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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September~~June 30, ~~2022~~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~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~September~~June 30, ~~2022,~~2023, there were ~~323,877,614~~333,250,321 shares outstanding of the registrant’s common stock, par value $0.01.

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JETBLUE AIRWAYS CORPORATION

FORM 10-Q

INDEX


			Page
PART I. FINANCIAL INFORMATION
~~Item 1. Financial Statements~~Forward-Looking Information			3
Item 1. Financial Statements			5
Consolidated Balance Sheets - ~~September~~ June 30, ~~2022~~2023 and December 31, ~~2021~~2022			35
Consolidated Statements of Operations - Three and ~~Nine~~Six Months Ended ~~September~~June 30,, 2023 and 2022 ~~and 2021~~			57
Consolidated Statements of Comprehensive Income - Three and ~~Nine~~Six Months Ended ~~September~~June 30,, 2023 and 2022 ~~and 2021~~			68
Condensed Consolidated Statements of Cash Flows - ~~Nine~~Six Months Ended ~~September~~June 30,, 2023 and 2022 ~~and 2021~~			79
Consolidated Statements of Stockholders' Equity - Three and ~~Nine~~Six Months Ended ~~September~~June 30,, 2023 and 2022 ~~and 2021~~			810
Notes to Condensed Consolidated Financial Statements			911
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2725
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4641
Item 4. Controls and Procedures			4641

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4742
Item 1A. Risk Factors			4742
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities,			4743
Item 5. Other Information			4743
Item 6. Exhibits			4743

SIGNATURE			4945

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Forward-Looking Information

This Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements other than statements of historical facts contained in this Report may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “expects,” “plans,” “intends,” “anticipates,” “indicates,” “remains,” “believes,” “estimates,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “goals,” “targets” or the negative of these terms or other similar expressions. 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 contained in this Report include, without limitation, statements regarding our outlook and future results of operations and financial position, our business strategy and plans for future operations, our sustainability initiatives, the impact of industry or other macroeconomic trends affecting our business, seasonality, our expectations regarding the planned wind-down of the Northeast Alliance with American Airlines and the related impact on our business, financial condition and results of operations, and our expectations regarding the outcome of the lawsuits challenging our merger with Spirit. 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 and government-imposed measures to control its spread; risk associated with execution of our strategic operating plans in the near-term and long-term; our extremely competitive industry; risks related to the long-term nature of our fleet order book; volatility in fuel prices and availability of fuel; increased maintenance costs associated with fleet age; costs associated with salaries, wages and benefits; risks associated with doing business internationally; our reliance on high daily aircraft utilization; our dependence on the New York metropolitan market; risks associated with extended interruptions or disruptions in service at our focus cities; risks associated with airport expenses; risks associated with seasonality and weather; our reliance on a limited number of suppliers; risks related to new or increased tariffs imposed on commercial aircraft and related parts imported from outside the United States; the outcome of legal proceedings with respect to our Northeast Alliance with American Airlines Group Inc. and our planned wind-down of the Northeast Alliance; 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 certain governmental approvals necessary to consummate the merger with Spirit (the “Merger”); the outcome of the lawsuit filed by the Department of Justice and certain state Attorneys General against us and Spirit related to the Merger; risks associated with failure to consummate the Merger in a timely manner or at all; risks associated with the pendency of the Merger and related business disruptions; indebtedness following consummation of the Merger and associated impacts on business flexibility, borrowing costs and credit ratings; the possibility that JetBlue may be unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all; challenges associated with successful integration of Spirit's operations; expenses related to the Merger and integration of Spirit; the potential for loss of management personnel 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 the combined company following consummation of the Merger; risks associated with the integration of JetBlue and Spirit workforce, including with respect to negotiation of labor agreements and labor costs; the impact of the Merger on JetBlue’s earnings per share; risks associated with cybersecurity and privacy, including information security breaches; heightened regulatory requirements concerning data security compliance; risks associated with reliance on, and potential failure of, automated systems to operate our business; our inability to attract and retain qualified crewmembers; our being subject to potential unionization, work stoppages, slowdowns or increased labor costs; reputational and business risk from an accident or incident involving our aircraft; risks associated with damage to our reputation and the JetBlue brand name; our significant amount of fixed obligations and the ability to service such obligations; our substantial indebtedness and impact on our ability to meet future financing needs; financial risks associated with credit card processors; restrictions as a result of our participation in governmental support programs under the CARES Act, the Consolidated Appropriations Act, and the American Rescue Plan Act; risks associated with seeking short-term additional financing liquidity; failure to realize the full value of intangible or long-lived assets, causing us to record impairments; risks associated with disease outbreaks or environmental disasters affecting travel behavior; compliance with future environmental regulations; the impacts of federal budget constraints or federally imposed furloughs; impact of global climate change and legal, regulatory or market response to such change; changes in government regulations in our industry; acts of war or terrorism; changes in global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; and risks associated with the implementation of 5G wireless technology near airports that we operate in. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs, and assumptions upon which we base our expectations may change

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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 of the 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 U.S. Securities and Exchange Commission (the “SEC”), including but not limited to in our Annual Report on Form 10-K for the year ended December 31, 2022 (“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.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

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


							June 30, 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	$	1,462	$	1,042
Investment securities	Investment securities	692		824		Investment securities	205		350
Receivables, less allowance (2022-$3; 2021-$3)		298		207
Inventories, less allowance (2022-$27; 2021-$24)		79		74
Receivables, less allowance (2023-$2; 2022-$4)						Receivables, less allowance (2023-$2; 2022-$4)	309		317
Inventories, less allowance (2023-$32; 2022-$29)						Inventories, less allowance (2023-$32; 2022-$29)	89		87
Prepaid expenses and other	Prepaid expenses and other	141		124		Prepaid expenses and other	165		120
Total current assets	Total current assets	2,611		3,247		Total current assets	2,230		1,916
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT					PROPERTY AND EQUIPMENT
Flight equipment	Flight equipment	11,579		11,161		Flight equipment	12,169		11,727
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	398		337		Predelivery deposits for flight equipment	385		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	12,554		12,142
Less accumulated depreciation	Less accumulated depreciation	3,532		3,227		Less accumulated depreciation	3,798		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	8,756		8,564
Other property and equipment	Other property and equipment	1,303		1,205		Other property and equipment	1,303		1,314
Less accumulated depreciation	Less accumulated depreciation	711		662		Less accumulated depreciation	767		731
Total other property and equipment, net	Total other property and equipment, net	592		543		Total other property and equipment, net	536		583
Total property and equipment, net	Total property and equipment, net	9,037		8,814		Total property and equipment, net	9,292		9,147
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	713		729		OPERATING LEASE ASSETS	621		660
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Investment securities	Investment securities	175		39		Investment securities	169		172
Restricted cash	Restricted cash	83		59		Restricted cash	148		146
Intangible assets, less accumulated amortization (2022-$443; 2021-$405)		258		284
Intangible assets, less accumulated amortization (2023-$485; 2022-$455)						Intangible assets, less accumulated amortization (2023-$485; 2022-$455)	333		298
Other	Other	453		470		Other	688		706
Total other assets	Total other assets	969		852		Total other assets	1,338		1,322
TOTAL ASSETS	TOTAL ASSETS	$	13,330	$	13,642	TOTAL ASSETS	$	13,481	$	13,045

See accompanying notes to condensed consolidated financial statements.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

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


							June 30, 2023		December 31, 2022
		September 30, 2022		December 31, 2021			(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	600	$	499	Accounts payable	$	699	$	532
Air traffic liability	Air traffic liability	1,745		1,618		Air traffic liability	1,751		1,581
Accrued salaries, wages and benefits	Accrued salaries, wages and benefits	510		480		Accrued salaries, wages and benefits	530		498
Other accrued liabilities	Other accrued liabilities	421		359		Other accrued liabilities	526		486
Current operating lease liabilities	Current operating lease liabilities	103		106		Current operating lease liabilities	113		97
Current maturities of long-term debt and finance lease obligations	Current maturities of long-term debt and finance lease obligations	524		355		Current maturities of long-term debt and finance lease obligations	271		554
Total current liabilities	Total current liabilities	3,903		3,417		Total current liabilities	3,890		3,748
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,235		3,651		LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,486		3,093
LONG-TERM OPERATING LEASE LIABILITIES	LONG-TERM OPERATING LEASE LIABILITIES	686		690		LONG-TERM OPERATING LEASE LIABILITIES	578		639
DEFERRED TAXES AND OTHER LIABILITIES	DEFERRED TAXES AND OTHER LIABILITIES					DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes	Deferred income taxes	790		843		Deferred income taxes	774		770
Air traffic liability - non-current	Air traffic liability - non-current	702		640		Air traffic liability - non-current	726		738
Other	Other	507		552		Other	473		494
Total deferred taxes and other liabilities	Total deferred taxes and other liabilities	1,999		2,035		Total deferred taxes and other liabilities	1,973		2,002
COMMITMENTS AND CONTINGENCIES (Note 6)	COMMITMENTS AND CONTINGENCIES (Note 6)					COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued	Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—		Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—
Common stock, $0.01 par value; 900 shares authorized, 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)
Common stock, $0.01 par value; 900 shares authorized, 492 and 486 shares issued and 333 and 327 shares outstanding at June 30, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value; 900 shares authorized, 492 and 486 shares issued and 333 and 327 shares outstanding at June 30, 2023 and December 31, 2022, respectively	5		5
Treasury stock, at cost; 159 shares at June 30, 2023 and December 31, 2022						Treasury stock, at cost; 159 shares at June 30, 2023 and December 31, 2022	(1,998)		(1,995)
Additional paid-in capital	Additional paid-in capital	3,102		3,047		Additional paid-in capital	3,183		3,129
Retained earnings	Retained earnings	2,400		2,786		Retained earnings	2,370		2,424
Accumulated other comprehensive (loss)		(5)		—
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(6)		—
Total stockholders’ equity	Total stockholders’ equity	3,507		3,849		Total stockholders’ equity	3,554		3,563
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,330	$	13,642	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,481	$	13,045

See accompanying notes to condensed consolidated financial statements.

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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,
2022 2021 2022 2021
OPERATING REVENUES
Passenger $ 2,415 $ 1,856 $ 6,319 $ 3,913
Other 147 116 424 290
Total operating revenues 2,562 1,972 6,743 4,203
OPERATING EXPENSES
Aircraft fuel and related taxes 825 443 2,305 973
Salaries, wages and benefits 675 620 2,058 1,718
Landing fees and other rents 131 182 412 470
Depreciation and amortization 147 140 435 398
Aircraft rent 30 25 83 76
Sales and marketing 81 60 216 130
Maintenance, materials and repairs 178 205 492 472
Other operating expenses 343 297 1,026 768
Special items 13 (186) 57 (841)
Total operating expenses 2,423 1,786 7,084 4,164
OPERATING INCOME (LOSS) 139 186 (341) 39
OTHER (EXPENSE) INCOME
Interest expense (44) (42) (121) (153)
Interest income 11 4 24 12
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)
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.18 $ 0.41 $ (1.20) $ (0.17)
Diluted $ 0.18 $ 0.40 $ (1.20) $ (0.17)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
OPERATING REVENUES
Passenger	$	2,460	$	2,302	$	4,641	$	3,904
Other	150		143		296		277
Total operating revenues	2,610		2,445		4,937		4,181
OPERATING EXPENSES
Aircraft fuel and related taxes	599		910		1,365		1,481
Salaries, wages and benefits	772		695		1,514		1,383
Landing fees and other rents	163		149		323		281
Depreciation and amortization	155		145		306		288
Aircraft rent	34		27		66		53
Sales and marketing	82		78		157		135
Maintenance, materials and repairs	170		162		345		313
Other operating expenses	376		348		732		683
Special items	24		44		136		44
Total operating expenses	2,375		2,558		4,944		4,661
OPERATING INCOME (LOSS)	235		(113)		(7)		(480)
OTHER INCOME (EXPENSE)
Interest expense	(47)		(40)		(93)		(77)
Interest income	23		8		40		12
Gain (loss) on investments, net	4		(5)		7		(4)
Other	1		(1)		3		—
Total other expense	(19)		(38)		(43)		(69)
INCOME (LOSS) BEFORE INCOME TAXES	216		(151)		(50)		(549)
Income tax benefit (expense)	(78)		(37)		(4)		106
NET INCOME (LOSS)	$	138	$	(188)	$	(54)	$	(443)

EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)
Diluted	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)

See accompanying notes to condensed consolidated financial statements.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

Three Months Ended September 30,
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 June 30,
	2023		2022
NET INCOME (LOSS)	$	138	$	(188)
Changes in fair value of available-for-sale securities and derivative instruments, net of reclassifications into earnings, net of taxes of $(1) and $0 in 2023 and 2022, respectively.	(1)		(1)
Total other comprehensive loss	(1)		(1)
COMPREHENSIVE INCOME (LOSS)	$	137	$	(189)

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)


	Six Months Ended June 30,
	2023		2022
NET LOSS	$	(54)	$	(443)
Changes in fair value of available-for-sale securities and derivative instruments, net of reclassifications into earnings, net of taxes of $(2) and $0 in 2023 and 2022, respectively.	(6)		(2)
Total other comprehensive loss	(6)		(2)
COMPREHENSIVE LOSS	$	(60)	$	(445)

See accompanying notes to condensed consolidated financial statements.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


		Nine Months Ended September 30,					Six Months Ended June 30,
		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	$	(54)	$	(443)
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	4		(101)
Depreciation	Depreciation	396		365		Depreciation	276		262
Amortization	Amortization	39		33		Amortization	30		26
Impairment of long-lived asset	Impairment of long-lived asset	5		—		Impairment of long-lived asset	—		5
Stock-based compensation	Stock-based compensation	25		23		Stock-based compensation	22		18
Changes in certain operating assets and liabilities	Changes in certain operating assets and liabilities	300		1,438		Changes in certain operating assets and liabilities	386		537

Other, net	Other, net	(7)		(11)		Other, net	(1)		(5)
Net cash provided by operating activities	Net cash provided by operating activities	321		1,755		Net cash provided by operating activities	663		299
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(483)		(770)		Capital expenditures	(439)		(274)
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	(116)		(33)		Predelivery deposits for flight equipment	(18)		(65)

Purchase of held to maturity investments		(142)		—
Purchase of held-to-maturity investments						Purchase of held-to-maturity investments	(37)		(85)
Purchase of available-for-sale securities	Purchase of available-for-sale securities	(470)		(520)		Purchase of available-for-sale securities	(155)		(461)
Proceeds from the sale/maturity of held to maturity investments		2		—
Proceeds from the sale/maturity of held-to-maturity investments						Proceeds from the sale/maturity of held-to-maturity investments	7		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	333		405
Payment for acquisition		(25)		—

Payment for Spirit Airlines acquisition						Payment for Spirit Airlines acquisition	(66)		—
Other, net	Other, net	(2)		(2)		Other, net	—		(7)
Net cash used in investing activities	Net cash used in investing activities	(647)		(735)		Net cash used in investing activities	(375)		(485)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	—		1,010		Proceeds from issuance of long-term debt	78		—

Proceeds from sale-leaseback transactions						Proceeds from sale-leaseback transactions	228		—
Proceeds from issuance of common stock						Proceeds from issuance of common stock	31		29

Proceeds from issuance of common stock		29		22
Proceeds from issuance of stock warrants		—		14
Repayment of long-term debt and finance lease obligations	Repayment of long-term debt and finance lease obligations	(255)		(1,775)		Repayment of long-term debt and finance lease obligations	(200)		(189)

Acquisition of treasury stock	Acquisition of treasury stock	(6)		(7)		Acquisition of treasury stock	(3)		(6)
Other, net	Other, net	(35)		(1)		Other, net	—		(35)
Net cash used in financing activities		(267)		(737)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	134		(201)
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	422		(387)
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)	$	1,610	$	1,690

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	$	(32)	$	(60)
Cash receipts of income tax refunds (net of payments)		(95)		—
Cash proceeds from income tax refunds (net of payments)						Cash proceeds from income tax refunds (net of payments)	52		49

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	$	14	$	60

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

		September 30, 2022		September 30, 2021			June 30, 2023		June 30, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,401	$	2,193	Cash and cash equivalents	$	1,462	$	1,611
Restricted cash		83		59
Restricted cash (2)						Restricted cash (2)	148		79
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	$	1,610	$	1,690

(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
																	Common Stock Issued Shares Amount			Treasury Stock Shares Amount			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at March 31, 2023																Balance at March 31, 2023	487	$	5	159	$	(1,998)	$	3,139	$	2,232	$	(5)	$	3,373
Net income	Net income	—	—		—	—		—		57		—		57		Net income	—	—		—	—		—		138		—		138
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	Other comprehensive loss	—	—		—	—		—		—		(2)		(2)		Other comprehensive loss	—	—		—	—		—		—		(1)		(1)
Vesting of restricted stock units	Vesting of restricted stock units	2	—		1	(6)		—		—		—		(6)		Vesting of restricted stock units	—	—		—	—		—		—		—		—
Stock compensation expense	Stock compensation expense	—	—		—	—		25		—		—		25		Stock compensation expense	—	—		—	—		12		—		—		12
Stock issued under crewmember stock purchase plan	Stock issued under crewmember stock purchase plan	3	—		—	—		30		—		—		30		Stock issued under crewmember stock purchase plan	5	—		—	—		32		—		—		32
Hedging Activity		—	—		—	—		—		—		(3)		(3)
Balance at September 30, 2022		483	$	5	159	$	(1,995)	$	3,102	$	2,400	$	(5)	$	3,507
Balance at June 30, 2023																Balance at June 30, 2023	492	$	5	159	$	(1,998)	$	3,183	$	2,370	$	(6)	$	3,554

		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)
																	Common Stock Issued Shares Amount			Treasury Stock Shares Amount			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at March 31, 2022																Balance at March 31, 2022	479	$	5	158	$	(1,995)	$	3,058	$	2,531	$	(1)	$	3,598
Net loss																Net loss	—	—		—	—		—		(188)		—		(188)
Other comprehensive loss																Other comprehensive loss	—	—		—	—		—		—		(1)		(1)
Vesting of restricted stock units	Vesting of restricted stock units	1	—		—	(8)		—		—		—		(8)		Vesting of restricted stock units	—	—		—	—		—		—		—		—
Stock compensation expense	Stock compensation expense	—	—		—	—		23		—		—		23		Stock compensation expense	—	—		—	—		7		—		—		7
Stock issued under crewmember stock purchase plan	Stock issued under crewmember stock purchase plan	1	—		—	—		22		—		—		22		Stock issued under crewmember stock purchase plan	3	—		—	—		30		—		—		30
Warrants issued under federal support programs		—	—		—	—		14						14
Balance at September 30, 2021		476	$	5	158	$	(1,989)	$	3,018	$	2,915	$	—	$	3,949
Balance at June 30, 2022																Balance at June 30, 2022	482	$	5	158	$	(1,995)	$	3,095	$	2,343	$	(2)	$	3,446

																	Common Stock Issued Shares Amount			Treasury Stock Shares Amount			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2022																Balance at December 31, 2022	486	$	5	159	$	(1,995)	$	3,129	$	2,424	$	—	$	3,563
Net loss																Net loss	—	—		—	—		—		(54)		—		(54)
Other comprehensive loss																Other comprehensive loss	—	—		—	—		—		—		(6)		(6)
Vesting of restricted stock units																Vesting of restricted stock units	1	—		—	(3)		—		—		—		(3)
Stock compensation expense																Stock compensation expense	—	—		—	—		22		—		—		22
Stock issued under crewmember stock purchase plan																Stock issued under crewmember stock purchase plan	5	—		—	—		32		—		—		32
Balance at June 30, 2023																Balance at June 30, 2023	492	$	5	159	$	(1,998)	$	3,183	$	2,370	$	(6)	$	3,554

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

See accompanying notes to condensed consolidated financial statements.

810

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—1 - Summary of Significant Accounting Policies

Basis of Presentation

JetBlue Airways Corporation ~~("JetBlue"~~(“JetBlue”), provides air transportation services across the United States, the Caribbean, Latin America, Canada, ~~and~~ the United ~~Kingdom.~~Kingdom and France. 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~~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 ("2021~~2022 (“2022 Form ~~10-K"~~10-K”).

These condensed consolidated financial statements are unaudited and have been prepared by us ~~following~~in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the ~~"SEC"~~“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"~~(“GAAP”), have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures included herein 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—2 - Revenue Recognition

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Passenger revenue	Passenger revenue									Passenger revenue
Passenger travel	Passenger travel	$	2,308	$	1,773	$	5,959	$	3,717	Passenger travel	$	2,289	$	2,162	$	4,315	$	3,651
Loyalty revenue - air transportation	Loyalty revenue - air transportation	107		83		360		196		Loyalty revenue - air transportation	171		140		326		253
Other revenue	Other revenue									Other revenue
Loyalty revenue	Loyalty revenue	102		80		287		206		Loyalty revenue	104		95		204		184
Other revenue	Other revenue	45		36		137		84		Other revenue	46		48		92		93
Total revenue	Total revenue	$	2,562	$	1,972	$	6,743	$	4,203	Total revenue	$	2,610	$	2,445	$	4,937	$	4,181

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			June 30, 2023		December 31, 2022
Air traffic liability - passenger travel	Air traffic liability - passenger travel	$	1,443	$	1,323	Air traffic liability - passenger travel	$	1,451	$	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)	990		1,000
Deferred revenue(1)	Deferred revenue(1)	547		613		Deferred revenue (1)	511		530
Total	Total	2,966		2,827		Total	$	2,952	$	2,821

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

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we recognized passenger revenue of ~~$1.2~~$1.1 billion and ~~$468~~$973 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.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points earned and sold to participating companies for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (in millions):


Balance at December 31, 2022	$	1,000
TrueBlue® points redeemed	(327)
TrueBlue® points earned and sold	317
Balance at June 30, 2023	$	990

Balance at December 31, 2021	$	891
TrueBlue® points redeemed	~~(360)~~(253)
TrueBlue® points earned and sold	~~445~~289
Balance at ~~September~~June 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~~927

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

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we made principal payments of ~~$255~~$200 million on our outstanding debt and finance lease obligations.

~~As of September~~At June 30, ~~2022,~~2023, we had pledged aircraft, engines, other equipment, and facilities with a net book value of ~~$6.3~~$6.2 billion as security under various financing arrangements.

At ~~September~~June 30, ~~2022,~~2023, 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.~~as follows (in millions):


Year	Total
Remainder of 2023	$	134
2024	251
2025	220
2026	959
2027	207
2028 and thereafter	1,986
Total	$	3,757

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~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows (in millions):


		September 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
		Carrying Value		Estimated Fair Value(1)		Carrying Value		Estimated Fair Value(1)			Carrying Value		Estimated Fair Value (1)		Carrying Value		Estimated Fair Value (1)
Public Debt	Public Debt									Public Debt
Fixed rate special facility bonds, due through 2036	Fixed rate special facility bonds, due through 2036	$	42	$	41	$	42	$	45	Fixed rate special facility bonds, due through 2036	$	42	$	43	$	42	$	43
Fixed rate enhanced equipment notes:	Fixed rate enhanced equipment notes:									Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	2019-1 Series AA, due through 2032	519		342		532		442		2019-1 Series AA, due through 2032	490		352		504		345
2019-1 Series A, due through 2028	2019-1 Series A, due through 2028	162		125		166		150		2019-1 Series A, due through 2028	153		126		157		124
2019-1 Series B, due through 2027	2019-1 Series B, due through 2027	88		94		94		121		2019-1 Series B, due through 2027	76		81		82		87
2020-1 Series A, due through 2032	2020-1 Series A, due through 2032	567		467		587		634		2020-1 Series A, due through 2032	527		455		546		457
2020-1 Series B, due through 2028	2020-1 Series B, due through 2028	144		151		153		199		2020-1 Series B, due through 2028	126		134		135		142
Non-Public Debt	Non-Public Debt									Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	Fixed rate enhanced equipment notes, due through 2023	60		59		88		88		Fixed rate enhanced equipment notes, due through 2023	—		—		61		60
Fixed rate equipment notes, due through 2028	Fixed rate equipment notes, due through 2028	495		400		620		706		Fixed rate equipment notes, due through 2028	381		320		447		422
Floating rate equipment notes, due through 2028		64		56		103		99
Sale-leaseback transactions, due through 2024		343		332		347		374
Floating rate equipment notes, due through 2030 (2)										Floating rate equipment notes, due through 2030 (2)	120		100		56		49
Sale-leaseback transactions, due through 2035										Sale-leaseback transactions, due through 2035	565		419		341		329
Unsecured CARES Act Payroll Support Program loan, due through 2030	Unsecured CARES Act Payroll Support Program loan, due through 2030	259		134		259		219		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	Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		73		144		121		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	Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		67		132		111		Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		65		132		62
0.50% convertible senior notes due 2026		738		543		736		673
Convertible senior notes due 2026										Convertible senior notes due 2026	741		560		739		534
Total~~(2)~~(3)	Total~~(2)~~(3)	$	3,757	$	2,884	$	4,003	$	3,982	Total~~(2)~~(3)	$	3,756	$	2,855	$	3,645	$	2,848

(1) The estimated fair values of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. The fair ~~value~~values of our non-public debt ~~was~~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 ~~to our condensed consolidated financial statements~~ for an explanation of the fair value hierarchy structure.

(2) Floating rate debt is equal to Secured Overnight Financing Rate (“SOFR”), plus an applicable margin.

(3)Total excludes finance lease obligations of $21 million and $3$2 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

We have financed certain aircraft with Enhanced Equipment Trust Certificates ~~("EETCs"~~(“EETCs”). One of the benefits of this structure is being able to finance several aircraft at one time, rather than individually. The structure of EETC financing is that we create pass-through trusts in order to issue pass-through certificates. The proceeds from the issuance of these certificates are then used to purchase equipment notes, which are issued by us and are secured by our aircraft. These trusts meet the definition of a variable interest entity ~~("VIE"~~(“VIE”), as defined in Topic 810, Consolidation of the ~~FASB~~Financial Accounting Standards Board (“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~~creditworthiness 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~~Equipment Notes

~~On May 16, 2022, we, along with our direct wholly-owned subsidiary, Sundown Acquisition Corp. ("Merger Sub"), commenced a tender offer~~In the second quarter of 2023, JetBlue entered into an agreement 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.~~finance certain aircraft for ~~a senior secured bridge facility in~~ an aggregate principal amount of ~~up to $3.5 billion, which was amended~~$78 million, bearing interest at a floating rate of SOFR plus a margin. Debt incurred under the agreement matures in 2030, with principal and ~~restated on~~interest payable quarterly in arrears.

2023 Sale-Leaseback Transactions

During the six months ended 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,~~2023, we entered into ~~a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the United States Department~~$228 million 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.sale-leaseback transactions. These transactions did not qualify as sales for accounting purposes. 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~~assets 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~~these transactions remain on our consolidated ~~statements of operations as~~balance sheets within property and equipment and the ~~funds were utilized. The relative fair value of~~related liabilities under 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 werelease are classified within ~~operating activities~~debt and finance leases obligations. These transactions are treated as cash from 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”), 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 June 30, 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~~June 30, ~~2022~~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”). As of and for the periods ended June 30, 2023 and December 31, 2022, we did not have a balance outstanding or any borrowings under this facility.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 4—4 - Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share is calculated similarly but includes potential dilution from restricted stock units, the crewmember ~~purchases made under the Company's crewmember Stock Purchase Plan,~~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 June 30, 2023. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings (loss) per share amounts were ~~September~~1.5 million for the three months ended June 30, ~~2022 and 2021.~~2022. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings (loss) per share amounts were ~~1.9~~1.7 million and ~~3.5~~2.2 million for the ~~nine~~six months endedJune 30, 2023 and ~~September~~June 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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (dollars and share data in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income (loss)	Net income (loss)	$	57	$	130	$	(386)	$	(53)	Net income (loss)	$	138	$	(188)	$	(54)	$	(443)

Weighted average basic shares	Weighted average basic shares	323.9		318.0		322.5		317.3		Weighted average basic shares	331.9		323.1		330.0		321.9
Effect of dilutive securities	Effect of dilutive securities	1.1		3.3		—		—		Effect of dilutive securities	1.7		—		—		—
Weighted average diluted shares	Weighted average diluted shares	325.0		321.3		322.5		317.3		Weighted average diluted shares	$	333.6	323.1		$	330.0	321.9

Earnings (loss) per common share	Earnings (loss) per common share									Earnings (loss) per common share
Basic	Basic	$	0.18	$	0.41	$	(1.20)	$	(0.17)	Basic	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)
Diluted	Diluted	$	0.18	$	0.40	$	(1.20)	$	(0.17)	Diluted	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)

Note 5—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 athe non-management crewmember's hire date.

Certain Federal Aviation Administration ~~("FAA"~~(“FAA”) ~~licensed~~-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"~~(“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~~June 30, 2023 and 2022 ~~and 2021~~ was ~~$186~~$72 million and ~~$157~~$63 million, respectively and for the six months ended June 30, 2023 and 2022 was $138 million and $125 million, respectively.

~~Note 6—Commitments and Contingencies~~

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ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 6 - Commitments and Contingencies

Flight Equipment Commitments

As of ~~September~~June 30, ~~2022,~~ 2023, our ~~firm aircraft orders consisted of 63 Airbus A321neo aircraft and 88 Airbus A220 aircraft, scheduled for delivery through 2027. Committed~~committed expenditures for ~~these~~ aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits, asis set forth in the table below (in millions):


Flight equipment commitments (1)
Year	Total
Remainder of 2023 (2)	$	1,270
2024	2,189
2025	1,701
2026	1,334
2027	987

Total	$	7,481

(1) The timing of ~~September~~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.

(2) Refer to the note in the flight equipment delivery table below for our 2023 capacity planning assumptions.

As of June 30, ~~2022 is approximately $245 million for~~2023, our firm aircraft orders included 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.~~ following aircraft:


Flight equipment deliveries (1)
Year	Airbus A321neo	Airbus A220	Total
Remainder of 2023 (2)	9	15	24
2024	13	30	43
2025	11	24	35
2026	12	14	26
2027	14	—	14

Total (3)	59	83	142

(1) The ~~amount of committed expenditures~~aircraft orders stated above represents the current delivery schedule set forth in our Airbus order book as of ~~September~~June 30, ~~2022.~~ 2023.

(2) Due to Airbus delivery delays, our full-year 2023 capacity planning assumes delivery of 11 A220, four A321neo, and four A321neo LR aircraft, of which six have been delivered through June 30, 2023.

(3) In ~~February 2022,~~addition, we ~~received notice from Airbus of anticipated delivery delays for certain A220 aircraft and in September 2022, we signed an amendment to the Airbus A220 purchase agreement.~~

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 obligatedhave options 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.additional 20 A220-300 aircraft.

Other Commitments and Contingencies

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

As of ~~September~~June 30, ~~2022,~~2023, we had ~~approximately $40~~$52 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 a $65 million letter of credit relating to our 5% ownership in JFK Millennium Partner LLC (“JMP”), 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~~$29 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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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"~~(“TWU”), respectively, our other frontline crewmembers do not have third party 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"~~(“NEA”), an expanded codeshare and marketing alliance between JetBlue and American Airlines, Inc. ~~("American"~~(“American”) at four ~~Northeast~~northeast airports. ALPA claims that in entering the NEA, JetBlue violated certain scope clauses as contained in the pilots’ ALPA collective bargaining agreement. The matter proceeded to arbitration pursuant to the grievance procedure contained in the collective bargaining agreement, which concluded in September 2021, and in January 2022, the parties submitted final, written briefs to the System Board of Adjustment~~. Shortly after submission of the briefs, the parties agreed to enter into non-binding mediation with the assistance of the arbitrator with a temporary hold on a System Board decision.~~ As a result of the mediation process, the parties agreed to certain changes to the collective bargaining agreement. The agreement was ratified by the JetBlue pilot group in April ~~2022,~~2022.

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 to unionize.

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.

In July 2020, JetBlue and American entered into the NEA which was designed to optimize our respective networks at JFK, LaGuardia, Newark, and Boston. Following review and agreement by the Department of Transportation (“DOT”), JetBlue and American began implementing the NEA in July 2021. On September 21, 2021, the United States Department of Justice, ~~("DOJ"),~~ along with the Attorneys General of ~~each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania, and Virginia,~~six states and the ~~District~~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 court issued a ~~lawsuit~~decision on May 19, 2023, permanently enjoining the NEA. On July 5, 2023, we announced that we do not plan to appeal the court’s determination that the NEA cannot continue as currently crafted, and instead had initiated a wind down of the NEA. On July 14, 2023, JetBlue and American announced that beginning on July 21, 2023, JetBlue customers will no longer be able to book new codeshare bookings on American and vice versa. On July 28, 2023, the court issued its Final Judgement and Order Entering Permanent

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Injunction (“Final Injunction”). The Final Injunction is effective August 18, 2023 and sets forth, among other things, provisions for the prompt and certain termination of the NEA, including applicable dates for the termination of JetBlue and American Airlines' revenue-sharing arrangements and procedures governing the termination of any remaining slot-sharing agreements. Pursuant to the Final Injunction, JetBlue and American Airlines may not enter into any new alliance, partnership, joint venture, or other agreement with each other, if such agreement provides for revenue sharing, or for coordination of routes or capacity, in a manner substantially similar to the NEA for a period of ten years following the effectiveness of the Final Injunction. The wind down of the NEA could result in a disruption to our business, require us to incur additional costs and ultimately have an adverse impact on our business, financial condition and results of operations.

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 United States District Court for 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~~American and, depending on the specific case, other airlines on flights to or from four airports (JFK, LaGuardia Airport, Newark Liberty International Airport, and Boston Logan International Airport) from July 16, 2020 through the present. Plaintiffs in these actions also seek to enjoin the NEA. JetBlue believes these lawsuits are without merit and that the ~~carriers be permanently enjoined from implementing~~equitable claims have been rendered moot following the ~~NEA. A bench trial was held September 27, 2022~~commencement of the NEA wind down. We will continue to work through ~~October 27, 2022. A decision has not yet been issued.~~the legal process to achieve a wind down plan designed to protect consumers. 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.

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.

Note 7—7 - Fair Value

Under Topic 820, Fair Value Measurement of 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~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in millions):

September 30, 2022
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 1,004 $ — $ — $ 1,004
Available-for-sale investment securities — 680 — 680
Equity investment securities 11 — — 11
Aircraft fuel derivatives — 3 — 3

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

~~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 and December 31, 2021.~~


	June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	645	$	—	$	—	$	645
Available-for-sale investment securities	—		154		13		167
Aircraft fuel derivatives	—		3		—		3

1918

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


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

Refer to Note 3 for fair value information related to our outstanding debt obligations as of June 30, 2023 and December 31, 2022.

Cash equivalents

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

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 ~~remaining instruments~~time deposits and commercial paper 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 and convertible debt securities.~~ The fair values of ~~these instruments~~convertible debt securities are based on ~~observable~~unobservable inputs ~~in non-active markets, which~~and are ~~therefore~~ classified as Level 23 in the hierarchy. ~~We did not record any material gains or losses on these securities during the three and nine months ended September 30, 2022 and 2021.~~

Equity investment securities

Our equity investment securities include investments in common stocks of publicly traded companies. The fair values of these instruments are classified as Level 1 in the hierarchy as they are based on unadjusted quoted prices in active markets for identical assets. We ~~recognized~~did not have any material equity investment securities as of June 30, 2023.

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.

2019

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Held-to-maturity investment securities

Our held-to-maturity investment securities consist of corporate bonds, which are stated at amortized cost. 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. 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):


	June 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Held-to-maturity investment securities	$	207	$	200	$	177	$	170

Note 8 - Investments

Investments in Debt Securities

Investments 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. Refer to Note 7 for an explanation of the fair value hierarchy structure.

Available-for-sale investment securities. We did not record any material gains or losses on these securities during the three and six months ended June 30, 2023 and 2022.

Held-to-maturity investment securities. We did not record any material gains or losses on held-to-maturity investment securities during the three and six months ended June 30, 2023 and 2022.

The aggregate carrying values of our short-term and long-term debt investment securities consisted of the following at June 30, 2023 and December 31, 2022 (in millions):


	June 30, 2023		December 31, 2022
Available-for-sale investment securities
Time deposits	$	150	$	285
Commercial paper	4		39
Debt securities	13		13
Total available-for-sale investment securities	167		337
Held-to-maturity investment securities
Corporate bonds	207		177
Total held-to-maturity investment securities	207		177
Total investments in debt securities	$	374	$	514

Investments 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 $39 million and $38 million as of June 30, 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 and six months ended June 30, 2023. We recognized a gain of $2 million on one of our equity method investments related to its issuance of additional shares upon the closing of a subsequent financing round in gain on investments on our consolidated statement of operations during the six months ended June 30, 2022. Our share of our equity method investees’ financial results is included in other income on our consolidated statement of operations.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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. We had an immaterial carrying amount of equity investment securities as of June 30, 2023 and a carrying amount of $8 million as of December 31, 2022 recorded within investment securities in the current asset section of our consolidated balance sheet. We recognized a net realized gain of $4 million and $6 million on our equity investment securities primarily related to the sale of one of our equity investments in other income on our consolidated statement of operations during the three and six months ended June 30, 2023, respectively. We recognized an unrealized loss of $6 million and $8 million in other income on our consolidated statement of operations during the three and six months ended June 30, 2022, respectively.

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 $90 million and $83 million as of June 30, 2023 and December 31, 2022, respectively. We did not record any material gains or losses on these investments during the three and six months ended June 30, 2023 or 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 June 30, 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.

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 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 %

~~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 $ — —

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)

The following table illustrates the approximate hedged percentages of our projected fuel usage by quarter as of June 30, 2023 related to our outstanding fuel hedging contracts that were designated as cash flow hedges for accounting purposes.


	Aircraft fuel call option spread agreements
Third Quarter 2023	30	%
Fourth Quarter 2023	30	%

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Fuel Derivatives
Hedge effectiveness gains (losses) recognized in aircraft fuel expense $ — $ — $ — $ —
Hedge gains (losses) on derivatives recognized in comprehensive income $ (3) $ — $ (3) $ —
Percentage of actual consumption economically hedged — — — —
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):


	June 30, 2023		December 31, 2022
Fuel Derivatives
Asset fair value recorded in prepaid expense and other current assets	3		3
Longest remaining term (months)	3		3
Hedged volume (barrels, in thousands)	3,240		450
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months	$	6	$	2


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Fuel Derivatives
Hedge effectiveness loss recognized in aircraft fuel expense	$	(4)		$	—		$	(3)		$	—
Hedge losses on derivatives recognized in comprehensive income	$	(6)		$	—		$	(11)		$	—
Percentage of actual consumption economically hedged	30		%	—		%	20		%	—		%

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 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~~June 30, ~~2022~~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~~roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 $ — $ — $ —

~~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—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, 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)

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

(2) The Employee Retention Credit ("ERC") under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers can qualify for up to $5,000 of credit for each employee based on qualified wages paid after March 12, 2020 and before January 1, 2021. The Internal Revenue Service ("IRS") subsequently issued Notice 2021-23 and Notice 2021-49 which collectively extended the ERC eligibility to cover qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee for the time that the employee is not providing services due to an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. Our policy is to recognize the ERC when it is filed with the Internal Revenue Service. We recognized $11 million of ERC as a contra-expense within special items on our consolidated statements of operations for the ~~nine months ended~~ ~~September 30, 2021, respectively.~~

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

To determine if impairment exists in our fleet, we grouped our aircraft by fleet-type and estimated their future cash flows based on projections of capacity, aircraft age, and maintenance conditions. Based on the assessment, we determined the future cash flows from the operation our Embraer E190 fleet were lower than the carrying value. For those aircraft, including the ones that are under operating lease, and related spare parts in our Embraer E190 fleet, we recorded impairment losses ~~of $5 million for the~~ 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~~

2422

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~determined using unobservable inputs, it~~


	Aircraft fuel derivatives		Available-for-sale securities		Total
Balance of accumulated loss, at March 31, 2023	$	(4)	$	(1)	$	(5)
Reclassifications into earnings, net of taxes of $1 (1)	3		—		3
Change in fair value, net of taxes of $(2)	(4)		—		(4)
Balance of accumulated loss, at June 30, 2023	$	(5)	$	(1)	$	(6)

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

(1) Reclassified to aircraft fuel expense.

A roll-forward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the six months ended June 30, 2023 and 2022 is ~~classified~~ as ~~Level 3 in the fair value hierarchy.~~follows (in millions):


	Aircraft fuel derivatives		Available-for-sale securities		Total
Balance of accumulated income (loss), at December 31, 2022	$	1	$	(1)	$	—
Reclassifications into earnings, net of taxes of $1 (1)	2		—		2
Change in fair value, net of taxes of $(3)	(8)		—		(8)
Balance of accumulated loss, at June 30, 2023	$	(5)	$	(1)	$	(6)

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

(1)~~We did not record any impairment loss~~ Reclassified to aircraft fuel expense.

Note 11 - Special Items

The following is a listing of special items presented on our ~~long-lived assets~~consolidated statements of operations for the three and ~~nine~~six months ended June 30, 2023 and 2022 (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Special Items
Spirit acquisition costs (1)	$	24	$	7	$	41	$	7
Embraer E190 fleet transition (2)	—		5		—		5
Union contract costs (3)	—		32		95		32
Total	$	24	$	44	$	136	$	44

(1) ~~September 30, 2021.~~Spirit acquisition costs primarily relate to consulting, professional and legal fees.

~~(4)~~(2) Fleet impairment charges relate to losses on certain Embraer E190 aircraft and spare parts as a result of our fleet

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

transition.

(3) As discussed in Note 6, union contract costs relate to ~~our condensed consolidated financial statements, we paid $32 million for an ALPA~~ ratification ~~bonus~~payments and ~~the associated payroll taxes during the~~ ~~nine months ended~~ ~~September 30, 2022.~~

~~(5) As discussed in Note 11~~adjustments 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.~~paid-time-off accruals resulting from pay rate increases.

Note ~~11—~~12 - Entry intoMerger 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 June 30, 2023, JetBlue has made an aggregate of $33 million in Additional Prepayments to Spirit shareholders resulting in a total prepayment of $363 million. This prepayment is included in other assets in the Company's consolidated balance sheets as of June 30, 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~~U.S. District Court for the District of Massachusetts. On March 31, 2023, 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

Part 1, Item 2 of this Report should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Report and our audited consolidated financial statements and related notes included in our 2022 Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A “Risk Factors” of our 2022 Form 10-K and in Part II, Item 1A “Risk Factors” and other parts of this Report.

OVERVIEW

~~Third~~Second Quarter ~~2022~~2023 Results

~~In the~~ ~~third~~Our second quarter ~~of 2022,~~2023 results were characterized by robust demand for air travel and continued revenue growth. Despite a challenging operating environment, marked by Air Traffic Control and weather-related disruptions, we ~~returned to profitability with~~executed on our ~~first adjusted quarterly profit since the beginning of the COVID-19 pandemic. We also recorded the highest quarterly revenue 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.cost outlook.

•~~Third~~Second quarter 2023 system capacity increased by ~~0.3% year-over-year and decreased by (0.5)% versus~~5.8% compared to the ~~third~~second quarter of ~~2019.~~2022.

•~~Revenue~~Record revenue for the ~~third~~second quarter of ~~2022~~2023. Revenue increased by ~~30.0%~~6.7%, or ~~$590~~$165 million, year-over-year to $2.6 ~~billion. Compared~~billion compared to the ~~third~~second quarter of ~~2019, revenu~~e 2022~~increased by 22.8%, or $476 million.~~

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

•~~Operating expense for the~~ ~~third quarter~~ ~~of 2022 increased by 35.7% to $2.4 billion. Compared to the~~ ~~third quarter~~ ~~of 2019, operating expense increased by 31.8%, or $584 million.~~.

•Operating expense per available seat mile ~~("CASM"~~(“CASM”) for the second quarter of 2023 decreased by 12.2% year-over-year to 13.68 cents compared to the second quarter of ~~third quarter~~2022 ~~of 2022 increased by 35.3% to 14.94 cents. This compares to an increase of 32.4% from the~~ ~~third quarter~~ ~~of 2019.~~.

•Our operating expense for the second quarter of 2023 and ~~third quarter~~2022 ~~of 2022, 2021, and 2019~~ included the effects of special items. Excluding fuel and related taxes, special items, ~~as well as~~and operating expenses related to our non-airline businesses, our operating expense(1) increased by ~~3.5%~~9.2% to ~~$1.6~~$1.7 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% to 9.69 cents in the third quarter of~~ ~~2022 compared to the third quarter of 2021~~.

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

~~Network~~

Following 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 details of the special items.

•Excluding fuel and related taxes, special items, and operating expenses related to our non-airline businesses, our cost per available seat mile (“CASM ex-fuel”) (1) increased by 3.2% to 10.00 cents in the second quarter of 2023 compared to the second quarter of 2022.

•Our reported earnings per share for the second quarter of 2023 was $0.41. This compares to a loss per share of $(0.58) for the second quarter of 2022. Excluding special items, mark-to-market and certain gains and losses on our investments, our adjusted earnings (loss) per share (1) for the second quarter of 2023 and 2022 was $0.45 and $(0.47), respectively.

Recent Developments

Network

We further expanded our presence in the transatlantic market with service from JFK to Paris, France in June 2023.

We announced three new destinations to our network in the second quarter of 2023:


Destination						Service Commencement
Amsterdam						Summer 2023
St. Kitts and Nevis						Fall 2023
Belize City						Winter 2023

Customer Experience

In May 2023, we launched a new TrueBlue® loyalty program, offering members more value and new opportunities to earn perks. New features include:

•Earn Tiles to Build Your Mosaic, Your Way: Tiles are the new way for TrueBlue® members to track progress toward Mosaic status while unlocking valuable perks along the way.

(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

~~taking as much work off planners' plates as possible. Troupe brings groups together~~•More Perks for More Customers: The New TrueBlue® gives customers the ability to ~~decide on all~~choose the ~~important details, so one person does not have~~rewards that are most valuable to ~~do it alone, presenting travelers with a stress-free experience from start~~them.

•Take Mosaic to ~~finish.~~

~~In October 2022, we announced a Cash + Points redemption option for JetBlue Vacations, which will allow customers~~the Next Level: The new and expanded Mosaic now contains four levels, each offering Mosaic Signature Perks 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.

~~Environmental, Social, and Governance ("ESG")~~enjoy.

We ~~remain focused on continuing to lead in ESG initiatives. In September 2022, we announced our plans to bolster our transition to sustainable aviation fuel ("SAF")~~expect that these new value enhancements will strengthen customer engagement with ~~a new agreement with AIR COMPANY, an innovative carbon technology company creating carbon-negative alcohols and fuels from carbon dioxide ("CO~~the 2TrueBlue~~"). AIR COMPANY has developed and deployed a single-step process for CO~~2~~-derived fuel production using renewable electricity 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 million gallons of AIRMADE~~TM SAF over five years, with a targeted start date 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.loyalty program.

Outlook for ~~2022~~2023

We ~~are pleased with the momentum we have seen in demand and~~expect revenue ~~trends which accelerated throughout~~for the third quarter ~~resulting in our return~~of 2023 to ~~profitability. We expect unit revenue for the fourth quarter of 2022~~decrease between (8.0%) to ~~increase between 15% to 19%~~(4.0%) compared to the same period in ~~2019.~~2022. Full year 2023 revenue is expected to increase 6.0% to 9.0% compared to 2022. For the ~~fourth~~third quarter and full year of ~~2022,~~2023, we expect capacity to increase ~~in a range~~ between 1%5.5% to 4%8.5% compared to 2022.

We expect CASM Ex-Fuel (1) for the ~~same period in 2019. Full year 2022 capacity is expected~~third quarter of 2023 to increase between 0%2.5% to ~~2% compared to 2019. Our previous expectation for full year 2022 capacity was an increase of between 0% to 3% versus 2019.~~

~~Operating expenses per available seat mile, excluding fuel and related taxes, other non-airline operating expenses, and special items ("CASM Ex-Fuel")(1)~~ ~~for the fourth quarter of 2022 is expected to increase between 8.5% to 10.5% compared to the fourth quarter of 2019.~~ ~~This increase is primarily attributed to the following factors:~~sequential step-down in capacity, timing of maintenance events, and continued operational investments. As previously announced, we expect to deliver $250 million of cost savings from our new structural cost program 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.~~5.5%. We expect full year ~~2022~~2023 CASM Ex-Fuel to increase between ~~13%~~1.5% to ~~14%~~4.5% compared to ~~2019 and to be profitable again in the fourth quarter.~~2022.

RESULTS OF OPERATIONS

Three Months Ended ~~September~~June 30, ~~2022~~2023 vs. ~~2021~~2022

Overview

We reported net income of $57138 million, operating income of $~~139~~235 million and an operating margin of ~~5.4%~~9.0% for the three months ended ~~September~~June 30, ~~2022.~~2023. This compares to a net ~~income~~loss of ~~$130~~$188 million, an operating ~~income~~loss of ~~$186~~$113 million and an operating margin of ~~9.4%~~(4.6)% for the three months ended ~~September~~June 30, ~~2021.~~2022. Earnings per ~~diluted~~ share was $~~0.18~~0.41 for the ~~third~~second quarter of ~~2022~~2023 compared to ~~$0.40 of earnings~~a $0.58 loss per ~~diluted~~ share for the same period in ~~2021.~~2022.

Our reported results for the three months ended ~~September~~June 30, ~~2022~~2023 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 $152 million, adjusted operating income (1) was $259 million, adjusted operating margin (1) was 9.9%, and adjusted earnings per share (1) was $0.45 for the three months ended June 30, 2023.

Our reported results for the three months ended June 30, 2022 included the effects of special items. Adjusting for these special items (1),our adjusted net loss (1) was $153 million, adjusted operating loss (1) was $69 million, adjusted operating ~~income(1)~~ ~~was $152 million, adjusted operating~~ margin(1)was ~~5.9%~~(2.8)%, and adjusted ~~earnings~~loss per ~~diluted~~ share(1)was ~~$0.21~~$0.47 for the three months ended ~~September~~June 30, 2022.

On-time performance, as defined by the DOT, is arrival within 14 minutes of scheduled arrival time. In the second quarter of 2023, our systemwide on-time performance was 67.4% compared to 63.2% for the same period in 2022. Our completion factor increased by 2.2% points to 97.8% in the second quarter of 2023 from 95.6% in the same period in 2022.

(1) Refer to our ~~''Regulation~~“Regulation G Reconciliation of Non-GAAP Financial ~~Measures"~~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

~~Our reported results for the three months ended September 30, 2021 included the effects of special items. Adjusting for these special items(1)~~,~~our adjusted net loss(1)~~ ~~was $39 million, adjusted operating loss(1)~~ ~~was $0 million, adjusted operating margin(1)~~ ~~was 0.0%, and adjusted loss per share was $(0.12) for the three months ended September 30, 2021.~~

On-time performance, as defined by the Department of Transportation ("DOT") is arrival within 14 minutes of scheduled arrival time. In the third quarter of 2022, our system wide on-time performance was ~~67.2%~~ ~~compared to 63.5% 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.~~

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 June 30,						Year-over-Year Change
		2022			2021			$		%				2023			2022			$		%
Passenger revenue	Passenger revenue	$	2,415		$	1,856		$	559	30.1	%		Passenger revenue	$	2,460		$	2,302		$	158	6.9	%
Other revenue	Other revenue	147			116			31		27.1			Other revenue	150			143			7		4.8	%
Total operating revenues	Total operating revenues	$	2,562		$	1,972		$	590	30.0	%		Total operating revenues	$	2,610		$	2,445		$	165	6.7	%

Average Fare	Average Fare	$	229.95		$	204.50		$	25.45	12.4	%		Average Fare	$	219.47		$	221.38		$	(1.91)	(0.9)	%
Yield per passenger mile (cents)	Yield per passenger mile (cents)	17.30			14.37			2.93		20.4			Yield per passenger mile (cents)	16.62			16.48			0.14		0.8
Passenger revenue per ASM (cents)	Passenger revenue per ASM (cents)	14.89			11.48			3.41		29.7			Passenger revenue per ASM (cents)	14.17			14.03			0.14		1.0
Operating revenue per ASM (cents)	Operating revenue per ASM (cents)	15.80			12.20			3.60		29.6			Operating revenue per ASM (cents)	15.04			14.90			0.14		0.9
Average stage length (miles)	Average stage length (miles)	1,191			1,320			(129)		(9.8)			Average stage length (miles)	1,218			1,233			(15)		(1.2)
Revenue passengers (thousands)	Revenue passengers (thousands)	10,502			9,075			1,427		15.7			Revenue passengers (thousands)	11,207			10,396			811		7.8
Revenue passenger miles (millions)	Revenue passenger miles (millions)	13,963			12,913			1,050		8.1			Revenue passenger miles (millions)	14,798			13,967			831		5.9
Available Seat Miles (ASMs) (millions)	Available Seat Miles (ASMs) (millions)	16,217			16,168			49		0.3			Available Seat Miles (ASMs) (millions)	17,353			16,405			948		5.8
Load Factor	Load Factor	86.1		%	79.9		%			6.2		pts.	Load Factor	85.3		%	85.1		%			0.2		pts.

Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The increase in passenger revenue of $~~559~~158 million, or ~~30.1%~~6.9%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021,~~2022, was primarily ~~driven by the return in~~due to robust demand for ~~travel as we continue~~air travel. ASMs increased 5.8% in the second quarter of 2023 compared to ~~recover from~~ the ~~COVID-19 pandemic.~~2022 period. Revenue passengers increased to ~~10.5~~11.2 million for the three months ended ~~September~~June 30, ~~2022~~2023 from ~~9.1~~10.4 million for the same period in ~~2021.~~2022.

Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, airport concessions and advertising revenue. The year-over-year increase in other revenue of $7 million, or 4.8%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend and acquisitions.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

Operating Expenses

In detail, our operating costs per ~~available seat mile ("ASM")~~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 June 30,				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	$	599	$	910	$	(311)	(34.2)	%	3.45	5.55	(37.8)	%
Salaries, wages and benefits	Salaries, wages and benefits	675		620		55		8.9		4.16	3.83	8.6		Salaries, wages and benefits	772		695		77		11.2		4.44	4.23	5.1
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	163		149		14		9.4		0.94	0.91	3.5
Depreciation and amortization	Depreciation and amortization	147		140		7		5.2		0.90	0.86	4.9		Depreciation and amortization	155		145		10		7.2		0.89	0.88	1.3
Aircraft rent	Aircraft rent	30		25		5		20.7		0.19	0.16	20.4		Aircraft rent	34		27		7		25.6		0.20	0.17	18.7
Sales and marketing	Sales and marketing	81		60		21		35.4		0.50	0.37	35.0		Sales and marketing	82		78		4		4.1		0.47	0.48	(1.6)
Maintenance, materials and repairs		178		205		(27)		(13.0)		1.10	1.27	(13.3)
Maintenance, materials, and repairs														Maintenance, materials, and repairs	170		162		8		5.0		0.98	0.98	(0.8)
Other operating expenses	Other operating expenses	343		297		46		15.4		2.12	1.84	15.0		Other operating expenses	376		348		28		7.9		2.17	2.12	2.0
Special items	Special items	13		(186)		199		(106.8)		0.08	(1.15)	(106.8)		Special items	24		44		(20)		(45.6)		0.14	0.27	(48.6)
Total operating expenses	Total operating expenses	$	2,423	$	1,786	$	637	35.7	%	14.94	11.04	35.3	%	Total operating expenses	$	2,375	$	2,558	$	(183)	(7.2)	%	13.68	15.59	(12.2)	%

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)	$	2,351	$	2,514	$	(163)	(6.5)	%	13.54	15.32	(11.6)	%

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

Aircraft Fuel and Related Taxes

Aircraft fuel and related taxes ~~increased~~decreased by $~~382~~311 million, or 34.2%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021.~~2022. The average fuel price ~~for the three months ended September 30, 2022~~ ~~increased~~decreased by ~~84.0%~~37.9% to ~~$3.84~~$2.63 per gallon. ~~Our fuel consumption for this period~~This ~~increased~~decrease was partially offset by ~~1.1%~~a 6.1%, or 213 million gallons, increase in fuel consumption due to ~~the increase in capacity as demand for travel returned.~~higher capacity.

Salaries, Wages and Benefits

Salaries, wages and benefits increased ~~$55~~$77 million, or ~~8.9%~~11.2%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021.~~2022, driven by higher wage rates. The wage 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. The average number of full-time equivalent crewmembers increased by 24.4% compareddue to the ~~same period~~new pilot union contract effective March 1, 2023, which included an initial pay rate increase of 14% as discussed in ~~2021.~~Note 6. Non-pilot crewmember wage rates also contributed to the increase.

Landing Fees and Other Rents

Landing fees and other rents ~~decreased $51~~increased $14 million, or ~~(27.9)%~~9.4%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021 primar~~2022, ~~ily~~primarily due to a ~~decrease in rates offset by a 10.3%~~6.7% increase in ~~departures.~~departures and rate increases at certain blue cities.

Depreciation and Amortization

Depreciation and amortization increased $7$10 million, or ~~5.2%~~7.2%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021~~ 2022. This increase was primarily driven by 11 aircraft and 19 spare engine deliveries since the ~~addition~~second quarter of 2022.

Aircraft Rent

Aircraft rent ~~eight~~increased $7 million, or 25.6% ~~new aircraft that were placed into service since September 30, 2021. The average number of our operating aircraft increased by 3.7% during~~, in the three months ended ~~September~~June 30, ~~2022 as~~2023 compared to the same period in ~~2021.~~2022 as a result of lease return compensation cost and incremental engine leases.

Maintenance, Materials, and Repairs

Maintenance materials and repairs increased $8 million, or 5.0%, in the three months ended June 30, 2023 compared to the same period in 2022, primarily driven by timing of heavy maintenance visits, aging of our fleet and increased 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 catering services), personnel expenses, professional and legal fees, onboard supplies, shop and office supplies, bad debts, communication costs, and taxes other than payroll and fuel taxes.

Other operating expenses increased $28 million, or 7.9%, for the three months ended June 30, 2023 compared to the same period in 2022, primarily driven by an increase in demand. Our ASM increased 5.8% year-over-year.

Special Items

For the three months ended June 30, 2023, special items included the following:

•$24 million relating to Spirit acquisition costs.

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

•$32 million relating to union contract costs;

•$7 million relating to Spirit acquisition; and

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

(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

Six Months Ended June 30, 2023 vs. 2022

Overview

We reported a net loss of $54 million, an operating loss of $7 million and an operating margin of (0.1)% for the six months ended June 30, 2023. This compares to a net loss of $443 million, an operating loss of $480 million and an operating margin of (11.5)% for the six months ended June 30, 2022. Loss per share was $0.16 for the six months ended June 30, 2023 compared to a loss per share of $1.38 for the same period in 2022.

Our reported results for the six months ended June 30, 2023 included the effects of special items and certain gains and losses on investments. Adjusted for these items, our adjusted net income (1) was $29 million, adjusted operating income (1) was $129 million, adjusted operating margin (1) was 2.6%, and adjusted earnings per share (1) was $0.10 for the six months ended June 30, 2023.

Our reported results for the six months ended June 30, 2022 included the effects of special items. Adjusting for these special items, our adjusted net loss (1) was $408 million, adjusted operating loss (1) was $436 million, adjusted operating margin(1) was (10.4)%, and adjusted loss per share (1) was $1.27 for the six months ended June 30, 2022.

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Six Months Ended June 30,						Year-over-Year Change
	2023			2022			$		%
Passenger revenue	$	4,641		$	3,904		$	737	18.9	%
Other revenue	296			277			19		7.0
Total operating revenues	$	4,937		$	4,181		$	756	18.1	%

Average Fare	$	216.90		$	210.20		$	6.70	3.2	%
Yield per passenger mile (cents)	16.47			15.68			0.79		5.0
Passenger revenue per ASM (cents)	13.60			12.28			1.32		10.7
Operating revenue per ASM (cents)	14.47			13.15			1.32		10.0
Average stage length (miles)	1,208			1,232			(24)		(1.9)
Revenue passengers (thousands)	21,398			18,573			2,825		15.2
Revenue passenger miles (millions)	28,173			24,893			3,280		13.2
Available Seat Miles (ASMs) (millions)	34,122			31,788			2,334		7.3
Load Factor	82.6		%	78.3		%			4.3		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 $737 million, or 18.9%, for the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to robust demand for air travel. ASMs increased 7.3% year-over-year and passenger revenue per ASM increased 10.7%. Revenue passengers increased by 15.2% to 21.4 million for the six months ended June 30, 2023 from 18.6 million for the same period in 2022.

Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, airport concessions and advertising revenue. The year-over-year increase in other revenue of $19 million, or 7.0%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend and acquisitions.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

Operating Expenses

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


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Six Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	1,365	$	1,481	$	(116)	(7.9)	%	4.00	4.66	(14.2)	%
Salaries, wages and benefits	1,514		1,383		131		9.5		4.43	4.34	2.0
Landing fees and other rents	323		281		42		14.9		0.95	0.88	7.1
Depreciation and amortization	306		288		18		6.4		0.90	0.91	(0.9)
Aircraft rent	66		53		13		25.0		0.19	0.17	16.5
Sales and marketing	157		135		22		16.2		0.46	0.42	8.3
Maintenance, materials and repairs	345		313		32		9.9		1.01	0.99	2.4
Other operating expenses	732		683		49		7.4		2.15	2.15	0.1
Special items	136		44		92		NM (2)		0.40	0.14	NM
Total operating expenses	$	4,944	$	4,661	$	283	6.1	%	14.49	14.66	(1.2)	%

Total operating expenses excluding special items (1)	$	4,808	$	4,617	$	191	4.2	%	14.09	14.52	(3.0)	%

(2) Not meaningful or greater than 100% change.

Aircraft Fuel and Related Taxes

Aircraft fuel and related taxes decreased by $116 million, or 7.9%, for the six months ended June 30, 2023 compared to the same period in 2022. The average fuel price for the six months ended June 30, 2023 decreased by 15.1% to $3.06 per gallon. The decrease in fuel price was partially offset by a 8.5%, or 35 million gallons, increase in fuel consumption due to higher capacity.

Salaries, Wages and Benefits

Salaries, wages and benefits increased by $131 million, or 9.5%, for the six months ended June 30, 2023 compared to the same period in 2022, driven by a mix of wage rate increases and more full-time equivalent (“FTE”) crew members. The wage rate increases were primarily due to the new pilot union contract effective March 1, 2023, which includes an initial pay rate increase of 14%. Non-pilot crew member wage rates also contributed to the increase. The average number of FTEs increased by 4.3% compared to the same period in 2022.

Landing Fees and Other Rents

Landing fees and other rents increased by $42 million, or 14.9%, for the six months ended June 30, 2023 compared to the same period in 2022, primarily due to a 9.1% increase in departures and rate increases at certain blue cities.

Depreciation and Amortization

Depreciation and amortization increased by $18 million, or 6.4%, for the six months ended June 30, 2023 compared to the same period in 2022. This increase was primarily driven by 11 aircraft and 19 spare engine deliveries since the second quarter of 2022.

Aircraft Rent

Aircraft rent increased $13 million, or 25.0%, in the six months ended June 30, compared to the same period in 2022 as a result of lease return compensation cost and incremental engine leases.

(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

~~Sales and Marketing~~Operating Expenses

~~Sales and marketing~~ ~~increased $21 million, or 35.4%~~, for the three months ended September 30, 2022 compared to the same period in 2021 principally driven by higher credit card fees and computer reservation system charges, which are directly related to the return in demandIn detail, our operating costs per ASM, were 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.~~follows:

~~Maintenance Materials and Repairs~~


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	599	$	910	$	(311)	(34.2)	%	3.45	5.55	(37.8)	%
Salaries, wages and benefits	772		695		77		11.2		4.44	4.23	5.1
Landing fees and other rents	163		149		14		9.4		0.94	0.91	3.5
Depreciation and amortization	155		145		10		7.2		0.89	0.88	1.3
Aircraft rent	34		27		7		25.6		0.20	0.17	18.7
Sales and marketing	82		78		4		4.1		0.47	0.48	(1.6)
Maintenance, materials, and repairs	170		162		8		5.0		0.98	0.98	(0.8)
Other operating expenses	376		348		28		7.9		2.17	2.12	2.0
Special items	24		44		(20)		(45.6)		0.14	0.27	(48.6)
Total operating expenses	$	2,375	$	2,558	$	(183)	(7.2)	%	13.68	15.59	(12.2)	%

Total operating expenses excluding special items (1)	$	2,351	$	2,514	$	(163)	(6.5)	%	13.54	15.32	(11.6)	%

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

~~Maintenance materials~~Aircraft Fuel and ~~repairs~~Related Taxes

Aircraft fuel and related taxes decreased ~~$27~~ by $311 million, or ~~(13.0)%~~34.2%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021,~~ 2022. The average fuel price decreased by 37.9% to $2.63 per gallon. This decrease was partially offset by a 6.1%, or 13 million gallons, increase in fuel consumption due to higher capacity.

Salaries, Wages and Benefits

Salaries, wages and benefits increased $77 million, or 11.2%, for the three months ended June 30, 2023 compared to the same period in 2022, driven by higher wage rates. The wage rate increase was primarily due to the new pilot union contract effective March 1, 2023, which included an initial pay rate increase of 14% as discussed in Note 6. Non-pilot crewmember wage rates also contributed to the increase.

Landing Fees and Other Rents

Landing fees and other rents increased $14 million, or 9.4%, for the three months ended June 30, 2023 compared to the same period in 2022, primarily due to a 6.7% increase in departures and rate increases at certain blue cities.

Depreciation and Amortization

Depreciation and amortization increased $10 million, or 7.2%, for the three months ended June 30, 2023 compared to the same period in 2022. This increase was primarily driven by 11 aircraft and 19 spare engine deliveries since the second quarter of 2022.

Aircraft Rent

Aircraft rent increased $7 million, or 25.6%, in the three months ended June 30, 2023 compared to the same period in 2022 as a result of lease return compensation cost and incremental engine leases.

Maintenance, Materials, and Repairs

Maintenance materials and repairs increased $8 million, or 5.0%, in the three months ended June 30, 2023 compared to the same period in 2022, primarily driven by timing of ~~engine maintenance, offset by an increase in~~ heavy maintenance visits, aging of our fleet and ~~power by the hour based maintenance driven by the increase in aircraft utilization.~~increased 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~~$28 million, or ~~15.4%~~7.9%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021 as we ramped up the level of our operations~~2022, primarily driven by an increase in ~~response to the return in demand for air travel.~~demand. Our ASM increased 5.8% year-over-year.

Special Items

For the three months ended ~~September~~June 30, ~~2022,~~2023, 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~~ included the following:

•~~Contra-expense of $(186)~~$24 million ~~which represents~~relating to Spirit acquisition costs.

For the ~~amount of federal payroll support grants utilized during the period.~~

~~Nine Months Ended September~~three months ended June 30, 2022, ~~vs. 2021~~

~~Overview~~special items included the following:

~~We reported a net loss of~~ •$~~386~~32 million ~~an operating loss of $341 million and an operating margin of (5.1)%~~ ~~for the nine months ended September 30, 2022. This compares~~relating 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.~~union contract costs;

~~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~~7 million~~, adjusted operating loss(1)~~ ~~was~~ ~~$284 million, adjusted operating margin(1)~~ ~~was~~ ~~(4.2)%~~, relating to Spirit acquisition; 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,~~•$5 million relating to an impairment on 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.~~Embraer E190 fleet.

(1) Refer to our ~~''Regulation~~“Regulation G Reconciliation of Non-GAAP Financial ~~Measures"~~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

Six Months Ended June 30, 2023 vs. 2022

Overview

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	(Revenues in millions; percent changes based on unrounded numbers)	Nine Months Ended September 30,						Year-over-Year Change					(Revenues in millions; percent changes based on unrounded numbers)	Six Months Ended June 30,						Year-over-Year Change
		2022			2021			$		%				2023			2022			$		%
Passenger revenue	Passenger revenue	$	6,319		$	3,913		$	2,406	61.5	%		Passenger revenue	$	4,641		$	3,904		$	737	18.9	%
Other revenue	Other revenue	424			290			134		46.4			Other revenue	296			277			19		7.0
Total operating revenues	Total operating revenues	$	6,743		$	4,203		$	2,540	60.4	%		Total operating revenues	$	4,937		$	4,181		$	756	18.1	%

Average Fare	Average Fare	$	217.34		$	182.22		$	35.12	19.3	%		Average Fare	$	216.90		$	210.20		$	6.70	3.2	%
Yield per passenger mile (cents)	Yield per passenger mile (cents)	16.26			13.26			3.00		22.7			Yield per passenger mile (cents)	16.47			15.68			0.79		5.0
Passenger revenue per ASM (cents)	Passenger revenue per ASM (cents)	13.17			10.06			3.11		30.9			Passenger revenue per ASM (cents)	13.60			12.28			1.32		10.7
Operating revenue per ASM (cents)	Operating revenue per ASM (cents)	14.05			10.80			3.25		30.0			Operating revenue per ASM (cents)	14.47			13.15			1.32		10.0
Average stage length (miles)	Average stage length (miles)	1,218			1,293			(75)		(5.8)			Average stage length (miles)	1,208			1,232			(24)		(1.9)
Revenue passengers (thousands)	Revenue passengers (thousands)	29,075			21,476			7,599		35.4			Revenue passengers (thousands)	21,398			18,573			2,825		15.2
Revenue passenger miles (millions)	Revenue passenger miles (millions)	38,857			29,524			9,333		31.6			Revenue passenger miles (millions)	28,173			24,893			3,280		13.2
Available Seat Miles (ASMs) (millions)	Available Seat Miles (ASMs) (millions)	48,005			38,902			9,103		23.4			Available Seat Miles (ASMs) (millions)	34,122			31,788			2,334		7.3
Load Factor	Load Factor	80.9		%	75.9		%			5.0		pts.	Load Factor	82.6		%	78.3		%			4.3		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,~~$737 million, or ~~61.5%~~18.9%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021,~~2022 was primarily ~~driven by the return in~~due to robust demand for ~~travel~~air travel. ASMs increased 7.3% year-over-year and ~~a 19.3% increase in fares, as we continue to recover from the COVID-19 pandemic.~~passenger revenue per ASM increased 10.7%. Revenue passengers increased by ~~35.4%~~15.2% to ~~29.1~~21.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~21.5~~18.6 million for the same period in ~~2021.~~2022.

Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, airport concessions and advertising revenue. The year-over-year increase in other revenue of $19 million, or 7.0%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend and acquisitions.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

Operating Expenses

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


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Six Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	1,365	$	1,481	$	(116)	(7.9)	%	4.00	4.66	(14.2)	%
Salaries, wages and benefits	1,514		1,383		131		9.5		4.43	4.34	2.0
Landing fees and other rents	323		281		42		14.9		0.95	0.88	7.1
Depreciation and amortization	306		288		18		6.4		0.90	0.91	(0.9)
Aircraft rent	66		53		13		25.0		0.19	0.17	16.5
Sales and marketing	157		135		22		16.2		0.46	0.42	8.3
Maintenance, materials and repairs	345		313		32		9.9		1.01	0.99	2.4
Other operating expenses	732		683		49		7.4		2.15	2.15	0.1
Special items	136		44		92		NM (2)		0.40	0.14	NM
Total operating expenses	$	4,944	$	4,661	$	283	6.1	%	14.49	14.66	(1.2)	%

Total operating expenses excluding special items (1)	$	4,808	$	4,617	$	191	4.2	%	14.09	14.52	(3.0)	%

(2) Not meaningful or greater than 100% change.

Aircraft Fuel and Related Taxes

Salaries, Wages and Benefits

Landing Fees and Other Rents

Depreciation and Amortization

Aircraft Rent

Aircraft rent increased $13 million, or 25.0%, in the six months ended June 30, compared to the same period in 2022 as a result of lease return compensation cost and incremental engine leases.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

Operating Expenses

In detail, our operating costs per 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~~


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	599	$	910	$	(311)	(34.2)	%	3.45	5.55	(37.8)	%
Salaries, wages and benefits	772		695		77		11.2		4.44	4.23	5.1
Landing fees and other rents	163		149		14		9.4		0.94	0.91	3.5
Depreciation and amortization	155		145		10		7.2		0.89	0.88	1.3
Aircraft rent	34		27		7		25.6		0.20	0.17	18.7
Sales and marketing	82		78		4		4.1		0.47	0.48	(1.6)
Maintenance, materials, and repairs	170		162		8		5.0		0.98	0.98	(0.8)
Other operating expenses	376		348		28		7.9		2.17	2.12	2.0
Special items	24		44		(20)		(45.6)		0.14	0.27	(48.6)
Total operating expenses	$	2,375	$	2,558	$	(183)	(7.2)	%	13.68	15.59	(12.2)	%

Total operating expenses excluding special items (1)	$	2,351	$	2,514	$	(163)	(6.5)	%	13.54	15.32	(11.6)	%

(1) Refer to our ~~''Regulation~~“Regulation G Reconciliation of Non-GAAP Financial ~~Measures"~~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

Aircraft Fuel and Related Taxes

~~demand for travel returned. Scheduled departures increased to 246,653 flights, o~~Aircraft fuel and related taxes ~~r 31.0%~~decreased by $311 million, or 34.2%, for the ~~nine~~three months ended ~~September~~June 30, 2023 compared to the same period in 2022. The average fuel price decreased by 37.9% to $2.63 per gallon. This decrease was partially offset by a 6.1%, or 13 million gallons, increase in fuel consumption due to higher capacity.

Salaries, Wages and Benefits

Landing Fees and Other Rents

Depreciation and Amortization

Aircraft Rent

Aircraft rent increased $7 million, or 25.6%, in the three months ended June 30, 2023 compared to the same period in 2022 as a result of lease return compensation cost and incremental engine leases.

Maintenance, Materials, and Repairs

Other Operating Expenses

Special Items

For the three months ended June 30, 2023, special items included the following:

•$24 million relating to Spirit acquisition costs.

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

•$32 million relating to union contract costs;

•$7 million relating to Spirit acquisition; and

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

(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

Six Months Ended June 30, 2023 vs. 2022

Overview

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Six Months Ended June 30,						Year-over-Year Change
	2023			2022			$		%
Passenger revenue	$	4,641		$	3,904		$	737	18.9	%
Other revenue	296			277			19		7.0
Total operating revenues	$	4,937		$	4,181		$	756	18.1	%

Average Fare	$	216.90		$	210.20		$	6.70	3.2	%
Yield per passenger mile (cents)	16.47			15.68			0.79		5.0
Passenger revenue per ASM (cents)	13.60			12.28			1.32		10.7
Operating revenue per ASM (cents)	14.47			13.15			1.32		10.0
Average stage length (miles)	1,208			1,232			(24)		(1.9)
Revenue passengers (thousands)	21,398			18,573			2,825		15.2
Revenue passenger miles (millions)	28,173			24,893			3,280		13.2
Available Seat Miles (ASMs) (millions)	34,122			31,788			2,334		7.3
Load Factor	82.6		%	78.3		%			4.3		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 $737 million, or 18.9%, for the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to robust demand for air travel. ASMs increased 7.3% year-over-year and passenger revenue per ASM increased 10.7%. Revenue passengers increased by 15.2% to 21.4 million for the six months ended June 30, 2023 from 18.6 million for the same period in 2022.

Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, airport concessions and advertising revenue. The year-over-year increase in other revenue of $19 million, or 7.0%, was principally driven by an increase in marketing revenue associated with our TrueBlue® program due to higher customer spend and acquisitions.

(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

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)	Six Months Ended June 30,				Year-over-Year Change				Cents per ASM
	2023		2022		$		%		2023	2022	% Change
Aircraft fuel and related taxes	$	1,365	$	1,481	$	(116)	(7.9)	%	4.00	4.66	(14.2)	%
Salaries, wages and benefits	1,514		1,383		131		9.5		4.43	4.34	2.0
Landing fees and other rents	323		281		42		14.9		0.95	0.88	7.1
Depreciation and amortization	306		288		18		6.4		0.90	0.91	(0.9)
Aircraft rent	66		53		13		25.0		0.19	0.17	16.5
Sales and marketing	157		135		22		16.2		0.46	0.42	8.3
Maintenance, materials and repairs	345		313		32		9.9		1.01	0.99	2.4
Other operating expenses	732		683		49		7.4		2.15	2.15	0.1
Special items	136		44		92		NM (2)		0.40	0.14	NM
Total operating expenses	$	4,944	$	4,661	$	283	6.1	%	14.49	14.66	(1.2)	%

Total operating expenses excluding special items (1)	$	4,808	$	4,617	$	191	4.2	%	14.09	14.52	(3.0)	%

(2) Not meaningful or greater than 100% change.

Aircraft Fuel and Related Taxes

Salaries, Wages and Benefits

Salaries, wages and benefits increased by ~~$340~~$131 million, or ~~19.8%~~9.5%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021.~~2022, driven by a mix of wage rate increases and more full-time equivalent (“FTE”) crew members. The wage rate increases were primarily due to the new pilot union contract effective March 1, 2023, which includes an initial pay rate increase ~~was driven primarily~~of 14%. Non-pilot crew member wage rates also contributed to the increase. The average number of FTEs increased 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 crewmembers4.3% compared to ~~approximately 21,250 crewmembers at September 30, 2021.~~the same period in 2022.

Landing Fees and Other Rents

Landing fees and other rents ~~decreased~~increased by ~~$58~~$42 million, or ~~(12.5%)~~14.9%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021~~2022, primarily due to a ~~decrease in rates offset by a 31%~~9.1% increase in ~~departures.~~departures and rate increases at certain blue cities.

Depreciation and Amortization

Depreciation and amortization increased by ~~$37~~$18 million, or ~~9.4%~~6.4%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021.~~2022. This increase was primarily ~~attributed to~~driven by 11 aircraft and 19 spare engine deliveries since the ~~addition~~second quarter 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.~~2022.

Aircraft Rent

Aircraft rent increased $7$13 million, or ~~10.0%~~25.0%, ~~for~~in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~ compared to the same period in ~~2021. The increase was driven primarily by an increase~~2022 as a result of ~~24 leased engines in 2022.~~

lease return compensation cost and incremental engine leases.

(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

Sales and Marketing

Sales and marketing increased ~~$86~~$22 million, or ~~66.6%~~16.2%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021, driven by~~2022, due to higher credit card fees and computer reservation system charges, ~~which are directly related to~~driven by the increase in demand ~~increases as we continue to recover from the COVID-19 pandemic.~~for air travel. Revenue passengers for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased by ~~7.6~~2.8 million, or ~~35.4%~~15.2%, year-over-year.

Maintenance Materials and Repairs

Maintenance materials and repairs increased ~~$20~~$32 million, or ~~4.0%~~9.9%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021,~~2022, primarily driven by ~~the~~ timing of ~~engine maintenance, offset by an increase in~~ heavy maintenance visits, aging of our fleet and ~~power by the hour based maintenance driven by the increase in aircraft utilization.~~increased 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 ~~$258~~$49 million, or ~~33.5%~~7.4%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021 as we ramped up the level of our operations~~2022, primarily driven by an increase in ~~response to the return in demand for air travel.~~demand. ASMs increased 7.3% year-over-year.

Special Items

~~Special items for~~For the ~~nine~~six months ended ~~September~~June 30, 2023, special items included the following:

•$95 million relating to union contract costs; and

•$41 million relating to Spirit acquisition costs.

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

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

•$187 million ~~in acquisition costs~~ relating to ~~our merger with Spirit;~~Spirit acquisition costs; and

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

•~~$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~~“Regulation G Reconciliation of Non-GAAP Financial ~~Measures"~~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

•~~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~~six months ended ~~September~~June 30, ~~2022~~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 June 30,						Year-over-Year Change			Six Months Ended June 30,						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			%			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)	11,207			10,396			7.8			21,398			18,573			15.2
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)	14,798			13,967			5.9			28,173			24,893			13.2
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)	17,353			16,405			5.8			34,122			31,788			7.3
Load factor	Load factor	86.1		%	79.9		%	6.2	pts	80.9		%	75.9		%	5.0	pts	Load factor	85.3		%	85.1		%	0.2		pts	82.6		%	78.3		%	4.3		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)	11.3			10.4			8.7			11.2			10.2			9.8

Average fare	Average fare	$	229.95		$	204.50		12.4		$	217.34		$	182.22		19.3		Average fare	$	219.47		$	221.38		(0.9)			$	216.90		$	210.20		3.2
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)	16.62			16.48			0.8			16.47			15.68			5.0
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)	14.17			14.03			1.0			13.60			12.28			10.7
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)	15.04			14.90			0.9			14.47			13.15			10.0
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)	13.68			15.59			(12.2)			14.49			14.66			(1.2)
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)	10.00			9.69			3.2			9.99			9.77			2.2

Departures	Departures	84,805			76,918			10.3		246,653			188,220			31.0		Departures	89,036			83,455			6.7			176,517			161,848			9.1
Average stage length (miles)	Average stage length (miles)	1,191			1,320			(9.8)		1,218			1,293			(5.8)		Average stage length (miles)	1,218			1,233			(1.2)			1,208			1,232			(1.9)
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	282			283			(0.6)			284			283			0.4
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	$	2.63		$	4.24		(37.9)			$	3.06		$	3.60		(15.1)
Fuel gallons consumed (millions)	Fuel gallons consumed (millions)	215			213			1.1		626			501			25.1		Fuel gallons consumed (millions)	228			215			6.1			446			411			8.5
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	20,921			20,249			3.3	%		20,729			19,868			4.3	%

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 experienced and continue to 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 second 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.

(1) Refer to our ~~''Regulation~~“Regulation G Reconciliation of Non-GAAP Financial ~~Measures"~~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 in certain balance sheet data between ~~September~~June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022 (in millions):

(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) %


(percent changes based on unrounded numbers)
Selected Balance Sheet Data:	June 30, 2023	December 31, 2022	$ Change	% Change
ASSETS
Cash and cash equivalents	1,462	1,042	420	40.3	%
Investment securities	205	350	(145)	(41.4)	%
Inventories, less allowance (2023-$32; 2022-$29)	89	87	2	2.5	%
Prepaid expenses and other	165	120	45	37.5	%
LIABILITIES
Accounts payable	699	532	167	31.5	%
Air traffic liability	1,751	1,581	170	10.7	%
Other accrued liabilities	526	486	40	8.1	%

Cash and cash equivalents

Cash and cash equivalents ~~decreased~~increased by ~~$617~~$420 million, or ~~(30.6)%,~~40.3%. Refer to ~~$1.4 billion as~~Analysis of ~~September 30, 2022. Notable outflows during the nine months ended September 30, 2022 include: $599 million in capital expenditures inclusive of predelivery deposits~~Cash Flows below for flight equipment, $21 million of net purchases in investment securities, and $255 million in repayment of long-term debt and finance lease obligations. These outflows were partially offset by net cash provided by operating activities of $321 million.additional information.

Investment securities

Investment securities decreased by ~~$132~~$145 million, or ~~(16.0)%~~41.4%, primarily driven by the ~~net purchases~~maturities of our commercial paper and time deposits ~~which had maturities between three~~that were outstanding at December 31, 2022.

Prepaid expense and ~~twelve months at September 30, 2022.~~other

~~Receivables, less allowance~~

~~Receivables~~ Prepaid expense and other increased by ~~$91~~$45 million, or 37.5%, ~~primarily~~ driven by an increase in ~~credit card receivables~~prepaid insurance and other goods and services.

Accounts payable

Accounts payable increased by $167 million, or 31.5%, primarily due to ~~an increase 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~~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.~~business partner payments.

Air traffic liability

Air traffic liability increased by ~~$127~~$170 million, or ~~7.9%~~10.7%, 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~~$40 million, or ~~17.5%~~8.1%, primarily asdue to vacation packages with JetBlue Travel Products and 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~~liability correlates to the increase in demand for travel.

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

~~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.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~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.

At June 30, 2023, we had unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities of approximately $1.8 billion, which we believe will be sufficient to satisfy our liquidity needs for the next twelve months, and

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PART I. FINANCIAL INFORMATION

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

we expect to meet our long-term liquidity needs with our projected cash from operations, available lines of credit and debt financing.

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, we had cash, cash equivalents, and short-term investments of approximately~~ ~~$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~~$663 million and ~~$1.8 billion~~$299 million for the ~~nine~~six months ended ~~September~~June 30, 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~~six months ended ~~September~~June 30, 2023, capital expenditures related to our purchase of flight equipment included $249 million related to the purchase of aircraft and spare engines, $102 million in work-in-progress relating to flight equipment and $24 million for spare part purchases. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $64 million. Investing activities for the current year period also included $148 million in net proceeds from investment securities, $66 million in payments for acquisition of Spirit, and $18 million in predelivery deposits.

During the six months ended June 30, 2022, capital expenditures related to our purchase of flight equipment included ~~$172~~$90 million related to the purchase of ~~four Airbus A220 aircraft, one Airbus A321neo~~ aircraft and ~~several~~ spare ~~engines; $51~~engines, $29 million for spare part ~~purchases; $165~~purchases, $99 million in work-in-progress relating to flight ~~equipment;~~equipment, and ~~$116~~$65 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for ~~$95~~$56 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$139 million.

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

Financing Activities

Financing activities for the ~~nine~~six months ended ~~September~~June 30, 2023 primarily consisted of proceeds from sale leaseback transactions of $228 million, issuance of $78 million in equipment notes to finance certain aircraft and issuance of common stock of $31 million related to our crewmember stock purchase plan. These proceeds were partially offset by $200 million in payments on our outstanding debt and finance lease obligations.

Financing activities for the six months ended June 30, 2022 primarily consisted of ~~the following:~~

•p~~Principal~~rincipal payments of ~~$255~~$189 million on our outstanding debt and finance lease ~~obligations.~~

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

~~Financing activities for the 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 a working capital deficit of ~~$1.3~~$1.7 billion at ~~September~~June 30, ~~2022~~2023 compared to ~~$170 million~~$1.8 billion at December 31, ~~2021.~~2022. Our working capital deficit decreased by ~~$1.1 billion~~$172 million due to several factors, including an overall increase in our ~~air traffic liability which was attributed to the increase~~cash and cash equivalents and a decrease in ~~customer bookings primarily driven by the return in demand for travel.~~current maturities of long-term debt.

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 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.

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PART I. FINANCIAL INFORMATION

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

Contractual Obligations

Our material cash requirements for known contractual and other obligations ~~at September~~as of June 30, ~~2022 include~~2023 includes the following (in ~~billions)~~millions):

Payments due in
Total 2022 2023 2024 2025 2026 Thereafter
Debt and finance lease obligations(1)
$ 4.4 $ 0.1 $ 0.7 $ 0.4 $ 0.3 $ 1.0 $ 1.9
Operating lease obligations 1.0 — 0.1 0.1 0.1 0.1 0.6
Flight equipment purchase obligations(2)
8.0 0.2 1.5 2.1 1.8 1.4 1.0
Other obligations(3)
2.5 0.1 0.4 0.4 0.4 0.4 0.8
Total $ 15.9 $ 0.4 $ 2.7 $ 3.0 $ 2.6 $ 2.9 $ 4.3



	Remainder of 2023		2024		2025		2026		2027		Thereafter		Total
Debt and finance lease obligations (1)	$	197	$	367	$	325	$	1,057	$	295	$	2,226	$	4,467
Operating lease obligations	80		147		105		84		84		438		938
Flight equipment purchase obligations (2)	1,270		2,189		1,701		1,334		987		—		7,481
Other obligations (3)	260		405		441		451		471		40		2,068
Total	$	1,807	$	3,108	$	2,572	$	2,926	$	1,837	$	2,704	$	14,954

The amounts stated above do not include additional obligations incurred as a result of financing activities executed after ~~September~~June 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~~ 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~~debt. Estimated floating rate is equal to Secured Overnight Financing Rate (“SOFR”) plus an applicable margin based on ~~September~~June 30, ~~2022~~2023 rates.

(2) Amounts represent obligations based on the current delivery schedule set forth in our Airbus order book as of ~~September~~June 30, ~~2022.~~2023. Refer to Note 6 to ourcondensed consolidated financial statements included in Part I, Item 1 of this Report for additional information on our 2023 capacity planning assumptions.

(3) Amounts primarily include non-cancelable commitments for ~~the purchase of goods~~flight equipment maintenance, construction and ~~services.~~information technology.

As of ~~September~~June 30, ~~2022, we believe~~2023, we are in compliance with the covenants of our debt and lease agreements. We have approximately $4052 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~~June 30, ~~2022, we operated a~~2023, our fleet ~~of 130 Airbus A320 aircraft, 63 Airbus A321 aircraft,~~consisted of:


Aircraft Type						Aircraft Count
Airbus
A320						130
A321						63
A321neo						19
A321LR						7
A220						17
Embraer
E190						55
Total						291

18 ~~Airbus A321neo aircraft, 4 Airbus A321neo long range aircraft,~~ 12 ~~Airbus A220 aircraft, and 60 Embraer E190 aircraft.~~ Of our fleet, ~~219~~223 are owned by us, 68 are leased under operating leases, and none are leased under finance leases. Our owned aircraft include aircraft associated with sale-leaseback transactions that did not qualify as sales for accounting purposes. As of ~~September~~June 30, ~~2022,~~2023, the average age of our operating fleet was 1212.6 years.

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PART I. FINANCIAL INFORMATION

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

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


Year	Year	Airbus A321neo	Airbus A220	Total	Year	Airbus A321neo	Airbus A220	Total
2022		2	2	4
2023		11	18	29
Remainder of 2023					Remainder of 2023	9	15	24
2024	2024	13	30	43	2024	13	30	43
2025	2025	11	24	35	2025	11	24	35
2026	2026	12	14	26	2026	12	14	26
2027	2027	14	—	14	2027	14	—	14

Total	Total	63	88	151	Total	59	83	142

~~In September 2022, we signed an amendment~~(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~~schedules. Refer to Note 6 to ourcondensed consolidated financial statements included in Part I, Item 1 of this Report for ~~certain A220 aircraft. The table above represents the current delivery schedule set forth in~~additional information on 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.~~capacity planning assumptions.

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.

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.

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.

Off-Balance Sheet Arrangements

~~Although some~~There have been no material changes to off-balance sheet arrangements from the information provided in Item 7. Management's Discussion and Analysis of ~~our aircraft lease arrangements are with variable interest entities, as defined by Topic 810, Consolidations~~Financial Condition and Results of ~~the FASB Codification, none of them require consolidation~~Operations - Off Balance Sheet Arrangements included 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.2022 Form 10-K.

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.

~~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"), and Section 21E of the Securities Exchange Act of 1934, as amended ("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,” “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 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; 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 our ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances; volatility in fuel prices, maintenance costs and interest rates; our reliance on high daily aircraft utilization; our ability to implement our growth strategy; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on a limited number of suppliers, including for aircraft, aircraft engines and parts and vulnerability to delays by those suppliers; our dependence on the New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology; the outcome of the lawsuit filed by the 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; 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 in a timely manner or otherwise and the potential financial consequences thereof; failure to satisfy other closing conditions to the transaction with Spirit; failure of the parties to consummate the transaction; JetBlue’s ability to finance the transaction with Spirit and the indebtedness JetBlue expects to incur in connection with the transaction; the possibility that JetBlue may be unable to achieve expected synergies and operating efficiencies within the expected timeframes or at all and to successfully integrate Spirit’s operations with those of JetBlue; the possibility that such integration may be more difficult, time-consuming or costly than expected or that operating costs and business disruption (including, without limitation, disruptions in relationships with employees, customers or suppliers) may be greater than expected in connection with the transaction with Spirit; failure to realize anticipated benefits of the combined operations; demand for the combined company’s services; the growth, change and competitive landscape of the markets in which the combined company participates; expected seasonality trends; diversion of managements’ attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the 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. 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.~~

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~~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 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, including but not limited to, JetBlue's 2021 Annual Report on 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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PART I. FINANCIAL INFORMATION

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

REGULATION G RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

We ~~use~~report our financial results in accordance with GAAP; however, we present certain non-GAAP financial measures in this ~~report.~~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").~~GAAP. We ~~believe~~present these non-GAAP financial measures because we believe they provide useful supplemental information that enables 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 presented in this Report and shows a reconciliation of each such non-GAAP financial ~~measures used in this filing~~measure to ~~the~~its most directly comparable GAAP financial ~~measures.~~measure.

Operating Expenses, excluding Fuel and Related Taxes, Other Non-Airline Operating Expenses, and Special Items (“Operating Expenses ex-fuel”) and Operating Expense ex-fuel per Available Seat Mile ~~excluding fuel and related taxes, other non-airline operating expenses, and special items ("~~ex-fuel (“CASM ~~Ex-Fuel"~~ex-fuel”)

Operating ~~expenses~~Expense per ~~available seat mile ("CASM"~~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 Technology Ventures and JetBlue Travel Products, and special items from total operating expenses to determine Operating Expenses ex-fuel, which is a non-GAAP financial measure, and we exclude the same items from CASM to determine CASM ex-fuel, which is also a non-GAAP financial measure.

~~In 2022,~~ We believe the impact of these special items ~~include an ALPA ratification bonus~~distorts our overall trends and ~~associated payroll taxes, an impairment on~~that our ~~E-190 fleet, fleet retirement~~metrics are more comparable with the presentation of our results excluding such impact.

For the three months ended June 30, 2023, special items included Spirit acquisition costs. For the six months ended June 30, 2023, special items included union contract costs and ~~expenses relating to the~~ Spirit ~~acquisition.~~acquisition costs.

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

~~Special items for 2019 include one-time costs related to the Embraer E190~~2022 included fleet transition ~~as well as one-time~~ costs, ~~related to the implementation of our pilots' collective bargaining agreement.~~union contract costs and Spirit acquisition costs.

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

The table below provides a reconciliation of our total operating expenses (“GAAP measure”) to Operating Expenses ex-fuel, and our CASM to CASM ex-fuel for the periods presented.

~~2022~~2023 vs. ~~2021~~2022


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 September 30,								Nine Months Ended September 30,									Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021					2023				2022				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		$		per ASM		$		per ASM
Total operating expenses	Total operating expenses	$	2,423	$	14.94	$	1,786	$	11.04	$	7,084	$	14.76	$	4,164	$	10.70	Total operating expenses	$	2,375	$	13.68	$	2,558	$	15.59	$	4,944	$	14.49	$	4,661	$	14.66
Less:	Less:																	Less:
Aircraft fuel and related taxes	Aircraft fuel and related taxes	825		5.08		443		2.74		2,305		4.80		973		2.50		Aircraft fuel and related taxes	599		3.45		910		5.55		1,365		4.00		1,481		4.66
Other non-airline expenses	Other non-airline expenses	14		0.09		11		0.06		43		0.09		30		0.07		Other non-airline expenses	16		0.09		14		0.08		33		0.10		29		0.09
Special items	Special items	13		0.08		(186)		(1.15)		57		0.12		(841)		(2.16)		Special items	24		0.14		44		0.27		136		0.40		44		0.14
Operating expenses, excluding fuel	Operating expenses, excluding fuel	$	1,571	$	9.69	$	1,518	$	9.39	$	4,679	$	9.75	$	4,002	$	10.29	Operating expenses, excluding fuel	$	1,736	$	10.00	$	1,590	$	9.69	$	3,410	$	9.99	$	3,107	$	9.77

4137

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

~~2022 vs. 2019~~

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
Three Months Ended Sept, Nine Months Ended Sept 30,
2022 2019 2022 2019
($ in millions; per ASM data in cents) $ per ASM $ per ASM $ per ASM $ per ASM
Total operating expenses $ 2,423 $ 14.94 $ 1,839 $ 11.29 $ 7,084 $ 14.76 $ 5,490 $ 11.50
Less:
Aircraft fuel and related taxes 825 5.08 471 2.89 2,305 4.80 1,392 2.92
Other non-airline expenses 14 0.09 10 0.07 43 0.09 32 0.07
Special items 13 0.08 — — 57 0.12 14 0.03
Operating expenses, excluding fuel $ 1,571 $ 9.69 $ 1,358 $ 8.33 $ 4,679 $ 9.75 $ 4,052 $ 8.48

With respect to JetBlue’s CASM ex-fuel guidance, we are unable to provide a reconciliation of the non-GAAP financial measure to GAAP CASM, the most directly comparable GAAP measure, because the quantification of certain excluded items ~~have not yet occurred and~~reflected in the CASM ex-fuel guidance cannot be ~~reasonably predicted.~~ calculated or predicted at this time without unreasonable efforts.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,~~For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a ~~reconciliation to CASM is not available without unreasonable effort.~~potentially unpredictable and potentially significant impact on our future GAAP financial results.

Operating Expense, Adjusted Operating Margin, Income (Loss) ~~Income~~ before Taxes, Adjusted Pre-tax Margin, Net Income (Loss) ~~Income~~ and Earnings (Loss) ~~Earnings~~ per Share, excluding Special Items and Net Gain (Loss) on Investments

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

~~In 2022,~~For the three months ended June 30, 2023, special items ~~include an ALPA ratification bonus and associated payroll taxes, an impairment on our E-190 fleet, fleet retirement~~included Spirit acquisition costs. For the six months ended June 30, 2023, special items included union contract costs and ~~expenses relating to the~~ Spirit ~~acquisition.~~acquisition costs.

~~Special items for 2019 include one-time costs related to the Embraer E190~~2022 included fleet transition ~~as well as one-time~~ costs, ~~related to the implementation of~~union contract costs and Spirit acquisition costs.

Certain gains and losses on our ~~pilots' collective bargaining agreement.~~equity investments were also excluded from our 2023 and 2022 GAAP results.

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.~~items for the periods presented.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

~~2022 vs. 2021~~

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, (LOSS) INCOME BEFORE TAXES, NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS AND NET GAIN (LOSS) ON INVESTMENTS
Three Months Ended 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)

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PART I. FINANCIAL INFORMATION

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

2023 vs. 2022


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, OPERATING INCOME (LOSS), ADJUSTED OPERATING MARGIN, PRE-TAX INCOME (LOSS), ADJUSTED PRE-TAX MARGIN, NET INCOME (LOSS), EARNINGS (LOSS) PER SHARE, EXCLUDING SPECIAL ITEMS AND GAIN (LOSS) ON EQUITY INVESTMENTS

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2023			2022			2023			2022
Total operating revenues	$	2,610		$	2,445		$	4,937		$	4,181

RECONCILIATION OF OPERATING EXPENSE
Total operating expenses	$	2,375		$	2,558		$	4,944		$	4,661
Less: Special items	24			44			136			44
Total operating expenses excluding special items	$	2,351		$	2,514		$	4,808		$	4,617

RECONCILIATION OF OPERATING INCOME (LOSS)
Operating income (loss)	$	235		$	(113)		$	(7)		$	(480)
Add back: Special items	24			44			136			44
Operating income (loss) excluding special items	$	259		$	(69)		$	129		$	(436)

RECONCILIATION OF ADJUSTED OPERATING MARGIN
Operating margin	9.0		%	(4.6)		%	(0.1)		%	(11.5)		%

Operating income (loss) excluding special items	$	259		$	(69)		$	129		$	(436)
Total operating revenues	2,610			2,445			4,937			4,181
Adjusted operating margin	9.9		%	(2.8)		%	2.6		%	(10.4)		%

RECONCILIATION OF PRE-TAX INCOME (LOSS)
Income (loss) before income taxes	$	216		$	(151)		$	(50)		$	(549)
Add back: Special items	24			44			136			44
Less: Net gain (loss) on investments	4			(5)			7			(4)
Income (loss) before income taxes excluding special items and net gain (loss) on investments	$	236		$	(102)		$	79		$	(501)

RECONCILIATION OF ADJUSTED PRE-TAX MARGIN
Pre-tax margin	8.3		%	(6.2)		%	(1.0)		%	(13.1)		%

Income (loss) before income taxes excluding special items and net gain (loss) on investments	$	236		$	(102)		$	79		$	(501)
Total operating revenues	2,610			2,445			4,937			4,181
Adjusted pre-tax margin	9.1		%	(4.2)		%	1.6		%	(12.0)		%

RECONCILIATION OF NET INCOME (LOSS)
Net income (loss)	$	138		$	(188)		$	(54)		$	(443)
Add back: Special items	24			44			136			44
Less: Income tax benefit related to special items	7			12			48			12
Less: Net gain (loss) on investments	4			(5)			7			(4)
Less: Income tax (expense) benefit related to net gain (loss) on investments	(1)			2			(2)			1
Net income (loss) excluding special items and net gain (loss) on investments	$	152		$	(153)		$	29		$	(408)

~~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

4439

Table of Contents

PART I. FINANCIAL INFORMATION

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


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, OPERATING INCOME (LOSS), ADJUSTED OPERATING MARGIN, PRE-TAX INCOME (LOSS), ADJUSTED PRE-TAX MARGIN, NET INCOME (LOSS), EARNINGS (LOSS) PER SHARE , EXCLUDING SPECIAL ITEMS AND GAIN (LOSS) ON EQUITY INVESTMENTS (CONTINUED)

	Three Months Ended June 30,				Six Months Ended June 30,
CALCULATION OF EARNINGS (LOSS) PER SHARE	2023		2022		2023		2022
Earnings (Loss) Per Common Share
Basic	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)
Add back: Special items, net of tax	0.05		0.10		0.27		0.10
Less: Net gain (loss) on investments, net of tax	0.01		(0.01)		0.01		(0.01)
Basic excluding special items and net gain (loss) on investments	$	0.45	$	(0.47)	$	0.10	$	(1.27)

Diluted	$	0.41	$	(0.58)	$	(0.16)	$	(1.38)
Add back: Special items, net of tax	0.05		0.10		0.27		0.10
Less: Net gain (loss) on investments, net of tax	0.01		(0.01)		0.01		(0.01)
Diluted excluding special items and net gain (loss) on investments	$	0.45	$	(0.47)	$	0.10	$	(1.27)

Free Cash Flow

~~The table below reconciles~~We define Free Cash Flow as net cash provided by ~~operations determined in accordance with GAAP to Free Cash Flow, a non-GAAP financial measure.~~ operating activities less capital expenditures and predelivery deposits for flight equipment.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
RECONCILIATION OF FREE CASH FLOW
Nine Months Ended September 30,
(in millions) 2022 2021
Net cash provided by operating activities $ 321 $ 1,755
Less: Capital expenditures (483) (770)
Less: Predelivery deposits for flight equipment (116) (33)
Free Cash Flow $ (278) $ 952
The table below reconciles cash provided by operations determined in accordance with GAAP to Free Cash Flow, a non-GAAP financial measure, for the periods presented.


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW

	Six Months Ended June 30,
(in millions)	2023		2022
Net cash provided by operating activities	$	663	$	299
Less: Capital expenditures	(439)		(274)
Less: Predelivery deposits for flight equipment	(18)		(65)
Free Cash Flow	$	206	$	(40)

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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~~June 30, ~~2022~~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~~$216 million. As of ~~September~~June 30, ~~2022,~~2023, we have hedged ~~27% of our projected fuel requirement~~approximately 30% for the ~~remainder~~third quarter of ~~2022.~~2023 and approximately 30% 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~~$3.6 billion of our debt and finance lease obligations, with the remaining ~~$64~~$120 million having floating interest rates. As of ~~September~~June 30, ~~2022,~~2023, if interest rates were on average 100 basis points higher in ~~2022,~~2023, our annual interest expense would increase by approximately $1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on our variable rate debt.

If interest rates were to average 100 basis points lower in ~~2022~~2023 than they were during ~~2021,~~2022, our interest income from cash and investment balances would decrease by approximately $1$3 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"~~(“CEO”), and our Chief Financial Officer ~~("CFO"~~(“CFO”), to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2022.~~2023. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2022.~~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~~June 30, ~~2022~~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 ourcondensed 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"~~“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.~~factors. There have been no material changes from the risk factors associated with our business previously disclosed in our Form 10-K, other than as described below.

The anticipated wind down of our Northeast Alliance with American Airlines could have an adverse impact on our business, financial condition and ~~Quarterly Report~~results of operations.

In July 2020, JetBlue and American entered into the NEA designed to optimize our respective networks at JFK, LaGuardia, Newark, and Boston. Following review and agreement by the Department of Transportation, JetBlue and American began implementing the NEA in July 2021. On September 21, 2021, the United States Department of Justice, along with the Attorneys General of 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 court issued a decision on ~~Form 10-Q~~May 19, 2023, permanently enjoining the NEA. On July 5, 2023, we announced that we do not plan to appeal the court's determination that the NEA cannot continue as currently crafted, and instead had initiated a wind down of the NEA. On July 14, 2023, JetBlue and American announced that beginning on July 21, 2023, JetBlue customers will no longer be able to book new codeshare bookings on American Airlines and vice versa. On July 28, 2023, the court issued its Final Judgement and Order Entering Permanent Injunction (“Final Injunction”). The Final Injunction is effective August 18, 2023 and sets forth, among other things, provisions for the ~~quarterly~~prompt and certain termination of the NEA, including applicable dates for the termination of JetBlue and American Airlines' revenue-sharing arrangements and procedures governing the termination of any remaining slot-sharing agreements. Pursuant to the Final Injunction, JetBlue and American Airlines may not enter into any new alliance, partnership, joint venture, or other agreement with each other, if such agreement provides for revenue sharing, or for coordination of routes or capacity, in a manner substantially similar to the NEA for a period ~~ended June 30, 2022.~~of ten years following the effectiveness of the Final Injunction. The wind down of the NEA could result in a disruption of the business, require us to incur additional costs and ultimately have an adverse impact on our business, financial condition and results of operations.

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 United States District Court of the District of Massachusetts, respectively, alleging that the NEA violates Sections 1 and 2 of the Sherman Act. Among other things, plaintiffs seek monetary damages on behalf of a putative class of direct purchasers of airline tickets from JetBlue and American and, depending on the specific case, other airlines on flights to or from our 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. JetBlue believes these lawsuits are without merit and that the equitable claims have been rendered moot following the commencement of the NEA wind down.

We are subject to the risks of having a limited number of suppliers for our aircraft, engines, and our Fly-Fi® product.

Our current dependence on five types of aircraft and engines for all of our flights makes us vulnerable to any significant problems associated with Pratt & Whitney Geared Turbofan Engines, or the PW1133G-JM engine, on our A321neo fleet, International Aero Engines, or the IAE V2533-A5 engine on our Airbus A321 fleet, International Aero Engines, or the IAE V2527-A5 engine on our Airbus A320 fleet, Pratt & Whitney Geared Turbofan Engines, or the PW1524G-3 engine, on our A220 fleet, and General Electric Engines, or the CF34-10 engine, on our Embraer E190 fleet. This could include, but is not limited to design defects, mechanical problems, contractual performance by the manufacturers, or adverse perception by the public which would result in customer avoidance or in actions by the FAA resulting in an inability to operate our aircraft. For example, we are subject to a removal of certain Pratt & Whitney engines for inspection, announced in July 2023, due to contaminated metal parts and the full impact of the removal and any potential remediation steps on our operations cannot be determined at this time. Carriers operating a more diversified fleet are better positioned than we are to manage such events.

Our Fly-Fi® service uses technology and satellite access through our agreement with Thales Avionics, Inc., or Thales. An integral component of the Fly-Fi® system is the antenna, which is supplied to us by Thales. If Thales were to stop supplying us

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with its antennas for any reason, we would have to incur significant costs to procure an alternate supplier. Additionally, if the satellites Fly-Fi® uses were to become inoperable for any reason, we would have to incur significant costs to replace the service.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

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.~~

~~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.None.

ITEM 5. OTHER INFORMATION

(a) None.

(b) None.

(c) During the three months ended June 30, 2023, no director or “officer”(as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

~~ITEM 6. EXHIBITS~~

~~See accompanying Exhibit Index for a list of the exhibits filed or furnished with this Report.~~

4743

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~~EXHIBIT INDEX~~

ITEM 6. EXHIBITS


Exhibit Number						Exhibit
~~2.1~~10.1						~~Agreement and~~Amendment to the Executive Change in Control Severance Plan, ~~of Merger,~~ dated ~~July 28, 2022, by and among JetBlue Airways Corporation, Sundown Acquisition Corp., and Spirit Airlines, Inc.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—May 4, 2023.—incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated ~~October 21, 2022~~May 4, 2023 and filed on ~~October 24, 2022~~May 5, 2023
10.2*						Amendment to the JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan
10.3*						Amendment to the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan
10.4						Employment Agreement between JetBlue Airways Corporation and Joanna Geraghty, dated June 21, 2023—incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated June 21, 2023 and filed on June 23, 2023
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)


*						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.

4844

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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~~August 1, 2023

By:

/s/ Al Spencer

Al Spencer

Vice President, Controller ~~and~~

(Principal Accounting ~~Officer~~Officer)

4945


	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	$	—	$	—	$	—


	Payments due in
	Total		2022		2023		2024		2025		2026		Thereafter
Debt and finance lease obligations(1)	$	4.4	$	0.1	$	0.7	$	0.4	$	0.3	$	1.0	$	1.9
Operating lease obligations	1.0		—		0.1		0.1		0.1		0.1		0.6
Flight equipment purchase obligations(2)	8.0		0.2		1.5		2.1		1.8		1.4		1.0
Other obligations(3)	2.5		0.1		0.4		0.4		0.4		0.4		0.8
Total	$	15.9	$	0.4	$	2.7	$	3.0	$	2.6	$	2.9	$	4.3


NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
	Three Months Ended Sept,								Nine Months Ended Sept 30,
	2022				2019				2022				2019
($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM
Total operating expenses	$	2,423	$	14.94	$	1,839	$	11.29	$	7,084	$	14.76	$	5,490	$	11.50
Less:
Aircraft fuel and related taxes	825		5.08		471		2.89		2,305		4.80		1,392		2.92
Other non-airline expenses	14		0.09		10		0.07		43		0.09		32		0.07
Special items	13		0.08		—		—		57		0.12		14		0.03
Operating expenses, excluding fuel	$	1,571	$	9.69	$	1,358	$	8.33	$	4,679	$	9.75	$	4,052	$	8.48


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)