UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2021

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

For the transition period from __________ to__________

Commission File Number: 000-49728

JETBLUE AIRWAYS CORPORATION

(Exact name of registrant as specified in its charter)


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

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

(718) 286-7900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~June~~September 30, 2021, there were ~~318,022,154~~318,030,520 shares outstanding of the registrant’s common stock, par value $0.01.

Table of Contents

JETBLUE AIRWAYS CORPORATION

FORM 10-Q

INDEX


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			3
Consolidated Balance Sheets - ~~June~~September 3 0 ,30, 2021 and December 31, 2020			3
Consolidated Statements of Operations - ~~Three~~ Three and ~~Six~~ Nine Months Ended ~~June~~September 3 0 ,30, 2021 and 2020			5
Consolidated Statements of Comprehensive Income - Three and ~~and Six~~ Nine Months Ended ~~June 30~~September ,30, 2021 and 2020			6
Condensed Consolidated Statements of Cash Flows - ~~Six~~Nine Months Ended ~~June~~September 3 0 ,30, 2021 and 2020			7
Consolidated Statements of Stockholders' Equity - Three and ~~and Six~~Nine Months Ended ~~June~~September 3 0 ,30, 2021 and 2020			89
Notes to Condensed Consolidated Financial Statements			910
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2526
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4344
Item 4. Controls and Procedures			4344

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			4445
Item 1A. Risk Factors			4445
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4447
Item 5. Other Information			4448
Item 6. Exhibits			4448

SIGNATURE			4450

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	2,409	$	1,918	Cash and cash equivalents	$	2,193	$	1,918
Investment securities	Investment securities	1,317		1,135		Investment securities	1,100		1,135
Receivables, net of allowance of $2, at June 30, 2021 and December 31, 2020, respectively.		276		98
Inventories, net of allowance of $22 and $27, at June 30, 2021 and December 31, 2020, respectively.		59		71
Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively.						Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively.	210		98
Inventories, net of allowance of $23 and $27, at September 30, 2021 and December 31, 2020, respectively.						Inventories, net of allowance of $23 and $27, at September 30, 2021 and December 31, 2020, respectively.	64		71
Prepaid expenses and other	Prepaid expenses and other	135		123		Prepaid expenses and other	123		123
Total current assets	Total current assets	4,196		3,345		Total current assets	3,690		3,345
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT					PROPERTY AND EQUIPMENT
Flight equipment	Flight equipment	10,793		10,256		Flight equipment	11,031		10,256
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	343		420		Predelivery deposits for flight equipment	339		420
Total flight equipment and predelivery deposits, gross	Total flight equipment and predelivery deposits, gross	11,136		10,676		Total flight equipment and predelivery deposits, gross	11,370		10,676
Less accumulated depreciation	Less accumulated depreciation	3,047		2,888		Less accumulated depreciation	3,131		2,888
Total flight equipment and predelivery deposits, net	Total flight equipment and predelivery deposits, net	8,089		7,788		Total flight equipment and predelivery deposits, net	8,239		7,788
Other property and equipment	Other property and equipment	1,219		1,202		Other property and equipment	1,199		1,202
Less accumulated depreciation	Less accumulated depreciation	629		591		Less accumulated depreciation	644		591
Total other property and equipment, net	Total other property and equipment, net	590		611		Total other property and equipment, net	555		611
Total property and equipment, net	Total property and equipment, net	8,679		8,399		Total property and equipment, net	8,794		8,399
OPERATING LEASE ASSETS	OPERATING LEASE ASSETS	742		804		OPERATING LEASE ASSETS	750		804
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Investment securities	Investment securities	1		2		Investment securities	1		2
Restricted cash	Restricted cash	53		51		Restricted cash	59		51
Intangible assets, net of accumulated amortization of $379 and $360, at June 30, 2021 and December 31, 2020, respectively.		264		261
Intangible assets, net of accumulated amortization of $392 and $360, at September 30, 2021 and December 31, 2020, respectively.						Intangible assets, net of accumulated amortization of $392 and $360, at September 30, 2021 and December 31, 2020, respectively.	283		261
Other	Other	480		544		Other	492		544
Total other assets	Total other assets	798		858		Total other assets	835		858
TOTAL ASSETS	TOTAL ASSETS	$	14,415	$	13,406	TOTAL ASSETS	$	14,069	$	13,406

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	530	$	365	Accounts payable	$	575	$	365
Air traffic liability	Air traffic liability	1,880		1,122		Air traffic liability	1,679		1,122
Accrued salaries, wages and benefits	Accrued salaries, wages and benefits	435		409		Accrued salaries, wages and benefits	465		409
Other accrued liabilities	Other accrued liabilities	584		215		Other accrued liabilities	348		215
Current operating lease liabilities	Current operating lease liabilities	112		113		Current operating lease liabilities	108		113
Current maturities of long-term debt and finance lease obligations	Current maturities of long-term debt and finance lease obligations	432		450		Current maturities of long-term debt and finance lease obligations	391		450
Total current liabilities	Total current liabilities	3,973		2,674		Total current liabilities	3,566		2,674
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,998		4,413		LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,760		4,413
LONG-TERM OPERATING LEASE LIABILITIES	LONG-TERM OPERATING LEASE LIABILITIES	697		752		LONG-TERM OPERATING LEASE LIABILITIES	712		752
DEFERRED TAXES AND OTHER LIABILITIES	DEFERRED TAXES AND OTHER LIABILITIES					DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes	Deferred income taxes	830		922		Deferred income taxes	882		922
Air traffic liability - non-current	Air traffic liability - non-current	589		616		Air traffic liability - non-current	618		616
Other	Other	515		78		Other	582		78
Total deferred taxes and other liabilities	Total deferred taxes and other liabilities	1,934		1,616		Total deferred taxes and other liabilities	2,082		1,616
COMMITMENTS AND CONTINGENCIES (Note 6)	COMMITMENTS AND CONTINGENCIES (Note 6)	0		0		COMMITMENTS AND CONTINGENCIES (Note 6)	0		0
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued	Preferred stock, $0.01 par value; 25 shares authorized, none issued	0		0		Preferred stock, $0.01 par value; 25 shares authorized, none issued	—		—
Common stock, $0.01 par value; 900 shares authorized, 476 and 474 shares issued and 318 and 316 shares outstanding at June 30, 2021 and December 31, 2020, respectively		5		5
Treasury stock, at cost; 158 and 158 shares at June 30, 2021 and December 31, 2020, respectively		(1,989)		(1,981)
Common stock, $0.01 par value; 900 shares authorized, 476 and 474 shares issued and 318 and 316 shares outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock, $0.01 par value; 900 shares authorized, 476 and 474 shares issued and 318 and 316 shares outstanding at September 30, 2021 and December 31, 2020, respectively	5		5
Treasury stock, at cost; 158 and 158 shares at September 30, 2021 and December 31, 2020, respectively						Treasury stock, at cost; 158 and 158 shares at September 30, 2021 and December 31, 2020, respectively	(1,989)		(1,981)
Additional paid-in capital	Additional paid-in capital	3,012		2,959		Additional paid-in capital	3,018		2,959
Retained earnings	Retained earnings	2,785		2,968		Retained earnings	2,915		2,968
Accumulated other comprehensive income	Accumulated other comprehensive income	0		0		Accumulated other comprehensive income	—		—
Total stockholders’ equity	Total stockholders’ equity	3,813		3,951		Total stockholders’ equity	3,949		3,951
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	14,415	$	13,406	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	14,069	$	13,406

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
OPERATING REVENUES	OPERATING REVENUES									OPERATING REVENUES
Passenger	Passenger	$	1,388	$	170	$	2,058	$	1,682	Passenger	$	1,856	$	445	$	3,913	$	2,126
Other	Other	111		45		174		121		Other	116		47		290		169
Total operating revenues	Total operating revenues	1,499		215		2,232		1,803		Total operating revenues	1,972		492		4,203		2,295
OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Aircraft fuel and related taxes	Aircraft fuel and related taxes	336		29		530		394		Aircraft fuel and related taxes	443		102		973		496
Salaries, wages and benefits	Salaries, wages and benefits	577		477		1,098		1,078		Salaries, wages and benefits	620		482		1,718		1,560
Landing fees and other rents	Landing fees and other rents	174		62		289		174		Landing fees and other rents	182		84		470		258
Depreciation and amortization	Depreciation and amortization	133		140		258		279		Depreciation and amortization	140		127		398		407
Aircraft rent	Aircraft rent	26		16		50		37		Aircraft rent	25		23		76		60
Sales and marketing	Sales and marketing	47		8		70		60		Sales and marketing	60		24		130		84
Maintenance, materials and repairs	Maintenance, materials and repairs	164		73		268		233		Maintenance, materials and repairs	205		111		472		344
Other operating expenses	Other operating expenses	261		124		471		394		Other operating expenses	297		167		768		560
Special items	Special items	(366)		(304)		(655)		(102)		Special items	(186)		(112)		(841)		(214)
Total operating expenses	Total operating expenses	1,352		625		2,379		2,547		Total operating expenses	1,786		1,008		4,164		3,555
OPERATING INCOME (LOSS)	OPERATING INCOME (LOSS)	147		(410)		(147)		(744)		OPERATING INCOME (LOSS)	186		(516)		39		(1,260)
OTHER EXPENSE
OTHER INCOME (EXPENSE)										OTHER INCOME (EXPENSE)
Interest expense	Interest expense	(54)		(40)		(112)		(65)		Interest expense	(42)		(56)		(153)		(121)
Capitalized interest	Capitalized interest	3		3		6		7		Capitalized interest	3		3		9		10
Gain on equity investments										Gain on equity investments	54		—		54		—
Interest income and other expenses	Interest income and other expenses	(39)		(3)		(37)		(2)		Interest income and other expenses	(11)		(9)		(49)		(10)
Total other expense		(90)		(40)		(143)		(60)
Total other income (expense)										Total other income (expense)	4		(62)		(139)		(121)
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	57		(450)		(290)		(804)		INCOME (LOSS) BEFORE INCOME TAXES	190		(578)		(100)		(1,381)
Income tax benefit		(7)		(130)		(107)		(216)
Income tax expense (benefit)										Income tax expense (benefit)	60		(185)		(47)		(400)
NET INCOME (LOSS)	NET INCOME (LOSS)	$	64	$	(320)	$	(183)	$	(588)	NET INCOME (LOSS)	$	130	$	(393)	$	(53)	$	(981)

EARNINGS (LOSS) PER COMMON SHARE:	EARNINGS (LOSS) PER COMMON SHARE:									EARNINGS (LOSS) PER COMMON SHARE:
Basic	Basic	$	0.20	$	(1.18)	$	(0.58)	$	(2.14)	Basic	$	0.41	$	(1.44)	$	(0.17)	$	(3.58)
Diluted	Diluted	$	0.20	$	(1.18)	$	(0.58)	$	(2.14)	Diluted	$	0.40	$	(1.44)	$	(0.17)	$	(3.58)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)


		Three Months Ended June 30,					Three Months Ended September 30,
		2021		2020			2021		2020
NET INCOME (LOSS)	NET INCOME (LOSS)	$	64	$	(320)	NET INCOME (LOSS)	$	130	$	(393)
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $(1) in 2021 and 2020, respectively	Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $(1) in 2021 and 2020, respectively	0		3		Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $(1) in 2021 and 2020, respectively	—		1
Total other comprehensive income	Total other comprehensive income	0		3		Total other comprehensive income	—		1
COMPREHENSIVE INCOME (LOSS)	COMPREHENSIVE INCOME (LOSS)	$	64	$	(317)	COMPREHENSIVE INCOME (LOSS)	$	130	$	(392)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2021		2020			2021		2020
NET LOSS	NET LOSS	$	(183)	$	(588)	NET LOSS	$	(53)	$	(981)
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $3 in 2021 and 2020, respectively		0		(5)
Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $1 in 2021 and 2020, respectively						Changes in fair value of derivative instruments, net of reclassifications into earnings, net of deferred taxes of $0 and $1 in 2021 and 2020, respectively	—		(4)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	0		(5)		Total other comprehensive income (loss)	—		(4)
COMPREHENSIVE LOSS	COMPREHENSIVE LOSS	$	(183)	$	(593)	COMPREHENSIVE LOSS	$	(53)	$	(985)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2021		2020			2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	Net loss	$	(183)	$	(588)	Net loss	$	(53)	$	(981)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes	Deferred income taxes	(93)		(198)		Deferred income taxes	(40)		(351)
Impairment of long-lived assets	Impairment of long-lived assets	0		202		Impairment of long-lived assets	—		258
Depreciation	Depreciation	238		255		Depreciation	365		374
Amortization	Amortization	20		24		Amortization	33		33
Stock-based compensation	Stock-based compensation	17		15		Stock-based compensation	23		20
Changes in certain operating assets and liabilities	Changes in certain operating assets and liabilities	1,439		147		Changes in certain operating assets and liabilities	1,438		242
Deferred federal payroll support program grants	Deferred federal payroll support program grants	185		363		Deferred federal payroll support program grants	—		49
Losses on sale-leaseback transactions						Losses on sale-leaseback transactions	—		106
Other, net	Other, net	35		3		Other, net	(11)		27
Net cash provided by operating activities		1,658		223
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	1,755		(223)
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(524)		(377)		Capital expenditures	(770)		(529)
Predelivery deposits for flight equipment	Predelivery deposits for flight equipment	(16)		(57)		Predelivery deposits for flight equipment	(33)		(67)

Proceeds from the maturities of held-to-maturity investments						Proceeds from the maturities of held-to-maturity investments	—		21
Purchase of available-for-sale securities	Purchase of available-for-sale securities	(520)		(861)		Purchase of available-for-sale securities	(520)		(1,162)
Proceeds from the sale of available-for-sale securities	Proceeds from the sale of available-for-sale securities	340		890		Proceeds from the sale of available-for-sale securities	590		944

Proceeds from sale-leaseback transactions						Proceeds from sale-leaseback transactions	—		209
Other, net	Other, net	(2)		0		Other, net	(2)		(1)
Net cash used in investing activities	Net cash used in investing activities	(722)		(405)		Net cash used in investing activities	(735)		(585)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	1,010		1,517		Proceeds from issuance of long-term debt	1,010		2,541
Proceeds from short-term borrowings	Proceeds from short-term borrowings	0		981		Proceeds from short-term borrowings	—		981
Proceeds from sale-leaseback transactions	Proceeds from sale-leaseback transactions	0		118		Proceeds from sale-leaseback transactions	—		236
Proceeds from issuance of common stock	Proceeds from issuance of common stock	22		22		Proceeds from issuance of common stock	22		22
Proceeds from issuance of stock warrants	Proceeds from issuance of stock warrants	14		18		Proceeds from issuance of stock warrants	14		28
Repayment of long-term debt and finance lease obligations	Repayment of long-term debt and finance lease obligations	(1,481)		(177)		Repayment of long-term debt and finance lease obligations	(1,775)		(272)
Repayment of short-term borrowings	Repayment of short-term borrowings	0		(3)		Repayment of short-term borrowings	—		(1,000)
Acquisition of treasury stock	Acquisition of treasury stock	(7)		(167)		Acquisition of treasury stock	(7)		(167)
Other, net	Other, net	(1)		0		Other, net	(1)		—
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(443)		2,309		Net cash (used in) provided by financing activities	(737)		2,369
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	493		2,127		INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	283		1,561
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	1,969		1,018		Cash, cash equivalents and restricted cash at beginning of period	1,969		1,018
Cash, cash equivalents and restricted cash at end of period(1)	Cash, cash equivalents and restricted cash at end of period(1)	$	2,462	$	3,145	Cash, cash equivalents and restricted cash at end of period(1)	$	2,252	$	2,579

SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest (net of amount capitalized)		$	97	$	45
Cash payments for income taxes (net of refunds)		0		0

NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities		$	0	$	2

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

		June 30, 2021		June 30, 2020
Cash and cash equivalents		$	2,409	$	2,561

Restricted cash		53		584
Total cash, cash equivalents and restricted cash		$	2,462	$	3,145

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)


	Nine Months Ended September 30,
	2021		2020
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest (net of amount capitalized)	$	121	$	37
Cash payments for income taxes (net of refunds)	—		—

NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities	$	—	$	144
Lease modifications and lease conversions	$	40	$	—

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

	September 30, 2021		September 30, 2020
Cash and cash equivalents	$	2,193	$	2,453
Short-term restricted cash recorded within prepaid expenses and other	—		74
Restricted cash	59		52
Total cash, cash equivalents and restricted cash	$	2,252	$	2,579

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in millions)


		Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total			Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at March 31, 2021		475	$	5	158	$	(1,987)	$	2,975	$	2,721	$	0	$	3,714
Balance at June 30, 2021																Balance at June 30, 2021	476	$	5	158	$	(1,989)	$	3,012	$	2,785	$	—	$	3,813
Net income	Net income	—	—		—	—		—		64		—		64		Net income	—	—		—	—		—		130		—		130

Stock compensation expense																Stock compensation expense	—	—		—	—		6		—		—		6

Balance at September 30, 2021																Balance at September 30, 2021	476	$	5	158	$	(1,989)	$	3,018	$	2,915	$	—	$	3,949

																	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at June 30, 2020																Balance at June 30, 2020	430	$	4	158	$	(1,981)	$	2,340	$	3,734	$	(3)	$	4,094
Net (loss)																Net (loss)	—	—		—	—		—		(393)		—		(393)
Other comprehensive income																Other comprehensive income	—	—		—	—		—		—		1		1
Vesting of restricted stock units																Vesting of restricted stock units	1	—		—	—		—		—		—		—
Stock compensation expense																Stock compensation expense	—	—		—	—		5		—		—		5

CARES Act warrant issuance																CARES Act warrant issuance	—	—		—	—		10		—		—		10
Balance at September 30, 2020																Balance at September 30, 2020	431	$	4	158	$	(1,981)	$	2,355	$	3,341	$	(2)	$	3,717

																	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance at December 31, 2020																Balance at December 31, 2020	474	$	5	158	$	(1,981)	$	2,959	$	2,968	$	—	$	3,951
Net (loss)																Net (loss)	—	—		—	—		—		(53)		—		(53)

Vesting of restricted stock units	Vesting of restricted stock units	0	—		—	(2)		—		—		—		(2)		Vesting of restricted stock units	1	—		—	(8)		—		—		—		(8)
Stock compensation expense	Stock compensation expense	—	—		—	—		9		—		—		9		Stock compensation expense	—	—		—	—		23		—		—		23
Stock issued under Crewmember stock purchase plan		1	—		—	—		22		—		—		22
Stock issued under Crewmember Stock Purchase Plan																Stock issued under Crewmember Stock Purchase Plan	1	—		—	—		22		—		—		22

Warrants issued under federal support programs	Warrants issued under federal support programs	—	—		—	—		6		—		—		6		Warrants issued under federal support programs	—	—		—	—		14		—		—		14
Balance at June 30, 2021		476	$	5	158	$	(1,989)	$	3,012	$	2,785	$	0	$	3,813

		Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at March 31, 2020		428	$	4	158	$	(1,980)	$	2,294	$	4,054	$	(6)	$	4,366
Net loss		—	—		—	—		—		(320)		—		(320)
Other comprehensive income		—	—		—	—		—		—		3		3
Vesting of restricted stock units		0	—		—	(1)		—		—		—		(1)
Stock compensation expense		—	—		—	—		6		—		—		6
Stock issued under Crewmember stock purchase plan		2	—		—	—		22		—		—		22
CARES Act warrant issuance		—	—		—	—		18		—		—		18
Balance at June 30, 2020		430	$	4	158	$	(1,981)	$	2,340	$	3,734	$	(3)	$	4,094

		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		—	—		—	—		—		(183)		—		(183)
Other comprehensive income		—	—		—	—		—		—		0		0
Vesting of restricted stock units		1	—		—	(8)		—		—		—		(8)
Stock compensation expense		—	—		—	—		17		—		—		17
Stock issued under Crewmember stock purchase plan		1	—		—	—		22		—		—		22
Shares repurchased		—	—		0	0		0		—		—		0
Warrants issued under federal support programs		—	—		—	—		14		—		—		14
Balance at June 30, 2021		476	$	5	158	$	(1,989)	$	3,012	$	2,785	$	0	$	3,813
Balance at September 30, 2021																Balance at September 30, 2021	476	$	5	158	$	(1,989)	$	3,018	$	2,915	$	—	$	3,949

		Common Shares	Common Stock		Treasury Shares	Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			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	Balance at December 31, 2019	427	$	4	145	$	(1,782)	$	2,253	$	4,322	$	2	$	4,799	Balance at December 31, 2019	427	$	4	145	$	(1,782)	$	2,253	$	4,322	$	2	$	4,799
Net loss		—	—		—	—		—		(588)		—		(588)
Net (loss)																Net (loss)	—	—		—	—		—		(981)		—		(981)
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		—		(5)		(5)		Other comprehensive loss	—	—		—	—		—		—		(4)		(4)
Vesting of restricted stock units	Vesting of restricted stock units	1	—		—	(7)		—		—		—		(7)		Vesting of restricted stock units	2	—		—	(7)		—		—		—		(7)
Stock compensation expense	Stock compensation expense	—	—		—	—		15		—		—		15		Stock compensation expense	—	—		—	—		20		—		—		20
Stock issued under Crewmember stock purchase plan		2	—		—	—		22		—		—		22
Stock issued under Crewmember Stock Purchase Plan																Stock issued under Crewmember Stock Purchase Plan	2	—		—	—		22		—		—		22
Shares repurchased	Shares repurchased	—	—		13	(192)		32		—		—		(160)		Shares repurchased	—	—		13	(192)		32		—		—		(160)
CARES Act warrant issuance	CARES Act warrant issuance							18						18		CARES Act warrant issuance	—	—		—	—		28		—		—		28
Balance at June 30, 2020		430	$	4	158	$	(1,981)	$	2,340	$	3,734	$	(3)	$	4,094
Balance at September 30, 2020																Balance at September 30, 2020	431	$	4	158	$	(1,981)	$	2,355	$	3,341	$	(2)	$	3,717

See accompanying notes to condensed consolidated financial statements.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

JetBlue Airways Corporation, or JetBlue, provides air transportation services across the United States, the Caribbean and Latin ~~America.~~America, and between New York and London. 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 2020 audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, or our 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, equity securities of publicly traded companies, and convertible debt securities. Our investments in equity securities of publicly traded companies are classified as Level 1 in the fair value hierarchy as their fair values are based on unadjusted quoted prices in active markets for identical assets. The fair values of ~~these instruments~~our time deposits and convertible debt securities are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the fair value hierarchy. We did 0tnot record any material gains or losses on these securities during the three and ~~six~~nine months ended ~~June~~September 30, 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 ~~June~~September 30, 2021 and December 31, 2020. We did 0tnot record any ~~significant~~ gains or losses on these securities during the three and ~~six~~nine months ended ~~June~~September 30, 2021 or 2020.

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


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Available-for-sale securities	Available-for-sale securities					Available-for-sale securities
Time deposits	Time deposits	$	1,311	$	1,130	Time deposits	$	1,060	$	1,130
Equity securities						Equity securities	36		—
Debt securities	Debt securities	7		7		Debt securities	5		7
Total available-for-sale securities	Total available-for-sale securities	1,318		1,137		Total available-for-sale securities	1,101		1,137
Total investment securities	Total investment securities	$	1,318	$	1,137	Total investment securities	$	1,101	$	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 $46 million and $40 million~~ ~~as of June 30, 2021 and December 31, 2020, respectively.~~

910

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

identifiable or similar investments of the same issuer. The carrying amount of these investments, which is included within other assets on our consolidated balance sheet, was $67 million and $40 million as of September 30, 2021 and December 31, 2020, respectively. We recognized a gain of $37 million on these investments during the three and nine months ended September 30, 2021. The gain was triggered by an observable transaction for a similar security issued by a company within the JTV investment portfolio which indicated a change in overall valuation. We estimated the fair value of our investment in the company using third party valuations and considered specific circumstances such as our expectation of a potential exit from the company, prices from previous issuances of equity securities, the rights and obligations of holders of similar securities within the company, and estimates of volatility. Due to the use of significant unobservable inputs, our investment is classified as Level 3 in the fair value hierarchy. In August 2021, we recognized a one-time gain of $17 million in connection with the initial public offering of a company within the JTV investment portfolio. The carrying value of this investment, which is included within short-term investment securities on our consolidated balance sheet, was $36 million as of September 30, 2021.

We have an approximate 10% ownership interest in the TWA Flight Center Hotel at John F. Kennedy International Airport and it is also accounted for under the measurement alternative. The carrying amount of this investment was $14 million as of ~~June~~September 30, 2021 and December 31, 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 Financial Accounting Standards Board (the "FASB") Accounting Standards Codification (the "Codification"). The carrying amount of our equity method investments was ~~$32~~$33 million and $34 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively, and is included within other assets on our consolidated balance sheets.

Recently 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. We adopted the requirements of ASU 2019-12 as of January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on our condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt —Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for 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 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 it is effective for 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 2020-06 as of January 1, 2021. The adoption did not have an impact on our condensed consolidated financial statements as we did not have any convertible instruments outstanding as of December 31, 2020. As discussed in Note 3 to our condensed consolidated financial statements, in March 2021, we completed a private offering for $750 million of 0.50% convertible notes due 2026. We evaluated the conversion feature of this note offering for embedded derivatives in accordance with ASC 815, Derivatives and Hedging, and the substantial premium model in accordance with ASC 470, Debt. Based on our assessment, we concluded that separate accounting for the conversion feature of this note offering is not required. The carrying value of this convertible note was included within long-term debt and finance lease obligations on our consolidated balance sheet as of ~~June~~September 30, 2021.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 2— Revenue Recognition

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Passenger revenue	Passenger revenue									Passenger revenue
Passenger travel	Passenger travel	$	1,322	$	145	$	1,945	$	1,553	Passenger travel	$	1,773	$	420	$	3,717	$	1,973
Loyalty revenue - air transportation	Loyalty revenue - air transportation	66		25		113		129		Loyalty revenue - air transportation	83		25		196		153
Other revenue	Other revenue									Other revenue
Loyalty revenue	Loyalty revenue	81		38		126		88		Loyalty revenue	80		38		206		127
Other revenue	Other revenue	30		7		48		33		Other revenue	36		9		84		42
Total revenue	Total revenue	$	1,499	$	215	$	2,232	$	1,803	Total revenue	$	1,972	$	492	$	4,203	$	2,295

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

In June 2021, the Company entered into an Amended and Restated Co-Branded Card Agreement with ~~Barclaycard®~~Barclaycard® (the "Co-Brand Agreement"). The Co-Brand Agreement, which amends and restates the existing ~~Barclaycard®~~Barclaycard® Co-Brand Agreement, extends the term to 2031 and modifies certain other terms. The terms of the Co-Brand Agreement are effective as of January 1, 2021. The performance obligations such as air transportation; use of the JetBlue brand name, and access to our frequent flyer customer lists; advertising; and other airline ~~benefits.~~benefits are consistent with the previous agreement. We continue to use the accounting method that allocates the consideration received based on the relative selling prices of those performance obligations. The increase in loyalty program revenues are primarily related to brand and non-air transportation elements. In addition, in July 2021, the Company entered into an Amended and Restated Co-Branded Card Agreement with ~~MasterCard®~~MasterCard® to continue our partnership as network provider under the Co-Brand ~~Agreements.~~Agreement.

Contract Liabilities

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


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Air traffic liability - passenger travel	Air traffic liability - passenger travel	$	1,628	$	964	Air traffic liability - passenger travel	$	1,416	$	964

Air traffic liability - loyalty program and deferred revenue	Air traffic liability - loyalty program and deferred revenue	1,350		825		Air traffic liability - loyalty program and deferred revenue	1,473		825
Total	Total	2,978		1,789		Total	$	2,889	$	1,789

During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we recognized passenger revenue of ~~$371~~$468 million and ~~$666~~$697 million respectively, that was included in passenger travel liability at the beginning of the respective periods.

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

TrueBlue® points are combined 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.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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


Balance at December 31, 2020	$	733
TrueBlue® points redeemed	~~(113)~~(196)
TrueBlue® points earned and sold	~~186~~308
Balance at ~~June~~September 30, 2021	$	~~806~~845

Balance at December 31, 2019	$	661
TrueBlue® points redeemed	~~(129)~~(153)
TrueBlue® points earned and sold	~~144~~195
Balance at ~~June~~September 30, 2020	$	~~676~~703

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.

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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 ~~six~~nine months ended ~~June~~September 30, 2021, we made payments of ~~$1.5~~$1.8 billion on our outstanding debt and finance lease ~~obligations.~~obligations and issued $1.0 billion of additional debt.

We had pledged aircraft, engines, other equipment, and facilities with a net book value of ~~$6.6~~$5.9 billion at ~~June~~September 30, 2021 as security under various financing arrangements.

At ~~June~~September 30, 2021, scheduled maturities of our long-term debt and finance lease obligations were ~~$218~~$130 million for the remainder of 2021, ~~$390~~$355 million in 2022, ~~$599~~$564 million in 2023, ~~$340~~$332 million in 2024, ~~$305~~$192 million in 2025, and $2.6 billion thereafter.

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


		June 30, 2021				December 31, 2020					September 30, 2021				December 31, 2020
		Carrying Value		Estimated Fair Value(2)		Carrying Value		Estimated Fair Value(2)			Carrying Value		Estimated Fair Value(2)		Carrying Value		Estimated Fair Value(2)
Public Debt	Public Debt									Public Debt
Fixed rate special facility bonds, due through 2036	Fixed rate special facility bonds, due through 2036	$	42	$	46	$	42	$	45	Fixed rate special facility bonds, due through 2036	$	42	$	46	$	42	$	45
Fixed rate enhanced equipment notes:	Fixed rate enhanced equipment notes:									Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	2019-1 Series AA, due through 2032	546		460		560		440		2019-1 Series AA, due through 2032	547		464		560		440
2019-1 Series A, due through 2028	2019-1 Series A, due through 2028	170		155		174		152		2019-1 Series A, due through 2028	170		157		174		152
2019-1 Series B, due through 2027	2019-1 Series B, due through 2027	101		133		107		139		2019-1 Series B, due through 2027	101		132		107		139
2020-1 Series A, due through 2032	2020-1 Series A, due through 2032	607		672		627		658		2020-1 Series A, due through 2032	607		675		627		658
2020-1 Series B, due through 2028	2020-1 Series B, due through 2028	161		216		170		223		2020-1 Series B, due through 2028	161		215		170		223
Non-Public Debt	Non-Public Debt									Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	Fixed rate enhanced equipment notes, due through 2023	100		102		114		116		Fixed rate enhanced equipment notes, due through 2023	88		89		114		116
Fixed rate equipment notes, due through 2028	Fixed rate equipment notes, due through 2028	796		806		891		1,017		Fixed rate equipment notes, due through 2028	675		680		891		1,017
Floating rate equipment notes, due through 2028	Floating rate equipment notes, due through 2028	128		126		152		144		Floating rate equipment notes, due through 2028	115		111		152		144
Floating rate term loan credit facility, due through 2024	Floating rate term loan credit facility, due through 2024	0		0		702		759		Floating rate term loan credit facility, due through 2024	—		—		702		759
Unsecured CARES Act Payroll Support Program loan, due through 2030	Unsecured CARES Act Payroll Support Program loan, due through 2030	259		222		259		207		Unsecured CARES Act Payroll Support Program loan, due through 2030	259		224		259		207
Secured CARES Act Loan, due through 2025	Secured CARES Act Loan, due through 2025	105		108		104		104		Secured CARES Act Loan, due through 2025	—		—		104		104
Citibank line of credit, due through 2023	Citibank line of credit, due through 2023	0		0		546		533		Citibank line of credit, due through 2023	—		—		546		533
2020 sale-leaseback transactions, due through 2024	2020 sale-leaseback transactions, due through 2024	350		387		352		393		2020 sale-leaseback transactions, due through 2024	348		382		352		393
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		123		0		0		Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031	144		124		—		—
0.50% convertible senior notes due 2026	0.50% convertible senior notes due 2026	734		675		0		0		0.50% convertible senior notes due 2026	735		680		—		—
Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		113		0		0		Unsecured American Rescue Plan Act of 2021 Payroll Support loan, due through 2031	132		114		—		—
Total(1)	Total(1)	$	4,375	$	4,344	$	4,800	$	4,930	Total(1)	$	4,124	$	4,093	$	4,800	$	4,930

(1) Total excludes finance lease obligations of $5527 million and $63 million at ~~June~~September 30, 2021 and December 31, 2020, respectively.

(2) The estimated fair values of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. The fair 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 8 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

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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.

~~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"). During the six months ended June 30, 2021, Treasury provided us with total payments of $580 million (the "Payroll Support 2 Payments") under the program, consisting of $436 million in grants and $144 million in unsecured term loans, with funding received on January 15, 2021, March 5, 2021 and April 29, 2021. 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 ("SOFR") plus 2.00% thereafter until January 15, 2031. In consideration for the Payroll Support 2 Payments, we issued warrants to purchase approximately 1.0 million shares of our common stock to 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.

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.

The carrying value relating to the payroll support extension grants were recorded within other accrued liabilities and were recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. The relative fair value of the warrants, estimated to be $9 million, were recorded within additional paid-in capital and reduced the total carrying value of the grants to $427 million. Proceeds from the payroll support extension grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. Our funding from the payroll support extension grants received under Payroll Support Program 2 was fully utilized as of June 30, 2021.

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.

0.50% Convertible Senior Notes due 2026

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

In March 2021, we completed a private offering for $750 million of 0.50% convertible notes due 2026. The notes are general senior unsecured ~~senior~~ obligations and will rank equal in right of payment with all of our existing and future senior unsecured indebtedness and senior in right of payment to our existing and future subordinated debt. The notes will effectively rank junior in right of payment to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all of our indebtedness and other liabilities. The net proceeds from this offering were approximately $734 million.

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

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

We are not required to 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 derivatives 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.

~~Unsecured American Rescue Plan Act~~Interest expense of ~~2021 Payroll Support Program~~

On May 6, 2021, we entered into a Payroll Support 3 Agreement (the "PSP3 Agreement") with Treasury governing our participation in the federal payroll support program for passenger air carriers under Section 7301 of the American Rescue Plan Act of 2021 (the "Payroll Support Program 3"). In the second quarter of 2021, Treasury provided us with total payments of $541$2 million ~~(the "Payroll Support 3 Payments") under the program, consisting of $409~~and $4 million in grants (the "PSP3 grants") and $132 million in unsecured term loans (the "PSP3 loans") with funding received on May 6, 2021 and June 3, 2021. The PSP3 loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until May 6, 2026, and the applicable SOFR plus 2.00% thereafter until May 6, 2031. In considerationwere recognized for the Payroll Support 3 Payments, we issued warrants (the "PSP3 warrants") to purchase approximately 0.7 million shares of our common stock to the Treasury at an exercise price of $19.90 per share. The PSP3 warrants will expire five years after issuancethree and ~~will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time.~~

The carrying value relating to the PSP3 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 $5 million, are recorded within additional paid-in capital and reduced the total carrying value of the grants to $404 million. Proceeds from the PSP3 grants and from the issuance of PSP3 warrants are classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. As of Junenine months ended September 30, 2021, respectively. Included within interest expense were $1 million and $2 million of debt issuance costs amortization for the ~~carrying value of our PSP3 grants was approximately $186 million.~~

~~The carrying value relating to the PSP3 loans is recorded within long-term debt~~three and ~~finance lease obligations on our consolidated balance sheets. The proceeds from the loans are classified as financing activities on our condensed consolidated statement of cash flows.~~nine months ended September 30, 2021, respectively.

Floating Rate Term Loan Credit Facility

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

On June 17, 2020, we entered into a $750 million term loan credit facility with Barclays Bank PLC, as administrative agent (the "Term Loan"). The loans thereunder ~~bear~~bore interest at a variable rate equal to LIBOR (subject to a 1.00% floor), or at our election, another rate, in each case, plus a specified margin. Our obligations were secured on a senior basis by airport takeoff and landing slots at LaGuardia Airport, John F. Kennedy International Airport, and Reagan National Airport and the right to use certain intellectual property assets comprising the JetBlue brand.

~~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 is subject to amortization payments~~Table 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.~~Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On June 17, 2021, the Company voluntarily repaid a portion of its outstanding borrowings under the Term Loan. On June 30, 2021, the Company repaid the full remaining amount of outstanding borrowings under the Term Loan, which, together with its repayment of June 17, 2021, totaled approximately $722 million, plus accrued interest and associated fees. As of June 30, 2021, all obligations under the Term Loan, including all pledges of collateral were terminated in full. As of September 30, 2021, we did not have a balance outstanding under the Term Loan.

~~The Coronavirus Aid, Relief, and Economic Security (CARES)~~Federal Payroll Support Programs

As a result of the adverse economic impact of COVID-19, we have received assistance under various payroll support programs provided by the federal government.

CARES Act – Payroll Support Program

On March 27, 2020, 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").

~~CARES Act Payroll Support Program~~

On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the United States Department of the Treasury ("Treasury") governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with ~~payments which totaled~~a total of approximately $963 million (the "Payroll Support Payments") consisting of $704 million in grants and $259 million in unsecured term ~~loans, with payments received on April 23, 2020 and September 30, 2020.~~loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until April 23, 2025, and the applicable ~~SOFR~~Secured Overnight Financing Rate ("SOFR") plus 2.00% thereafter until April 23, 2030. The principal amount may be repaid at any time prior to maturity at par. As part of the agreement, JetBlue issued to ~~the~~ Treasury warrants to acquire more than 2.7 million shares of our common stock under the program at an exercise price of $9.50 per share.

Consolidated Appropriations Act – Payroll Support Program 2

On January 15, 2021, we entered into a Payroll Support Program Extension Agreement (the "PSP Extension Agreement") with Treasury governing our participation in the federal Payroll Support Program for passenger air carriers under the United States Consolidated Appropriations Act, 2021 (the “Payroll Support Program 2"). Treasury provided us with a total of approximately $580 million (the "Payroll Support 2 Payments") under the program, consisting of $436 million in grants and $144 million in unsecured term loans, with funding received on January 15, 2021, March 5, 2021 and April 29, 2021. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until January 15, 2026, and the applicable SOFR plus 2.00% thereafter until January 15, 2031. In consideration for the Payroll Support 2 Payments, we issued warrants to purchase approximately 1.0 million shares of our common stock to Treasury at an exercise price of $14.43 per share.

American Rescue Plan Act – Payroll Support Program 3

On May 6, 2021, we entered into a Payroll Support 3 Agreement (the "PSP3 Agreement") with Treasury governing our participation in the federal payroll support program for passenger air carriers under Section 7301 of the American Rescue Plan Act of 2021 (the "Payroll Support Program 3"). Treasury provided us with a total of approximately $541 million (the "Payroll Support 3 Payments") under the program, consisting of $409 million in grants and $132 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until May 6, 2026, and the applicable SOFR plus 2.00% thereafter until May 6, 2031. In consideration for the Payroll Support 3 Payments, we issued warrants to purchase approximately 0.7 million shares of our common stock to Treasury at an exercise price of $19.90 per share.

The warrants associated with each of the payroll support programs described above will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time.

The carrying ~~value~~values relating to the payroll support grants ~~was~~were recorded within other accrued liabilities and ~~was~~were recognized as a contra-expense within special items on our consolidated statements of operations as the funds were utilized. The relative fair value of the warrants ~~estimated to be $19 million, was~~were recorded within additional paid-in capital and reduced the total carrying value of the ~~grants to $685 million.~~grants. Proceeds from the payroll support grants and from the issuance of payroll support warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. Our funding from ~~the~~all payroll support grants ~~under the CARES Act~~ were fully utilized as of ~~December 31, 2020.~~September 30, 2021.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The carrying ~~value~~values relating to the unsecured ~~term~~payroll support loans iswere 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.

~~Secured~~ CARES Act – Secured Loan Program

Under the CARES Act Loan Program, JetBlue had the ability to borrow up to a total of approximately $1.9 billion from ~~the~~ Treasury. We entered into a loan and guarantee agreement (the "Loan Agreement") with ~~the~~ Treasury and made an initial drawing of $115 million under the CARES Act Loan Program on September 29, 2020. In connection with this initial drawing, we entered into a warrant agreement with Treasury, pursuant to which we issued to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share. The warrants will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time.

~~Unless otherwise terminated early, all~~On September 15, 2021, the Company repaid the full amount of outstanding borrowings under the ~~CARES Act~~ Loan ~~Program are due~~Agreement, which, together with accrued interest and ~~payable on the fifth anniversary~~fees, totaled approximately $118 million. As of ~~the initial borrowing date. Borrowings bear interest at~~September 30, 2021, we did not have 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~~balance outstanding and all obligations under the ~~CARES Act~~ Loan ~~Program are secured by liens on (i) certain eligible aircraft and engine~~Agreement, including all pledges of collateral, ~~and (ii) certain cash accounts (collectively, the "Collateral"). Under the terms of the CARES Act Loan Program, we~~

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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 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 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 Program or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio. The CARES Act Loan 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 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 loanswere terminated in ~~full under the CARES Act Loan Program.~~

In May 2021, we notified the Treasury of our intent to forego our remaining borrowing capacity of approximately $1.8 billion and subsequently on June 2, 2021 the liens on certain eligible engines and certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, were released from the Collateral.

~~As of June 30, 2021, $115 million remained outstanding under the Loan Agreement.~~full.

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.~~semi-annually in arrears.

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.~~semi-annually in arrears.

2020 Sale-Leaseback Transactions

In 2020, we executed $563 million of aircraft sale-leaseback transactions. 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 consolidated statements of cash flows. The remaining $209 million of sale-leaseback transactions qualified as sales and generated a loss of $106 million. The assets associated with 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 consolidated statements of cash flows.

We did not execute any sale-leaseback transactions induring the ~~second quarter~~ ofnine months ended September 30, 2021.

Citibank Revolving Credit Agreement

We have a revolving Credit and Guaranty Agreement with Citibank N.A. as the administrative agent, for up to $550 million (the "Revolving Facility"). The term of the Revolving Facility runs through August 2023. Borrowings under the Revolving Facility bear interest at a variable rate equal to LIBOR, plus a margin. The Revolving Facility is secured by aircraft, simulators, and certain other assets as permitted thereunder. The Revolving Facility includes covenants that require us to maintain certain minimum balances in unrestricted cash, cash equivalents, and unused commitments available under revolving credit facilities. In addition, the covenants restrict our ability to, among other things, dispose of certain collateral, or merge, consolidate, or sell assets.

We borrowed the full amount of $550 million under this revolving credit facility on April 22, 2020.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

We ~~borrowed the full amount of $550 million under this revolving credit facility on April 22, 2020.~~

We repaid the full balance of this facility in the first quarter of ~~2021 and all the collateral securing the borrowings under the facility has been released.~~2021. As of and for the quarter ended ~~June~~September 30, 2021, we did not have a balance outstanding or any borrowings under the Revolving Facility.

Short-term Borrowings

Morgan Stanley Line of Credit

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

Note 4—Earnings (Loss) Per Share

Basic earnings per share is calculated by dividing net income (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 Company's Crewmember Stock Purchase Plan, convertible notes, warrants issued under various federal payroll support programs, and any other potentially dilutive instruments using the treasury stock and if-converted methods. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were ~~1.2~~1.9 million for the three months ended ~~June~~September 30, 2020. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were ~~3.6~~3.5 million and ~~1.6~~1.7 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and ~~June~~September 30, 2020, respectively.

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Net income (loss)	Net income (loss)	$	64	$	(320)	$	(183)	$	(588)	Net income (loss)	$	130	$	(393)	$	(53)	$	(981)

Weighted average basic shares	Weighted average basic shares	317.7		271.7		317.0		275.1		Weighted average basic shares	318.0		272.4		317.3		274.3
Effect of dilutive securities	Effect of dilutive securities	3.8		0		0		0		Effect of dilutive securities	3.3		—		—		—
Weighted average diluted shares	Weighted average diluted shares	321.5		271.7		317.0		275.1		Weighted average diluted shares	321.3		272.4		317.3		274.3

Earnings (loss) per common share:	Earnings (loss) per common share:									Earnings (loss) per common share:
Basic	Basic	$	0.20	$	(1.18)	$	(0.58)	$	(2.14)	Basic	$	0.41	$	(1.44)	$	(0.17)	$	(3.58)
Diluted	Diluted	$	0.20	$	(1.18)	$	(0.58)	$	(2.14)	Diluted	$	0.40	$	(1.44)	$	(0.17)	$	(3.58)

On February 24, 2020, JetBlue entered into an accelerated share repurchase agreement, or ASR, paying $160 million for an initial delivery of 6.6 million shares. The term of the ASR concluded on March 16, 2020 with a delivery of 4.9 million additional shares to JetBlue on March 18, 2020. A total of 11.5 million shares, at an average price of $13.91 per share, were repurchased under the agreement.

Our share repurchase program has been suspended since March 31, 2020.

Note 5—Crewmember Retirement Plan

We sponsor a retirement savings 401(k) defined contribution plan, or the Plan, covering all of our crewmembers where we match 100% of our crewmember contributions up to 5% of their eligible wages. The contributions vest over three years and are measured from a crewmember's hire date. Crewmembers are immediately vested in their voluntary contributions.

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Another component of the Plan is a Company discretionary contribution of 5% of eligible non-management crewmember compensation, which we refer to as Retirement Plus. Retirement Plus contributions vest over three years and are measured from a crewmember's hire date.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

~~Our~~Effective August 1, 2018 and through December 31, 2020, our pilots ~~receive~~received a non-elective Company contribution of ~~16%~~15% of eligible pilot compensation per the terms of the collective bargaining agreement between JetBlue and the Air Line Pilots Association, or ALPA, in lieu of the above 401(k) Company matching contribution, Retirement Plus, and Retirement Advantage contributions. This non-elective Company contribution was increased to 16% beginning on January 1, 2021.Refer to Note 6 to our condensed consolidated financial statements for additional information. The Company's non-elective contribution ~~of 16%~~ of eligible pilot compensation vests after three years of service.

Our non-management crewmembers are eligible to receive profit sharing, calculated as 10% of adjusted pre-tax income before profit sharing and special items up to a pre-tax margin of 18% with the result reduced by Retirement Plus contributions and the equivalent of Retirement Plus contributions for pilots. If JetBlue's resulting pre-tax margin exceeds 18%, non-management crewmembers will receive 20% profit sharing on amounts above an 18% pre-tax margin.

Total 401(k) company match, Retirement Plus, Retirement Advantage, pilot retirement contribution, and profit sharing expensed for the ~~six~~three months ended ~~June~~September 30, 2021 and 2020 ~~was $100~~were $57 million and ~~$92~~$42 million, respectively, while the total expensed for the nine months ended September 30, 2021 and 2020 were $157 million and $135 million, respectively.

Note 6—Commitments and Contingencies

Flight Equipment Commitments

As of ~~June~~September 30, 2021, our firm aircraft orders consisted of 6564 Airbus A321neo aircraft and 6764 Airbus A220 aircraft, scheduled for delivery through 2027. Committed expenditures for these aircraft and related flight equipment, including estimated amounts for contractual price escalations and predelivery deposits as of ~~June~~September 30, 2021 is approximately ~~$0.4~~$0.2 billion for the remainder of 2021, ~~$0.8~~$0.9 billion in 2022, $1.6 billion in 2023, $1.8 billion in 2024, ~~$1.2~~$1.3 billion in 2025, and ~~$1.6~~$1.9 billion thereafter.

In October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new commercial aircraft and related parts imported from certain European Union member states, which include aircraft and other parts we are already contractually obligated to purchase, including those noted above. The U.S. Trade Representative increased the tariff to 15% effective March 2020. In March 2021, the U.S. Trade Representative announced a four-month suspension of the tariff that was followed by an announcement in June 2021 that the suspension will be extended for five years. We continue to work with our business partners, including Airbus, to evaluate the potential financial and operational impact on our future aircraft 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 ~~June~~September 30, 2021, we had approximately ~~$26~~$28 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 $26 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.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~JETBLUE AIRWAYS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

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 November 2020, our inflight crewmembers voted to reject the tentative collective bargaining agreement between JetBlue and the TWU. The parties have re-engaged in negotiations for a collective bargaining agreement.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 (business partners), 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.

On September 21, 2021, the United States Department of Justice (the “DOJ”), along with the Attorneys General of each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania, and Virginia, and the District of Columbia, filed a lawsuit in the United States District Court for the District of Massachusetts against JetBlue Airways Corporation (“JetBlue”) and American Airlines, Inc. (“American” and, together with JetBlue, the “Carriers”) concerning the Carriers’ previously implemented Northeast Alliance (the “NEA”). The lawsuit asserts and seeks an adjudication that the NEA violates Section 1 of the Sherman Act, and that the Carriers be permanently enjoined from continuing and restrained from further implementing the NEA. JetBlue believes the lawsuit is without merit and, along with American, intends to defend itself vigorously. Given the nature of this case, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

Note 7—Financial Derivative Instruments and Risk Management

As part of our risk management strategy, we periodically purchase ~~over the counter~~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 ASC 815, Derivatives and Hedging 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.

We did not have any fuel hedging contracts outstanding as of ~~June~~September 30, 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):

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020				2021			2020			2021			2020
Fuel derivatives	Fuel derivatives													Fuel derivatives
Hedge effectiveness losses recognized in aircraft fuel expense	Hedge effectiveness losses recognized in aircraft fuel expense	$	0		$	1		$	0		$	3		Hedge effectiveness losses recognized in aircraft fuel expense	$	—		$	2		$	—		$	5
Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other	Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other	0			3			0			5			Losses on derivatives resulting from the discontinuance of hedge accounting recognized in interest income and other	—			1			—			6
Hedge losses on derivatives recognized in comprehensive income	Hedge losses on derivatives recognized in comprehensive income	0			0			0			11			Hedge losses on derivatives recognized in comprehensive income	—			—			—			11
Percentage of actual consumption economically hedged	Percentage of actual consumption economically hedged	0		%	32		%	0		%	24		%	Percentage of actual consumption economically hedged	—		%	27		%	—		%	25		%

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 0no offsetting derivative instruments as of ~~June~~September 30, 2021 or December 31, 2020.

Note 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 ~~June~~September 30, 2021 and December 31, 2020 (in millions):


		June 30, 2021									September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,740	$	100	$	0	$	1,840	Cash equivalents	$	1,616	$	50	$	—	$	1,666
Available-for-sale investment securities	Available-for-sale investment securities	0		1,318		0		1,318		Available-for-sale investment securities	36		1,065		—		1,101

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


		December 31, 2020									December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,330	$	130	$	0	$	1,460	Cash equivalents	$	1,330	$	130	$	—	$	1,460
Available-for-sale investment securities	Available-for-sale investment securities	0		1,137		0		1,137		Available-for-sale investment securities	—		1,137		—		1,137

Refer to Note 3 to our condensed consolidated financial statements for fair value information related to our outstanding debt obligations as of ~~June~~September 30, 2021 and December 31, 2020.

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, equity securities of publicly traded companies, and convertible debt securities. Our investments in equity securities of publicly traded companies are classified as Level 1 in the fair value hierarchy as their fair values are based on unadjusted quoted prices in active markets for identical assets. The fair values of ~~these instruments~~our time deposits and convertible debt securities are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the fair value hierarchy. We did 0tnot record any material gains or losses on these securities during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 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 months ended ~~June~~September 30, 2021 and 2020 is as follows (in millions):


	Aircraft Fuel Derivatives(1)(2)
Balance of accumulated income, at ~~March 31,~~June 30, 2021	$	0—
Reclassifications into earnings, net of deferred taxes of $0	0—
Change in fair value, net of deferred taxes of $0	0—
Balance of accumulated income, at ~~June~~September 30, 2021	$	0—

Balance of accumulated (loss), at ~~March 31,~~June 30, 2020	$	~~(6)~~(3)
Reclassifications into earnings, net of deferred taxes $(1)	31
Change in fair value, net of deferred taxes of $0	0—
Balance of accumulated (loss), at ~~June~~September 30, 2020	$	~~(3)~~(2)

A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 is as follows (in millions):


	Aircraft Fuel Derivatives(1)(2)
Balance of accumulated income, at December 31, 2020	$	0—
Reclassifications into earnings, net of deferred taxes of $0	0—
Change in fair value, net of deferred taxes of $0	0—
Balance of accumulated income, at ~~June~~September 30, 2021	$	0—

Balance of accumulated income, at December 31, 2019	$	2
Reclassifications into earnings, net of deferred taxes ~~$(2)~~$(4)	67
Change in fair value, net of deferred taxes of $5	(11)
Balance of accumulated (loss), at ~~June 30,~~September30, 2020	$	~~(3)~~(2)

(1) Reclassified to aircraft fuel expense.

(2) In 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 $2$1 million and $4$5 million that were previously deferred in other comprehensive loss were reclassified to interest income and other during the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 10—Special Items

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Special Items	Special Items									Special Items
Federal payroll support grant recognition(1)	Federal payroll support grant recognition(1)	$	(357)	$	(304)	$	(644)	$	(304)	Federal payroll support grant recognition(1)	$	(186)	$	(332)	$	(830)	$	(636)
CARES Act employee retention credit(2)	CARES Act employee retention credit(2)	(9)		0		(11)		0		CARES Act employee retention credit(2)	—		—		(11)		—
Fleet impairment(3)	Fleet impairment(3)	0		0		0		202		Fleet impairment(3)	—		56		—		258
Severance and benefit costs(4)										Severance and benefit costs(4)	—		58		—		58
Losses on sale-leaseback transactions(5)										Losses on sale-leaseback transactions(5)	—		106		—		106
Total	Total	$	(366)	$	(304)	$	(655)	$	(102)	Total	$	(186)	$	(112)	$	(841)	$	(214)

(1) As discussed in Note 3 to our condensed consolidated financial statements, we ~~are participants~~received assistance in ~~Payroll Support Program 2~~the form of grants and ~~Payroll Support Program 3, both of which are~~unsecured loans under various federal payroll support programs. Funds under these federal payroll support programs for air carriers (the "Programs"). In the six months ended June 30, 2021, Treasury provided us with payroll support funding totaling $1.1 billion, consisting of $845 million in grants and $276 million in unsecured term loans under the Programs. The payroll support funds under these Programs arewere to be used exclusively for the continuation of payment of crewmember wages, salaries and benefits. The carrying values of the payroll support grants ~~are~~were recorded within other liabilities and ~~will be~~were recognized as contra-expenses within special items on our consolidated statements of operations as the funds are utilized. We utilized ~~$357~~$186 million and ~~$644~~$830 million of the payroll support grants ~~under the Programs~~ for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. Our payroll support grants were fully utilized as of September 30, 2021.

(2) The Employee Retention Credit ("ERC") under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers can qualify for up to $5,000 of credit for each employee based on qualified wages paid after March 12, 2020 and before January 1, 2021. The Internal Revenue Service ("IRS") subsequently issued Notice 2021-23 and Notice 2021-49 which collectively extended the ERC eligibility to cover qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee for the time that the employee is not providing services due to an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. Our policy is to recognize the ERC when it is filed with the ~~Internal Revenue Service.~~IRS. We recognized ~~$9 million and~~ $11 million of ERC as a contra-expense within special items on our consolidated statements of operations for the ~~three and six~~nine months ended ~~June~~September 30, ~~2021, respectively.~~2021. No ERC was recognized during the three months ended September 30, 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.

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 $0$56 million and ~~$202~~$258 million for the three and ~~six~~nine months ended ~~June~~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. 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 ~~June~~September 30, 2021.

No impairment loss was recorded for the three and ~~six~~nine months ended ~~June~~September 30, 2021.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

(4) 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 voluntary separation programs 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 programs were executed in the third quarter of 2020. 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 programs. Approximately $39 million of this charge was disbursed during the third quarter of 2020. Substantially all of the remaining balance has been disbursed as of September 30, 2021 with the residual amount expected to be disbursed by mid-2022. Accruals related to the voluntary separation programs are primarily recorded in accrued salaries, wages and benefits, and accounts payable on our consolidated balance sheets.

(5) In the third quarter of 2020, we executed $327 million of aircraft 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.

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Table of Contents

PART I. FINANCIAL INFORMATION

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

OVERVIEW

The COVID-19 pandemic continues to have a significant impact on our operating revenues and financial position. We began seeing signs of recovery in February 2021 that continued to progress ~~throughout~~into the ~~second~~third quarter of 2021. The length and severity of the reduction in travel demand due to the COVID-19 pandemic are uncertain, but with increasing vaccination rates, reductions in infection rates related to new COVID-19 variants and easing of travel advisories and restrictions, we believe customer confidence will continue to ~~grow, leading to increased demand throughout the summer of 2021.~~grow. We expect widespread vaccinations to result in sustained demand improvement going forward, with recovery of domestic demand ~~preceding~~outpacing the recovery of international demand in most regions. ~~If consumer confidence and demand for air travel returns, we expect to return to 2019 capacity levels in the second half of 2021.~~

~~Second~~Third Quarter 2021 Results

Our ~~second~~third quarter 2020 results were adversely impacted by the COVID-19 pandemic. As a result, ~~the~~ comparisons of our 2021 results to 2020 are inflated and are not necessarily indicative of future operating results. In certain cases, we have also provided comparisons of our ~~second~~third quarter 2021 results to our ~~second~~third quarter 2019 results which isare more reflective of pre-pandemic operations.

•~~Second~~Third quarter system capacity increased by ~~465.6%~~134.1% year-over-year and decreased by ~~(14.9)%~~0.8% versus the ~~second~~third quarter of 2019.

•Revenue for the ~~second~~third quarter of 2021 increased by ~~$1,284 million~~300.8% year-over-year to ~~$1,499 million~~$2.0 billion and decreased by ~~(28.8)%~~5.5% versus the ~~second~~third quarter of 2019.

•Operating revenue per available seat mile (RASM) for the three months ended ~~June~~September 30, 2021 increased by ~~23.4%~~71.2% to ~~10.99 cents.~~12.20 cents year-over-year and decreased by 4.7% versus the three months ended September 30, 2019.

•Operating expense for the ~~three months ended June 30,~~third quarter of 2021 increased by ~~116.3%~~77.1% year-over-year to ~~1,352 million~~$1.8 billion and decreased by ~~(27.2)%~~2.9% versus the ~~second~~third quarter of 2019.

•Operating expense per available seat mile (CASM) for the three months ended ~~June~~September 30, 2021 decreased by ~~(61.7)%~~24.3% year-over-year to ~~9.91 cents.~~11.04 cents and decreased by 2.1% versus the three months ended September 30, 2019.

•Our operating expense for the ~~second~~third quarter of 2021 and 2020 included the effects of special items. In the ~~second~~third quarter of 2021, we recognized ~~$357~~$186 million of contra-expense representing the amount of federal payroll support ~~extension~~ grants ~~provided by the payroll support programs,~~ that were utilized during the ~~period, and $9 million of contra-expense related to the recognition of Employee Retention Credits provided by the CARES Act. Our operating expense~~period. Special items for the ~~second~~third quarter of 2020 included ~~$304~~$332 million of payroll support grants under the CARES act recognized as a contra-expense ~~within special items~~ on our consolidated statement of ~~operations.~~operations, $58 million of one-time costs associated with our voluntary crewmember separation program, $56 million of impairment charges on our Embraer E190 fleet, and losses of $106 million generated by certain aircraft sale-leaseback transactions. Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our operating expense increased by ~~53.7%~~50.2% year-over-year to ~~$1,371 million.~~$1.5 billion for the third quarter of 2021 and 11.8% versus the third quarter of 2019.

•Excluding fuel and related taxes, special items, as well as operating expenses related to our non-airline businesses, our cost per available seat mile (CASM ex-fuel)(1) decreased by ~~(72.8)%~~35.9% year-over-year to ~~10.05~~9.39 cents for the ~~second~~third quarter of 2021. and increased by 12.7% versus the third quarter of 2019.

•Our reported diluted earnings (loss) per share for the ~~second~~third quarter of 2021 and 2020 were ~~$0.20~~$0.40 and ~~$(1.18)~~$(1.44), respectively. In addition to the special items described above, our results for the third quarter of 2021 also included $54 million of one-time gains on equity investments. Excluding ~~special~~these items, our adjusted loss per share(1) for the ~~second~~third quarter of 2021 and 2020 were ~~$(0.65)~~$(0.12) and ~~$(2.02)~~$(1.75), respectively.

Since February 2021, we have seen a meaningful rebound in the demand for leisure travel. We are encouraged by the improving booking trends, and believe the ongoing acceleration in demand will continue, ~~throughout the summer,~~ subject to the increase in vaccination rates, reductions in COVID-19 infection rates, including those associated with new variants, and easing of travel restrictions. We expect to ~~increase~~adjust capacity in response to the level of demand. We have taken a number of steps to position ourselves for recovery when demand for air travel returns to pre-pandemic levels.

Network

In ~~February~~August 2021, we ~~added service to Miami and Key West which further expanded our relevance in South Florida.~~

~~In April 2021, we operated~~launched our inaugural ~~flight between New York's~~transatlantic service from John F. Kennedy International Airport ("JFK") ~~to Guatemala City's La Aurora International Airport, making us the only airline that offers daily service between~~in New York ~~City and Guatemala's capital city.~~

~~(1)~~ ~~Refer~~ to London Heathrow Airport. We further expanded our ~~''Regulation G Reconciliation of Non-GAAP Financial Measures" at~~presence in 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~~

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

~~In July 2021, we launched~~transatlantic market with services ~~to Kalispell/Glacier Park International Airport in Montana with up to three weekly flights from JFK and launched service to Boise Airport in Idaho from JFK with up to four weekly flights.~~

~~We also anticipate launching service~~ from JFK to London ~~Heathrow in August 2021 and London~~ Gatwick Airport, which began in September 2021. ~~Service~~We expect to begin services to London from ~~Boston’s~~Boston Logan International Airport ~~to London will launch~~ in summer 2022. ~~London will be our first destination in Europe.~~

~~Commercial Partnerships~~

~~We continue to develop our strategic relationship with 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 add seven new destinations between late 2021 and 2022 to our route map. We also announced significant growth plans at New York's LaGuardia Airport ("LGA") where we plan to launch 40 new routes in the coming months, many enabled by the Northeast Alliance; doubling our presence in LGA by the end of 2021.

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. By leveraging our Northeast Alliance with American, we look to re-build business market frequencies ahead of an expected business travel recovery in the fall. 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.

~~Fleet~~

~~We took delivery of six aircraft in the second quarter of 2021 and paid for each delivery with cash on hand.~~

~~In connection with our plans to begin service to London, we took delivery of our first two Airbus A321LR aircraft, the long range model of the Airbus A321, in the second quarter.~~

Given the new growth opportunities being provided by our Northeast alliance, we are re-examining our Fleet to ensure we are well equipped to capitalize fully on current and near term conditions. We have a plan to delay our retirement schedule for our owned E190s which offers a constructive way to profitably grow in the Northeast while protecting the balance sheet. We will of course remain flexible with our fleet to align with the demand environment.

Also in the second quarter, we placed our first two 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.

~~Additionally we placed two new Airbus A321neo aircraft into service which will help reduce C0~~2 ~~emissions with improved fuel economy through newly designed engine technology and cabin changes.~~

~~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 offer the most space in a premium experience from any U.S. airline based on personal square footage per passenger seat. We debuted this new premium service with a 16-seat individual

(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

~~suite layout in June 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 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 one carry-on bag.~~

In March 2021, we introduced Paisley by JetBlue ("Paisley"), a new travel website that leverages smart technology to provide individually tailored offers our customers based on their itinerary. We believe Paisley will add breadth to our product offerings, learn more about our customers' preferences, and contribute to future earnings growth.

~~Outlook for 2021~~

~~As we continue to navigate through the pandemic, we are optimistic about the future. Based on our current planning assumptions, we expect capacity for~~ the third quarter of 2021, we also launched seasonal services from JFK to ~~be flat to down~~Glacier Park International Airport in Kalispell, Montana, as well as Boise Airport in Idaho.

Fleet

We took delivery of three ~~percent as compared to the same period in 2019.~~

~~Revenue is expected to decline between 4%~~Airbus A220 aircraft and 9%one Airbus A321neo aircraft in the third quarter of 2021, all of which were paid for with cash on hand.

Sustainability

We are committed to reducing our contribution to climate change and decarbonizing our operation. We have a clear plan to address our flight emissions, using the following six levers:

(1) Aircraft Efficiency: Our investments in new aircraft increase fuel efficiency and drive down costs;

(2) Fuel Optimization: We continuously monitor and adjust our operations to ensure adherence to fuel-savings procedures;

(3) Sustainable Aviation Fuels: We use sustainable aviation fuels ("SAF") on our existing aircraft reducing lifecycle emissions by up to 80%;

(4) Electric Ground Operations: We are converting our Ground Service Equipment to electric and maximizing electric ground power and air systems for our aircraft to minimize our fuel and emissions use on the ramp;

(5) Technology Partnerships: Through our subsidiary, JetBlue Technology Ventures, we support and invest in alternative energy aircraft technologies, such as ~~compared~~those developing electric- and hydrogen-fueled aircraft; and

(6) Offsets: For unavoidable emissions, we purchase high-quality, verified carbon offsets.

In 2020, we became the first major U.S airline to achieve carbon neutrality for all domestic flights, which is achieved through large-scale carbon offsetting. Our target is to achieve net zero carbon emissions by 2040, ten years ahead of the Paris Climate Agreement.

We view the adoption of SAF as the most promising means of rapidly and directly reducing emissions in the aviation industry. Enabled by our recent agreements with SG Preston, Neste, World Energy, and World Fuel Services, we are well ahead of pace to achieve our goal of converting 10% of our jet fuel usage to SAF by 2030.

Commercial Partnerships

We continue to develop our strategic relationship with American Airlines, Inc. ("American") under the Northeast Alliance (the “NEA”).

On September 21, 2021, the United States Department of Justice ("DOJ"), along with the Attorneys General of six states and the District of Columbia filed a lawsuit against JetBlue and American concerning the previously implemented NEA. The lawsuit asserts and seeks an adjudication that the NEA violates U.S. antitrust laws, and that we and American should be permanently enjoined from continuing and restrained from further implementing the NEA.

Also on September 21, 2021, the United States Department of Transportation ("DOT") published a Clarification Notice relating to the ~~same period~~agreement that had been reached between the DOT, JetBlue, and American in ~~2019. We expect~~January 2021, at the ~~demand acceleration which began in February 2021 to continue as larger portions~~conclusion of the ~~U.S. population become vaccinated~~DOT’s review of the NEA ("DOT Agreement"). The DOT Clarification Notice stated, among other things, that the DOT Agreement remains in force during the pendency of the DOJ action against ~~COVID-19~~the NEA and, ~~travel advisories and restrictions begin~~while the DOT retains independent statutory authority to ~~ease. We are closely monitoring~~prohibit unfair methods of competition in air transportation, the ~~latest news~~DOT intends to defer to DOJ to resolve the antitrust concerns that DOJ has identified with respect to the ~~COVID variants and the potential impact that continued spread of these variants could have on the demand for air travel.~~

~~We presently expect third quarter 2021 operating expenses to increase by approximately 11-13% as compared to the same period~~NEA. The DOT simultaneously published a Notice Staying Proceeding in 2019. We plan to continue managing our cost structure, while mitigating near term cost pressures from higher fuel prices, airport rents and landing fees, and labor costs as we ramp up our operations if we begin to see a return of capacity back to pre-pandemic levels.

~~RESULTS OF OPERATIONS~~

~~Three Months Ended June 30, 2021 vs. 2020~~

~~Overview~~

~~We reported a net income of $64 million, operating income of $147 million and an operating margin of 9.8% for the three months ended June 30, 2021. This compares~~relation to a ~~net loss~~complaint by Spirit Airlines, Inc. regarding the NEA, pending resolution of ~~$320 million, an operating loss of $410 million~~the DOJ action described above.

The NEA was established to unlock capacity growth and ~~an operating margin of (190.8)% for the three months ended June 30, 2020. Earnings per share were $0.20 for the second quarter of 2021~~customer benefits that could not have been achieved independently by either airline and ~~$(1.18) of loss per diluted share for the same period in 2020.~~

~~Our reported results for the second quarter of 2021 and 2020 included the effects of special items. Adjusting for these special items(1)~~, our adjusted net loss was $(206) million, adjusted operating loss was $(219), adjusted operating margin was (14.6)%, and adjusted loss per share was $(0.65) for the second quarter of 2021. This compares to ~~adjusted net loss of $(548) million, adjusted operating loss of $(714) million, adjusted operating margin was (332.6)%, and adjusted diluted loss per share of $(2.02) for the second quarter of 2020.~~

On-time performance, as defined by the Department of Transportation, or DOT, is arrival within 14 minutes of scheduled arrival time. In the second quarter of 2021, our systemwide on-time performance was 73.8% compared to 92.9% for the same

~~period in 2020. Our completion factor increased by 13.3% points to 99.2%~~better compete in the ~~second quarter of 2021 from 85.9%~~Northeast market. We believe our partnership with American will create more capacity, seamless connectivity for travelers in the ~~same period in 2020.~~northeast, and offer more choices for customers across the networks of both airlines.

The Company believes the DOJ lawsuit is without merit and, along with American, intends to defend this matter vigorously.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

~~Operating Revenues~~Outlook for 2021

(Revenues in millions; percent changes based on unrounded numbers) Three Months Ended June 30, Year-over-Year Change
2021 2020 $ %
Passenger revenue $ 1,388 $ 170 $ 1,218 715.5 %
Other revenue 111 45 66 148.0
Total operating revenues $ 1,499 $ 215 $ 1,284 597.7 %
Average Fare $ 174.90 $ 276.35 $ (101.45) (36.7) %
Yield per passenger mile (cents) 12.82 20.86 (8.04) (38.5)
Passenger revenue per ASM (cents) 10.18 7.06 3.12 44.2
Operating revenue per ASM (cents) 10.99 8.91 2.08 23.4
Average stage length (miles) 1,279 1,183 96 8.1
Revenue passengers (thousands) 7,938 616 7,322 1,188.5
Revenue passenger miles (millions) 10,804 816 9,988 1,223.7
Available Seat Miles (ASMs) (millions) 13,645 2,413 11,232 465.6
Load Factor 79.2 % 33.8 % 45.4 pts.

~~Passenger revenue is~~As we continue to navigate through the pandemic, we are optimistic about the future. Based on our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The increase in passenger revenue of $1,218 million, or 715.5%,current planning assumptions, we expect capacity for the ~~three months ended June 30,~~fourth quarter of 2021 to decline between 4% and 7% percent as compared to the same period in ~~2020, was primarily driven by~~2019.

Revenue is expected to decline between 8% and 13% in the ~~increase~~fourth 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 U.S. population become vaccinated against COVID-19 and travel advisories and restrictions begin to ease. We are closely monitoring the developments associated with the COVID variants and the potential impact that continued spread of these variants could have on the demand for ~~travel~~air travel.

We plan to continue managing our cost structure, while mitigating near term cost pressures from higher fuel prices, airport rents and landing fees, and labor costs as we ~~recover from the COVID-19 pandemic. Revenue passengers increased~~return our operations to ~~7.9~~pre-pandemic levels.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2021 vs. 2020

Overview

We reported a net income of $130 million, operating income of $186 million and an operating margin of 9.4% for the three months ended ~~June~~September 30, 2021. This compares to a net loss of $393 million, an operating loss of $516 million and an operating margin of (104.9)% for the three months ended September 30, 2020. Earnings per diluted share were $0.40 for the third quarter of 2021 ~~from 616 thousand~~and $(1.44) of loss per share for the same period in 2020.

Our reported results for the third quarter of 2021 and 2020 included the effects of special items. In addition to special items, our third quarter 2021 results also included one-time gains on certain equity investments. Adjusting for these items(1), our operations broke even with an adjusted net loss of $39 million and an adjusted loss per share of $(0.12) for the third quarter of 2021. This compares to adjusted net loss of $477 million, adjusted operating loss of $628 million, adjusted operating margin of (127.6)%, and adjusted loss per share of $(1.75) for the third quarter of 2020.

~~Operating Expenses~~On-time performance, as defined by the Department of Transportation, or DOT, is arrival within 14 minutes of scheduled arrival time. In the third quarter of 2021, our system wide on-time performance was 63.5% compared to 88.9% for the same

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

(in millions; per ASM data in cents; percent changes based on unrounded numbers) Three Months Ended June 30, Year-over-Year Change Cents per ASM
2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related taxes $ 336 $ 29 $ 307 1,051.8 % 2.46 1.21 103.7 %
Salaries, wages and benefits 577 477 100 20.9 4.23 19.78 (78.6)
Landing fees and other rents 174 62 112 180.7 1.27 2.57 (50.4)
Depreciation and amortization 133 140 (7) (4.9) 0.98 5.81 (83.2)
Aircraft rent 26 16 10 63.8 0.19 0.66 (71.0)
Sales and marketing 47 8 39 508.9 0.35 0.32 7.7
Maintenance, materials and repairs 164 73 91 122.8 1.20 3.05 (60.6)
Other operating expenses 261 124 137 110.5 1.91 5.12 (62.8)
Special items (366) (304) (62) 20.2 (2.68) (12.62) (78.7)
Total operating expenses $ 1,352 $ 625 $ 727 116.3 % 9.91 25.90 (61.7) %
Total operating expenses excluding special items(1)
$ 1,718 $ 929 $ 789 84.8 % 12.59 38.52 (67.3) %

~~Aircraft Fuel and Related Taxes~~

~~Aircraft fuel and related taxes~~period in 2020. Our completion factor increased by ~~$307 million, for~~0.1 points to 97.7% in the ~~three months ended June 30,~~third quarter of 2021 ~~compared to~~from 97.6% in the same period in 2020. The average fuel price for the three months ended June 30, 2021 increased by 98.8% to $1.91 per gallon. Our fuel consumption increased by 479.3%, or 146 million gallons, due to increased demand as we recover from the COVID-19

(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

~~pandemic. We expect~~Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Three Months Ended September 30,						Year-over-Year Change
	2021			2020			$		%
Passenger revenue	$	1,856		$	445		$	1,411	317.3	%
Other revenue	116			47			69		145.6
Total operating revenues	$	1,972		$	492		$	1,480	300.8	%

Average Fare	$	204.50		$	206.73		$	(2.23)	(1.1)	%
Yield per passenger mile (cents)	14.37			15.10			(0.73)		(4.8)
Passenger revenue per ASM (cents)	11.48			6.44			5.04		78.2
Operating revenue per ASM (cents)	12.20			7.12			5.08		71.2
Average stage length (miles)	1,320			1,313			7		0.5
Revenue passengers (thousands)	9,075			2,151			6,924		321.8
Revenue passenger miles (millions)	12,913			2,945			9,968		338.5
Available Seat Miles (ASMs) (millions)	16,168			6,905			9,263		134.1
Load Factor	79.9		%	42.6		%			37.3		pts.

Passenger revenue is our ~~fuel consumption to gradually~~primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The increase in ~~2021 as we continue to recover from the pandemic and add capacity back into the system.~~

~~Salaries, Wages and Benefits~~

~~Salaries, wages and benefits increased $100 million,~~passenger revenue of $1.4 billion, or ~~20.9%~~317.3%, for the three months ended ~~June~~September 30, 2021 compared to the same period in 2020, was primarily driven ~~primarily~~ by the increase in demand for travel ~~driving up total hours worked by our crewmembers. Beginning in March 2020,~~as we ~~instituted a company-wide hiring freeze, implemented salary and wage reductions of 20%~~gradually recover from the COVID-19 pandemic. Revenue passengers increased to ~~50% for our officers, and reduced work hours for all other management workgroups.~~

~~Landing Fees and Other Rents~~

~~Landing fees and other rents increased $112~~9.1 million ~~or 180.7%,~~ for the three months ended ~~June~~September 30, 2021 ~~compared to~~from 2.2 million for the same period in ~~2020 primarily due to increases in rates~~2020.

Operating Expenses

In detail, our operating costs per available seat mile, or ASM, were as ~~well as increases in customers~~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
	2021		2020		$		%		2021	2020	% Change
Aircraft fuel and related taxes	$	443	$	102	$	341	335.3	%	2.74	1.47	85.9	%
Salaries, wages and benefits	620		482		138		28.6		3.83	6.98	(45.1)
Landing fees and other rents	182		84		98		115.8		1.12	1.22	(7.8)
Depreciation and amortization	140		127		13		9.6		0.86	1.84	(53.2)
Aircraft rent	25		23		2		9.5		0.16	0.33	(53.2)
Sales and marketing	60		24		36		154.4		0.37	0.34	8.6
Maintenance, materials and repairs	205		111		94		85.5		1.27	1.60	(20.8)
Other operating expenses	297		167		130		78.1		1.84	2.43	(23.9)
Special items	(186)		(112)		(74)		67.1		(1.15)	(1.61)	(28.6)
Total operating expenses	$	1,786	$	1,008	$	778	77.1	%	11.04	14.60	(24.3)	%

Total operating expenses excluding special items(1)	$	1,972	$	1,120	$	852	76.1	%	12.19	16.21	(24.8)	%

Aircraft Fuel and ~~departures. We currently expect rents~~Related Taxes

Aircraft fuel and ~~landing fees to continue to increase into 2022 due to~~related taxes increased ~~rates and a higher volume of flights.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization decreased $(7)~~by $341 million, ~~or (4.9)%,~~ for the three months ended ~~June~~September 30, 2021 compared to the same period in 2020. Beginning in June 2020, we entered into sale-leaseback transactions for our aircraft resulting in a decline in depreciation expense. This decline in expense was essentially offset by an increase in aircraft rent as we converted owned aircraft into leased aircraft.

~~Aircraft Rent~~

~~Aircraft rent increased $10 million, or 63.8%,~~The average fuel price for the three months ended ~~June~~September 30, 2021 ~~compared~~increased by 69.7% to ~~the same period in 2020. Beginning in June 2020, we entered into sale-leaseback transactions for some of our aircraft resulting in an increase in aircraft rent.~~

~~Sales and Marketing~~

~~Sales and marketing~~$2.08 per gallon. Our fuel consumption increased ~~$39~~by 156.4%, or 130 million ~~or 508.9%, for the three months ended June 30, 2021 compared to the same~~

~~period in 2020 driven by an increase in sales in the period~~gallons, due to ~~an increase in~~increased demand ~~for travel.~~

~~Maintenance Materials and Repairs~~

Maintenance materials and repairs increased $91 million, or 122.8%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily driven by an increase in maintenance deferred during the COVID-19 pandemic. As of June 30, 2020, we had approximately 115 aircraft parked.

~~Other Operating Expenses~~

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

~~Other operating expenses increased $137 million, or 110.5%, for the three months ended June 30, 2021 compared to the same period in 2020 due to an increase in demand to fly~~ as we ~~begin to come out of the COVID-19 pandemic.~~

~~We continue to focus on driving efficiencies and productivity across our business. We expect the benefits~~recover from the ~~run-rate savings associated with our Structural Cost Program to continue.~~

~~Special Items~~

For the three months ended June 30, 2021, special items included a contra-expense of $357 million which represents the amount of payroll support grants utilized during the period. In addition, special items included a contra-expense of $9 million related to the recognition of Employee Retention Credits provided by the CARES act.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

~~Six Months Ended June 30, 2021 vs. 2020~~

~~Overview~~

COVID-19 pandemic. We ~~reported a net loss of $183 million, an operating loss of $147 million and an operating margin of (6.6)% for~~expect the six months ended June 30, 2021. This compares to a net loss of $588 million, an operating loss of $744 million and an operating margin of (41.3)% for the six months ended June 30, 2020. Loss per share was $(0.58) for the six months ended June 30, 2021 compared to loss per share of $(2.14) for the same period in 2020.

~~Our reported results for the six months ended June 30, 2021 and 2020 included the effects of special items. Adjusting for these special items(1)~~, our adjusted net loss was $665 million, adjusted operating loss was $802 million, adjusted operating margin was (35.9)%, and adjusted loss per share was $(2.10) for the six months ended June 30, 2021. This compares to adjusted net loss of $664 million, adjusted operating loss of $846 million, adjusted operating margin of (46.9)%, and adjusted loss per share of $(2.42) for the six months ended June 30, 2020.

~~Operating Revenues~~

(Revenues in millions; percent changes based on unrounded numbers) Six Months Ended June 30, Year-over-Year Change
2021 2020 $ %
Passenger revenue $ 2,058 $ 1,682 $ 376 22.4 %
Other revenue 174 121 53 42.9
Total operating revenues $ 2,232 $ 1,803 $ 429 23.7 %
Average Fare $ 165.93 $ 191.83 $ (25.90) (13.5) %
Yield per passenger mile (cents) 12.39 15.00 (2.61) (17.4)
Passenger revenue per ASM (cents) 9.05 9.72 (0.67) (6.9)
Operating revenue per ASM (cents) 9.82 10.42 (0.60) (5.8)
Average stage length (miles) 1,278 1,163 115 9.9
Revenue passengers (thousands) 12,401 8,766 3,635 41.5
Revenue passenger miles (millions) 16,611 11,208 5,403 48.2
Available Seat Miles (ASMs) (millions) 22,734 17,304 5,430 31.4
Load Factor 73.1 % 64.8 % 8.3 pts.

~~Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More~~® ~~Space. The~~year-over-year increase in ~~passenger revenue of $376~~fuel consumption to continue as we add capacity back into the system.

Salaries, Wages and Benefits

Salaries, wages and benefits increased $138 million, or ~~22.4%~~28.6%, for the ~~six~~three months ended ~~June~~September 30, 2021 compared to the same period in 2020 ~~was~~ primarily ~~driven~~due to higher total hours worked by our crewmembers as we align our workforce with the increase in travel demand.

Salaries, wages and benefits in 2020 were lower than usual as a result of various cost saving initiatives taken in response to the decreased demand for air travel due to the COVID-19 pandemic. Beginning in March 2020, we instituted a company-wide hiring freeze, implemented salary and wage reductions of 20% to 50% for our officers, and reduced work hours for all other management workgroups. In June 2020, we announced voluntary separation programs to our crewmembers, with most departures having occurred in the third quarter of 2020.

Landing Fees and Other Rents

Landing fees and other rents increased $98 million, or 115.8%, for the three months ended September 30, 2021 compared to the same period in 2020 primarily due to increases in departures as well as increases in rates. We expect the increase in landing fees and other rents to continue into 2022 as we ~~begin~~recover from the COVID-19 pandemic.

Depreciation and Amortization

Depreciation and amortization increased $13 million, or 9.6%, for the three months ended September 30, 2021 compared to ~~come out~~the same period in 2020 primarily due a higher number of operating aircraft. We placed 15 new aircraft into service since the end of the ~~COVID-19 pandemic~~third quarter of 2020.

Aircraft Rent

Aircraft rent increased $2 million, or 9.5%, for the three months ended September 30, 2021 compared to the same period in 2020. We executed a number of aircraft sale-leaseback transactions in the second half of 2020, the majority of which ~~began~~qualified as sales for accounting purposes. The assets associated with these transactions, which qualified as sales, are recorded within operating lease assets for which rent expenses are recognized through the life of the related lease terms.

Sales and Marketing

Sales and marketing increased $36 million, or 154.4%, for the three months ended September 30, 2021 compared to the same period in ~~March of 2020.~~2020 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we recover from the pandemic. Revenue passengers increased ~~by 41.5%~~ to ~~12.4~~9.1 million for the ~~six months ended June 30,~~third quarter 2021 from ~~8.8~~2.2 million for the same period in 2020.

Maintenance Materials and Repairs

Maintenance materials and repairs increased $94 million, or 85.5%, for the three months ended September 30, 2021 compared to the same period in 2020 primarily driven by an increase in maintenance events as we bring our parked aircraft back into service. We significantly reduced our flying in 2020 as a result of the COVID-19 pandemic and parked a portion of our fleet throughout the year.

We expect the increase in expenses relating to maintenance, materials, and repairs to continue as we return our operations to pre-pandemic levels.

Other Operating Expenses

Other operating expenses increased $130 million, or 78.1%, for the three months ended September 30, 2021 compared to the same period in 2020 due to higher levels of operations in response to the increased demand for travel.

Special Items

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

~~Operating Expenses~~For the three months ended September 30, 2021, special items included a contra-expense of $186 million which represents the amount of payroll support grants utilized during the period.

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

(in millions; per ASM data in cents; percent changes based on unrounded numbers) Six Months Ended June 30, Year-over-Year Change Cents per ASM
2021 2020 $ % 2021 2020 % Change
Aircraft fuel and related taxes $ 530 $ 394 $ 136 34.3 % 2.33 2.28 2.2 %
Salaries, wages and benefits 1,098 1,078 20 1.9 4.83 6.23 (22.5)
Landing fees and other rents 289 174 115 66.4 1.27 1.00 26.7
Depreciation and amortization 258 279 (21) (7.6) 1.13 1.61 (29.7)
Aircraft rent 50 37 13 35.7 0.22 0.22 3.3
Sales and marketing 70 60 10 15.7 0.31 0.35 (11.9)
Maintenance, materials and repairs 268 233 35 14.7 1.18 1.35 (12.7)
Other operating expenses 471 394 77 19.7 2.07 2.27 (8.9)
Special items (655) (102) (553) (541.8) (2.88) (0.59) (388.5)
Total operating expenses $ 2,379 $ 2,547 $ (168) (6.6) % 10.46 14.72 (28.9) %
Total operating expenses excluding special items(1)
$ 3,034 $ 2,649 $ 385 14.5 % 13.34 15.31 (12.9) %
For the three months ended September 30, 2020, special items included the following:

~~Aircraft Fuel~~•Contra-expense of $332 million, which represents the amount of CARES Act payroll support grants utilized during the period;

•Impairment charges of $56 million on our Embraer E190 fleet;

•Losses of $106 million related to aircraft sale-leaseback transactions; and.

•One-time costs of $58 million, consisting of severance and ~~Related Taxes~~health benefits, in connection with our voluntary separation programs.

~~Aircraft fuel~~Nine Months Ended September 30, 2021 vs. 2020

Overview

We reported a net loss of $53 million, an operating income of $39 million and ~~related taxes increased by $136 million, or 34.3%,~~an operating margin of 0.9% for the ~~six~~nine months ended ~~June~~September 30, 2021. This compares to a net loss of $981 million, an operating loss of $1.3 billion and an operating margin of (54.9)% for the nine months ended September 30, 2020. Loss per share was $(0.17) for the nine months ended September 30, 2021 compared to loss per share of $(3.58) for the same period in 2020. ~~The average fuel price~~

Our reported results for the ~~six~~nine months ended ~~June~~September 30, 2021 ~~increased by 5.8%~~and 2020 included the effects of special items. In addition to ~~$1.84~~special items, we also recognized one-time gains on certain equity investments during 2021. Adjusting for these items(1), our adjusted net loss was $682 million, adjusted operating loss was $802 million, adjusted operating margin was (19.1)%, and adjusted loss per ~~gallon. Our fuel consumption increased by 27.0%~~share was $(2.15) for the nine months ended September 30, 2021. This compares to adjusted net loss of $1.1 billion, adjusted operating loss of $1.5 billion, adjusted operating margin of (64.2)%, ~~or 61 million gallons, due to capacity increases~~and adjusted loss per share of $(4.16) for the nine months ended September 30, 2020.

Operating Revenues


(Revenues in millions; percent changes based on unrounded numbers)	Nine Months Ended September 30,						Year-over-Year Change
	2021			2020			$		%
Passenger revenue	$	3,913		$	2,126		$	1,787	84.0	%
Other revenue	290			169			121		71.6
Total operating revenues	$	4,203		$	2,295		$	1,908	83.1	%

Average Fare	$	182.22		$	194.77		$	(12.55)	(6.4)	%
Yield per passenger mile (cents)	13.26			15.02			(1.76)		(11.8)
Passenger revenue per ASM (cents)	10.06			8.78			1.28		14.5
Operating revenue per ASM (cents)	10.80			9.48			1.32		14.0
Average stage length (miles)	1,293			1,201			92		7.7
Revenue passengers (thousands)	21,476			10,918			10,558		96.7
Revenue passenger miles (millions)	29,524			14,153			15,371		108.6
Available Seat Miles (ASMs) (millions)	38,902			24,209			14,693		60.7
Load Factor	75.9		%	58.5		%			17.4		pts.

Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as ~~demand for travel grew. We expect~~well as revenue from our ~~fuel consumption to gradually~~ancillary product offerings such as Even More® Space. The increase in ~~2021 as we continue to recover from the pandemic and add capacity back into the system.~~

~~Salaries, Wages and Benefits~~

~~Salaries, wages and benefits increased by $20 million,~~passenger revenue of $1.8 billion, or ~~1.9%~~84.0%, for the ~~six~~nine months ended ~~June~~September 30, 2021 compared to the same period in 2020, was primarily driven ~~primarily~~ by the increase in demand for travel ~~driving up total hours worked by our crewmembers. In the comparison period, beginning~~as we gradually recover from COVID-19 pandemic which began in March ~~2020, we instituted a company-wide hiring freeze, implemented salary reductions~~ of ~~20%~~2020. Revenue passengers increased by 96.7% to ~~50%~~21.5 million for ~~our officers, and reduced work hours for all other management workgroups. As of June~~the nine months ended September 30, 2021 ~~we have approximately 20,000 crewmembers compared to approximately 21,500 crewmembers at June 30, 2020.~~

~~Landing Fees and Other Rents~~

~~Landing fees and other rents increased by $115~~from 10.9 million ~~or 66.4%,~~ for ~~the six months ended June 30, 2021 compared to~~ the same period in ~~2020 primarily due to increases in rates, customers, and departures as demand for travel increases.~~2020.

~~We expect cost pressures in landing fees and other rents due to increases in rates at the airports we serve, coupled with an increase in the number of departures as we ramp up our operations.~~

~~Depreciation and Amortization~~

Depreciation and amortization decreased by $21 million, or 7.6%, for the six months ended June 30, 2021 compared to the same period in 2020. This decrease was primarily attributed to the impairment of our E190 fleet and related spare parts in 2020. In addition, we also executed a number of sale-leaseback transactions towards the second half of 2020, the majority of which qualified as sales for accounting purposes. As a result of these sales, we no longer record depreciation expense on the assets. The costs associated with leasing these assets back from the purchaser are included in Aircraft Rent on our consolidated statements of operations.

(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 decreases described above~~Operating Expenses

In detail, our operating costs per available seat mile, or ASM, were ~~partially offset by additional depreciation expenses~~as follows:


(in millions; per ASM data in cents; percent changes based on unrounded numbers)	Nine Months Ended September 30,				Year-over-Year Change				Cents per ASM
	2021		2020		$		%		2021	2020	% Change
Aircraft fuel and related taxes	$	973	$	496	$	477	96.1	%	2.50	2.05	22.0	%
Salaries, wages and benefits	1,718		1,560		158		10.1		4.42	6.44	(31.5)
Landing fees and other rents	470		258		212		82.6		1.21	1.06	13.6
Depreciation and amortization	398		407		(9)		(2.2)		1.02	1.68	(39.2)
Aircraft rent	76		60		16		25.7		0.19	0.25	(21.8)
Sales and marketing	130		84		46		54.6		0.33	0.35	(3.8)
Maintenance, materials and repairs	472		344		128		37.5		1.22	1.42	(14.5)
Other operating expenses	768		560		208		37.1		1.97	2.32	(14.7)
Special items	(841)		(214)		(627)		293.8		(2.16)	(0.88)	145.1
Total operating expenses	$	4,164	$	3,555	$	609	17.1	%	10.70	14.69	(27.1)	%

Total operating expenses excluding special items(1)	$	5,005	$	3,769	$	1,236	32.8	%	12.86	15.57	(17.4)	%

Aircraft Fuel and Related Taxes

Aircraft fuel and related ~~to four new aircraft that were placed into service since June 30, 2020. The average number of aircraft~~taxes increased by ~~2.8% during the six months ended June 30, 2021 as compared to the same period in 2020.~~

~~Aircraft Rent~~

~~Aircraft rent increased $13~~$477 million, or ~~35.7%~~96.1%, for the ~~six~~nine months ended ~~June~~September 30, 2021 compared to the same period in 2020. The average fuel price for the nine months ended September 30, 2021 increased by 21.3% to $1.94 per gallon. Our fuel consumption increased by 61.6%, or 191 million gallons, due to capacity increases as demand for travel grew. We expect the year-over-year increase in fuel consumption to continue as we as add capacity back into the system.

Salaries, Wages and Benefits

Salaries, wages and benefits increased by $158 million, or 10.1%, for the nine months ended September 30, 2021 compared to the same period in 2020, driven primarily by higher total hours worked by our crewmembers as we align our workforce with the increase in travel demand.

As ~~discussed above,~~of September 30, 2021, we have approximately 21,250 crewmembers compared to approximately 20,500 crewmembers at September 30, 2020.

Landing Fees and Other Rents

Landing fees and other rents increased by $212 million, or 82.6%, for the nine months ended September 30, 2021 compared to the same period in 2020 due to increases in departures as well as increases in rates. We expect the increase in landing fees and other rents to continue into 2022 as we recover from the COVID-19 pandemic.

Depreciation and Amortization

Depreciation and amortization decreased by $9 million, or 2.2%, for the nine months ended September 30, 2021 compared to the same period in 2020. This decrease was partially attributed to the impairment of our E190 fleet and related spare parts in 2020. In addition, we also executed a number of aircraft sale-leaseback transactions towards the second half of 2020, the majority of which qualified as sales for accounting purposes. ~~The assets associated with~~As a result of these ~~transactions which qualified as~~ sales, ~~are recorded~~ ~~within operating lease assets and rent expenses are recognized throughout the life of the related lease terms.~~

~~Sales and Marketing~~

Sales and marketing increased $10 million, or 15.7%, for the six months ended June 30, 2021 compared to the same period in 2020 driven by higher credit card fees and computer reservation system charges which are directly related to demand increases as we ~~recover from the pandemic.~~

~~Maintenance Materials and Repairs~~

Maintenance materials and repairs increased $35 million, or 14.7%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily driven by an increase in maintenance events. During 2020, we parked aircraft and deferred non-essential maintenance expenditures to conserve cash.

~~We expect expenses relating to maintenance, materials, and repairs to increase throughout 2021.~~

~~Other Operating Expenses~~

Other operating expenses increased $77 million, or 19.7%, for the six months ended June 30, 2021 compared to the same period in 2020 due to capacity increases in response to the increase in demand as we recover from the COVID-19 pandemic.

~~Special Items~~

~~Special items for the six months ended June 30, 2021 included the following:~~

•~~Contra-expense of $(644) million, which represents the amount of federal payroll support grants utilized during the period; and~~

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

For the six months ended June 30, 2020, special items include a contra-expense of $304 million which represents the amount of CARES Act payroll support grants utilized during the period, and the impairment charge of $202 million on our Embraer E190 fleet.no longer record depreciation

(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

expense on the assets. The costs associated with leasing these assets back from the purchaser are included in Aircraft Rent on our consolidated statements of operations.

The decreases described above were partially offset by additional depreciation expenses related to 15 new aircraft that have been placed into service since September 30, 2020. The average number of aircraft increased by 3.5% during the nine months ended September 30, 2021 as compared to the same period in 2020.

Aircraft Rent

Aircraft rent increased $16 million, or 25.7%, for the nine months ended September 30, 2021 compared to the same period in 2020. As discussed above, we executed a number of aircraft sale-leaseback transactions towards the second half of 2020, the majority of which qualified as sales for accounting purposes. The assets associated with these transactions, which qualified as sales, are recorded within operating lease assets for which rent expenses are recognized throughout the life of the related lease terms.

Sales and Marketing

Sales and marketing increased $46 million, or 54.6%, for the nine months ended September 30, 2021 compared to the same period in 2020 driven by higher credit card fees and computer reservation system charges, which are directly related to demand increases as we recover from the pandemic. Revenue passengers increased to 21.5 million for the nine months ended September 30, 2021 from 10.9 million for the same period in 2020.

Maintenance Materials and Repairs

Maintenance materials and repairs increased $128 million, or 37.5%, for the nine months ended September 30, 2021 compared to the same period in 2020 primarily driven by an increase in maintenance events as we bring our parked aircraft back into service. We significantly reduced our flying in 2020 as a result of the COVID-19 pandemic and parked a portion of our fleet throughout the year.

We expect the increase in expenses relating to maintenance, materials, and repairs to continue as we return our operations to pre-pandemic levels.

Other Operating Expenses

Other operating expenses increased $208 million, or 37.1%, for the nine months ended September 30, 2021 compared to the same period in 2020 due to higher levels of operations in response to the increased demand for travel.

Special Items

Special items for the nine months ended September 30, 2021 included the following:

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

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

For the nine months ended September 30, 2020, special items include a contra-expense of $636 million which represents the amount of CARES Act payroll support grants utilized during the period, impairment charges of $258 million on our Embraer E190 fleet, losses of $106 million related to certain aircraft sale-leaseback transactions, and one-time costs of $58 million, consisting of severance and health benefits, in connection with our voluntary separation programs.

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

Table of Contents

PART I. FINANCIAL INFORMATION

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

The following table sets forth our operating statistics for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Three Months Ended June 30,						Year-over-Year Change		Six Months Ended June 30,						Year-over-Year Change			Three Months Ended September 30,						Year-over-Year Change		Nine Months Ended September 30,						Year-over-Year Change
(percent changes based on unrounded numbers)	(percent changes based on unrounded numbers)	2021			2020			%		2021			2020			%		(percent changes based on unrounded numbers)	2021			2020			%		2021			2020			%
Operational Statistics	Operational Statistics																	Operational Statistics
Revenue passengers (thousands)	Revenue passengers (thousands)	7,938			616			1,188.5		12,401			8,766			41.5		Revenue passengers (thousands)	9,075			2,151			321.8		21,476			10,918			96.7
Revenue passenger miles (RPMs) (millions)	Revenue passenger miles (RPMs) (millions)	10,804			816			1,223.7		16,611			11,208			48.2		Revenue passenger miles (RPMs) (millions)	12,913			2,945			338.5		29,524			14,153			108.6
Available seat miles (ASMs) (millions)	Available seat miles (ASMs) (millions)	13,645			2,413			465.6		22,734			17,304			31.4		Available seat miles (ASMs) (millions)	16,168			6,905			134.1		38,902			24,209			60.7
Load factor	Load factor	79.2		%	33.8		%	45.4	pts	73.1		%	64.8		%	8.3	pts	Load factor	79.9		%	42.6		%	37.3	pts	75.9		%	58.5		%	17.4	pts
Aircraft utilization (hours per day)	Aircraft utilization (hours per day)	8.8			1.6			450.0		7.4			6.1			21.3		Aircraft utilization (hours per day)	10.1			4.2			140.5		8.3			5.5			50.9

Average fare	Average fare	$	174.90		$	276.35		(36.7)		$	165.93		$	191.83		(13.5)		Average fare	$	204.50		$	206.73		(1.1)		$	182.22		$	194.77		(6.4)
Yield per passenger mile (cents)	Yield per passenger mile (cents)	12.82			20.86			(38.5)		12.39			15.00			(17.4)		Yield per passenger mile (cents)	14.37			15.10			(4.8)		13.26			15.02			(11.8)
Passenger revenue per ASM (cents)	Passenger revenue per ASM (cents)	10.18			7.06			44.2		9.05			9.72			(6.9)		Passenger revenue per ASM (cents)	11.48			6.44			78.2		10.06			8.78			14.5
Operating revenue per ASM (cents)	Operating revenue per ASM (cents)	10.99			8.91			23.4		9.82			10.42			(5.8)		Operating revenue per ASM (cents)	12.20			7.12			71.2		10.80			9.48			14.0
Operating expense per ASM (cents)	Operating expense per ASM (cents)	9.91			25.90			(61.7)		10.46			14.72			(28.9)		Operating expense per ASM (cents)	11.04			14.60			(24.3)		10.70			14.69			(27.1)
Operating expense per ASM, excluding fuel(1)	Operating expense per ASM, excluding fuel(1)	10.05			36.95			(72.8)		10.92			12.90			(15.3)		Operating expense per ASM, excluding fuel(1)	9.39			14.64			(35.9)		10.29			13.40			(23.2)

Departures	Departures	67,253			12,896			421.5		111,302			96,191			15.7		Departures	76,918			32,124			139.4		188,220			128,315			46.7
Average stage length (miles)	Average stage length (miles)	1,279			1,183			8.1		1,278			1,163			9.9		Average stage length (miles)	1,320			1,313			0.5		1,293			1,201			7.7
Average number of operating aircraft during period	Average number of operating aircraft during period	269.0			262.0			2.7		268.0			260.6			2.8		Average number of operating aircraft during period	275.9			262.9			4.9		270.4			261.3			3.5
Average fuel cost per gallon, including fuel taxes	Average fuel cost per gallon, including fuel taxes	$	1.91		$	0.96		98.8		$	1.84		$	1.74		5.8		Average fuel cost per gallon, including fuel taxes	$	2.08		$	1.23		69.7		$	1.94		$	1.60		21.3
Fuel gallons consumed (millions)	Fuel gallons consumed (millions)	176			30			479.3		288			227			27.0		Fuel gallons consumed (millions)	213			83			156.4		501			310			61.6
Average number of full-time equivalent crewmembers	Average number of full-time equivalent crewmembers									15,416			16,759					Average number of full-time equivalent crewmembers									16,088			16,004

Historical trends may not continue. The ongoing COVID-19 pandemic continues to cause disruptions in our operations during the ~~three~~nine months ended ~~June~~September 30, 2021. We expect our operating results to significantly fluctuate from quarter-to-quarter in the future due to the uncertainties surrounding the COVID-19 pandemic, its impact on the economy and consumer behavior, and various other factors which are outside of our control. Consequently, we believe quarter-to-quarter comparisons of our operating results may not necessarily be meaningful; you should not rely on our results for any one quarter as an indication of our future performance.

(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

CONSOLIDATED BALANCE SHEET ANALYSIS

The following is a discussion of the significant changes between ~~June~~September 30, 2021, and December 31, 2020.


(in millions)	(in millions)						(in millions)
Selected Balance Sheet Data:	Selected Balance Sheet Data:	June 30, 2021	December 31, 2020	$ Change	% Change		Selected Balance Sheet Data:	September 30, 2021	December 31, 2020	$ Change	% Change
ASSETS	ASSETS						ASSETS
Cash and cash equivalents	Cash and cash equivalents	2,409	1,918	491	25.6	%	Cash and cash equivalents	2,193	1,918	275	14.3	%
Investment securities	Investment securities	1,317	1,135	182	16.0	%	Investment securities	1,100	1,135	(35)	(3.0)	%
Receivables, net of allowance of $2, at June 30, 2021 and December 31, 2020, respectively.		276	98	178	181.9	%
Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively.							Receivables, net of allowance of $3 and $2, at September 30, 2021 and December 31, 2020, respectively.	210	98	112	114.9	%
Flight equipment	Flight equipment	10,793	10,256	537	5.2	%	Flight equipment	11,031	10,256	775	7.5	%
LIABILITIES	LIABILITIES						LIABILITIES
Air traffic liability	Air traffic liability	1,880	1,122	758	67.5	%	Air traffic liability	1,679	1,122	557	49.7	%
Other accrued liabilities	Other accrued liabilities	584	215	369	171.7	%	Other accrued liabilities	348	215	133	61.7	%
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,998	4,413	(415)	(9.4)	%	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS	3,760	4,413	(653)	(14.8)	%
Other							Other	582	78	504	642.9	%

Cash and cash equivalents

Cash and cash equivalents increased by ~~$491~~$275 million, or ~~25.6%~~14.3%, primarily ~~related to $1.6~~driven by $1.8 billion of cash generated from ~~operations, including~~operations. We received $1.1 billion of funds ~~related to the~~under various PSP ~~programs.~~programs in 2021, of which $831 million were classified as operating activities on our condensed consolidated statement of cash flows with the remaining $290 million classified as financing activities. 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. Our cash ~~portion~~position at ~~June~~September 30, 2021 also benefited from the initial cash payments associated with our new Co-Branded Credit Card ~~agreement.The increase~~agreements. The increases to cash ~~was~~were partially offset by ~~$1.4~~$1.8 billion of debt ~~principal repayments.~~

~~Investment securities~~

~~Investment securities increased by $182~~repayments and $803 million ~~or 16.0%, primarily driven by an increase in time deposits.~~of capital expenditures.

Receivables, less allowance

Receivables increased by ~~$178~~$112 million 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 ~~$537~~$775 million, or ~~5.2%~~7.5%, principally driven by aircraft capital expenditures made induring the ~~first half of~~nine months ended September 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 ~~$758~~$557 million, or ~~67.5%~~49.7%, 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 consolidated balance sheet until the point in time that the customer travels.

Other accrued liabilities

Other accrued liabilities increased by ~~$369~~$133 million, or ~~171.7%~~61.7%, primarily due to the timing of passenger tax remittances to governmental authorities. Passenger taxes are collected from customers when tickets are sold and remitted to the authorities at a later date. The increase in passenger tax liability correlates to the increase in demand for travel as ~~a result~~we gradually recover from the COVID-19 pandemic. In addition, the initial cash payments received from our new Co-Branded Credit Card agreements are deferred and recognized as revenue over the terms of the ~~unused portion of~~related contracts within other accrued liabilities and other liabilities on our ~~payroll support extension grants received under the Consolidated Appropriations Act.~~consolidated balance sheet.

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 half of 2021, Treasury provided us with Payroll Support 2 Payments totaling $580 million. These payments consist of $436 million in grants and $144 million in unsecured term loans. In consideration for the Payroll Support 2 Payments, we issued warrants to Treasury to purchase approximately 1.0 million shares of our common stock at an exercise price of $14.43 per share.

~~On May 6, 2021, we entered into a Payroll Support 3 Agreement with Treasury governing our participation in the federal~~

(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

payroll support program for passenger air carriers under Section 7301 of the American Rescue Plan Act of 2021. In the second quarter of 2021, Treasury provided us with total payments of $541 million under the program, consisting of $409 million in grants and $132 million in unsecured term loans. In consideration for the Payroll Support 3 Payments, we issued warrants to purchase approximately 0.7 million shares of our common stock to the Treasury at an exercise price of $19.90 per share.

Long-term debt and finance lease obligations

Long-term debt and finance lease obligations decreased by ~~$(415)~~$653 million, or ~~(9.4)%. In~~14.8%, primarily due to $1.8 billion of debt repayments made during the ~~first~~ ~~quarter~~ ofnine months ended September 30, 2021 ~~we completed~~partially offset by the issuance of our 0.50% Convertible Senior Notes ~~due 2026 in the amount of $750 million~~ and ~~also received $276 million in~~ unsecured term loans received under the Payroll Support Program 2. These increases were partially offset by $768 million of principal payments on our debt and finance lease obligations and $722 million repayment of outstanding borrowings under the Term Loan. As the business continues to recover wevarious federal payroll support programs. We will continue to look for opportunities to reduce our overall debt level as our business continues to recover.

Other liabilities

Other liabilities increased by $504 million principally due to the initial cash payments received from our new Co-Branded Credit Card agreements in 2021. Earnings associated with the cash payments are deferred over the terms of ~~debt.~~the related contracts within other accrued liabilities and other liabilities on our consolidated balance sheets.

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.

At ~~June~~September 30, 2021, we had cash, cash equivalents, and short-term investments of approximately ~~$3.7~~$3.3 billion. Our business and operating results for 2021 continue to be impacted by the COVID-19 pandemic and we expect to maintain an elevated level of cash on hand as we navigate through ~~2021..~~the remainder of 2021.

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 ~~$1,658 million~~$1.8 billion and ~~$223~~$(223) million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Lower losses, principally driven by ~~lower~~higher operating ~~expenses~~revenues coupled with federal ~~payroll support extension~~ grants received under ~~the Consolidated Appropriations Act~~various payroll support programs, and the initial cash payments associated with our new Co-Branded Credit Card ~~Agreement~~Agreements all contributed to the increase in operating cash flows.

Investing Activities

~~Investing activities for~~During the ~~six~~nine months ended ~~June 30, 2021 included $340 million in proceeds from maturities of investment securities.~~

~~During the six months ended June~~September 30, 2021, capital expenditures related to our purchase of flight equipment included ~~$340~~$577 million ~~related to~~for the purchase of ~~seven~~eight Airbus A321neo aircraft, ~~and spare engines, $59 million related to the purchase of two~~five Airbus A220 aircraft, and the purchases of several spare ~~engines $27 million for spare part purchases, $57~~engines; $97 million in work-in-progress relating to flight ~~equipment,~~equipment; $34 million for spare part purchases; and ~~$16~~$33 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for ~~$41~~$62 million.

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

During the ~~six~~nine months ended ~~June~~September 30, 2020, capital expenditures related to our purchase of flight equipment included ~~$200~~$295 million related to the purchase of ~~three~~five Airbus A321neo aircraft, one Airbus A321 lease buyout, and the purchase of several spare engines, ~~$104~~$128 million in work-in-progress relating to flight equipment, $7$8 million for spare part purchases, and ~~$57~~$67 million for flight equipment deposits. Other property and equipment capital expenditures also included ground equipment purchases and facilities improvements for ~~$66~~$98 million.

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

Investing activities for the nine months ended September 30, 2020 also included ~~the~~$217 million of net proceeds from investment ~~securities of $29 million.~~securities.

(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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Financing Activities

Financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 primarily consisted of debt repayments of $1.8 billion on our outstanding debt and finance lease obligations which included the ~~following:~~following payoffs:

•$722 million on our Term Loan;

•$550 million on our Revolving Facility; and

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

These principal payments were partially offset by:

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

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

~~These proceeds were more than offset by principal payments of $1.5 billion on our outstanding debt and finance lease obligations, $550~~•$22 million of ~~which were associated with~~proceeds from the ~~payoff~~issuance of common stock related to our ~~revolving Credit and Guaranty Agreement.~~Crewmember Stock Purchase Plan.

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

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

• ~~$717~~$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~~agent.

Also included in financing activities were:

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

•~~Proceeds~~Net proceeds of ~~$251~~$259 million and ~~$18~~$19 million from the issuance of unsecured term loan and warrants, respectively, in connection with the Payroll Support Program under the CARES Act;

•$~~118~~236 million of aircraft sale-leaseback ~~transactions;~~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~~Crewmember Stock Purchase Plan.

~~CARES Act Loan Program~~

~~Under~~These proceeds were partially offset by the ~~CARES Act Loan Program~~payoff of our 364-day term loan facility for $1.0 billion, scheduled maturities of $272 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 ~~signed in September 2020~~sales for accounting purposes, and ~~subsequently amended in November 2020, we had~~ the ~~ability to borrow up to a total~~acquisitions of ~~approximately $1.9 billion from the Treasury. If we accepted the full amount of the loan, we would have issued warrants to purchase approximately 20.5 million~~treasury shares of our common stock to the Treasury. Any amount received under the CARES Act Loan Program would have been subject to the relevant provisions of the CARES Act, including many of those governing the Payroll Support Program.

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

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 through May 28, 2021. In May 2021, we notified the Treasury of our intent to forego our remaining approximately $1.8 billion borrowing capacity and subsequently on June 2, 2021 the liens on certain eligible engines and certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, were released from the collateral package.

~~As of June 30, 2021, $115~~$167 million, of ~~the borrowings under the CARES Act loan remained outstanding.~~which $160 million related to our accelerated share repurchases, or ASR. Our share repurchase program has been suspended since March 31, 2020.

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~~depository 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 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 working capital of ~~$223~~$124 million at ~~June~~September 30, 2021 compared to $671 million at December 31, 2020. Our working capital decreased by ~~$448~~$547 million due to several factors, including 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 the COVID-19 pandemic.

(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 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, which may be available to us.

~~(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 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.

Contractual Obligations

Our contractual obligations at ~~June~~September 30, 2021 include the following (in billions):


		Payments due in															Payments due in
		Total		2021		2022		2023		2024		2025		Thereafter			Total		2021		2022		2023		2024		2025		Thereafter
Debt and finance lease obligations(1)	Debt and finance lease obligations(1)	$	5.1	$	0.3	$	0.5	$	0.7	$	0.4	$	0.4	$	2.8	Debt and finance lease obligations(1)	$	4.9	$	0.2	$	0.5	$	0.7	$	0.4	$	0.3	$	2.8
Operating lease obligations	Operating lease obligations	1.1		0.1		0.2		0.1		0.1		0.1		0.5		Operating lease obligations	1.0		0.1		0.1		0.1		0.1		0.1		0.5
Flight equipment purchase obligations(2)	Flight equipment purchase obligations(2)	7.4		0.4		0.8		1.6		1.8		1.2		1.6		Flight equipment purchase obligations(2)	7.7		0.2		0.9		1.6		1.8		1.3		1.9
Other obligations(3)	Other obligations(3)	3.0		0.2		0.4		0.5		0.4		0.4		1.1		Other obligations(3)	2.9		0.1		0.3		0.5		0.5		0.5		1.0
Total	Total	$	16.6	$	1.0	$	1.9	$	2.9	$	2.7	$	2.1	$	6.0	Total	$	16.5	$	0.6	$	1.8	$	2.9	$	2.8	$	2.2	$	6.2

The amounts stated above do not include additional obligations incurred as a result of financing activities executed after ~~June~~September 30, 2021.

(1) Includes actual interest and estimated interest for floating-rate debt based on ~~June~~September 30, 2021 rates.

(2) Amounts represent obligations based on the current delivery schedule set forth in our Airbus order book as of ~~June~~September 30, 2021.

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

As of ~~June~~September 30, 2021, we are in compliance with the covenants of our debt and lease agreements. We have approximately ~~$26~~$28 million of restricted cash pledged under standby letters of credit related to certain leases that will expire at the end of the related lease terms.

As of ~~June~~September 30, 2021, we operated a fleet of 130 Airbus A320 aircraft, 63 Airbus A321 aircraft, 2021 Airbus A321neo aircraft, ~~three~~six Airbus A220 aircraft, and 60 Embraer E190 aircraft. Of our fleet, ~~210~~216 are owned by us, 62 are leased under operating leases, and ~~four~~two are leased under finance leases. Our owned aircraft include aircraft associated with sale-leaseback transactions that did not qualify as sales for accounting purposes. As of ~~June~~September 30, 2021, the average age of our operating fleet was 11.5 years.

Our aircraft order book as of ~~June~~September 30, 2021 is as follows:


Year	Year	Airbus A321neo	Airbus A220	Total	Year	Airbus A321neo	Airbus A220	Total
2021	2021	1	5	6	2021	—	2	2
2022	2022	3	9	12	2022	3	9	12
2023	2023	11	18	29	2023	11	18	29
2024	2024	13	22	35	2024	13	22	35
2025	2025	11	12	23	2025	11	12	23
2026	2026	12	1	13	2026	12	1	13
2027	2027	14	—	14	2027	14	—	14
Total	Total	65	67	132	Total	64	64	128

(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

Expenditures for our aircraft and spare engines include estimated amounts for contractual price escalations and predelivery deposits. We expect to meet our predelivery deposit requirements for our aircraft by paying cash or by using short-term borrowing facilities for deposits required six to 24 months prior to delivery. Any predelivery deposits paid by the issuance of notes are fully repaid at the time of delivery of the related aircraft.

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

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

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

Depending on market conditions, we anticipate using ~~a mix of~~ cash ~~and debt financing~~on hand to pay for the remaining aircraft ~~scheduled for delivery~~deliveries in 2021. For deliveries after 2021, although we believe debt and/or lease financing should be available to us, we cannot give any assurance that we will be able to secure financing on attractive terms, if at all. While these financings may or may not result in an increase in liabilities on our balance sheet, we expect our fixed costs to increase regardless of the financing method ultimately chosen. To the extent we cannot secure financing on terms we deem attractive, we may be required to pay in cash, further modify our aircraft acquisition plans, or incur higher than anticipated financing costs.

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

Off-Balance Sheet Arrangements

Although some of our aircraft lease arrangements are with variable interest entities, as defined by the Consolidations topic of the Codification, none of them require consolidation in our condensed consolidated financial statements. Our decision to finance these aircraft through operating leases rather than through debt was based on an analysis of the cash flows and tax consequences of each financing alternative and a consideration of liquidity implications. We are responsible for all maintenance, insurance and other costs associated with operating these aircraft; however, we have not made any residual value or other guarantees to our lessors.

We have determined that we hold a variable interest in, but are not the primary beneficiary of, certain pass-through trusts. The beneficiaries of these pass-through trusts are the purchasers of equipment notes issued by us to finance the acquisition of aircraft. They maintain liquidity facilities whereby a third party agrees to make payments sufficient to pay up to 18 months of interest on the applicable certificates if a payment default occurs.

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

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates included in our 2020 Form 10-K.

Forward-Looking Information

Forward-Looking Information Statements in this Report (or otherwise made by JetBlue or on JetBlue’s behalf) contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which represent our management’s beliefs and assumptions concerning future events. These statements are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. When used in this Report, the words “expects,” “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks, uncertainties, and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, the coronavirus ("COVID-19") pandemic, including the effectiveness of the available vaccines, the associated distribution and vaccination rates, the infection rates associated with COVID-19 variants, travel advisories and restrictions and the outbreak of any other disease or similar public health threat that affects travel demand or behavior; restrictions on our business related to the financing we accepted under various federal government support programs such as the CARES Act, the Consolidated

(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

Appropriations Act, and the ~~Consolidated Appropriations Act, 2021;~~American Rescue Plan Act; our significant fixed obligations and substantial indebtedness; risk associated with execution of our strategic operating plans in the near-term and long-term; the recording of a material impairment loss of tangible or intangible assets; our extremely competitive industry; volatility in financial and credit markets which could affect our ability to obtain debt and/or lease financing or to raise funds through debt or equity issuances; volatility in fuel prices, maintenance costs and interest

~~(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~~

rates; our reliance on high daily aircraft utilization; our ability to implement our growth strategy; our ability to attract and retain qualified personnel and maintain our culture as we grow; our reliance on a limited number of suppliers, including for aircraft, aircraft engines and parts and vulnerability to delays by those suppliers; our dependence on the New York and Boston metropolitan markets and the effect of increased congestion in these markets; our reliance on automated systems and technology; the outcome of the lawsuit filed by the DOJ and certain state Attorneys General against us related to our Northeast Alliance entered into with American Airlines, our being subject to potential unionization, work stoppages, slowdowns or increased labor costs; our presence in some international emerging markets that may experience political or economic instability or may subject us to legal risk; reputational and business risk from information security breaches or cyber-attacks; changes in or additional domestic or foreign government regulation, including new or increased tariffs; changes in our industry due to other airlines' financial condition; acts of war or terrorism; global economic conditions or an economic downturn leading to a continuing or accelerated decrease in demand for air travel; adverse weather conditions or natural disasters; and external geopolitical events and conditions. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections, beliefs, and assumptions upon which we base our expectations may change prior to the end of each quarter or year.

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. You should understand that many important factors, in addition to those discussed in this Report, could cause our results to differ materially from those expressed in the forward-looking statements. Potential factors that could affect our results include, those described in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures about Market Risk" in this Report and our recently filed periodic report on Forms 10-K and 10-Q, as well as our other filings with the SEC. In light of these risks and uncertainties, the forward-looking events discussed in this Report might not occur. Our forward-looking statements speak only as of the date of this Report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.

Where You Can Find Other Information

Our website is www.jetblue.com. Information contained on our website is not part of this Report. Information we furnish or file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to or exhibits included in these reports are available for download, free of charge, on our website soon after such reports are filed with or furnished to the SEC. Our SEC filings, including exhibits filed therewith, are also available at the SEC’s website at www.sec.gov.

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

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

REGULATION G RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

Operating Expenses per Available Seat Mile, excluding fuel 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.

~~For the three and six months ended June 30,~~In 2021, special items include contra-expenses recognized on the utilization of ~~payroll support extension~~federal grants received under ~~the~~various payroll support programs and contra-expenses recognized on the Employee Retention Credits provided by the CARES Act.

Special items ~~for the three and six months ended June 30,~~in 2020 include contra-expenses recognized on the utilization of payroll support grants received under the CARES Act, ~~and the~~ impairment ~~charge~~charges of our Embraer E190 ~~fleet.~~fleet, losses generated from certain sale-leaseback transactions, and one-time costs associated with our voluntary separation programs.

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	NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL																	NON-GAAP FINANCIAL MEASURE RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020					2021				2020				2021				2020
($ in millions; per ASM data in cents)	($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM		($ in millions; per ASM data in cents)	$		per ASM		$		per ASM		$		per ASM		$		per ASM
Total operating expenses	Total operating expenses	$	1,352	$	9.91	$	625	$	25.90	$	2,379	$	10.46	$	2,547	$	14.72	Total operating expenses	$	1,786	$	11.04	$	1,008	$	14.60	$	4,164	$	10.70	$	3,555	$	14.69
Less:	Less:																	Less:
Aircraft fuel and related taxes	Aircraft fuel and related taxes	336		2.46		29		1.21		530		2.33		394		2.28		Aircraft fuel and related taxes	443		2.74		102		1.47		973		2.50		496		2.05
Other non-airline expenses	Other non-airline expenses	11		0.08		9		0.36		20		0.09		22		0.13		Other non-airline expenses	11		0.06		7		0.10		30		0.07		29		0.12
Special items	Special items	(366)		(2.68)		(304)		(12.62)		(655)		(2.88)		(102)		(0.59)		Special items	(186)		(1.15)		(112)		(1.61)		(841)		(2.16)		(214)		(0.88)
Operating expenses, excluding fuel	Operating expenses, excluding fuel	$	1,371	$	10.05	$	891	$	36.95	$	2,484	$	10.92	$	2,233	$	12.90	Operating expenses, excluding fuel	$	1,518	$	9.39	$	1,011	$	14.64	$	4,002	$	10.29	$	3,244	$	13.40

Operating Expense, Loss before Taxes, Net Loss and Loss per Share, excluding ~~special items~~Special Items and Gain on Equity Investments

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

~~For the three months ended June 30,~~In 2020, special items included ~~a contra-expense which represents~~contra-expenses recognized on the ~~amount~~utilization of ~~CARES Act~~ payroll support grants ~~utilized during~~received under the ~~period. For the six months ended June 20, 2020, special items included the~~CARES Act, impairment ~~charge~~charges of our Embraer E190 fleet, ~~resulting~~losses generated from ~~the decline in demand caused by the COVID-19 pandemic.~~certain sale-leaseback transactions, and one-time costs associated with our voluntary crewmember separation programs.

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

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


NON-GAAP FINANCIAL MEASURE	NON-GAAP FINANCIAL MEASURE													NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE EXCLUDING SPECIAL ITEMS
RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY INVESTMENTS														RECONCILIATION OF OPERATING EXPENSE, LOSS BEFORE TAXES, NET LOSS AND LOSS PER SHARE EXCLUDING SPECIAL ITEMS AND GAIN ON EQUITY INVESTMENTS
		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share amounts)	(in millions, except per share amounts)	2021			2020			2021			2020			(in millions, except per share amounts)	2021			2020			2021			2020
Total operating revenues	Total operating revenues	$	1,499		$	215		$	2,232		$	1,803		Total operating revenues	$	1,972		$	492		$	4,203		$	2,295

Total operating expenses	Total operating expenses	$	1,352		$	625		$	2,379		$	2,547		Total operating expenses	$	1,786		$	1,008		$	4,164		$	3,555
Less: Special items	Less: Special items	(366)			(304)			(655)			(102)			Less: Special items	(186)			(112)			(841)			(214)
Total operating expenses excluding special items	Total operating expenses excluding special items	$	1,718		$	929		$	3,034		$	2,649		Total operating expenses excluding special items	$	1,972		$	1,120		$	5,005		$	3,769

Operating income (loss)	Operating income (loss)	$	147		$	(410)		$	(147)		$	(744)		Operating income (loss)	$	186		$	(516)		$	39		$	(1,260)
Add back: Special items	Add back: Special items	(366)			(304)			(655)			(102)			Add back: Special items	(186)			(112)			(841)			(214)
Operating loss excluding special items		$	(219)		$	(714)		$	(802)		$	(846)
Operating (loss) excluding special items														Operating (loss) excluding special items	$	—		$	(628)		$	(802)		$	(1,474)

Operating margin excluding special items	Operating margin excluding special items	(14.6)		%	(332.6)		%	(35.9)		%	(46.9)		%	Operating margin excluding special items	—		%	(127.6)		%	(19.1)		%	(64.2)		%

Income (loss) before income taxes	Income (loss) before income taxes	$	57		$	(450)		$	(290)		$	(804)		Income (loss) before income taxes	$	190		$	(578)		$	(100)		$	(1,381)
Add back: Special items	Add back: Special items	(366)			(304)			(655)			(102)			Add back: Special items	(186)			(112)			(841)			(214)
Loss before income taxes excluding special items		$	(309)		$	(754)		$	(945)		$	(906)
Less: Gain on equity investments														Less: Gain on equity investments	54			—			54			—
(Loss) excluding special items and gain on equity investments														(Loss) excluding special items and gain on equity investments	$	(50)		$	(690)		$	(995)		$	(1,595)

Pre-tax margin excluding special items		(20.6)		%	(351.0)		%	(42.3)		%	(50.2)		%
Pre-tax margin excluding special items and gain on equity investments														Pre-tax margin excluding special items and gain on equity investments	(2.6)		%	(140.1)		%	(23.7)		%	(69.5)		%

Net income (loss)	Net income (loss)	$	64		$	(320)		$	(183)		$	(588)		Net income (loss)	$	130		$	(393)		$	(53)		$	(981)
Add back: Special items	Add back: Special items	(366)			(304)			(655)			(102)			Add back: Special items	(186)			(112)			(841)			(214)
Less: Income tax (expense) benefit related to special items	Less: Income tax (expense) benefit related to special items	(96)			(76)			(173)			(26)			Less: Income tax (expense) benefit related to special items	(55)			(28)			(250)			(53)
Net loss excluding special items		$	(206)		$	(548)		$	(665)		$	(664)
Less: Gain on equity investments														Less: Gain on equity investments	54			—			54			—
Less: Income tax (expense) related to gain on equity investments														Less: Income tax (expense) related to gain on equity investments	(16)			—			(16)			—
Net (loss) excluding special items and gain on equity investments														Net (loss) excluding special items and gain on equity investments	$	(39)		$	(477)		$	(682)		$	(1,142)

Earnings Per Common Share:	Earnings Per Common Share:													Earnings Per Common Share:
Basic	Basic	$	0.20		$	(1.18)		$	(0.58)		$	(2.14)		Basic	$	0.41		$	(1.44)		$	(0.17)		$	(3.58)
Add back: Special items, net of tax	Add back: Special items, net of tax	(0.85)			(0.84)			(1.52)			(0.28)			Add back: Special items, net of tax	(0.41)			(0.31)			(1.86)			(0.58)
Less: Gain on equity investments, net of tax														Less: Gain on equity investments, net of tax	0.12			—			0.12			—
Basic excluding special items	Basic excluding special items	$	(0.65)		$	(2.02)		$	(2.10)		$	(2.42)		Basic excluding special items	$	(0.12)		$	(1.75)		$	(2.15)		$	(4.16)

Diluted	Diluted	$	0.20		$	(1.18)		$	(0.58)		$	(2.14)		Diluted	$	0.40		$	(1.44)		$	(0.17)		$	(3.58)
Add back: Special items, net of tax	Add back: Special items, net of tax	(0.85)			(0.84)			(1.52)			(0.28)			Add back: Special items, net of tax	(0.40)			(0.31)			(1.86)			(0.58)
Diluted excluding special items and gain on equity method investments		$	(0.65)		$	(2.02)		$	(2.10)		$	(2.42)
Less: Gain on equity investments, net of tax														Less: Gain on equity investments, net of tax	0.12			—			0.12			—
Diluted excluding special items and gain on equity investments														Diluted excluding special items and gain on equity investments	$	(0.12)		$	(1.75)		$	(2.15)		$	(4.16)

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PART I. FINANCIAL INFORMATION

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

Free Cash Flow

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


NON-GAAP FINANCIAL MEASURE	NON-GAAP FINANCIAL MEASURE					NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW	RECONCILIATION OF FREE CASH FLOW					RECONCILIATION OF FREE CASH FLOW
		Six Months Ended June 30,					Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		(in millions)	2021		2020
Net cash provided by operating activities		$	1,658	$	223
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	1,755	$	(223)
Less: Capital expenditures	Less: Capital expenditures	(524)		(377)		Less: Capital expenditures	(770)		(529)
Less: Predelivery deposits for flight equipment	Less: Predelivery deposits for flight equipment	(16)		(57)		Less: Predelivery deposits for flight equipment	(33)		(67)
Free Cash Flow	Free Cash Flow	$	1,118	$	(211)	Free Cash Flow	$	952	$	(819)

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PART I. FINANCIAL INFORMATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except as described below, there have been no material changes in market risks from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our 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 ~~June~~September 30, 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 $~~166~~190 million. As of ~~June~~September 30, 2021, we had not hedged any of our projected fuel requirement for the remainder of 2021.

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 ~~$3.9~~$4.0 billion of our debt and finance lease obligations, with the remaining $0.2 billion having floating interest rates. As of ~~June~~September 30, 2021, if interest rates were on average 100 basis points higher in 2021, our annual interest expense would increase by ~~an insignificant amount.~~approximately $1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on our variable rate debt.

If interest rates were to average 100 basis points lower in 2021 than they were during 2020, our interest income from cash and investment balances would decrease by approximately ~~and insignificant amount.~~$1 million. This amount is determined by considering the impact of the hypothetical change in interest rates on the balances of our money market funds and short-term, interest-bearing ~~investment~~investments 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 ~~June~~September 30, 2021. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 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 ~~June~~September 30, 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. Refer to Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

ITEM 1A. RISK FACTORS

The global COVID-19 pandemic has had, and is expected to continue to have, a material adverse impact on the travel industry generally and, as a result, on our business and results of operations, and these impacts may persist for an extended period of time or become more pronounced over time.

The global spread and impact of the COVID-19 pandemic is complex, unpredictable, and continuously evolving and has resulted in significant disruption and additional risks to our business; the travel and hospitality industries; and the global economy. The COVID-19 pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on large gatherings of people, travel bans, border closings and restrictions, business closures, quarantines, shelter-in-place orders, and social distancing measures and vaccination mandates. As a result, the COVID-19 pandemic and its consequences have significantly reduced global passenger air travel and have had a material detrimental impact on global commercial activity across the travel and hospitality industries, all of which has had, and is expected to continue to have, a material adverse impact on our business, operations, and financial results.

The extent, duration, and magnitude of the COVID-19 pandemic's effects will depend on various factors, all of which are highly uncertain, difficult to predict and not controlled by us, including, but not limited to, the impact of the pandemic on global and regional economies, travel, and economic activity, as well as actions taken by governments, businesses, and individuals in response to the pandemic, including vaccination rates in the markets where we operate, and any additional resurgence of COVID-19 and the development of new variants. These factors include the impact of the COVID-19 pandemic on unemployment rates and consumer discretionary spending; governmental or regulatory orders that impact our business and our industry, including mandates that require all passengers on our flights and our crewmembers to be vaccinated; the demand for air travel; levels of consumer confidence; the ability to effectively and widely manufacture and distribute vaccines and broad acceptance of the vaccine by the general population; and the pace of recovery when the pandemic subsides. Moreover, even after shelter-in-place orders and travel bans and advisories are lifted and, vaccines are more widely distributed and available and vaccination rates increase, demand for air travel may remain depressed for a significant length of time, and we cannot predict if and when demand will return to pre-COVID-19 levels. In addition, we cannot predict whether business travel for in-person meetings will decrease over the long-term due to technological advancements in, and consumer acceptance and adaptation to, virtual meetings and/or changes in customer preferences.

The COVID-19 pandemic has subjected our business, operations, and financial condition to a number of significant risks:

Demand, Capacity, Revenues and Expenses: With the global spread of COVID-19 beginning in March 2020, 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 $1.4 billion for the year ended December 31, 2020. The Company expects its results of operations for full-year 2021 to be materially impacted. Additionally, the U.S. Congress has considered legislation that would mandate all passengers on our domestic flights to be vaccinated, which could negatively impact demand in certain of our markets. 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.

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The COVID-19 pandemic has caused us, and could continue to cause us, to incur additional expenses. While governments have and may continue to implement various stimulus and relief programs, it is uncertain whether and to what extent we will be eligible to participate in, or successfully access, such programs, whether conditions or restrictions imposed under such programs will be acceptable, and whether such programs will be effective in avoiding or significantly mitigating the financial impacts of the COVID-19 pandemic. Further, we have incurred additional costs related to severance payments and may incur additional expenses related to restructuring activities in future periods. Even after the COVID-19 pandemic subsides, we could experience other short or longer-term impacts on our costs, including, for example, the need for enhanced health and hygiene standards or certifications, social distancing requirements or other precautionary measures in response to the health and safety challenges presented by the COVID-19 pandemic. These effects could impact our ability to generate profits even after revenues improve. The Company has and expects to continue to focus on reducing expenses and managing liquidity. While we lowered our cash burn from an average of approximately $18 million per day at the end of March 2020 to approximately $6.7 million per day in in the fourth quarter ended December 31, 2020, we may not be able to continue to reduce cash burn at the same rate in the future. Cash burn is calculated as net cash used in operating activities, net cash used in investing activities, and net cash provided by financing activities adjusted for certain items such as: grant proceeds received under various federal payroll support programs, proceeds from the issuance of long-term debt and finance lease obligations, proceeds of financing arrangements reported within investing activities (such as certain aircraft sale-leaseback transactions), early repayments of our debt and finance lease obligation, cash payments associated with our voluntary separation programs, net purchases of investment securities, and net proceeds from our common stock offerings.

Operations: In response to the significant decline in demand for air travel across our system, we have taken actions and continue to evaluate spending to manage operating expenses and optimize our financial resources. These actions include a permanent reduction in our workforce across our BlueCities and our support centers, eliminating non-essential spending and corporate initiatives, and reducing costs. We have received, and may continue to receive, demands or requests from labor unions that represent our colleagues, whether in the course of our periodic renegotiation of our collective bargaining agreements or otherwise, for additional compensation, healthcare benefits, or other terms that could increase costs, and we could experience labor disputes or disruptions as we continue to implement our mitigation plans. Additionally, as a result of a federal government mandate and by virtue of JetBlue being a contractor to the federal government, our crewmembers who do not receive an approved medical or religious accommodation will be required to be vaccinated against the SARS-Cov-2 novel coronavirus. As a result, we may face staffing shortages as we begin to enforce this mandate that may disrupt our operations. Further, once the effects of the pandemic subside, the recovery period could be extended and we expect that certain operational changes, particularly with respect to enhanced health and safety measures and global care and cleanliness certifications, will be necessary over the long-term.

Further, certain crewmembers of the Company, its suppliers and its business partners, such as airport, air traffic personnel, and those working on certain production lines, 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 as well as that of our suppliers. The Company’s operations may be further impacted in the event of additional instances of actual or perceived risk of infection among crewmembers 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 crewmember matters.

Financial Condition and Indebtedness: As we manage through the effects of the pandemic, our level of indebtedness has increased and may continue to increase. To enhance our liquidity profile and cash position in response to the COVID-19 pandemic, the Company 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, completed a public offering of 42 million shares of our common stock for net proceeds of $583 million, executed a number of aircraft sale-leaseback transactions, and temporarily grounded a portion of its fleet. There is no guarantee that debt financings will be available in the future to fund our obligations or will be available on terms consistent with our expectations. We also expect the ongoing impact of the COVID-19 pandemic on the financial markets could also adversely affect our ability to raise equity financing in the future. Changes in the credit ratings of our debt, including our revolving credit facility and outstanding senior notes, could have an adverse impact on our interest expense. As a result of the general economic uncertainty and the impact of the COVID-19 pandemic, our credit ratings have been downgraded. If our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our credit rating levels, our industry, or our Company, our access to capital and the cost of debt financing would be negatively impacted.

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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.

Growth: The COVID-19 pandemic has negatively impacted, and could continue to impact, the pace and timing of our growth. As a result of the COVID-19 pandemic, the Company reduced its planned capital expenditures and operating expenditures in 2020 (including by postponing projects deemed non-critical to the Company's operations), suspended share repurchases under its share repurchase program, and grounded or redeployed aircraft.

Capital Markets Impact: The global stock markets have experienced, and may continue to experience, significant volatility as a result of the COVID-19 pandemic, and the price of our common stock has been volatile since the onset of the pandemic. The COVID-19 pandemic and the significant uncertainties it has caused for the global economy, business activity, and business confidence have had, and are likely to continue to have, a significant effect on the market price of securities generally, including our securities. In addition, certain debt covenants restrict our ability to engage in share repurchase activity.

The impacts of the COVID-19 pandemic on our business, operations and financial condition are continuously evolving, and the continuation of the pandemic, any additional resurgence, of COVID-19 or variants could precipitate or aggravate the other risk factors included in this annual report, which in turn could further materially adversely affect our business, financial condition, liquidity, results of operations, and profitability, including in ways that are not currently known to us or that we do not currently consider to present significant risks.

Our Northeast Alliance with American Airlines is Subject to Challenge

In July 2020, we announced a strategic partnership with American Airlines Group Inc., designed to optimize our and American Airlines’ networks through certain flights operated by us and American Airlines to and from John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty International Airport and Boston Logan International Airport, which we refer to as the Northeast Alliance. On September 21, 2021, the United States Department of Justice, along with the Attorneys General of each of the States of Arizona, California, and Florida, the Commonwealths of Massachusetts, Pennsylvania and Virginia, and the District of Columbia, filed a lawsuit in the United States District Court for the District of Massachusetts against us and American Airlines concerning the Northeast Alliance. The lawsuit asserts and seeks an adjudication that the Northeast Alliance violates Section 1 of the Sherman Act, and that we and American Airlines should be permanently enjoined from continuing and restrained from further implementing the Northeast Alliance.

We and American Airlines established the Northeast Alliance to unlock capacity growth and customer benefits neither of us could achieve independently and to better compete in the northeast market. We believe the lawsuit is without merit, we, along with American Airlines, intend to defend this matter vigorously. If we are unsuccessful, the failure to achieve the intended benefits of the Northeast Alliance could have an adverse impact on our business, financial condition and results of operations. Additionally, we are incurring costs associated with implementing operational and marketing elements of the Northeast Alliance, which would not be recoverable if we were required to unwind all or portion of the Northeast Alliance.

Part I, Item 1A "Risk Factors" of our 2020 Form 10-K, includes a discussion of our risk factors which are incorporated herein. ~~There~~Other than the risk factors described above, there have been no material changes from the risk factors ~~associated with our business~~ previously disclosed in our Form 10-K.

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

In accordance with the Payroll Support Program Agreement, the Payroll Support Program Extension Agreement, the Payroll Support 3 Agreement, and the Loan Agreement with the Treasury, we are prohibited from making any share repurchases through September 30, 2022. We have suspended our share repurchase program as of March 31, 2020. The acquisition of treasury stock reflected on our condensed consolidated statement of cash flows for the ~~three~~nine months ended ~~June~~September 30, 2021 represents the return of shares to satisfy tax payments associated with crewmember stock compensation that vested during the period.

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PART II. OTHER INFORMATION

In consideration for the Payroll Support 2 Payments, during the ~~six~~nine months ended ~~June~~September 30, 2021, we issued warrants to purchase approximately $11.0 million shares of our common stock to the Treasury at an exercise price of $14.43 per share.

In consideration for the Payroll Support 3 Payments, during the ~~six~~nine months ended ~~June~~September 30, 2021, we issued warrants to purchase approximately ~~$0.7~~0.7 million shares of our common stock to the Treasury at an exercise price of $19.90 per share. See Note 3 to our condensed consolidated financial statements.

ITEM 5. OTHER INFORMATION

None.

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*10.1						~~Warrant Agreement, dated as of May 6, 2021, between~~ JetBlue ~~Airways Corporation and the United States Department of the Treasury~~
4.2*						~~Form of Warrant (included as Annex B to Exhibit 4.1)~~
10.1*						~~Payroll Support Program 3 Agreement, dated as of May 6, 2021, between JetBlue Airways Corporation and the United States Department of the Treasury~~
10.2*						~~Promissory Note, dated as of May 6, 2021 issued by JetBlue Airways Corporation in the name of the United States Department of the Treasury~~
~~10.3~~						~~Offer Letter between~~Executive Retention Award - Ursula Hurley, ~~and JetBlue Airways Corporation,~~ dated ~~June 15,~~September 5, 2021—incorporated by reference to Exhibit 10.1 to our current report on Form 8-K dated ~~May 11,~~September 5, 2021 and filed on ~~June 21,~~September 7, 2021.
~~10.4~~10.2						~~Form of Performance-Contingent Executive Retention Award Agreement—~~Amendment to Employment Agreement between Robin Hayes and JetBlue Airways Corporation, dated September 5, 2021—incorporated by reference to Exhibit ~~10.4~~10.2 to our ~~Quarterly Report~~current report on Form ~~10-Q for the quarter ended March 31,~~8-K dated September 5, 2021 and filed on September 7, 2021.
10.5*						~~JetBlue Executive Retention Award - Ursula Hurley dated February 12, 2021~~
10.6*						~~JetBlue Executive Retention Award - Ursula Hurley dated April 12, 2021~~
10.7*						~~Form of Performance Share Unit Award Agreement (2020 Omnibus Incentive Plan)~~
10.8*						~~Form of RSU Award Agreement for Non-Employee Directors (2020 Omnibus Incentive Plan)~~
10.9*						~~Form of RSU Award Agreement, Crewmembers (2020 Omnibus Incentive Plan)~~
10.10*						~~Form of Deferred Stock Unit Award Agreement (2020 Omnibus Incentive Plan)~~
31.1*						Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2*						Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32**						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Labels Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)


*						Filed herewith.
**						Furnished herewith.

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SIGNATURE

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

JETBLUE AIRWAYS CORPORATION

(Registrant)

Date:

~~July 30,~~November 1, 2021

By:

/s/ Alexander Chatkewitz

Vice President, Controller, and
Chief Accounting Officer
(Principal Accounting Officer)

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