JETBLUE AIRWAYS CORP MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)


PREVIEW

The COVID-19 pandemic continued to negatively impact our business and operating results in the first quarter of 2022. We saw continued improvements in our business during the first quarter, and we expect these to continue. will continue throughout 2022.

First quarter 2022 results

Our operating results in the first quarter of 2021 and 2020 were adversely
impacted by the COVID-19 pandemic. As a result, comparisons of our
year-over-year performance are inflated and would not necessarily be indicative
of our future operating results. In certain cases, we have also provided
comparisons of our first quarter 2022 results to our first quarter 2019 results,
which are more reflective of pre-pandemic operations, allowing for a better
understanding of the full impact of the COVID-19 pandemic and the progress of
our recovery.

• System capacity in the first quarter increased 69.2% year over year and decreased 0.3% compared to the first quarter of 2019.

•Revenue for the first quarter of 2022 increased by 137.0%, or $1.0 billion
year-over-year, to $1.7 billion. Compared to the first quarter of 2019, revenue
decreased by 7.2%, or $135 million.

• Operating revenue per available seat mile (“RASM”) for the first quarter of 2022 increased 40.0% year-over-year to reach 11.29 cents. That compares with a 6.9% drop from the first quarter of 2019.

• Operating expenses for the first quarter of 2022 increased 104.8% year-over-year to reach $2.1 billion. Compared to the first quarter of 2019, operating expenses increased by 17.1%, i.e. $308 million.

• Operating expenses per available seat mile (“CASM”) for the first quarter of 2022 increased 21.0% year-over-year to reach 13.67 cents. This compares to a 17.5% increase from the first quarter of 2019.

•Our operating expense for the first quarter of 2021 and 2019 included the
effects of special items. Excluding fuel and related taxes, special items, as
well as operating expenses related to our non-airline businesses, our operating
expense(1) increased by 36.3% to $1.5 billion year-over-year. This compares to
an increase of 13.5% from the first quarter of 2019. Refer to our ''Regulation G
Reconciliation of Non-GAAP Financial Measures" at the end of this section for
details of the special items.

•Excluding fuel and related taxes, special items, as well as operating expenses
related to our non-airline businesses, our cost per available seat mile ("CASM
ex-fuel")(1) decreased by 19.4% year-over-year to 9.87 cents for the first
quarter of 2022. This compares to an increase of 13.9% from the first quarter of
2019.

•Our reported (loss) earnings per share for the first quarter of 2022, 2021, and
2019 were $(0.79), $(0.78), and $0.14, respectively. Excluding mark-to-market
and certain gains and losses on our investments, our adjusted loss per share(1)
for the first quarter of 2022 was $(0.80). Excluding special items, our adjusted
(loss) earnings per share(1) for the first quarter of 2021 and 2019 were $(1.48)
and $0.16, respectively.

Network

Thanks to our NEA with American, we added three new destinations to our network in the first quarter of 2022.

                   Destination                    Service Commenced

                   Puerto Vallarta, Mexico          February 19, 2022
                   Kansas City, Missouri               March 27, 2022
                   Milwaukee, Wisconsin                March 27, 2022

We plan to continue to diversify our network as we recover from the pandemic. We previously announced services to the following new destinations:

           Destination                        Service Expected to Commence

           Vancouver, Canada                                    June 9, 2022
           Asheville, North Carolina                           June 16, 2022

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

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

Following the success of our inaugural transatlantic service between New York's
John F. Kennedy International Airport and London, which began in August 2021, we
have announced plans to begin service to London from Boston Logan International
Airport this summer.

Fleet

In February 2022, we exercised our option to purchase 30 additional Airbus
A220-300 aircraft under our existing agreement with Airbus Canada Limited
Partnership. The 30 additional A220-300 aircraft are expected to be delivered
from 2022 to 2026. Options for 20 additional A220-300 aircraft remain available
to us.

Properties

Reaffirming our commitment to New York, in February 2022, we executed a new
lease for our primary corporate offices that will extend our stay in the present
Long Island City location until 2039. This new lease contributed $59 million to
our total operating lease assets and liabilities balances at March 31, 2022.

Environment, Social and Governance (“ESG”)

We remain focused on maintaining our leadership in ESG initiatives. Our efforts include:

•In March 2022, the JetBlue Foundation awarded 10 charitable organizations with
grants to support and advance their education and mentorship programs. These
grants are expected to further the Foundation's mission of increased advocacy
for inclusion, gender and racial parity within science, technology, engineering
and math education, and aviation.

•We have expanded our bridge program to provide a pathway for the families of our crew members to become pilots through a defined program of education, training and time building.

• We have invested in Power supply systemsone of the leading suppliers of battery systems for aerospace, thanks to JetBlue Technology Ventures (“JTV”), our wholly owned subsidiary.

•In April 2022JTV announced its investment as a limited partner in TPG Rise Climate, the climate investment strategy of TPG’s global impact investing platform, TPG Rise, continuing its commitment to creating a more sustainable travel industry.

•In April 2022we announced the signing of an offtake agreement with Aemetis for 125 million gallons of Sustainable Blended Aviation Fuel (“SAF”) to be delivered over 10 years beginning in 2025.

Outlook for 2022

We are pleased with the momentum in demand and revenue trends which accelerated
throughout the first quarter. We expect revenue for the second quarter of 2022
to increase between 11% to 16 % compared to the same period in 2019, sustained
by the underlying momentum.

To alleviate the recent operational challenges, we are further moderating our
capacity growth for the remainder of the year. For the second quarter of 2022,
we expect capacity to increase between 0% to 3% compared to the same period in
2019. Full year 2022 capacity is expected to increase between 0% to 5% compared
to 2019. Our original expectation for full year 2022 capacity was an increase of
between 11% to 15% versus 2019. We believe our operational investments and
capacity reductions will improve our operational performance in the coming
months while we expect to fly a record number of customers. Given our reduced
capacity outlook, we are also exploring the potential to accelerate the
retirement of some of our older aircraft.

Operating expenses per available seat mile, excluding fuel and related taxes,
other non-airline operating expenses, and special items ("CASM Ex-Fuel")(1) for
the second quarter of 2022 is expected to increase between 15% to 17%. This
increase is primarily attributed to the following factors: certain inefficient,
close-in capacity reductions; premium and incentive pay to our frontline
crewmembers to support the operation; ramp-up costs to maintain our hiring pace
for the summer; and recent changes

(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

to the collective agreement with our group of pilots. We expect a 10-15% increase in CASM Ex-Fuel for the full year of 2022 compared to 2019.

Despite the temporary cost challenges expected in the near term, we expect the Company to return to profitability in the second half of 2022.

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

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

RESULTS OF OPERATIONS

Three months completed March 31, 2022 compared to 2021

Insight

We reported a net loss of $255 million, an operating loss of $367 million and an
operating margin of (21.1)% for the three months ended March 31, 2022. This
compares to a net loss of $247 million, an operating loss of $294 million and an
operating margin of (40.2)% for the three months ended March 31, 2021. Loss per
share was $(0.79) for the three months ended March 31, 2022 compared to $(0.78)
for the same period in 2021.

Our reported results for the three months ended March 31, 2022 included
mark-to-market and certain gains and losses on our investments. Adjusting for
these items, our adjusted net loss(1) was $256 million, and adjusted loss per
share(1) was $(0.80) for the three months ended March 31, 2022.

Our reported results for the three months ended March 31, 2021 included the
effects of special items. Adjusting for these special items(1), our adjusted net
loss(1) was $467 million, adjusted operating loss(1) was $583 million, adjusted
operating margin(1) was (79.6)%, and adjusted loss per share(1) was $(1.48) for
the three months ended March 31, 2021.

On-time performance, as defined by the Department of Transportation ("DOT"), is
arrival within 14 minutes of scheduled arrival time. In the first quarter of
2022, our system wide on-time performance was 65.6% compared to 78.9% for the
same period in 2021. Our completion factor decreased by 3.0 points to 94.9% in
the first quarter of 2022 from 97.9% for the same period in 2021. We experienced
operational challenges in the first quarter of 2022 which continued into April.

operating income

(Revenues in millions; percent           Three Months Ended March 31,                          Year-over-Year Change
changes based on unrounded numbers)        2022                  2021                     $                            %
Passenger revenue                    $       1,603           $     670          $               933                139.5  %
Other revenue                                  133                  63                           70                111.0
Total operating revenues             $       1,736           $     733          $             1,003                137.0  %

Average Fare                         $      195.99           $  149.97          $             46.02                 30.7  %
Yield per passenger mile (cents)             14.67               11.52                         3.15                 27.3
Passenger revenue per ASM (cents)            10.42                7.36                         3.06                 41.5
Operating revenue per ASM (cents)            11.29                8.06                         3.23                 40.0
Average stage length (miles)                 1,231               1,277                          (46)                (3.6)
Revenue passengers (thousands)               8,177               4,463                        3,714                 83.2
Revenue passenger miles (millions)          10,927               5,808                        5,119                 88.1
Available Seat Miles (ASMs)
(millions)                                  15,383               9,090                        6,293                 69.2
Load Factor                                   71.0   %            63.9  %                                            7.1    pts.


Passenger revenue is our primary source of revenue, which includes seat revenue
and baggage fees, as well as revenue from our ancillary product offerings such
as Even More® Space. The increase in passenger revenue of $933 million, or
139.5%, for the three months ended March 31, 2022 compared to the same period in
2021, was primarily driven by the return in demand for travel as we continue to
recover from the COVID-19 pandemic. Revenue passengers increased by 83.2% to 8.2
million for the three months ended March 31, 2022 from 4.5 million for the same
period in 2021.

Other revenue is primarily comprised of the marketing component of the sales of
our TrueBlue® points. It also includes revenue from the sale of vacation
packages, ground handling fees received from other airlines, and rental income.
The increase in other revenue of $70 million, or 111.0%, was principally driven
by an increase in marketing revenue associated with our TrueBlue® program due to
higher customer spend along with improved metrics from our new co-branded credit
card agreements, which became effective in mid-2021.

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

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

Our first quarter 2022 results were characterized by a very strong demand
acceleration, with revenue coming in more than six points ahead of our original
forecast of a decline between 11% and 16% compared to the same period in 2019.
Load factors improved meaningfully from an average of 62% in January to 80% in
March. We delivered positive year-over-three revenue growth in the month of
March as we exited the quarter with tremendous revenue momentum driven by very
strong underlying travel demand across our business.

Functionnary costs

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


(in millions; per ASM data   Three Months Ended March 31,                 Year-over-Year Change                                    Cents per ASM
in cents; percent changes
based on unrounded numbers)     2022              2021                    $                       %                 2022               2021              % Change
Aircraft fuel and related
taxes                        $    571          $   193          $               378              195.0  %             3.71              2.13                 74.3  %
Salaries, wages and benefits      688              521                          167               32.0                4.47              5.74           

(22.0)

Landing fees and other rents      132              115                           17               14.8                0.86              1.26                (32.2)
Depreciation and
amortization                      143              125                           18               15.1                0.93              1.37                (32.0)
Aircraft rent                      26               25                            1                4.2                0.17              0.27                (38.4)
Sales and marketing                57               23                           34              152.9                0.37              0.25                 49.4
Maintenance, materials and
repairs                           152              104                           48               45.8                0.99              1.15           

(13.8)

Other operating expenses          334              210                          124               59.2                2.17              2.31                 (5.9)
Special items                       -             (289)                         289             (100.0)                  -             (3.18)              (100.0)

Total operating expenses $2,103 $1,027 $

   1,076              104.8  %            13.67             11.30            

21.0%

Total operating expenses
excluding special items(1)   $  2,103          $ 1,316          $               787               59.8  %            13.67             14.48           

(5.6)%

Aviation fuel and related taxes

Aircraft fuel and related taxes increased by $378 million, or 195.0%, for the
three months ended March 31, 2022 compared to the same period in 2021. The
average fuel price for the three months ended March 31, 2022 increased by 68.4%
to $2.90 per gallon. Our fuel consumption increased by 75.2%, or 85 million
gallons, due to the increase in capacity as demand for travel returned.
Scheduled departures increased to 78,393 flights, or 78.0%, for the three months
ended March 31, 2022. Given the significant rise in fuel costs, we moderated our
capacity growth for the first quarter of 2022.

Salaries, wages and benefits

Salaries, wages and benefits increased by $167 million, or 32.0%, for the three
months ended March 31, 2022 compared to the same period in 2021. The increase
was driven primarily by higher total hours worked by our crewmembers as we align
our workforce with the increased demand for travel. As of March 31, 2022, we
have approximately 23,500 crewmembers compared to approximately 20,000
crewmembers at March 31, 2021. The average number of full-time equivalent
crewmembers increased by 33.2% compared to the same period in 2021. We expect
near-term pressures on salaries, wages and benefits driven by premium and
incentive pay to our frontline crewmembers to support the operation, ramp-up
costs to maintain our hiring pace for the summer, and recent changes to the
collective bargaining agreement with our pilots group.

Landing fees and other rents

Landing fees and other rents increased by $17 million, or 14.8%, for the three
months ended March 31, 2022 compared to the same period in 2021 primarily due to
increases in departures.

Depreciation and amortization

Depreciation and amortization increased by $18 million, or 15.1%, for the three
months ended March 31, 2022 compared to the same period in 2021 primarily driven
by the addition of 16 new aircraft that were placed into service since March 31,
2021. The average number of our operating aircraft increased by 6.0% during the
three months ended March 31, 2022 as compared to the same period in 2021.

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

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

Sales and Marketing

Sales and marketing increased $34 million, or 152.9%, for the three months ended
March 31, 2022 compared to the same period in 2021 principally driven by higher
credit card fees and computer reservation system charges, which are directly
related to return in demand as we continue to recover from the pandemic. Revenue
passengers increased by 4 million, or 83.2%, year-over-year.

Materials and repairs

Upkeep materials and repairs increased $48 millionor 45.8%, for the three months ended March 31, 2022 compared to the same period in 2021, mainly due to increased flights and timing of heavy maintenance visits and engine maintenance.

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 $124 million, or 59.2%, for the three months
ended March 31, 2022 compared to the same period in 2021 as we ramped up the
level of our operations in response to the return in demand for air travel.

Special items

Special items for the three months ended March 31, 2021 included the following:

• Costs of $288 million, which is the amount of federal payroll support grants used during the period; and

• Costs of $1 million related to the recognition of employee retention credits under the CARES Act.

There were no special items for the three months ended March 31, 2022.

Operational statistics

The following table presents our operating statistics for the three months ended March 31, 2022 and 2021:

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

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

                                                      Three Months Ended March 31,                 Year-over-Year Change
(percent changes based on unrounded numbers)            2022                  2021                           %
Operational Statistics
Revenue passengers (thousands)                            8,177               4,463                  83.2
Revenue passenger miles (RPMs) (millions)                10,927               5,808                  88.1
Available seat miles (ASMs) (millions)                   15,383               9,090                  69.2
Load factor                                                71.0   %            63.9  %                7.1       pts
Aircraft utilization (hours per day)                        9.9                 5.9                  67.8

Average fare                                      $      195.99           $  149.97                  30.7
Yield per passenger mile (cents)                          14.67               11.52                  27.3
Passenger revenue per ASM (cents)                         10.42                7.36                  41.5
Operating revenue per ASM (cents)                         11.29                8.06                  40.0
Operating expense per ASM (cents)                         13.67               11.30                  21.0
Operating expense per ASM, excluding fuel(1)               9.87               12.25                 (19.4)

Departures                                               78,393              44,049                  78.0
Average stage length (miles)                              1,231               1,277                  (3.6)
Average number of operating aircraft during               282.0               266.0                   6.0

period

Average fuel cost per gallon, including fuel      $        2.90           $    1.72                  68.4

taxes

Fuel gallons consumed (millions)                            197                 112                  75.2
Average number of full-time equivalent                   19,304              14,493
crewmembers                                                                                          33.2


Historical trends may not continue. The ongoing COVID-19 pandemic continues to
cause disruptions in our operations. 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.

As the aviation industry continues to recover from the impacts of the COVID-19
pandemic, airlines including us, have faced ongoing challenges ranging from the
spread of the Omicron variant, staffing ramp up, workforce attrition, weather
events, and air traffic delays. To address these challenges, we have announced a
series of investments aimed at restoring crewmember and customer confidence for
the upcoming summer travel season. These investments are centered around five
initiatives:

Schedule reduction

A reduced schedule will offer more buffer and flexibility to recover from
operational disruptions and put less stress on crew resources. We originally
planned to grow our 2022 capacity by 11% to 15% compared to 2019. With a reduced
schedule, we now plan to grow our 2022 capacity by 0% to 5% compared to 2019.
Most importantly, we are reducing our summer schedule by more than 10% from our
original plan, and scheduled aircraft utilization will be down by 10% to 15%
compared to 2019. Even with the reductions, we expect to grow significantly in
New York's three major airports as part of the NEA, from 200 flights per day in
2019 to nearly 300 flights per day.

Hiring and training

Despite reductions in capacity growth, we will proceed with hiring efforts to
increase staffing for the summer, including 5,000 new crewmembers in New York.
We have also increased our pilot training team and simulator capacity to meet
the increase in demand resulting from pilot attrition.

Respond to customer call volume and wait times

Recent operational disruptions have led to a record number of calls into our
customer support center and extended wait times. These disruptions, coupled with
a greater number of customers taking advantage of ticket flexibility and calls
regarding other COVID-related questions, have taxed customer service teams
across the industry. Since last fall, we have onboarded more than 1,100 new
hires into customer support and we continue to increase hiring and training
while also bringing on outside

(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

support to help manage call volume. By this summer, we plan to have our largest customer support team ready to help customers as many embark on their first vacation or travel experience since the pandemic.

We are continuing to strengthen staffing for our suite of digital tools to help
customers avoid waiting on hold, including online chat capabilities and support
via iMessage. In addition, we are also improving self-service capabilities on
our website to offer customers additional options to make changes without
calling.

Furthermore, we are also working to proactively cancel flights on days when bad
weather is forecasted or if we anticipate air traffic control delays due to
congestion or air traffic control center staffing shortages. Cancellations well
in advance of scheduled departures will allow customers more time to adjust
their plans.

Proactive aircraft maintenance efforts

The reduced schedule frees up aircraft time to give us additional opportunities
to get ahead of planned maintenance programs. We are investing in additional
preventative maintenance as well as reserving more aircraft as spares this
summer to reduce the impact of maintenance-related cancellations and delays.

As the supply chain challenges of COVID-19 continue, we have pre-purchased long-lead parts, tools and equipment, as well as additional inventory of frequently used parts, in order to mitigate potential delays.

Preparation of facilities/infrastructure

This summer, we expect to operate approximately 190 daily flights from JFK as we
continue to expand our footprint enabled by the NEA. With our heavy
concentration in the Northeast and major operation at JFK, ensuring that JFK
runs smoothly is essential for the entire network. In addition to hiring across
workgroups, we are making a number of investments at JFK's Terminal 5, which
include:

•Redesign part of the lobby to add more kiosks and open up additional space for customer throughput.

• Rescheduling of flights for the busiest international markets to ensure sufficient lobby space is available for COVID documentation checks.

• Smooth out some of the peaks in the schedule to reduce congestion in the lobby, CST checkpoint and gates.

• Assignment of ground crews to Terminal 5 gates and addition of ground equipment.

While summer reliability continues to be the focus, we expect to also see a
significant improvement in our airport facilities across focus cities this fall,
as new terminals and space become available to support our growth. We plan to
consolidate or open new or renovated terminal spaces in LaGuardia, Newark, and
Orlando.

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