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 ~~June 30, 2022~~March 31, 2023

☐ 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 ~~June 30, 2022,~~March 31, 2023, there were ~~323,854,365~~327,900,975 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 - ~~June 30, 2022~~March 31, 202 3 and December 31, ~~2021~~202 2			3
Consolidated Statements of Operations - Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 202 3 and ~~2021~~202 2			5
Consolidated Statements of Comprehensive ~~Income~~Loss - Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 202 3 and ~~2021~~202 2			6
~~Condensed~~C ondensed Consolidated Statements of Cash Flows - ~~Six~~Three Months Ended ~~June 30, 2022~~March 31, 202 3 and ~~2021~~202 2			7
Consolidated Statements of Stockholders' Equity - Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 202 3 and ~~2021~~202 2			8
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2522
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4336
Item 4. Controls and Procedures			4336

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4437
Item 1A. Risk Factors			4437
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4937
Item 5. Other Information			4937
Item 6. Exhibits			4938

SIGNATURE			5140

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(~~unaudited,~~ in millions, except per share data)


							March 31, 2023		December 31, 2022
		June 30, 2022		December 31, 2021			(unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,611	$	2,018	Cash and cash equivalents	$	1,333	$	1,042
Investment securities	Investment securities	873		824		Investment securities	204		350
Receivables, less allowance (2022-$3; 2021-$3)		291		207
Inventories, less allowance (2022-$26; 2021-$24)		73		74
Receivables, less allowance (2023-$3; 2022-$4)						Receivables, less allowance (2023-$3; 2022-$4)	331		317
Inventories, less allowance (2023-$30; 2022-$29)						Inventories, less allowance (2023-$30; 2022-$29)	76		87
Prepaid expenses and other	Prepaid expenses and other	146		124		Prepaid expenses and other	154		120
Total current assets	Total current assets	2,994		3,247		Total current assets	2,098		1,916
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT					PROPERTY AND EQUIPMENT
Flight equipment	Flight equipment	11,390		11,161		Flight equipment	11,889		11,727
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	369		337		Predelivery deposits for flight equipment	398		415
Total flight equipment and predelivery deposits, gross	Total flight equipment and predelivery deposits, gross	11,759		11,498		Total flight equipment and predelivery deposits, gross	12,287		12,142
Less accumulated depreciation	Less accumulated depreciation	3,430		3,227		Less accumulated depreciation	3,689		3,578
Total flight equipment and predelivery deposits, net	Total flight equipment and predelivery deposits, net	8,329		8,271		Total flight equipment and predelivery deposits, net	8,598		8,564
Other property and equipment	Other property and equipment	1,274		1,205		Other property and equipment	1,309		1,314
Less accumulated depreciation	Less accumulated depreciation	699		662		Less accumulated depreciation	749		731
Total other property and equipment, net	Total other property and equipment, net	575		543		Total other property and equipment, net	560		583
Total property and equipment, net	Total property and equipment, net	8,904		8,814		Total property and equipment, net	9,158		9,147
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	739		729		OPERATING LEASE ASSETS	637		660
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Investment securities	Investment securities	120		39		Investment securities	153		172
Restricted cash	Restricted cash	79		59		Restricted cash	146		146
Intangible assets, less accumulated amortization (2022-$430; 2021-$405)		269		284
Intangible assets, less accumulated amortization (2023-$469; 2022-$455)						Intangible assets, less accumulated amortization (2023-$469; 2022-$455)	310		298
Other	Other	438		470		Other	725		706
Total other assets	Total other assets	906		852		Total other assets	1,334		1,322
TOTAL ASSETS	TOTAL ASSETS	$	13,543	$	13,642	TOTAL ASSETS	$	13,227	$	13,045

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)

June 30, 2022 December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 585 $ 499
Air traffic liability 1,984 1,618
Accrued salaries, wages and benefits 489 480
Other accrued liabilities 465 359
Current operating lease liabilities 114 106
Current maturities of long-term debt and finance lease obligations 428 355
Total current liabilities 4,065 3,417
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS 3,394 3,651
LONG-TERM OPERATING LEASE LIABILITIES 699 690
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes 742 843
Air traffic liability - non-current 667 640
Other 530 552
Total deferred taxes and other liabilities 1,939 2,035
COMMITMENTS AND CONTINGENCIES (Note 6) 0 0
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued — —
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 (1,995) (1,989)
Additional paid-in capital 3,095 3,047
Retained earnings 2,343 2,786
Accumulated other comprehensive income (loss) (2) —
Total stockholders’ equity 3,446 3,849
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,543 $ 13,642


	March 31, 2023		December 31, 2022
	(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	626	$	532
Air traffic liability	1,926		1,581
Accrued salaries, wages and benefits	543		498
Other accrued liabilities	554		486
Current operating lease liabilities	98		97
Current maturities of long-term debt and finance lease obligations	263		554
Total current liabilities	4,010		3,748
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,316		3,093
LONG-TERM OPERATING LEASE LIABILITIES	616		639
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes	692		770
Air traffic liability - non-current	731		738
Other	489		494
Total deferred taxes and other liabilities	1,912		2,002
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—
Common stock, $0.01 par value; 900 shares authorized, 487 and 486 shares issued and 328 and 327 shares outstanding at March 31, 2023 and December 31, 2022, respectively	5		5
Treasury stock, at cost; 159 shares at March 31, 2023 and December 31, 2022	(1,998)		(1,995)
Additional paid-in capital	3,139		3,129
Retained earnings	2,232		2,424
Accumulated other comprehensive loss	(5)		—
Total stockholders’ equity	3,373		3,563
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,227	$	13,045

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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
OPERATING REVENUES	OPERATING REVENUES									OPERATING REVENUES
Passenger	Passenger	$	2,302	$	1,388	$	3,904	$	2,058	Passenger	$	2,182	$	1,603
Other	Other	143		111		277		174		Other	146		133
Total operating revenues	Total operating revenues	2,445		1,499		4,181		2,232		Total operating revenues	2,328		1,736
OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Aircraft fuel and related taxes	Aircraft fuel and related taxes	910		336		1,481		530		Aircraft fuel and related taxes	765		571
Salaries, wages and benefits	Salaries, wages and benefits	695		577		1,383		1,098		Salaries, wages and benefits	741		688
Landing fees and other rents	Landing fees and other rents	149		174		281		289		Landing fees and other rents	160		132
Depreciation and amortization	Depreciation and amortization	145		133		288		258		Depreciation and amortization	151		143
Aircraft rent	Aircraft rent	27		26		53		50		Aircraft rent	32		26
Sales and marketing	Sales and marketing	78		47		135		70		Sales and marketing	76		57
Maintenance, materials and repairs	Maintenance, materials and repairs	162		164		313		268		Maintenance, materials and repairs	176		152
Other operating expenses	Other operating expenses	348		261		683		471		Other operating expenses	357		334
Special items	Special items	44		(366)		44		(655)		Special items	112		—
Total operating expenses	Total operating expenses	2,558		1,352		4,661		2,379		Total operating expenses	2,570		2,103
OPERATING (LOSS) INCOME		(113)		147		(480)		(147)
OTHER EXPENSE
OPERATING LOSS										OPERATING LOSS	(242)		(367)
OTHER INCOME (EXPENSE)										OTHER INCOME (EXPENSE)
Interest expense	Interest expense	(40)		(54)		(77)		(112)		Interest expense	(46)		(37)
Interest income	Interest income	8		4		12		8		Interest income	17		4
Gain (loss) on investments, net		(5)		—		(4)		3
Other		(1)		(40)		—		(42)
Gain on investments, net										Gain on investments, net	3		2
Other income										Other income	2		—
Total other expense	Total other expense	(38)		(90)		(69)		(143)		Total other expense	(24)		(31)
(LOSS) INCOME BEFORE INCOME TAXES		(151)		57		(549)		(290)
Income tax (benefit)		37		(7)		(106)		(107)
NET (LOSS) INCOME		$	(188)	$	64	$	(443)	$	(183)
LOSS BEFORE INCOME TAXES										LOSS BEFORE INCOME TAXES	(266)		(398)
Income tax benefit										Income tax benefit	(74)		(143)
NET LOSS										NET LOSS	$	(192)	$	(255)

(LOSS) EARNINGS PER COMMON SHARE:
LOSS PER COMMON SHARE:										LOSS PER COMMON SHARE:
Basic	Basic	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)	Basic	$	(0.58)	$	(0.79)
Diluted	Diluted	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)	Diluted	$	(0.58)	$	(0.79)

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)~~LOSS

(unaudited, in millions)

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


	Three Months Ended March 31,
	2023		2022
NET LOSS	$	(192)	$	(255)
Changes in fair value of available-for-sale securities and derivative instruments, net of reclassifications into earnings, net of deferred taxes of $(1) and $— in 2023 and 2022, respectively	(5)		(1)
Total other comprehensive loss	(5)		(1)
COMPREHENSIVE LOSS	$	(197)	$	(256)

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)


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	Net loss	$	(443)	$	(183)	Net loss	$	(192)	$	(255)
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	(101)		(93)		Deferred income taxes	(78)		(141)

Depreciation	Depreciation	262		238		Depreciation	137		130
Amortization	Amortization	26		20		Amortization	14		13
Impairment of long-lived asset		5		—
Stock-based compensation	Stock-based compensation	18		17		Stock-based compensation	10		11
Changes in certain operating assets and liabilities	Changes in certain operating assets and liabilities	537		1,439		Changes in certain operating assets and liabilities	520		499
Deferred federal payroll support program grants		—		185
Other, net	Other, net	(5)		35		Other, net	(6)		(10)
Net cash provided by operating activities	Net cash provided by operating activities	299		1,658		Net cash provided by operating activities	405		247
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(274)		(524)		Capital expenditures	(172)		(85)
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	(65)		(16)		Predelivery deposits for flight equipment	—		(49)
Purchase of held-to-maturity investments						Purchase of held-to-maturity investments	(4)		(63)

Proceeds from the maturities of held-to-maturity investments						Proceeds from the maturities of held-to-maturity investments	4		—
Purchase of available-for-sale securities						Purchase of available-for-sale securities	(102)		(290)

Purchase of held to maturity investments		(85)		—
Purchase of available-for-sale securities		(461)		(520)
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	405		340		Proceeds from the sale of available-for-sale securities	267		153

Other, net		(7)		(2)
Payment for Spirit Airlines acquisition						Payment for Spirit Airlines acquisition	(33)		—
Net cash used in investing activities	Net cash used in investing activities	(485)		(722)		Net cash used in investing activities	(40)		(334)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		—		1,010

Proceeds from issuance of common stock		29		22
Proceeds from issuance of stock warrants		—		14
Proceeds from sale-leaseback transactions						Proceeds from sale-leaseback transactions	38		—
Repayment of long-term debt and finance lease obligations	Repayment of long-term debt and finance lease obligations	(189)		(1,481)		Repayment of long-term debt and finance lease obligations	(109)		(83)

Acquisition of treasury stock	Acquisition of treasury stock	(6)		(7)		Acquisition of treasury stock	(3)		(6)
Other, net		(35)		(1)
Net cash used in financing activities	Net cash used in financing activities	(201)		(443)		Net cash used in financing activities	(74)		(89)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(387)		493		INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	291		(176)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	2,077		1,969		Cash, cash equivalents and restricted cash at beginning of period	1,188		2,077
Cash, cash equivalents and restricted cash at end of period(1)	Cash, cash equivalents and restricted cash at end of period(1)	$	1,690	$	2,462	Cash, cash equivalents and restricted cash at end of period(1)	$	1,479	$	1,901

SUPPLEMENTAL CASH FLOW INFORMATION	SUPPLEMENTAL CASH FLOW INFORMATION					SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest	Cash payments for interest	$	60	$	97	Cash payments for interest	$	6	$	20
Cash payments for income taxes (net of refunds)	Cash payments for income taxes (net of refunds)	(49)		—		Cash payments for income taxes (net of refunds)	—		1

NON-CASH TRANSACTIONS	NON-CASH TRANSACTIONS					NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities		$	60	$	—
Operating lease assets obtained under operating leases						Operating lease assets obtained under operating leases	$	4	$	59

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

		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,611	$	2,409	Cash and cash equivalents	$	1,333	$	1,834
Restricted cash		79		53

Restricted cash(2)						Restricted cash(2)	146		67
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	1,690	$	2,462	Total cash, cash equivalents and restricted cash	$	1,479	$	1,901

(2) Restricted cash primarily consists of funds held in escrow for estimated workers’ compensation obligations and other letters of credit.						(2) Restricted cash primarily consists of funds held in escrow for estimated workers’ compensation obligations and other letters of credit.

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 Loss		Total			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
Balance at December 31, 2022																Balance at December 31, 2022	486	$	5	159	$	(1,995)	$	3,129	$	2,424	$	—	$	3,563
Net loss	Net loss	—	—		—	—		—		(188)		—		(188)		Net loss	—	—		—	—		—		(192)		—		(192)
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		—		(1)		(1)		Other comprehensive loss	—	—		—	—		—		—		(5)		(5)
Vesting of restricted stock units	Vesting of restricted stock units	—	—		—	—		—		—		—		—		Vesting of restricted stock units	1	—		—	(3)		—		—		—		(3)
Stock compensation expense	Stock compensation expense	—	—		—	—		7		—		—		7		Stock compensation expense	—	—		—	—		10		—		—		10
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
Balance at March 31, 2023																Balance at March 31, 2023	487	$	5	159	$	(1,998)	$	3,139	$	2,232	$	(5)	$	3,373

		Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2021	Balance at December 31, 2021	478	$	5	158	$	(1,989)	$	3,047	$	2,786	$	—	$	3,849	Balance at December 31, 2021	478	$	5	158	$	(1,989)	$	3,047	$	2,786	$	—	$	3,849
Net loss	Net loss	—	—		—	—		—		(443)		—		(443)		Net loss	—	—		—	—		—		(255)		—		(255)
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		—		(2)		(2)		Other comprehensive loss	—	—		—	—		—		—		(1)		(1)
Vesting of restricted stock units	Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)		Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)
Stock compensation expense	Stock compensation expense	—	—		—	—		18		—		—		18		Stock compensation expense	—	—		—	—		11		—		—		11
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

Balance at March 31, 2022																Balance at March 31, 2022	479	$	5	158	$	(1,995)	$	3,058	$	2,531	$	(1)	$	3,598

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,~~("JetBlue") provides air transportation services across the United States, the Caribbean and Latin ~~America,~~America, Canada, and ~~the United Kingdom. Our~~England. 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 ~~2021~~2022 audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021, or our 2021~~2022 ("2022 Form ~~10-K.~~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.~~(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,~~("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 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, commercial paper, and convertible debt securities.~~

~~The fair values of 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 no~~t record any material gains or losses on these securities during the three and six months ended June 30, 2022 or 2021. Refer to Note 7 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 record any material gains or losses on these securities during the three and six months ended June 30, 2022 or 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 June 30, 2022 and December 31, 2021 (in millions):~~

June 30, 2022 December 31, 2021
Available-for-sale investment securities
Time deposits $ 795 $ 790
Debt securities 10 8
Commercial Paper 51 2
Total available-for-sale investment securities 856 800
Held-to-maturity investment securities
Corporate bonds 120 37
Total held-to-maturity investment securities 120 37
Equity investment securities
Common stock of publicly traded companies 17 26
Total equity investment securities 17 26
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 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 identifiable or similar investments of the same issuer. The carrying amount of ~~these investments was $77 million and $72 million~~ ~~as of June 30, 2022 and December 31, 2021, respectively. We did not record any material gains or losses on these investments during the three and six months ended June 30, 2022 and 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 June 30, 2022 and December 31, 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 FASB Codification. The carrying amount of our equity method investments was $40 million and $32 million as of June 30, 2022 and December 31, 2021, respectively, and is included within other assets on our consolidated balance sheets. In June 2022, we recognized a gain of~~ ~~$2 million~~ ~~on one of our equity method investments related to its issuance of additional shares upon the closing of a subsequent financing round.~~

~~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 six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in millions):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Passenger revenue	Passenger revenue									Passenger revenue
Passenger travel	Passenger travel	$	2,162	$	1,322	$	3,651	$	1,945	Passenger travel	$	2,026	$	1,490
Loyalty revenue - air transportation	Loyalty revenue - air transportation	140		66		253		113		Loyalty revenue - air transportation	156		113
Other revenue	Other revenue									Other revenue
Loyalty revenue	Loyalty revenue	95		81		184		126		Loyalty revenue	100		88
Other revenue	Other revenue	48		30		93		48		Other revenue	46		45
Total revenue	Total revenue	$	2,445	$	1,499	$	4,181	$	2,232	Total revenue	$	2,328	$	1,736

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. Loyalty revenue within ~~Other~~other revenue is primarily comprised of the non-air transportation elements of the sales of our TrueBlue®points.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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):


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Air traffic liability - passenger travel	Air traffic liability - passenger travel	$	1,690	$	1,323	Air traffic liability - passenger travel	$	1,624	$	1,291
Air traffic liability - loyalty program (air transportation)	Air traffic liability - loyalty program (air transportation)	927		891		Air traffic liability - loyalty program (air transportation)	998		1,000
Deferred revenue(1)	Deferred revenue(1)	571		613		Deferred revenue(1)	525		530
Total	Total	3,188		2,827		Total	$	3,147	$	2,821

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

During the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized passenger ~~rev~~revenue of ~~enue of $973~~$858 million and ~~$371~~$693 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 ininto 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.

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 three months ended March 31, 2023 and 2022 (in millions):


Balance at December 31, 2022	$	1,000
TrueBlue® points redeemed	(156)
TrueBlue® points earned and sold	154
Balance at March 31, 2023	$	998

Balance at December 31, 2021	$	891
TrueBlue® points redeemed	(113)
TrueBlue® points earned and sold	134
Balance at March 31, 2022	$	912

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 three months ended March 31, 2023, we made principal payments of $109 million on our outstanding debt and finance lease obligations.

At March 31, 2023, we had pledged aircraft, engines, other equipment, and facilities with a net book value of $6.0 billion as security under various financing arrangements.

At March 31, 2023, scheduled maturities of our long-term debt and finance lease obligations were as follows (in millions):

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


Year	Total
Remainder of 2023	$	216
2024	237
2025	204
2026	943
2027	189
2028 and thereafter	1,790
Total	$	3,579

The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at March 31, 2023 and December 31, 2022 were as follows (in millions):


	March 31, 2023				December 31, 2022
	Carrying Value		Estimated Fair Value(2)		Carrying Value		Estimated Fair Value(2)
Public Debt
Fixed rate special facility bonds, due through 2036	$	42	$	43	$	42	$	43
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	505		360		504		345
2019-1 Series A, due through 2028	157		128		157		124
2019-1 Series B, due through 2027	82		88		82		87
2020-1 Series A, due through 2032	547		473		546		457
2020-1 Series B, due through 2028	135		144		135		142
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	—		—		61		60
Fixed rate equipment notes, due through 2028	409		343		447		422
Floating rate equipment notes, due through 2028	48		43		56		49
Sale-leaseback transactions, due through 2034	378		295		341		329
Unsecured CARES Act Payroll Support Program loan, due through 2030	259		130		259		126
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		70		144		68
Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		65		132		62
Convertible senior notes due 2026	740		551		739		534
Total(1)	$	3,578	$	2,733	$	3,645	$	2,848

(1) Total excludes finance lease obligations of $1 million and $2 million at March 31, 2023 and December 31, 2022, 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 value of our non-public debt are 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. Refer to Note 7 for an explanation of the fair value hierarchy structure.

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 six months ended June 30, 2022 and 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~~	~~(113)~~
~~TrueBlue~~® ~~points earned and sold~~	~~186~~
~~Balance at June 30, 2021~~	$	~~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.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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

June 30, 2022 December 31, 2021
Carrying Value
Estimated Fair Value(1)
Carrying Value
Estimated Fair Value(1)
Public Debt
Fixed rate special facility bonds, due through 2036 $ 42 $ 43 $ 42 $ 45
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032 518 352 532 442
2019-1 Series A, due through 2028 162 128 166 150
2019-1 Series B, due through 2027 88 98 94 121
2020-1 Series A, due through 2032 566 490 587 634
2020-1 Series B, due through 2028 144 159 153 199
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023 67 65 88 88
Fixed rate equipment notes, due through 2028 539 458 620 706
Floating rate equipment notes, due through 2028 78 69 103 99
2020 sale-leaseback transactions, due through 2024 344 342 347 374
Unsecured CARES Act Payroll Support Program loan, due through 2030 259 156 259 219
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 132 78 132 111
0.50% convertible senior notes due 2026 737 578 736 673
Total(2)
$ 3,820 $ 3,101 $ 4,003 $ 3,982

~~(1) The estimated fair va~~lues of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. 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. Refer to Note 7 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

~~(2) Total excludes finance lease obligations of~~ ~~$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.~~("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,~~("VIE"), as defined in Topic 810, Consolidation 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.

Short-term Borrowings

~~Table~~Citibank Line of ~~Contents~~Credit

~~PART I. FINANCIAL INFORMATION~~On October 21, 2022, JetBlue entered into the $600 million Second Amended and Restated Credit and Guaranty Agreement (the "Second Amended and Restated Facility"), amending and restating the Company's existing $550 million credit facility. The Second Amended and Restated Facility is among JetBlue, Citibank N.A., as administrative agent and the lenders party thereto. The Second Amended and Restated Facility modifies the existing credit facility to, among other things, (i) increase the lending commitments by $50 million, for total lending commitments of $600 million, and (ii) establish the maturity date for the $600 million in lending commitments as October 21, 2024. Borrowings under the Second Amended and Restated Facility bear interest at a variable rate based on the secured overnight financing rate, known as SOFR, plus a margin of 2.00% per annum, or another rate (at JetBlue's election) based on certain market interest rates, plus a margin of 1.00% per annum, in each case with a floor of 0%. The Second Amended and Restated Facility is secured by spare parts, aircraft, simulators, and certain other assets as permitted thereunder. The Second Amended and Restated Facility 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.

~~ITEM 1. FINANCIAL STATEMENTS~~As of and for the periods ended March 31, 2023 and December 31, 2022, we did not have a balance outstanding or any borrowings under this line of credit.

~~JETBLUE AIRWAYS CORPORATION~~Morgan Stanley Line of Credit

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

We have a revolving line of credit with Morgan Stanley for up to approximately $200 million. As of and for the periods ended March 31, 2023 and December 31, 2022, we did not have a balance outstanding or any borrowings under this line of credit.

2022 $3.5 ~~Billion~~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 11, 2022 to include other lenders that have committed to the 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 as defined in Note 12, JetBlue entered into a ~~second amended~~Second Amended and ~~restated commitment letter~~Restated Commitment Letter (the ~~"Commitment Letter"~~“Commitment Letter”), ~~date~~ddated July 28, 2022,, with Goldman Sachs Bank USA; BofA Securities, Inc.; Bank of 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 “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.~~Spirit Airlines, Inc. (“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, 2022 we did not have a balance outstanding or any borrowings under 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 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. 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~~

~~Table of Contents~~

~~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 has been fully utilized as of September 30, 2021.

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 June 30, 2022, we did not have a balance outstanding and all obligations under the Loan Agreement, including all pledges of collateral, were terminated in full.

~~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 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.

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 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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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.

~~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 included $2 million in amortization of debt issuance costs.During the six months ended June 30, 2021, interest expense recorded was $2 million and included $1 million in amortization of debt issuance costs.~~

~~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.

On June 17, 2021, the Company voluntarily repaid a portion of its outstanding borrowings under the 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 million~~during the six months ended June 30, 2021. These expenses are included within other expense on our consolidated statements of operations.~~

~~Short-term Borrowings~~

~~Citibank Line of Credit~~

We have a revolving Credit and Guaranty Agreement with Citibank N.A. as the administrative agent, for up to $550 million. The term of the facility runs through August 2023. Borrowings under the Credit and Guaranty Agreement bear interest at a variable rate equal to LIBOR, plus a margin. The Credit and Guaranty Agreement is secured by aircraft, simulators, and certain other assets. The 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. As of and for the periods ended June 30, 2022 and December 31, 2021, we did not have a balance outstanding or any borrowings under 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 June 30, 2022 and December 31, 2021, we did not have a balance outstanding or any borrowings under this line of credit.

~~Table of Contents~~

~~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 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 wwere ~~ere~~ ~~1.5~~1.6 million and 2.9 million for the three months ended March 31, 2023 and 2022, respectively.

~~June 30, 2022. There were no anti-dilutive common stock equivalents excluded from the computation~~

Table of ~~diluted earnings per share amounts for the three months ended~~Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~June 30, 2021.~~

~~Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts w~~

~~ere~~
~~2.2 million~~ ~~and 3.6 million for the six months ended~~ ~~June 30, 2022 and~~ ~~June 30, 2021, respectively~~.

The following table shows how we computed ~~basic and diluted earnings~~loss per common share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars and share data in millions):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net (loss) income		$	(188)	$	64	$	(443)	$	(183)
Net loss										Net loss	$	(192)	$	(255)

Weighted average basic shares	Weighted average basic shares	323.1		317.7		321.9		317.0		Weighted average basic shares	327.6		320.5
Effect of dilutive securities	Effect of dilutive securities	—		3.8		—		—		Effect of dilutive securities	—		—
Weighted average diluted shares	Weighted average diluted shares	323.1		321.5		321.9		317.0		Weighted average diluted shares	327.6		320.5

(Loss) earnings per common share
Loss per common share										Loss per common share
Basic	Basic	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)	Basic	$	(0.58)	$	(0.79)
Diluted	Diluted	$	(0.58)	$	0.20	$	(1.38)	$	(0.58)	Diluted	$	(0.58)	$	(0.79)

Note 5—Crewmember Retirement Plan

We sponsor a retirement savings 401(k) defined contribution plan ~~or the Plan,~~(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.

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

Our pilots receive a non-elective Company contribution of 16% of eligible pilot compensation per the terms of the finalized collective bargaining agreement between JetBlue and the Air Line Pilots Association ("ALPA"), in lieu of the above 401(k) Company matching contribution, Retirement Plus, and Retirement Advantage contributions. 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 ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 was $66 millionand ~~2021 was $125 million and $100~~$62 million, respectively.

Note 6—Commitments and Contingencies

Flight Equipment Commitments

In February 2022, we exercised our option to purchase 30 additional Airbus A220-300 aircraft under our existing agreement with Airbus Canada Limited Partnership. The 30 additional A220-300 aircraft are expected to be delivered from 2023 to 2026. Options for 20 additional A220-300 aircraft remain available to us.

As of March 31, 2023, our committed expenditures for aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits were as set forth in the table below (in billions):

1713

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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~~


Flight equipment commitments(1)
Year	Total
Remainder of 2023	$	1.5
2024	2.2
2025	1.7
2026	1.3
2027	1.0
Total	$	7.7

(1)The timing of ~~June 30, 2022,~~these commitments is based on our contractual agreements and may be subject to change based on modifications to contractual agreements or changes in the delivery schedules.

Our firm aircraft orders ~~consisted of 64 Airbus A321neo~~included the following aircraft and 89 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 June 30, 2022 is approximately $571 million for the remainder of 2022, $1.6 billion in 2023, $2.0 billion in 2024, $1.7 billion in 2025, $1.4 billion in 2026, and $1.0 billion thereafter.at March 31, 2023:


Year	Airbus A321neo	Airbus A220	Total
2023	11	17	28
2024	13	30	43
2025	11	24	35
2026	12	14	26
2027	14	—	14
Total	61	85	146

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~~March 31, 2023. Due to Airbus ~~of anticipated~~ delivery delays, ~~for the A220 aircraft. We expect a~~our 2023 capacity planning assumes delivery of ~~a maximum of 9~~11 A220, ~~aircraft in 2022 as a result of the delays.~~four A321neo, and four A321neo LR aircraft.

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 imposition of this or any tariff could substantially increase the cost of new 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 ~~June 30, 2022,~~March 31, 2023, we had ~~approximately $41~~$45 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~~leases, which will expire at the end of the related lease terms. We also had $65 million letter of credit relating to our 5% ownership in JFK Millennium Partner LLC, a private entity that will finance, develop, and operate John F. Kennedy International Airport ("JFK") Terminal 6. The letters of credit are included in restricted cash on the consolidated balance sheets. Additionally, we had ~~approximately $34~~$36 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.

Except for our pilots and inflight crewmembers who are represented by the ~~Air Line Pilots Association ("ALPA")~~ALPA and the Transport Workers Union of America ("TWU"), respectively, our other frontline crewmembers do not have third party ~~representation.~~representation.

Air Line Pilots Association

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 4four Northeast airports. ALPA ~~claims~~claimed 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~~a mediation process, the parties agreed to certain changes to the collective bargaining agreement. The agreement was ratified by the JetBlue pilot group in April ~~2022,~~2022.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In January 2023, JetBlue pilots approved a two year contract extension effective March 1, 2023, which included a ~~one-time~~ratification payment and ~~associated payroll taxes~~adjustments to paid-time-off accruals resulting from pay rate increases of ~~$32 million, paid and~~$95 million. This was recorded as an expense within special items in the ~~second~~first quarter of 2023.

International Association of Machinists and Aerospace Workers

In September 2022, the International Association of Machinists and Aerospace Workers filed for an election to unionize our ground operations crewmembers. In February 2023, our crewmembers voted to maintain our direct relationship rather than elect a ~~3% base~~union.

We enter into individual employment agreements with each of our non-unionized FAA-licensed crewmembers, which include dispatchers, technicians, and inspectors, as well as air traffic controllers. Each employment agreement is for a term of five years and automatically renews for an additional five years unless either the crewmember or we elect not to renew it by giving at least 90 days' notice before the end of the relevant term. Pursuant to these agreements, these crewmembers can only be terminated for cause. In the event of a downturn in our business that would require a reduction in work hours, we are obligated to pay ~~increase effective May 1, 2022.~~these crewmembers a guaranteed level of income and to continue their benefits if they do not obtain other aviation employment.

Legal Matters

Occasionally, we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters involving suppliers, 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

~~Table of Contents~~

~~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, ~~("DOJ"),~~ along with ~~the~~ Attorneys General of ~~each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania, and Virginia,~~six states and the District of Columbia filed suit against JetBlue and American seeking to enjoin the NEA, alleging that it violates Section 1 of the Sherman Act. The bench trial of this matter was concluded in November 2022 and the Court’s decision remains pending. An adverse ruling could adversely impact our ability to achieve the intended benefits of the NEA 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 NEA, which would not be recoverable if we were required to unwind all or a ~~lawsuit~~portion of the NEA.

In December 2022 and February 2023, four putative class actions lawsuits were filed in the United States District Court for the Eastern District of New York and the District of Massachusetts, ~~(the "Court") against~~respectively, alleging that the NEA violates Sections 1 and 2 of the Sherman Act. Among other things, plaintiffs seek monetary damages on behalf of a putative class of direct purchasers of airline tickets from JetBlue and American ~~Airlines alleging that~~and, depending on the ~~North East Alliance (“NEA”) violates Section 1 of~~specific case, other airlines on flights to or from four airports (JFK, LaGuardia Airport, Newark Liberty International Airport, and Boston Logan International Airport) from July 16, 2020 through the ~~Sherman Act, and asking that~~present. Plaintiffs in these actions also seek to enjoin the ~~carriers be permanently enjoined from 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, and American in January 2021, at the 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, 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 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,~~these cases, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from this ~~matter.~~matter; however, JetBlue believes these lawsuits are without merit and, along with American Airlines, will defend these matters vigorously.

We are also subject to a number of legal proceedings initiated by individual consumers, the Department of Justice and Attorneys General in six states and the District of Columbia alleging that our pending acquisition of Spirit violates Section 7 of the Clayton Act. For more information, see Note 12.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In 2023, we expect to continue to seek additional strategic opportunities through new commercial partners as well as assess ways to deepen existing airline partnerships, including the NEA. We plan to do this by expanding codeshare relationships and other areas of cooperation such as frequent flyer programs. We believe these commercial partnerships allow us to better leverage our strong network and drive incremental traffic and revenue while improving off-peak travel.

Note 7—Fair Value

Under Topic 820, Fair Value Measurementof the ~~FASB~~Financial Accounting Standards Board (the "FASB") Accounting Standards Codification (the "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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in millions):


		June 30, 2022									March 31, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,139	$	—	$	—	$	1,139	Cash equivalents	$	599	$	—	$	—	$	599
Available-for-sale investment securities	Available-for-sale investment securities	—		856		—		856		Available-for-sale investment securities	—		157		13		170
Equity investment securities	Equity investment securities	17		$	—	—		17		Equity investment securities	11		—		—		11
Aircraft fuel derivatives										Aircraft fuel derivatives	—		8		—		8

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~


		December 31, 2021									December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,515	$	—	$	—	$	1,515	Cash equivalents	$	665	$	—	$	—	$	665
Available-for-sale investment securities	Available-for-sale investment securities	—		800		—		800		Available-for-sale investment securities	—		324		13		337
Equity investment securities	Equity investment securities	26		—		—		26		Equity investment securities	8		—		—		8
Aircraft fuel derivatives										Aircraft fuel derivatives	—		3		—		3

Refer to Note 3 ~~to our condensed consolidated financial statements~~ for fair value information related to our outstanding debt obligations as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

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, commercial paper, and convertible debt securities. The fair values of ~~these instruments~~time deposits and commercial paper are based on observable inputs in non-active markets,

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

which are therefore classified as Level 2 in the hierarchy. ~~We did not record any material gains or losses~~The fair values of convertible debt securities are based on ~~these securities during~~unobservable inputs and are classified as Level 3 in the ~~three and six months ended June 30, 2022 and 2021.~~hierarchy.

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.

Other investments

Our wholly-owned subsidiary, JetBlue Technology Ventures, LLC ("JBV"), has equity investments in emerging companies that do not have readily determinable fair values. In accordance with Topic 321, Investments - Equity Securities of 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 identifiable or similar investments of the same issuer.

Aircraft fuel derivatives

Our aircraft fuel derivatives include call spread options which are not traded on public exchanges. Their fair values are determined using a market approach based on inputs that are readily available from public markets for commodities and energy trading activities; therefore, they are classified as Level 2 inputs. The data inputs are combined into qualitative models and processes to generate forward curves and volatility related to the specific terms of the underlying hedge contracts.

Held-to-maturity investment securities

Our held-to-maturity investment securities consist of investment-grade interest bearing instruments, such as U.S. Treasury notes and corporate bonds, which are stated at amortized cost. If the U.S. Treasury notes were measured at fair value, they would be classified as Level 1 in the fair value hierarchy, based on inputs observable in active markets for identical securities. If the corporate bonds were measured at fair value, they would be classified as Level 2 in the fair value hierarchy, based on quoted prices in active markets for similar securities .

We ~~recognized~~do not intend to sell these investment securities and do not hold any contractual maturities greater than 24 months. Those securities that will mature in twelve months or less are included in short-term investments on our consolidated balance sheets. Those securities with remaining maturities greater than twelve months are included in long-term investments on our consolidated balance sheets.

The carrying value and estimated fair value of our held-to-maturity investment securities, were as follows (in millions):


	March 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Held-to-maturity investment securities	$	177	$	171	$	177	$	170

Note 8— Investments

Investment in Debt Securities

Investment in debt securities consist of available-for-sale investment securities and held-to-maturity investment securities. When sold, we use a ~~net unrealized loss~~specific identification method to determine the cost of ~~$6 million and~~the securities.

Available-for-sale investment securities. ~~$8 million~~We did not record any material gains or losses on these securities during the three ~~and six~~ months ended ~~June 30, 2022, respectively. No~~March 31, 2023 and 2022. Refer to Note 7 for an explanation of the fair value hierarchy structure.

Held-to-maturity investment securities. We did not record any material gains or losses ~~were recorded~~on held-to-maturity investment securities during the ~~same periods in 2021.~~three months ended March 31, 2023 and 2022.

The aggregate carrying values of our short-term and long-term debt investment securities consisted of the following at March 31, 2023 and December 31, 2022 (in millions):

~~Table of Contents~~

~~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.~~

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~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Note 9—Special Items~~

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

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Special Items
Federal payroll support grant recognition(1)
$ — $ (357) $ — $ (644)
CARES Act employee retention credit(2)
— (9) — (11)
Fleet Impairment (3)
5 — 5 —
Air Lines Pilot Association ratification bonus (4)
32 — 32 —
Spirit Airlines, Inc. proposal expenses (5)
7 — 7 —
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 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 were utilized. We utilized $357 million and $644 million of payroll support grants for the three and six months ended 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 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 three and six months ended June 30, 2021, respectively.

~~(3) Under Topic 320 -~~ ~~Property, Plant, and Equipment~~ 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.

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, and maintenance conditions. Based on the assessment, we determined the future cash flows from the operation 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 impairment losses ~~of $5 million for the six months ended~~ June 30, 2022. These losses represent the difference between the book value of these assets and their fair value. 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 unobservable inputs, it is classified as Level 3 in the fair value hierarchy. We evaluated the remaining fleet types and determined the future cash flows of our Airbus A320 and Airbus A321 fleets exceeded their carrying value as of June~~

2217

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~30, 2022.~~


	March 31, 2023		December 31, 2022
Available-for-sale investment securities
Time deposits	$	150	$	285
Commercial paper	7		39
Debt securities	13		13
Total available-for-sale investment securities	170		337
Held-to-maturity investment securities
Corporate bonds	177		177
Total held-to-maturity investment securities	177		177
Total investment in debt securities	$	347	$	514

Investment in Equity Securities

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 FASB Codification. The carrying amount of our equity method investments was $37 million and $38 million as of March 31, 2023 and December 31, 2022, respectively, and is included within other assets on our consolidated balance sheets. We did not record any material gains or losses on these investments during the three months ended March 31, 2023. We recognized a gain of $3 million on one of our equity method investments related to its issuance of additional shares upon the closing of a subsequent financing round in other income on our consolidated statement of operations during the three months ended March 31, 2022.

We partnered with JMP to finance, develop, and operate JFK Terminal 6. In exchange of this partnership, we committed a letter of credit as discussed further in Note 6. We exercise significant influence over this transaction, which is accounted for under the equity method.

Other Investments

Our equity investment securities include investments in common stocks of publicly traded companies which are stated at fair value. The carrying amount of our equity investment securities, which are recorded within investment securities in the current asset section of our consolidated balance sheet, was $11 million and $8 million as of March 31, 2023 and December 31, 2022, respectively. We recognized a net unrealized gain of $3 million on these securities in other income on our consolidated statement of operations during the three months ended March 31, 2023 and an unrealized loss of $2 million in other income on our consolidated statement of operations during the three months ended March 31, 2022.

JBV has equity investments in emerging companies which do not have readily determinable fair values. In accordance with Topic 321, Investments - Equity Securities of the FASB Codification, we account for these investments using a measurement alternative that allows entities to measure these investments at cost, less any impairment, adjusted for changes from observable price changes in orderly transactions for 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 $87 million and $83 million as of March 31, 2023 and December 31, 2022, respectively. We did not record any material gains or losses on these investments during the three months ended March 31, 2023 and 2022.

We have an approximate 10% ownership interest in the TWA Flight Center Hotel at JFK, which is also accounted for under the measurement alternative described above, and is recorded in the other assets section of the consolidated balance sheet. The carrying amount of this investment was $14 million as of March 31, 2023 and December 31, 2022.

Note 9—Financial Derivative Instruments and Risk Management

As part of our risk management techniques, we periodically purchase over the counter energy derivative instruments to manage our exposure to the effect of changes in the price of aircraft fuel. Prices for the underlying commodities have historically been highly correlated to aircraft fuel, making derivatives of them effective at providing short-term protection against sharp increases in average fuel prices. We do not hold or issue any derivative financial instruments for trading purposes.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 the Derivatives and Hedging topic of the FASB Codification which allows for gains and losses on the effective portion of qualifying hedges to be deferred until the underlying planned aircraft fuel consumption occurs, rather than recognizing the gains and losses on these instruments into earnings during each period they are outstanding. The effective portion of realized fuel hedging derivative gains and losses is recognized in aircraft fuel expense in the period during which the underlying fuel is consumed.

Ineffectiveness occurs, in certain circumstances, when the change in the total fair value of the derivative instrument differs from the change in the value of our expected future cash outlays for the purchase of aircraft fuel. If a hedge does not qualify for hedge accounting, the periodic changes in its fair value are also recognized in interest income and other. When aircraft 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. 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. 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.

The following table illustrates the approximate hedged percentages of our projected fuel usage by quarter as of March 31, 2023 related to our outstanding fuel hedging contracts that were designated as cash flow hedges for accounting purposes.


	Aircraft fuel call option spread agreements
Second Quarter 2023	30.5	%
Third Quarter 2023	30.1	%
Fourth Quarter 2023	20.0	%

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):


	March 31, 2023		December 31, 2022
Fuel Derivatives
Asset fair value recorded in prepaid expense and other current assets	$	8	$	3
Longest remaining term (months)	3		3
Hedged volume (barrels, in thousands)	4,380		450
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months	$	4	$	2


	Three Months Ended March 31,
	2023			2022
Fuel Derivatives
Hedge effectiveness gains recognized in aircraft fuel expense	$	1		$	—
Hedge losses on derivatives recognized in comprehensive income	$	(5)		$	—
Percentage of actual consumption economically hedged	9		%	—		%

Any outstanding derivative instrument exposes us to credit loss in connection with our fuel contracts in the event of nonperformance by the counterparties to our 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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 March 31, 2023 and December 31, 2022.

Note 10—Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) includes changes in fair value of our aircraft fuel derivatives which qualify for hedge accounting and unrealized loss on ~~our long-lived assets~~available-for-sale securities. A roll forward of the amounts included in accumulated other comprehensive income (loss), net of deferred taxes for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2023 and 2022 is as follows (in millions):


	Aircraft Fuel Derivatives		Available-for-sale securities		Total
Balance of accumulated income (loss), at December 31, 2022	$	1	$	(1)	$	—
Reclassifications into earnings, net of deferred taxes of $— (1)	(1)		—		(1)
Change in fair value, net of deferred taxes of $(1)	(4)		—		(4)
Balance of accumulated loss, at March 31, 2023	$	(4)	$	(1)	$	(5)

Balance of accumulated income (loss), at December 31, 2021	$	—	$	—	$	—
Reclassifications into earnings, net of deferred taxes $—	—		—		—
Change in fair value, net of deferred taxes of $(1)	—		(1)		(1)
Balance of accumulated loss, at March 31, 2022	$	—	$	(1)	$	(1)

(1) Reclassified to aircraft fuel expense.

~~(4)~~

Note 11—Special Items

The following is a listing of special items presented on our consolidated statements of operations for the three months ended March 31, 2023 and 2022 (in millions):


	Three Months Ended March 31,
	2023		2022
Special Items
Union contract costs (1)	$	95	$	—
Spirit acquisition costs (2)	17		—
Total	$	112	$	—

(1) As discussed in Note 6, ~~to our condensed consolidated financial statements, we paid $32 million for an ALPA ratification bonus and the associated payroll taxes during the three months ending June 30, 2022.~~

~~(5) As discussed in Note 10 to our condensed consolidated financial statements,~~ we incurred and ~~paid $7~~recognized $95 million for ~~various expenses related~~a ratification payment and adjustments to ~~our proposed acquisition of Spirit during~~paid-time-off accruals resulting from pay rate increases for the three months ended ~~June 30, 2022.~~March 31, 2023.

(2) We incurred and recognized $17 million in Spirit acquisition costs, primarily related to professional fees for the three months ended March 31, 2023.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note ~~10—Subsequent Event~~

12—Entry into Merger Agreement with Spirit Airlines

OnAs previously disclosed, 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~~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”).

During the quarter ending on March 31, 2023, JetBlue has made an aggregate of $33 million in Additional Prepayments to Spirit Shareholders resulting in a total prepayment of $330 million. This prepayment is included in other assets in the Company's consolidated balance sheets as of March 31, 2023.

The Closing is subject to the satisfaction or waiver of certain closing conditions, including, among other ~~things: (a)~~things, the receipt of Spirit stockholder ~~approval; (b)~~approval, which was obtained on October 19, 2022, the 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).~~

transactions.

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 obtaining~~any necessary approval of a governmental entity (including under the 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 consummation of the 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 July 15, 2020, and the agreements contemplated thereby. Any such divestiture action may be conditioned upon the closing of the Merger.

~~The Merger Agreement~~ contains certain ~~customary~~ termination rights for JetBlue and Spirit ~~including, without limitation, a right for either party to terminate if the Merger is not consummated on or before July 28, 2023,~~ which, ~~may be extended to January 28, 2024 and to July 24, 2024~~ in certain ~~circumstances (such date, as extended,~~cases, will result in the ~~“Outside Date”) if needed to obtain~~

~~Table~~payment of ~~Contents~~

~~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 Agreementfees 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.

applicable.

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~~On November 3, 2022, 25 individual consumers filed suit in the U.S. District Court for the Northern District of California against JetBlue and Spirit seeking to enjoin the Merger, alleging that it violates Section 7 of the Clayton Act (the “Private Merger Lawsuit”). The lawsuit also seeks to enjoin the NEA. On March 7, 2023, the U.S. Department of Justice, along with the Attorneys General of two states and the District of Columbia filed suit in the U.S. District Court for the District of Massachusetts against JetBlue and Spirit, alleging that the Merger violates Section 7 of the Clayton Act (the “Government Merger Lawsuit”). On March 29, 2023, the Private Merger Lawsuit was transferred to the ~~execution~~District of Massachusetts. On March 31, the Attorneys General of four additional states joined the Government Merger Lawsuit. The court set a trial date of October 16, 2023 for the Government Merger Lawsuit. The Private Merger Lawsuit does not yet have a trial date. An adverse ruling in either lawsuit could adversely impact our ability to achieve the intended benefits of the Merger ~~Agreement, Spirit terminated the Agreement~~ and ~~Plan~~could have an adverse impact on our business, financial condition, and results 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.~~operations.

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PART I. FINANCIAL INFORMATION

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

OVERVIEW

~~Second~~First Quarter ~~2022~~2023 Results

Our ~~operating~~first quarter 2023 results were characterized by strong operational performance with higher revenue and better cost efficiency compared to the same period in the second quarter of 2021 and 2020 were adversely impacted by the COVID-19 pandemic. As a result, comparisons of our year-over-year performance are inflated and would not necessarily be indicative of our future operating results. In certain cases, we have also provided comparisons of our second quarter 2022 results to our second quarter 2019 results (or year-over-three), which are better reflective of pre-pandemic operations, allowing for a better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery.2022.

•~~Second~~First quarter system capacity increased by ~~20.2% year-over-year and increased by 2.3% versus~~9.0% compared to the ~~second~~first quarter of ~~2019.~~2022.

•Revenue for the ~~second~~first quarter of ~~2022~~2023 increased by ~~63.1%~~34.1%, or ~~$946~~$592 million year-over-year, to ~~$2.4 billion. Compared~~$2.3 billion compared to the ~~second~~first quarter of ~~2019, revenu~~e ~~increased by 16.1%, or $340 million.~~2022.

•Operating revenue per available seat mile ("RASM") for the ~~second~~first quarter of ~~2022~~2023 increased by ~~35.7%~~23.0% year-over-year to ~~14.90 cents. This compares~~13.88 cents compared to ~~an increase~~the first quarter of ~~13.5% year-over-three.~~2022.

•Operating expense for the ~~second~~first quarter of ~~2022~~2023 increased by ~~89.2%~~22.2% year-over-year to $2.6 ~~billion. Compared~~billion compared to the ~~second~~first quarter of ~~2019, operating expense increased by 37.8%, or $702 million.~~2022.

•Operating expense per available seat mile ("CASM") for the ~~second~~first quarter of ~~2022~~2023 increased by ~~57.4%~~12.1% year-over-year to ~~15.59~~15.32 cents. ~~This compares to an increase of 34.7% from the second quarter of 2019.~~

•Our operating expense for the second quarter of 2022, 2021, and 2019 included the effects of special items. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense~~(1)~~ ~~increased by 16.0% to $1.6 billion year-over-year. This compares to an increase~~ ~~of 17.1%~~ ~~compared to the second quarter of 2019. Refer to our ''Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of 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")(1) ~~decreased~~increased by ~~(3.5)%~~1.2% year-over-year to ~~9.69~~10 cents infor the ~~second~~first quarter of ~~2022 compared to the second quarter of 2021~~.2023.

•Our reported ~~(loss) diluted earnings~~loss per share for the ~~second~~first quarter of ~~2022, 2021,~~2023 and ~~2019~~2022 were $(0.58)~~, $0.20,~~ and ~~$0.59,~~$(0.79), respectively. Excluding ~~special items,~~ mark-to-market and certain net gains ~~and losses~~ on our investments, our adjusted ~~(loss) earnings~~loss per share(1) for the ~~second~~first quarter of ~~2022~~2023 was ~~$(0.47)~~$(0.34). Excluding special items, our adjusted ~~(loss) diluted earnings~~loss per share(1) for the ~~second~~first quarter of ~~2021 and 2019 were $(0.65) and $0.60, respectively.~~2022 was $(0.80).

Network

We ~~added two~~previously announced services to the following new ~~destinations to our network in the second quarter of 2022:~~destinations:


Destination						Service ~~Commenced~~Expected to Commence

Paris, France						Summer 2023
~~Vancouver, Canada~~Amsterdam, Netherlands						~~June 9, 2022~~Summer 2023
~~Asheville, North Carolina~~Tallahassee, Florida						~~June 16, 2022~~Early 2024

~~Following~~Environmental, Social, and Governance ("ESG")

We remain focused on continuing to lead in ESG initiatives. Our efforts during the ~~success~~first quarter of 2023 included:

•In February 2023, we announced a partnership with climate tech company CHOOOSE which focuses on sustainability and advancing the use of sustainable aviation fuel ("SAF"). This partnership allows JetBlue customers to estimate the CO2 emissions of their flights and address their own emissions by allowing customers to make contributions into a fund dedicated to covering the cost of SAF.

•In March 2023, we announced a new collaboration with Shell Aviation to provide 10 million gallons of blended SAF at Los Angeles International Airport ("LAX") over the next two years starting in the first half of 2023, with the option to purchase up to five million gallons more in the third year either for LAX or other airports in the network.

Outlook for 2023

We expect revenue for the second quarter of 2023 to increase between 4.5% to 8.5% compared to the same period in 2022, sustained by strong demand trends. For the second quarter of 2023, we expect capacity to increase in range between 4.5% to 7.5% compared to the same period in 2022. Full year 2023 capacity is expected to increase between 5.5% to 8.5% compared to 2022.

We expect CASM Ex-Fuel(1) for the second quarter of 2023 to increase between 1.5% to 3.5%. The increase is primarily attributed to increased maintenance expense due to the timing of maintenance activity and growth in sales and distribution costs

(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

given the year-over-year growth in revenue. We expect full year 2023 CASM Ex-Fuel to increase between 1.5% to 4.5% compared to 2022.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2023 vs. 2022

Overview

We reported a net loss of $192 million, an operating loss of $242 million and an operating margin of (10.4)% for the three months ended March 31, 2023. This compares to a net loss of $255 million, an operating loss of $367 million and an operating margin of (21.1)% for the three months ended March 31, 2022. Loss per share was $(0.58) for the three months ended March 31, 2023 compared to $(0.79) for the same period in 2022.

Our reported results for the three months ended March 31, 2023 included the effects of special items and certain net gains on our investments. Adjusting for these items, our adjusted net loss(1) was $111 million, adjusted operating loss(1) was $130 million, adjusted operating margin(1) was (5.6)%, and adjusted loss per share(1) was $(0.34) for the three months ended March 31, 2023.

Our reported results for the three months ended March 31, 2022 included mark-to-market and certain gains and losses on our investments. Adjusting for these items, our adjusted net loss(1) was $256 million, adjusted operating loss(1) was $367 million, adjusted operating margin(1) was (21.1)%, and adjusted loss per share(1) was $(0.80) for the three months ended March 31, 2022.

On-time performance, as defined by the Department of Transportation, is arrival within 14 minutes of scheduled arrival time. In the first quarter of 2023, our system wide on-time performance was 70.4% compared to 65.6% for the same period in 2022. Our completion factor increased by 3.9 points to 98.8% in the first quarter of 2023 from 94.9% for the same period in 2022.

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended March 31,						Year-over-Year Change
	2023			2022			$		%
Passenger revenue	$	2,182		$	1,603		$	579	36.1	%
Other revenue	146			133			13		9.4
Total operating revenues	$	2,328		$	1,736		$	592	34.1	%

Average Fare	$	214.07		$	195.99		$	18.08	9.2	%
Yield per passenger mile (cents)	16.31			14.67			1.64		11.2
Passenger revenue per ASM (cents)	13.01			10.42			2.59		24.9
Operating revenue per ASM (cents)	13.88			11.29			2.59		23.0
Average stage length (miles)	1,199			1,231			(32)		(2.6)
Revenue passengers (thousands)	10,192			8,177			2,015		24.6
Revenue passenger miles (millions)	13,375			10,927			2,448		22.4
Available Seat Miles (ASMs) (millions)	16,769			15,383			1,386		9.0
Load Factor	79.8		%	71.0		%			8.8		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 $579 million, or 36.1%, for the three months ended March 31, 2023 compared to the same period in 2022, was primarily driven by the return in demand for travel as revenue passengers increased by 24.6%. In addition, average fares increased 9.2% year-over-year.

Other revenue is primarily comprised of the marketing component of the sales of our ~~inaugural transatlantic service between New York's John F. Kennedy International Airport~~TrueBlue® points. It also includes revenue from the sale of vacation packages, ground handling fees received from other airlines, and ~~London, which began~~rental income. The year-

(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

over-year increase in ~~August 2021, we began service~~other revenue of $13 million, or 9.4%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to ~~London from Boston Logan International Airport ("Boston") on August 4, 2022.~~higher customer spend and acquisitions.

Operating Expenses

In ~~June~~detail, our operating costs per available seat mile ("ASM") were as follows:


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended March 31,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	765	$	571	$	194	34.1	%	4.56	3.71	23.0	%
Salaries, wages and benefits	741		688		53		7.7		4.42	4.47	(1.2)
Landing fees and other rents	160		132		28		21.1		0.95	0.86	11.1
Depreciation and amortization	151		143		8		5.6		0.90	0.93	(3.2)
Aircraft rent	32		26		6		24.4		0.19	0.17	14.1
Sales and marketing	76		57		19		32.8		0.45	0.37	21.9
Maintenance, materials and repairs	176		152		24		15.2		1.04	0.99	5.7
Other operating expenses	357		334		23		6.9		2.13	2.17	(1.9)
Special items	112		—		112		NM		0.68	—	NM
Total operating expenses	$	2,570	$	2,103	$	467	22.2	%	15.32	13.67	12.1	%

Total operating expenses excluding special items(1)	$	2,458	$	2,103	$	355	16.9	%	14.64	13.67	7.2	%

Aircraft Fuel and Related Taxes

Aircraft fuel and related taxes increased by $194 million, or 34.1%, for the three months ended March 31, 2023 compared to the same period in 2022. The average fuel price for the three months ended March 31, 2023 increased by 20.8% to $3.50 per gallon. Our fuel consumption increased by 11.1%, or 22 million gallons, due to the increase in capacity as demand for travel returned.

Salaries, Wages and Benefits

Salaries, wages and benefits increased by $53 million, or 7.7%, for the three months ended March 31, 2023 compared to the same period in 2022. The new pilot union contract was effective March 1, 2023 and includes several pay rate increases during the two year term, including an initial pay rate increase of 14%. The average number of full-time equivalent crewmembers increased by 4.5% compared to the same period in 2022.

Landing Fees and Other Rents

Landing fees and other rents increased by $28 million, or 21.1%, for the three months ended March 31, 2023 compared to the same period in 2022 ~~we received permanent slots at London Heathrow Airport~~primarily due to an 11.6% increase in departures and our operations and growth in high-cost terminals.

Depreciation and Amortization

Depreciation and amortization increased by $8 million, or 5.6%, for ~~flights starting October 29,~~the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by the addition of 10 new aircraft that were placed into service since March 31, 2022.

Aircraft Rent

Aircraft rent increased by $6 million, or 24.4%, for the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by an increase in leased engines since March 31, 2022 which ~~will help secure~~we added to the fleet to support end of life optimization and continuity of the operation due to supply chain constraints.

Sales and Marketing

Sales and marketing increased $19 million, or 32.8%, for the three months ended March 31, 2023 compared to the same period in 2022 principally driven by higher credit card fees and computer reservation system charges, which are directly related

(1) Refer to our ~~long-term future~~''Regulation G Reconciliation of Non-GAAP Financial Measures" at the ~~iconic global hub. Permanent slots allow us~~ 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

to ~~retain our presence and visibility at the busiest airport~~return in ~~the United Kingdom~~demand as we continue to ~~grow~~recover from the pandemic. Revenue passengers increased by 2 million, or 24.6% year-over-year.

Materials and Repairs

Maintenance materials and repairs increased $24 million, or 15.2%, for the three months ended March 31, 2023 compared to the same period in 2022, primarily driven by the timing of engine and heavy maintenance visits, the aging of our ~~base~~fleet, and the increase in flying.

Other Operating Expenses

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

~~Customer Experience~~Other operating expenses increased $23 million, or 6.9%, for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to an increase in airport services resulting from an 11.6% increase in departures.

~~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~~Special Items

Special items for the three months ended March 31, 2023 included the following:

•Expenses of $17 million relating to our ~~customers based on their itinerary. We believe that~~acquisition of Spirit Airlines; and

•Expense of $95 million related to a pilot union contract ratification payment and adjustment to other benefit-related items.

There were no special items for the three months ended March 31, 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

~~through Paisley we will add breadth~~Operational Statistics

The following table sets forth our operating statistics for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,						Year-over-Year Change
(percent changes based on unrounded numbers)	2023			2022			%
Operational Statistics
Revenue passengers (thousands)	10,192			8,177			24.6
Revenue passenger miles (RPMs) (millions)	13,375			10,927			22.4
Available seat miles (ASMs) (millions)	16,769			15,383			9.0
Load factor	79.8		%	71.0		%	8.8	pts
Aircraft utilization (hours per day)	11.1			9.9			12.1

Average fare	$	214.07		$	195.99		9.2
Yield per passenger mile (cents)	16.31			14.67			11.2
Passenger revenue per ASM (cents)	13.01			10.42			24.9
Operating revenue per ASM (cents)	13.88			11.29			23.0
Operating expense per ASM (cents)	15.32			13.67			12.1
Operating expense per ASM, excluding fuel(1)	9.99			9.87			1.2

Departures	87,481			78,393			11.6
Average stage length (miles)	1,199			1,231			(2.6)
Average number of operating aircraft during period	278.2			282.0			(1.3)
Average fuel cost per gallon, including fuel taxes	$	3.50		$	2.90		20.8
Fuel gallons consumed (millions)	219			197			11.1
Average number of full-time equivalent crewmembers	20,167			19,304			4.5

We expect our operating results 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~~significantly fluctuate from quarter-to-quarter in the ~~event their flight changes or cancels~~future as a result of various factors, many of which are outside of our control. For example, air traffic controller shortages in the northeast have recently caused disruptions in the industry and forced us to ~~check in with them on how they would like~~cut back our summer capacity plans 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~~help protect our ~~commitment to work~~operations. Even with the ~~Science Based Targets initiative to set an interim emissions intensity target for our airline operations,~~flight cutbacks, we still expect challenges in ~~support~~the operating environment this summer. Consequently, we believe quarter-to-quarter comparisons of our ~~broader commitment~~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. Except for uncertainty related to ~~net zero by 2040.~~the cost of aircraft fuel, we expect our expenses to continue to increase as we acquire additional aircraft, as our fleet ages, and as we expand the frequency of flights in existing markets as well as enter into new markets.

•~~In April 2022, we announced~~Operational challenges have had an impact on our business in the ~~execution~~first quarter of ~~an offtake agreement~~2023. These challenges include disruptions in our supply chains and those of our business partners, leading to aircraft delivery delays and negatively impacting the ability to source spare parts and complete maintenance on a timely basis. Additionally, reliability challenges with ~~Aemetis for 125 million gallons~~some of ~~blended sustainable aviation fuel ("SAF")~~our aircraft engines using new technology have led to grounded aircraft events. These challenges have resulted - and are expected to ~~be delivered~~continue to ~~JetBlue over 10 years beginning~~result - in ~~2025.~~flight delays and cancellations.

•~~In April 2022, JetBlue Technology Ventures ("JTV"), our wholly owned subsidiary, announced its investment as~~

CONSOLIDATED BALANCE SHEET ANALYSIS

The following is 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~~discussion 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, foodchanges in certain balance sheet data between March 31, 2023, and ~~beverage locations, stores, businesses and other public venues to serve as a~~ ~~Safe Space for members of the LGBTQ+ community.~~December 31, 2022:

~~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.


(in millions)
Selected Balance Sheet Data:	March 31, 2023	December 31, 2022	$ Change	% Change
ASSETS
Cash and cash equivalents	1,333	1,042	291	27.9	%
Investment securities	357	522	(165)	(31.6)	%

(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~~


(in millions)
Selected Balance Sheet Data:	March 31, 2023	December 31, 2022	$ Change	% Change
Inventories, less allowance (2023-$30; 2022-$29)	76	87	(11)	(11.7)	%
Prepaid expenses and other	154	120	34	29.0	%
LIABILITIES
Accounts payable	626	532	94	17.6	%
Air traffic liability	1,926	1,581	345	21.8	%
Other accrued liabilities	554	486	68	14.2	%

~~Three Months Ended June 30, 2022 vs. 2021~~

~~Overview~~Cash and cash equivalents

~~We reported a net loss of~~Cash and cash equivalents ~~$(188)~~increased by $291 million, ~~operating loss~~or 27.9%, to $1.3 billion as of ~~$(113) million~~ ~~and an operating margin of~~ ~~(4.6)%~~ ~~for~~March 31, 2023. Notable inflows during the three months ended ~~June 30, 2022. This compares to a~~March 31, 2023 included net ~~income~~proceeds from the sale of ~~$64 million, an operating income~~investment securities of ~~$147~~$165 million and ~~an operating margin~~proceeds from a sale leaseback transaction of ~~9.8% for the three months ended June 30, 2021. Loss per share was~~ ~~$(0.58)~~ ~~for the second quarter of 2022 compared to $0.20 of earnings per diluted share for the same period in 2021.~~$38 million.

~~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)~~Investment securities

Investment securities decreased by $165 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.~~

~~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 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~~ ~~$914 million~~31.6%, or ~~65.8%, for the three months ended June 30, 2022 compared to the same period in 2021, was~~ primarily driven by the ~~return~~maturities of our commercial paper and time deposits that were outstanding at December 31, 2022.

Inventories, less allowance

Inventories, less allowance decreased by $11 million, or 11.7%, mainly driven by a decrease in our inventory of aircraft fuel.

Prepaid expense and other

Prepaid expense and other increased by $34 million, or 29.0%, driven by an increase in prepaid credit card fees in line with our increase in air traffic liability.

Accounts payable

Accounts payable increased by $94 million, or 17.6%, primarily due to increases in operating expenses coupled with timing of vendor payments.

Air traffic liability

Air traffic liability increased by $345 million, or 21.8%, driven by the strengthening of demand for future air travel.

Other accrued liabilities

Other accrued liabilities increased by $68 million, or 14.2%, primarily due to the timing of passenger tax remittances to governmental authorities. Passenger taxes are collected from customers when tickets are sold and remitted to the government authorities at a later date. The increase in passenger tax liability correlates to the increase in demand for ~~travel as we continue to recover from the 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.~~travel.

(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~~

~~Aircraft fuel and related taxes~~ ~~increased~~ by ~~$574 million, for the 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 a decrease in rates offset by an increase in departures.~~

~~Depreciation and 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 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 passengers increased by 2.5 ~~million~~, ~~or 31.0%,~~ ~~during the three months ended June 30, 2022 as compared to the same period in 2021.~~

~~Maintenance Materials and 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

~~Maintenance materials and repairs~~ ~~decreased $2 million, or (1.3)%~~, for the three months ended June 30, 2022 compared to the same period in 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 aircraft utilization.

~~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 $87 million, or 33.6%, for the three 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~~

~~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 June 30, 2021 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 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 a net loss of $183 million, an operating loss~~ ~~of $147 million and an operating margin of (6.6)% for the six months ended June 30, 2021. Loss per share wa~~s ~~$(1.38)~~ ~~for the six months ended June 30, 2022 compared to $(0.58) for the same period in 2021.~~

~~Our 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, adjusted operating loss(1)~~ ~~was~~ ~~$436 million, 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.

~~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 89.7%,~~ for the six months ended June 30, 2022 compared to the same period in 2021, was primarily driven by the return in demand for travel and a 26.7% increase in fare, as we continue to recover from the COVID-19 pandemic. 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 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 Related Taxes~~

~~Aircraft fuel and related taxes~~ ~~increased by $951 million, or 179.6%,~~ ~~for the six months ended June 30, 2022 compared to the same period in 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 the increase in capacity as demand for travel returned. Scheduled departures increased to 161,848 flights, or 45.4%, for the six months ended June 30, 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 six months ended June 30, 2021, special items included:~~

•~~Contra-expense of $644 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.~~

~~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~~

~~The following table sets forth our operating statistics for the three and six months ended June 30, 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 future due to the uncertainties related to economic conditions, cost of aircraft fuel, recovery from the COVID-19 pandemic, 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.

~~CONSOLIDATED BALANCE SHEET ANALYSIS~~

~~The following is a discussion of the significant changes between June 30, 2022, and December 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~~

~~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 $49 million, or 6.1%, primarily driven by the net purchases of commercial paper and time deposits which had maturities between three and twelve months at June 30, 2022.

~~Receivables, less allowance~~

~~Receivables~~ ~~increased by $84 million, primarily driven by an increase in credit card receivables due to an increase in sale~~s.

~~Flight equipment~~

Flight equipment increased by $229 million, or 2.1%, principally driven by aircraft capital expenditures made in the 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 $366 million, or 22.6%, driven by the improvements in demand as customers began to gain confidence to travel in the midst of the COVID-19 pandemic and resume booking travel further in advance. The cash collected from customers for future travel is recorded on our balance sheet until the point in time that the customer travels.

~~Other accrued liabilities~~

~~Other accrued liabilities~~ ~~increased by $106 million, or 29.9%, primarily as a result of an increase in passenger tax liabilities~~.

~~Long-term debt and finance lease obligations~~

~~Long-term debt and finance lease obligations decreased by $257 million, or (7.0)%, mainly due to regularly scheduled principal payments made in the first half of 2022.~~

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, maintain financial flexibility, and be prudent with capital spending.

At ~~June 30, 2022,~~March 31, 2023, we had cash, cash equivalents, ~~and~~ short-term investments, and long-term marketable securities of approximately $1.7 billion.

~~$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 ~~$299~~ $405 million and ~~$1.7 billion~~$247 million for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Higher~~Lower losses, principally driven by higher operating ~~expenses, along with a significant reduction in air traffic liability~~revenues contributed to the ~~decrease~~increase in operating cash flows.

~~(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~~

Investing Activities

During the ~~six~~three months ended ~~June 30,~~March 31, 2023, capital expenditures related to our purchase of flight equipment included $10 million in work-in-progress relating to flight equipment, $47 million for flight equipment deposits, and $83 million for aircraft and engines. Other property and equipment capital expenditures also included $31 million in groundwork-in-progress. Investing activities for the current year period also included $165 million in net proceeds from investment securities and $33 million payment for acquisition of Spirit. We made no flight equipment deposits for the three months ended March 31, 2023 as we work with Airbus to realign such payments to anticipated delivery delays as described further in Note 6 to our condensed consolidated financial statements.

During the three months ended March 31, 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~~$17 million for spare part purchases, ~~$99~~$49 million in work-in-progress relating to flight equipment, and ~~$65~~$49 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for ~~$56~~$19 million. Investing activities for the current year period also included ~~the~~$200 million in net ~~purchase~~purchases 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.securities.

Financing Activities

Financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2023 primarily consisted of proceeds from a sale leaseback transaction of $38 million offset by $109 million payments on our outstanding debt and finance lease obligations.

Financing activities for the three months ended March 31, 2022 primarily consisted of ~~the following:~~

•~~Principal~~principal payments of ~~$189~~$83 million on our outstanding debt and finance lease obligations.

•~~Entering into a commitment letter for a Senior Secured Bridge Facility of up to $3.5 billion to finance the potential acquisition of Spirit.~~

~~Financing activities for the 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 and Payroll Support Program 3~~

•These proceeds were more than offset by principal payments of $1.5 billion on our outstanding debt and finance lease obligations, $550 million of which were associated with the payoff of our revolving Credit and Guaranty Agreement.

Working Capital

We had aworking capital deficits of $1.9 billion and $1.8 billion at March 31, 2023 and December 31, 2022, respectively. Our working capital deficit ~~of $1.1 billion at June 30, 2022 compared to $170 million at December 31, 2021. Our working capital decreased~~increased by ~~$901~~$80 million due to several factors, including an overall increase in our air traffic liability.

Working capital deficits are customary in the airline industry since a large portion of air traffic liability ~~which was attributed to the increase in customer bookings primarily driven by the return in demand for travel.~~is classified within current liability.

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, which may be available to us. We expect to generate positive ~~working capital through our operations.~~operating cash flow. However, we cannot predict what the effect on our business might be from ~~future developments related to the recovery of the 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

(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

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, acts of terrorism, or other external geopolitical events and conditions. We believe there is sufficient liquidity available to us to meet our cash requirements for at least the 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.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

Contractual Obligations

Our contractual obligations at ~~June 30, 2022 include~~March 31, 2023 included the following (in billions):


		Payments due in															Payments due in
		Total		2022		2023		2024		2025		2026		Thereafter			Total		2023		2024		2025		2026		2027		2028
Debt and finance lease obligations(1)	Debt and finance lease obligations(1)	$	4.5	$	0.2	$	0.7	$	0.4	$	0.3	$	1.0	$	1.9	Debt and finance lease obligations(1)	$	4.1	$	0.3	$	0.3	$	0.3	$	1.0	$	0.2	$	2.0
Operating lease obligations	Operating lease obligations	1.0		0.1		0.1		0.1		0.1		0.1		0.5		Operating lease obligations	1.0		0.1		0.1		0.1		0.1		0.1		0.5
Flight equipment purchase obligations(2)	Flight equipment purchase obligations(2)	8.3		0.6		1.6		2.0		1.7		1.4		1.0		Flight equipment purchase obligations(2)	7.7		1.5		2.2		1.7		1.3		1.0		—
Other obligations(3)	Other obligations(3)	2.5		0.2		0.4		0.4		0.4		0.4		0.7		Other obligations(3)	2.2		0.4		0.4		0.4		0.5		0.5		—
Total	Total	$	16.3	$	1.1	$	2.8	$	2.9	$	2.5	$	2.9	$	4.1	Total	$	15.0	$	2.3	$	3.0	$	2.5	$	2.9	$	1.8	$	2.5

The amounts stated above do not include additional obligations incurred as aof result of financing activities executed after ~~June 30, 2022.~~March 31, 2023.

(1) Includes actual interest and estimated interest for floating-rate debt based on ~~June 30, 2022~~March 31, 2023 rates.

(2) Amounts represent obligations based on the current delivery schedule set forth in our Airbus order book as of ~~June 30, 2022.~~March 31, 2023.

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

As of ~~June 30, 2022, we believe~~March 31, 2023, we are in ~~material~~ compliance with the covenants of our debt and lease agreements. We have approximately ~~$41~~$45 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~~March 31, 2023, our fleet consisted of 130 Airbus A320 aircraft, 63 Airbus A321 aircraft, 18 24 Airbus A321neo aircraft, 1115 Airbus A220 aircraft, and 6058 Embraer E190 aircraft. Of our fleet, ~~217~~ 228 are owned by us, 6862 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. In the first quarter of 2023, we took delivery of one Airbus A321 LR aircraft and one Airbus A220 aircraft, and sold two EMBRAER E190 aircraft. As of ~~June 30, 2022,~~March 31, 2023, the average age of our operating fleet wa~~s 12~~ was 12.5 years.

Our aircraft order book as of ~~June 30, 2022~~March 31, 2023 is as ~~follows:~~follows(1):


Year	Year	Airbus A321neo	Airbus A220	Total	Year	Airbus A321neo	Airbus A220	Total
2022		3	7	10
2023	2023	11	21	32	2023	11	17	28
2024	2024	13	27	40	2024	13	30	43
2025	2025	11	20	31	2025	11	24	35
2026	2026	12	14	26	2026	12	14	26
2027	2027	14	—	14	2027	14	—	14

Total	Total	64	89	153	Total	61	85	146

~~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~~(1) Our aircraft order book ~~as of June 30, 2022. However, due~~is subject to ~~delays, we expect a~~change based on modifications to the contractual agreements or changes in the delivery ~~of a maximum of~~ ~~nine~~ ~~Airbus A220 aircraft in 2022.~~schedules.

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 6six 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.

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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 ~~paying~~using a mix of cash and debt financing for aircraft scheduled for delivery in ~~cash for all scheduled aircraft deliveries in 2022.~~2023. For deliveries after ~~2022,~~2023, 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.

Off-Balance Sheet Arrangements

Although some of our aircraft lease arrangements are with variable interest entities, as defined by Topic 810, Consolidations 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 ~~2021~~2022 Form 10-K.

(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

Forward-Looking Information

This Report (or otherwise made by JetBlue or on JetBlue’s behalf) ~~contain~~contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ~~or the Securities Act,~~(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, ~~or the Exchange Act,~~(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 document and in documents incorporated herein by reference, the words “expects,” ~~“plans,~~“plans,” ~~“intends,~~“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 COVID-19 pandemic ~~including new~~ and ~~existing variants, and the outbreak of any other disease or similar public health threat that affects travel demand or behavior; restrictions on our business related~~government-imposed measures to the financing we accepted under various federal government support programs such as the Coronavirus Aid, Relief, and Economic Security Act, the Consolidated Appropriations Act, and the American Rescue Plan Act; our significant fixed obligations and substantial indebtedness;control its spread; 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.~~

~~Table of Contents~~

~~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~~risks related to the long-term nature of our ~~ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances;~~fleet order book; volatility in fuel prices and availability of fuel; increased maintenance costs associated with fleet age; costs associated with salaries, wages and ~~interest rates;~~benefits; risks associated with doing business internationally; our reliance on high daily aircraft utilization; our ~~ability to implement~~dependence on the New York metropolitan market; risks associated with extended interruptions or disruptions in service at our ~~growth strategy; our ability to attract~~focus cities; risks associated with airport expenses; risks associated with seasonality and ~~retain qualified personnel and maintain our culture as we grow;~~weather; our reliance on a limited number of ~~suppliers, including for~~suppliers; risks related to new or increased tariffs imposed on commercial aircraft ~~aircraft engines~~ and related parts ~~and vulnerability~~imported from outside the United States; the outcome of lawsuits filed against us related to ~~delays by those suppliers;~~ our ~~dependence on~~Northeast Alliance with American Airlines Group Inc.; the ~~New York and Boston metropolitan markets and~~occurrence of any event, change or other circumstances that could give rise to the ~~effect~~right of ~~increased congestion in these markets; our reliance on automated systems and technology;~~JetBlue or Spirit Airlines Inc. ("Spirit") or both of them to terminate the Merger Agreement; failure to obtain certain governmental approvals necessary to consummate the merger with Spirit (the "Merger"); the outcome of the lawsuit filed by the Department of Justice and certain state Attorneys General against us and Spirit related to the Merger; risks associated with failure to consummate the Merger in a timely manner or at all; risks associated with the pendency of the Merger and related business disruptions; indebtedness following consummation of the Merger and associated impacts on business flexibility, borrowing costs and credit ratings; the possibility that JetBlue may be unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all; challenges associated with successful integration of Spirit's operations; expenses related to the Merger and integration of Spirit; the potential for loss of management personal and other key crewmembers as a result of the Merger; risks associated with effective management of the combined company following the Merger; risks associated with JetBlue being bound by all obligations and liabilities of Spirit following consummation of the Merger; risks associated with the integration of JetBlue and Spirit workforce, including with respect to negotiation of labor agreements and labor costs; the impact of the Merger on JetBlue’s earnings per share; risks associated with cybersecurity incidents; heightened regulatory requirements concerning data security compliance; risks associated with reliance on, and potential failure of, automated systems; our ~~Northeast Alliance entered into with American Airlines,~~inability to attract and retain qualified crewmembers; 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~~an accident or ~~cyber-attacks;~~incident involving our aircraft; risks associated with our reputation and brand; our significant fixed obligations; our substantial indebtedness; financial risks associated with credit card processors; restrictions as a result of our participation in governmental support programs; risks associated with seeking short-term additional financing liquidity; failure to realize the value of intangible or long-lived assets; risks associated with disease outbreaks or environmental disasters affecting travel behavior; compliance with future environmental regulations; the impacts of federal budget constraints or federally imposed furloughs; climate change; changes in ~~or additional domestic or foreign~~ government ~~regulation, including new or increased tariffs; changes~~regulations in our ~~industry due to other airlines' financial condition;~~industry; 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; external geopolitical events~~ and 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 connectionrisks associated with the ~~proposed transaction; the possibility~~implementation of 5G wireless technology near airports 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.we operate in. 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~~Merger 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. Further information concerning these and other factors is contained in JetBlue's filings with the Securities and Exchange Commission

(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

(the "SEC"), including but not limited to in our 2022 Form 10-K. 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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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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~~Fuel and ~~related taxes, other non-airline operating expenses,~~Related Taxes, Other Non-Airline Operating Expenses, and ~~special items~~Special Items ("CASM Ex-Fuel")

Operating expenses per available seat mile ~~or CASM,~~("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~~JBV and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure.

~~In 2022,~~For the three months ended March 31, 2023, 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~~included costs related to our acquisition of Spirit Airlines and union contract costs.

There were no special items for the ~~Embraer E190 fleet transition as well as one-time costs related to the implementation of our pilots' collective bargaining agreement.~~three months ended March 31 2022.

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.

~~2022 vs. 2021~~

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

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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	NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL																	NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2022				2019				2022				2019					2023				2022
($ in millions; per ASM data in cents)	($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM		($ in millions; per ASM data in cents)	$		per ASM		$		per ASM
Total operating expenses	Total operating expenses	$	2,558	$	15.59	$	1,855	$	11.58	$	4,661	$	14.66	$	3,652	$	11.60	Total operating expenses	$	2,570	$	15.32	$	2,103	$	13.67
Less:	Less:																	Less:
Aircraft fuel and related taxes	Aircraft fuel and related taxes	910		5.55		484		3.02		1,481		4.66		921		2.93		Aircraft fuel and related taxes	765		4.56		571		3.71
Other non-airline expenses	Other non-airline expenses	14		0.08		12		0.09		29		0.09		23		0.07		Other non-airline expenses	18		0.09		14		0.09
Special items	Special items	44		0.27		2		0.01		44		0.14		14		0.04		Special items	112		0.68		—		—
Operating expenses, excluding fuel	Operating expenses, excluding fuel	$	1,590	$	9.69	$	1,357	$	8.46	$	3,107	$	9.77	$	2,694	$	8.56	Operating expenses, excluding fuel	$	1,675	$	9.99	$	1,518	$	9.87

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~~Loss before Taxes, Net ~~(Loss) Income~~Loss and ~~(Loss) Earnings~~Loss 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.

~~Special items for 2019 include one-time~~included costs related to our acquisition of Spirit Airlines and union contract costs.

There were no special items for the ~~Embraer E190 fleet transition as well as one-time costs related to~~three months ended March 31 2022.

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PART I. FINANCIAL INFORMATION

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

Mark-to-market and certain net gains on our investments were also excluded from our results for the ~~implementation of our pilots' collective bargaining agreement.~~three months ended March 31, 2023.

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 NET GAIN ON INVESTMENTS
	Three Months Ended March 31,
(in millions, except per share amounts)	2023			2022
Total operating revenues	$	2,328		$	1,736

Total operating expenses	$	2,570		$	2,103
Less: Special items	112			—
Total operating expenses excluding special items	$	2,458		$	2,103

Operating loss	$	(242)		$	(367)
Add back: Special items	112			—
Operating loss excluding special items	$	(130)		$	(367)

Operating margin excluding special items	(5.6)		%	(21.1)		%

Loss before income taxes	$	(266)		$	(398)
Add back: Special items	112			—
Less: Net gain on investments	3			2
Loss before income taxes excluding special items and net gain on investments	$	(157)		$	(400)

Pre-tax margin excluding special items and net gain on investments	(6.8)		%	(23.0)		%

Net loss	$	(192)		$	(255)
Add back: Special items	112			—
Less: Income tax benefit related to special items	29			—
Less: Net gain on investments	3			2
Less: Income tax expense related to gain on investments	(1)			(1)
Net loss excluding special items and net gain on investments	$	(111)		$	(256)

Loss Per Common Share:
Basic	$	(0.58)		$	(0.79)
Add back: Special items, net of tax	0.25			—
Less: Net gain on investments, net of tax	0.01			0.01
Basic excluding special items and net gain on investments	$	(0.34)		$	(0.80)

Diluted	$	(0.58)		$	(0.79)
Add back: Special items, net of tax	0.25			—
Less: Net gain on investments, net of tax	0.01			0.01
Diluted excluding special items and net gain on investments	$	(0.34)		$	(0.80)

~~Table of Contents~~

~~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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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
		Six Months Ended June 30,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	299	$	1,658	Net cash provided by operating activities	$	405	$	247
Less: Capital expenditures	Less: Capital expenditures	(274)		(524)		Less: Capital expenditures	(172)		(85)
Less: Predelivery deposits for flight equipment	Less: Predelivery deposits for flight equipment	(65)		(16)		Less: Predelivery deposits for flight equipment	—		(49)
Free Cash Flow	Free Cash Flow	$	(40)	$	1,118	Free Cash Flow	$	233	$	113

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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 ~~2021~~2022 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 ~~June 30, 2022~~March 31, 2023 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 ~~$347 million.~~ $282 million. As of ~~June 30, 2022,~~March 31, 2023, we ~~had not~~have hedged ~~any~~30.5% of our projected fuel requirement for the ~~remainder~~second quarter of ~~2022.~~2023, 30.1% for the third quarter of 2023 and 20.0% for the fourth quarter of 2023.

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 ~~$3.7~~$3.5 billion of our debt and finance lease obligations, with the remaining ~~$100~~$48 million having floating interest rates. As of ~~June 30, 2022,~~March 31, 2023, if interest rates were on average 100 basis points higher in ~~2022,~~2023, our annual interest expense would ~~increase by approximately $1 million.~~not materially increase. 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 ~~2022~~2023 than they were during ~~2021,~~2022, our interest income from cash and investment balances would decrease by approximately $1$2 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~~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,~~("CEO") and our Chief Financial Officer ~~or CFO,~~("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 ~~June 30, 2022.~~March 31, 2023. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~June 30, 2022.~~March 31, 2023.

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 ~~June 30, 2022~~March 31, 2023 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

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~~2022 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.~~10-K.

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 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 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 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, our cost of capital. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance and ability to meet our debt obligations or, following completion of the Merger, those obligations of the 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 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 performance, as well as prevailing market conditions and other factors beyond our control. We cannot assure you that we will be able to obtain additional financing on terms acceptable to us or at all.

Although we expect that the Merger will result in synergies and other benefits to us, we may not realize those benefits because of required divestitures, difficulties related to integration and the achievement of such synergies and other challenges.

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 be more time consuming, costly and require more resources than initially expected. We expect we will be required to 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 anticipated benefits and operational synergies of the Merger may take longer than expected to be realized or not be realized at all. In connection with the integration of our business with Spirit’s in a manner that permits us to achieve the synergies anticipated to result from the Merger we will need to address, among other things, the following issues:

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

•maintaining existing or negotiating new agreements with unions, employees, suppliers, third-party service providers and third-party distribution channels, and avoiding delays in entering into new agreements with prospective employees, suppliers, third-party service providers and 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 a manner that minimizes any adverse impact on 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 attention of management and other key employees;~~

•~~harmonizing the 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 Merger may not be realized. There is risk that the expected benefits may not be achieved within the anticipated

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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 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 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 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 a disruption to our business and our operations and the loss of important data. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

~~The 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 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 estimate accurately. These integration expenses likely will result in the combined company taking significant charges against earnings following the completion of the Merger, and the amount and timing of such charges are uncertain at present.

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

We and Spirit are dependent on the experience and 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 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 cash consideration payable under 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 retaining replacements and may lose significant expertise and talent, and our ability to 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 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 to decline or grow at a reduced rate.

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 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 six months ended June 30, 2022 and 2021 represents the return of shares to satisfy tax payments associated with crewmember stock compensation that vested during the respective periods.

In consideration for the Payroll Support 2 Payments, during the six months ended June 30, 2021, we issued warrants to purchase approximately $1.0 million shares of common stock to Treasury at an exercise price of $14.43 per share. In consideration for the Payroll Support 3 Payments, during the six months ended June 30, 2021, we issued warrants to purchase approximately $0.7 million shares of common stock to Treasury at an exercise price of $19.90 per share. See Note 3 to our condensed consolidated financial statements.None.

ITEM 5. OTHER INFORMATION

~~None.~~Transaction Incentive Awards

In connection with the Company’s proposed merger (the “Merger”) with Spirit Airlines, Inc. (“Spirit”), on April 25, 2023 and April 27, 2023 the Compensation Committee and the Board approved transaction incentive awards (“Transaction Incentive Awards”) comprised of cash (25%), performance stock units (“PSUs”) (25%) and restricted stock units (“RSUs”) (50%), for the named executive officers (“NEOs”). The target amounts for the Transaction Incentive Awards to the NEOs are as follows: $2,000,000 for Robin Hayes, $1,100,000 for Joanna Geraghty, $1,500,000 for Ursula Hurley, $700,000 for Carol Clements and $1,250,000 for Brandon Nelson.

The cash portion of the Transaction Incentive Awards is designed to recognize the past, current and future efforts by the NEOs necessary to achieve a successful completion of the Merger and integration of the two companies. The cash portion of the award will vest on the first anniversary of the grant date and is subject to the NEOs continued employment with the Company.

The RSUs and PSUs portions of the Transaction Incentive Awards were granted under, and pursuant to the terms and conditions of, the Company’s 2020 Omnibus Equity Incentive Plan (the “Plan”). The RSUs and PSUs are designed to retain and motivate our NEOs and to further align their interests with those of our stockholders throughout the planning and completion of the Merger and the integration of the two companies.

The RSUs will vest on the second anniversary of the grant date and are otherwise subject to the same terms and conditions provided under the form of RSU award agreement previously disclosed by the Company.

The PSUs will settle as soon as reasonably practicable following the certification of performance results by the Compensation Committee, based on the level of achievement of pre-established performance goals and subject to the consummation of the Merger, following a three-year performance period commencing on January 1, 2023 and subject to the terms and conditions of the form of PSU award agreement filed herewith as Exhibit 10.2. If the Merger is not consummated, the PSUs will be forfeited in their entirety.

The Compensation Committee and the Board determined that the three components of the Transaction Incentive Awards would collectively reward, retain and incentivize the NEOs for their efforts, while also continuing to tie pay to performance (including but not limited to the successful integration of the two companies).

The foregoing description of the RSUs and PSUs are summaries and are qualified in their entirety by reference to the complete terms of the Plan and applicable forms of award agreement, each as incorporated by reference herein. The Plan was filed as Exhibit 10.31 to the Company’s Current Report on Form 8-K, filed on May 20, 2020, the form of RSU award agreement was filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q, for the quarter ended June 30, 2021 and the form of PSU award agreement for the Transaction Incentive Awards is filed herewith as Exhibit 10.2.

Executive Compensation Awards

As previously disclosed in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and March 31, 2022, in April 2021 and April 2022 certain NEOs were granted Executive Retention Awards (“ERAs”), subject to

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PART II. OTHER INFORMATION

the lapse of compensation restrictions under the grants and loans the Company received from the U.S. Department of the Treasury under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the United States Consolidated Appropriations Act, and the American Rescue Plan Act of 2021 (collectively referred to as the “Government Support”). A portion of the ERAs is also subject to the achievement of certain performance conditions.

The Government Support restrictions lapsed on April 1, 2023 and, on April 27, 2023, the Board certified the achievement of the performance conditions, two successive quarters of positive EBITDA, for the performance-based ERAs and approved an additional payment based on the Company’s achievement of five out of six quarters of positive EBITDA, in the following amounts: $200,000 for Robin Hayes, $60,000 for Joanna Geraghty, $485,000 for Ursula Hurley and $135,000 for Brandon Nelson. The payments pursuant to the ERAs will be made on May 5, 2023.

Changes to Chief Financial Officer Compensation

Upon the lapse of the Government Support restrictions, the Compensation Committee established new target compensation levels under our executive compensation programs for our Chief Financial Officer, Ursula Hurley, as described below. In establishing this new target compensation, the Compensation Committee took into account Ms. Hurley’s experience and responsibility, the Company’s compensation philosophy and focus on performance-based compensation, and the compensation of similarly situated executives at other comparable companies.

Ms. Hurley’s new target compensation levels were approved by the Compensation Committee on April 24, 2023 and will be effective as of May 1, 2023. Ms. Hurley’s target base salary was increased to $575,000, her target annual short-term incentive was increased to 100% of base salary, and her target annual long-term incentive was set at $1,900,000, comprised of RSUs and PSUs.

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
~~2.1~~3.1						~~Agreement~~Amended and ~~Plan~~Restated Bylaws of ~~Merger, dated July 28, 2022, by and among~~ JetBlue Airways ~~Corporation, Sundown Acquisition Corp., and Spirit Airlines, Inc.—~~Corporation—incorporated by reference to Exhibit ~~2.1~~3.1 to our Current Report on Form 8-K dated ~~June 28, 2022~~February 17, 2023 and filed on ~~July 28, 2022~~February 17, 2023.
10.1†*						Form of Performance Stock Unit Award Agreement
10.2†*						Form of Performance ~~Cash Award Agreement—incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022~~
~~10.2†~~						~~Form of Executive~~Stock Unit Award Agreement ~~(award vesting on May 1, 2023)—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 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 February 1, 2025)—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022(Transaction Incentives)
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:

~~August 5, 2022~~April 28, 2023

By:

/s/ Al Spencer

Al Spencer

Vice President, Controller and Principal Accounting Officer

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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)