PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

JetBlue Airways Corporation, or JetBlue, provides air transportation services across the United States, the Caribbean and Latin America. Our condensed consolidated financial statements include the accounts of JetBlue and our subsidiaries which are collectively referred to as “we” or the “Company”. All majority-owned subsidiaries are consolidated on a line by line basis, with all intercompany transactions and balances being eliminated. These condensed consolidated financial statements and related notes should be read in conjunction with our ~~2019~~2020 audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, or our ~~2019~~2020 Form 10-K.

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

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

Investment Securities

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

Available-for-sale investment securities. Our available-for-sale investment securities include investments such as time deposits and convertible debt securities. The fair values of these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the fair value hierarchy. We did 0t record any material gains or losses on these securities during the three months ended March 31, 2021 or 2020. Refer to Note 8 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

Held-to-maturity investment securities. We did not have any held-to-maturity investments as of ~~September 30,~~March 31, 2021 and December 31, 2020. We did ~~not~~0t record any significant gains or losses on these securities during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 or ~~2019. The estimated fair value of these investments approximated their carrying value as of December 31, 2019.~~2020.

The aggregate carrying values of our short-term and long-term investment securities consisted of the following at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in millions):

September 30, 2020 December 31, 2019
Available-for-sale securities
Time deposits $ 561
$ 325
Commercial paper 0
20
Debt securities 8
6
Total available-for-sale securities 569
351
Held-to-maturity securities
Corporate bonds 0
21
Total held-to-maturity securities 0
21
Total investment securities $ 569
$ 372


	March 31, 2021		December 31, 2020
Available-for-sale securities
Time deposits	$	860	$	1,130
Debt securities	7		7
Total available-for-sale securities	867		1,137
Total investment securities	$	867	$	1,137

Other Investments

Our wholly-owned subsidiary, JetBlue Technology Ventures, LLC, or JTV, has equity investments in emerging companies which do not have readily determinable fair values. In accordance with Accounting Standards Update ("ASU") 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, we account for these investments using a measurement alternative which allows entities to measure these investments at cost, less any impairment, adjusted for changes from observable price changes in orderly transactions for identifiable or similar investments of the same issuer. The carrying amount of these investments was ~~$40~~$45 million and ~~$41~~$40 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

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Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

We have an approximate 10% ownership interest in the TWA Flight Center Hotel at John F. Kennedy International Airport and it is also accounted for under the measurement alternative. The carrying amount of this investment was $14 million ~~and $13 million~~ as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively.~~2020.

Equity Method Investments

Investments in which we can exercise significant influence are accounted for using the equity method in accordance with Topic 323, Investments - Equity Method and Joint Ventures of the ~~FASB~~Financial Accounting Standards Board (the "FASB") Accounting Standards Codification ~~("Codification"~~(the "Codification"). The carrying amount of our equity method investments was ~~$35~~$33 million and ~~$38~~$34 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, and is included within other assets on our consolidated balance sheets.

Recently ~~Issued~~Adopted Accounting Standards

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

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update eliminates, clarifies, and modifies certain guidance related to the accounting for income taxes. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted. We are still evaluating the full impact of adopting the update on our consolidated financial statements.

~~Recently Adopted Accounting Standards~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. The update requires the use of an "expected loss" model on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans, and held-to-maturity debt securities, entities are required to estimate lifetime expected credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. We adopted the requirements of ASU ~~2016-13~~2019-12 as of January 1, ~~2020 using a modified retrospective transition approach.~~2021. The adoption of ASU ~~2016-13~~2019-12 did not have a material impact on our condensed consolidated financial statements.

In August ~~2018,~~2020, the FASB issued ASU ~~2018-13,~~2020-06, ~~Fair Value Measurement (Topic 820)~~Debt —Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): ~~Disclosure Framework - Changes to the Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). This update simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion feature and for convertible instruments with a beneficial conversion feature. As a result, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, this update amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The ~~update eliminates, adds,~~treasury stock method is no longer available. Entities may adopt the requirements of ASU 2020-06 using either a full or modified retrospective approach, and ~~modifies certain disclosure requirements~~it is effective for ~~fair value measurements.~~interim and annual reporting periods beginning after December 15, 2021. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2020. We adopted the requirements of ASU ~~2018-13~~2020-06 as of January 1, ~~2020.~~2021. The adoption ~~of ASU 2018-13~~ did not have ~~a significant~~an impact on our condensed consolidated financial ~~statement disclosures.~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Note 2—The COVID-19 Pandemic~~

The unprecedented coronavirus ("COVID-19") pandemic and the related travel restrictions and physical distancing measures implemented throughout the world have significantly reduced demand for air travel. Beginning in March 2020, large public events were canceled, governmental authorities began imposing restrictions on non-essential activities, businesses suspended travel, and popular leisure destinations temporarily closed to visitors. Certain countries have imposed bans on international travelers for specified periods or indefinitely.

Demand for air travel began to weaken at the end of February 2020. The pace of decline accelerated throughout March into April 2020 and has remained depressed. This decline in demand has had a material adverse impact on our operating revenues and financial position. During the third quarter of 2020, our operating revenues were 76% lower than the same quarter of 2019. Although demand improved compared to the second quarter of 2020, it remains significantly lower than in prior years. The exact timing and pace of the recovery is uncertain given the significant impact of the pandemic on the overall U.S. and global economy. Some states have experienced a resurgence of COVID-19 cases after reopening and as a result, certain other states, such as New York, have implemented travel restrictions or advisories for travelers from such states. We have also seen a similar resurgence of COVID-19 cases in other countries and we expect to see fluctuations in the number of cases, which we believe will result in actions by governmental authorities restricting activities. We expect the demand environment to remain depressed until an accepted treatment and/or vaccine for COVID-19 is widely available. Our response to the pandemic and the measures we take to secure additional liquidity may be modifiedstatements as we did not have ~~more clarity on the timing~~any convertible instruments outstanding as of ~~demand recovery.~~

~~In response to these developments, since March 2020 we have implemented the following measures to focus on the safety of our customers, our crewmembers, and our business.~~

~~Customers and Crewmembers~~

~~The safety of our customers and crewmembers continues to be a priority.~~December 31, 2020. As the COVID-19 pandemic has developed, we have taken steps to promote physical distancing and implemented new procedures that reflect the recommendations of health experts, including some of the following:

~~Introduced "Safety from the Ground Up", an initiative with a multi-layer approach that encompasses enhanced safety and cleaning measures on our flights, at our airports, and in our offices;~~

~~Instituted temperature checks for our customer-facing and support-center crewmembers;~~

~~Updated our sick leave policy to provide up to 14 days of paid sick leave for crewmembers who have been diagnosed with COVID-19 or are required to quarantine;~~

~~Implemented a framework for internal contact tracing, crewmember notification, and a return to work clearance process for all crewmembers, wherever they may be located;~~

~~Required face coverings for all crewmembers while boarding, in flight, and when physical distancing cannot be maintained;~~

~~Administered more frequent disinfecting of common surfaces and areas with high touchpoints in our facilities;~~

~~Enhanced daily and overnight cleaning of our aircraft and all facilities, using electrostatic spraying of disinfectant in the cabins of aircraft parked overnight at selected focus cities;~~

~~Required customers to wear face coverings during check-in, boarding, and inflight;~~

~~Limited the number of seats available to be sold on most flights; we plan to continue limiting the capacity on our flights to less than 70% through December 1, 2020;~~

~~Suspended group boarding and implemented a back-to-front boarding process to minimize passing in the aisle;~~

~~Eliminated layovers for crewmembers in New York City and worked with crew transportation companies to ensure physical distancing;~~

~~Implemented jump seat buffers on our flights to further promote physical distancing measures;~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Provided enhanced flexibility to our customers by waiving change and cancel fees for customers with existing bookings made through February 28, 2021, while also extending the expiration date of travel credits issued between February 27, 2020 and June 30, 2020 for flight purchases to 24 months; and

~~Announced our partnership with Vault Health to provide discounted at-home COVID-19 testing to customers with pending travel plans.~~

~~Our Business~~

The COVID-19 pandemic drove a significant decline in demand beginning in the second half of March 2020. We have significantly reduced our capacity to a level that maintains essential services to align with demand. Our capacity for the third quarter of 2020 declined by 58% year-over-year. For the fourth quarter of 2020, we expect capacity to be down by at least 45%, as compared to the same period in prior year. As a result of the significant reduction in demand expectations and lower capacity, we have temporarily parked a portion of our fleet.

The reductions in demand and in our capacity have resulted in a significant reduction to our revenue. As a result, we have, and will continue to implement cost saving initiatives to reduce our overall level of cash spend. Some of the initiatives we have undertaken include:

~~Adjustments in flying capacity to align with the expected demand.~~

•~~Temporary consolidations of our operations in certain cities that contain multiple airport locations.~~

~~Renegotiated service rates with business partners and extended payment terms.~~

•~~Instituted a company-wide hiring freeze.~~

~~Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.~~

~~Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring during the third quarter.~~

At September 30, 2020, we had cash, cash equivalents, short-term investments, and short-term restricted cash of approximately $3.1 billion. We believe the unprecedented impact of COVID-19 on the demand for air travel and the corresponding decline in revenue will continue to have an adverse impact on our operating cash flow. Given this situation, we have taken actions to increase liquidity, strengthen our financial position, and conserve cash. Some of the actions we have taken since the onset of the pandemic through September 30, 2020 include:

Executed a new $1.0 billion 364-day delayed draw term loan agreement in March 2020 and immediately drew down on the facility for the full amount available. This term loan facility was repaid during the third quarter.

~~Borrowed on our existing $550 million revolving credit facility in April 2020.~~


•	~~Executed a $150 million pre-purchase arrangement of TrueBlue~~^® ~~points with our co-brand credit card partner in April 2020.~~

~~Suspended non-critical capital expenditure projects.~~

~~Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.~~

~~Suspended share repurchases.~~

~~Obtained $963 million of government funding under the Payroll Support Program of The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which is~~ discussed ~~further below.~~

~~Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.~~

~~Entered into $445 million of sale-leaseback transactions; which is discussed further below.~~

~~Completed public placements of equipment notes in an aggregate principal amount of $923 million secured by 49 Airbus A321 aircraft in August 2020, which is discussed further~~ in Note 42 to our condensed consolidated financial

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~statements. The net proceeds were primarily used to repay the outstanding borrowings under our 364-day delayed draw term loan facility that was due to be repaid~~ statements, in March ~~2021.~~


•	~~Entered into a Loan and Guarantee agreement with the United States Department of the Treasury ("Treasury") under the Loan Pr~~ogram of the CARES Act which gives us access to loans in an aggregate principal amount of up to $1.14 billion until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.

As2021, we completed a ~~result of these activities, we had $2.5 billion in unrestricted and short-term restricted cash as of September 30, 2020.~~

~~In the second quarter of 2020, we executed $118~~private offering for $750 million of sale-leaseback transactions. These transactions did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipment and the related liabilities under the lease are classified within debt and finance leases obligations. These transactions are treated as cash from financing activities on our condensed consolidated statements of cash flows.

In the third quarter of 2020, we executed $327 million of sale-leaseback transactions. Of these transactions, $118 million did not qualify as sales for accounting purposes. The remaining $209 million qualified as sales and generated a loss of $106 million. The assets associated with sale-leaseback transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our condensed consolidated statements of cash flows.

In October 2020, we further amended our our purchase agreement with Airbus to defer several aircraft deliveries, resulting in approximately $2.0 billion of reduction in aircraft capital expenditures through 2022.

~~We also executed $59 million of sale-leaseback transactions in October 2020.~~

~~In November 2020, we entered into an agreement with the Treasury to increase our borrowing capacity under the Loan Program of the CARES Act to $1.95 billion.~~

~~We continue to evaluate future financing opportunities to leverage our unencumbered assets in an effort to build additional levels of liquidity.~~

~~Valuation of Long-Lived Assets~~

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

As discussed above, our operations were adversely impacted by the unprecedented decline in demand for travel caused by the COVID-19 pandemic. To determine if impairment exists in our fleet, we grouped our aircraft by fleet-type and estimated their future cash flows based on projections of capacity, aircraft age, maintenance requirements, and other relevant conditions. Based on the assessment, we determined the future cash flows from the operation of our Embraer E190 fleet were lower than the carrying value. For those aircraft, including the ones that are under operating lease, and related spare parts in our Embraer E190 fleet, we recorded an impairment loss of $56 million and $258 million for the three and nine months ended September 30, 2020, respectively. These losses represent the difference between the book value of these assets and their fair value. We estimated the fair value of our Embraer E190 fleet using third party valuations and considered specific circumstances such as aircraft age, maintenance requirements and condition, and therefore classified as Level 3 in the fair value hierarchy.0.50% convertible notes due 2026. We evaluated the ~~remaining fleet~~conversion feature of this note offering for embedded derivatives in accordance with ASC 815, Derivatives and ~~determined~~Hedging, and the future cash flows of our Airbus A320 and Airbus A321 fleet exceeded their carrying value as of September 30, 2020. As the extent of the ongoing impact from the COVID-19 pandemic remains uncertain, we expect to updatesubstantial premium model in accordance with ASC 470, Debt. Based on our assessment, ~~from time to time, as new information becomes available.~~

~~Valuation of Indefinite-Lived Intangibles~~

Our intangible assets consist primarily of acquired take-off and landing slots, or Slots, at certain domestic airports. Slots are the rights to take-off or land at a specific airport during a specific time period of the day and are a means by which airport capacity and congestion can be managed. We account for Slots at High Density Airports, including Reagan National Airport in Washington, D.C., LaGuardia Airport, and JFK Airport, both in New York City, as indefinite life intangible assets which result in no amortization expense. We evaluate our intangible assets for impairment at least annually or when events and

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

circumstances indicate they may be impaired. Indicators include operating or cash flow losses as well as various market factors to determine if events and circumstances could reasonably have affected the fair value. We performed an impairment assessment as of September 30, 2020 and determined our indefinite-lived intangible assets are not impaired.

~~The Coronavirus Aid, Relief, and Economic Security Act~~

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

~~On April 23, 2020,~~ we entered into a Payroll Support Program Agreement (the "PSP Agreement") with the United States Department of the Treasury ("Treasury") governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with a payment of $936 million (the "Payroll Support Payment"), consisting of $685 million in grants and $251 million in an unsecured term loan. The loan has a 10-year term and bears interest on the principal amount outstanding at an annual rate of 1.00% until April 23, 2025, and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% thereafter until April 23, 2030. The principal amount may be repaid at any time prior to maturity at par. In considerationconcluded that separate accounting for the ~~Payroll Support Payment, we issued warrants to purchase approximately 2.6 million shares~~conversion feature of our common stock to the Treasury at an exercise price of $9.50 per share. The warrants will expire five years after issuance, and will be exercisable either through net cash settlement or net share settlement, at JetBlue's option, in whole or in part at any time. In accordance with the PSP Agreement, we are required to comply with the relevant provisions of the CARES Act which, among other things, includes the following: the requirement to use the Payroll Support Payment exclusively for the continuation of payment of crewmember wages, salaries and benefits; the prohibition on involuntary furloughs and reductions in crewmember pay rates and benefits through September 30, 2020; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and restrictions on the payment of certain executive compensation until March 24, 2022.

On September 30, 2020, Treasury provided us a payment of $27 million (the "Additional Payroll Support Payment"), consisting of $19 million in grants and $8 million in an unsecured term loan under the PSP Agreement. The terms of the unsecured term loan are identical to those under the initial loan issued on April 23, 2020. In consideration for the Additional Payroll Support Payment, we issued warrants to purchase approximately 85,540 additional shares of our common stock to the Treasury at an exercise price of $9.50 per share (the "Additional PSP Warrants"). The Additional PSP Warrants have the same terms and exercise price as the initial warrants issued on April 23, 2020 under the Payroll Support Program.

The total payroll support funding of $963 million received under the CARES Act was originally classified as short-term restricted cash since the funds had to be utilized to pay the salaries and benefits costs of our crewmembers. The funds are reclassified from short-term restricted cash within prepaid expenses and other on our consolidated balance sheets to cash and cash equivalents when the funds are utilized. As of September 30, 2020, $74 million of payroll support funding remained available.

this note offering is not required. The carrying value ~~relating to the payroll support grants is recorded within other liabilities and will be recognized as a contra-expense within special items on our consolidated statements~~ of ~~operations as the funds are utilized. The relative fair value of the warrants, estimated to be $19 million,~~this convertible note was recorded within stockholder's equity and reduced the total carrying value of the grants to $685 million. As of September 30, 2020, the carrying value of the grants was $49 million. Proceeds from the payroll support grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows.

~~The carrying value relating to the unsecured term loan is recorded~~included within long-term debt and finance lease obligations on our consolidated balance ~~sheets. The proceeds from the loan were classified~~sheet as ~~financing activities on our consolidated statement~~ of ~~cash flows.~~March 31, 2021.

On April 29, 2020, we submitted our application for the Loan Program of the CARES Act. Under the Loan Program, we have the ability to borrow up to approximately $1.14 billion from the Treasury. Any loans issued under the Loan Program are expected to be senior secured obligations of the Company. If we accept the full amount of the loan, we will issue warrants to purchase approximately 12.0 million shares of our common stock to the Treasury. Any amount received under the Loan Program will be subject to the relevant provisions of the CARES Act, including many of those described above under the Payroll Support Program.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~On September 29, 2020, we enter~~
ed into a Loan and Guarantee Agreement (the "Loan Agreement") with the Treasury under the Loan Program of the CARES Act. Pursuant to the Loan Agreement, Treasury agreed to extend loans to us in an aggregate principal amount of up to $1.14 billion until March 26, 2021, subject to specified terms. Unless otherwise terminated early, all borrowings under the Loan Agreement are due and payable on the fifth anniversary of the initial borrowing date. We drew $115 million under the Loan Agreement on September 29, 2020. Borrowings under the Loan Agreement bear interest at a variable rate equal to LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum. Our obligations under the Loan Agreement are secured by liens on (i) certain eligible aircraft collateral, (ii) certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, and (iii) certain cash accounts (collectively, the "Collateral"). Under the terms of the Loan Agreement, we may also pledge eligible spare parts, slots, gates and routes, and a~~dditional aircraft, real property, ground support equipment, flight simulators and equity interests.~~ The Loan Agreement includes affirmative and negative covenants that restrict our ability to, among other things, dispose of Collateral, merge, consolidate or sell assets, incur certain additional indebtedness or pay certain dividends. In addition, we are required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities aggregating not less than $550 million and to maintain a minimum ratio of the borrowing base of the Collateral (determined as the sum of a specified percentage of the appraised value of each type of Collateral) to outstanding obligations under the Loan Agreement of not less than 1.6 to 1.0. If we do not meet the minimum collateral coverage ratio, we must either provide additional Collateral to secure our obligations under the Loan Agreement or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio. The Loan Agreement contains events of default customary for similar financings. 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 addition, if certain change of control events were to occur with respect to JetBlue, we would be required to prepay the loans in full under the Loan Agreement.

In connection with the Loan Agreement, on September 29, 2020, we entered into a warrant agreement with Treasury, pursuant to which we agreed to issue to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share.

~~As previously discussed, we entered into an agreement with the Treasury to increase our borrowing capacity under the Loan Program of the CARES Act to $1.95 billion in November 2020.~~

The CARES Act also provides for deferred payments of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. We have deferred $36 million in payments through September 30, 2020. We expect to defer approximately $13 million of additional payments for the remainder of 2020.

~~Income Taxes~~

Among other things, the CARES Act allows a five-year carryback period for tax losses generated in 2018 through 2020. As a result, our effective tax rate includes an income tax benefit related to anticipated refunds from tax losses generated during 2020 that are permitted to be carried back to certain years when the U.S. federal income tax rate was 35%. A benefit of $10 million was recorded in the quarter related to the release of a valuation allowance to adjust deferred tax assets to an amount we consider is more likely than not to be realized. Because realizability is dependent on future income, we plan to continue monitoring and updating our assessment and it is possible tax attributes may require a valuation allowance in future periods.

Note 3—2— Revenue Recognition

The Company categorizes the revenues received from contracts with its customers by revenue source as we believe it best depicts the nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenues recognized by revenue source for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions):

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Passenger revenue
Passenger travel $ 420
$ 1,914
$ 1,973
$ 5,563
Loyalty revenue - air transportation 25
91
153
275
Other revenue
Loyalty revenue 38
54
127
146
Other revenue 9
27
42
79
Total revenue $ 492
$ 2,086
$ 2,295
$ 6,063


	Three Months Ended March 31,
	2021		2020
Passenger revenue
Passenger travel	$	625	$	1,408
Loyalty revenue - air transportation	45		103
Other revenue
Loyalty revenue	45		51
Other revenue	18		26
Total revenue	$	733	$	1,588

TrueBlue^® is our customer loyalty program designed to reward and recognize our customers. TrueBlue® points earned from ticket purchases are presented as a reduction to Passenger travel within passenger revenue. Amounts presented in Loyalty

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

revenue - air transportation represent the revenue recognized when TrueBlue^® points have been redeemed and the travel has occurred.

Contract Liabilities

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

September 30, 2020 December 31, 2019
Air traffic liability - passenger travel $ 1,020
$ 929
Air traffic liability - loyalty program (air transportation) 703
661
Deferred revenue 42
10
Total $ 1,765
$ 1,600


	March 31, 2021		December 31, 2020
Air traffic liability - passenger travel	$	1,184	$	964
Air traffic liability - loyalty program (air transportation)	758		733
Deferred revenue	36		41
Total	$	1,978	$	1,738

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ we recognized passenger revenue of ~~$697~~$237 million and ~~$856~~$636 million respectively, that was included in passenger travel liability at the beginning of the respective periods.

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

In response to the impact of COVID-19 on air travel, we extended the expiration dates for travel credits issued from February 27 through June 30, 2020 to a 24 month period. Accordingly, any revenue associated with these travel credits, which are deferred in air traffic liability, will be recognized within 24 months. ~~We continue to monitor~~Based on our customers' ~~behavior to determine whether any portion~~behaviors and estimates of ~~these~~breakage, we expect $18 million of the outstanding travel credits ~~may need~~at March 31, 2021 will be recognized into revenue beyond 12 months. We have, accordingly, reclassified this amount to ~~be classified as~~air traffic liability - non-current on our consolidated balance sheets. Given the change in contract duration, our estimates of revenue from unused tickets may be subject to variability and differ from historical experience.

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

In April 2020, we executed a pre-purchase arrangement of TrueBlue^® points with our co-brand credit card partner for $150 million. The funds ~~are expected to be~~have been fully applied to ~~future~~ point purchases ratably over the course of one year. As the funds are not yet associated with a point, they are considered to be short-term and have been included within other accrued liabilities on our consolidated balance sheets. The carrying value of this arrangement was approximately $75 million as of ~~September 30, 2020. The proceeds from this arrangement were classified within operating activities on our condensed consolidated statements of cash flows.~~March 31, 2021.

The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points earned and sold to participating companies for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions):

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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

Balance at December 31, 2018 $ 580
TrueBlue^® points redeemed
(275 )
TrueBlue^® points earned and sold
342
Balance at September 30, 2019 $ 647


Balance at December 31, 2020	$	733
TrueBlue® points redeemed	(45)
TrueBlue® points earned and sold	70
Balance at March 31, 2021	$	758

Balance at December 31, 2019	$	661
TrueBlue® points redeemed	(103)
TrueBlue® points earned and sold	98
Balance at March 31, 2020	$	656

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

~~Note 4—Long-term Debt, Short-term Borrowings and Finance Lease Obligations~~

During the nine months ended September 30, 2020, we made principal payments of $1.3 billion on our outstanding debt and finance lease obligations. Of this amount, $998 million represents the early repayment of outstanding balance on our 364-day delayed draw term loan facility during the third quarter.

~~We had pledged aircraft, engines, other equipment, and facilities with a net book value of $6.2 billion at September 30, 2020 as security under various financing arrangements.~~

At September 30, 2020, scheduled maturities of our long-term debt and finance lease obligations were $95 million for the remainder of 2020, $438 million in 2021, $417 million in 2022, $1.1 billion in 2023, $966 million in 2024, and $1.9 billion thereafter.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

During the three months ended March 31, 2021, we made principal payments of $644 million on our outstanding debt and finance lease obligations.

We had pledged aircraft, engines, other equipment, and facilities with a net book value of $6.8 billion at March 31, 2021 as security under various financing arrangements.

At March 31, 2021, scheduled maturities of our long-term debt and finance lease obligations were $351 million for the remainder of 2021, $419 million in 2022, $629 million in 2023, $955 million in 2024, $305 million in 2025, and $2.4 billion thereafter.

The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows (in millions):

September 30, 2020 December 31, 2019
Carrying Value
Estimated Fair Value⁽²⁾
Carrying Value
Estimated Fair Value⁽²⁾
Public Debt
Fixed rate special facility bonds, due through 2036 $ 42
$ 43
$ 42
$ 46
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032 574
414
581
586
2019-1 Series A, due through 2028 179
146
181
186
2019-1 Series B, due through 2027 114
142
0
0
2020-1 Series A, due through 2032 628
611
0
0
2020-1 Series B, due through 2028 170
213
0
0
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023 114
115
133
141
Floating rate equipment notes, due through 2028 164
150
201
207
Fixed rate equipment notes, due through 2028 935
920
1,107
1,201
Floating rate term loan credit facility, due through 2024 709
750
0
0
Unsecured CARES Act Payroll Support Program loan, due through 2030 259
192
0
0
Secured CARES Act Loan, due through 2025 105
100
0
0
2020 sale-leaseback transactions, due through 2024 235
262
0
0
Citibank line of credit, due through 2023 546
520
0
0
Total⁽¹⁾
$ 4,774
$ 4,578
$ 2,245
$ 2,367


	March 31, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value(2)		Carrying Value		Estimated Fair Value(2)
Public Debt
Fixed rate special facility bonds, due through 2036	$	42	$	46	$	42	$	45
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	560		456		560		440
2019-1 Series A, due through 2028	175		155		174		152
2019-1 Series B, due through 2027	107		140		107		139
2020-1 Series A, due through 2032	627		676		627		658
2020-1 Series B, due through 2028	170		226		170		223
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	100		101		114		116
Fixed rate equipment notes, due through 2028	841		829		891		1,017
Floating rate equipment notes, due through 2028	140		133		152		144
Floating rate term loan credit facility, due through 2024	695		754		702		759
Unsecured CARES Act Payroll Support Program loan, due through 2030	259		214		259		207
Secured CARES Act Loan, due through 2025	104		106		104		104
Citibank line of credit, due through 2023	0		0		546		533
2020 sale-leaseback transactions, due through 2024	351		388		352		393
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	121		100		0		0
0.50% convertible senior notes due 2026	734		659		0		0
Total(1)	$	5,026	$	4,983	$	4,800	$	4,930

(1) Total excludes finance lease obligations of ~~$65~~$56 million and ~~$89~~$63 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

(2) The estimated fair ~~values~~values of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. The fair values of our enhanced equipment notes and our special facility bonds were based on quoted market prices in markets with low trading volumes. The fair value of our non-public debt was estimated using a discounted cash flow analysis based on our borrowing rates for instruments with similar terms and therefore classified as Level 3 in the fair value hierarchy. The fair values of our other financial instruments approximate their carrying values. Refer to Note 98 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

~~Floating~~Unsecured Consolidated Appropriations Act Payroll Support Program Extension Loan

On January 15, 2021, we entered into a Payroll Support Program Extension Agreement (the "PSP Extension Agreement") with the United States Department of the Treasury ("Treasury") governing our participation in the federal Payroll Support Program for passenger air carriers under the United States Consolidated Appropriations Act, 2021 (the “Payroll Support Program 2"). In the first quarter of 2021, Treasury provided us with total payments of $504 million (the "Payroll Support 2 Payments") under the program, consisting of $383 million in grants and $121 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until January 15, 2026, and the applicable Secured Overnight Financing Rate ~~Term Loan Credit Facility~~("SOFR") plus 2.00% thereafter until January 15, 2031. In consideration for the Payroll Support 2 Payments, we issued warrants to purchase approximately 0.8 million shares of our common stock to the Treasury at an exercise price of $14.43 per share. The warrants will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time. In accordance with the PSP Extension Agreement, we are required to comply with the relevant provisions of the Payroll Support Program 2 which, among other things, includes the following: the requirement to use the Payroll Support 2 Payments exclusively for the continuation of payment of crewmember wages, salaries and benefits; the prohibition on involuntary furloughs and reductions in crewmember pay rates and benefits through March 31, 2021; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and restrictions on the payment of certain executive compensation until October 1, 2022.

The carrying value relating to the payroll support extension grants are recorded within other accrued liabilities and are recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. The relative fair value of the warrants, estimated to be $8 million, are recorded within additional paid-in capital and reduced the total carrying value of the grants to $375 million. Proceeds from the payroll support extension grants and from the issuance of warrants are classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. As of March 31, 2021, the carrying value of our payroll support extension grants received under Payroll Support Program 2 was approximately $87 million.

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

On April 29, 2021, Treasury provided us an additional payment of $76 million (the "Additional Payroll Support 2 Payment"), consisting of $53 million in grants and $23 million in an unsecured term loan under the PSP Extension Agreement. In consideration for the Additional Payroll Support 2 Payment, we issued warrants to Treasury to purchase approximately 0.2 million additional shares of our common stock at an exercise price of $14.43 per share (the "Additional Payroll Support 2 Warrants"). The terms of the unsecured term loan and additional warrants are identical to those issued in the first quarter of 2021 under the Payroll Support Program 2 as described above.

0.50% Convertible Senior Notes due 2026

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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

indebtedness and are structurally subordinated to all of our indebtedness and other liabilities. The net proceeds from this offering were approximately $734 million.

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

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

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

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

Floating Rate Term Loan Credit Facility

On June 17, 2020, we entered into a $750 million term loan credit facility with Barclays Bank PLC, as administrative agent. The loans under this term loan credit facility bear interest at a variable rate equal to LIBOR (subject to a 1.00% floor), or at our election another rate, in each case, plus a specified margin. Our obligations are secured on a senior basis by airport takeoff and landing slots at LaGuardia Airport, John F. Kennedy International Airport, and Reagan National Airport and the right to use certain intellectual property assets comprising the JetBlue brand. Slots are rights to take-off or land at a specific airport during a specific time period during the day and a means by which airport capacity and congestion can be managed.The term loan facility is subject to amortization payments of 5% per year, payable quarterly, commencing on September 30, 2020 with the remaining balance due and payable in a single payment on the maturity date of June 17, 2024.

The interest rate on our outstanding balance was 6.25% as of ~~September 30, 2020.~~March 31, 2021.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

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

Unsecured CARES Act Payroll Support Program Loan

~~As discussed in Note 2 to our condensed consolidated financial statements, on~~On April 23, 2020, we entered into ~~the PSP~~a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the ~~Treasury. Pursuant to~~Treasury governing our participation in the ~~agreement, JetBlue received a~~ Payroll Support ~~Payment of $936~~Program. Under the Payroll Support Program, Treasury provided us with payments which totaled $963 million (the "Payroll Support ~~Payment"~~Payments") ~~which included~~consisting of $704 million in grants and $259 million in unsecured term loans. The loans have a ~~grant~~10-year term and bear interest on the principal amount outstanding at an annual rate of ~~$685 million~~1.00% until April 23, 2025, and ~~a promissory note for $251 million.~~the applicable SOFR plus 2.00% thereafter until April 23, 2030. The ~~note matures 10 years after issuance and is payable in a lump sum~~principal amount may be repaid at ~~maturity.~~any time prior to maturity at par. As part of the agreement, JetBlue issued to the Treasury warrants to acquire more than ~~2.6~~2.7 million shares of our common stock under the ~~program. The warrants expire five years after issuance.~~

On September 30, 2020, Treasury provided us Additional Payroll Support Payment of $27 million consisting of $19 million in grants and $8 million in an unsecured term loan under the PSP Agreement. The terms of the unsecured term loan are identical to those under the initial loan issued on April 23, 2020. In consideration for the Additional Payroll Support Payment, we issued Additional PSP Warrants to purchase approximately 85,540 additional shares of our common stock to the Treasuryprogram at an exercise price of $9.50 per share. The ~~Additional PSP Warrants have~~warrants expire five years after issuance.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The carrying value relating to the ~~same terms~~payroll support grants was recorded within other accrued liabilities and ~~exercise price~~was recognized as a contra-expense within special items on our consolidated statements of operations as the ~~initial~~funds were utilized. The relative fair value of the warrants, ~~issued~~estimated to be $19 million, was recorded within additional paid-in capital and reduced the total carrying value of the grants to $685 million. Proceeds from the payroll support grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on ~~April 23,~~our condensed consolidated statements of cash flows. Our funding from the payroll support grants under the CARES Act were fully utilized as of December 31, 2020.

Secured CARES Act Loan Program

~~As discussed in Note 2 to our condensed consolidated financial statements, on April 29, 2020, we submitted our application for~~Under the CARES Act Loan Program, ~~of the CARES Act. Under the Loan Program, we have~~JetBlue has the ability to borrow up to a total of approximately ~~$1.14~~$1.9 billion from the Treasury. ~~Any loans issued under the Loan Program are expected to be senior secured obligations of the Company.~~ If we accept the full amount of the loan, we will issue warrants to purchase approximately ~~12.0~~20.5 million shares of our common stock to the Treasury. Any amount received under the CARES Act Loan Program will be subject to the relevant provisions of the CARES Act, including many of those described above under the Payroll Support Program.

On September 29, 2020, we entered into the Loan Agreement with the Treasury under the Loan Program of the CARES Act. Pursuant to the Loan Agreement, Treasury agreed to extend loans to us in an aggregate principal amount of up to $1.14 billion until March 26, 2021, subject to specified terms. Unless otherwise terminated early, all borrowings under the CARES Act Loan ~~Agreement~~Program are due and payable on the fifth anniversary of the initial borrowing date. ~~We made a drawing of $115 million under the Loan Agreement on September 29, 2020.~~ Borrowings ~~under the Loan Agreement~~ bear interest at a variable rate equal to LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum. Our obligations under the CARES Act Loan ~~Agreement~~Program are secured by liens on (i) certain eligible aircraft and engine collateral, (ii) certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, and (iii) certain cash accounts (collectively, the "Collateral"). Under the terms of the CARES Act Loan ~~Agreement,~~Program, we may also pledge eligible spare parts, slots, gates and routes, and additional aircraft, real property, ground support equipment, flight simulators and equity interests. The CARES Act Loan ~~Agreement~~Program includes affirmative and negative covenants that restrict our ability to, among other things, dispose of Collateral, merge, consolidate or sell assets, incur certain additional indebtedness or pay certain dividends. In addition, we are required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities aggregating not less than $550 million and to maintain a minimum ratio of the borrowing base of the Collateral (determined as the sum of a specified percentage of the appraised value of each type of Collateral) to outstanding obligations under the CARES Act Loan ~~Agreement~~Program of not less than 1.6 to 1.0. If we do not meet the minimum collateral coverage ratio, we must either provide additional Collateral to secure our obligations under the CARES Act Loan ~~Agreement~~Program or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio. The CARES Act Loan ~~Agreement~~Program contains events of default customary for similar financings. Upon the occurrence of an event of default, the outstanding obligations under the CARES Act Loan ~~Agreement~~Program may be accelerated and become due and payable immediately. In addition, if certain change of control events occur with respect to JetBlue, we will be required to prepay the loans in full under the CARES Act Loan ~~Agreement.~~Program.

~~Table~~We entered into a loan and guarantee agreement (the "Loan Agreement") with the Treasury with a borrowing capacity of ~~Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

$1.1 billion and made an initial drawing of $115 million under the CARES Act Loan Program on September 29, 2020. In connection with ~~the Loan Agreement, on September 29, 2020,~~this initial drawing, we entered into a warrant agreement with Treasury, pursuant to which we ~~agreed to issue~~issued to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share.

InOn November 3, 2020, we amended and restated the Loan Agreement and increased JetBlue's borrowing capacity from approximately $1.1 billion to approximately $1.9 billion.

On January 15, 2021, we entered into ana letter agreement with Treasury which provided an extension of the ~~Treasury~~Loan Agreement allowing us the option to ~~increase our~~access the remaining borrowing capacity through May 28, 2021.

As of March 31, 2021, $115 million remained outstanding under the Loan ~~Program of the CARES Act to $1.95 billion.~~Agreement.

Fixed Rate Enhanced Equipment Notes

2020-1A and B Equipment Notes

In August 2020, we completed a public placement of equipment notes in an aggregate principal amount of $808 million secured by 24 Airbus A321 aircraft. The equipment notes were issued in two series: (i) Series A, bearing interest at the rate of 4.00% per annum in the aggregate principal amount equal to $636 million, and (ii) Series B, bearing interest at the rate of 7.75% per annum in the aggregate principal amount equal to $172 million. Principal and interest are payable semi-annually.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

2019-1B Equipment Notes

In August 2020, we completed a public placement of equipment notes in an aggregate principal amount of $115 million bearing interest at a rate of 8.00% per annum. These equipment notes are secured by 25 Airbus A321 aircraft, which were included in the collateral pool of our 2019-1 Series AA and Series A offerings completed in November 2019. Principal and interest are payable semi-annually.

2020 Sale-Leaseback Transactions

In ~~the second quarter of~~ 2020, we executed ~~$118~~$563 million of sale-leaseback transactions. ~~These~~Of these transactions, $354 million did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipment and the related liabilities under the lease are classified within debt and finance leases obligations. These transactions are treated as cash from financing activities on our ~~condensed~~ consolidated statements of cash flows.

~~In the third quarter of 2020, we executed $327~~ The remaining $209 million of sale-leaseback ~~transactions. Of these~~ transactions ~~$118 million did not qualify as sales for accounting purposes. The remaining $209 million~~ qualified as sales and generated a loss of $106 million. The assets associated with ~~sale-leaseback~~these transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our ~~condensed~~ consolidated statements of cash flows.

We did not execute any sale-leaseback transactions in the first quarter of 2021.

Citibank Line of Credit

~~In August 2019, we amended our~~We have a revolving Credit and Guaranty Agreement with Citibank N.A. as the administrative ~~agent. The amendment increased our borrowing capacity by $125 million~~agent, for up to $550 ~~million and extended the~~million. The term of the facility runs through August 2023. Borrowings under the Credit and Guaranty Agreement bear interest at a variable rate equal to LIBOR, plus a margin. The Credit and Guaranty Agreement was previously secured by Slots at John F. Kennedy International Airport, LaGuardia Airport, and Reagan National Airport, as well as certain other assets. Slots are rights to take-off or land at a specific airport during a specific time period during the day and a means by which airport capacity and congestion can be managed. On May 29, 2020, we exercised our pre-existing right and removed the Slots from the collateral pool to the facility. In exchange for the Slots, we added unencumbered aircraft, simulators, and certain other assets ~~to the facility~~ as ~~permitted.~~permitted thereunder. The Credit and Guaranty Agreement includes covenants that require us to maintain certain minimum balances in unrestricted cash, cash equivalents, and unused commitments available under revolving credit facilities. In addition, the covenants restrict our ability to, among other things, dispose of certain collateral, or merge, consolidate, or sell assets.

We borrowed the full amount of $550 million under this revolving credit facility on April 22, 2020. ~~The interest rate on our outstanding balance was 2.22% as of September 30, 2020.~~

~~Short-term Borrowings~~

~~Morgan Stanley Delayed Draw Term Loan Agreement~~

In March 2020, we entered into a 364-day delayed draw term loan credit agreement with Morgan Stanley Senior Funding Inc., as the administrative agent. The delayed draw term loan agreement provided for a term loan facility of up to $1 billion. Borrowings under the credit agreement bear interest at a variable rate equal to LIBOR (but not less than 1% per annum), plus a margin, or at our election, another rate based on certain market interest rates.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Our obligations under the delayed draw term loan agreement were secured by liens on certain aircraft and spare engines. The delayed draw term loan agreement includes provisions that require us to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities (including the term loan facility) aggregating not less than $550 million.

We borrowed the full amount of the term loan facility in March 2020. Amortization payments equal to 0.25% of the outstanding principal of the term loan will be due on the last day of each quarter during the term. The remaining outstanding principal amount of the term loan was required be repaid in a single installment on the maturity date on March 15, 2021. We may prepay all or a portion of the term loan from time to time, at par plus accrued and unpaid interest.

We repaid the full balance of this facility ~~during~~in the ~~third~~first quarter of ~~2020.~~2021.

Short-term

Morgan Stanley Line of Credit

We have a revolving line of credit with Morgan Stanley for up to approximately $200 million. This line of credit is secured by a portion of our investment securities held by Morgan Stanley and the amount available to us under this line of credit may vary accordingly. This line of credit bears interest at a floating rate based upon LIBOR, plus a margin. As of and for the periods ended ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we did not have a balance outstanding or any borrowings under this line of credit.

Note ~~5—(Loss) Earnings~~4—Loss Per Share

Basic earnings per share is calculated by dividing net (loss) income by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from restricted stock units, the Crewmember Stock Purchase Plan, convertible notes, and any other potentially dilutive instruments using the treasury stock ~~method.~~and if-converted methods. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were ~~1.9~~3.5 million and ~~1.7~~2.0 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, respectively. ~~There were no anti-dilutive common stock equivalents during the three and nine months ended September 30, 2019.~~

The following table shows how we computed basic and diluted earnings per common share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (dollars and share data in millions):

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


												Three Months Ended March 31,
	Three Months Ended September 30,					Nine Months Ended September 30,						2021		2020
	2020			2019		2020			2019
Net (loss) income	$	(393	)	$	187	$	(981	)	$	408
Net loss											Net loss	$	(247)	$	(268)

Weighted average basic shares	272.4			294.0		274.3			300.1		Weighted average basic shares	316.3		277.2
Effect of dilutive securities	0			1.9		0			1.7		Effect of dilutive securities	0		0
Weighted average diluted shares	272.4			295.9		274.3			301.8		Weighted average diluted shares	316.3		277.2

(Loss) earnings per common share
Loss per common share											Loss per common share
Basic	$	(1.44	)	$	0.63	$	(3.58	)	$	1.36	Basic	$	(0.78)	$	(0.97)
Diluted	$	(1.44	)	$	0.63	$	(3.58	)	$	1.35	Diluted	$	(0.78)	$	(0.97)

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

Other Commitments

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

As of ~~September 30, 2020,~~March 31, 2021, we had approximately ~~$25~~$26 million in assets serving as collateral for letters of credit relating to a certain number of our leases. These are included in restricted cash and expire at the end of the related lease terms. Additionally, we had approximately $25 million pledged related to our workers' compensation insurance policies and other business partner agreements, which will expire according to the terms of the related policies or agreements.

In April 2014, ALPA was certified by the National Mediation Board, or NMB, as the representative body for JetBlue pilots after winning a representation election. We reached a final agreement for our first collective bargaining agreement which was ratified by the pilots in July 2018. The agreement is a four-year, renewable contract, which became effective August 1, 2018 and included compensation, benefits, work rules, and other policies.

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

In April 2018, JetBlue inflight crewmembers elected to be solely represented by the Transport Workers Union of America, or TWU. The National Mediation Board, or NMB, certified the TWU as the representative body for JetBlue inflight crewmembers. In ~~October~~November 2020, ~~we reached a~~our inflight crewmembers voted to reject the tentative ~~agreement for our first~~ collective bargaining agreement ~~which is subject~~between JetBlue and the TWU. We are currently working with the TWU to a ratification vote. JetBlue can provide no assurance that the tentative agreement will be approved, and therefore the effect of any incentives and other provisions would be recorded upon final ratification.determine next steps.

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

Legal Matters

Occasionally, we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters involving suppliers, crewmembers, customers, and governmental agencies, arising, for the most part, in the ordinary course of business. The outcome of litigation and other legal matters is always uncertain. The Company believes it has valid defenses to the legal matters currently pending against it, is defending itself vigorously, and has recorded accruals determined in accordance with GAAP, where appropriate. In making a determination regarding accruals, using available information, we evaluate the likelihood of an unfavorable outcome in legal or regulatory proceedings to which we are a party and record a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of our defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to our consolidated results of operations, liquidity, or financial condition.

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

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 8—7—Financial Derivative Instruments and Risk Management

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

Aircraft Fuel Derivatives

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

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

~~The following table illustrates the approximate hedge percentages of our projected fuel usage by quarter as of September 30, 2020, related to our outstanding~~We did not have any fuel hedging contracts ~~that were designated~~outstanding as ~~cash flow hedges for accounting purposes.~~



	~~Jet fuel call spread option agreements~~
~~Fourth Quarter 2020~~	25	%

of March 31, 2021 or December 31, 2020.

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

September 30, 2020 December 31, 2019
Fuel derivatives
Asset fair value recorded in prepaid expense and other⁽¹⁾
$ 0
$ 8
Longest remaining term (months) 3
6
Hedged volume (barrels, in thousands) 680
2,112
Estimated amount of existing losses (gains) expected to be reclassified into earnings in the next 12 months $ 2
$ (2 )

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Fuel derivatives
Hedge effectiveness losses recognized in aircraft fuel expense $ 2
$ 0
$ 5
$ 4
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other 1
0
6
0
Hedge losses (gains) on derivatives recognized in comprehensive income 0
2
11
1
Percentage of actual consumption economically hedged 27 % 0 % 25 % 5 %

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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


	Three Months Ended March 31,
	2021			2020
Fuel derivatives
Hedge effectiveness losses recognized in aircraft fuel expense	$	0		$	2
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other	0			2
Hedge losses on derivatives recognized in comprehensive income	0			11
Percentage of actual consumption economically hedged	0		%	22		%

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

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

There were no0 offsetting derivative instruments as of ~~September 30, 2020 and~~March 31, 2021 or December 31, ~~2019.~~2020.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 9—8—Fair Value

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

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

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

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

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

The following is a listing of our assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in millions):


	March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	1,240	$	270	$	0	$	1,510
Available-for-sale investment securities	0		867		0		867

September 30, 2020
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 1,330
$ 160
$ 0
$ 1,490
Available-for-sale investment securities 0
569
0
569


	December 31, 2019									December 31, 2020
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets									Assets
Cash equivalents	$	611	$	30	$	0	$	641	Cash equivalents	$	1,330	$	130	$	0	$	1,460
Available-for-sale investment securities	0		351		0		351		Available-for-sale investment securities	0		1,137		0		1,137
Aircraft fuel derivatives	0		8		0		8

~~Refer~~Refer to Note 43 to ~~our~~our condensed consolidated financial statements for fair value information related to our outstanding debt obligations as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Cash equivalents

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

Available-for-sale investment securities

Our available-for-sale investment securities include investments such as time deposits ~~commercial paper,~~ and convertible debt securities. The fair values of these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy. We did ~~not~~0t record any material gains or losses on these securities during the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019.~~2020.

~~Aircraft Fuel Derivatives~~

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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

Comprehensive income (loss) includes changes in fair value of our aircraft fuel derivatives which qualify for hedge accounting. A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the three

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ is as follows (in millions):

Aircraft Fuel Derivatives⁽¹⁾⁽²⁾

Total
Balance of accumulated (loss), at June 30, 2020 $ (3 )
$ (3 )
Reclassifications into earnings, net of deferred taxes of $(1) 1

1
Change in fair value, net of deferred taxes of $0 0

0
Balance of accumulated (loss), at September 30, 2020 $ (2 )
$ (2 )

Balance of accumulated income at June 30, 2019 $ 1

$ 1
Reclassifications into earnings, net of deferred taxes of $0 0

0
Change in fair value, net of deferred taxes of $0 (2 )
(2 )
Balance of accumulated (loss) at September 30, 2019 $ (1 )
$ (1 )


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

Balance of accumulated income, at December 31, 2019	$	2	$	2
Reclassifications into earnings, net of deferred taxes $(1)	3		3
Change in fair value, net of deferred taxes of $4	(11)		(11)
Balance of accumulated (loss), at March 31, 2020	$	(6)	$	(6)

~~A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the nine months ended September 30, 2020 and 2019 is as follows (in millions):~~

Aircraft Fuel Derivatives⁽¹⁾⁽²⁾
Total
Balance of accumulated income, at December 31, 2019 $ 2
$ 2
Reclassifications into earnings, net of deferred taxes of $(4) 7
7
Change in fair value, net of deferred taxes of $5 (11 ) (11 )
Balance of accumulated (loss), at September 30, 2020 $ (2 ) $ (2 )

Balance of accumulated (loss), at December 31, 2018 $ (3 ) $ (3 )
Reclassifications into earnings, net of deferred taxes $(1) 3
3
Change in fair value, net of deferred taxes of $0 (1 ) (1 )
Balance of accumulated (loss), at September 30, 2019 $ (1 ) $ (1 )

(1) Reclassified to aircraft fuel expense.

(2) WeIn 2020, we made several capacity reductions in response to the COVID-19 pandemic. These capacity reductions led to the discontinuance of hedge accounting on a number of our aircraft fuel derivatives as the forecasted consumption of aircraft fuel was no longer probable. Losses of ~~$1 million and $5~~$2 million that were previously deferred in other comprehensive loss were reclassified to interest income and other during the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2020.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Note ~~11—~~10—Special Items

The following is a listing of special items presented on our consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Special Items
CARES Act payroll support grant recognition⁽¹⁾
$ (332 ) $ 0
$ (636 ) $ 0
Fleet impairment⁽²⁾
56
0
258
0
Severance and benefit costs⁽³⁾
58
0
58
0
Losses on sale-leaseback transactions⁽⁴⁾
106
0
106
0
Embraer E190 fleet transition costs⁽⁵⁾
0
(3 ) 0
6
Union contract costs⁽⁶⁾
0
3
0
8
Total $ (112 ) $ 0
$ (214 ) $ 14


	Three Months Ended March 31,
	2021		2020
Special Items
Federal payroll support grant recognition(1)	$	(288)	$	0
CARES Act employee retention credit(2)	(1)		0
Fleet impairment(3)	0		202
Total	$	(289)	$	202

(1) As discussed in Note 23 to our condensed consolidated financial statements, we entered into a PSP Extension Agreement with the Treasury governing our participation in the federal Payroll Support Program for air carriers under the ~~CARES Act. Under~~United States Consolidated Appropriations Act, 2021. In the ~~Payroll Support Program,~~first quarter of 2021, Treasury provided us with payroll support funding totaling ~~$963~~$504 million, consisting of ~~$704~~$383 million in grants and ~~$259~~$121 million in an unsecured term ~~loan.~~loans. The payroll support funds are to be used exclusively for the continuation of payment of crewmember wages, salaries and benefits. The carrying value of the payroll support extension grants is recorded within other liabilities and will be recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. We utilized ~~$332 million and $636~~$288 million of the payroll support extension grants for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021.

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

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~(2)~~

ended March 31, 2021.

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

~~As discussed in Note 2 to our condensed consolidated financial statements, our~~Our operations were adversely impacted by the unprecedented decline in demand for travel caused by the COVID-19 pandemic. To determine if impairment exists in our fleet, we grouped our aircraft by fleet-type and estimated their future cash flows based on projections of capacity, aircraft age, maintenance requirements, and other relevant conditions. Based on the assessment, we determined the future cash flows from the operation our Embraer E190 fleet were lower than the carrying value. For those aircraft, including the ones that are under operating lease, and related spare parts in our Embraer E190 fleet, we recorded an impairment loss of ~~$56 million and $258~~$202 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2020. These losses represent the difference between the book value of these assets and their fair value. We estimated the fair value of our Embraer E190 fleet using third party valuations and considered specific circumstances such as aircraft age, maintenance requirements and condition, and therefore classified as Level 3 in the fair value hierarchy. We evaluated the remaining fleet and determined the future cash flows of our Airbus A320 and Airbus A321 fleet exceeded their carrying value as of ~~September 30,~~March 31, 2020.

No impairment loss was recorded for the three months ended March 31, 2021 as the book value of our fleet reflected their fair value as of March 31, 2021.

As the extent of the ongoing impact from the COVID-19 pandemic remains uncertain, we will update our assessment as new information becomes ~~available~~available.

(3) The unprecedented declines in demand and in our capacity caused by COVID-19 has led to a significant reduction to our staffing needs. In June 2020, we announced a voluntary separation program which allowed eligible crewmembers the opportunity to voluntarily separate from the Company in exchange for severance, health coverage for a specified period of time, and travel privileges based on years of service. Virtually all of our crewmembers were eligible to participate in the voluntary separation program with the exception of our union-represented crewmembers and crewmembers of our wholly-owned subsidiaries (JetBlue Technology Ventures and JetBlue Travel Products). Separation agreements for the majority of the crewmembers who elected to participate in the voluntary program were executed in the third quarter. One time costs of $58 million, consisting of severance and health benefits, were recorded for the three months ended September 30, 2020 in connection with the program. Approximately $39 million of this charge was disbursed during the third quarter of 2020.

2922

Table of Contents

PART I. FINANCIAL INFORMATION

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Accruals related to the voluntary separation program are primarily recorded in accrued salaries, wages and benefits, and accounts payable on our consolidated balance sheets. Additional costs may be incurred as the remaining separation agreements are executed.

(4) In the third quarter of 2020, we executed $327 million of sale-leaseback transactions. Of these transactions, $118 million did not qualify as sales for accounting purposes. The remaining $209 million qualified as sales and generated a loss of $106 million. These losses represent the difference between the book value of these assets and their fair value. We estimated the fair value of the related aircraft considering third party valuations and considered specific circumstances such as aircraft age, maintenance requirements and condition, and therefore classified as Level 3 in the fair value hierarchy.

(5) In July 2018, we announced our decision to exit the Embraer E190 fleet and order 60 Airbus A220-300 aircraft, formerly known as the Bombardier CS300, for expected deliveries beginning in 2020 with the option for 60 additional aircraft. For the three and nine months ended September 30, 2019, fleet transition costs include certain contract termination costs associated with the transition.

(6) In April 2014, ALPA was certified by NMB as the representative body for JetBlue pilots after winning a representation election. We reached a final agreement for our first collective bargaining agreement which was ratified by the pilots in July 2018. The agreement is a four-year renewable contract, which became effective August 1, 2018 and included compensation, benefits, work rules, and other policies. For the three and nine months ended September 30, 2019, union contract costs primarily include various one-time costs incurred to implement the provisions of the collective bargaining agreement into our systems.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

OVERVIEW

The ~~Coronavirus (COVID-19) Pandemic~~

~~The unprecedented coronavirus ("COVID-19")~~COVID-19 pandemic ~~and the related travel restrictions and physical distancing measures implemented throughout the world~~continues to have significantly reduced demand for air travel. Beginning in March 2020, large public events were canceled, governmental authorities began imposing restrictions on non-essential activities, businesses suspended travel, and popular leisure destinations temporarily closed to visitors. Certain countries have imposed bans on international travelers for specified periods or indefinitely.

~~Demand for air travel began to weaken at the end of February 2020. The pace of decline accelerated throughout March into April 2020 and has remained depressed. This decline in demand has had~~ a material adverse impact on our operating revenues and financial position. ~~During~~Although we began seeing signs of recovery in the ~~third~~first quarter of ~~2020, our operating revenues were 76% lower than the same quarter of 2019. Although~~2021, demand ~~improved compared to the second quarter of 2020, it~~for air travel remains significantly lower than ~~in prior years. The exact timing~~pre-pandemic levels.

First Quarter 2021 Results

•First quarter system capacity decreased by 39.0% year over year.

•Revenue for the first quarter of 2021 decreased by $855 million to $733 million.

•Operating revenue per available seat mile (RASM) for the three months ended March 31, 2021 decreased by 24.5% to 8.06 cents.

•Operating expense for the three months ended March 31, 2021 decreased by 46.6% to $1.0 billion.

•Operating expense per available seat mile (CASM) for the three months ended March 31, 2021 decreased by 12.5% to 11.30 cents.

•Our operating expense for the first quarter of 2021 and ~~pace~~2020 included the effects of special items. In the ~~recovery is uncertain given~~first quarter of 2021, we recognized $288 million of contra-expense representing the ~~significant impact~~amount of federal payroll support extension grants provided by the ~~pandemic~~Consolidated Appropriations Act, 2021, that were utilized during the period, and $1 million of contra-expense related to the recognition of Employee Retention Credits provided by the CARES Act. Our operating expense for the first quarter of 2020 included the impairment charge of $202 million on our Embraer E190 fleet. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense decreased by 17.0% to $1.1 billion.

•Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile (CASM ex-fuel)(1) increased by 36.0% to 12.25 cents for the ~~overall U.S.~~first quarter of 2021.

•Our reported loss per share for the first quarter of 2021 and ~~global economy. Some states~~2020 were $(0.78) and $(0.97), respectively. Excluding special items, our adjusted loss per share(1) for the first quarter of 2021 and 2020 were $(1.48) and $(0.42), respectively.

Since February 2021, we have experienced a resurgence of COVID-19 cases after reopening and as a result, certain other states, such as New York, have implemented travel restrictions or advisories for travelers from such states. We have also seen a ~~similar resurgence of COVID-19 cases~~meaningful rebound in ~~other countries~~the demand for leisure travel. We are encouraged by the improving booking trends, and webelieve the ongoing acceleration in demand will continue into the summer. We expect to ~~continue to see fluctuations~~increase capacity in the numbers of cases, which we believe will result in actions by governmental authorities restricting activities. We expect the demand environment to remain depressed until an accepted treatment and/or vaccine for COVID-19 is widely available. Our response to the ~~pandemic and the measures we take~~level of demand. We have taken a number of steps to ~~secure additional liquidity may be modified~~position ourselves for recovery as ~~we have more clarity on the timing of~~ demand ~~recovery.~~for air travel eventually returns to pre-pandemic levels.

Network

In ~~response~~February 2021, we added services to ~~these developments, since March 2020~~Miami and Key West which further expanded our relevance in South Florida.

In April 2021, we ~~have implemented~~operated our inaugural flight between New York's John F. Kennedy International Airport ("JFK") to Guatemala City's La Aurora International Airport, making us the ~~following measures to focus on the safety of our customers, our crewmembers, and our business.~~

~~Customers and Crewmembers~~

~~The safety of our customers and crewmembers continues to be a priority. As the COVID-19 pandemic has developed, we have taken steps to promote physical distancing and implemented new procedures~~only airline that ~~reflect the recommendations of health experts, including some of the following:~~

~~Introduced "Safety from the Ground Up", an initiative with a multi-layer approach that encompasses enhanced safety and cleaning measures on our flights, at our airports, and in our offices;~~

~~Instituted temperature checks for our customer-facing and support center crewmembers;~~

~~Updated our sick leave policy to provide up to 14 days of paid sick leave for crewmembers who have been diagnosed with COVID-19 or are required to quarantine;~~

~~Implemented a framework for internal contact tracing, crewmember notification, and a return to work clearance process for all crewmembers, wherever they may be located;~~

~~Required face coverings for all crewmembers while boarding, in flight, and when physical distancing cannot be maintained;~~

~~Administered more frequent disinfecting of common surfaces and areas with high touchpoints in our facilities;~~

~~Enhanced~~offers daily ~~and overnight cleaning of our aircraft and all facilities, using electrostatic spraying of disinfectant in the cabins of aircraft parked overnight at selected focus cities;~~

~~Required customers to wear face coverings during check-in, boarding, and inflight;~~

~~Limited the number of seats available to be sold on most flights; we plan to continue limiting the capacity on our flights to less than 70% through December 1, 2020;~~

~~Suspended group boarding and implemented a back-to-front boarding process to minimize passing in the aisle;~~

~~Eliminated layovers for crewmembers in~~service between New York City and ~~worked~~Guatemala's capital city.

In June 2021, we expect to launch daily service to Los Cabos, Mexico from JFK and Los Angeles International Airport.

We also anticipate launching service from Boston's Logan International Airport and JFK to London in the second half of 2021. London will be our first destination in Europe.

Commercial Partnerships

We continue to develop our strategic relationship with ~~crew transportation companies~~American Airlines Group Inc. ("American"). In February 2021, we began codeshare operations under our alliance agreement on select flights.

Enabled by our alliance with American, in April 2021, we announced our plans to ~~ensure physical distancing;~~

~~Implemented jump seat buffers on~~add seven new destinations between late 2021 and 2022 to our ~~flights~~route map. We also announced significant growth plans at New York's LaGuardia Airport where we plan to ~~further promote physical distancing measures;~~

increase our operations from 15 daily departures prior to the pandemic, to more than 50 daily departures by summer 2022.

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

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

We believe our partnership with American will create more capacity, seamless connectivity for travelers in the northeast, and offer more choices for customers across the networks of both airlines. In addition, we expect this relationship will also accelerate our recovery as the travel industry adapts to new trends as a result of the COVID-19 pandemic.

~~Provided enhanced flexibility~~Fleet

We took delivery of three Airbus A321neo aircraft in the first quarter of 2021and paid for each delivery with cash on hand.

In connection with our plans to begin services to London, we took delivery of our first Airbus A321LR aircraft, the long range model of the Airbus A321, in April 2021.

Also in April 2021, we placed out first Airbus A220 aircraft into service. We believe the economics of the Airbus A220 aircraft, which have approximately 30% lower direct cost per seat as compared to our Embraer E190 fleet, will be pivotal in helping us reshape our cost structure and rebuild our margin as we begin to recover from the pandemic.

Customer Experience

In February 2021, we unveiled a reimagined version of our Mint® experience, our premium product offering. The new service includes a completely refreshed cabin design featuring private suites with a sliding door for every Mint® customer. Each Mint® aircraft will also include two Mint® Studio suites which offers the most space in a premium experience from any U.S. airline based on personal square footage per passenger seat. We expect to debut this new premium service with a 16-seat individual suite layout on a limited number of flights between New York and Los Angeles in 2021. For our anticipated transatlantic flights to London, the new Mint® experience will include 24 individual suites.

We also updated our Fare Options platform giving our customers more choices and flexibility by ~~waiving~~eliminating change and cancel fees on our Blue, Blue Extra, Blue Plus, and Mint® fares. Beginning in July 2021, customers who purchased these fares on our domestic flights will also be guaranteed overhead bin space for ~~customers with existing bookings made through February 28,~~one carry-on bag.

In March 2021, ~~while also extending the expiration date of~~we introduced Paisley by JetBlue ("Paisley"), a new travel ~~credits issued between February 27, 2020 and June 30, 2020 for flight purchases to 24 months; and~~

~~Announced our partnership with Vault Health~~website that leverages smart technology to provide ~~discounted at-home COVID-19 testing~~individually tailored offers our customers based on their itinerary. We believe Paisley will add breadth to ~~customers with pending travel plans.~~our product offerings, learn more about our customers' preferences, and contribute to future earnings growth.

~~Our Business~~Outlook for 2021

~~The COVID-19~~As we continue to navigate through the pandemic, ~~drove a significant decline in demand beginning in~~we are optimistic about the ~~second half of March 2020. We have significantly reduced~~future. Based on our ~~capacity to a level that maintains essential services to align with demand. Our~~current planning assumptions, we expect capacity for the ~~third~~second quarter of ~~2020 declined~~2021 to decline by ~~58% year-over-year. For the third fourth of 2020, we expect capacity to be down by at least 45%,~~approximately 15% as compared to the same period in 2019.

Revenue is expected to decline between 30% and 35% in the ~~prior year. As a result~~second quarter of 2021 as compared to the same period in 2019. We expect the demand acceleration which began in February 2021 to continue as larger portions of the ~~significant reduction~~U.S. population become vaccinated against COVID-19 and travel advisories and restrictions begin to ease.

We presently expect second quarter 2021 operating expenses to decline by approximately 8% as compared to the same period in ~~demand expectations~~2019. We plan to continue managing our cost structure, while mitigating near term cost pressures from higher fuel prices, airport rents and ~~lower capacity,~~landing fees, and labor costs as we ~~have temporarily parked a portion of our fleet.~~

~~Adjustments in flying capacity to align with the expected demand.~~

•~~Temporary consolidations of~~ramp up our operations ~~in certain cities that contain multiple airport locations.~~and begin to return capacity back to pre-pandemic levels.

~~Renegotiated service rates with business partners and extended payment terms.~~

•~~Instituted a company-wide hiring freeze.~~

~~Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.~~

~~Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring during the third quarter.~~

~~Borrowed on our existing $550 million revolving credit facility in April 2020.~~


•	~~Executed a $150 million pre-purchase arrangement of TrueBlue~~ ^® ~~points with our co-brand credit card partner in April 2020.~~

~~Suspended non-critical capital expenditure projects.~~

~~Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.~~

~~Suspended share repurchases.~~

~~Obtained $963 million of government funding under Payroll Support Program of The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which is discussed further below.~~

~~Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.~~

~~Entered into $445 million of sale-leaseback transactions; which is discussed further below.~~

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

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

~~statements. The net proceeds were primarily used to repay the outstanding borrowings under the 364-day delayed draw term loan facility that was due to be repaid in March 2021.~~

Entered into a Loan and Guarantee agreement with the United States Department of the Treasury ("Treasury") under the Loan Program of the CARES Act which gives us access to loans in an aggregate principal amount of up to $1.14 billion until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.

~~As a result of these activities, we had $2.5 billion in unrestricted and short-term restricted cash as of September 30, 2020.~~

In the second quarter of 2020, we executed $118 million of sale-leaseback transactions. These transactions did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipment and the related liabilities under the lease are classified within debt and finance leases obligations. These transactions are treated as cash from financing activities on our condensed consolidated statements of cash flows.

In the third quarter of 2020, we executed $327 million of sale-leaseback transactions. Of these transaction, $118 million did not qualify as sales for accounting purposes. The remaining $209 million, qualified as sales and generated a loss of $106 million. The assets associated with sale-leaseback transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our condensed consolidated statements of cash flows.

In October, 2020, we further amended our our purchase agreement with Airbus to defer several aircraft deliveries, resulting in approximately $2.0 billion of reduction in aircraft capital expenditures through 2022.

~~We also executed $59 million of sale-leaseback transactions in October 2020.~~

~~In November 2020, we entered into an agreement with the Treasury to increase our borrowing capacity under the Loan Program of the CARES Act to $1.95 billion.~~

~~We continue to evaluate future financing opportunities to leverage our unencumbered assets in an effort to build additional levels of liquidity.~~

~~The Coronavirus Aid, Relief, and Economic Security Act~~

~~Under the CARES Act, assistance was made available to the aviation industry in the form of direct payroll support (the "Payroll Support Program") and secured loans (the "Loan Program").~~

On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") with the Treasury governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with a payment of $936 million (the "Payroll Support Payment"), consisting of $685 million in grants and $251 million in an unsecured term loan. The loan has a 10-year term and bears interest on the principal amount outstanding at an annual rate of 1.00% until April 23, 2025, and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% thereafter until April 23, 2030. The principal amount may be repaid at any time prior to maturity at par. In consideration for the Payroll Support Payment, we issued warrants to purchase approximately 2.6 million shares of our common stock to the Treasury at an exercise price of $9.50 per share. The warrants will expire five years after issuance, and will be exercisable either through net cash settlement or net share settlement, at JetBlue's option, in whole or in part at any time. In accordance with the PSP Agreement, we are required to comply with the relevant provisions of the CARES Act which, among other things, includes the following: the requirement to use the Payroll Support Payment exclusively for the continuation of payment of crewmember wages, salaries and benefits; the requirement against involuntary furloughs and reductions in crewmember pay rates and benefits through September 30, 2020; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and restrictions on the payment of certain executive compensation until March 24, 2022.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

The carrying value relating to the payroll support grants is recorded within other liabilities and will be recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. The relative fair value of the warrants, estimated to be $19 million, was recorded within stockholder's equity and reduced the total carrying value of the grants to $685 million. As of September 30, 2020, the carrying value of the grants was $49 million. Proceeds from the payroll support grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows.

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

On April 29, 2020, we submitted our application for the Loan Program of the CARES Act. Under the Loan Program, we have the ability to borrow up to approximately $1.14 billion from the Treasury. Any loans issued under the Loan Program are expected to be senior secured obligations of the Company, with the form of the collateral to be determined. If we accept the full amount of the loan, we will issue warrants to purchase approximately 12.0 million shares of our common stock to the Treasury. Any amount received under the Loan Program will be subject to the relevant provisions of the CARES Act, including many of those described above under the Payroll Support Program.

On September 29, 2020, we entered into a Loan and Guarantee Agreement (the "Loan Agreement") with the Treasury under the Loan Program of the CARES Act. Pursuant to the Loan Agreement, Treasury agreed to extend loans to us in an aggregate principal amount of up to $1.14 billion until March 26, 2021, subject to specified terms. Unless otherwise terminated early, all borrowings under the Loan Agreement are due and payable on the fifth anniversary of the initial borrowing date. We drew $115 million under the Loan Agreement on September 29, 2020. Borrowings under the Loan Agreement bear interest at a variable rate equal to LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum. Our obligations under the Loan Agreement are secured by liens on (i) certain eligible aircraft collateral, (ii) certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, and (iii) certain cash accounts (collectively, the "Collateral"). Under the terms of the Loan Agreement, we may also pledge eligible spare parts, slots, gates and routes, and additional aircraft, real property, ground support equipment, flight simulators and equity interests. The Loan Agreement includes affirmative and negative covenants that restrict our ability to, among other things, dispose of Collateral, merge, consolidate or sell assets, incur certain additional indebtedness or pay certain dividends. In addition, we are required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities aggregating not less than $550 million and to maintain a minimum ratio of the borrowing base of the Collateral (determined as the sum of a specified percentage of the appraised value of each type of Collateral) to outstanding obligations under the Loan Agreement of not less than 1.6 to 1.0. If we do not meet the minimum collateral coverage ratio, we must either provide additional Collateral to secure our obligations under the Loan Agreement or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio. The Loan Agreement contains events of default customary for similar financings. 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 addition, if certain change of control events were to occur with respect to JetBlue, we would be required to prepay the loans in full under the Loan Agreement.

~~As previously discussed, we entered into an agreement with the Treasury to increase our borrowing capacity under the Loan Program of the CARES Act to $1.95 billion in November 2020.~~

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

We lowered our cash burn from approximately $8 million per day at the end of June to an average of approximately $6 million per day during the third quarter of 2020. We expect our daily cash burn to average between $4 million and $6 million per day during the fourth quarter of 2020.

~~Preparing for Recovery~~

~~As the COVID-19 pandemic progresses, we have taken a number of steps to position the Company for recovery when demand for air travel eventually returns.~~

In June 2020, we announced the addition of 30 new domestic routes to serve customers in markets where leisure and visiting friends and relatives travel is showing signs of strength. These new routes include daily nonstop Mint^®service from Newark Liberty International Airport to both Los Angeles International Airport and San Francisco International Airport. While the timeline for recovery remains uncertain, these new routes offer us the opportunity to generate revenue, bring aircraft back into service that would otherwise sit idle, and add more flying opportunities of our crewmembers. We believe adding more destinations in these key markets will make us more relevant to travelers and increase customer loyalty.

In July 2020, we announced plans for a multi-year west coast expansion from southern California which includes moving our primary base of operations from Long Beach Airport to Los Angeles International Airport. We plan to grow our operations at Los Angeles International Airport from the average current level of 20 flights per day to approximately 70 flights per day by 2025.

In July 2020, we announced our intention to enter into a strategic relationship with American Airlines Group Inc. This arrangement, once finalized, includes an alliance agreement with reciprocal code sharing on domestic and international routes from New York (John F. Kennedy International Airport, LaGuardia Airport, and Newark Liberty International Airport) and Boston. The arrangement does not include our future transatlantic flying. The implementation of the alliance agreement is subject to governmental review and approval.

In September 2020, we announced plans to launch 24 new routes aimed at immediately capturing traffic on a variety of new, nonstop routes as demand increases. These routes will introduce new non-stop destinations from our focus cities and expand our Mint^® ~~service in Newark and Los Angeles.~~

~~Third Quarter 2020 Results~~

The unprecedented and rapid spread of COVID-19 and the related travel restrictions and physical distancing measures implemented throughout the world have significantly reduced demand for air travel. Demand for air travel has remained depressed through the third quarter. This decline in demand has had a material adverse impact on our operating revenues and financial position. Although demand began to improve during the quarter, it remains significantly lower than the prior year.

~~Third quarter system capacity decreased by 57.6% year over year.~~

~~Revenue decreased by $1.6 billion compared to the third quarter of 2019.~~

~~Operating revenue per available seat mile (RASM) for the three months ended September 30, 2020 decreased by 44.4% to 7.12 cents.~~

~~Operating expense for the three months ended September 30, 2020 decreased by 45.2% to $1.0 billion.~~

Operating expense per available seat mile (CASM) for the three months ended September 30, 2020 increased by 29.3% to 14.6 cents, due principally to lower capacity which reduced the number of available seat miles.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

Our operating expense for the third quarter of 2020 included the effects of special items which were comprised of $332 million of CARES Act payroll support grants recognized as a contra-expense, $58 million of one-time costs associated with our voluntary crewmember separation programs, and $56 million of impairment charges on our Embraer E190 fleet. Special items did not have a material impact on our operating expenses for the third quarter of 2019. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense decreased by 25.6% to $1.0 billion.


•	~~Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile (CASM ex-fuel)~~⁽¹⁾ ~~increased by 75.7% to 14.64 cents.~~

•

Our reported loss per share for the third quarter of 2020 was $(1.44) compared to reported earnings per diluted share of $0.63 for the third quarter of 2019. Our results for the third quarter of 2020 and 2019 included the effects of special items. Excluding special items, our adjusted (loss) earnings per diluted share⁽¹⁾ ~~for the third quarter of 2020 and 2019 were $(1.75) and $0.59, respectively.~~

~~We lowered our cash burn from approximately $8 million per day at the end of June to an average of approximately $6 million per during the third quarter of 2020.~~

~~Outlook for 2020~~

The length and severity of the reduction in demand due to the COVID-19 pandemic is uncertain; accordingly, we expect the adverse impact to continue in the fourth quarter of 2020 and beyond. The exact timing and pace of the recovery is uncertain given the significant impact of the pandemic on the overall U.S. and global economy. We expect the demand environment to remain depressed until an accepted treatment and/or vaccine for COVID-19 becomes widely available. Our response to the pandemic and the measures we take to secure additional liquidity may be modified as we have more clarity in the timing of demand recovery.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

RESULTS OF OPERATIONS

Three Months Ended ~~September 30,~~March 31, 2021 vs. 2020 ~~vs. 2019~~

Overview

We reported a net loss of ~~$393~~$247 million, an operating loss of ~~$516~~$294 million and an operating margin of ~~(104.9)~~(40.2)% for the three months ended ~~September 30, 2020.~~March 31, 2021. This compares to a net ~~income~~loss of ~~$187~~$268 million, an operating ~~income~~loss of ~~$247~~$334 million and an operating margin of ~~11.8%~~(21.0)% for the three months ended ~~September 30, 2019.~~March 31, 2020. Loss per share was ~~$(1.44)~~$(0.78) for the ~~third quarter of 2020~~three months ended March 31, 2021 compared to ~~$0.63 of earnings per diluted share~~$(0.97) for the same period in ~~2019.~~2020.

Our reported results for the ~~third quarter of~~three months ended March 31, 2021 and 2020 ~~and 2019~~ included the effects of special items. Adjusting for these special items⁽¹⁾, our adjusted net loss was ~~$477~~$467 million, adjusted operating loss was ~~$628~~$583 million, adjusted operating margin was ~~(127.6)~~(79.6)%, and adjusted loss per share was ~~$(1.75)~~$(1.48) for the ~~third quarter of 2020.~~three months ended March 31, 2021. This compares to adjusted net ~~income~~loss of ~~$176~~$116 million, adjusted operating ~~income~~loss of ~~$247~~$132 million, adjusted operating margin ~~was 11.8%~~of (8.3)%, and adjusted ~~diluted earnings~~loss per share of ~~$0.59~~$(0.42) for the ~~third quarter of 2019.~~three months ended March 31, 2020.

On-time performance, as defined by the Department of Transportation, or DOT, is arrival within 14 minutes of scheduled arrival time. In the ~~third~~first quarter of ~~2020,~~2021, our systemwide on-time performance was ~~88.9%~~78.9% compared to ~~73.7%~~84.8% for the same period in ~~2019.~~2020. Our completion factor ~~decreased~~increased by ~~0.9~~4.2 points to ~~97.6%~~97.9% in the ~~third~~first quarter of ~~2020~~2021 from ~~98.5% in~~93.7% for the same period in ~~2019.~~2020.

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended September 30,						Year-over-Year Change						(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended March 31,						Year-over-Year Change
	2020			2019			$			%				2021			2020			$		%
Passenger revenue	$	445		$	2,005		$	(1,560	)	(77.8	)%		Passenger revenue	$	670		$	1,511		$	(841)	(55.7)	%
Other revenue	47			81			(34		)	(42.0	)		Other revenue	63			77			(14)		(18.0)
Total operating revenues	$	492		$	2,086		$	(1,594	)	(76.4	)%		Total operating revenues	$	733		$	1,588		$	(855)	(53.9)	%

Average Fare	$	206.73		$	181.26		$	25.47		14.1	%		Average Fare	$	149.97		$	185.44		$	(35.47)	(19.1)	%
Yield per passenger mile (cents)	15.10			14.39			0.71			4.9			Yield per passenger mile (cents)	11.52			14.54			(3.02)		(20.8)
Passenger revenue per ASM (cents)	6.44			12.30			(5.86		)	(47.7	)		Passenger revenue per ASM (cents)	7.36			10.15			(2.79)		(27.5)
Operating revenue per ASM (cents)	7.12			12.80			(5.68		)	(44.4	)		Operating revenue per ASM (cents)	8.06			10.67			(2.61)		(24.5)
Average stage length (miles)	1,313			1,132			181			16.0			Average stage length (miles)	1,277			1,160			117		10.1
Revenue passengers (thousands)	2,151			11,061			(8,910		)	(80.6	)		Revenue passengers (thousands)	4,463			8,150			(3,687)		(45.2)
Revenue passenger miles (millions)	2,945			13,930			(10,985		)	(78.9	)		Revenue passenger miles (millions)	5,808			10,392			(4,584)		(44.1)
Available Seat Miles (ASMs) (millions)	6,905			16,296			(9,391		)	(57.6	)		Available Seat Miles (ASMs) (millions)	9,090			14,891			(5,801)		(39.0)
Load Factor	42.6		%	85.5		%				(42.9	)	pts.	Load Factor	63.9		%	69.8		%			(5.9)		pts.

Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More^® Space. The decrease in passenger revenue of ~~$1.6 billion,~~$841 million, or ~~77.8%~~55.7%, for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the same period in ~~2019,~~2020, was primarily driven by the ~~unprecedented~~ decline in demand for travel tied to COVID-19 and its ~~effects.~~effects which began in March of 2020. Revenue passengers decreased by ~~80.6%~~45.2% to ~~2.2~~4.5 million for the three months ended ~~September 30, 2020~~March 31, 2021 from ~~11.1~~8.2 million for the same period in ~~2019.~~2020.

The length and severity of the reduction in travel demand due to the COVID-19 pandemic are uncertain, but with continued distribution of effective vaccines and easing of travel advisories and restrictions, we believe customer confidence will continue to grow, leading to increased demand into the summer of 2021. We expect widespread vaccinations to result in sustained demand improvement going forward, with recovery of domestic demand preceding the recovery of international demand in most regions.

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

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

Operating Expenses

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


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended September 30,					Year-over-Year Change					Cents per ASM					(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Three Months Ended March 31,				Year-over-Year Change				Cents per ASM
	2020			2019		$			%		2020		2019	% Change			2021		2020		$		%		2021	2020	% Change
Aircraft fuel and related taxes	$	102		$	471	$	(369	)	(78.4	)%	1.47		2.89	(49.0	)%	Aircraft fuel and related taxes	$	193	$	365	$	(172)	(47.0)	%	2.13	2.45	(13.2)	%
Salaries, wages and benefits	482			580		(98		)	(16.9	)	6.98		3.56	96.1		Salaries, wages and benefits	521		601		(80)		(13.2)		5.74	4.04	42.2
Landing fees and other rents	84			125		(41		)	(32.7	)	1.22		0.77	58.7		Landing fees and other rents	115		112		3		3.0		1.26	0.75	68.8
Depreciation and amortization	127			134		(7		)	(5.0	)	1.84		0.82	124.2		Depreciation and amortization	125		139		(14)		(10.4)		1.37	0.93	46.8
Aircraft rent	23			26		(3		)	(12.5	)	0.33		0.16	106.5		Aircraft rent	25		21		4		14.9		0.27	0.14	88.2
Sales and marketing	24			74		(50		)	(68.3	)	0.34		0.46	(25.3	)	Sales and marketing	23		53		(30)		(57.2)		0.25	0.35	(29.8)
Maintenance, materials and repairs	111			158		(47		)	(30.2	)	1.60		0.97	64.7		Maintenance, materials and repairs	104		160		(56)		(34.9)		1.15	1.07	6.7
Other operating expenses	167			271		(104		)	(38.1	)	2.43		1.66	46.0		Other operating expenses	210		269		(59)		(22.1)		2.31	1.82	27.7
Special items	(112		)	—		(112		)	28,320.3		(1.61	)	—	66,968.7		Special items	(289)		202		(491)		(242.6)		(3.18)	1.36	(333.6)
Total operating expenses	$	1,008		$	1,839	$	(831	)	(45.2	)%	14.60		11.29	29.3	%	Total operating expenses	$	1,027	$	1,922	$	(895)	(46.6)	%	11.30	12.91	(12.5)	%

Total operating expenses excluding special items⁽¹⁾	$	1,120		$	1,839	$	(719	)	(39.1	)%	16.21		11.29	43.6	%	Total operating expenses excluding special items(1)	$	1,316	$	1,720	$	(404)	(23.5)	%	14.48	11.55	25.3	%

Table of Contents

PART I. FINANCIAL INFORMATION

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


(in millions)
Selected Balance Sheet Data:	March 31, 2021	December 31, 2020	$ Change	% Change
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	4,619	4,413	206	4.7	%

Cash and cash equivalents

Cash and cash equivalents increased by $440 million, or 22.9%, primarily as a result of $734 million of net proceeds from the issuance of our 0.50% Convertible Senior Notes due 2026; $504 million of payroll support extension payments received under the Consolidated Appropriations Act; and $270 million of proceeds from the maturities of our time deposits. Theses cash inflows were partially offset by $644 million of principal payments on our outstanding debt and finance lease obligations, $550 million of which related to the payoff of our revolving Credit and Guaranty Agreement, and capital expenditures of $217 million in the first quarter of 2021.

Investment securities

Investment securities decreased by $268 million, or 23.6%, primarily driven by the maturities of our time deposits as described in the cash and cash equivalents section above.

Receivables, less allowance

Receivables increased by $55 million, or 56.2%, as a result of improvements in demand which led to an increase in receivables from our credit card processors.

Flight equipment

Flight equipment increased by $210 million, or 2.0%, principally driven by aircraft capital expenditures made in the first quarter of 2021. Additional information related to our aircraft capital expenditures are provided within our discussion of investing activities under the "Liquidity and Capital Resources" section below.

Air traffic liability

Air traffic liability increased by $283 million, or 25.3%, driven by the improvements in demand as customers begin to gain confidence to travel and resumed booking travel further in advance. The cash collected from customers for future travel is recorded on our balance sheet until the point in time that the customer travels.

Other accrued liabilities

Other accrued liabilities increased by $148 million, or 68.9%, primarily as a result of the unused portion of our payroll support extension grants received under the Consolidated Appropriations Act.

As discussed in Note 3 to our condensed consolidated financial statements, on January 15, 2021, we entered into a PSP Extension Agreement with the Treasury governing our participation in the Payroll Support Program 2. In the first quarter of 2021, Treasury provided us with Payroll Support 2 Payments totaling $504 million. These payments consist of $383 million in grants and $121 million in unsecured term loans. In consideration for the Payroll Support 2 Payments, we issued warrants to Treasury to purchase approximately 0.8 million shares of our common stock at an exercise price of $14.43 per share.

Long-term debt and finance lease obligations

Long-term debt and finance lease obligations increased by $206 million, or 4.7%. In the first quarter of 2021, we completed the issuance of our 0.50% Convertible Senior Notes due 2026 in the amount of $750 million and also received $121 million in unsecured term loans under the Payroll Support Program 2. These increases were partially offset by $644 million of principal payments on our debt and finance lease obligations.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

~~Impact of the COVID-19 Pandemic~~

~~The COVID-19 pandemic drove a significant decline in demand beginning in the second half of~~At March 2020. We have significantly reduced our capacity to a level that maintains essential services to align with demand. Our capacity for the third quarter of 2020 declined by 58% year-over-year. For the fourth quarter of 2020, we expect capacity to be down by at least 45% compared to the prior year. As a result of the significant reduction in demand expectations and lower capacity, we have temporarily parked a portion of our fleet.

~~Adjustments in flying capacity to align with the expected demand.~~

•~~Temporary consolidations of our operations in certain cities that contain multiple airport locations.~~

~~Renegotiated service rates with business partners and extended payment terms.~~

•~~Instituted a company-wide hiring freeze.~~

~~Implemented salary reductions of 20% to 50% for our officers through September 30, 2020, and 10% to 20% in the fourth quarter of 2020.~~

~~Offered crewmembers voluntary time off and separation programs, with most departures for the separation program occurring in the third quarter.~~

~~At September 30, 2020,~~31, 2021, we had cash, cash equivalents, and short-term investments ~~and short-term restricted cash~~ of approximately ~~$3.1~~$3.2 billion. ~~We believe~~Our business and operating results for 2021 continue to be impacted by the ~~unprecedented impact of~~ COVID-19 onpandemic. However, we have seen improvements in our business during the ~~demand for air travel and the corresponding decline in revenue~~three months ended March 31, 2021 which we expect will continue to have an adverse impact on our operating cash flow. Given this situation, we have taken actions to increase liquidity, strengthen our financial position, and conserve cash. Some of the actions we have taken since the onset of the pandemic through September 30, 2020 include:

~~Borrowed on our existing $550 million revolving credit facility in April 2020.~~


•	~~Executed a $150 million pre-purchase arrangement of TrueBlue~~^® ~~points with our co-brand credit card partner in April 2020.~~

~~Suspended non-critical capital expenditure projects.~~

~~Amended our purchase agreement with Airbus which changed the timing of our Airbus A321 and A220 deliveries in May 2020.~~

~~Suspended share repurchases.~~

~~Obtained $963 million of funding under Payroll Support Program of the CARES Act.~~

~~Executed a $750 million term loan credit facility and immediately drew down on the facility for the full amount available in June 2020.~~

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

~~Entered into $445 million of sale-leaseback transactions; which is discussed further below.~~

Completed public placements of equipment notes in an aggregate principal amount of $923 million secured by 49 Airbus A321 aircraft in August 2020, which is discussed further in Note 3 to our condensed consolidated financial statements. The net proceeds were primarily used to repay the outstanding borrowings under the 364-day delayed draw term loan facility that was due to be repaid in Marchthroughout 2021.


•	Entered into a Loan and Guarantee Agreement with the United States Department of the Treasury ("Treasury") under the Loan Program of the CARES Act which gives us access to loans in an aggregate principal amount of up to ~~$1.14 billion~~ ~~until March 26, 2021, which is discussed further below. We made a drawing of $115 million under the Loan Program on September 29, 2020.~~

As a result of these activities, we had $2.5 billion in unrestricted and short-term restricted cash as of September 30, 2020. The $963 million of payroll support funding under the CARES Act was originally classified as short-term restricted cash since the funds had to be be utilized to pay the salaries and benefits costs of our crewmembers. The funds are reclassified from short-term unrestricted cash within prepaid expenses and other on our consolidated balance sheets to cash and cash equivalents when the funds are utilized. As of September 30, 2020, $74 million of payroll support funding remained available.

In the third quarter of 2020, we executed $327 million of sale-leaseback transactions. Of these transactions, $118 million did not qualify as sales for accounting purposes. The remaining $209 million, qualified as sales and generated a loss of $106 million. The assets associated with sale-leaseback transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our condensed consolidated statements of cash flows.

~~We also executed $59 million of sale-leaseback transactions in October 2020.~~

~~In November 2020, we entered into an agreement with the Treasury to increase our borrowing capacity under the Loan Program of the CARES Act to $1.95 billion.~~

~~We will continue to evaluate future financing opportunities to leverage our unencumbered assets in an effort to build additional levels of liquidity~~.

Analysis of Cash Flows

Operating Activities

We rely primarily on operating cash flows to provide working capital for current and future operations. Cash flows from operating activities were ~~$(223)~~$177 million and ~~$1.2 billion~~$124 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. Lower ~~earnings,~~losses, principally driven by lower operating expenses coupled with federal payroll support extension grants received under the ~~unprecedented decline in demand for travel caused by COVID-19~~Consolidated Appropriations Act contributed to the ~~decrease~~increase in operating cash flows.

Investing Activities

Investing activities for the three months ended March 31, 2021 included $270 million in proceeds from maturities of investment securities.

During the three months ended March 31, 2021, capital expenditures related to our purchase of flight equipment included $156 million related to the purchase of three Airbus A321neo aircraft and spare engines, $20 million for spare part purchases, $12 million in work-in-progress relating to flight equipment, and $6 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $23 million.

During the three months ended March 31, 2020, capital expenditures related to our purchase of flight equipment included $215 million related to the purchase of three Airbus A321neo aircraft, one Airbus A321 lease buyout, the purchase of several spare engines, $55 million in work-in-progress relating to flight equipment, $6 million for spare part purchases, and $53 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $38 million. Investing activities also included the net proceeds from investment securities of $190 million.

Financing Activities

Financing activities for the three months ended March 31, 2021 primarily consisted of the following:

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

•Net proceeds of $121 million and $8 million from the issuances of unsecured term loans and warrants, respectively, in connection with the Payroll Support Program 2 under the Consolidated Appropriations Act.

These proceeds were partially offset by principal payments of $644 million on our outstanding debt and finance lease obligations, $550 million of which were associated with the payoff of our revolving Credit and Guaranty Agreement.

On April 29, 2021, Treasury provided us an Additional Payroll Support 2 Payment of $76 million, consisting of $53 million in grants and $23 million in an unsecured term loan under the PSP Extension Agreement. In consideration for the Additional Payroll Support 2 Payment, we issued warrants to Treasury to purchase approximately 0.2 million additional shares of our common stock at an exercise price of $14.43 per share. The terms of the unsecured term loan and additional warrants are identical to those issued in the first quarter of 2021 under the Payroll Support Program 2.

Financing activities for the three months ended March 31, 2020 primarily consisted of $983 million in net proceeds from the drawdown of our 364-day term loan facility, partially offset by the acquisitions of treasury shares of $166 million, of which

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

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PART I. FINANCIAL INFORMATION

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

~~During the nine months ended September 30, 2020, capital expenditures~~$160 million related to our ~~purchase of flight equipment included $295 million related to the purchase of five Airbus A321neo aircraft, one Airbus A321 lease buyout,~~accelerated share repurchases, and the purchase of several spare engines, $128 million in work-in-progress relating to flight equipment, $8 million for spare part purchases, and $67 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $98 million. Investing activities also included the net purchase in investment securities of $217 million. We continue to limit our capital expenditures to only those critical to our operations as we navigate through the COVID-19 pandemic.

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

In May and October 2020, we amended our purchase agreement with Airbus which updated the schedules of our Airbus A321 and A220 deliveries. We are scheduled to receive two new Airbus A321neo aircraft and our first Airbus A220 aircraft for the remainder of 2020. We expect the aircraft deferrals will result in approximately $2 billion of reduced aircraft capital expenditures through 2022.

During the nine months ended September 30, 2019, capital expenditures related to our purchase of flight equipment included $188 million related to the purchase of one Airbus A321neo aircraft, one Airbus A320 lease buyout, the purchase of several spare engines, $165 million in work-in-progress relating to flight equipment, $41 million for spare part purchases, and $172 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for $111 million. Investing activities also included the net purchase of $111 million in investment securities.

~~Financing Activities~~

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

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

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

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

~~Also included in financing activities are:~~

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

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

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

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

•~~$22 million of proceeds from the issuance of common stock related to our crewmember stock purchase plan.~~

~~These proceeds are partially offset by the payoff of our 364-day delayed draw term loan facility for $1.0 billion,~~ scheduled maturities of ~~$272~~$102 million relating to debt and finance lease obligations, $4 million of which were associated with scheduled rent payments on sale-leaseback aircraft that did not qualify as sales for accounting purposes, and the acquisitions of treasury shares of $167 million, of which $160 million related to our accelerated share repurchases, or ASR.obligations. Our share repurchase program has been suspended ~~since~~as of March 31, 2020.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

~~On April 29, 2020, we submitted our application for the~~CARES Act Loan Program of

Under the CARES ~~Act. Under the~~Act Loan Program ~~we have~~as signed in September 2020 and subsequently amended in November 2020, JetBlue has the ability to borrow up to a total of approximately ~~$1.14~~$1.9 billion from the Treasury. ~~Any loans issued under the Loan Program are expected to be senior secured obligations of the Company.~~ If we accept the full amount of the loan, we will issue warrants to purchase approximately ~~12.0~~20.5 million shares of our common stock to the Treasury. Any amount received under the CARES Act Loan Program will be subject to the relevant provisions of the CARES Act, including many of those ~~described under~~governing the Payroll Support Program. ~~As described above, we~~

We made aan initial drawing of $115 million under the CARES Act Loan Program on September 29, 2020. AsIn connection with this initial drawing, we entered into a warrant agreement with Treasury, pursuant to which we issued to Treasury warrants to purchase approximately 1.2 million shares of ~~September 30, 2020, approximately $1.03 billion~~our common stock at an exercise price of $9.50 per share.

On January 15, 2021, we entered into a letter agreement with Treasury which provided an extension of the Loan Agreement allowing us the option to access the remaining borrowing capacity ~~remains available to us~~ through ~~March 26,~~May 28, 2021.

As ~~previously discussed, we entered into an agreement with~~of March 31, 2021, $115 million of the ~~Treasury to increase our borrowing capacity~~borrowings under ~~the Loan Program of~~ the CARES Act loan remained outstanding. In April 2021, we determined not to ~~$1.95~~draw any of our remaining borrowing capacity of approximately $1.8 billion ~~in November 2020.~~

~~Financing activities for~~and will work with Treasury to release the ~~nine months ended September 30, 2019 primarily consisted~~excess Collateral ahead of the acquisitions of treasury shares of $381 million, of which $375 million related to our accelerated share repurchases, and scheduled maturities of $258 million relating to debt and finance lease obligations, partially offset by net proceeds from debt issuance of $218 million and $27 million of proceeds from the issuance of common stock.May 28, 2021 deadline.

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

Working Capital

We had a working capital of ~~$647~~$477 million at ~~September 30, 2020~~March 31, 2021 compared to ~~a deficit of $877~~$671 million at December 31, ~~2019.~~2020. Our working capital ~~improved~~decreased by ~~$2 billion~~$194 million due to several factors, including ~~cash proceeds~~an overall increase in our air traffic liability which was attributed to the increase in customer bookings as demand for air travel begins to recover from ~~long-term debt financing activities and lower level of operational payables resulting from various cost saving initiatives amid~~ the COVID-19 pandemic.

~~Working capital deficits can be customary in the airline industry because a significant portion of air traffic liability is classified as a current liability,~~

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

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

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PART I. FINANCIAL INFORMATION

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

REGULATION G RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

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

Operating expenses per available seat mile, or CASM, is a common metric used in the airline industry. Our CASM for the relevant periods are summarized in the table below. We exclude aircraft fuel and related taxes, operating expenses related to other non-airline businesses, such as JetBlue Technology Ventures and JetBlue Travel Products, and special items from operating expenses to determine CASM ex-fuel, which is a non-GAAP financial measure. ~~In 2020,~~

For the three months ended March 31, 2021, special items include contra-expenses recognized on the utilization of payroll support extension grants received under the Consolidated Appropriations Act, 2021, and contra-expenses recognized on the Employee Retention Credits provided by the CARES ~~Act,~~Act.

Special items for the three months ended March 31, 2020 include the impairment ~~charges~~charge of our Embraer E190 fleet ~~losses generated~~resulting from ~~sale-leaseback transactions, and one-time costs associated with our voluntary crewmember separation programs. Special items for 2019 include one-time costs related to~~ the ~~Embraer E190 fleet transition, one-time costs related to~~decline in demand caused by the ~~implementation of our pilots' collective bargaining agreement, as well as a gain on an equity method investment.~~ COVID-19 pandemic.

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

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
($ in millions; per ASM data in cents) $ per ASM $ per ASM $ per ASM $ per ASM
Total operating expenses $ 1,008
$ 14.60
$ 1,839
$ 11.29
$ 3,555
$ 14.69
$ 5,490
$ 11.50
Less:
Aircraft fuel and related taxes 102
1.47
471
2.89
496
2.05
1,392
2.92
Other non-airline expenses 7
0.10
10
0.07
29
0.12
32
0.07
Special items (112 ) (1.61 ) —
—
(214 ) (0.88 ) 14
0.03
Operating expenses, excluding fuel $ 1,011
$ 14.64
$ 1,358
$ 8.33
$ 3,244
$ 13.40
$ 4,052
$ 8.48


NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
	Three Months Ended March 31,
	2021				2020
($ in millions; per ASM data in cents)	$		per ASM		$		per ASM
Total operating expenses	$	1,027	$	11.30	$	1,922	$	12.91
Less:
Aircraft fuel and related taxes	193		2.13		365		2.45
Other non-airline expenses	10		0.10		14		0.09
Special items	(289)		(3.18)		202		1.36
Operating expenses, excluding fuel	$	1,113	$	12.25	$	1,341	$	9.01

Table of Contents

PART I. FINANCIAL INFORMATION

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

Operating Expense, ~~Income~~Loss before Taxes, Net ~~Income~~Loss and ~~Earnings~~Loss per Share, excluding special items ~~and gain on equity method investments~~

Our GAAP results in the applicable periods were impacted by credits and charges that ~~are~~were deemed special ~~items, and gain on equity method investments. We believe~~items.

For the impacts of these items make our results difficult to compare to prior periods as well as future periods and guidance, and, as a result, we exclude these items from the calculation of certain adjusted results, which are non-GAAP financial measures. In 2020,three months ended March 31, 2021, special items include contra-expenses recognized on the utilization of payroll support extension grants received under the Consolidated Appropriations Act, 2021, and contra-expenses recognized on the Employee Retention Credits provided by the CARES ~~Act,~~Act.

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

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY METHOD INVESTMENTS
Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2020
2019 2020 2019
Total operating revenues $ 492
$ 2,086
$ 2,295
$ 6,063

Total operating expenses $ 1,008
$ 1,839
$ 3,555
$ 5,490
Less: Special items (112 ) —
(214 )
14
Total operating expenses excluding special items $ 1,120
$ 1,839
$ 3,769
$ 5,476

Operating (loss) income $ (516 ) $ 247
$ (1,260 ) $ 573
Add back: Special items (112 )
—
(214 ) 14
Operating (loss) income excluding special items $ (628 ) $ 247
$ (1,474 ) $ 587

Operating margin excluding special items (127.6 )% 11.8 % (64.2 )% 9.7 %

(Loss) income before income taxes $ (578 ) $ 254
$ (1,381 ) $ 548
Add back: Special items (112 ) —
(214 ) 14
Less: Gain on equity method investments —
15
—
15
(Loss) income before income taxes excluding special items and gain on equity method investments $ (690 ) $ 239
$ (1,595 ) $ 547

Pre-tax margin excluding special items and gain on equity method investments (140.1 )% 11.4 % (69.5 )% 9.0 %

Net (loss) income $ (393 ) $ 187
$ (981 ) $ 408
Add back: Special items (112 ) —
(214 ) 14
Less: Income tax (expense) benefit related to special items (28 ) —
(53 ) 3
Less: Gain on equity method investments —
15
—
15
Less: Income tax (expense) related to gain on equity method investments —
(4 ) —
(4 )
Net (loss) income excluding special items and gain on equity method investments $ (477 ) $ 176
$ (1,142 ) $ 408


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE EXCLUDING SPECIAL ITEMS
	Three Months Ended March 31,
(in millions, except per share amounts)	2021			2020
Total operating revenues	$	733		$	1,588

Total operating expenses	$	1,027		$	1,922
Less: Special items	(289)			202
Total operating expenses excluding special items	$	1,316		$	1,720

Operating loss	$	(294)		$	(334)
Add back: Special items	(289)			202
Operating loss excluding special items	$	(583)		$	(132)

Operating margin excluding special items	(79.6)		%	(8.3)		%

Loss before income taxes	$	(347)		$	(354)
Add back: Special items	(289)			202
Loss before income taxes excluding special items	$	(636)		$	(152)

Pre-tax margin excluding special items	(86.7)		%	(9.5)		%

Net loss	$	(247)		$	(268)
Add back: Special items	(289)			202
Less: Income tax (expense) benefit related to special items	(69)			50
Net loss income excluding special items and gain on equity method investments	$	(467)		$	(116)

Loss Per Common Share:
Basic	$	(0.78)		$	(0.97)
Add back: Special items, net of tax	(0.70)			0.55
Basic excluding special items	$	(1.48)		$	(0.42)

Diluted	$	(0.78)		$	(0.97)
Add back: Special items, net of tax	(0.70)			0.55
Diluted excluding special items and gain on equity method investments	$	(1.48)		$	(0.42)

Table of Contents

PART I. FINANCIAL INFORMATION

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

(Loss) Earnings Per Common Share:
Basic $ (1.44 ) $ 0.63
$ (3.58 ) $ 1.36
Add back: Special items, net of tax (0.31 ) —
(0.58 ) 0.03
Less: Gain on equity method investments, net of tax —
0.04
—
0.04
Basic excluding special items and gain on equity method investments $ (1.75 ) $ 0.59
$ (4.16 ) $ 1.35

Diluted $ (1.44 ) $ 0.63
$ (3.58 ) $ 1.35
Add back: Special items, net of tax (0.31 ) —
(0.58 ) 0.03
Less: Gain on equity method investments, net of tax —
0.04
—
0.03
Diluted excluding special items and gain on equity method investments $ (1.75 ) $ 0.59
$ (4.16 ) $ 1.35

Free Cash Flow

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


NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW
	Three Months Ended March 31,
(in millions)	2021		2020
Net cash provided by operating activities	$	177	$	124
Less: Capital expenditures	(211)		(314)
Less: Predelivery deposits for flight equipment	(6)		(53)
Free Cash Flow	$	(40)	$	(243)

NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW
Nine Months Ended September 30,
(in millions) 2020 2019
Net cash (used in) provided by operating activities $ (223 ) $ 1,198
Less: Capital expenditures (529 ) (505 )
Less: Predelivery deposits for flight equipment (67 ) (172 )
Free Cash Flow $ (819 ) $ 521

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except as described below, there have been no material changes in market risks from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our ~~2019~~2020 Form 10-K.

Aircraft Fuel

Our results of operations are affected by changes in the price and availability of aircraft fuel. Market risk is estimated as a hypothetical 10% increase in the ~~September 30, 2020~~March 31, 2021 cost per gallon of fuel. Based on projected fuel consumption for the next 12 months, including the impact of our hedging position, such an increase would result in an increase to aircraft fuel expense of approximately ~~$83 million.~~$159 million. As of ~~September 30, 2020,~~March 31, 2021, we had not hedged ~~approximately 25%~~any of our projected fuel requirement for the remainder of 2021.~~2020. All hedge contracts existing at~~ ~~September 30, 2020~~ ~~settle by December 31, 2020.~~

The financial derivative instrument agreements we have with our counterparties may require us to fund all, or a portion of, outstanding loss positions related to these contracts prior to their scheduled maturities. The amount of collateral posted, if any, is periodically adjusted based on the fair value of the hedge contracts. Refer to Note 8 to our condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for additional information.

Interest

Our earnings are affected by changes in interest rates due to the impact those changes have on interest expense from variable-rate debt instruments and on interest income generated from our cash and investment balances. The interest rate is fixed for ~~$3.3~~$3.8 billion of our debt and finance lease obligations, with the remaining ~~$1.5~~$1.0 billion having floating interest rates. As of ~~September 30, 2020,~~March 31, 2021, if interest rates were on average 100 basis points higher in ~~2020,~~2021, our annual interest expense would increase by approximately ~~$16~~$10 million. This amount is determined by considering the impact of the hypothetical change in interest rates on our variable rate debt.

If interest rates were to average 100 basis points lower in ~~2020~~2021 than they were during ~~2019,~~2020, our interest income from cash and investment balances would decrease by approximately $4$1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on the balances of our ~~cash and cash equivalents~~money market funds and short-term, interest-bearing investment ~~securities balances~~ for the trailing twelve month period.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2020~~.March 31, 2021. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2020~~.March 31, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our controls performed during the quarter ended ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of our business, we are party to various legal proceedings and claims which we believe are incidental to the operation of our ~~business.~~business. Refer to Note 76 to our condensed ~~consolidated~~consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

ITEM 1A. RISK FACTORS

Part I, Item 1A "Risk Factors" of our ~~2019~~2020 Form 10-K, includes a discussion of our risk factors which are incorporated herein. ~~The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K. Except as presented below, there~~There have been no material changes from the risk factors associated with our business previously disclosed in our Form 10-K.

The global pandemic resulting from a novel strain of coronavirus has had an adverse impact that has been material to the Company's business, operating results, financial condition and liquidity, and the duration and spread of the pandemic could result in additional adverse impacts. The outbreak of another disease or similar public health threat in the future could also have an adverse effect on the Company's business, operating results, financial condition and liquidity.

A novel strain of coronavirus ("COVID-19"), which was first reported in December 2019, was declared a "Public Health Emergency of International Concern" by the World Health Organization (the "WHO"). On March 13, 2020, the U.S. government declared a national emergency and the U.S. Department of State subsequently issued a global Level 4 "do not travel" advisory advising U.S. citizens to avoid all international travel due to the global impact of COVID-19. The U.S. government has also implemented enhanced screenings, mandatory 14-day quarantine requirements and other travel restrictions in connection with the COVID-19 pandemic, including restrictions on travel from international locations, and many foreign and U.S. state governments instituted similar measures and declared states of emergency.

In the United States and other locations around the world, public events, such as conferences, sporting events, and concerts, have been canceled, attractions, including theme parks and museums, have been closed, cruise lines have suspended operations, and schools and businesses are operating with remote attendance, among other actions.

Other governmental restrictions and regulations that may be implemented in the future in response to COVID-19 could include additional travel restrictions (including expanded restrictions on domestic air travel within the United States), quarantines of additional populations (including our personnel), and restrictions on our ability to access our facilities or aircraft or requirements to collect additional passenger data. In addition, governments, non-governmental organizations, and entities in the private sector have issued and may continue to issue non-binding advisories or recommendations regarding air travel or other physical distancing measures, including limitations on the number of persons that should be present at public gatherings. These restrictions and regulations have had, and will continue to have, a material adverse impact on our business, operating results, financial condition, and liquidity.

The Company began experiencing a significant decline in international and domestic demand related to COVID-19 during the first quarter of 2020, and this reduction in demand has continued through the date of this report and is expected to continue for the foreseeable future. The decline in demand caused a material deterioration in our revenues , resulting in a net loss of $981 million for the nine months ended September 30, 2020. The Company expects its results of operations for full-year 2020 to be materially impacted. For planning purposes, the Company has assumed that demand will remain depressed for the remainder of 2020. In response to decreased demand, the Company reduced scheduled capacity, relative to 2019, by approximately 58% for the third quarter of 2020, with at least a 45% reduction expected for the fourth quarter of 2020. The Company plans to proactively manage capacity until there are meaningful signs of a recovery in demand. The continued decline in demand, which is expected to continue for the foreseeable future, is expected to have a material adverse impact on our business, operating results, financial condition, and liquidity.

In addition to the schedule reductions discussed above, the Company has reduced its planned capital expenditures and reduced operating expenditures for the remainder of 2020 (including by postponing projects deemed non-critical to the Company's operations), suspended share repurchases under its share repurchase program, executed two new term loan agreements and immediately drew down on these facilities for the full amount available, borrowed on its existing $550 million revolving credit facility, completed the public placements of equipment notes in an aggregate principal of $923 million, executed a number of aircraft sale-leaseback transactions, and temporarily grounded certain of its fleet.

The Company continues to focus on reducing expenses and managing its liquidity. The Company currently expects to lower its cash burn from an average of approximately $6 million per day during the third quarter of 2020 to an average of between $4 million and $6 million per day during the fourth quarter of 2020. For this purpose, "cash burn" is defined as net

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cash revenues, less cash operating costs, capital expenditures, and debt payments. Proceeds from the issuance of new debt (excluding expected aircraft financing), government grants associated with the Payroll Support Program of the CARES Act, early repayment of our 364-day delayed draw term loan facility, and one-time cash payments associated with our voluntary separation programs, and net purchases of investment securities are not included in this figure. We expect to continue to modify our cost management structure, liquidity-raising efforts and capacity as the timing of demand recovery becomes more certain.

On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the United States Department of the Treasury ("Treasury") governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with a payment of $936 million (the "Payroll Support Payment"), consisting of $685 million in grants and $251 million in an unsecured term loan. On September 29, 2020, we entered into a loan and guarantee agreement (the "Loan Agreement") with Treasury under the Loan Program of the CARES Act, pursuant to which Treasury agreed to extend loans to us in an aggregate principal amount of up to $1.14 billion until March 26, 2021, subject to specified terms. On September 30, 2020, Treasury provided us a payment of $27 million (the "Additional Payroll Support Payment"), consisting of $19 million in grants and $8 million in unsecured term loan under the PSP Agreement. The terms of the unsecured term loan are identical to those under the initial loan issued on April 23, 2020. The substance and duration of restrictions to which we are subject under the grants and/or loans under the CARES Act, including, but not limited to, those outlined below will materially affect the Company's operations, and the Company may not be successful in managing these impacts. Further, these restrictions could limit our ability to take actions that we otherwise might have determined to be in the best interest of our Company and our shareholders. In particular, limitations on executive compensation, which, depending on the form of aid, could extend up to six years, may impact the Company's ability to attract and retain senior management or attract other key employees during this critical time. See "—We are subject to certain restrictions on our business as a result of our participation in governmental programs under the CARES Act."

Further, certain employees of the Company, its suppliers and its business partners, such as airport and air traffic personnel, have tested positive for or been suspected of having COVID-19, which has resulted in facility closures, reduction in available staffing, and disruptions to the Company’s overall operations. The Company’s operations may be further impacted in the event of additional instances of actual or perceived risk of infection among employees of the Company, its suppliers or its business partners, and this impact may have a material and adverse effect if the Company is unable to maintain a suitably skilled and sized workforce and address related employee matters.

The Company may also take additional actions to improve its financial position, including measures to improve liquidity, such as the issuance of additional unsecured and secured debt securities, equity securities and equity-linked securities, the sale of assets and/or the entry into additional bilateral and syndicated secured and/or unsecured credit facilities. There can be no assurance as to the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms, or at all. Any such actions may be material in nature and could result in significant additional borrowing. The Company's reduction in expenditures, measures to improve liquidity or other strategic actions that the Company may take in the future in response to COVID-19 may not be effective in offsetting decreased demand, and the Company will not be permitted to take certain strategic actions as a result of the CARES Act, which could result in a material adverse effect on the Company's business, operating results, liquidity and financial condition.

The full extent of the ongoing impact of COVID-19 on the Company's longer-term operational and financial performance will depend on future developments, many of which are outside of our control, including the effectiveness of the mitigation strategies discussed above, the duration, spread, severity and recurrence of COVID-19 and related travel advisories and restrictions, the impact of COVID-19 on overall long-term demand for air travel, including after the pandemic subsides, the impact of COVID-19 on the financial health and operations of the Company's business partners, future governmental actions, including their duration and scope, and the Company's access to capital, all of which are highly uncertain and cannot be predicted.

In addition, an outbreak of another disease or similar public health threat, or fear of such an event, that affects travel demand, travel behavior or travel restrictions could have a material adverse impact on the Company's business, operating results, liquidity and financial condition. Outbreaks of other diseases could also result in increased government restrictions and regulation, such as those actions described above or otherwise, which could adversely affect our business, operating results, financial condition, and liquidity.

Even after the COVID-19 pandemic has moderated and the enhanced screenings, quarantine requirements, and travel restrictions have eased, we may continue to experience similar adverse effects to our business, operating results, financial condition, and liquidity resulting from a recessionary economic environment that may persist, including increases in unemployment. The impact that the COVID-19 pandemic will have on our businesses, operating results, financial condition, and liquidity could exacerbate the risks identified in “Item 1A. Risk Factors” in our Annual Report on Form 10-K.

~~We are subject to certain restrictions on our business as a result of our participation in governmental programs under the CARES Act.~~

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On April 23, 2020, we entered into the PSP Agreement under the CARES Act with the Treasury governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us a $936 million Payroll Support Payment, consisting of $685 million in grants and $251 million in an unsecured term loan. On September 30, 2020, Treasury provided us a $27 million Additional Payroll Support Payment, consisting of $19 million in grants and $8 million in unsecured term loan under the PSP Agreement. In consideration for the Payroll Support Payment and the Additional Payroll Support Payment, we issued warrants to purchase approximately 2.6 million and 85,540 shares of common stock, respectively, to the Treasury at an exercise price of $9.50 per share. Additionally, on September 29, 2020, we entered into the Loan Agreement with Treasury under the Loan Program of the CARES Act. Pursuant to the Loan Agreement, Treasury agreed to extend loans to us in an aggregate principal amount of up to $1.14 billion until March 26, 2021, subject to specified terms. In connection with the Loan Agreement, on September 29, 2020, we entered into a warrant agreement with Treasury, pursuant to which we agreed to issue to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share. See “Part I-Item 2. Overview-The Coronavirus (COVID-19) Pandemic-The Coronavirus Aid, Relief, and Economic Security Act” and Note 2 to the condensed consolidated financial statements included herein for more information.

In accordance with any grants and/or loans received under the CARES Act, we are required to comply with the relevant provisions of the CARES Act which, among other things, includes the following: the requirement to use the Payroll Support Payment and the Additional Payroll Support Payment exclusively for the continuation of payment of crewmember wages, salaries and benefits; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and restrictions on the payment of certain executive compensation until March 24, 2022.

Further, the Loan Agreement includes affirmative and negative covenants that restrict our ability to, among other things, dispose of certain assets, merge, consolidate or sell assets, incur certain additional indebtedness or pay certain dividends. In addition, we are required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities aggregating not less than $550 million and to maintain a minimum ratio of the borrowing base of the collateral. If we do not meet the minimum collateral coverage ratio, we must either provide additional collateral to secure our obligations under the Loan Agreement or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio.

The substance and duration of restrictions to which we are subject under the grants and/or loans under the CARES Act, including, but not limited to, those outlined above, will materially affect the Company's operations, and the Company may not be successful in managing these impacts. Further, these restrictions could limit our ability to take actions that we otherwise might have determined to be in the best interest of our Company and our shareholders. In particular, limitations on executive compensation, which, depending on the form of aid, could extend up to six years, may impact the Company's ability to attract and retain senior management or attract other key employees during this critical time.

We cannot predict whether the assistance under any of these programs will be adequate to support our business for the duration of the COVID-19 pandemic or whether additional assistance will be required or available in the future.

The Company has a significant amount of indebtedness from fixed obligations and may seek material amounts of additional financial liquidity in the short-term, and insufficient liquidity may have a material adverse effect on the Company's financial condition and business.

The Company has a significant amount of indebtedness from fixed obligations, including aircraft lease and debt financings, leases of airport property, secured loan facilities and other facilities, and other material cash obligations. In addition, the Company has substantial noncancelable commitments for capital expenditures, including for the acquisition of new aircraft and related spare engines.

In addition, in response to the travel restrictions, decreased demand and other effects the COVID-19 pandemic has had and is expected to have on the Company's business, the Company currently intends to continue to seek material amounts of additional financial liquidity in the short-term, which may include the issuance of additional unsecured or secured debt securities, equity securities and equity-linked securities, the sale of assets, the entry into sale-leaseback transactions, as well as additional bilateral and syndicated secured and/or unsecured credit facilities, among other items. If the Company's credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to the Company's rating levels, the airline industry, or the Company, the Company's access to capital and the cost of any debt financing would be negatively affected. There can be no assurance as to the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms, or at all. In addition, the Company has received a total of $963 million in funding under the Payroll Support Program of the CARES Act and $115 million under the Loan Program of the CARES Act, which financial assistance subjects the Company and its business to certain restrictions. See “We are subject to certain restrictions on our business as a result of our participation in governmental programs under the CARES Act.”

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Although the Company's cash flows from operations and its available capital, including the proceeds from financing transactions, have been sufficient to meet its obligations and commitments to date, the Company's liquidity has been, and may in the future be, negatively affected by the risk factors discussed in the Company's 2019 Form 10-K, as updated by this report, including risks related to future results arising from the COVID-19 pandemic. If the Company's liquidity is materially diminished, the Company might not be able to timely pay its leases and debts or comply with certain operating and financial covenants under its financing and credit card processing agreements or with other material provisions of its contractual obligations. Moreover, as a result of the Company's recent financing activities in response to the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby subjecting the Company to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions could become binding on the Company as it continues to seek additional liquidity. In addition, the Company has agreements with financial institutions that process customer credit card transactions for the sale of air travel and other services. Under certain of the Company's credit card processing agreements, the financial institutions in certain circumstances have the right to require that the Company maintain a reserve equal to a portion of advance ticket sales that have been processed by that financial institution, but for which the Company has not yet provided the air transportation. Such financial institutions may require cash or other collateral reserves to be established or withholding of payments related to receivables to be collected, including if the Company does not maintain certain minimum levels of unrestricted cash, cash equivalents and short-term investments. In light of the affect COVID-19 is having on demand and, in turn, capacity, the Company has seen an increase in demand from consumers for refunds on their tickets, and we anticipate this will continue to be the case for the foreseeable future. Refunds lower our liquidity and put us at risk of triggering liquidity covenants in these processing agreements and, in doing so, could force us to post cash collateral with the credit card companies for advance ticket sales. The Company also maintains certain insurance- and surety-related agreements under which counterparties may require collateral.

The Company's substantial level of indebtedness, particularly following the additional liquidity transactions completed and contemplated in response to the impacts of COVID-19, and non-investment grade credit rating, as well as market conditions and the availability of assets as collateral for loans or other indebtedness, which has been reduced as a result of the $2.3 billion in secured term loan facilities entered into since the beginning of fiscal year 2020 and may be further reduced as the Company continues to seek material amounts of additional financial liquidity, together with the effect the COVID-19 pandemic has had on the global economy generally and the air transportation industry specifically, may make it difficult for the Company to raise additional capital if needed to meet its liquidity needs on acceptable terms, or at all.

See Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, of this report for additional information regarding the Company's liquidity as of September 30, 2020.

COVID-19 has materially disrupted our strategic operating plans in the near-term, and there are risks to our business, operating results, liquidity and financial condition associated with executing our strategic operating plans in the long-term.

COVID-19 has materially disrupted our strategic operating plans in the near-term, and there are risks to our business, operating results and financial condition associated with executing our strategic operating plans in the long-term. In recent years, we have announced several strategic operating plans, including several revenue-generating initiatives and plans to optimize our revenue, such as our plans to add capacity, including international expansion and new or increased service to mid-size airports, initiatives and plans to optimize and control our costs and opportunities to enhance our segmentation and improve the customer experience at all points in air travel. Most recently, in July 2020, we announced a strategic partnership with American Airlines Group Inc. (“AAL”), designed to optimize the Company and AAL’s network through certain flights operated by us and AAL to and from John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty International Airport and Boston Logan International Airport. In developing our strategic operating plans, we make certain assumptions, including, but not limited to, those related to customer demand, competition, market consolidation, the availability of aircraft and the global economy. Actual economic, market and other conditions have been and may continue to be different from our assumptions. In 2020, demand has been, and is expected to continue to be, significantly impacted by COVID-19, which has materially disrupted the timely execution of our strategic operating plans, including plans to add capacity in 2020. If we do not successfully execute or adjust our strategic operating plans in the long-term, or if actual results continue to vary significantly from our prior assumptions or vary significantly from our future assumptions, our business, operating results and financial condition could be materially and adversely impacted.

The Company may never realize the full value of its intangible assets or its long-lived assets causing it to record impairments that may negatively affect its financial condition and operating results.

In accordance with applicable accounting standards, the Company is required to test its indefinite-lived intangible assets for impairment on an annual basis, or more frequently where there is an indication of impairment. In addition, the Company is required to test certain of its other assets for impairment where there is any indication that an asset may be impaired.

The Company may be required to recognize losses in the future due to, among other factors, extreme fuel price volatility, tight credit markets, government regulatory changes, decline in the fair values of certain tangible or intangible assets, such as

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aircraft, route authorities, airport slots and frequent flyer database, unfavorable trends in historical or forecasted results of operations and cash flows and an uncertain economic environment, as well as other uncertainties. For example, during the nine months ended September 30, 2020, the Company recorded impairment charges of $258 million associated with its E190 fleet due to COVID-19. The Company can provide no assurance that a material impairment loss of tangible or intangible assets will not occur in a future period, and the risk of future material impairments has been significantly heightened as result of the effects of the COVID-19 pandemic on our flight schedules and business. The value of the Company's aircraft could also be impacted in future periods by changes in supply and demand for these aircraft. Such changes in supply and demand for certain aircraft types could result from the grounding of aircraft. A further impairment loss could have a material adverse effect on the Company's financial condition and operating results.

~~If we are unable to attract and retain qualified personnel or fail to maintain our company culture, our business could be harmed.~~

We compete against other major U.S. airlines for pilots, mechanics, and other skilled labor; some of them offer wage and benefit packages exceeding ours. As more pilots in the industry approach mandatory retirement age, the U.S. airline industry may be affected by a pilot shortage. We may be required to increase wages and/or benefits in order to attract and retain qualified personnel or risk considerable crewmember turnover. In addition, we may lose crewmembers due to the impact of COVID-19 on aviation and we may lose crewleaders as a result of restrictions imposed under the CARES Act. If we are unable to hire, train, and retain qualified crewmembers representing diverse backgrounds, experiences, and skill sets, our business could be harmed and we may be unable to implement our growth plans.

In addition, as we hire more people and grow, we believe it may be increasingly challenging to continue to hire people who will maintain our company culture and inclusive work environment. We believe one of our competitive strengths is our service-oriented company culture which emphasizes friendly, helpful, team-oriented, and customer-focused crewmembers. Our company culture is important to providing high quality customer service and having a productive workforce in order to help keep our costs low. As we continue to grow, we may be unable to identify, hire, or retain enough people who meet the above criteria, including those in management or other key positions. Our company culture could otherwise be adversely affected by our growing operations and broader geographic diversity. If we fail to maintain the strength of our company culture, our competitive ability and our business may be harmed.

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

On September 19, 2019, the Board of Directors approved a share repurchase program, or the 2019 Authorization, of up to $800 million worth of common stock beginning on October 1, 2019 and ending no later than December 31, 2021. Our share repurchase programs include authorization for repurchases in open market transactions pursuant to Rules 10b-18 and/or 10b5-1 of the Exchange Act, and/or one or more privately-negotiated accelerated stock repurchase transactions. The timing, price, and volume of any repurchases will be based on market conditions and other relevant factors. In accordance with the ~~PSP~~Payroll Support Program Agreement, the Payroll Support Program Extension Agreement, and the Loan Agreement with the Treasury, we are prohibited from making any share ~~repurchases.~~repurchases through March 31, 2022. We have suspended our share repurchase program as of March 31, 2020. No shares were repurchased during the three months ended ~~September 30, 2020.~~March 31, 2021. The acquisition of treasury stock reflected on our condensed consolidated statement of cash flows for the three months ended March 31, 2021 represents the return of shares to satisfy tax payments associated with crewmember stock compensation that vested during the period.

In consideration for the Payroll Support ~~Payment and borrowings under Loan Agreement,~~2 Payments, during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 we issued warrants to purchase approximately ~~2.7~~0.8 million shares of common stock to the Treasury at an exercise price of ~~$9.50~~$14.43 per share. See Note 23 to our condensed consolidated financial statements.

ITEM 5. OTHER INFORMATION

On April 29, 2021, the Board approved Performance-Contingent Executive Retention Awards to certain members of the Company’s senior leadership team, including the named executive officers (the “Awards”). In approving the Awards, the Compensation Committee of the Board, in consultation with its advisors, determined that the Awards were appropriate and necessary to help ensure key leaders of the Company with deep airline industry expertise continue to steward the Company during the unprecedented economic disruption caused by the COVID-19 pandemic. The Awards were designed to retain and motivate our key leaders and to further align their interests with those of our shareholders. When setting the terms of the Awards, the Compensation Committee and the Board considered that each recipient’s pay package was substantially reduced in 2020 through a combination of base salary reductions, the suspension of performance stock unit awards for the 2020-2022 performance cycle (with no substitution awards or other adjustments made to replace their value), and the 0% Corporate Performance Factor payout under the annual cash incentive award program (resulting in awards being paid out significantly below target), notwithstanding their extraordinary leadership during these unprecedented times. In addition, the Compensation Committee and the Board considered the compensation and retention challenges expected over the next several years due to continued uncertainty as to the long-term effects of the COVID-19 pandemic on the industry coupled with certain Government Support (as defined below) limitations affecting the Company’s ability to provide market-competitive compensation opportunities. These concerns are particularly acute for the Company given these crewmembers’ expertise and demonstrated leadership, which are, to varying degrees, valued and transferrable to other companies both within – and outside – the airline industry.

The receipt of each Award is subject to certain terms and performance conditions, including (i) the Company’s full repayment of all governmental loans received pursuant to the CARES Act and the expiration of all restrictions related to the Payroll Support Program pursuant to the CARES Act, the Payroll Support Program Extension under the Consolidated Appropriations Act and any other subsequent government support (collectively, the “Government Support”); and (ii) the Company’s achievement of two successive quarters of positive EBITDA. In addition, the recipient must remain employed with or performing services for the Company on the payment date, provided, if a recipient experiences a termination without cause or for good reason prior to the payment date, the recipient will receive the Award on the payment date. For all other terminations of service prior to the payment date, the Board (or Compensation Committee if delegated by the Board), will determine continued eligibility for the Award.

Upon satisfaction of the terms and conditions of the Awards each of the recipients will receive an Award equivalent to a pre-established multiple of their respective base salaries as of April 15, 2021 as follows: Robin Hayes (3.36x), Joanna Geraghty (2.23x), Steve Priest (2.13x), and Brandon Nelson (2.09x). Payments pursuant to the Awards, if any, will be made in cash or

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fully vested shares of the Company’s common stock as determined by the Board (or Compensation Committee if delegated by the Board)in its sole discretion. No portion of the Award may be paid earlier than 30 days following the lapse of both the Government Support restrictions and achievement of the performance condition.

The foregoing summary is not complete and is qualified in its entirety by reference to the Form of Performance-Contingent Executive Retention Award Agreement, filed herewith as Exhibit 10.4 and incorporated by reference herein.

ITEM 6. EXHIBITS

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

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EXHIBIT INDEX



Exhibit Number			Exhibit
4.1*			Indenture, dated March 25, 2021, between JetBlue Airways Corporation, as issuer, and Wilmington Trust, National Association, as trustee
4.2*			Form of 0.50% Convertible Senior Note due 2026, dated March 25, 2021 (included as Exhibit A to Exhibit 4.1)
4.3			Warrant Agreement, dated as of ~~September 29, 2020,~~January 15, 2021, between JetBlue Airways Corporation and the United States Department of the ~~Treasury~~Treasury—incorporated by reference to Exhibit 4.16 to our Annual Report on Form 10-K for the year ended December 31, 2020
4.1(a)*4.4			Form of Warrant (included as Annex B to Exhibit 4.3)
~~4.2~~10.1			~~Trust Supplement No. 2020-1A,~~Payroll Support Program Extension Agreement, dated as of ~~August 17, 2020,~~January 15, 2021, between JetBlue Airways Corporation and ~~Wilmington Trust Company, as Class A Trustee, to~~ the ~~Pass Through Trust Agreement dated as~~United States Department of ~~November 12, 2019-incorporated~~the Treasury—incorporated by reference to Exhibit ~~4.2~~10.57 to our ~~Current~~Annual Report on Form ~~8-K dated August 17,~~10-K for the year ended December 31, 2020 ~~and filed on August 18, 2020~~
~~4.2(a)~~10.2			~~Trust Supplement No. 2020-1B,~~Promissory Note, dated as of ~~August 17, 2020, between~~January 15, 2021 issued by JetBlue Airways Corporation ~~and Wilmington Trust Company, as Class B Trustee, to~~in the ~~Pass Through Trust Agreement dated as~~name of ~~November 12, 2019-incorporated~~the United States Department of the Treasury—incorporated by reference to Exhibit ~~4.3~~10.58 to our ~~Current~~Annual Report on Form ~~8-K dated August 17, 2020 and filed on August 18, 2020~~
~~4.2(b)~~	Form of Pass Through Trust Certificate, Series 2020-1A (included in Exhibit A to Exhibits 4.2)-incorporated by reference to Exhibit A to Exhibit 4.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(c)~~	Form of Pass Through Trust Certificate, Series 2020-1B (included in Exhibit A to Exhibit 4.2(a))-incorporated by reference to Exhibit A to Exhibit 4.3 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
4.2(d)***	Intercreditor Agreement (2020-1), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington Trust Company, as Trustee of the JetBlue Airways Pass Through Trust 2020-1A and the JetBlue Airways Pass Through Trust 2020-1B, Natixis S.A., acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent-incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
4.2(e)***	~~Revolving Credit Agreement (2020-1A), dated as of August 17, 2020, between Wilmington Trust Company, as Subordination Agent, as agent and trustee~~10-K for the trustee of JetBlue Airways Pass Through Trust 2020-1A and as Borrower, and Natixis S.A., acting through its New York Branch, as Class A Liquidity Provider-incorporated by reference to Exhibit 4.7 to our Current Report on Form 8-K dated August 17,year ended December 31, 2020 ~~and filed on August 18, 2020~~
4.2(f)***	Revolving Credit Agreement (2020-1B), dated as of August 17, 2020, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2020-1B and as Borrower, and Natixis S.A., acting through its New York Branch, as Class B Liquidity Provider-incorporated by reference to Exhibit 4.8 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(g)*,~~ ~~**~~	Participation Agreement (N946JL), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein-incorporated by reference to Exhibit 4.9 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(h)*,~~ ~~**~~	Indenture and Security Agreement (N946JL), dated as of August 17, 2020, between JetBlue Airways Corporation and Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.10 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(i)*,~~ ~~***~~	Participation Agreement (N2002J), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein-incorporated by reference to Exhibit 4.11 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(j)*,~~ ~~***~~	Indenture and Security Agreement (N2002J), dated as of August 17, 2020, between JetBlue Airways Corporation and Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.12 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.2(k)~~	~~Form of Series 2020-1 Equipment Notes (included in Exhibits 4.2(h) and 4.2(j))-incorporated by reference to Exhibits~~ ~~4.10~~ ~~and~~ ~~4.12~~ ~~to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020~~
4.2(l)****		Schedule I (setting forth the details by which the documents referred to therein differ from the corresponding representative sample of documents included as Exhibits 4.2(g) and 4.2(h) with respect to Aircraft bearing Registration No. N946JL)-incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 202010.3*

~~Table of Contents~~



4.2(m)*****	~~Schedule II (setting forth the details by which the documents referred~~Letter of Amendments to therein differ from the corresponding representative sample of documents included as Exhibits 4.2(i) and 4.2(j) with respect to Aircraft bearing Registration No. N2002J)-incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020
~~4.3~~	Trust Supplement No. 2019-1B, dated as of August 27, 2020, between JetBlue Airways Corporation and Wilmington Trust Company, as Class B Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019-incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
~~4.3(a)~~	Form of Pass Through Trust Certificate, Series 2019-1B (included in Exhibit A to Exhibit 4.3)-incorporated by reference to Exhibit A to Exhibit 4.2 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
4.3(b)***	Amended and Restated Intercreditor Agreement (2019-1), dated as of August 27, 2020, among JetBlue Airways Corporation, Wilmington Trust Company, as Trustee of the JetBlue Airways Pass Through Trust 2019-1AA, the JetBlue Airways Pass Through Trust 2019-1A and the JetBlue Airways Pass Through Trust 2019-1B, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class AA Liquidity Provider, Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent-incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
4.3(c)***	Revolving Credit Agreement (2019-1B), dated as of August 27, 2020, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2019-1B and as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class B Liquidity Provider-incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
4.3(d)*, ****	First Amendment to Participation Agreement (N976JT), dated as of August 27, 2020, among JetBlue Airways Corporation, Wilmington Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein-incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
4.3(e)******	First Amendment to Indenture and Security Agreement (N976JT), dated as of August 27, 2020, between JetBlue Airways Corporation and Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.7 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
~~4.3(f)~~	~~Form of Series 2019-1 Equipment Notes (incorporated by reference to~~ ~~Exhibit 4.11~~ ~~to our Form 8-K filed on November 12, 2019, as amended by~~ ~~Exhibit 4.7~~ ~~to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020)~~
4.3(g)******	Schedule I (setting forth the details by which the documents referred to therein differ from the corresponding representative sample of documents included as Exhibits 4.3(d) and 4.3(e) with respect to Aircraft bearing Registration No. N976JT)-incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020
~~10.1*†~~	Loan and Guarantee Agreement, dated as of ~~September 29, 2020, among~~January 15, 2021, between JetBlue Airways Corporation ~~as Borrower, the Subsidiaries of JetBlue Airways party thereto from time to time, as Guarantors,~~and the United States Department of the Treasury ~~as Lender, and The Bank of New York Mellon as Administrative Agent and Collateral Agent~~
10.2*10.4†		~~Amended and Restated JetBlue Airways Corporation Severance Plan dated July 8, 2020~~Form of Performance-Contingent Executive Retention Award Agreement
~~10.3,~~ ~~*~~ 31.1		~~Northeast Alliance Agreement, dated as of July 15, 2020, between JetBlue Airways Corporation and American Airlines, Inc.~~
~~10.4,~~ ~~**~~	~~Codeshare Agreement, dated as of July 15, 2020 between, JetBlue Airways Corporation and American Airlines, Inc.~~
~~10.5,~~ ~~**~~	~~Mutual Growth Incentive Agreement, dated as of July 15, 2020, between JetBlue Airways Corporation and American Airlines, Inc.~~
31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2*		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32**		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

~~Table of Contents~~


101.LAB
~~101.LAB~~	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)
†		~~Pursuant to Item 601(a)(5)~~Compensatory plans in which the directors and executive officers of ~~Regulation S-K, schedules have been omitted and will be furnished on a supplemental basis to the Securities and Exchange Commission upon request.~~JetBlue participate.
*		~~Filed herewith.~~
**		~~Furnished~~Filed herewith.
***		Certain confidential information contained in this exhibit, marked by [***], has been omitted because it (i) is not material and (ii) would likely cause competitive harm to the Company if it were to be publicly disclosed.Furnished herewith.
~~****~~		Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.2(l), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N946JL) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.9 and 4.10 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.1 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.9 and 4.10 with respect to Aircraft bearing Registration No. N946JL.
~~*****~~	Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.2(m), incorporated herein by reference to Exhibit 99.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N2002J) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.11 and 4.12 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.2 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.11 and 4.12 with respect to Aircraft bearing Registration No. N2002J.
~~******~~	Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(g), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 28, 2020 and filed on August 28, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N976JT) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2019-1B, which documents are substantially identical to those which were filed as Exhibits 4.6 and 4.7 to our Current Report on Form 8-K dated August 28, 2020 and filed on August 28, 2020, incorporated by reference herein, except for the information identifying such Aircraft in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.3 sets forth the details by which such documents differ from the corresponding representative sample of documents filed as Exhibits 4.6 and 4.7 with respect to Aircraft bearing Registration No. N976JT.

6241

Table of Contents

SIGNATURE

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

JETBLUE AIRWAYS CORPORATION

(Registrant)

Date:

~~November 9, 2020~~April 30, 2021

By:

/s/ Alexander Chatkewitz

Vice President, Controller, and

Chief Accounting Officer

(Principal Accounting Officer)

6342



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

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



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


			Page
			~~Page~~
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			3
Consolidated Balance Sheets - ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020			3
Consolidated Statements of Operations - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~			5
Consolidated Statements of Comprehensive ~~Income~~Loss - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~			6
Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~			7
Consolidated Statements of Stockholders' Equity - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~			98
Notes to Condensed Consolidated Financial Statements			109
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			3123
Item 3. Quantitative and Qualitative Disclosures About Market Risk			5438
Item 4. Controls and Procedures			5438

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			5539
Item 1A. Risk Factors			5539
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5939
Item 5. Other Information			39
Item 6. Exhibits			5940

SIGNATURE			42


	March 31, 2021		December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,358	$	1,918
Investment securities	867		1,135
Receivables, less allowance (2021-$2; 2020-$2)	153		98
Inventories, less allowance (2021-$28; 2020-$27)	68		71
Prepaid expenses and other	162		123
Total current assets	3,608		3,345
PROPERTY AND EQUIPMENT
Flight equipment	10,466		10,256
Predelivery deposits for flight equipment	393		420
Total flight equipment and predelivery deposits, gross	10,859		10,676
Less accumulated depreciation	2,968		2,888
Total flight equipment and predelivery deposits, net	7,891		7,788
Other property and equipment	1,225		1,202
Less accumulated depreciation	610		591
Total other property and equipment, net	615		611
Total property and equipment, net	8,506		8,399
OPERATING LEASE ASSETS	772		804
OTHER ASSETS
Investment securities	0		2
Restricted cash	52		51
Intangible assets, net of accumulated amortization of $368 and $360, at 2021 and 2020, respectively.	243		261
Other	479		544
Total other assets	774		858
TOTAL ASSETS	$	13,660	$	13,406



	September 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,453	$	959
Investment securities	566		369
Receivables, less allowance (2020-$2; 2019-$1)	91		231
Inventories, less allowance (2020-$26; 2019-$22)	70		81
Prepaid expenses and other	275		146
Total current assets	3,455		1,786
PROPERTY AND EQUIPMENT
Flight equipment	10,103		10,332
Predelivery deposits for flight equipment	441		433
Total flight equipment and predelivery deposits, gross	10,544		10,765
Less accumulated depreciation	2,799		2,768
Total flight equipment and predelivery deposits, net	7,745		7,997
Other property and equipment	1,210		1,145
Less accumulated depreciation	580		528
Total other property and equipment, net	630		617
Total property and equipment, net	8,375		8,614
OPERATING LEASE ASSETS	833		912
OTHER ASSETS
Investment securities	3		3
Restricted cash	52		59
Other	715		544
Total other assets	770		606
TOTAL ASSETS	$	13,433	$	11,918


	March 31, 2021		December 31, 2020
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	375	$	365
Air traffic liability	1,405		1,122
Accrued salaries, wages and benefits	413		409
Other accrued liabilities	363		215
Current operating lease liabilities	112		113
Current maturities of long-term debt and finance lease obligations	463		450
Total current liabilities	3,131		2,674
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	4,619		4,413
LONG-TERM OPERATING LEASE LIABILITIES	725		752
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes	826		922
Air traffic liability - non-current	573		616
Other	72		78
Total deferred taxes and other liabilities	1,471		1,616
COMMITMENTS AND CONTINGENCIES (Note 6)	0		0
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued	0		0
Common stock, $0.01 par value; 900 shares authorized, 475 and 474 shares issued and 317 and 316 shares outstanding at March 31, 2021 and December 31, 2020, respectively	5		5
Treasury stock, at cost; 158 and 158 shares at March 31, 2021 and December 31, 2020, respectively	(1,987)		(1,981)
Additional paid-in capital	2,975		2,959
Retained earnings	2,721		2,968
Accumulated other comprehensive income	0		0
Total stockholders’ equity	3,714		3,951
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,660	$	13,406


	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at December 31, 2020	474	$	5	158	$	(1,981)	$	2,959	$	2,968	$	0	$	3,951
Net loss	—	—		—	—		—		(247)		—		(247)
Other comprehensive income	—	—		—	—		—		—		0		0
Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)
Stock compensation expense	—	—		—	—		8		—		—		8
Warrants issued under federal support programs	—	—		—	—		8		—		—		8
Balance at March 31, 2021	475	$	5	158	$	(1,987)	$	2,975	$	2,721	$	0	$	3,714

	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2019	427	$	4	145	$	(1,782)	$	2,253	$	4,322	$	2	$	4,799
Net loss	—	—		—	—		—		(268)		—		(268)
Other comprehensive loss	—	—		—	—		—		—		(8)		(8)
Vesting of restricted stock units	1	—		—	(6)		—		—		—		(6)
Stock compensation expense	—	—		—	—		9		—		—		9
Shares repurchased	—	—		13	(192)		32		—		—		(160)
Balance at March 31, 2020	428	$	4	158	$	(1,980)	$	2,294	$	4,054	$	(6)	$	4,366



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

Balance at December 31, 2018	$	580
TrueBlue^® points redeemed	(275		)
TrueBlue^® points earned and sold	342
Balance at September 30, 2019	$	647



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

Balance of accumulated income at June 30, 2019	$	1		$	1
Reclassifications into earnings, net of deferred taxes of $0	0			0
Change in fair value, net of deferred taxes of $0	(2		)	(2		)
Balance of accumulated (loss) at September 30, 2019	$	(1	)	$	(1	)


•	~~Losses of~~ ~~$106 million~~ ~~related to sale-leaseback transactions.~~


	Payments due in															Payments due in
	Total		2020		2021		2022		2023		2024		Thereafter			Total		2021		2022		2023		2024		2025		Thereafter
Debt and finance lease obligations⁽¹⁾	$	5.7	$	0.1	$	0.6	$	0.6	$	1.2	$	1.1	$	2.1	Debt and finance lease obligations(1)	$	6.1	$	0.5	$	0.6	$	0.8	$	1.1	$	0.4	$	2.7
Operating lease obligations	1.2		—		0.2		0.2		0.1		0.1		0.6		Operating lease obligations	1.1		0.1		0.2		0.1		0.1		0.1		0.5
Flight equipment purchase obligations⁽²⁾	7.8		0.2		1.0		0.9		1.7		1.9		2.1		Flight equipment purchase obligations(2)	7.7		0.7		0.8		1.6		1.8		1.2		1.6
Other obligations⁽³⁾	2.6		0.1		0.3		0.4		0.4		0.4		1.0		Other obligations(3)	2.6		0.3		0.4		0.4		0.4		0.4		0.7
Total	$	17.3	$	0.4	$	2.1	$	2.1	$	3.4	$	3.5	$	5.8	Total	$	17.5	$	1.6	$	2.0	$	2.9	$	3.4	$	2.1	$	5.5



Year	Airbus A321neo	Airbus A220	Total
2020	2	1	3
2021	10	7	17
2022	7	8	15
2023	15	19	34
2024	15	22	37
2025	13	12	25
2026	12	1	13
Total	74	70	144



NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY METHOD INVESTMENTS
	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	2020			2019			2020			2019
Total operating revenues	$	492		$	2,086		$	2,295		$	6,063

Total operating expenses	$	1,008		$	1,839		$	3,555		$	5,490
Less: Special items	(112		)	—			(214		)	14
Total operating expenses excluding special items	$	1,120		$	1,839		$	3,769		$	5,476

Operating (loss) income	$	(516	)	$	247		$	(1,260	)	$	573
Add back: Special items	(112		)	—			(214		)	14
Operating (loss) income excluding special items	$	(628	)	$	247		$	(1,474	)	$	587

Operating margin excluding special items	(127.6		)%	11.8		%	(64.2		)%	9.7		%

(Loss) income before income taxes	$	(578	)	$	254		$	(1,381	)	$	548
Add back: Special items	(112		)	—			(214		)	14
Less: Gain on equity method investments	—			15			—			15
(Loss) income before income taxes excluding special items and gain on equity method investments	$	(690	)	$	239		$	(1,595	)	$	547

Pre-tax margin excluding special items and gain on equity method investments	(140.1		)%	11.4		%	(69.5		)%	9.0		%

Net (loss) income	$	(393	)	$	187		$	(981	)	$	408
Add back: Special items	(112		)	—			(214		)	14
Less: Income tax (expense) benefit related to special items	(28		)	—			(53		)	3
Less: Gain on equity method investments	—			15			—			15
Less: Income tax (expense) related to gain on equity method investments	—			(4		)	—			(4		)
Net (loss) income excluding special items and gain on equity method investments	$	(477	)	$	176		$	(1,142	)	$	408



(Loss) Earnings Per Common Share:
Basic	$	(1.44	)	$	0.63	$	(3.58	)	$	1.36
Add back: Special items, net of tax	(0.31		)	—		(0.58		)	0.03
Less: Gain on equity method investments, net of tax	—			0.04		—			0.04
Basic excluding special items and gain on equity method investments	$	(1.75	)	$	0.59	$	(4.16	)	$	1.35

Diluted	$	(1.44	)	$	0.63	$	(3.58	)	$	1.35
Add back: Special items, net of tax	(0.31		)	—		(0.58		)	0.03
Less: Gain on equity method investments, net of tax	—			0.04		—			0.03
Diluted excluding special items and gain on equity method investments	$	(1.75	)	$	0.59	$	(4.16	)	$	1.35