~~Table of Contents~~

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 March 31, 2008~~
or
    ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF~~
~~THE SECURITIES EXCHANGE ACT OF 1934~~
~~For the transition period from                      to~~


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2008
or
o		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.)

118-29 Queens Boulevard, Forest Hills, New York			11375
(Address of principal executive offices)			(Zip Code)

(718) 286-7900

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year,
if changed since last report)

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 þ No Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of ~~‘‘large~~“large accelerated ~~filer’’~~filer”, ~~‘‘accelerated filer’’~~“accelerated filer” and ~~‘‘smaller~~“smaller reporting ~~company’’~~company” inRule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o
Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes oNo þ

As of ~~March 31,~~June 30, 2008, there were ~~224,308,781~~270,660,656 shares of the registrant’s common stock, par value $.01, outstanding.

JetBlue Airways Corporation

FORM 10-Q

INDEX


			Page #’s

PART I. FINANCIAL INFORMATION
~~Item 1.~~	~~Financial Statements~~				1

Item 1. Financial Statements			1

		Condensed Consolidated Balance Sheets – ~~March 31,~~June 30, 2008 and December 31, 2007	1
	1
		Consolidated Statements of Operations – Three and Six Months Ended ~~March 31,~~June 30, 2008 and 2007	2
	2
		Condensed Consolidated Statements of Cash Flows – ~~Three~~Six Months Ended ~~March 31,~~June 30, 2008 and 2007	3
	3
		Notes to Condensed Consolidated Financial Statements				4

Item 2.				Management’s Discussion and Analysis of Financial Condition and Results of Operations				9	12

Item 3.				Quantitative and Qualitative Disclosures About Market Risk				17	21

Item 4.				Controls and Procedures				17	21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			22

Item 1.A Risk Factors			22

Item 2. Changes in Securities and Use of Proceeds			22

Item 4. Submission of Matters to a Vote of Security Holders			23

Item 5. Other Information			24

Item 6. Exhibits			24
~~Item 1.~~EX-3.5: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION							~~Legal Proceedings~~			18
~~Item 1.A~~EX-3.6: FIFTH AMENDED AND RESTATED BYLAWS							~~Risk Factors~~			18
~~Item 6.~~EX-10.1: AMENDMENT NO. 32 TO AIRBUS A320 PURCHASE AGREEMENT
~~Exhibits~~EX-10.2: SIDE LETTER NO. 24
EX-10.3: SIDE LETTER NO. 25
EX-12.1: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATION


	PART 1.	18	FINANCIAL INFORMATION


Item 1.	Financial Statements

~~Table of Contents~~

~~PART 1. FINANCIAL INFORMATION~~

~~Item 1. Financial Statements~~

JETBLUE AIRWAYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)


	June 30,		December 31,
	2008		2007
	(unaudited)

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	846	$	190
Investment securities and derivative assets		118		644
Receivables, less allowance		132		92
Restricted cash		10		—
Prepaid expenses and other		226		190

Total current assets		1,332		1,116
PROPERTY AND EQUIPMENT
Flight equipment		3,762		3,547
Predelivery deposits for flight equipment		221		238

		3,983		3,785
Less accumulated depreciation		367		336

		3,616		3,449
Other property and equipment		503		475
Less accumulated depreciation		149		130

		354		345

Total property and equipment		3,970		3,794
OTHER ASSETS
Assets constructed for others		547		452
Investment securities		279		—
Restricted cash and securities		129		53
Other		211		183

Total other assets		1,166		688

TOTAL ASSETS	$	6,468	$	5,598

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	118	$	140
Air traffic liability		561		426
Accrued salaries, wages and benefits		88		110
Other accrued liabilities		194		120
Short-term borrowings		30		43
Current maturities of long-term debt and capital leases		369		417

Total current liabilities		1,360		1,256
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS		2,936		2,588
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes		183		192
Construction obligation		528		438
Other		83		88

		794		718
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; 500,000,000 shares authorized, 270,660,656 and 181,593,440 shares issued and outstanding in 2008 and 2007, respectively		3		2
Additional paid-in capital		1,165		853
Retained earnings		148		162
Accumulated other comprehensive income		62		19

Total stockholders’ equity		1,378		1,036

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,468	$	5,598

March 31,
2008 December 31,
2007
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 713 $ 190
Investment securities 40 644
Receivables, less allowance 111 92
Inventories, less allowance 27 26
Prepaid expenses and other 173 164
Total current assets 1,064 1,116
PROPERTY AND EQUIPMENT
Flight equipment 3,689 3,547
Predelivery deposits for flight equipment 238 238
3,927 3,785
Less accumulated depreciation 358 336
3,569 3,449
Other property and equipment 489 475
Less accumulated depreciation 139 130
350 345
Total property and equipment 3,919 3,794
OTHER ASSETS
Assets constructed for others 503 452
Investment securities 284 —
Restricted cash 54 53
Other 226 183
Total other assets 1,067 688
TOTAL ASSETS $ 6,050 $ 5,598
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 122 $ 140
Air traffic liability 480 426
Accrued salaries, wages and benefits 95 110
Other accrued liabilities 170 120
Short-term borrowings 23 43
Current maturities of long-term debt and capital leases 377 417
Total current liabilities 1,267 1,256
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 2,697 2,588
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes 187 192
Construction obligation 485 438
Other 85 88
757 718
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; 500,000,000 shares authorized, 224,308,781 and 181,593,440 shares issued and outstanding in 2008 and 2007, respectively 2 2
Additional paid-in capital 1,158 853
Retained earnings 154 162
Accumulated other comprehensive income 15 19
Total stockholders’ equity 1,329 1,036
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 6,050 $ 5,598

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

JETBLUE AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007

OPERATING REVENUES
Passenger	$	779		$	683		$	1,527		$	1,247
Other		80			47			148			91

Total operating revenues		859			730			1,675			1,338
OPERATING EXPENSES
Aircraft fuel		370			226			678			416
Salaries, wages and benefits		168			158			346			322
Landing fees and other rents		49			47			100			92
Depreciation and amortization		46			43			91			85
Aircraft rent		32			30			64			60
Sales and marketing		42			31			80			60
Maintenance materials and repairs		32			27			65			53
Other operating expenses		99			95			213			190

Total operating expenses		838			657			1,637			1,278

OPERATING INCOME (LOSS)		21			73			38			60
OTHER INCOME (EXPENSE)
Interest expense		(53	)		(56	)		(109	)		(108	)
Capitalized interest		14			11			28			19
Interest income and other		8			15			20			27

Total other income (expense)		(31	)		(30	)		(61	)		(62	)

INCOME (LOSS) BEFORE INCOME TAXES		(10	)		43			(23	)		(2	)
Income tax expense (benefit)		(3	)		22			(8	)		(1	)

NET INCOME (LOSS)	$	(7	)	$	21		$	(15	)	$	(1	)

INCOME (LOSS) PER COMMON SHARE:
Basic	$	(0.03	)	$	0.12		$	(0.07	)	$	—

Diluted	$	(0.03	)	$	0.11		$	(0.07	)	$	—

Three Months Ended
March 31,
2008 2007
OPERATING REVENUES
Passenger $ 748 $ 564
Other 68 44
Total operating revenues 816 608
OPERATING EXPENSES
Aircraft fuel 308 190
Salaries, wages and benefits 178 164
Landing fees and other rents 51 45
Depreciation and amortization 45 42
Aircraft rent 32 30
Sales and marketing 39 29
Maintenance materials and repairs 33 26
Other operating expenses 113 95
Total operating expenses 799 621
OPERATING INCOME (LOSS) 17 (13 )
OTHER INCOME (EXPENSE)
Interest expense (56 ) (52 )
Capitalized interest 14 8
Interest income and other 12 12
Total other income (expense) (30 ) (32 )
LOSS BEFORE INCOME TAXES (13 ) (45 )
Income tax benefit (5 ) (23 )
NET LOSS $ (8 ) $ (22 )
LOSS PER COMMON SHARE:
Basic $ (0.04 ) $ (0.12 )
Diluted $ (0.04 ) $ (0.12 )

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

JETBLUE AIRWAYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)

Three Months Ended
March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8 ) $ (22 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes (5 ) (23 )
Depreciation 41 39
Amortization 5 5
Stock-based compensation 4 4
Changes in certain operating assets and liabilities 20 141
Other, net (8 ) 3
Net cash provided by operating activities 49 147
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (200 ) (212 )
Predelivery deposits for flight equipment (30 ) (32 )
Assets constructed for others (44 ) (76 )
Purchase of available-for-sale securities (69 ) (254 )
Sale of available-for-sale securities 385 246
Other, net 15 (2 )
Net cash provided by (used in) investing activities 57 (330 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Issuance of common stock 310 6
Issuance of long-term debt 147 140
Aircraft sale and leaseback transactions 26 52
Short-term borrowings — 14
Construction obligation 41 76
Repayment of long-term debt and capital lease obligations (78 ) (30 )
Repayment of short-term borrowings (20 ) (26 )
Other, net (9 ) (3 )
Net cash provided by financing activities 417 229
INCREASE IN CASH AND CASH EQUIVALENTS 523 46
Cash and cash equivalents at beginning of period 190 10
Cash and cash equivalents at end of period $ 713 $ 56

tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as level 1 within our fair value hierarchy.

Level 2 Level 3 Total
Assets
Auction rate securities $ — $ 313 $ 313
Aircraft fuel derivatives 40 — 40
$ 40 $ 313 $ 353
Liabilities
Interest rate swaps $ — $ 3 $ 3

Previous guidance provided for accounting for this type of convertible debt instrument entirely as debt. FSP APB14-a is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. We are currently evaluating the impact adoption of FSP APB14-a may have on our consolidated financial statements.

~~Note 2 — Stock-Based Compensation~~


Note 2 —	Stock-Based Compensation

During the ~~three~~six months ended ~~March 31,~~June 30, 2008, the Company granted ~~1.5~~approximately 1.6 million restricted stock units under our Amended and Restated 2002 Stock Incentive Plan, at a weighted average grant date fair value of ~~$6.35~~$6.16 per share. At ~~March 31,~~June 30, 2008, ~~1.5~~1.7 million restricted stock units were unvested with a weighted average grant date fair value of ~~$6.54~~$6.28 per share.


Note 3 —	Long-term Debt and Capital Lease Obligations

On June 4, 2008, we completed a public offering of $100.6 million aggregate principal amount of 5.5% Series A convertible debentures due 2038, or the Series A Debentures, and $100.6 million aggregate principal amount of 5.5% Series B convertible debentures due 2038, or the Series B Debentures, and collectively with the Series A Debentures, the Debentures. The Debentures are general senior obligations secured in part by an escrow account for each series. We have deposited approximately $32 million of the net proceeds from the offering, representing the first six scheduled semi-annual interest payments on the Debentures, into escrow accounts for the exclusive benefit of the holders of each series of Debentures, which are reflected as restricted cash on our condensed consolidated balance sheets. The net proceeds were approximately $165 million after deducting underwriting fees and other transaction related expenses as well as the $32 million escrow deposit. Interest on the Debentures is payable semi-annually on April 15 and October 15. The first interest payment on the Debentures is due October 15, 2008.

Holders of the Series A Debentures may convert them into shares of our common stock at any time at a conversion rate of 220.6288 shares per $1,000 principal amount of Series A Debentures. Holders of the Series B Debentures may convert them into shares of our common stock at any time at a conversion rate of 225.2252 shares per $1,000 principal amount of Series B Debentures. The conversion rates are subject to adjustment should we declare common stock dividends or effect any common stock splits or similar transactions. If the holders convert the Debentures in connection with a fundamental corporate change that occurs prior to October 15, 2013 for the Series A Debentures or October 15, 2015 for the Series B Debentures, the applicable conversion rate may be increased depending upon our then current common stock price. The maximum number of shares into which all Debentures are convertible, including pursuant to this make-whole fundamental change provision, is 54.4 million shares.

We may redeem any of the Debentures for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest at any time on or after October 15, 2013 for the Series A Debentures and October 15, 2015 for the Series B Debentures. Holders may require us to repurchase the Debentures for cash at a repurchase price equal to 100% of their principal amount plus accrued and unpaid interest, if any, on October 15, 2013, 2018, 2023, 2028, and 2033 for the Series A Debentures and October 15, 2015, 2020, 2025, 2030, and 2035 for the Series B Debentures; or at any time prior to their maturity upon the occurrence of a certain designated event. Holders who convert their Debentures prior to April 15, 2011 will receive, in addition to the number of shares of our common stock calculated at the applicable conversion rate, a cash payment from the escrow account for Debentures of the series converted equal to the sum of the remaining interest payments that would have been due on or before April 15, 2011 in respect of the converted Debentures.

lending agreement, the share borrower will be required to return the borrowed shares when the Debentures are no longer outstanding. We did not receive any proceeds from the sale of the borrowed shares by the share borrower, but we did receive a nominal lending fee of $0.01 per share from the share borrower for the use of the borrowed shares.

The net proceeds from our public offering of the Debentures described above were used for the repurchase of substantially all of our $175 million principal amount of 3.5% convertible notes due 2033, issued in July 2003, which became subject to repurchase at the holder’s option on July 15, 2008.

In July 2008, we executed a line of credit which allows for borrowings of up to $110 million through July 20, 2009. Advances under this agreement will bear interest at the Open Federal Funds rate plus 2.30%. This line of credit is secured by a majority of our auction rate securities, with total borrowings available subject to reduction should any of the underlying collateral be sold, or should there be a significant drop in the fair value of the underlying collateral. Advances may be used to fund working capital requirements, capital expenditures or other general corporate purposes, except that they may not be used to purchase any securities or to refinance any debt. We have provided various representations, warranties and ~~Capital Lease Obligations~~

other covenants, including a financial covenant to maintain at least $300 million in cash and cash equivalents throughout the term of the agreement.

During the ~~three~~six months ended ~~March 31,~~June 30, 2008, we issued ~~$102~~$249 million in fixed rate equipment notes due through ~~2020, which are secured by three Airbus A320 aircraft,~~2023 and $45 million in floating rate equipment notes due through 2020, which are secured by ~~two~~six Airbus A320 Aircraft and four EMBRAER 190 aircraft. We also sold four owned Airbus A320 aircraft for $133 million and repaid $86 million in associated debt. We also made $211 million in other scheduled principal payments on our outstanding debt and capital leases. At ~~March 31,~~June 30, 2008, the weighted average interest rate of all of our long-term debt was ~~5.3%~~5.0% and scheduled maturities ~~are $343~~were $294 million for the remainder of 2008, ~~$159~~$156 million in 2009, ~~$163~~$162 million in 2010, ~~$169~~$160 million in 2011, ~~$203~~$196 million in 2012 and ~~$3.07~~$2.3 billion thereafter. The weighted average interest rate of our outstanding short-term borrowings at ~~March 31,~~June 30, 2008 and December 31, 2007 was ~~4.8%~~4.7% and 6.7%, respectively.

In March 2008, we renewed our Airbus A320 aircraft predelivery funding facility to allow for borrowings of up to $44 million through December 2010. At March 31, 2008, there were a total of $23 million outstanding borrowings under our facilities at a weighted average interest rate of 4.8%.

~~Note 4 — Assets Constructed for Others~~


Note 4 —	Assets Constructed for Others

In November 2005, we executed a lease agreement with ~~The~~the Port Authority of New York and New Jersey, or the PANYNJ, for the construction and operation of a new terminal at New York’s John F. Kennedy International Airport, which the PANYNJ will own. We have evaluated this lease and have concluded that we bear substantially all of the construction period risk. As a result, we are considered the owner of the project for financial reporting purposes only and are required to reflect an asset and liability for in-process construction related to this project on our balance sheets. To date, we have paid ~~$509~~$554 million in project costs and have capitalized ~~$43~~$53 million in interest, which are reflected as Assets Constructed for Others as well as Other Property and Equipment in the accompanying condensed consolidated balance sheets. Reimbursements from the PANYNJ and

~~Table of Contents~~

financing charges totaled ~~$503~~$547 million through ~~March 31,~~June 30, 2008 and are reflected as Construction Obligation in our condensed consolidated balance sheet, net of ~~$18~~$19 million in scheduled payments to the PANYNJ.

~~Note 5 — Comprehensive Loss~~


Note 5 —	Comprehensive Loss

Comprehensive loss includes changes in fair value of our aircraft fuel derivatives and interest rate swap agreements, which ~~quality~~qualify for hedge accounting, and unrealized losses on our auction-rate securities that are

classified as available for sale securities. The differences between net ~~loss~~income (loss) and comprehensive ~~loss~~income for each of these periods are as follows (dollars are in millions):


	Three Months Ended
	June 30,
	2008			2007

Net Income (Loss)	$	(7	)	$	21
Aircraft Fuel Derivatives
Change in fair value (net of taxes, $47 and $3)		72			4
Reclassification into earnings (net of taxes, $18 and $3)		(27	)		(4	)
Interest Rate Swap Agreements
Change in fair value (net of taxes, $2 and $0)		3			—
Available for Sale Securities
Unrealized losses (net of taxes, $1 and $0)		(2	)		—

Comprehensive Income	$	39		$	21


	Six Months Ended
	June 30,
	2008			2007

Net Loss	$	(15	)	$	(1	)
Aircraft Fuel Derivatives
Change in fair value (net of taxes, $59 and $7)		90			19
Reclassification into earnings (net of taxes, $26 and $0)		(40	)		—
Interest Rate Swap Agreements
Change in fair value (net of taxes, $1 and $0)		1			—
Available for Sale Securities
Unrealized losses (net of taxes, $5 and $0)		(8	)		—

Comprehensive Income	$	28		$	18


Note 6 —	Earnings (Loss) Per Share

Three Months Ended
March 31,
2008 2007
Net Loss $ (8 ) $ (22 )
Aircraft Fuel Derivatives
Change in fair value (net of taxes, $12 and $4) 18 16
Reclassification into earnings (net of taxes, $8 and $0) (13 ) 4
Interest Rate Swap Agreements
Change in fair value (net of taxes, $1 and $0) (2 ) —
Available for Sale Securities
Unrealized losses (net of taxes, $4 and $0) (7 ) —
Comprehensive Loss $ (12 ) $ (2 )

~~Note 6 — Loss Per Share~~

The following table shows how we computed basic and diluted loss per common share (dollars in millions; share data in thousands):


Note 8 —	Commitments and Contingencies

As of ~~March 31,~~June 30, 2008, including the May 2008 amendment to our Airbus A320 purchase agreement, which deferred delivery of 21 Airbus A320 aircraft originally scheduled for delivery from 2009 through 2011 to 2014 through 2015, our firm aircraft orders consisted of 6764 Airbus A320 aircraft, 7169 EMBRAER 190 aircraft and 23 spare engines scheduled for delivery through 2015. Committed expenditures for these aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits, will be approximately ~~$455~~$265 million for the remainder of 2008, ~~$750~~$415 million in 2009, ~~$700~~$445 million in 2010, ~~$735~~$555 million in 2011, ~~$875~~$895 million in 2012 and ~~$1.55~~$2.52 billion thereafter.

In July, 2008, we deferred delivery of 10 EMBRAER 190 aircraft previously scheduled for delivery from 2009 through 2011 to 2016. The impact of our EMBRAER 190 deferral is not reflected in the committed expenditures above.

~~Table of Contents~~

During the ~~three~~six months ended ~~March 31,~~June 30, 2008, we entered into a sale-leaseback transaction for one EMBRAER 190 aircraft, a short-term operating lease for ~~an additional~~another EMBRAER 190 aircraft, as well as leases for certain other facilities and equipment. Future minimum lease payments associated with these operating leases totaled ~~$37~~$48 million at ~~March 31, 2008 over the next 18 years.~~June 30, 2008. These amounts are in addition to the minimum lease payments described in Note 3 to our audited financial ~~statement~~statements included in our 2007Form 10-K.

We ~~deferred approximately $1~~utilize several credit card processors to process our ticket sales. Our agreements with these processors do not contain covenants, but do generally allow the processors to withhold cash reserves to protect the processor for potential liability for tickets purchased, but not yet used for travel. Historically, we have not had cash reserves withheld; however, in June 2008, a $35 million ~~in gains related~~letter of credit, collateralized by cash, was issued to one of our primary processors. We may be required to issue additional collateral to our ~~sale-leaseback transaction, which is being recognized on a straight-line basis over it’s 18-year lease term as a reduction to aircraft rent expense.~~

~~Note 9 — Financial Instruments and Risk Management~~

credit card processors, or other key vendors in the future.


Note 9 —	Financial Instruments and Risk Management

We are exposed to the effect of changes in the price and availability of aircraft fuel. To manage this risk, we periodically enter into crude or heating oil option contracts and swap agreements. The following is a summary of our derivative contracts (in millions, except as otherwise indicated):


	2008		2007

At June 30:
Fair value of fuel derivative instruments	$	116	$	32
Longest remaining term (months)		12		12
Hedged volume (barrels, in thousands)		2,979		3,272


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007

Hedge effectiveness net gains (losses) recognized in aircraft fuel expense	$	58		$	8		$	83		$	(1	)
Hedge ineffectiveness net gains recognized in other income (expense)		1			3			1			4
Other hedge net gains recognized in other income (expense)		—			—			—			—
Percentage of actual consumption economically hedged		47	%		65	%		41	%		68	%

March 31,
2008 December 31,
2007
Fair value of derivative instruments $ 40 $ 33
Longest remaining term (months) 12 9
Hedged volume (barrels, in thousands) 3,009 1,506

Three Months Ended
March 31,
2008 2007
Hedge effectiveness net gains (losses) recognized in aircraft fuel expense $ 25 $ (9 )
Hedge ineffectiveness net gains recognized in other income (expense) — 1
Other hedge net gains recognized in other income (expense) — —
Percentage of actual consumption economically hedged 35 % 71 %

We are also exposed to the variability of interest rates on our floating rate equipment notes. ~~During the three months ended March 31,~~In 2008, we entered into interest rate swap agreements whereby we swapped the floating rate interest, based on three-month LIBOR, related to our2004-2 Series enhanced equipment trust facility G-1 notes for an effective 4.3% fixed interest rate. The notional amount hedged was initially $152 million and will be reduced through maturity in 2016 as scheduled principal payments are made on the notes.

~~Note 10 — LiveTV~~


Note 10 —	LiveTV

During the ~~three~~six months ended ~~March 31,~~June 30, 2008, LiveTV installed in-flight entertainment systems for other airlines on 1620 aircraft bringing total installations of these systems for other airlines to ~~388~~392 aircraft. Third-party revenues for the three months ended ~~March 31,~~June 30, 2008 and 2007 were $13 million and $8$10 million, respectively, and third-party revenues for the six months ended June 30, 2008 and 2007 were $26 million and $18 million,

respectively. Deferred profit on hardware sales and advance deposits for future hardware sales included in non-current liabilities in the accompanying condensed consolidated balance sheets was ~~$27~~$24 million and $28 million at ~~March 31,~~June 30, 2008 and December 31, 2007, respectively. Deferred profit to be recognized as income on installations completed through ~~March 31,~~June 30, 2008 will be approximately $5$3 million for the remainder of 2008, $6$7 million in 2009, $2 million in each of 2010 through 2012, and $6 million thereafter.

~~Note 11 — Stockholders’ Equity~~


Note 11 —	Stockholders’ Equity

In January 2008, we completed a $301 million, net of transaction costs, equity offering to Deutsche Lufthansa AG. Under the terms of the agreement Lufthansa purchased, in a private placement, approximately 42.6 million newly issued ~~common~~ shares of JetBlue orcommon stock, which represented approximately 19% of JetBlue’s ~~equity after giving effect to the issuance.~~then outstanding common stock. Under the terms of the agreement, a Lufthansa nominee, Christoph Franz, was appointed to ~~the~~our Board of Directors. ~~The Lufthansa nominee is a Class II director and is a nominee for election at JetBlue’s annual meeting in 2008.~~


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations.*

Outlook

~~Table of Contents~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

~~Outlook~~

~~The U.S. economy has continued to slow as a result of high energy costs, a weakening dollar and the direct and indirect impact from turmoil in the credit markets.~~

The U.S. domestic airline industry continues to be severely impacted by ~~record high~~soaring fuel prices. ~~As a result, a number~~Our average price per gallon of ~~domestic~~fuel in the second quarter of 2008 increased by nearly 60% over the same period in 2007. Domestic airlines have ~~taken a number of steps~~responded to ~~reduce losses, including~~the unprecedented rise in fuel prices by reducing ~~employee headcount, limiting service offerings, renegotiating labor contracts, reconfiguring flight schedules, restructuring~~ their ~~operations and taking other efficiency and cost-cutting measures. We have also reduced our~~ planned domestic capacity in 2008 and have announced other cost saving initiatives. While we believe that we continue to have a cost advantage over many of our competitors in the airline industry, the steps taken by our competitors to reduce losses have reduced that advantage in certain cases. Furthermore, althoughbeyond, raising feesand/or furloughing employees. Although the fares charged by domestic airlines have increased on a year over year ,basis, these increases have not been sufficient to offset the record increases in fuel costs ~~which have contributed to five~~and, as a result, the industry as a whole is facing record losses in 2008. Several U.S. airlines ~~declaring~~have either filed for bankruptcy protection thus far in 2008. With the uncertainty in the overall economy and the operational challenges faced by the domestic airline industry, there continues to be reports of consolidation and liquidation within the industry, including the recently announced merger agreement between2008 or have ceased operations all together. In April 2008, Delta Air Lines and Northwest Airlines ~~that, if completed, would result~~entered into a definitive agreement to merge, subject to approvals. In July 2008, Southwest Airlines and Westjet Airlines announced plans for a code-share partnership, a significant development for domestic low cost carriers. There continue to be reports of potential further consolidation, alliances and liquidation in the ~~world’s largest airline.~~industry. We are unable to predict what the effect would be of further industry bankruptcies, liquidations or consolidation on JetBlue or the domestic airline industry ~~in general.~~

as a whole.

During the ~~first~~second quarter of 2008, we ~~commenced service~~continued to ~~Puerto Plata in the Dominican Republic~~moderate our growth plans and ~~St. Maartin in the Netherlands Antilles.~~focus on liquidity preservation. In May, ~~2008,~~ we ~~will be expanding our presence in Austin, Texas, which will allow us~~deferred the delivery of 21 Airbus A320 aircraft that had been scheduled for delivery between 2009 and 2011 to ~~introduce our~~between 2014 and 2015. In July, we deferred the delivery of 10 EMBRAER 190 aircraft that had been scheduled for delivery between 2009 and 2011 to 2016. These deferrals have reduced our near term capital funding requirements and reduced our near term debt burden. We also successfully accessed the ~~western U.S.~~capital markets by completing a new $201 million convertible debt financing in June, the net proceeds of which were used to repay substantially all of our $175 million principal amount of 3.5% convertible debt issued in 2003. In July, we executed a $110 million line of credit, secured by a portion of our auction rate securities, which provides us with additional liquidity, if needed. We ~~believe that~~also completed four previously announced A320 aircraft sales, which generated $133 million in proceeds, or $47 million after repayment of the ~~market potential~~related debt. We have commitments for the ~~100-seat EMBRAER 190 aircraft in smaller and mid-sized markets is significant and are excited to be introducing it into more~~sale of ~~these markets. Our growth strategy remains disciplined, with the planned sales of three~~five additional ~~Airbus~~ A320 aircraft ~~in 2008 and another in 2009, bringing our total planned aircraft sales to nine in~~throughout the remainder of 2008 and one in 2009. We ~~are continuing to evaluate~~may further slow our growth ~~rate and if conditions warrant, we may elect to sell~~through additional aircraft ~~or defer scheduled deliveries~~sales, leasing aircraft, grounding aircraft, returns of leased aircraftand/or deferral of aircraft deliveries.

We have also continued our focus on new ~~aircraft. Primarily as a result of high fuel costs~~ and ~~slow market maturation, we will also discontinue service~~innovative ways to ~~Tucson, Arizona in May& nbsp;2008.~~

Inincrease our ~~effort~~revenues which serve to enhance the JetBlue Experience ~~for~~and not compromise it. During the second quarter of 2008, customers were able to experience our ~~customers, we have reconfigured our Airbus A320 fleet to provide for~~new Even More Legroom offering, which consists of 38 inches of seat pitch in selected rows, ~~which we are now offering as an optional upgrades~~ for a modest ~~additional~~ fee on ~~travel beginning~~selected flights. The customer feedback from this product offering has been very positive. In addition, similar to others in ~~April 2008. This modification~~the industry, we began charging a fee for customer’s second checked bag and have also increased our reservation change fees. During the quarter, we also launched a Spanish website, which we believe is ~~not being sold as a separate class~~very helpful to many of ~~service nor did it create a second cabin or change~~our customers, and have improved the ~~total number~~pay per view movie offerings available onboard all of ~~seats~~our aircraft.

Our focus on ~~our aircraft. In this fuel intensive environment,~~cost control and cash preservation has helped us to take advantage of market opportunities. For example, we have ~~started~~increased our presence in the Caribbean by redeploying aircraft into Puerto Rico and the Dominican Republic, which we expect will further strengthen our financial position as these markets have historically tended to ~~focus more on trying to grow other revenues – both passenger related~~generate higher revenue than mainland flights of a comparable distance. We also have one of the youngest and ~~otherwise – through various initiatives, all while continuing to deliver~~most fuel efficient fleets in the ~~core JetBlue Experience to our customers.~~

industry, with an average age per aircraft of three years, which we believe gives us a competitive advantage, especially in the current fuel environment.

We expect our full-year operating capacity to increase approximately 3%0% to 5%2% over 2007 with the net ~~increase~~addition of three ~~new~~ Airbus A320 aircraft and seven ~~new~~ EMBRAER 190 aircraft to our operating ~~fleet, offset by the planned sale of nine of our A320 aircraft during the year.~~fleet. We expect that the EMBRAER 190 aircraft will represent approximately 13% of our total 2008 operating capacity. Assuming fuel prices of ~~$3.05~~$3.27 per gallon, net of effective hedges, our cost per available seat mile for 2008 is expected to increase ~~20%~~25% to ~~22%~~27% over 2007. We expect our full year operating margin to be between 2%negative 1% and 4%1% and our pre-tax margin to be between ~~(2%)~~negative 5% and 0%negative 3%.

Results of Operations

Our operating revenue per available seat mile for the quarter increased ~~18%~~13% over the same period in 2007. Our ~~results from the prior year are impacted by last year’s ice storms, when we cancelled approximately 1,200 flights in February and 440 flights in March. Our~~ average fares for the quarter increased ~~22%~~13% over 2007 to ~~$135.64,~~$138, while our load factor declined ~~2.4~~2.9 points to ~~78.2%~~80.6% from a year ago.

Our on-time performance, defined by the Department of Transportation, or DOT, as arrival within 14 minutes of schedule, was ~~71.8%~~73.8% in the ~~first~~second quarter of 2008 compared to ~~63.6%~~69.0% for the same

~~Table of Contents~~

period in 2007, while our completion factor was ~~98.4~~98.9% and ~~96.1~~98.5% in 2008 and 2007, respectively. ~~Our improvement in on-time performance is due to operational and other improvements implemented following the February 2007 storm.~~

Three Months Ended ~~March 31,~~June 30, 2008 and ~~200~~20077

We reported a net loss of $8$7 million for the three months ended ~~March 31,~~June 30, 2008, compared to a net ~~loss~~income of ~~$22~~$21 million for the three months ended ~~March 31,~~June 30, 2007. Diluted loss per share was ~~$0.04~~$.03 for the ~~first~~second quarter of 2008 ~~and $0.12~~compared to diluted earnings per share of $0.11 for 2007. Our operating income for the three months ended ~~March 31,~~June 30, 2008 was ~~$17~~$21 million compared to ~~an operating loss of $13~~$73 million for the same period last year, and our pre-tax margin ~~increased 5.8~~decreased 7 points from 2007.

Our ~~first~~second quarter 2008 and 2007 tax rates differ from the statutory rate due to the non-deductibility of certain items for tax purposes and the relationship of these items to our operating results for the quarter. The impact of these non-deductible items on our full-year operating results could result in our full year 2008 effective tax rate differing from that of our ~~first~~second quarter rate.

Operating Revenues. Operating revenues increased ~~34%~~18%, or ~~$208~~$129 million, over the same period in 2007 primarily due to a ~~33%~~14%, or ~~$184~~$96 million, increase in passenger revenues. The increase in passenger revenues was largely attributable to a ~~20%~~14% increase in yield and a ~~14%~~4% increase in capacity over the ~~first~~second quarter of 2007.

Other revenue increased ~~53%~~70%, or ~~$24~~$33 million, primarily due to higher change fee and excess baggage revenue resulting from more passengers and increased change fee rates. Other revenue also increased due to additional LiveTV third party revenues, marketing component of TrueBlue point sales, rental income, and inflight sales.

Operating Expenses. Operating expenses increased ~~29%~~28%, or ~~$178~~$181 million, over the same period in 2007, primarily due to higher fuel prices and increased ~~capacity and fuel cost.~~capacity. Operating capacity increased ~~14%~~4% to ~~8.40~~8.4 billion available seat miles due to 15having 13 additional average aircraft in service during 2008. Operating expenses per available seat mile increased ~~13%~~23% to ~~9.51~~9.99 cents for the three months ended ~~March 31, 2008, due primarily to the increase in fuel price.~~June 30, 2008. Excluding fuel, our cost per available seat mile for the three months ended ~~March 31,~~June 30, 2008 was ~~unchanged from~~5% higher compared to the same period in 2007. In detail, operating costs per available seat mile were as follows (percent changes are based on unrounded numbers):


	Three Months Ended
	June 30,				Percent
	2008		2007		Change
	(in cents)

Operating expenses:
Aircraft fuel		4.40		2.80		57.5	%
Salaries, wages and benefits		2.01		1.96		2.0	%
Landing fees and other rents		.59		.58		0.9	%
Depreciation and amortization		.55		.53		4.2	%
Aircraft rent		.38		.38		—	%
Sales and marketing		.49		.37		31.5	%
Maintenance materials and repairs		.38		.34		12.5	%
Other operating expenses		1.19		1.18		1.5	%

Total operating expenses		9.99		8.14		22.8	%

Three Months Ended
March 31, Percent
Change
2008 2007
(in cents)
Operating expenses:
Aircraft fuel 3.67 2.59 42.0 %
Salaries, wages and benefits 2.12 2.21 (4.7 )%
Landing fees and other rents .61 .61 — %
Depreciation and amortization .53 .57 (7.1 )%
Aircraft rent .38 .41 (5.3 )%
Sales and marketing .47 .40 17.1 %
Maintenance materials and repairs .39 .35 12.7 %
Other operating expenses 1.34 1.29 3.4 %
Total operating expenses 9.51 8.43 12.8 %

Aircraft fuel expense increased ~~62%~~64%, or ~~$118~~$144 million, due to a ~~41%~~59% increase in average fuel cost per gallon, or ~~$89~~$136 million after the impact of fuel hedging, and 16four million more gallons of aircraft fuel consumed, resulting in ~~$29~~$8 million of additional fuel expense. Aircraft fuel prices ~~remain at~~continued to rise to record

high levels, with our average fuel ~~cost per~~ gallon at ~~$2.65~~$3.17 for the ~~first~~second quarter of 2008 compared to ~~$1.88~~$2.00 for the ~~first~~second quarter of 2007. Cost per available seat mile increased ~~42%~~58% primarily due to the increase in fuel price.

~~Table of Contents~~

Salaries, wages and benefits increased 9%6%, or ~~$14~~$10 million, due primarily to ~~an 8%~~a 6% increase in average full-time equivalent employees. ~~Cost per available seat mile decreased 5% as a result of higher overtime pay during the storms in the first quarter of 2007.~~

Landing fees and other rents increased ~~14%~~5%, or $6$2 million, due to a ~~12%~~6% increase in departures over 2007. Cost per available seat mile remained consistent with the same ~~compared to~~period in 2007.

Depreciation and amortization increased 6%8%, or $3 million, primarily due to having an average of 9eight more owned and ~~capital-leased~~capital leased aircraft in 2008. Cost per available seat mile ~~was 7% lower~~increased 4% as a result of our fleet ~~modification work performed in 2007.~~

being comprised of more owned and capital leased aircraft.

Aircraft rent increased 8%5%, or $2 million, due to ~~six~~four more aircraft leases in 2008 compared to the same period ~~last year.~~in 2007. Cost per available seat mile ~~decreased 5% due~~remained unchanged when compared to ~~a lower percentage of our fleet being leased.~~

the same period in 2007.

Sales and marketing expense increased ~~33%~~37%, or $10 million, due primarily to $6 million more in advertising costs in connection with our new “jetting” campaign and $4 million in higher credit card fees resulting from increased passenger ~~revenues and commissions related to our participation in Global Distribution Systems, or GDSs, in 2008.~~revenues. The majority of our sales are booked through a combination of our website and our own reservation agents ~~(77%~~(77.2% and ~~11%~~9.5% in the ~~first~~second quarter of 2008, respectively). On a cost per available seat mile basis, sales and marketing expense increased ~~17%~~32% primarily due to ~~GDS commissions.~~

increased advertising.

Maintenance, materials, and repairs increased ~~28%~~17%, or $7$5 million, due to an average of 1513 additional more operating aircraft in 2008, compared to the same period in 2007. Cost per available seat mile increased 13% primarily due to the gradual aging of our fleet which results in additional repairs. Maintenance expense is expected to increase significantly as our fleet ages.

Other operating expenses increased ~~18%~~5%, or ~~$18~~$5 million, primarily due to higher variable costs associated with a ~~12%~~4% increase in capacity, ~~and 8%~~taxes associated with the increase in ~~passengers served, as well as payroll taxes~~fuel price, research and development related to ~~increased employees.~~LiveTV’s in-flight data connectivity; partially offset by $13 million in gains on the sale of four A320 aircraft in 2008. Cost per available seat mile increased 3%2% primarily due to additional LiveTV third party customer installations and taxes associated with the increase in fuel ~~price, partially offset by the 2007 interrupted trip expenses related to the ice storms.~~

price.

Other Income (Expense). Interest expense ~~increased 7%~~decreased 4%, or $4$3 million, primarily due to the ~~debt~~impact of lower interest rates and ~~capital lease financing of 11 additional aircraft, which resulted in $5 million of additional interest expense, partially offset by savings from~~ the retirement of debt associated with sold aircraft ~~and~~partially offset by the ~~impact~~financing of ~~lower interest rates.~~15 additional aircraft. Interest expense also included an increased accretion in interest of $5 million related to our construction obligation for our new terminal at John F. Kennedy International Airport, or JFK, which was capitalized and contributed to the $5$3 million increase in capitalized ~~interest.~~

interest, which was otherwise lower due to the decline in interest rates.

~~Table~~

Interest income and other decreased 44%, or $7 million, primarily due to lower interest rates on cash and investment balances which resulted in $5 million less interest income in 2008 despite slightly higher average cash and investment balances. We also had $2 million in higher fuel hedging gains in 2007 than in 2008. We are unable to predict what the amount of ~~Contents~~accounting ineffectiveness will be related to our crude and heating oil derivative instruments each period, or the potential loss of hedge accounting, which is determined on aderivative-by-derivative basis, due to the volatility in the forward markets for these commodities.

Six Months Ended June 30, 2008 and 2007

We reported a net loss of $15 million for the six months ended June 30, 2008 compared to a $1 million net loss for the six months ended June 30, 2007. Diluted loss per share was $.07 for the six months ended June 30, 2008 and $0.00 for 2007. Our operating income for the six months ended June 30, 2008 was $38 million compared to of $60 million for the same period in 2007, and our pre-tax margin decreased 1.3 points from 2007.

Operating Revenues. Operating revenues increased 25%, or $337 million, over the same period in 2007 primarily due to a 23%, or $280 million, increase in passenger revenues. The increase in passenger revenues was largely attributable to a 17% increase in yield and 9% increase in capacity over the first half of 2007.

Other revenue increased 62%, or $57 million, primarily due to higher change fee and excess baggage revenue resulting from more passengers and increased change fee rates. Other revenue also increased due to

additional LiveTV third party revenues, marketing component of TrueBlue point sales and higher rental income and inflight sales.

Operating Expenses. Operating expenses increased 28%, or $359 million, over the same period in 2007, primarily due to higher fuel prices and increased capacity. Operating capacity increased 9% to 16.8 billion available seat miles as a result of having an average of 14 more aircraft in service during 2008. Operating expenses per available seat mile increased 18% to 9.75 cents for the six months ended June 30, 2008. Excluding fuel, our cost per available seat mile for the six months ended June 30, 2008 was 2% higher than the same period in 2007. In detail, operating costs per available seat mile were as follows (percent changes are based on unrounded numbers):


	Six Months Ended
	June 30,				Percent
	2008		2007		Change
	(in cents)

Operating expenses:
Aircraft fuel		4.04		2.70		49.8	%
Salaries, wages and benefits		2.05		2.10		(1.3	)%
Landing fees and other rents		.60		.59		0.6	%
Depreciation and amortization		.54		.55		(1.5	)%
Aircraft rent		.38		.39		(2.0	)%
Sales and marketing		.48		.39		24.2	%
Maintenance materials and repairs		.39		.34		12.7	%
Other operating expenses		1.27		1.22		2.7	%

Total operating expenses		9.75		8.28		17.8	%

Aircraft fuel expense increased 63%, or $262 million, due to a 50% increase in average fuel cost per gallon, or $225 million after the impact of fuel hedging, and 19 million more gallons of aircraft fuel consumed, resulting in $37 million of additional fuel expense. Aircraft fuel prices continued to rise to record high levels, with our average fuel cost per gallon at $2.91 for the six months ended June 30, 2008 compared to $1.95 for the same period in 2007. Cost per available seat mile increased 50% primarily due to the increase in fuel price.

Salaries, wages and benefits increased 7%, or $24 million, due primarily to a 7% increase in average full-time equivalent employees. Cost per available seat mile decreased 1.3% as a result of higher wages paid during and after the February 2007 ice storm.

Landing fees and other rents increased 9%, or $8 million, due to a 9% increase in departures over 2007. Cost per available seat mile remained the unchanged from 2007.

Depreciation and amortization increased 7%, or $6 million, primarily due to having an average of eight more owned and capital-leased aircraft in 2008. Cost per available seat mile was 2% lower as a result of fleet modification work performed in 2007 which resulted in accelerated depreciation.

Aircraft rent increased 7%, or $4 million, due to six more aircraft leases in 2008 compared to the same period in 2007. Cost per available seat mile decreased 2% due to a lower percentage of our fleet being leased.

Sales and marketing expense increased 35%, or $20 million, due to $9 million in higher credit card fees resulting from increased passenger revenues and $3 million in higher commissions as well as $8 million in higher advertising costs in 2008. The majority of our sales are booked through a combination of our website and our own reservation agents (77.0% and 10.3% in 2008, respectively). On a cost per available seat mile basis, sales and marketing expense increased 24% primarily due to higher advertising costs.

Maintenance, materials, and repairs increased 23%, or $12 million, due to an 11% increase average operating aircraft in 2008 compared to the same period in 2007. Cost per available seat mile increased 13% primarily due to the gradual aging of our fleet which results in additional repairs. Maintenance expense is expected to increase significantly as our fleet ages.

Other operating expenses increased 12%, or $23 million, primarily due to higher variable costs associated with a 9% increase in capacity, taxes associated with the increase in fuel price, research and development

related to LiveTV’s in-flight data connectivity and higher LiveTV third party costs of sales offset partially by $13 million of gains on the sale of four aircraft in 2008. Cost per available seat mile increased 3% primarily due to higher LiveTV expenses and fuel taxes.

Other Income (Expense). Interest expense increased 2%, or $1 million, primarily due the financing of 15 additional aircraft, which resulted in $12 million of additional interest expense, partially offset by the retirement of debt associated with sold aircraft and the impact of lower interest rates. Interest expense also included an increased accretion in interest of $9 million related to our construction obligation for our new terminal at JFK, which was capitalized and contributed to the $9 million increase in capitalized interest.

Interest income and other decreased 26%, or $7 million, as a result of lower interest rates on cash and investment balances and $3 million in lower fuel hedging gains in 2008 compared to 2007.

The following table sets forth our operating statistics for the three and six months ended ~~March 31,~~June 30, 2008 and 2007:


	Three Months Ended									Six Months Ended
	June 30,						Percent			June 30,						Percent
	2008			2007			Change			2008			2007			Change

Operating Statistics:
Revenue passengers (thousands)		5,637			5,587			0.9			11,155			10,678			4.5
Revenue passenger miles (millions)		6,756			6,736			0.3			13,319			12,678			5.1
Available seat miles (ASMs) (millions)		8,383			8,066			3.9			16,778			15,436			8.7
Load factor		80.6	%		83.5	%		(2.9	)pts.		79.4	%		82.1	%		(2.7	)pts.
Breakeven load factor⁽¹⁾		84.1	%		79.6	%		4.5	pts.		83.1	%		83.5	%		(0.4	)pts.
Aircraft utilization (hours per day)		12.6			13.2			(4.2	)		12.8			12.9			(1.0	)
Average fare	$	138.13		$	122.17			13.1		$	136.90		$	116.74			17.3
Yield per passenger mile (cents)		11.53			10.13			13.7			11.47			9.83			16.6
Passenger revenue per ASM (cents)		9.29			8.46			9.8			9.10			8.08			12.7
Operating revenue per ASM (cents)		10.24			9.05			13.2			9.98			8.67			15.2
Operating expense per ASM (cents)		9.99			8.14			22.8			9.75			8.28			17.8
Operating expense per ASM, excluding fuel (cents)		5.59			5.34			4.7			5.71			5.58			2.3
Airline operating expense per ASM (cents)⁽¹⁾		9.69			8.07			20.1			9.53			8.21			16.1
Departures		52,236			49,513			5.5			104,501			96,087			8.8
Average stage length (miles)		1,138			1,135			0.3			1,135			1,111			2.1
Average number of operating aircraft during period		139.6			126.7			10.2			138.0			124.1			11.2
Average fuel cost per gallon	$	3.17		$	2.00			58.5		$	2.91		$	1.95			49.5
Fuel gallons consumed (millions)		116			113			3.3			233			214			8.9
Percent of sales through jetblue.com during period		77.2	%		74.0	%		3.2	pts.		77.0	%		75.2	%		1.8	pts.
Full-time equivalent employees at period end⁽¹⁾											9,856			9,421			4.6

Three Months Ended
March 31, Percent
Change
2008 2007
Operating Statistics:
Revenue passengers (thousands) 5,518 5,091 8.4
Revenue passenger miles (millions) 6,563 5,942 10.4
Available seat miles (ASMs) (millions) 8,395 7,370 13.9
Load factor 78.2 % 80.6 % (2.4 ) pts.
Breakeven load factor⁽¹⁾ 82.2 % 88.1 % (5.9 ) pts.
Aircraft utilization (hours per day) 12.9 12.7 2.8
Average fare $ 135.64 $ 110.79 22.4
Yield per passenger mile (cents) 11.40 9.49 20.2
Passenger revenue per ASM (cents) 8.92 7.65 16.5
Operating revenue per ASM (cents) 9.72 8.25 17.8
Operating expense per ASM (cents) 9.51 8.43 12.8
Operating expense per ASM, excluding fuel (cents) 5.84 5.85 (0.2 )
Airline operating expense per ASM (cents)⁽¹⁾ 9.37 8.36 12.1
Departures 52,265 46,574 12.2
Average stage length (miles) 1,131 1,086 4.2
Average number of operating aircraft during period 136.3 121.5 12.2
Average fuel cost per gallon $ 2.65 $ 1.88 40.5
Fuel gallons consumed (millions) 117 101 15.1
Percent of sales through jetblue.com during period 76.7 % 76.4 % 0.3 pts.
Full-time equivalent employees at period end⁽¹⁾ 10,165 9,260 9.8


(1)

~~(1)~~

Excludes operating expenses and employees of LiveTV, LLC, which are unrelated to our airline operations.

Liquidity and Capital Resources

At ~~March 31,~~June 30, 2008, we had unrestricted cash and cash equivalents of ~~$713~~$846 million compared to cash and cash equivalents of $190 million at December 31, 2007. Cash flows from operating activities were ~~$49~~$105 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008 compared to ~~$147~~$219 million for the ~~three~~six months ended ~~March 31,~~June 30, 2007. The decrease in operating cash flows was primarily the result of a ~~41% increase in the~~50% higher price of fuel ~~from the first quarter of~~in 2008 compared to 2007. We rely primarily on operating cash flows to provide working capital. ~~We presently have~~At June 30, 2008, we had no lines of credit other than ~~two~~one short-term borrowing ~~facilities~~facility for certain aircraft predelivery deposits. At ~~March 31,~~June 30, 2008, we had ~~$23~~$30 million in borrowings outstanding under ~~these facilities.~~

this facility.

Investing Activities. During the ~~three~~six months ended ~~March 31,~~June 30, 2008, capital expenditures related to our purchase of flight equipment included expenditures of ~~$181~~$339 million for ~~six~~ten aircraft and ~~one~~two spare ~~engine, $30~~engines,

$42 million for flight equipment deposits and $3$5 million for spare part purchases. Capital expenditures for other property and equipment, including ground equipment purchases and facilities improvements, were ~~$16~~$32 million. Net cash provided by the purchase and sale of available-for-sale securities was ~~$316~~$319 million and proceeds from the sale of four aircraft were $133 million. ~~Investing activities also includes $15~~We posted $52 million in ~~deposits received related~~restricted cash that collateralizes letters of credit issued to certain of our ~~scheduled aircraft sales.~~

business partners, including $35 million for one of our primary credit card processors.

During the ~~three~~six months ended ~~March 31,~~June 30, 2007, capital expenditures related to our purchase of flight equipment included expenditures of ~~$203~~$361 million for ~~six~~11 aircraft and ~~one~~three spare ~~engine, $32~~engines, $59 million for flight equipment deposits and $2$7 million for spare part purchases. Capital expenditures for other property and equipment, including ground equipment purchases and facilities improvements, were $7$24 million. Net cash ~~used in~~provided by the purchase and sale of available-for-sale securities was $8$130 million.

~~Table of Contents~~

Financing Activities. Financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2008 consisted of (1) the issuance of approximately 42.6 million ~~shares of common stock, representing approximately 19% of our total outstanding~~ shares of common stock to Deutsche Lufthansa AG for approximately $301 million, net of transaction costs, (2) our issuance of $201 million of 5.5% convertible debentures, raising net proceeds of approximately $165 million after depositing approximately $32 million to related interest escrow accounts and paying issuance costs, (3) our issuance of $249 million in fixed equipment notes to European banks and $58 million in floating rate equipment notes to European banks secured by six Airbus A320, four EMBRAER 190 aircraft and two spare engines, (4) repayment of $86 million of debt associated with the sale of four aircraft, (5) scheduled maturities of $124 million of debt and capital lease obligations, (6) reimbursement of construction costs incurred for our new terminal at JFK of $73 million and (7) the sale-leaseback over 18 years of one EMBRAER 190 aircraft for $26 million by a U.S. leasing institution.

Financing activities for the six months ended June 30, 2007 consisted of (1) the sale and leaseback over 18 years of four EMBRAER 190 aircraft for $104 million by a U.S. leasing institution, ~~(3)~~(2) our issuance of ~~$102~~$210 million in ~~12-year~~ fixed rate and $35 million in floating rate equipment notes to European banks secured by ~~three~~seven Airbus A320 aircraft, ~~(4) our issuance~~(3) the financing of ~~$45~~three previously unsecured owned spare engines for $16 million, ~~in 12-year floating rate equipments notes to European banks secured by two EMBRAER 190 aircraft, (5)~~(4) scheduled maturities of ~~$97~~$79 million of debt and capital lease obligations, and ~~(6)~~(5) reimbursement of ~~construct ion~~construction costs incurred for our new terminal at JFK of ~~$41~~$130 million.

We currently have an automatic shelf registration statement on file with the SEC relating to our sale, from time to time, of one or more public offerings of debt securities, pass-through certificates, common stock, preferred stockand/or other securities. The net proceeds of any securities we sell under this registration statement may be used to fund working capital and capital expenditures, including the purchase of aircraft and construction of facilities on or near airports. Through ~~March 31,~~June 30, 2008, we had issued ~~$124~~a total of $626 million ~~of pass-through certificates~~in securities under this registration statement. On

In April ~~21,~~ 2008, we filed a prospectus supplement under our automatic ~~shell~~shelf registration statement ~~reporting~~registering the shares of our common stock issued to Deutsche Lufthansa AG in ~~January. The registration of such~~January 2008. Such shares ~~was~~were registered pursuant to our obligations under ~~the~~our registration rights agreement ~~between us and~~with Deutsche Lufthansa AG. We will not receive the proceeds of any ~~share s~~shares sold by Deutsche Lufthansa AG.

Financing activities for the three months ended March 31, 2007, consisted of (1) the sale-leaseback over 18 years of two EMBRAER 190 aircraft for $52 million by a U.S. leasing institution, (2) our issuance of $140 million in 12-year fixed rate equipment notes to a European bank secured by four Airbus A320 aircraft, (3) scheduled maturities of $30 million of debt and capital lease obligations, and (4) reimbursement of construction costs incurred for our new terminal at JFK of $76 million.

Working Capital. We had a working capital deficit of ~~$203~~$28 million at ~~March 31,~~June 30, 2008, compared to a working capital deficit of $140 million at December 31, 2007. A working capital deficit is customary for airlines since air traffic liability is classified as a current liability. Included in our working capital deficit is $175 million of indebtedness related to our ~~3½%~~3.5% convertible notes due 2033, which ~~is classified as a current liability because we expect holders of these notes to exercise~~were repurchased almost in their ~~repurchase right~~entirety on ~~the first repurchase date of~~ July 15, 2008. Working capital also includes the fair value of our fuel hedge derivatives, which was $116 million at June 30, 2008 and $33 million at December 31, 2007. Also contributing to ~~the increase in~~our working capital deficit is the classification of all of our auction rate securities, or ARSs, as long-term assets at ~~March 31,~~June 30, 2008.

At December 31, 2007, we had $611 million invested in ARSs, which were included in short-term investments. Beginning in February 2008, the auctions for all of the ARSs then held by us, all of which are collateralized by student loan portfolios (substantially all of which are guaranteed by the United States government) ~~were unsuccessful,~~began failing, resulting in our continuing to hold them beyond their typical auction reset dates. As a result of the illiquidity in the market following the auction failures, we have recorded a temporary

impairment charge of ~~$11~~$14 million through other comprehensive income related to the ARSs we hold, bringing the carrying value at ~~March 31,~~June 30, 2008 to ~~$313~~$307 million. Since we are unable to predict when liquidity will return to the ARS market, or whether issuers will call their securities, we classified all of our ARSs as ~~non-current~~long term investments to match the contractual maturities of the ~~underly ing~~underlying securities and the assumptions used to estimate their fair values at ~~March 31,~~June 30, 2008. We do not presently believe ~~there is a~~we are at risk of default for our ARSs due to the nature and guarantees of the underlying collateral; however, we will continue to evaluate the market factors in subsequent periods. If future evaluations of our ARS securities indicate that an impairment is other than temporary, in addition to adjusting the carrying value of the securities, we would also record an impairment charge through our statement of operations, which could be significant.

We expect to meet our obligations as they become due through available cash, investment securities and internally generated funds, supplemented as necessary by debtand/or equity financings and proceeds from sale-leaseback transactions. We expect to generate positive working capital through

~~Table of Contents~~

our operations, and the planned sale of ~~nine~~five additional Airbus A320 aircraft ~~later~~throughout the rest of 2008 and one in 2009. We may sell or lease additional aircraft in the ~~year.~~future, should conditions warrant. Assuming that we utilize the predelivery short-term borrowing ~~facilities~~facility available to us as well as our $110 million line of credit entered into in July 2008, we believe that our working capital will be sufficient to meet our cash requirements for at least the next 12 months. However, we cannot predict what the effect on our business might be from the extremely competitive environment we are operating in or from events that are beyond our control, such as continued record high fuel prices, weather-related disruptions, the impact of airline bankruptcies or consolidations, U.S. military actions or acts of terrorism.

JetBlue utilizes several credit card companies to process ticket sales. Our credit card processing agreements provide for reserves to be deposited with the processor in certain circumstances. If we were required to deposit reserves with any of our primary processors, the negative impact to our liquidity could be significant.

Contractual Obligations

Our noncancelable contractual obligations at ~~March 31,~~June 30, 2008, as adjusted for a May 2008 amendment to our Airbus A320 purchase agreement which deferred delivery of 21 Airbus A320 aircraft originally scheduled for delivery from 2009 through 2011 to 2014 through 2015, include the following (in millions):


	Payments due in
	Total		2008		2009		2010		2011		2012		Thereafter

Long-term debt and capital lease obligations⁽¹⁾	$	4,947	$	384	$	324	$	321	$	309	$	336	$	3,273
Lease commitments		2,099		118		219		196		182		161		1,223
Flight equipment obligations		5,095		265		415		445		555		895		2,520
Short-term borrowings		30		30		—		—		—		—		—
Financing obligations and other⁽²⁾		3,880		102		141		141		157		198		3,172

Total	$	16,082	$	899	$	1,099	$	1,103	$	1,203	$	1,590	$	10,188

Payments due in
Total 2008 2009 2010 2011 2012 Thereafter
Long-term debt and capital lease obligations⁽¹⁾ $ 4,423 $ 478 $ 321 $ 315 $ 310 $ 334 $ 2,665
Lease commitments 2,166 184 219 196 181 162 1,224
Flight equipment obligations 5,065 455 750 700 735 875 1,550
Short-term borrowings 23 23 — — — — —
Financing obligations and other⁽²⁾ 4,228 107 142 146 165 214 3,454
Total $ 15,905 $ 1,247 $ 1,432 $ 1,357 $ 1,391 $ 1,585 $ 8,893


(1)

~~(1)~~

Includes actual interest and estimated interest for floating-rate debt based on ~~March 31,~~June 30, 2008 rates.


(2)		Amounts include noncancelable commitments for the purchase of goods and services.

There have been no material changes in the terms of our debt instruments from the information provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources included in our 2007Form 10-K. We are not subject to any financial covenants in any of our debt ~~obligations.~~obligations, except for the requirement to maintain $300 million in cash and cash equivalents related to our $110 million line of credit agreement entered into on July 21, 2008. We have ~~$27~~$78 million of restricted cash pledged under standby letters of credit related to certain of our ~~leases.~~

leases, credit card processors and other business partners.

~~Table of Contents~~

As of ~~March 31,~~June 30, 2008, we operated a fleet of ~~105~~106 Airbus A320 aircraft and 3436 EMBRAER 190 aircraft, of which 8083 were owned, 55 were leased under operating leases and four were leased under capital leases. ~~We had also purchased one A320 aircraft which was not yet in service as of March 31, 2008.~~ The average age of our fleet was 3.2 years at ~~March 31,~~June 30, 2008. As of ~~March 31,~~June 30, 2008, including the May 2008 amendment to our Airbus A320 purchase agreement, which deferred delivery of 21 Airbus A320 aircraft previously scheduled for delivery from 2009 through 2011 to 2014 through 2015, we had on order 6764 Airbus

A320 aircraft and 7169 EMBRAER 190 aircraft with options to acquire 3222 additional Airbus A320 aircraft and 91 additional EMBRAER 190 aircraft as follows:


	Firm						Option
	Airbus		EMBRAER				Airbus		EMBRAER
Year	A320		190		Total		A320		190		Total

Remainder of 2008		6		1		7		—		—		—
2009		3		9		12		—		4		4
2010		3		8		11		—		9		9
2011		5		8		13		3		11		14
2012		13		10		23		4		12		16
2013		13		12		25		7		14		21
2014		12		12		24		4		21		25
2015		9		9		18		4		20		24

		64		69		133		22		91		113

Firm Option
Year Airbus
A320 EMBRAER
190 Total Airbus
A320 EMBRAER
190 Total
Remainder of 2008 9 3 12 — — —
2009 12 9 21 — 4 4
2010 10 8 18 — 9 9
2011 10 8 18 6 11 17
2012 13 10 23 8 12 20
2013 13 12 25 10 14 24
2014 — 12 12 4 21 25
2015 — 9 9 4 20 24
67 71 138 32 91 123

In July 2008, we deferred delivery of 10 EMBRAER 190 aircraft previously scheduled for delivery between 2009 and 2011 to 2016. The impact of this deferral is not reflected in the tables above. Committed expenditures for our ~~138~~133 firm aircraft and 23 spare engines include estimated amounts for contractual price escalations and predelivery deposits. Debt and lease financing has been arranged for all of our remaining aircraft deliveries scheduled for 2008. Although we believe that debtand/or lease financing should be available for our remaining aircraft deliveries, we cannot assure you that we will be able to secure financing on terms attractive to us, if at all, which may require us to modify our aircraft acquisition plans. Capital expenditures for facility improvements, spare parts, and ground purchases are expected to be approximately ~~$135~~$90 million for the remainder of 2008.

In November 2005, we executed a30-year lease agreement with The Port Authority of New York and New Jersey, or the PANYNJ, for the construction and operation of a new terminal at JFK with occupancy projected in late 2008, which for financial reporting purposes only, is being accounted for as a financing obligation because we do not believe we will qualify for sale-leaseback accounting due to our continuing involvement in the property following the construction period. JetBlue has committed to rental payments under the lease, including ground rents for the new terminal site, which began on lease execution and are included as part of lease commitments in the contractual obligations table above. Facility rents are anticipated to commence upon the date of our beneficial occupancy of the new terminal and are included as part of ~~financing~~“financing obligations and ~~other~~other” in the ~~table.~~

table above.

JetBlue utilizes several credit card companies to process ticket sales. Although our credit card processing agreements do not contain any financial covenants, they do allow for the processors to maintain cash reserves or other collateral until the associated air travel is provided. As of June 30, 2008 we were required to maintain $35 million in reserves with one of our primary processors in the form of a letter of credit. Should our credit card processors require additional reserves, the negative impact on our liquidity, depending on the amount of such required additional reserves, could be significant, which could adversely affect our business.

Off-Balance Sheet Arrangements

None of our operating lease obligations are reflected on our balance sheet. Although some of our aircraft lease arrangements are variable interest entities, as defined by FASB Interpretation No. 46,Consolidation of Variable Interest Entities, or FIN 46, none of them require consolidation in our financial statements. The 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 option and a consideration of our liquidity requirements. 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 which are the purchasers of equipment notes issued by us to finance the acquisition of new aircraft and are held by such pass-through trusts. These pass-through trusts 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. The liquidity providers for theSeries 2004-1 certificates and the spare

parts certificates are Landesbank Hessen-Thüringen Girozentrale and Morgan Stanley Capital Services Inc. The liquidity providers for theSeries 2004-2 certificates are Landesbank Baden-Württemberg and Citibank, N.A.

~~Table of Contents~~

We utilize a policy provider to provide credit support on theClass G-1 andClass G-2 certificates. The policy provider has unconditionally guaranteed the payment of interest on the certificates when due and the payment of principal on the certificates no later than 18 months after the final expected regular distribution date. The policy provider is MBIA Insurance Corporation (a subsidiary of MBIA, Inc.). Financial information for the parent company of the policy provider is available at the SEC’s website athttp://www.sec.govor at the SEC’s public reference room in Washington, D.C.

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

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates included in our 2007Form 10-K.

New Accounting Standards

In March 2008, the Financial Accounting Standards Board, or FASB, affirmed the consensus of FSP APB14-a,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), which applies to all convertible debt instruments that have a ~~‘‘net~~“net settlement ~~feature’’~~feature”; ~~which means~~ that ~~such convertible debt instruments,~~is, by their terms, they may be settled either wholly or partially in cash upon conversion. FSP APB14-a requires issuers of convertible debt instruments that may be settled wholly or partially in cash upon conversion to separately account for the liability and equity components in a manner reflective of the issuer’s nonconvertible debt borrowing rate. Previous guidance provided for accounting for this type of convertible ~~deb t~~debt instrument entirely as debt. FSP APB14-a is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. We are currently evaluating the impact adoption of FSP APB14-a may have on our consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards 161,Disclosures about Derivative Instruments and Hedging Activities, or SFAS 161, which requires enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 amends and expands the disclosure requirements of SFAS 133 with the intent to provide users of financial statements adequate information about how derivative and hedging activities effect an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the impact adoption of SFAS 161 may have on our consolidated financial statements.

Other Information

Recent Awards. In ~~February~~June 2008, JetBlue was ~~ranked top airline~~recognized by J.D. Power and ~~seventh overall across all industries~~Associates as having the highest customer satisfaction among low-cost carriers in ~~Business Week magazine’s list of ‘‘Customer Service Champs’’. In March 2008, JetBlue was awarded~~North America for the ~~Investor Relations Magazine award for Best Crisis Communications.~~

fourth consecutive year.

New Executive Vice President, ~~Systems and Technology.~~Chief Commercial Officer. In ~~March~~May 2008, we named ~~Joseph Eng~~Robin Hayes as our new Executive Vice President, ~~Systems and Technology.~~Chief Commercial Officer. Prior to ~~joining~~agreeing to join JetBlue, Mr. ~~Eng was~~Hayes served as the Executive Vice President ~~and Chief Executive Officer~~for The Americas of ~~Spectrum Systems, a software company.~~

British Airways.

Forward-Looking Information. This report contains forward-looking statements relating to future events and our future performance, including, without limitation, statements regarding financial forecasts or projections, our expectations, beliefs, intentions or future strategies, that are signified by the words ~~‘‘expects’’~~”expects”, ~~‘‘anticipates’’~~”anticipates”, ~~‘‘intends’’~~”intends”, ~~‘‘believes’’~~”believes”, ~~‘‘plans’’~~”plans”, or similar language. Our actual results and the timing of certain events could differ materially from those expressed in the forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date of this report. It is

routine for our internal projections and

~~Table of Contents~~

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. Although these expectations may change, we may not inform you if they do.

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, our extremely competitive industry; increases in fuel prices, maintenance costs and interest rates; our ability to profitably implement our growth strategy, including the ability to operate reliably the EMBRAER 190 aircraft and our new terminal at JFK; our significant fixed obligations; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on high daily aircraft utilization; our dependence on the New York metropolitan market; our reliance on automated systems and technology; our subjectivity to potential unionization; our reliance on a limited number of suppliers; changes in or additional government regulation; and changes in our industry due to other airlines’ financial ~~condition and consolidations;~~condition; and external geopolitical events and conditions.

Additional information concerning these and other factors is contained in our SEC filings, including but not limited to, our 2007Form 10-K.

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk.~~


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

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 2007Form 10-K, except as follows:

Aircraft Fuel. As of ~~March 31,~~June 30, 2008, we had hedged approximately ~~32%~~41% of our expected remaining 2008 fuel requirements using ~~crude and~~ heating oil ~~options and~~ swaps. 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 ~~March 31,~~June 30, 2008, cost per gallon of fuel, including the effects of our fuel hedges. Based on our projected twelve month fuel consumption, such an increase would result in an increase to aircraft fuel expense of approximately ~~$148~~$175 million, compared to an estimated ~~$88~~$108 million for 2007 measured as of ~~March 31,~~June 30, 2007. See Note 9 to our unaudited condensed consolidated financial statements for additional information.

Fixed Rate Debt. On ~~March 31,~~June 30, 2008, our ~~$425~~$626 million aggregate principal amount of convertible debt had an estimated fair value of ~~$362~~$555 million, based on quoted market prices.

~~Item 4. Controls and Procedures.~~


Item 4.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined inRule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or 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 as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~March 31,~~June 30, 2008. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~March&nb sp;31,~~June 30, 2008.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation of our controls performed during the quarter ended ~~March 31,~~June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~
PART II. OTHER INFORMATION
~~Item 1. Legal Proceedings.~~


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. We believe that the ultimate outcome of these proceedings to which we are currently a party will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

The following is an update to Item 1A – Risk Factors contained in our 2007Form 10-K. For additional risk factors that could cause actual results to differ materially from those anticipated, please refer to our 2007Form 10-K.

Our liquidity could be adversely impacted in the event one or more of our credit card processors were to impose material reserve requirements for payments due to us from credit card transactions.

We currently have agreements with organizations that process credit card transactions arising from purchases of air travel tickets by our customers. ~~A majority of our revenues arise out of credit card transactions.~~ Credit card processors have financial risk associated with tickets purchased for travel, which can occur several weeks after the purchase. Our credit card processing agreements ~~contain provisions which may require a cash reserve~~provide for reserves to be deposited with the processor ~~under~~in certain circumstances. ~~Although we have not been asked to provide any reserves nor have been subject to any holdbacks, it is possible that our credit card processors could request these in the future.~~ If circumstances were to occur that would require us to deposit ~~a material reserve~~additional reserves with one or more of our major processors, the negative impact on our liquidity ~~could~~would likely be significant, which could materially adversely affect our business.

A substantial portion of our long-term marketable securities are highly rated auction rate securities, and failures in these auctions may adversely impact our liquidity.

A substantial percentage of our marketable securities portfolio is invested in highly rated auction rate securities. Auction rate securities are securities that are structured to allow for short-term interest rate resets but with contractual maturities that can be well in excess of ten years. At the end of each reset period, investors can sell or continue to hold the securities at par. In recent months, due to current conditions in the credit markets, the auction process for certain of our auction rate securities failed, which resulted in the interest rates on these investments resetting to predetermined rates that were, in some instances, lower than current market rates. We will not be able to liquidate our investments in these types of securities until a future auction is successful, the issuer redeems the securities, a buyer is found outside the auction process, the securities mature, or there is a default that requires immediate repayment by the issuer. Continued failure of auctions could adversely impact the liquidity of our investments, and if one or more of the issuers of the auction rate securities in our portfolio cannot successfully close future auctions or their credit ratings deteriorate, we may be required to adjust the carrying value of these investments through an impairment charge, which may be material.


Item 2.	*Changes in Securities and Use of Proceeds*

On June 4, 2008, we completed a public offering of $100.6 million aggregate principal amount of 5.5% Series A convertible debentures due 2038, or the Series A Debentures, and $100.6 million aggregate principal amount of 5.5% Series B convertible debentures due 2038, or the Series B Debentures, and collectively, with the Series A Debentures, the Debentures. Morgan Stanley & Co. Incorporated and Merrill Lynch & Co. Incorporated acted as underwriters for our sale of the Debentures in a registered public offering. The net proceeds from the offering, after underwriting fees, were $195 million. The Debentures bear interest at 5.5%, payable semi-annually on April 15 and October 15. The first interest payment on the Debentures is due October 15, 2008. The Debentures are our general obligations and rank equal in right of payment with all of our existing and future senior debt, effectively junior in right of payment to our existing and future secured debt, including our secured equipment notes, to the extent of the value of the assets securing such debt, and senior in right of payment to any subordinated debt. In addition, the Debentures will be structurally subordinated to all liabilities of our subsidiaries. The Debentures of each series are secured in part by an

escrow account into which we have deposited a total of approximately $32 million of the net proceeds from the offering, equal to the sum of the first six scheduled semi-annual interest payments on the Debentures, for the exclusive benefit of the holders of the Debentures. The $32 million held in escrow for the Debentures is recorded as restricted cash on our condensed consolidated balance sheets. The net proceeds of the offering were used for the purchase of substantially all of our $175 million principal amount 3.5% convertible debt, issued in 2003, which was subject to repurchase at the option of the holders on July 15, 2008.

Holders of the Series A Debentures may convert the debentures into shares of our common stock at a conversion rate of 220.6288 shares per $1,000 principal amount of Series A Debentures. Holders of the Series B Debentures may convert the debentures into shares of our common stock at a conversion rate of 225.2252 shares per $1,000 principal amount of Series B Debentures. The conversion ratios are subject to adjustment should we declare common stock dividends or effect any common stock splits or similar transactions. If the holders convert the Debentures in connection with a fundamental corporate change that occurs prior to October 15, 2013 for the Series A Debentures or October 15, 2015 for the Series B Debentures, the applicable conversion rate may be increased depending upon our then current common stock price. The maximum number of shares into which all Debentures are convertible, including pursuant to this make-whole fundamental change provision, is 54.4 million shares.

We may redeem any of the Debentures for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest at any time on or after October 15, 2013 for the Series A Debentures and October 15, 2015 for the Series B Debentures. Holders may require us to repurchase the Debentures for cash at a repurchase price equal to 100% of their principal amount plus accrued and unpaid interest, if any, on October 15, 2013, 2018, 2023, 2028, and 2033 for the Series A Debentures and October 15, 2015, 2020, 2025, 2030, and 2035 for the Series B Debentures; or at any time prior to their maturity upon the occurrence of a specified designated event. Holders who convert their Debentures prior to April 15, 2011 will receive, in addition to the number of shares of our common stock calculated at the applicable conversion rate, a cash payment from the escrow account for Debentures of the series converted equal to the sum of the remaining interest payments that would have been due on or before April 15, 2011 in respect of the converted Debentures.

On June 4, 2008, in conjunction with the public offering of the Debentures described above, we also entered into a share lending agreement with Morgan Stanley Capital Services, Inc., an affiliate of one of the managing underwriters of our offering, or the share borrower, pursuant to which we loaned approximately 44.9 million shares of our common stock. Under the share lending agreement, the share borrower will offer and sell borrowed shares of JetBlue common stock in a registered public offering and use the short position resulting from the sale of the shares of our common stock to facilitate the establishment of hedge positions by investors in the Debentures offering. The common stock was then sold at a price of $3.70 per share. Under the share lending agreement, the share borrower will be required to return the borrowed shares when the Debentures are no longer outstanding. We did not receive any proceeds from the sale of the borrowed shares by the share borrower, but we did receive a nominal lending fee of $0.01 per share from the share borrower for the use of the borrowed shares.


Item 4.	Submission of Matters to a Vote of Security Holders.

Our Annual Meeting of Stockholders, or Annual Meeting, was held on May 15, 2008. At the Annual Meeting, Robert Clanin, Christoph Franz and Frank Sica were each elected to serve as a director of the Company for a three year term expiring on the date of our Annual Meeting of Stockholders in 2011. The votes were as follows:


	For		Withheld

Robert Clanin		157,299,102		22,975,397
Christoph Franz		176,536,598		3,737,902
Frank Sica		158,079,718		22,194,781

There were no broker non-votes on this matter.

The terms of the following directors continued after the Annual Meeting: Joel Peterson, Ann Rhoades, David Checketts, Kim Clark, Neal Moszkowski, Virginia Gambale and Dave Barger.

The results of voting on Items 2 through 4 at the Annual Meeting were as follows:

Item ~~6. Exhibits.~~

2. A Board-sponsored proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008.


	Number of		% of Shares
	Votes		Outstanding

For		178,606,676		79.63
Against		760,581		0.33
Abstain		907,243		0.40

There were no broker non-votes on this matter.

Item 3. A Board-sponsored proposal to approve amendments to the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws to eliminate supermajority voting provisions:


	Number of		% of Shares
	Votes		Outstanding

For		176,094,776		78.51
Against		2,531,531		1.12
Abstain		1,648,192		0.73

There were no broker non-votes on this matter.

Item 4. A Board-sponsored proposal to approve amendments to the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws to declassify the Company’s Board of Directors and provide for annual election of all directors:


	Number of		% of Shares
	Votes		Outstanding

For		178,690,176		79.67
Against		1,224,786		0.54
Abstain		359,537		0.16

There were no broker non-votes on this matter.


Item 5.	Other Information.

As of July 22, 2008, we executed a line of credit with Citigroup Global Markets, Inc. which allows for borrowings of up to $110 million through July 20, 2009. Advances under this agreement will bear interest at the Open Federal Funds rate plus 2.30%. This line of credit is secured by a majority of our auction rate securities, with total borrowings available subject to reduction should any of the underlying collateral be sold, or should there be a significant drop in the fair value of the underlying collateral. Advances may be used to fund working capital requirements, capital expenditures or other general corporate purposes, except that they may not be used to purchase any securities or to refinance any debt. We have provided various representations, warranties and other covenants, including a financial covenant to maintain at least $300 million in cash and cash equivalents throughout the term of the agreement. The agreement also contains customary events of default. Upon the occurrence of an event of default, the outstanding obligations under the loan agreement may be accelerated and become due and payable immediately. In connection with this transaction, we agreed to release the lender and its affiliates from certain claims related to our auction rate securities in specified circumstances.


Item 6.	Exhibits.

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

SIGNATURE

~~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: July 24, 2008 By:	/s/ EDWARD BARNES

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EXHIBIT INDEX


Exhibit
Number		Exhibit


3.5	~~JETBLUE AIRWAYS CORPORATION~~	Amended and Restated Certificate of Incorporation of JetBlue Airways Corporation.

3.6				~~(Registrant)~~
~~Date: April 25, 2008~~			~~By:~~		~~/s/ EDWARD BARNES~~Fifth Amended and Restated Bylaws of JetBlue Airways Corporation.

10.1*		Amendment No. 32 to Airbus A320 Purchase Agreement between AVSA, S.A.R.L. and JetBlue Airways Corporation, dated May 23, 2008.

10.2*		Side Letter No. 24 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated April 2, 2008.

10.3*		Side Letter No. 25 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated May 27, 2008.

12.1		Computation of Ratio of Earnings to Fixed Charges.

31.1		13a-14(a)/15d-14(a) Certification of the Chief Executive ~~Vice President and~~Officer, furnished herewith.

31.2		13a-14(a)/15d-14(a) Certification of the Chief Financial Officer, ~~(Principal Financial Officer)~~furnished herewith.

32		Certification Pursuant to Section 1350, furnished herewith.

~~EXHIBIT INDEX~~

Exhibit Number Exhibit
10 .1 Employment Agreement, dated February 11, 2008, between JetBlue Airways Corporation and David Barger.
10 .2 Employment Agreement, dated February 11, 2008, between JetBlue Airways Corporation and Russell Chew.
10 .3* Amendment No. 31 to Airbus A320 Purchase Agreement between AVSA, S.A.R.L. and JetBlue Airways Corporation, dated January 21, 2008.
12 .1 Computation of Ratio of Earnings to Fixed Charges.
31 .1 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer, furnished herewith.
31 .2 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer, furnished herewith.
32 Certification Pursuant to Section 1350, furnished herewith.


*

*	Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request filed with the SEC.


	March 31, 2008			December 31, 2007
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	713		$	190
Investment securities			40			644
Receivables, less allowance			111			92
Inventories, less allowance			27			26
Prepaid expenses and other			173			164
Total current assets			1,064			1,116
PROPERTY AND EQUIPMENT
Flight equipment			3,689			3,547
Predelivery deposits for flight equipment			238			238
			3,927			3,785
Less accumulated depreciation			358			336
			3,569			3,449
Other property and equipment			489			475
Less accumulated depreciation			139			130
			350			345
Total property and equipment			3,919			3,794
OTHER ASSETS
Assets constructed for others			503			452
Investment securities			284			—
Restricted cash			54			53
Other			226			183
Total other assets			1,067			688
TOTAL ASSETS		$	6,050		$	5,598
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	122		$	140
Air traffic liability			480			426
Accrued salaries, wages and benefits			95			110
Other accrued liabilities			170			120
Short-term borrowings			23			43
Current maturities of long-term debt and capital leases			377			417
Total current liabilities			1,267			1,256
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS			2,697			2,588
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes			187			192
Construction obligation			485			438
Other			85			88
			757			718
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; 500,000,000 shares authorized, 224,308,781 and 181,593,440 shares issued and outstanding in 2008 and 2007, respectively			2			2
Additional paid-in capital			1,158			853
Retained earnings			154			162
Accumulated other comprehensive income			15			19
Total stockholders’ equity			1,329			1,036
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,050		$	5,598


	Three Months Ended March 31,
	2008				2007
OPERATING REVENUES
Passenger		$	748			$	564
Other			68				44
Total operating revenues			816				608
OPERATING EXPENSES
Aircraft fuel			308				190
Salaries, wages and benefits			178				164
Landing fees and other rents			51				45
Depreciation and amortization			45				42
Aircraft rent			32				30
Sales and marketing			39				29
Maintenance materials and repairs			33				26
Other operating expenses			113				95
Total operating expenses			799				621
OPERATING INCOME (LOSS)			17				(13	)
OTHER INCOME (EXPENSE)
Interest expense			(56	)			(52	)
Capitalized interest			14				8
Interest income and other			12				12
Total other income (expense)			(30	)			(32	)
LOSS BEFORE INCOME TAXES			(13	)			(45	)
Income tax benefit			(5	)			(23	)
NET LOSS		$	(8	)		$	(22	)
LOSS PER COMMON SHARE:
Basic		$	(0.04	)		$	(0.12	)
Diluted		$	(0.04	)		$	(0.12	)


	Six Months Ended June 30,
	2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(15	)	$	(1	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes		(8	)		(1	)
Depreciation		84			77
Amortization		10			10
Stock-based compensation		6			8
Changes in certain operating assets and liabilities		48			124
Other, net		(20	)		2

Net cash provided by operating activities		105			219
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(376	)		(392	)
Predelivery deposits for flight equipment		(42	)		(59	)
Proceeds from the sale of flight equipment		133			—
Assets constructed for others		(74	)		(131	)
Proceeds from maturities of held-to-maturity investments		—			7
Purchase of available-for-sale securities		(69	)		(269	)
Sale of available-for-sale securities		388			399
Other, net		(59	)		4

Net cash provided by investing activities		(99	)		(441	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Issuance of common stock		316			16
Issuance of long-term debt		476			261
Aircraft sale and leaseback transactions		26			104
Short-term borrowings		17			21
Construction obligation		73			130
Repayment of long-term debt and capital lease obligations		(210	)		(79	)
Repayment of short-term borrowings		(30	)		(38	)
Other, net		(18	)		(5	)

Net cash provided by financing activities		650			410

INCREASE IN CASH AND CASH EQUIVALENTS		656			188
Cash and cash equivalents at beginning of period		190			10

Cash and cash equivalents at end of period	$	846		$	198


Note 1 —	Summary of Significant Accounting Policies


	Level 1	quoted prices in active markets for identical assets or liabilities;


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


	Level 3	unobservable inputs, such as discounted cash flow models or valuations.


	Auction Rate			Interest Rate
	Securities			Swaps			Total

Balance as of March 31, 2008	$	313		$	(3	)	$	310
Transfers in		—			—			—
Unrealized gains/(losses), net		(3	)		5			2
Purchases, issuances and settlements, net		(3	)		—			(3	)

Balance as of June 30, 2008	$	307		$	2		$	309

Balance as of December 31, 2007	$	—		$	—		$	—
Transfers in		255			—			255
Unrealized gains/(losses), net		(14	)		2			(12	)
Purchases, issuances and settlements, net		66			—			66

Balance as of June 30, 2008	$	307		$	2		$	309


	Auction Rate Securities				Interest Rate Swaps				Total
Balance as of December 31, 2007		$	—			$	—			$	—
Transfers in			255								255
Unrealized gains/(losses), net			(11	)			(3	)			(14	)
Purchases, issuances and settlements, net			69				—				69
Balance as of March 31, 2008		$	313			$	(3	)		$	310


	March 31, 2008			December 31, 2007
Fair value of derivative instruments		$	40		$	33
Longest remaining term (months)			12			9
Hedged volume (barrels, in thousands)			3,009			1,506


Note 7 —	Employee Retirement Plan


	Three Months Ended March 31,				Percent Change
	2008		2007		Percent Change
	(in cents)
Operating expenses:
Aircraft fuel		3.67		2.59		42.0	%
Salaries, wages and benefits		2.12		2.21		(4.7	)%
Landing fees and other rents		.61		.61		—	%
Depreciation and amortization		.53		.57		(7.1	)%
Aircraft rent		.38		.41		(5.3	)%
Sales and marketing		.47		.40		17.1	%
Maintenance materials and repairs		.39		.35		12.7	%
Other operating expenses		1.34		1.29		3.4	%
Total operating expenses		9.51		8.43		12.8	%


	Firm						Option
Year	Airbus A320		EMBRAER 190		Total		Airbus A320		EMBRAER 190		Total
Remainder of 2008		9		3		12		—		—		—
2009		12		9		21		—		4		4
2010		10		8		18		—		9		9
2011		10		8		18		6		11		17
2012		13		10		23		8		12		20
2013		13		12		25		10		14		24
2014		—		12		12		4		21		25
2015		—		9		9		4		20		24
		67		71		138		32		91		123


Exhibit Number			Exhibit
	10	.1	Employment Agreement, dated February 11, 2008, between JetBlue Airways Corporation and David Barger.
	10	.2	Employment Agreement, dated February 11, 2008, between JetBlue Airways Corporation and Russell Chew.
	10	.3*	Amendment No. 31 to Airbus A320 Purchase Agreement between AVSA, S.A.R.L. and JetBlue Airways Corporation, dated January 21, 2008.
	12	.1	Computation of Ratio of Earnings to Fixed Charges.
	31	.1	13a-14(a)/15d-14(a) Certification of the Chief Executive Officer, furnished herewith.
	31	.2	13a-14(a)/15d-14(a) Certification of the Chief Financial Officer, furnished herewith.
	32		Certification Pursuant to Section 1350, furnished herewith.