UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 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 ~~September 30, 2022,~~March 31, 2023, there were ~~323,877,614~~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 - March 31, 202 ~~September~~ 3 ~~30, 2022~~ and December 31, ~~2021~~202 2			3
Consolidated Statements of Operations - Three ~~and~~ ~~Nine~~Months Ended March 31, 202 ~~September 30~~3 ~~, 2022~~ and ~~2021~~202 2			5
Consolidated Statements of Comprehensive ~~Income~~Loss - Three ~~and~~ ~~Nine~~ Months Ended March 31, 202 ~~September 30~~3 ~~, 2022~~ and ~~2021~~202 2			6
~~Condensed~~C ondensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended March 31, 202 ~~September 30~~3 ~~, 2022~~ and ~~2021~~202 2			7
Consolidated Statements of Stockholders' Equity - Three ~~and~~ ~~Nine~~ Months Ended March 31, 202 ~~September 30~~3 ~~, 2022~~ 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			2722
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4636
Item 4. Controls and Procedures			4636

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4737
Item 1A. Risk Factors			4737
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4737
Item 5. Other Information			4737
Item 6. Exhibits			4738

SIGNATURE			4940

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
		September 30, 2022		December 31, 2021			(unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,401	$	2,018	Cash and cash equivalents	$	1,333	$	1,042
Investment securities	Investment securities	692		824		Investment securities	204		350
Receivables, less allowance (2022-$3; 2021-$3)		298		207
Inventories, less allowance (2022-$27; 2021-$24)		79		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	141		124		Prepaid expenses and other	154		120
Total current assets	Total current assets	2,611		3,247		Total current assets	2,098		1,916
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT					PROPERTY AND EQUIPMENT
Flight equipment	Flight equipment	11,579		11,161		Flight equipment	11,889		11,727
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	398		337		Predelivery deposits for flight equipment	398		415
Total flight equipment and predelivery deposits, gross	Total flight equipment and predelivery deposits, gross	11,977		11,498		Total flight equipment and predelivery deposits, gross	12,287		12,142
Less accumulated depreciation	Less accumulated depreciation	3,532		3,227		Less accumulated depreciation	3,689		3,578
Total flight equipment and predelivery deposits, net	Total flight equipment and predelivery deposits, net	8,445		8,271		Total flight equipment and predelivery deposits, net	8,598		8,564
Other property and equipment	Other property and equipment	1,303		1,205		Other property and equipment	1,309		1,314
Less accumulated depreciation	Less accumulated depreciation	711		662		Less accumulated depreciation	749		731
Total other property and equipment, net	Total other property and equipment, net	592		543		Total other property and equipment, net	560		583
Total property and equipment, net	Total property and equipment, net	9,037		8,814		Total property and equipment, net	9,158		9,147
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	713		729		OPERATING LEASE ASSETS	637		660
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Investment securities	Investment securities	175		39		Investment securities	153		172
Restricted cash	Restricted cash	83		59		Restricted cash	146		146
Intangible assets, less accumulated amortization (2022-$443; 2021-$405)		258		284
Intangible assets, less accumulated amortization (2023-$469; 2022-$455)						Intangible assets, less accumulated amortization (2023-$469; 2022-$455)	310		298
Other	Other	453		470		Other	725		706
Total other assets	Total other assets	969		852		Total other assets	1,334		1,322
TOTAL ASSETS	TOTAL ASSETS	$	13,330	$	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)

September 30, 2022 December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 600 $ 499
Air traffic liability 1,745 1,618
Accrued salaries, wages and benefits 510 480
Other accrued liabilities 421 359
Current operating lease liabilities 103 106
Current maturities of long-term debt and finance lease obligations 524 355
Total current liabilities 3,903 3,417
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS 3,235 3,651
LONG-TERM OPERATING LEASE LIABILITIES 686 690
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes 790 843
Air traffic liability - non-current 702 640
Other 507 552
Total deferred taxes and other liabilities 1,999 2,035
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, 483 and 478 shares issued and 324 and 320 shares outstanding at September 30, 2022 and December 31, 2021, respectively 5 5
Treasury stock, at cost; 159 and 158 shares at September 30, 2022 and December 31, 2021, respectively (1,995) (1,989)
Additional paid-in capital 3,102 3,047
Retained earnings 2,400 2,786
Accumulated other comprehensive (loss) (5) —
Total stockholders’ equity 3,507 3,849
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 13,330 $ 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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
OPERATING REVENUES	OPERATING REVENUES									OPERATING REVENUES
Passenger	Passenger	$	2,415	$	1,856	$	6,319	$	3,913	Passenger	$	2,182	$	1,603
Other	Other	147		116		424		290		Other	146		133
Total operating revenues	Total operating revenues	2,562		1,972		6,743		4,203		Total operating revenues	2,328		1,736
OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Aircraft fuel and related taxes	Aircraft fuel and related taxes	825		443		2,305		973		Aircraft fuel and related taxes	765		571
Salaries, wages and benefits	Salaries, wages and benefits	675		620		2,058		1,718		Salaries, wages and benefits	741		688
Landing fees and other rents	Landing fees and other rents	131		182		412		470		Landing fees and other rents	160		132
Depreciation and amortization	Depreciation and amortization	147		140		435		398		Depreciation and amortization	151		143
Aircraft rent	Aircraft rent	30		25		83		76		Aircraft rent	32		26
Sales and marketing	Sales and marketing	81		60		216		130		Sales and marketing	76		57
Maintenance, materials and repairs	Maintenance, materials and repairs	178		205		492		472		Maintenance, materials and repairs	176		152
Other operating expenses	Other operating expenses	343		297		1,026		768		Other operating expenses	357		334
Special items	Special items	13		(186)		57		(841)		Special items	112		—
Total operating expenses	Total operating expenses	2,423		1,786		7,084		4,164		Total operating expenses	2,570		2,103
OPERATING INCOME (LOSS)		139		186		(341)		39
OTHER (EXPENSE) INCOME
OPERATING LOSS										OPERATING LOSS	(242)		(367)
OTHER INCOME (EXPENSE)										OTHER INCOME (EXPENSE)
Interest expense	Interest expense	(44)		(42)		(121)		(153)		Interest expense	(46)		(37)
Interest income	Interest income	11		4		24		12		Interest income	17		4
Gain (loss) on investments, net		—		54		(4)		57
Other		(1)		(12)		(1)		(55)
Total other (expense) income		(34)		4		(102)		(139)
INCOME (LOSS) BEFORE INCOME TAXES		105		190		(443)		(100)
Income tax expense (benefit)		48		60		(57)		(47)
NET INCOME (LOSS)		$	57	$	130	$	(386)	$	(53)
Gain on investments, net										Gain on investments, net	3		2
Other income										Other income	2		—
Total other expense										Total other expense	(24)		(31)
LOSS BEFORE INCOME TAXES										LOSS BEFORE INCOME TAXES	(266)		(398)
Income tax benefit										Income tax benefit	(74)		(143)
NET LOSS										NET LOSS	$	(192)	$	(255)

EARNINGS (LOSS) PER COMMON SHARE:
LOSS PER COMMON SHARE:										LOSS PER COMMON SHARE:
Basic	Basic	$	0.18	$	0.41	$	(1.20)	$	(0.17)	Basic	$	(0.58)	$	(0.79)
Diluted	Diluted	$	0.18	$	0.40	$	(1.20)	$	(0.17)	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 September 30,
2022 2021
NET INCOME $ 57 $ 130
Changes in fair value of available-for-sale securities and derivative instruments, net of reclassifications into earnings, net of deferred taxes of $2 and $0 in 2022 and 2021, respectively. (3) —
Total other comprehensive (loss) (3) —
COMPREHENSIVE INCOME $ 54 $ 130


	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)

Nine Months Ended September 30,
2022 2021
NET (LOSS) $ (386) $ (53)
Changes in fair value of available-for-sale securities and derivative instruments, net of reclassifications into earnings, net of deferred taxes of $2 and $0 in 2022 and 2021, respectively. (5) —
Total other comprehensive (loss) (5) —
COMPREHENSIVE (LOSS) $ (391) $ (53)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


		Nine Months Ended September 30,					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)		$	(386)	$	(53)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Net loss						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:
Deferred income taxes	Deferred income taxes	(51)		(40)		Deferred income taxes	(78)		(141)

Depreciation	Depreciation	396		365		Depreciation	137		130
Amortization	Amortization	39		33		Amortization	14		13
Impairment of long-lived asset		5		—
Stock-based compensation	Stock-based compensation	25		23		Stock-based compensation	10		11
Changes in certain operating assets and liabilities	Changes in certain operating assets and liabilities	300		1,438		Changes in certain operating assets and liabilities	520		499
Other, net	Other, net	(7)		(11)		Other, net	(6)		(10)
Net cash provided by operating activities	Net cash provided by operating activities	321		1,755		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	(483)		(770)		Capital expenditures	(172)		(85)
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	(116)		(33)		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		(142)		—
Purchase of available-for-sale securities		(470)		(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	589		590		Proceeds from the sale of available-for-sale securities	267		153
Payment for acquisition		(25)		—

Other, net		(2)		(2)
Payment for Spirit Airlines acquisition						Payment for Spirit Airlines acquisition	(33)		—
Net cash used in investing activities	Net cash used in investing activities	(647)		(735)		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	(255)		(1,775)		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	(267)		(737)		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	(593)		283		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)	$	1,484	$	2,252	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	$	86	$	121	Cash payments for interest	$	6	$	20
Cash receipts of income tax refunds (net of payments)		(95)		—
Cash payments for income taxes (net of refunds)						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		$	61	$	—
Lease Modifications and lease conversions		$	—	40
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:

		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,401	$	2,193	Cash and cash equivalents	$	1,333	$	1,834
Restricted cash		83		59

Restricted cash(2)						Restricted cash(2)	146		67
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	1,484	$	2,252	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
Balance at June 30, 2022 482 $ 5 158 $ (1,995) $ 3,095 $ 2,343 $ (2) $ 3,446
Net income — — — — — 57 — 57
Other comprehensive income — — — — — — — —
Vesting of restricted stock units 1 — 1 — — — — —
Stock compensation expense — — — — 7 — — 7
Stock issued under crewmember stock purchase plan — — — — — — — —
Hedging Activity — — — — — — (3) (3)
Balance at September 30, 2022 483 $ 5 159 $ (1,995) $ 3,102 $ 2,400 $ (5) $ 3,507
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income Total
Balance at June 30, 2021 476 $ 5 158 $ (1,989) $ 3,012 $ 2,785 $ — $ 3,813
Net income — — — — — 130 — 130
Vesting of restricted stock units — — — — — — — —
Stock compensation expense — — — — 6 — — 6
Stock issued under crewmember stock purchase plan — — — — — — — —
Warrants issued under federal support programs — — — — — — — —
Balance at September 30, 2021 476 $ 5 158 $ (1,989) $ 3,018 $ 2,915 $ — $ 3,949
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2021 478 $ 5 158 $ (1,989) $ 3,047 $ 2,786 $ — $ 3,849
Net (loss) — — — — — (386) — (386)
Other comprehensive loss — — — — — — (2) (2)
Vesting of restricted stock units 2 — 1 (6) — — — (6)
Stock compensation expense — — — — 25 — — 25
Stock issued under crewmember stock purchase plan 3 — — — 30 — — 30
Hedging Activity — — — — — — (3) (3)
Balance at September 30, 2022 483 $ 5 159 $ (1,995) $ 3,102 $ 2,400 $ (5) $ 3,507
Common
Shares Common
Stock Treasury
Shares Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income Total
Balance at December 31, 2020 474 $ 5 158 $ (1,981) $ 2,959 $ 2,968 $ — $ 3,951
Net (loss) — — — — — (53) — (53)
Vesting of restricted stock units 1 — — (8) — — — (8)
Stock compensation expense — — — — 23 — — 23
Stock issued under crewmember stock purchase plan 1 — — — 22 — — 22
Warrants issued under federal support programs — — — — 14 14
Balance at September 30, 2021 476 $ 5 158 $ (1,989) $ 3,018 $ 2,915 $ — $ 3,949


	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2022	486	$	5	159	$	(1,995)	$	3,129	$	2,424	$	—	$	3,563
Net loss	—	—		—	—		—		(192)		—		(192)
Other comprehensive loss	—	—		—	—		—		—		(5)		(5)
Vesting of restricted stock units	1	—		—	(3)		—		—		—		(3)
Stock compensation expense	—	—		—	—		10		—		—		10
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 Loss		Total
Balance at December 31, 2021	478	$	5	158	$	(1,989)	$	3,047	$	2,786	$	—	$	3,849
Net loss	—	—		—	—		—		(255)		—		(255)
Other comprehensive loss	—	—		—	—		—		—		(1)		(1)
Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)
Stock compensation expense	—	—		—	—		11		—		—		11

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 ("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~~2022 ("~~2021~~2022 Form 10-K").

These condensed consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the U.S. Securities and Exchange Commission (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 ("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 nine months ended September 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 nine months ended September 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 $10 million~~ ~~on these securities during the nine months ended September 30, 2022. An immaterial gain was recorded during the same period in 2021.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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

September 30, 2022 December 31, 2021
Available-for-sale investment securities
Time deposits $ 630 $ 790
Debt securities 11 8
Commercial paper 39 2
Total available-for-sale investment securities 680 800
Held-to-maturity investment securities
Corporate bonds 176 37
Total held-to-maturity investment securities 176 37
Equity investment securities
Common stock of publicly traded companies 11 26
Total equity investment securities 11 26
Total investment securities $ 867 $ 863

~~Other Investments~~

Our wholly-owned subsidiary, JetBlue Technology Ventures, LLC ("JetBlue Ventures") 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 (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 $78 million and $72 million~~ ~~as of September 30, 2022 and December 31, 2021, respectively. We did not record any material gains or losses on these investments during the three and nine months ended September 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 September 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 $39 million and $32 million as of September 30, 2022 and December 31, 2021, respectively, and is included within other assets on our consolidated balance sheets.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Note 2— Revenue Recognition

The Company categorizes the revenues received from contracts with its customers by revenue source as we believe it best depicts the nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenues recognized by revenue source for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Passenger revenue	Passenger revenue									Passenger revenue
Passenger travel	Passenger travel	$	2,308	$	1,773	$	5,959	$	3,717	Passenger travel	$	2,026	$	1,490
Loyalty revenue - air transportation	Loyalty revenue - air transportation	107		83		360		196		Loyalty revenue - air transportation	156		113
Other revenue	Other revenue									Other revenue
Loyalty revenue	Loyalty revenue	102		80		287		206		Loyalty revenue	100		88
Other revenue	Other revenue	45		36		137		84		Other revenue	46		45
Total revenue	Total revenue	$	2,562	$	1,972	$	6,743	$	4,203	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):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Air traffic liability - passenger travel	Air traffic liability - passenger travel	$	1,443	$	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)	976		891		Air traffic liability - loyalty program (air transportation)	998		1,000
Deferred revenue(1)	Deferred revenue(1)	547		613		Deferred revenue(1)	525		530
Total	Total	2,966		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 ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized passenger ~~rev~~revenue of ~~enue of $1.2 billion~~$858 million and ~~$468~~$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 nine months ended September 30, 2022 and 2021 (in millions):


~~Balance at December 31, 2021~~	$	~~891~~
~~TrueBlue~~® ~~points redeemed~~	~~(360)~~
~~TrueBlue~~® ~~points earned and sold~~	~~445~~
~~Balance at September 30, 2022~~	$	~~976~~

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

~~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 nine months ended September 30, 2022, we made payments of $255 million on our outstanding debt and finance lease obligations.~~

~~As of September 30, 2022, we pledged aircraft, engines, other equipment, and facilities with a net book value of $6.3 billion as security under various financing arrangements.~~

At September 30, 2022, scheduled maturities of our long-term debt and finance lease obligations were $100 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 September 30, 2022 and December 31, 2021 were as follows (in millions):~~

September 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 $ 41 $ 42 $ 45
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032 519 342 532 442
2019-1 Series A, due through 2028 162 125 166 150
2019-1 Series B, due through 2027 88 94 94 121
2020-1 Series A, due through 2032 567 467 587 634
2020-1 Series B, due through 2028 144 151 153 199
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023 60 59 88 88
Fixed rate equipment notes, due through 2028 495 400 620 706
Floating rate equipment notes, due through 2028 64 56 103 99
Sale-leaseback transactions, due through 2024 343 332 347 374
Unsecured CARES Act Payroll Support Program loan, due through 2030 259 134 259 219
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031 144 73 144 121
Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031 132 67 132 111
0.50% convertible senior notes due 2026 738 543 736 673
Total(2)
$ 3,757 $ 2,884 $ 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 September 30, 2022 and December 31, 2021, respectively.~~

We have financed certain aircraft with Enhanced Equipment Trust Certificates ("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 ("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.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~2022 $3.5 Billion Senior Secured Bridge Facility~~

On May 16, 2022, we, along with our direct wholly-owned subsidiary, Sundown Acquisition Corp. ("Merger Sub"), 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 ("TO") 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, JetBlue entered into a second amended and restated commitment letter (the "Commitment Letter"), dated 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.

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 period ended September 30, 2022 we did not have a balance outstanding or any borrowings thereunder.

~~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 warrants to Treasury to acquire more than 2.7 million shares of our common stock 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 was 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 warrants to Treasury 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. 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 nine months ended September 30, 2022 was $6 million and included $2 million in amortization of debt issuance costs.During the nine months ended September 30, 2021, interest expense recorded was $4 million and included $2 million in amortization of debt issuance costs.~~

Short-term Borrowings

Citibank Line of Credit

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

On October 21, 2022, JetBlue entered into the $600 million Second Amended and Restated Credit and Guaranty Agreement (the ~~“Second~~"Second Amended and Restated ~~Facility”~~Facility"), amending and restating the ~~Existing Credit Facility.~~Company's existing $550 million credit facility. The Second Amended and Restated Facility is among JetBlue, ~~the Agent~~Citibank N.A., as administrative agent and the lenders party thereto. The Second Amended and Restated Facility modifies the ~~Existing Credit Facility~~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%. ~~JetBlue has not made any drawings under the~~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.

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

Morgan Stanley Line of Credit

We have a revolving line of credit with Morgan Stanley for up to approximately $200 million. This line of credit is secured by a portion of our investment securities held by Morgan Stanley and the amount available to us under this line of credit may vary accordingly. This line of credit bears interest at a floating rate based upon LIBOR, plus a margin. As of and for the periods ended ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we did not have a balance outstanding or any borrowings under this line of credit.

2022 $3.5 billion Senior Secured Bridge Facility

In connection with the entry into the Merger Agreement as defined in Note 12, JetBlue entered into a Second Amended and Restated Commitment Letter (the “Commitment Letter”), dated 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 Airlines, Inc. (“Spirit”).

Note 4—Loss Per Share

Basic earnings per share is calculated by dividing net 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, the crewmember Stock Purchase Plan, convertible notes, warrants issued under various federal payroll support programs, and any other potentially dilutive instruments using the treasury stock and if-converted methods. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were 1.6 million and 2.9 million for the three months ended March 31, 2023 and 2022, respectively.

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ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~Note 4—Earnings (Loss) Per Share~~

Basic earnings per share is calculated by dividing net 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. There were no anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts for the three months ended
~~September 30, 2022 and 2021.~~ ~~Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were~~ ~~1.9 million~~ ~~and 3.5 million for the~~ ~~nine months endedSeptember 30, 2022 and~~ ~~September 30, 2021, respectively~~.

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net income (loss)		$	57	$	130	$	(386)	$	(53)
Net loss										Net loss	$	(192)	$	(255)

Weighted average basic shares	Weighted average basic shares	323.9		318.0		322.5		317.3		Weighted average basic shares	327.6		320.5
Effect of dilutive securities	Effect of dilutive securities	1.1		3.3		—		—		Effect of dilutive securities	—		—
Weighted average diluted shares	Weighted average diluted shares	325.0		321.3		322.5		317.3		Weighted average diluted shares	327.6		320.5

Earnings (loss) per common share
Loss per common share										Loss per common share
Basic	Basic	$	0.18	$	0.41	$	(1.20)	$	(0.17)	Basic	$	(0.58)	$	(0.79)
Diluted	Diluted	$	0.18	$	0.40	$	(1.20)	$	(0.17)	Diluted	$	(0.58)	$	(0.79)

Note 5—Crewmember Retirement Plan

We sponsor a retirement savings 401(k) defined contribution plan ~~("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 ("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 ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 was $66 millionand ~~2021 was $186 million and $157~~$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):

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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 ~~September 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 63 Airbus A321neo~~included the following aircraft and 88 Airbus A220 aircraft, scheduled for delivery through 2027. Committed expenditures for these aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits as of September 30, 2022 is approximately $245 million for the remainder of 2022, $1.5 billion in 2023, $2.1 billion in 2024, $1.8 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 ~~September 30, 2022.~~ ~~In February 2022, we received notice from~~March 31, 2023. Due to Airbus ~~of anticipated~~ delivery delays, ~~for certain~~our 2023 capacity planning assumes delivery of 11 A220, ~~aircraft~~four A321neo, and ~~in September 2022, we signed an amendment to the Airbus A220 purchase agreement.~~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 ~~September 30, 2022,~~March 31, 2023, we had ~~approximately $40~~$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 $40~~$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 four 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.

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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 ~~2022,~~2023.

International Association of Machinists and ~~a 3% base pay increase effective May 1, 2022.~~
Aerospace Workers

In September 2022, the International Association of Machinists and Aerospace Workers ~~(“IAM”)~~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 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 these crewmembers a guaranteed level of income and to continue ~~to monitor this process as it affects our crewmembers.~~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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective 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.

InOn 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 JetBlue and American Airlines~~respectively, alleging that the NEA violates ~~Section~~Sections 1 and 2 of the Sherman ~~Act,~~Act. Among other things, plaintiffs seek monetary damages on behalf of a putative class of direct purchasers of airline tickets from JetBlue and ~~asking that~~American and, depending on the ~~carriers be permanently enjoined~~specific case, other airlines on flights to or from ~~implementing~~four airports (JFK, LaGuardia Airport, Newark Liberty International Airport, and Boston Logan International Airport) from July 16, 2020 through the present. Plaintiffs in these actions also seek to enjoin the NEA. ~~A bench trial was held September 27, 2022 through October 27, 2022. A decision has not yet been issued.~~ 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.

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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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in millions):


		September 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	$	1,004	$	—	$	—	$	1,004	Cash equivalents	$	599	$	—	$	—	$	599
Available-for-sale investment securities	Available-for-sale investment securities	—		680		—		680		Available-for-sale investment securities	—		157		13		170
Equity investment securities	Equity investment securities	11		—		—		11		Equity investment securities	11		—		—		11
Aircraft fuel derivatives	Aircraft fuel derivatives	—		3		—		3		Aircraft fuel derivatives	—		8		—		8


		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	—		—		—		—		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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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 nine months ended September 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. ~~We recognized~~

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 ~~net unrealized loss~~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 ~~$1 million and~~ ~~$10 million~~ ~~on these securities during the three and nine months ended September 30, 2022, respectively. An immaterial gain was recorded during~~ the same ~~period in 2021.~~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 ~~quantitative~~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 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 specific identification method to determine the cost of the securities.

Available-for-sale investment securities. We did not record any material gains or losses on these securities during the three months ended 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 on held-to-maturity investment securities during the 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):

2017

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	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 8—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.

Table of Contents

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 ~~September 30, 2022~~March 31, 2023 related to our outstanding fuel hedging contracts that were designated as cash flow hedges for accounting purposes. ~~As of September 30, 2022 there were no fuel hedge contracts beyond December 31, 2022.~~
Aircraft fuel call option spread agreements Total
Fourth Quarter 2022 27 % 27 %


	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):

September 30, 2022 December 31, 2021
Fuel Derivatives
Asset fair value recorded in prepaid expense and other current assets1 $ 3 $ —
Longest remaining term (months) 3 0
Hedged volume (barrels, in thousands) 1,379 —
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months $ — —


	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

1 ~~Gross asset of each contract prior to consideration of offsetting positions with each counterparty and prior to the impact of collateral paid~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023			2022
Fuel Derivatives	Fuel Derivatives									Fuel Derivatives
Hedge effectiveness gains (losses) recognized in aircraft fuel expense		$	—	$	—	$	—	$	—
Hedge gains (losses) on derivatives recognized in comprehensive income		$	(3)	$	—	$	(3)	$	—
Hedge effectiveness gains recognized in aircraft fuel expense										Hedge effectiveness gains recognized in aircraft fuel expense	$	1		$	—
Hedge losses on derivatives recognized in comprehensive income										Hedge losses on derivatives recognized in comprehensive income	$	(5)		$	—
Percentage of actual consumption economically hedged	Percentage of actual consumption economically hedged	—		—		—		—		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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Note 9—10—Accumulated Other Comprehensive Income (Loss)

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

Available-for-sale securities(1) Aircraft Fuel Derivatives(2) Total
Balance of accumulated income (loss), at June 30, 2022 $ (2) $ — $ (2)
Reclassifications into earnings, net of taxes of $0 — — —
Change in fair value, net of taxes of $2 — (3) (3)
Balance of accumulated income (loss), at September 30, 2022 $ (2) $ (3) $ (5)
Balance of accumulated income (loss), at June 30, 2021 $ — $ — $ —
Reclassifications into earnings, net of taxes $0 — — —
Change in fair value, net of taxes of $0 — — —
Balance of accumulated income (loss), at September 30, 2021 $ — $ — $ —


	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)

~~A roll forward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the nine months ended September 30, 2022 and 2021 is as follows (in millions):~~

Available-for-sale securities(1) Aircraft Fuel Derivatives(2) Total
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 $2 (2) (3) (5)
Balance of accumulated income (loss), at September 30, 2022 $ (2) $ (3) $ (5)
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 September 30, 2021 $ — $ — $ —

(1) ~~Reclassified to interest income.~~

~~(2)~~ Reclassified to aircraft fuel expense.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Note ~~10—~~11—Special Items

The following is a listing of special items presented on our consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Special Items
Federal payroll support grant recognition(1)
$ — $ (186) $ — $ (830)
CARES Act employee retention credit(2)
— — — (11)
Fleet Impairment (3)
— — 5 —
Air Lines Pilot Association ratification bonus (4)
— — 32 —
Spirit Airlines, Inc. acquisition related expenses (5)
11 — 18 —
Fleet Retirement (6)
2 — 2
Total $ 13 $ (186) $ 57 $ (841)


	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 36, we incurred and recognized $95 million for a ratification payment and adjustments 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 $186 million and $830 million of payroll support grantspaid-time-off accruals resulting from pay rate increases for the three ~~and nine~~ months ended ~~September 30, 2021, respectively. Our payroll support grants were fully utilized as of September 30, 2021.~~March 31, 2023.

(2) ~~The Employee Retention Credit ("ERC") under the CARES Act is a refundable tax credit which encourages businesses~~We incurred and recognized $17 million in Spirit acquisition costs, primarily related 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 employeeprofessional fees 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 $11 million of ERC as a contra-expense within special items on our consolidated statements of operations for the ~~nine~~three months ended ~~September 30, 2021, respectively.~~March 31, 2023.

~~(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~~ nine months ended September 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~~

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ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~determined using unobservable inputs, it is classified as Level 3 in the fair value hierarchy.~~

~~We did not record any impairment loss on our long-lived assets for the~~ ~~three and nine months ended~~ ~~September 30, 2021.~~

~~(4) 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~~ ~~nine months ended~~ ~~September 30, 2022.~~

~~(5) As discussed in Note 11 to our condensed consolidated financial statements, we incurred and paid $18 million for acquisition-related cost related to our Spirit merger during the~~ ~~nine months ended~~ ~~September 30, 2022.~~

(6) As part of our Embraer E190 retirement plan, we exchanged the title to an unencumbered CF34 engine with an engine owned by an Embraer E190 lessor. We recorded the $2 million difference between the carrying value of the original engine and the appraised value of the received engine as a loss for the ~~three and nine months ended September 31, 2022.~~

Note ~~11—~~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”). ~~On October 19, 2022, Spirit announced that its stockholders approved the Merger Agreement.~~

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”).

On October 26, 2022, in accordance with the Merger Agreement, JetBlue paid $2.50 per share to each holder of record as of September 12, 2022, the record date for the special meeting of Spirit stockholders. The total payment came to $272 million.

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, which was obtained on October 19, ~~2022; (b)~~2022, the receipt of applicable regulatory approvals, ~~including approvals from the U.S. Federal Communications Commission, U.S. Federal Aviation Administration~~ and the U.S. Department of Transportation; (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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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 the required regulatory approvals. Upon the~~payment of termination of the Merger Agreement under specified circumstances, Spirit will be required to pay JetBlue a breakup fee of $94 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 million (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. ("Frontier"), Top Gun Acquisition Corp., and Spirit, in accordance with its terms and pursuant to a Termination Agreement (the "Termination Agreement") among the parties. Consistent with the Frontier Merger Agreement and pursuant to the Termination Agreement, on July 29, 2022, Spirit paid $25 million to Frontier for the reimbursement of transaction expenses incurred by Frontier. In accordance with the Merger Agreement, on August 2, 2022, JetBlue reimbursed Spirit for the $25 million paid to Frontier. This amount is included as Other Assets in the Company's Consolidated Balance Sheet as of September 30, 2022 and reported as Payment for Acquisition in the company's condensed consolidated statements of cash flows for the nine months ended September 30, 2022.

operations.

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

OVERVIEW

~~Third~~First Quarter ~~2022~~2023 Results

InOur first quarter 2023 results were characterized by strong operational performance with higher revenue and better cost efficiency compared to the ~~third quarter of 2022, we returned to profitability with our first adjusted quarterly profit since the beginning of the COVID-19 pandemic. We also recorded the highest quarterly revenue~~same period in ~~JetBlue's history. However, our operating results in the~~ ~~third 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 ~~third quarter~~ ~~2022 results to our~~ ~~third 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.

•~~Third~~First quarter system capacity increased by ~~0.3% year-over-year and decreased by (0.5)% versus~~9.0% compared to the ~~third~~first quarter of ~~2019.~~2022.

•Revenue for the ~~third~~first quarter of ~~2022~~2023 increased by ~~30.0%~~34.1%, or ~~$590~~$592 million year-over-year, to ~~$2.6 billion. Compared~~$2.3 billion compared to the ~~third~~first quarter of ~~2019, revenu~~e ~~increased by 22.8%, or $476 million.~~2022.

•Operating revenue per available seat mile ("RASM") for the ~~third~~first quarter of ~~2022~~2023 increased by ~~29.6%~~23.0% year-over-year to ~~15.80 cents. This compares~~13.88 cents compared to ~~an increase~~the first quarter of ~~23.4% year-over-three.~~2022.

•Operating expense for the ~~third~~first quarter of ~~2022~~2023 increased by ~~35.7%~~22.2% year-over-year to ~~$2.4 billion. Compared~~$2.6 billion compared to the ~~third~~first quarter of ~~2019, operating expense increased by 31.8%, or $584 million.~~2022.

•Operating expense per available seat mile ("CASM") for the ~~third~~first quarter of ~~2022~~2023 increased by ~~35.3%~~12.1% year-over-year to ~~14.94~~15.32 cents. ~~This compares to an increase of 32.4% from the~~ ~~third quarter~~ ~~of 2019.~~

•~~Our operating expense for the~~ ~~third 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 3.5% to $1.6 billion year-over-year. This compares to an increase~~ ~~of 16.3%~~ ~~compared to the~~ ~~third quarter~~ ~~of 2019.~~

•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) increased by ~~3.2%~~1.2% year-over-year to ~~9.69~~10 cents infor the ~~third~~first quarter of ~~2022 compared to the third quarter of 2021~~.2023.

•Our reported ~~diluted earnings~~loss per share for the ~~third~~first quarter of 2023 and 2022 ~~2021,~~were $(0.58) and ~~2019 were $0.18, $0.41, and $0.63,~~$(0.79), respectively. Excluding ~~special items,~~ mark-to-market and certain net gains ~~and losses~~ on our investments, our adjusted ~~earnings~~loss per share(1) for the ~~third~~first quarter of ~~2022~~2023 was ~~$0.21.~~$(0.34). Excluding special items, our adjusted ~~(loss) diluted earnings~~loss per share(1) for the ~~third~~first quarter of ~~2021 and 2019 were $(0.12) and $0.59, respectively.~~2022 was $(0.80).

Network

~~Following~~We previously announced services to the success of our inaugural transatlantic service between New York's John F. Kennedy International Airport and London, which began in August 2021, we began service to London from Boston Logan International Airport ("Boston") on August 4, 2022.

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

~~Customer Experience~~

In September 2022, we announced the expansion of our JetBlue Travel Products Insider Experience program for JetBlue Vacations packages to Nassau, Bahamas. The Insider Experience is currently included, free of charge, in all JetBlue Vacations flight + hotel packages to Aruba, Cancún, Montego Bay, and Punta Cana, making Nassau the fifth destination to offer customers traveling to these destinations unique concierge services. The Insider Experience also features before, during and post-trip support.

In September 2022, JetBlue Travel Products announced the formation of Troupe, a free and collaborative group trip planning app. Aligned with JetBlue's efforts to make travel seamless for its customers, Troupe is a convenient app dedicated to

~~(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.~~following new destinations:

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

taking as much work off planners' plates as possible. Troupe brings groups together to decide on all the important details, so one person does not have to do it alone, presenting travelers with a stress-free experience from start to finish.

In October 2022, we announced a Cash + Points redemption option for JetBlue Vacations, which will allow customers to use TrueBlue points to book their entire vacation package (minus insurance and certain taxes & fees), where previously they could only use their points towards the flight portion of a flight + hotel package. For JetBlue Vacations customers who are ready to book travel but do not have enough TrueBlue points to cover the full cost of their entire trip, TrueBlue members are now able to make up the difference by using a combination of cash and points towards their flight, hotel, and even a rental car.


Destination						Service Expected to Commence

Paris, France						Summer 2023
Amsterdam, Netherlands						Summer 2023
Tallahassee, Florida						Early 2024

Environmental, Social, and Governance ("ESG")

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

•In ~~September 2022,~~February 2023, we announced ~~our plans to bolster our transition to~~a partnership with climate tech company CHOOOSE which focuses on sustainability and advancing the use of sustainable aviation fuel ("SAF") ~~with~~. 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 ~~agreement~~collaboration with ~~AIR COMPANY, an innovative carbon technology company creating carbon-negative alcohols and fuels from carbon dioxide ("CO~~2~~"). AIR COMPANY has developed and deployed a single-step process for CO~~2~~-derived fuel production using renewable electricity~~Shell Aviation to ~~create its novel AIRMADE~~TM SAF product. JetBlue's memorandum of understanding with AIR COMPANY comes on the heels of a direct capital investment into AIR COMPANY's Series A funding round from JetBlue's venture capital subsidiary, JetBlue Ventures.

~~With this commitment, JetBlue announced its intent to purchase 25~~provide 10 million gallons of ~~AIRMADE~~TMblended 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 ~~years, with a targeted start date~~million gallons more in ~~2027. AIR COMPANY joins JetBlue's growing list of SAF partnerships as it advances its goal to convert 10% of its total fuel usage to SAF on a blended basis by 2030.~~the third year either for LAX or other airports in the network.

Outlook for ~~2022~~2023

~~We are pleased with the momentum we have seen in demand and revenue trends which accelerated throughout the third quarter resulting in our return to profitability.~~ We expect ~~unit~~ revenue for the ~~fourth~~second quarter of ~~2022~~2023 to ~~increase~~increase between ~~15%~~4.5% to ~~19%~~8.5% compared to the same period in ~~2019.~~2022, sustained by strong demand trends. For the ~~fourth~~second quarter of ~~2022,~~2023, we expect capacity to increase in a range between 1%4.5% to 4%7.5% compared to the same period in ~~2019.~~2022. Full year ~~2022~~2023 capacity is expected to increase between 0%5.5% to 2%8.5% compared to ~~2019. Our previous expectation for full year 2022 capacity was an increase of between 0% to 3% versus 2019.~~2022.

~~Operating expenses per available seat mile, excluding fuel and related taxes, other non-airline operating expenses, and special items ("~~We expect CASM ~~Ex-Fuel")~~Ex-Fuel(1)for the ~~fourth~~second quarter of ~~2022 is expected~~2023 to increase ~~between 8.5%~~between 1.5% to ~~10.5% compared to the fourth quarter of 2019.~~ ~~This~~3.5%. The increase is primarily attributed to increased maintenance expense due to the ~~following factors:sequential step-down in capacity,~~ timing of maintenance ~~events,~~activity and ~~continued operational investments. As previously announced, we expect to deliver $250 million of cost savings from our new structural cost program~~growth in sales and our Embraer E190 retirement plan through 2024. The new structural cost program is expected to deliver run rate savings of approximately $150 million to $200 million through 2024 by leveraging the new Enterprise Planning team to help unlock structural efficiencies across the airline longer-term; and investing in automation across the business, particularly in support of end-of-life maintenance planning as we begin to retire aircraft.

We expect to show benefits from our new structural cost program and our E190 retirement plan in the fourth quarter of 2022 and through 2024. We expect full year 2022 CASM Ex-Fuel to increase between 13% to 14% compared to 2019 and to be profitable again in the fourth quarter.

~~RESULTS OF OPERATIONS~~

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

~~Overview~~

~~We reported net income of~~ ~~$57 million, operating income of~~ ~~$139 million~~ ~~and an operating margin of~~ ~~5.4%~~ for the three months ended September 30, 2022. This compares to a net income of $130 million, an operating income of $186 million and an operating margin of 9.4% for the three months ended September 30, 2021. Earnings per diluted share was ~~$0.18~~ ~~for the third quarter of 2022 compared to $0.40 of earnings per diluted share for the same period in 2021.~~

~~Our reported results for the three months ended September 30, 2022 included the effects of special items and certain gains and losses on our investments. Adjusting for these items(1), our adjusted net income(1)~~ ~~was $69 million, adjusted operating income(1)~~ ~~was $152 million, adjusted operating margin(1)~~ ~~was 5.9%, and adjusted earnings per diluted share(1)~~ ~~was $0.21 for the three months ended September 30, 2022.~~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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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 ~~September 30, 2021~~March 31, 2023 included the effects of special ~~items.~~items and certain net gains on our investments. Adjusting for these ~~special~~ items,~~(1)~~,our adjusted net loss(1)was ~~$39~~$111 million, adjusted operating loss(1) was $0$130 million, adjusted operating margin(1) was ~~0.0%~~(5.6)%, and adjusted loss per share(1) was ~~$(0.12)~~$(0.34) for the three months ended ~~September 30, 2021.~~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, ~~("DOT")~~ is arrival within 14 minutes of scheduled arrival time. In the ~~third~~first quarter of ~~2022,~~2023, our system wide on-time performance was ~~67.2%~~ 70.4% compared to ~~63.5%~~65.6% for ~~the same~~

~~period in 2021. Our completion factor~~ ~~was 97.7%~~ ~~in each of the third quarter of 2022 and~~ the same period in ~~2021.~~

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)	(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended September 30,						Year-over-Year Change					(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended March 31,						Year-over-Year Change
		2022			2021			$		%				2023			2022			$		%
Passenger revenue	Passenger revenue	$	2,415		$	1,856		$	559	30.1	%		Passenger revenue	$	2,182		$	1,603		$	579	36.1	%
Other revenue	Other revenue	147			116			31		27.1			Other revenue	146			133			13		9.4
Total operating revenues	Total operating revenues	$	2,562		$	1,972		$	590	30.0	%		Total operating revenues	$	2,328		$	1,736		$	592	34.1	%

Average Fare	Average Fare	$	229.95		$	204.50		$	25.45	12.4	%		Average Fare	$	214.07		$	195.99		$	18.08	9.2	%
Yield per passenger mile (cents)	Yield per passenger mile (cents)	17.30			14.37			2.93		20.4			Yield per passenger mile (cents)	16.31			14.67			1.64		11.2
Passenger revenue per ASM (cents)	Passenger revenue per ASM (cents)	14.89			11.48			3.41		29.7			Passenger revenue per ASM (cents)	13.01			10.42			2.59		24.9
Operating revenue per ASM (cents)	Operating revenue per ASM (cents)	15.80			12.20			3.60		29.6			Operating revenue per ASM (cents)	13.88			11.29			2.59		23.0
Average stage length (miles)	Average stage length (miles)	1,191			1,320			(129)		(9.8)			Average stage length (miles)	1,199			1,231			(32)		(2.6)
Revenue passengers (thousands)	Revenue passengers (thousands)	10,502			9,075			1,427		15.7			Revenue passengers (thousands)	10,192			8,177			2,015		24.6
Revenue passenger miles (millions)	Revenue passenger miles (millions)	13,963			12,913			1,050		8.1			Revenue passenger miles (millions)	13,375			10,927			2,448		22.4
Available Seat Miles (ASMs) (millions)	Available Seat Miles (ASMs) (millions)	16,217			16,168			49		0.3			Available Seat Miles (ASMs) (millions)	16,769			15,383			1,386		9.0
Load Factor	Load Factor	86.1		%	79.9		%			6.2		pts.	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 ~~$559~~$579 million,, or ~~30.1%~~36.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021,~~2022, was primarily driven by the return in demand for travel as ~~we continue to recover~~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 TrueBlue® points. It also includes revenue from the ~~COVID-19 pandemic. Revenue passengers~~ ~~increased~~ to ~~10.5 million~~ ~~for the three months ended September 30, 2022~~sale of vacation packages, ground handling fees received from ~~9.1 million for the same period in 2021.~~

other airlines, and 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.

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over-year increase in other revenue of $13 million, or 9.4%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend and acquisitions.

Operating Expenses

In 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)	(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended September 30,				Year-over-Year Change				Cents per ASM				(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
		2022		2021		$		%		2022	2021	% Change			2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	Aircraft fuel and related taxes	$	825	$	443	$	382	86.0	%	5.08	2.74	85.5	%	Aircraft fuel and related taxes	$	765	$	571	$	194	34.1	%	4.56	3.71	23.0	%
Salaries, wages and benefits	Salaries, wages and benefits	675		620		55		8.9		4.16	3.83	8.6		Salaries, wages and benefits	741		688		53		7.7		4.42	4.47	(1.2)
Landing fees and other rents	Landing fees and other rents	131		182		(51)		(27.9)		0.81	1.12	(28.1)		Landing fees and other rents	160		132		28		21.1		0.95	0.86	11.1
Depreciation and amortization	Depreciation and amortization	147		140		7		5.2		0.90	0.86	4.9		Depreciation and amortization	151		143		8		5.6		0.90	0.93	(3.2)
Aircraft rent	Aircraft rent	30		25		5		20.7		0.19	0.16	20.4		Aircraft rent	32		26		6		24.4		0.19	0.17	14.1
Sales and marketing	Sales and marketing	81		60		21		35.4		0.50	0.37	35.0		Sales and marketing	76		57		19		32.8		0.45	0.37	21.9
Maintenance, materials and repairs	Maintenance, materials and repairs	178		205		(27)		(13.0)		1.10	1.27	(13.3)		Maintenance, materials and repairs	176		152		24		15.2		1.04	0.99	5.7
Other operating expenses	Other operating expenses	343		297		46		15.4		2.12	1.84	15.0		Other operating expenses	357		334		23		6.9		2.13	2.17	(1.9)
Special items	Special items	13		(186)		199		(106.8)		0.08	(1.15)	(106.8)		Special items	112		—		112		NM		0.68	—	NM
Total operating expenses	Total operating expenses	$	2,423	$	1,786	$	637	35.7	%	14.94	11.04	35.3	%	Total operating expenses	$	2,570	$	2,103	$	467	22.2	%	15.32	13.67	12.1	%

Total operating expenses excluding special items(1)	Total operating expenses excluding special items(1)	$	2,410	$	1,972	$	438	22.2	%	14.86	12.19	21.9	%	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 ~~$382~~$194 million, or 34.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~2022. The average fuel price for the three months ended ~~September 30, 2022~~ March 31, 2023 increased by ~~84.0%~~20.8% to ~~$3.84~~$3.50 per gallon. Our fuel consumption ~~for this period~~ increased by ~~1.1%~~11.1%, or 222 million gallons, due to the increase in capacity as demand for travel returned.

Salaries, Wages and Benefits

Salaries, wages and benefits increased ~~$55~~by $53 million, or ~~8.9%~~7.7%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021.~~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 ~~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 to support our operation. As~~ of ~~September 30, 2022, we have approximately 24,500 crewmembers compared to approximately 21,250 crewmembers at September 30, 2021.~~14%. The average number of full-time equivalent crewmembers increased by ~~24.4%~~4.5% compared to the same period in ~~2021.~~2022.

Landing Fees and Other Rents

Landing fees and other rents ~~decreased $51~~increased by $28 million, or ~~(27.9)%~~21.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021 primarily~~2022 primarily due to ~~a decrease in rates offset by a 10.3%~~an 11.6% increase in ~~departures.~~departures and our operations and growth in high-cost terminals.

Depreciation and Amortization

Depreciation and amortization increased $7by $8 million, or ~~5.2%~~5.6%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 primarily driven by the addition of ~~eight~~of 10 new aircraft that were placed into service since ~~September 30, 2021. The average number of our operating aircraft~~March 31, 2022.

Aircraft Rent

Aircraft rent increased by ~~3.7% during~~$6 million, or 24.4%, for the three months ended ~~September 30, 2022 as~~March 31, 2023 compared to the same period in ~~2021.~~2022 primarily driven by an increase in leased engines since March 31, 2022 which 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 ~~$21~~$19 million, or ~~35.4%~~32.8%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021~~2022 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 1.4~~ ~~million~~, ~~or 15.7%,~~ ~~during the three months ended September 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.

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to return in demand as we continue to recover from the pandemic. Revenue passengers increased by 2 million, or 24.6% year-over-year.

Materials and Repairs

Maintenance materials and repairs ~~decreased $27~~increased $24 million, or ~~(13.0)%~~15.2%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021,~~2022, primarily driven by the timing of engine ~~maintenance, offset by an increase in~~and heavy maintenance ~~and power by~~visits, the ~~hour based maintenance driven by~~aging of our fleet, and the increase in ~~aircraft utilization.~~flying.

Other Operating Expenses

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

Other operating expenses increased ~~$46~~$23 million, or ~~15.4%~~6.9%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the same period in ~~2021 as we ramped up the level of our operations~~2022, primarily due to an increase in ~~response to the return~~airport services resulting from an 11.6% increase in ~~demand for air travel.~~departures.

Special Items

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

•~~$11 million in acquisition costs relating to our merger with Spirit; and~~

•~~$2 million relating to engine exchanges related to the retirement of our Embraer E190 fleet.~~

Special items for the three months ended ~~September 30, 2021~~March 31, 2023 included the following:

•~~Contra-expense~~Expenses of ~~$(186)~~$17 million ~~which represents the amount~~relating to our acquisition of ~~federal payroll support grants utilized during the period.~~Spirit Airlines; and

~~Nine Months Ended September 30, 2022 vs. 2021~~•Expense of $95 million related to a pilot union contract ratification payment and adjustment to other benefit-related items.

~~Overview~~

~~We reported a net loss of~~ ~~$386 million, an operating loss of $341 million and an operating margin of (5.1)%~~There were no special items for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. ~~This compares to a net loss of $53 million, an operating income~~ ~~of $39 million and an operating margin of 0.9% for the nine months ended September 30, 2021. Loss per share wa~~s ~~$(1.20)~~ ~~for the nine months ended September 30, 2022 compared to $(0.17) for the same period in 2021.~~

~~Our reported results for the nine months ended September 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~~ ~~$332 million, adjusted operating loss(1)~~ ~~was~~ ~~$284 million, adjusted operating margin(1)~~ ~~was~~ ~~(4.2)%, and adjusted loss per share(1)~~ ~~was $(1.03) for the nine months ended September 30, 2022.~~

~~Our reported results for the nine months ended September 30, 2021 included the effects of special items. Adjusting for these special items, our adjusted net loss(1)~~ ~~was $685 million, adjusted operating loss(1)~~ ~~was $802 million, adjusted operating margin(1)~~ ~~was (19.1)%, and adjusted loss per share(1)~~ ~~was $(2.16) for the nine months ended September 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.

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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) Nine Months Ended September 30, Year-over-Year Change
2022 2021 $ %
Passenger revenue $ 6,319 $ 3,913 $ 2,406 61.5 %
Other revenue 424 290 134 46.4
Total operating revenues $ 6,743 $ 4,203 $ 2,540 60.4 %
Average Fare $ 217.34 $ 182.22 $ 35.12 19.3 %
Yield per passenger mile (cents) 16.26 13.26 3.00 22.7
Passenger revenue per ASM (cents) 13.17 10.06 3.11 30.9
Operating revenue per ASM (cents) 14.05 10.80 3.25 30.0
Average stage length (miles) 1,218 1,293 (75) (5.8)
Revenue passengers (thousands) 29,075 21,476 7,599 35.4
Revenue passenger miles (millions) 38,857 29,524 9,333 31.6
Available Seat Miles (ASMs) (millions) 48,005 38,902 9,103 23.4
Load Factor 80.9 % 75.9 % 5.0 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 $2.4 billion, or 61.5%,~~ for the nine months ended September 30, 2022 compared to the same period in 2021, was primarily driven by the return in demand for travel and a 19.3% increase in fares, as we continue to recover from the COVID-19 pandemic. Revenue passengers increased by ~~35.4% to 29.1 million~~ ~~for the nine months ended September 30, 2022 from~~ ~~21.5 million~~ ~~for the same period in 2021.~~

~~Operating Expenses~~

~~In detail, our operating costs per ASM were as follows:~~

(in millions; per ASM data in cents; percent changes based on unrounded numbers) Nine Months Ended September 30, Year-over-Year Change Cents per ASM
2022 2021 $ % 2022 2021 % Change
Aircraft fuel and related taxes $ 2,305 $ 973 $ 1,332 137.0 % 4.80 2.50 92.0 %
Salaries, wages and benefits 2,058 1,718 340 19.8 4.29 4.42 (2.9)
Landing fees and other rents 412 470 (58) (12.5) 0.86 1.21 (29.1)
Depreciation and amortization 435 398 37 9.4 0.91 1.02 (11.3)
Aircraft rent 83 76 7 10.0 0.17 0.19 (10.9)
Sales and marketing 216 130 86 66.6 0.45 0.33 35.0
Maintenance, materials and repairs 492 472 20 4.0 1.02 1.22 (15.7)
Other operating expenses 1,026 768 258 33.5 2.14 1.97 8.2
Special items 57 (841) 898 106.8 0.12 (2.16) 105.5
Total operating expenses $ 7,084 $ 4,164 $ 2,920 70.1 % 14.76 10.70 37.9 %
Total operating expenses excluding special items(1)
$ 7,027 $ 5,005 $ 2,022 40.4 % 14.64 12.86 13.8 %

~~Aircraft Fuel and Related Taxes~~

~~Aircraft fuel and related taxes~~ ~~increased by $1.3 billion, or 137.0%,~~ ~~for the nine months ended September 30, 2022 compared to the same period in 2021. The average fuel price for the nine months ended September 30, 2022 increased by~~ ~~89.4% to $3.68~~ ~~per gallon. Our fuel consumption~~ ~~increased by 25.1%, or 125 million~~ ~~gallons, due to the increase in capacity as~~

~~(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~~

~~demand for travel returned. Scheduled departures increased to 246,653 flights, or 31.0%, for the nine months ended September 30, 2022.~~

~~Salaries, Wages and Benefits~~

~~Salaries, wages and benefits~~ ~~increased by $340 million, or 19.8%~~, for the nine months ended September 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 September 30, 2022, we have approximately 24,500 crewmembers compared to approximately 21,250 crewmembers at September 30, 2021.

~~Landing Fees and Other Rents~~

Landing fees and other rents decreased by $58 million, or (12.5%), for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to a decrease in rates offset by a 31% increase in departures.

~~Depreciation and Amortization~~

Depreciation and amortization increased by $37 million, or 9.4%, for the nine months ended September 30, 2022 compared to the same period in 2021. This increase was primarily attributed to the addition of ~~eight~~ ~~new aircraft that were placed into service since September 30, 2021. The average number of aircraft increased by 5.0% during the nine months ended September 30, 2022 as compared to the same period in 2021.~~

~~Aircraft Rent~~

~~Aircraft rent~~ ~~increased $7 million, or 10.0%, for the nine months ended September 30, 2022 compared to the same period in 2021. The increase was driven primarily by an increase of 24 leased engines in 2022.~~

~~Sales and Marketing~~

~~Sales and marketing~~ ~~increased $86 million, or 66.6%~~, for the nine months ended September 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 nine months ended September 30, 2022 increased by 7.6 ~~million, or 35.4%, year-over-year.~~

~~Maintenance Materials and Repairs~~

~~Maintenance materials and repairs~~ ~~increased $20 million, or 4.0%~~, for the nine months ended September 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 $258 million, or 33.5%, for the nine months ended September 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 nine months ended September 30, 2022 included the following:~~

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

•~~$18 million in acquisition costs relating to our merger with Spirit;~~

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

•~~$2 million relating to engine exchanges as part of our Embraer E190 retirement plan.~~

~~For the nine months ended September 30, 2021, special items included:~~

~~(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~~

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

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

Operational Statistics

The following table sets forth our operating statistics for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		Three Months Ended September 30,						Year-over-Year Change		Nine Months Ended September 30,						Year-over-Year Change			Three Months Ended March 31,						Year-over-Year Change
(percent changes based on unrounded numbers)	(percent changes based on unrounded numbers)	2022			2021			%		2022			2021			%		(percent changes based on unrounded numbers)	2023			2022			%
Operational Statistics	Operational Statistics																	Operational Statistics
Revenue passengers (thousands)	Revenue passengers (thousands)	10,502			9,075			15.7		29,075			21,476			35.4		Revenue passengers (thousands)	10,192			8,177			24.6
Revenue passenger miles (RPMs) (millions)	Revenue passenger miles (RPMs) (millions)	13,963			12,913			8.1		38,857			29,524			31.6		Revenue passenger miles (RPMs) (millions)	13,375			10,927			22.4
Available seat miles (ASMs) (millions)	Available seat miles (ASMs) (millions)	16,217			16,168			0.3		48,005			38,902			23.4		Available seat miles (ASMs) (millions)	16,769			15,383			9.0
Load factor	Load factor	86.1		%	79.9		%	6.2	pts	80.9		%	75.9		%	5.0	pts	Load factor	79.8		%	71.0		%	8.8	pts
Aircraft utilization (hours per day)	Aircraft utilization (hours per day)	10.1			10.1			—		10.1			8.3			21.7		Aircraft utilization (hours per day)	11.1			9.9			12.1

Average fare	Average fare	$	229.95		$	204.50		12.4		$	217.34		$	182.22		19.3		Average fare	$	214.07		$	195.99		9.2
Yield per passenger mile (cents)	Yield per passenger mile (cents)	17.30			14.37			20.4		16.26			13.26			22.7		Yield per passenger mile (cents)	16.31			14.67			11.2
Passenger revenue per ASM (cents)	Passenger revenue per ASM (cents)	14.89			11.48			29.7		13.17			10.06			30.9		Passenger revenue per ASM (cents)	13.01			10.42			24.9
Operating revenue per ASM (cents)	Operating revenue per ASM (cents)	15.80			12.20			29.6		14.05			10.80			30.0		Operating revenue per ASM (cents)	13.88			11.29			23.0
Operating expense per ASM (cents)	Operating expense per ASM (cents)	14.94			11.04			35.3		14.76			10.70			37.9		Operating expense per ASM (cents)	15.32			13.67			12.1
Operating expense per ASM, excluding fuel(1)	Operating expense per ASM, excluding fuel(1)	9.69			9.39			3.2		9.75			10.29			(5.3)		Operating expense per ASM, excluding fuel(1)	9.99			9.87			1.2

Departures	Departures	84,805			76,918			10.3		246,653			188,220			31.0		Departures	87,481			78,393			11.6
Average stage length (miles)	Average stage length (miles)	1,191			1,320			(9.8)		1,218			1,293			(5.8)		Average stage length (miles)	1,199			1,231			(2.6)
Average number of operating aircraft during period	Average number of operating aircraft during period	286			276			3.7		284			270			5.0		Average number of operating aircraft during period	278.2			282.0			(1.3)
Average fuel cost per gallon, including fuel taxes	Average fuel cost per gallon, including fuel taxes	$	3.84		$	2.08		84.0		$	3.68		$	1.94		89.4		Average fuel cost per gallon, including fuel taxes	$	3.50		$	2.90		20.8
Fuel gallons consumed (millions)	Fuel gallons consumed (millions)	215			213			1.1		626			501			25.1		Fuel gallons consumed (millions)	219			197			11.1
Average number of full-time equivalent crewmembers	Average number of full-time equivalent crewmembers									20,013			16,088			24.4		Average number of full-time equivalent crewmembers	20,167			19,304			4.5

We expect our operating results to significantly fluctuate from quarter-to-quarter in the future ~~due to the uncertainties related to economic conditions, cost~~as a result of ~~aircraft fuel, recovery from the COVID-19 pandemic, and~~ various ~~other~~ 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 cut back our summer capacity plans to help protect our operations. Even with the flight cutbacks, we still expect challenges in the operating environment this summer. 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. Except for uncertainty related to 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.

Operational challenges have had an impact on our business in the first quarter of 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 some of our aircraft engines using new technology have led to grounded aircraft events. These challenges have resulted - and are expected to continue to result - in flight delays and cancellations.

CONSOLIDATED BALANCE SHEET ANALYSIS

The following is a discussion of the changes in certain balance sheet data between March 31, 2023, and December 31, 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.

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PART I. FINANCIAL INFORMATION

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

~~CONSOLIDATED BALANCE SHEET ANALYSIS~~

~~The following is a discussion of the significant changes between September 30, 2022, and December 31, 2021.~~

(in millions)
Selected Balance Sheet Data: September 30, 2022 December 31, 2021 $ Change % Change
ASSETS
Cash and cash equivalents 1,401 2,018 (617) (30.6) %
Investment securities 692 824 (132) (16.0) %
Receivables, less allowance (2022-$3; 2021-$3) 298 207 91 44.1 %
Flight equipment 11,579 11,161 418 3.7 %
LIABILITIES
Air traffic liability 1,745 1,618 127 7.9 %
Other accrued liabilities 421 359 62 17.5 %
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS 3,235 3,651 (416) (11.4) %


(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	%

Cash and cash equivalents

Cash and cash equivalents ~~decreased~~increased by ~~$617~~$291 million, or ~~(30.6)%~~27.9%, to ~~$1.4~~$1.3 billion as of ~~September 30, 2022.~~March 31, 2023. Notable ~~outflows~~inflows during the ~~nine~~three months ended ~~September 30, 2022 include: $599 million in capital expenditures inclusive~~March 31, 2023 included net proceeds from the sale of ~~predelivery deposits for flight equipment, $21 million of net purchases in~~ investment securities of $165 million and ~~$255 million in repayment~~proceeds from a sale leaseback transaction of ~~long-term debt and finance lease obligations. These outflows were partially offset by net cash provided by operating activities of $321~~$38 million.

Investment securities

Investment securities decreased by ~~$132~~$165 million, or ~~(16.0)%~~31.6%, primarily driven by the ~~net purchases~~maturities of our commercial paper and time deposits ~~which had maturities between three and twelve months~~that were outstanding at ~~September 30,~~December 31, 2022.

~~Receivables,~~Inventories, less allowance

~~Receivables~~ 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 ~~$91~~$34 million, or 29.0%, ~~primarily~~ driven by an increase in prepaid credit card ~~receivables~~fees in line with our increase in air traffic liability.

Accounts payable

Accounts payable increased by $94 million, or 17.6%, primarily due to ~~an increase~~increases in ~~sale~~s.

~~Flight equipment~~

~~Flight equipment increased by $418 million, or 3.7%, principally driven by aircraft capital expenditures made in the first nine months~~operating expenses coupled with timing 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.~~vendor payments.

Air traffic liability

Air traffic liability increased by ~~$127~~$345 million, or ~~7.9%~~21.8%, driven by the ~~improvements in~~strengthening of 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.~~air travel.

Other accrued liabilities

Other accrued liabilities increased by ~~$62~~$68 million, or ~~17.5%~~14.2%, primarily asdue 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 ~~result of an~~later date. The increase in passenger tax ~~liabilities~~.

~~Long-term debt and finance lease obligations~~liability correlates to the increase in demand for travel.

~~Long-term debt and finance lease obligations decreased by $416 million, or (11.4)%, mainly due to regularly scheduled principal payments made in the first~~ ~~nine months~~ ~~of 2022.~~

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

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

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

~~$2.1 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 ~~$321~~ $405 million and ~~$1.8 billion~~$247 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Higher~~Lower losses, principally driven by higher operating expenses during the nine months ended September 30, 2022, coupled with significant cash flow benefits from the federal grants received under various payroll support programs and the initial cash payments associated with our new co-branded credit card agreements noted for the nine months ended September 30, 2021 allrevenues contributed to the ~~$1.5 billion decrease~~increase in operating cash flows.

Investing Activities

During the ~~nine~~three months ended ~~September 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 ~~$172 million related to the purchase of four Airbus A220 aircraft, one Airbus A321neo aircraft, and several spare engines; $51~~$17 million for spare part ~~purchases; $165~~purchases, $49 million in work-in-progress relating to flight ~~equipment;~~equipment, and ~~$116~~$49 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for ~~$95~~$19 million. ~~Investing activities also included the net purchase of investment securities of $21 million and $25 million paid to Spirit pursuant to our Merger Agreement.~~

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

Investing activities for the ~~nine months ended September 30, 2021~~current year period also included ~~$70~~$200 million ofin net ~~proceeds from maturities~~purchases of investment securities.

Financing Activities

Financing activities for the ~~nine~~three months ended ~~September 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 ~~$255~~$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 acquisition of Spirit.~~

~~Financing activities for the nine months ended September 30, 2021 primarily consisted of debt repayments of $1.8 billion~~

~~(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~~

~~on our outstanding debt and finance lease obligations which included the following payoffs:~~

•~~$722 million on our Term Loan;~~

•~~$550 million on our Revolving Facility; and~~

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

~~These principal payments were partially offset by:~~

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

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

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

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 $1.3 billion at September 30, 2022 compared to $170~~increased by $80 million ~~at December 31, 2021. Our working capital decreased by $1.1 billion~~ 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.

Contractual Obligations

Our contractual obligations at ~~September 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)	$	4.4	$	0.1	$	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		0.6		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)	8.0		0.2		1.5		2.1		1.8		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		0.1		0.4		0.4		0.4		0.4		0.8		Other obligations(3)	2.2		0.4		0.4		0.4		0.5		0.5		—
Total	Total	$	15.9	$	0.4	$	2.7	$	3.0	$	2.6	$	2.9	$	4.3	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 ~~September 30, 2022. In October 2022, we entered into the Second Amended and Restated Agreement. See Note 3 to condensed consolidated financial statements. Also in October 2022, we~~March 31, 2023.

(1) ~~paid $2.50 per share to each holder of record in accordance with the Merger Agreement totaling $272 million. See Note 11 to condensed consolidated financial statements.~~

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

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

As of ~~September 30, 2022, we believe~~March 31, 2023, we are in compliance with the covenants of our debt and lease agreements. We have approximately ~~$40~~$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.

~~(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~~

As of ~~September 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, ~~4 Airbus A321neo long range aircraft,~~ 1215 Airbus A220 aircraft, and 6058 Embraer E190 aircraft. Of our fleet, ~~219~~ 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 ~~September 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 ~~September 30, 2022~~March 31, 2023 is as ~~follows:~~follows(1):

Year Airbus A321neo Airbus A220 Total
2022 2 2 4
2023 11 18 29
2024 13 30 43
2025 11 24 35
2026 12 14 26
2027 14 — 14
Total 63 88 151

~~In September 2022, we signed an amendment~~


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

(1) Our aircraft order book is subject to change based on modifications to the ~~Airbus A220 purchase agreement, delaying~~contractual agreements or changes in the delivery dates for certain A220 aircraft. The table above represents the current delivery schedule set forth in our Airbus order book as of September 30, 2022. However, we note that due to Airbus delivery delays, we anticipate delivery in 2023 of 14 A220 aircraft and 8 A321neo aircraft.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.

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.

~~(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~~

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) contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ~~("the Securities Act"~~(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, ~~("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 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 to delays by those suppliers; our dependence on~~imported from outside the ~~New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology;~~United States; the outcome of ~~the lawsuit~~lawsuits filed ~~by the Department of Justice and certain state Attorneys General~~ against us related to our Northeast Alliance ~~entered into~~ with American Airlines our being subject to potential unionization, work stoppages, slowdowns or increased labor costs; our presence in some international emerging markets that may experience political or economic instability or may subject us to legal risk; reputational and business risk from information security breaches or cyber-attacks; changes in or additional domestic or foreign government regulation, including new or increased tariffs; changes in our industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; adverse weather conditions or natural disasters; external geopolitical events and conditions;Group Inc.; the occurrence of any event, change or other circumstances that could give rise to the right of JetBlue or Spirit Airlines Inc. ("Spirit") or both of them to terminate the Merger Agreement; failure to obtain ~~applicable regulatory approval~~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 ~~otherwise and~~at all; risks associated with the ~~potential financial consequences thereof; failure to satisfy other closing conditions to the transaction with Spirit; failure~~pendency of the ~~parties to consummate~~Merger and related business disruptions; indebtedness following consummation of the ~~transaction; JetBlue’s ability to finance the transaction with Spirit~~Merger and ~~the indebtedness JetBlue expects to incur in connection with the transaction;~~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 ~~successfully integrate Spirit’s operations~~negotiation of labor agreements and labor costs; the impact of the Merger on JetBlue’s earnings per share; risks associated with ~~those~~cybersecurity incidents; heightened regulatory requirements concerning data security compliance; risks associated with reliance on, and potential failure of, ~~JetBlue; the possibility that such integration may be more difficult, time-consuming~~automated systems; our inability to attract and retain qualified crewmembers; our being subject to potential unionization, work stoppages, slowdowns or ~~costly than expected or that operating costs~~increased labor costs; reputational and business ~~disruption (including, without limitation, disruptions~~risk from an accident or 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 ~~relationships~~governmental support programs; risks associated with ~~employees, customers or suppliers) may be greater than expected in connection with the transaction with Spirit;~~seeking short-term additional financing liquidity; failure to realize ~~anticipated benefits~~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 ~~combined operations;~~impacts of federal budget constraints or federally imposed furloughs; climate change; changes in government regulations in our 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; and risks associated with the ~~combined company’s services; the growth, change and competitive landscape~~implementation 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 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 transaction with Spirit; and ongoing and increase in costs related to IT network security.5G wireless technology near airports that we operate in. It is routine for our internal projections

~~(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~~

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 ~~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 ~~or SEC,~~

(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 ~~JetBlue's 2021 Annual Report on~~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, ~~("GAAP").~~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 ("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 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, fleet retirement costs, and expenses relating to the 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 September 30, Nine Months Ended September 30,
2022 2021 2022 2021
($ in millions; per ASM data in cents) $ per ASM $ per ASM $ per ASM $ per ASM
Total operating expenses $ 2,423 $ 14.94 $ 1,786 $ 11.04 $ 7,084 $ 14.76 $ 4,164 $ 10.70
Less:
Aircraft fuel and related taxes 825 5.08 443 2.74 2,305 4.80 973 2.50
Other non-airline expenses 14 0.09 11 0.06 43 0.09 30 0.07
Special items 13 0.08 (186) (1.15) 57 0.12 (841) (2.16)
Operating expenses, excluding fuel $ 1,571 $ 9.69 $ 1,518 $ 9.39 $ 4,679 $ 9.75 $ 4,002 $ 10.29

~~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 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 Sept,								Nine Months Ended Sept 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	$	2,423	$	14.94	$	1,839	$	11.29	$	7,084	$	14.76	$	5,490	$	11.50	Total operating expenses	$	2,570	$	15.32	$	2,103	$	13.67
Less:	Less:																	Less:
Aircraft fuel and related taxes	Aircraft fuel and related taxes	825		5.08		471		2.89		2,305		4.80		1,392		2.92		Aircraft fuel and related taxes	765		4.56		571		3.71
Other non-airline expenses	Other non-airline expenses	14		0.09		10		0.07		43		0.09		32		0.07		Other non-airline expenses	18		0.09		14		0.09
Special items	Special items	13		0.08		—		—		57		0.12		14		0.03		Special items	112		0.68		—		—
Operating expenses, excluding fuel	Operating expenses, excluding fuel	$	1,571	$	9.69	$	1,358	$	8.33	$	4,679	$	9.75	$	4,052	$	8.48	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)

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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 September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2022 2021 2022 2021
Total operating revenues $ 2,562 $ 1,972 $ 6,743 $ 4,203
Total operating expenses $ 2,423 $ 1,786 $ 7,084 $ 4,164
Less: Special items 13 (186) 57 (841)
Total operating expenses excluding special items $ 2,410 $ 1,972 $ 7,027 $ 5,005
Operating income (loss) $ 139 $ 186 $ (341) $ 39
Add back: Special items 13 (186) 57 (841)
Operating income (loss) excluding special items $ 152 $ — $ (284) $ (802)
Operating margin excluding special items 5.9 % — % (4.2) % (19.1) %
Income (loss) before income taxes $ 105 $ 190 $ (443) $ (100)
Add back: Special items 13 (186) 57 (841)
Less: Net gain (loss) on investments — 54 (4) 57
Income (loss) before income taxes excluding special items and net gain (loss) on investments $ 118 $ (50) $ (382) $ (998)
Pre-tax margin excluding special items 4.6 % (2.6) % (5.7) % (23.8) %
Net income (loss) $ 57 $ 130 $ (386) $ (53)
Add back: Special items 13 (186) 57 (841)
Less: Income tax (expense) benefit related to special items 1 (55) 7 (250)
Less: Net gain (loss) on investments — 54 (4) 57
Less: Income tax (expense) benefit related to net gain (loss) on investments — (16) — (16)
Net income (loss) excluding special items and net gain (loss) on investments $ 69 $ (39) $ (332) $ (685)
Earnings Per Common Share:
Basic $ 0.18 $ 0.41 $ (1.20) $ (0.17)
Add back: Special items, net of tax 0.03 (0.41) 0.16 (1.86)
Less: Net gain (loss) on investments, net of tax — 0.12 (0.01) 0.13
Basic excluding special items and net gain (loss) on investments $ 0.21 $ (0.12) $ (1.03) $ (2.16)
Diluted $ 0.18 $ 0.40 $ (1.20) $ (0.17)
Add back: Special items, net of tax 0.03 (0.40) 0.16 (1.86)
Less: Net gain (loss) on investments, net of tax — 0.12 (0.01) 0.13
Diluted excluding special items and net gain (loss) on investments $ 0.21 $ (0.12) $ (1.03) $ (2.16)

~~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 September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2022 2019 2022 2019
Total operating revenues $ 2,562 $ 2,086 $ 6,743 $ 6,063
Total operating expenses $ 2,423 $ 1,839 $ 7,084 $ 5,490
Less: Special items 13 — 57 14
Total operating expenses excluding special items $ 2,410 $ 1,839 $ 7,027 $ 5,476
Operating income (loss) $ 139 $ 247 $ (341) $ 573
Add back: Special items 13 — 57 14
Operating income (loss) excluding special items $ 152 $ 247 $ (284) $ 587
Operating margin excluding special items 5.9 % 11.8 % (4.2) % 9.7 %
Income (loss) before income taxes $ 105 $ 254 $ (443) $ 548
Add back: Special items 13 — 57 14
Less: Net gain (loss) on investments — 15 (4) 15
Income (loss) before income taxes excluding special items and net gain (loss) on investments $ 118 $ 239 $ (382) $ 547
Pre-tax margin excluding special items 4.6 % 11.4 % (5.7) % 9.0 %
Net income (loss) $ 57 $ 187 $ (386) $ 408
Add back: Special items 13 — 57 14
Less: Income tax (expense) benefit related to special items 1 — 7 3
Less: Net gain (loss) on investments — 15 (4) 15
Less: Income tax (expense) benefit related to net gain (loss) on investments — (4) — (4)
Net income (loss) excluding special items and net gain (loss) on investments $ 69 $ 176 $ (332) $ 408
Earnings Per Common Share:
Basic $ 0.18 $ 0.63 $ (1.20) $ 1.36
Add back: Special items, net of tax 0.03 — 0.16 0.03
Less: Net gain (loss) on investments, net of tax — 0.04 (0.01) 0.04
Basic excluding special items and net gain (loss) on investments $ 0.21 $ 0.59 $ (1.03) $ 1.35
Diluted $ 0.18 $ 0.63 $ (1.20) $ 1.35
Add back: Special items, net of tax 0.03 — 0.16 0.03
Less: Net gain (loss) on investments, net of tax — 0.04 (0.01) 0.03
Diluted excluding special items and net gain (loss) on investments $ 0.21 $ 0.59 $ (1.03) $ 1.35

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

Free Cash Flow

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


NON-GAAP FINANCIAL MEASURE	NON-GAAP FINANCIAL MEASURE					NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW	RECONCILIATION OF FREE CASH FLOW					RECONCILIATION OF FREE CASH FLOW
		Nine Months Ended September 30,					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	$	321	$	1,755	Net cash provided by operating activities	$	405	$	247
Less: Capital expenditures	Less: Capital expenditures	(483)		(770)		Less: Capital expenditures	(172)		(85)
Less: Predelivery deposits for flight equipment	Less: Predelivery deposits for flight equipment	(116)		(33)		Less: Predelivery deposits for flight equipment	—		(49)
Free Cash Flow	Free Cash Flow	$	(278)	$	952	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 ~~September 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 ~~$321 million.~~ $282 million. As of ~~September 30, 2022,~~March 31, 2023, we have hedged ~~27%~~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 ~~$64~~$48 million having floating interest rates. As of ~~September 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 ("CEO"), and our Chief Financial Officer ("CFO"), to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2022.~~March 31, 2023. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 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 ~~September 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, ~~as supplemented by Part II, Item 1A "Risk Factors" of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022,~~ 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 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.~~10-K.

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

In accordance with the Payroll Support Program Agreement, the Payroll Support Program Extension Agreement, the Payroll Support 3 Agreement, and the Loan Agreement with Treasury, we have been prohibited from making any share repurchases through September 30, 2022. We suspended our share repurchase program as of March 31, 2020, and it remains suspended. The acquisition of treasury stock reflected on our condensed consolidated statement of cash flows for the ~~nine months ended~~ ~~September 30, 2022 and 2021 represents the return of shares to satisfy tax payments associated with crewmember stock compensation that vested during the respective periods.~~None.

~~In consideration for the Payroll Support 2 Payments, during the~~ ~~nine months ended~~ September 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 ~~nine months ended~~ September 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.

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 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 to our Current Report on Form 8-K~~/A ~~dated Ju~~ly ~~28, 2022 and filed on~~ ~~August 16, 2022~~
10.1***	Second Amended and Restated Credit and Guaranty Agreement, dated as of October 21, 2022, among JetBlue Airways Corporation, as Borrower, the Subsidiaries of the Borrower party thereto as Guarantors, the Lenders party thereto and Citibank, N.A., as Administrative Agent—incorporated by reference to Exhibit 10.13.1 to our Current Report on Form 8-K dated ~~October 21, 2022~~February 17, 2023 and filed on ~~October 24, 2022~~February 17, 2023.
10.1†*	Form of Performance Stock Unit Award Agreement
10.2†*	Form of Performance Stock Unit Award Agreement (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.
~~***~~	Information in this exhibit identified by brackets is confidential and has been excluded because it (i) is not material and (ii) is the type of information that the registrant treats as private or confidential.

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SIGNATURE

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

JETBLUE AIRWAYS CORPORATION

(Registrant)

Date:

~~November 2, 2022~~April 28, 2023

By:

/s/ Al Spencer

Al Spencer

Vice President, Controller and Principal Accounting Officer

4940


	Aircraft fuel call option spread agreements		Total
Fourth Quarter 2022	27	%	27	%


	Available-for-sale securities(1)		Aircraft Fuel Derivatives(2)		Total
Balance of accumulated income (loss), at June 30, 2022	$	(2)	$	—	$	(2)
Reclassifications into earnings, net of taxes of $0	—		—		—
Change in fair value, net of taxes of $2	—		(3)		(3)
Balance of accumulated income (loss), at September 30, 2022	$	(2)	$	(3)	$	(5)

Balance of accumulated income (loss), at June 30, 2021	$	—	$	—	$	—
Reclassifications into earnings, net of taxes $0	—		—		—
Change in fair value, net of taxes of $0	—		—		—
Balance of accumulated income (loss), at September 30, 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 September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2022			2021			2022			2021
Total operating revenues	$	2,562		$	1,972		$	6,743		$	4,203

Total operating expenses	$	2,423		$	1,786		$	7,084		$	4,164
Less: Special items	13			(186)			57			(841)
Total operating expenses excluding special items	$	2,410		$	1,972		$	7,027		$	5,005

Operating income (loss)	$	139		$	186		$	(341)		$	39
Add back: Special items	13			(186)			57			(841)
Operating income (loss) excluding special items	$	152		$	—		$	(284)		$	(802)

Operating margin excluding special items	5.9		%	—		%	(4.2)		%	(19.1)		%

Income (loss) before income taxes	$	105		$	190		$	(443)		$	(100)
Add back: Special items	13			(186)			57			(841)
Less: Net gain (loss) on investments	—			54			(4)			57
Income (loss) before income taxes excluding special items and net gain (loss) on investments	$	118		$	(50)		$	(382)		$	(998)

Pre-tax margin excluding special items	4.6		%	(2.6)		%	(5.7)		%	(23.8)		%

Net income (loss)	$	57		$	130		$	(386)		$	(53)
Add back: Special items	13			(186)			57			(841)
Less: Income tax (expense) benefit related to special items	1			(55)			7			(250)
Less: Net gain (loss) on investments	—			54			(4)			57
Less: Income tax (expense) benefit related to net gain (loss) on investments	—			(16)			—			(16)
Net income (loss) excluding special items and net gain (loss) on investments	$	69		$	(39)		$	(332)		$	(685)

Earnings Per Common Share:
Basic	$	0.18		$	0.41		$	(1.20)		$	(0.17)
Add back: Special items, net of tax	0.03			(0.41)			0.16			(1.86)
Less: Net gain (loss) on investments, net of tax	—			0.12			(0.01)			0.13
Basic excluding special items and net gain (loss) on investments	$	0.21		$	(0.12)		$	(1.03)		$	(2.16)

Diluted	$	0.18		$	0.40		$	(1.20)		$	(0.17)
Add back: Special items, net of tax	0.03			(0.40)			0.16			(1.86)
Less: Net gain (loss) on investments, net of tax	—			0.12			(0.01)			0.13
Diluted excluding special items and net gain (loss) on investments	$	0.21		$	(0.12)		$	(1.03)		$	(2.16)