measures and global care and cleanliness certifications, will be necessary over the long-term.

Further, certain crewmembers of the Company, its suppliers and its business partners, such as airport, air traffic personnel, and those working on certain production lines, have tested positive for or been suspected of having COVID-19, which has resulted in facility closures, reduction in available staffing, and disruptions to the Company’s overall operations as well as thatintegration of our ~~suppliers. The Company’s operations may be further impacted~~business with Spirit’s in a manner that permits us to achieve the ~~event of additional instances of actual or perceived risk of infection~~synergies anticipated to result from the Merger we will need to address, among ~~crewmembers of~~other things, the Company, its suppliers or its business partners, and this impact may have a material and adverse effect if the Company is unable to maintain a suitably skilled and sized workforce and address related crewmember matters.following issues:

~~Financial Condition~~

•combining the companies’ separate operational, financial, reporting and ~~Indebtedness~~internal control functions;

•~~: As we manage through the effects of the pandemic, our level of indebtedness has increased~~maintaining existing or negotiating new agreements with unions, employees, suppliers, third-party service providers and ~~may continue to increase. To enhance our liquidity profile~~third-party distribution channels, and ~~cash position~~avoiding delays in ~~response to the COVID-19 pandemic, the Company suspended share repurchases under its share repurchase program, executed two~~entering into new ~~term loan~~ agreements with prospective employees, suppliers, third-party service providers and ~~immediately drew down on these facilities for the full amount available, borrowed on its existing $550 million revolving credit facility, completed the public placements of equipment notes~~third-party distribution channels;

•integrating complex systems and technologies, including implementing an integrated customer reservations system, operating procedures, regulatory compliance programs, aircraft fleets, networks, and other assets in ~~an aggregate principal of $923 million, completed~~ a public offering of 42 million shares of our common stock for net proceeds of $583 million, executed a number of aircraft sale-leaseback transactions, and temporarily grounded a portion of its fleet. There is no guaranteemanner that debt financings will be available in the future to fund our obligations or will be available on terms consistent with our expectations. We also expect the ongoing impact of the COVID-19 pandemic on the financial markets could also adversely affect our ability to raise equity financing in the future. Changes in the credit ratings of our debt, including our revolving credit facility and outstanding senior notes, could have anminimizes any adverse impact on ~~our interest expense. As a result~~customers, suppliers, employees and other constituencies;

•addressing possible differences in business backgrounds, corporate cultures and management philosophies;

•integrating the businesses’ corporate, administrative and information technology infrastructure, including coordinating geographically dispersed companies;

•diversion of the ~~general economic uncertainty~~attention of management and other key employees;

•harmonizing the ~~impact~~companies’ employee development, compensation and benefit programs and related policies, procedures and practices;

•integrating workforces and attracting and retaining key personnel while maintaining focus on providing consistent, high quality customer service and running an efficient operation;

•identifying and eliminating redundant and underperforming operations and assets in both companies;

•managing the expanded operations of a significantly larger and more complex company;

•coordinating sales, distribution and marketing efforts, including the rebranding initiatives related to the Spirit business;

•effecting potential actions that may be required in connection with obtaining regulatory approvals; and

•resolving potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the Merger.

Even if the operations of our business and Spirit’s business are integrated successfully, the full expected benefits and synergies of the ~~COVID-19 pandemic, our credit ratings have been downgraded. If our credit ratings were to~~Merger may not be ~~further downgraded, or general market conditions were to ascribe higher~~realized. There is risk ~~to our credit rating levels, our industry, or our Company, our access to capital and~~that the ~~cost of debt financing would~~expected benefits may not be ~~negatively impacted.~~achieved within the anticipated

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The Company may also take additional actions to improve its financial position, including measures to improve liquidity, such as the issuance of additional unsecured and secured debt securities, equity securities and equity-linked securities, the sale of assets and/or the entry into additional bilateral and syndicated secured and/or unsecured credit facilities. There can be no assurance as to the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms,time frame or at all. Additional unanticipated costs, which could be material, may also be incurred in the integration of our business and Spirit’s business. Further, it is possible that there could be loss of key JetBlue or Spirit employees, loss of customers, disruption of either or both of our or Spirit’s ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated. Additionally, the full benefits of the Merger may not be realized if the combined business does not perform as expected or demand for the combined company’s services does not meet our expectations. The risks currently facing each of our and Spirit’s business and the airline industry, including the ongoing impact of the COVID-19 pandemic and any possible resurgence in infection rates and the impact on airline travel, will also present additional challenges for us to successfully integrate our two companies.

We plan to submit to the FAA a transition plan for merging the day-to-day operations of JetBlue and Spirit under a single operating certificate. The issuance of a single operating certificate will occur when the FAA agrees that we have achieved a level of integration that can be safely managed under one certificate. The actual time required and cost incurred to receive this approval cannot be predicted and no actual integration may start until after closing. Any delay in the grant of such ~~actions~~approval or increase in costs beyond those presently expected could have a material adverse effect on the completion date of our integration plan and receipt of the benefits expected from that plan. We face challenges in integrating our computer, communications and other technology systems. All of these factors could materially adversely affect our business, results of operations and financial condition.

We may face challenges in integrating our computer, communications and other technology systems.

Among the principal risks of integrating our and Spirit’s businesses and operations are the risks relating to integrating various computer, communications and other technology systems, including implementing an integrated customer reservations system, that will be necessary to operate JetBlue and Spirit as a single airline. The integration of these systems may be ~~material~~more disruptive and cost more than we may originally estimate. The implementation process to integrate these various systems will involve a number of risks that could adversely impact our business, results of operations and financial condition. The related implementation will be a complex and time-consuming project involving internal resources, substantial expenditures for implementation consultants, system hardware, software and implementation activities, as well as the transformation of business and financial processes.

As with any large project, there will be many factors that may materially affect the schedule, cost and execution of the integration of our computer, communications and other technology systems. These factors could include, among others: problems during the design, implementation and testing phases; systems delays and/or malfunctions; the risk that suppliers and contractors will not perform as required under their contracts; the diversion of management attention from daily operations to the project; reworks due to unanticipated changes in ~~nature~~business processes; challenges in simultaneously activating new systems throughout our network; training employees in the operations of new systems; the risk of security breach or disruption; and other unexpected events beyond our control. We cannot assure you that our and Spirit’s security measures, change control procedures or disaster recovery plans will be adequate to prevent disruptions or delays. Disruptions in or changes to these systems could result in ~~significant additional borrowing. The Company's reduction in expenditures, measures~~a disruption to ~~improve liquidity or other strategic actions that the Company may take in the future in response to COVID-19 may not be effective in offsetting decreased demand,~~our business and our operations and the ~~Company will not be permitted to take certain strategic actions as a result~~loss of important data. Any of the ~~CARES Act, which~~foregoing could result in a material adverse effect on ~~the Company's~~our business, ~~operating~~ results ~~liquidity~~of operations and financial condition.

~~Growth~~
:

The ~~COVID-19 pandemic has negatively impacted,~~combined company is expected to incur substantial expenses related to the Merger and the integration of JetBlue and Spirit.

The combined company is expected to incur substantial expenses in connection with the Merger and the integration of JetBlue and Spirit. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, reservations, maintenance, flight operations, marketing and benefits. While we and Spirit have assumed that a certain level of expenses would be incurred, there are many factors beyond our control that could ~~continue~~affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to ~~impact,~~estimate accurately. These integration expenses likely will result in the ~~pace~~combined company taking significant charges against earnings following the completion of the Merger, and the amount and timing of ~~our growth. As~~such charges are uncertain at present.

Uncertainties associated with the Merger may cause a ~~result~~loss of management personnel and other key employees which could adversely affect the future business and operations of the ~~COVID-19 pandemic,~~combined company.

We and Spirit are dependent on the ~~Company reduced its planned capital expenditures~~experience and ~~operating expenditures~~industry knowledge of our respective officers and other key employees to execute our respective business plans. The combined company’s success after the Merger will depend in ~~2020 (including by postponing projects deemed non-critical~~part upon the ability of our and Spirit to retain key management personnel and other key employees. Current and prospective employees of JetBlue and Spirit may experience uncertainty about their roles within the combined company following the Merger, which may impair

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the ability of both entities to attract, retain and motivate key management and other key personnel. Employee retention may be particularly challenging during the pendency of the Merger, as employees of JetBlue and Spirit may experience uncertainty about their future roles in the combined business.

Various Spirit officers and employees hold Spirit common shares, Spirit restricted stock units (“Spirit RSUs”) and Spirit performance stock units (“Spirit PSUs”), some of which are subject to accelerated vesting upon a change in control, and, if the Merger is completed, these officers and employees may be entitled to the ~~Company's operations), suspended share repurchases~~cash consideration payable under ~~its share repurchase~~the Merger Agreement in respect of such Spirit common shares, Spirit RSUs and Spirit PSUs. These payouts could also make retention of these officers and employees following the closing more difficult. Additionally, pursuant to employment agreements and/or other agreements or arrangements with Spirit, certain key employees of Spirit are entitled to receive severance payments upon a termination without cause and/or a resignation for “good reason” following completion of the Merger. Under these agreements, certain key employees of Spirit could resign from employment following specified circumstances set forth in the applicable agreement, including an adverse change in title, authority or responsibilities, compensation and benefits or primary office location, and receive significant severance payments.

Furthermore, if key employees of JetBlue or Spirit depart or are at risk of departing, we may have to incur significant costs (in addition to the retention program to be implemented by Spirit in connection with the Merger Agreement) in retaining such individuals or in identifying, hiring and ~~grounded or redeployed aircraft.~~

~~Capital Markets Impact: The global stock markets have experienced,~~retaining replacements and may ~~continue~~lose significant expertise and talent, and our ability to ~~experience, significant volatility~~realize the anticipated benefits of the Merger may be materially and adversely affected. Accordingly, no assurance can be given that the combined company will be able to attract or retain key management personnel and other key employees of JetBlue and Spirit to the same extent that JetBlue and Spirit have previously been able to attract or retain their own employees.

The future results of the combined company will suffer if the combined company does not effectively manage its expanded operations following the Merger.

Following the Merger, the size of the business of the combined company will increase significantly beyond the current size of either our or Spirit’s business. The combined company’s future success depends, in part, upon its ability to manage this expanded business, which will pose challenges for management, including those related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected synergies, operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the Merger.

Following the closing of the Merger, we will be bound by all of the obligations and liabilities of both companies.

Following the closing, we will become bound by all of the obligations and liabilities of JetBlue and Spirit. Neither we nor Spirit can predict the financial condition of JetBlue or Spirit at the time of that combination or our ability to satisfy the obligations and liabilities of the combined company.

The need to integrate the JetBlue and Spirit workforces following the Merger and negotiate joint labor agreements presents the potential for delay in achieving expected synergies, increased labor costs or labor disputes that could adversely affect the combined company’s operations.

The successful integration of JetBlue and Spirit and achievement of the anticipated benefits of the combination depend significantly on integrating employee groups and on maintaining productive employee relations. Failure to do so presents the potential for delays in achieving expected synergies of integration, increased labor costs and labor disputes that could adversely affect the combined company’s operations.

Spirit is a highly unionized company; JetBlue's two unionized groups are its Pilots and Inflight Crewmembers. The process for integrating labor groups in an airline merger is governed by a combination of the United States Railway Labor Act (“RLA”), the McCaskill-Bond Act, and where applicable, the existing provisions of each company’s collective bargaining agreements, and to a certain extent, union policy related to seniority integration. Pending operational integration, it is generally necessary to maintain a “fence” between employee groups, during which time the combined company will keep the employee groups separate and apply the terms of the existing collective bargaining agreements, unless other terms have been negotiated.

Under the RLA, the National Mediation Board (“NMB”) has exclusive authority to resolve representation disputes arising out of airline mergers. The disputes that the NMB has authority to resolve include (i) whether the merger has created a “single carrier” for representation purposes; (ii) designation of the appropriate “craft or class”—the RLA term for “bargaining unit”—for bargaining at the combined company on a system wide basis, an issue which typically arises from minor inconsistencies

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over which positions are included within a particular craft or class at the two companies; and (iii) designation of the representative of each craft or class at the combined company.

In order to fully integrate the pre-merger represented employee groups, the combined company must negotiate a joint collective bargaining agreement covering each combined group. These negotiations can begin immediately where the same union represents employees of both companies within the craft or class in question, but otherwise will likely begin after a single post-merger representative has been certified by the NMB.

Prior to the completion of the Merger, there is a risk of litigation or arbitration by unions or individual employees that could delay or halt the Merger or result in monetary damages on the basis that the Merger either violates a provision of an existing collective bargaining agreement or an obligation under the RLA or other applicable law. The unions or individual employees might also pursue judicial or arbitral claims arising out of changes implemented as a result of the ~~COVID-19 pandemic,~~Merger. There is also a possibility that employees or unions could engage in unlawful job actions such as slow-downs, work-to-rule campaigns, sick-outs or other actions designed to disrupt our and Spirit’s normal operations, whether in opposition to the Merger or in an attempt to pressure the companies in collective bargaining negotiations. Although the RLA makes such actions unlawful until the parties have been lawfully released to self-help, and we and Spirit can seek injunctive relief against premature self-help, such actions can cause significant harm even if ultimately enjoined.

The Merger may not be accretive, and may be dilutive, to our earnings per share, which may negatively affect the market price of shares of our common stock.

We currently project that the Merger will result in a number of benefits, including enhanced competitive positioning and a platform from which to accelerate growth, and that it will be accretive to earnings per share in the first full year after the close of the transaction. This projection is based on preliminary estimates that may materially change. In addition, future events and conditions could decrease or delay the accretion that is currently projected or could result in dilution, including adverse changes in market conditions, additional transaction and integration-related costs and other factors such as the failure to realize some or all of the anticipated benefits of the Merger. Any dilution of, decrease in or delay of any accretion to, our earnings per share could cause the price of shares of our common stock has been volatile since the onset of the pandemic. The COVID-19 pandemic and the significant uncertainties it has caused for the global economy, business activity, and business confidence have had, and are likely to ~~continue to have,~~decline or grow at a ~~significant effect on the market price of securities generally, including our securities. In addition, certain debt covenants restrict our ability to engage in share repurchase activity.~~reduced rate.

The impacts of the COVID-19 pandemic on our business, operations and financial condition are continuously evolving, and the continuation of the pandemic, any additional resurgence, of COVID-19 or variants could precipitate or aggravate the other risk factors included in this annual report, which in turn could further materially adversely affect our business, financial condition, liquidity, results of operations, and profitability, including in ways that are not currently known to us or that we do not currently consider to present significant risks.

~~Our Northeast Alliance with American Airlines is Subject to Challenge~~

In July 2020, we announced a strategic partnership with American Airlines Group Inc., designed to optimize our and American Airlines’ networks through certain flights operated by us and American Airlines to and from John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty International Airport and Boston Logan International Airport, which we refer to as the Northeast Alliance. On September 21, 2021, the United States Department of Justice, along with the Attorneys General of each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania and Virginia, and the District of Columbia, filed a lawsuit in the United States District Court for the District of Massachusetts against us and American Airlines concerning the Northeast Alliance. The lawsuit asserts and seeks an adjudication that the Northeast Alliance violates Section 1 of the Sherman Act, and that we and American Airlines should be permanently enjoined from continuing and restrained from further implementing the Northeast Alliance.

We and American Airlines established the Northeast Alliance to unlock capacity growth and customer benefits neither of us could achieve independently and to better compete in the northeast market. We believe the lawsuit is without merit, we, along with American Airlines, intend to defend this matter vigorously. If we are unsuccessful, the failure to achieve the intended benefits of the Northeast Alliance could have an adverse impact on our business, financial condition and results of operations. Additionally, we are incurring costs associated with implementing operational and marketing elements of the Northeast Alliance, which would not be recoverable if we were required to unwind all or portion of the Northeast Alliance.

Part I, Item 1A "Risk Factors" of our 2020 Form 10-K, includes a discussion of our risk factors which are incorporated herein. Other than the risk factors described above, there have been no material changes from the risk factors previously disclosed in our Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In accordance with the Payroll Support Program Agreement, the Payroll Support Program Extension Agreement, the Payroll Support 3 Agreement, and the Loan Agreement with ~~the~~ Treasury, we are prohibited from making any share repurchases through September 30, 2022. We have suspended our share repurchase program as of March 31, 2020. The acquisition of treasury stock reflected on our condensed consolidated statement of cash flows for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 represents the return of shares to satisfy tax payments associated with crewmember stock compensation that vested during the ~~period.~~

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~~PART II. OTHER INFORMATION~~

respective periods.

In consideration for the Payroll Support 2 Payments, during the ~~nine~~six months ended ~~September~~June 30, 2021, we issued warrants to purchase approximately ~~1.0~~$1.0 million shares of ~~our~~ common stock to ~~the~~ Treasury at an exercise price of $14.43 per share.

In consideration for the Payroll Support 3 Payments, during the ~~nine~~six months ended ~~September~~June 30, 2021, we issued warrants to purchase approximately ~~0.7~~$0.7 million shares of ~~our~~ common stock to ~~the~~ Treasury at an exercise price of $19.90 per share. See Note 3 to our condensed consolidated financial statements.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See accompanying Exhibit Index included after the signature page of this Report for a list of the exhibits filed or furnished with this Report.

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EXHIBIT INDEX


Exhibit Number						Exhibit
~~10.1~~2.1						Agreement and Plan of Merger, dated July 28, 2022, by and among JetBlue ~~Executive Retention~~Airways Corporation, Sundown Acquisition Corp., and Spirit Airlines, Inc.—incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K dated June 28, 2022 and filed on July 28, 2022
10.1†						Form of Performance Cash Award ~~- Ursula Hurley, dated September 5, 2021—~~Agreement—incorporated by reference to Exhibit 10.1 to our ~~current report~~Quarterly Report on Form ~~8-K dated September 5, 2021 and filed on September 7, 2021.~~10-Q for the quarter ended March 31, 2022
~~10.2~~10.2†						~~Amendment to Employment~~Form of Executive Award Agreement ~~between Robin Hayes and JetBlue Airways Corporation, dated September 5, 2021—~~(award vesting on May 1, 2023)—incorporated by reference to Exhibit 10.2 to our ~~current report~~Quarterly Report on Form ~~8-K dated September 5, 2021~~10-Q for the quarter ended March 31, 2022
10.3†						Form of Executive Award Agreement (award vesting on May 1, 2023, February 1, 2024, and ~~filed~~February 1, 2025)—incorporated by reference to Exhibit 10.3 to our Quarterly Report on ~~September 7, 2021.~~Form 10-Q for the quarter ended March 31, 2022
31.1*						Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2*						Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32**						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Labels Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


†						Compensatory plans in which the directors and executive officers of JetBlue participate.
*						Filed herewith.
**						Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JETBLUE AIRWAYS CORPORATION

(Registrant)

Date:

~~November 1, 2021~~August 5, 2022

By:

/s/ ~~Alexander Chatkewitz~~Al Spencer

Al Spencer

Vice President, Controller and
~~Chief~~ Principal Accounting Officer
~~(Principal Accounting Officer)~~

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Fuel derivatives
Hedge effectiveness losses recognized in aircraft fuel expense	$	—		$	2		$	—		$	5
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other	—			1			—			6
Hedge losses on derivatives recognized in comprehensive income	—			—			—			11
Percentage of actual consumption economically hedged	—		%	27		%	—		%	25		%


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY INVESTMENTS
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2021			2020			2021			2020
Total operating revenues	$	1,972		$	492		$	4,203		$	2,295

Total operating expenses	$	1,786		$	1,008		$	4,164		$	3,555
Less: Special items	(186)			(112)			(841)			(214)
Total operating expenses excluding special items	$	1,972		$	1,120		$	5,005		$	3,769

Operating income (loss)	$	186		$	(516)		$	39		$	(1,260)
Add back: Special items	(186)			(112)			(841)			(214)
Operating (loss) excluding special items	$	—		$	(628)		$	(802)		$	(1,474)

Operating margin excluding special items	—		%	(127.6)		%	(19.1)		%	(64.2)		%

Income (loss) before income taxes	$	190		$	(578)		$	(100)		$	(1,381)
Add back: Special items	(186)			(112)			(841)			(214)
Less: Gain on equity investments	54			—			54			—
(Loss) excluding special items and gain on equity investments	$	(50)		$	(690)		$	(995)		$	(1,595)

Pre-tax margin excluding special items and gain on equity investments	(2.6)		%	(140.1)		%	(23.7)		%	(69.5)		%

Net income (loss)	$	130		$	(393)		$	(53)		$	(981)
Add back: Special items	(186)			(112)			(841)			(214)
Less: Income tax (expense) benefit related to special items	(55)			(28)			(250)			(53)
Less: Gain on equity investments	54			—			54			—
Less: Income tax (expense) related to gain on equity investments	(16)			—			(16)			—
Net (loss) excluding special items and gain on equity investments	$	(39)		$	(477)		$	(682)		$	(1,142)

Earnings Per Common Share:
Basic	$	0.41		$	(1.44)		$	(0.17)		$	(3.58)
Add back: Special items, net of tax	(0.41)			(0.31)			(1.86)			(0.58)
Less: Gain on equity investments, net of tax	0.12			—			0.12			—
Basic excluding special items	$	(0.12)		$	(1.75)		$	(2.15)		$	(4.16)

Diluted	$	0.40		$	(1.44)		$	(0.17)		$	(3.58)
Add back: Special items, net of tax	(0.40)			(0.31)			(1.86)			(0.58)
Less: Gain on equity investments, net of tax	0.12			—			0.12			—
Diluted excluding special items and gain on equity investments	$	(0.12)		$	(1.75)		$	(2.15)		$	(4.16)