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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2021

or

☐     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

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

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.

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 March 31, 2021, there were 316,636,886 shares outstanding of the registrant’s common stock, par value $0.01.

JETBLUE AIRWAYS CORPORATION

FORM 10-Q

INDEX

			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			3
Consolidated Balance Sheets - March 31, 2021 and December 31, 2020			3
Consolidated Statements of Operations - Three Months Ended March 31, 2021 and 2020			5
Consolidated Statements of Comprehensive Loss - Three Months Ended March 31, 2021 and 2020			6
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2021 and 2020			7
Consolidated Statements of Stockholders' Equity - Three Months Ended March 31, 2021 and 2020			8
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			38
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			39
Item 1A. Risk Factors			39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 5. Other Information			39
Item 6. Exhibits			40
SIGNATURE			42

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)

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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share data)

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

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 March 31,
						2021						2020
OPERATING REVENUES
Passenger						$	670					$	1,511
Other						63						77
Total operating revenues						733						1,588
OPERATING EXPENSES
Aircraft fuel and related taxes						193						365
Salaries, wages and benefits						521						601
Landing fees and other rents						115						112
Depreciation and amortization						125						139
Aircraft rent						25						21
Sales and marketing						23						53
Maintenance, materials and repairs						104						160
Other operating expenses						210						269
Special items						(289)						202
Total operating expenses						1,027						1,922
OPERATING LOSS						(294)						(334)
OTHER INCOME (EXPENSE)
Interest expense						(58)						(25)
Capitalized interest						3						3
Interest income and other						2						2
Total other income (expense)						(53)						(20)
LOSS BEFORE INCOME TAXES						(347)						(354)
Income tax benefit						(100)						(86)
NET LOSS						$	(247)					$	(268)
LOSS PER COMMON SHARE:
Basic						$	(0.78)					$	(0.97)
Diluted						$	(0.78)					$	(0.97)

			Three Months Ended March 31,
			2021						2020
NET LOSS			$	(247)					$	(268)
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			—						(8)
Total other comprehensive loss			—						(8)
COMPREHENSIVE LOSS			$	(247)					$	(276)

			Three Months Ended March 31,
			2021						2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss			$	(247)					$	(268)
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes			(97)						(83)
Impairment of long-lived assets			—						202
Depreciation			117						127
Amortization			8						12
Stock-based compensation			8						9
Changes in certain operating assets and liabilities			304						129
Deferred federal payroll support program grants			87						—
Other, net			(3)						(4)
Net cash provided by operating activities			177						124
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures			(211)						(314)
Predelivery deposits for flight equipment			(6)						(53)
Purchase of available-for-sale securities			—						(207)
Proceeds from the sale of available-for-sale securities			270						395
Other, net			(1)						—
Net cash provided by (used in) investing activities			52						(179)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt			855						—
Proceeds from short-term borrowings			—						983
Proceeds from issuance of stock warrants			8						—
Repayment of long-term debt and finance lease obligations			(644)						(102)
Acquisition of treasury stock			(6)						(166)
Other, net			(1)						(1)
Net cash provided by financing activities			212						714
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			441						659
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)			$	2,410					$	1,677
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest (net of amount capitalized)			$	37					$	18
Cash payments for income taxes (net of refunds)			—						1
NON-CASH TRANSACTIONS
Operating lease assets obtained in exchange for operating lease liabilities			$	—					$	2
(1) Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:
			March 31, 2021						March 31, 2020
Cash and cash equivalents			$	2,358					$	1,618
Restricted cash			52						59
Total cash, cash equivalents and restricted cash			$	2,410					$	1,677

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
Balance at December 31, 2020						474						$	5					158						$	(1,981)					$	2,959					$	2,968					$	—					$	3,951
Net loss						—						—						—						—						—						(247)						—						(247)
Other comprehensive income						—						—						—						—						—						—						—						—
Vesting of restricted stock units						1						—						—						(6)						—						—						—						(6)
Stock compensation expense						—						—						—						—						8						—						—						8
Warrants issued under federal support programs						—						—						—						—						8						—						—						8
Balance at March 31, 2021						475						$	5					158						$	(1,987)					$	2,975					$	2,721					$	—					$	3,714
						Common Shares						Common Stock						Treasury Shares						Treasury Stock						Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive  Income (Loss)						Total
Balance at December 31, 2019						427						$	4					145						$	(1,782)					$	2,253					$	4,322					$	2					$	4,799
Net loss						—						—						—						—						—						(268)						—						(268)
Other comprehensive loss						—						—						—						—						—						—						(8)						(8)
Vesting of restricted stock units						1						—						—						(6)						—						—						—						(6)
Stock compensation expense						—						—						—						—						9						—						—						9
Shares repurchased						—						—						13						(192)						32						—						—						(160)
Balance at March 31, 2020						428						$	4					158						$	(1,980)					$	2,294					$	4,054					$	(6)					$	4,366

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

JetBlue Airways Corporation, or JetBlue, provides air transportation services across the United States, the Caribbean and Latin America. Our condensed consolidated financial statements include the accounts of JetBlue and our subsidiaries which are collectively referred to as “we” or the “Company”. All majority-owned subsidiaries are consolidated on a line by line basis, with all intercompany transactions and balances being eliminated. These condensed consolidated financial statements and related notes should be read in conjunction with our 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 and convertible debt securities. The fair values of these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the fair value hierarchy. We did not record any material gains or losses on these securities during the three months ended March 31, 2021 or 2020. Refer to Note 8 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

Held-to-maturity investment securities. We did not have any held-to-maturity investments as of March 31, 2021 and December 31, 2020. We did not record any significant gains or losses on these securities during the three months ended March 31, 2021 or 2020.

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

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 $45 million and $40 million as of March 31, 2021 and December 31, 2020, respectively.

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 March 31, 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 $33 million and $34 million as of March 31, 2021 and December 31, 2020, respectively, and is included within other assets on our consolidated balance sheets.

Recently Adopted Accounting Standards

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 2 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 March 31, 2021.

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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

Contract Liabilities

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

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

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

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

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

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

In April 2020, we executed a pre-purchase arrangement of TrueBlue® points with our co-brand credit card partner for $150 million. The funds have been fully applied to point purchases as of March 31, 2021.

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

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

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

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

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

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

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

(1) Total excludes finance lease obligations of $56 million and $63 million at March 31, 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.

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

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

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

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

0.50% Convertible Senior Notes due 2026

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

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

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

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

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

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

Floating Rate Term Loan Credit Facility

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

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

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

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

Unsecured CARES Act Payroll Support Program Loan

On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the Treasury governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with payments which totaled $963 million (the "Payroll Support Payments") consisting of $704 million in grants and $259 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 April 23, 2025, and the applicable 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. The warrants expire five years after issuance.

The carrying value relating to the payroll support grants was recorded within other accrued liabilities and was 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 recorded within additional paid-in capital and reduced the total carrying value of the grants to $685 million. Proceeds from the payroll support grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. Our funding from the payroll support grants under the CARES Act were fully utilized as of December 31, 2020.

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.

Secured CARES Act Loan Program

Under the CARES Act Loan Program, JetBlue has the ability to borrow up to a total of approximately $1.9 billion from the Treasury. If we accept the full amount of the loan, we will issue warrants to purchase approximately 20.5 million shares of our common stock to the Treasury. Any amount received under the CARES Act Loan Program will be subject to the relevant provisions of the CARES Act, including many of those described above under the Payroll Support Program.

Unless otherwise terminated early, all borrowings under the CARES Act Loan Program are due and payable on the fifth anniversary of the initial borrowing date. Borrowings bear interest at a variable rate equal to LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum. Our obligations under the CARES Act Loan Program are secured by liens on (i) certain eligible aircraft and engine collateral, (ii) certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, and (iii) certain cash accounts (collectively, the "Collateral"). Under the terms of the CARES Act Loan Program, we may also pledge eligible spare parts, slots, gates and routes, and additional aircraft, real property, ground support equipment, flight simulators and equity interests. The CARES Act Loan 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 loans in full under the CARES Act Loan Program.

We entered into a loan and guarantee agreement (the "Loan Agreement") with the Treasury with a borrowing capacity of $1.1 billion 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.

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

On January 15, 2021, we entered into 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.

As of March 31, 2021, $115 million remained outstanding under the Loan Agreement.

Fixed Rate Enhanced Equipment Notes

2020-1A and B Equipment Notes

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

2019-1B Equipment Notes

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

2020 Sale-Leaseback Transactions

In 2020, we executed $563 million of 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 in the first quarter of 2021.

Citibank Line of Credit

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

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

We repaid the full balance of this facility in the first quarter of 2021.

Short-term

Morgan Stanley Line of Credit

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

Note 4—Loss Per Share

Basic earnings per share is calculated by dividing net (loss) income by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated similarly but includes potential dilution from restricted stock units, the Crewmember Stock Purchase Plan, convertible notes, and any other potentially dilutive instruments using the treasury stock and if-converted methods. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share amounts were 3.5 million and 2.0 million for the three months ended March 31, 2021 and 2020, respectively.

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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

			Three Months Ended March 31,
			2021						2020
Net loss			$	(247)					$	(268)
Weighted average basic shares			316.3						277.2
Effect of dilutive securities			—						—
Weighted average diluted shares			316.3						277.2
Loss per common share
Basic			$	(0.78)					$	(0.97)
Diluted			$	(0.78)					$	(0.97)

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.

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.

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 pilots receive a non-elective Company contribution of 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. Refer to Note 6 to our condensed consolidated financial statements for additional information. The Company's non-elective contribution of 15% 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 three months ended March 31, 2021 and 2020 was $48 million and $52 million, respectively.

Note 6—Commitments and Contingencies

Flight Equipment Commitments

As of March 31, 2021, our firm aircraft orders consisted of 69 Airbus A321neo aircraft and 69 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 March 31, 2021 is approximately $0.7 billion for the remainder of 2021, $0.8 billion in 2022, $1.6 billion in 2023, $1.8 billion in 2024, $1.2 billion in 2025, and $1.6 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. 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 March 31, 2021, we had approximately $26 million in assets serving as collateral for letters of credit relating to a certain number of our leases. These are included in restricted cash and expire at the end of the related lease terms. Additionally, we had approximately $25 million pledged related to our workers' compensation insurance policies and other business partner agreements, which will expire according to the terms of the related policies or agreements.

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.

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. We are currently working with the TWU to determine next steps.

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

Legal Matters

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

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

Note 7—Financial Derivative Instruments and Risk Management

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

Aircraft Fuel Derivatives

We attempt to obtain cash flow hedge accounting treatment for each fuel derivative that we enter into. This treatment is provided for under 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 March 31, 2021 or December 31, 2020.

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

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 no offsetting derivative instruments as of March 31, 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 March 31, 2021 and December 31, 2020 (in millions):

Refer to Note 3 to our condensed consolidated financial statements for fair value information related to our outstanding debt obligations as of March 31, 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 and convertible debt securities. The fair values of these instruments are based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy. We did not record any material gains or losses on these securities during the three months ended March 31, 2021 and 2020.

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

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JETBLUE AIRWAYS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

			Aircraft Fuel Derivatives(1)(2)						Total
Balance of accumulated income, at December 31, 2020			$	—					$	—
Reclassifications into earnings, net of deferred taxes of $0			—						—
Change in fair value, net of deferred taxes of $0			—						—
Balance of accumulated income, at March 31, 2021			$	—					$	—
Balance of accumulated income, at December 31, 2019			$	2					$	2
Reclassifications into earnings, net of deferred taxes $(1)			3						3
Change in fair value, net of deferred taxes of $4			(11)						(11)
Balance of accumulated (loss), at March 31, 2020			$	(6)					$	(6)

(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 million that were previously deferred in other comprehensive loss were reclassified to interest income and other during the three months ended March 31, 2020.

(1) As discussed in Note 3 to our condensed consolidated financial statements, we entered into a PSP Extension Agreement with the Treasury governing our participation in the federal Payroll Support Program for air carriers under the United States Consolidated Appropriations Act, 2021. In the first quarter of 2021, Treasury provided us with payroll support funding totaling $504 million, consisting of $383 million in grants and $121 million in unsecured term loans. The payroll support funds are to be used exclusively for the continuation of payment of crewmember wages, salaries and benefits. The carrying value of the payroll support extension grants is recorded within other liabilities and will be recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. We utilized $288 million of the payroll support extension grants for the three months ended March 31, 2021.

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

ended March 31, 2021.

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

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

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

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

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

OVERVIEW

The COVID-19 pandemic continues to have a material adverse impact on our operating revenues and financial position. Although we began seeing signs of recovery in the first quarter of 2021, demand for air travel remains significantly lower than pre-pandemic levels.

First Quarter 2021 Results

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

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

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

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

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

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

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

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

Since February 2021, we have 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 into the summer. We expect to increase capacity in response to the level of demand. We have taken a number of steps to position ourselves for recovery as demand for air travel eventually returns to pre-pandemic levels.

Network

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

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

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

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

Commercial Partnerships

We continue to develop our strategic relationship with 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 where we plan to increase our operations from 15 daily departures prior to the pandemic, to more than 50 daily departures by summer 2022.

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

Fleet

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

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

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

Customer Experience

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

We also updated our Fare Options platform giving our customers more choices and flexibility by 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 second quarter of 2021 to decline by approximately 15% as compared to the same period in 2019.

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

We presently expect second quarter 2021 operating expenses to decline by approximately 8% as compared to the same period in 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 and begin to return capacity back to pre-pandemic levels.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2021 vs. 2020

Overview

We reported 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. This compares to a net loss of $268 million, an operating loss of $334 million and an operating margin of (21.0)% for the three months ended March 31, 2020. Loss per share was $(0.78) for the three months ended March 31, 2021 compared to $(0.97) for the same period in 2020.

Our reported results for the three months ended March 31, 2021 and 2020 included the effects of special items. Adjusting for these special items(1), our adjusted net loss was $467 million, adjusted operating loss was $583 million, adjusted operating margin was (79.6)%, and adjusted loss per share was $(1.48) for the three months ended March 31, 2021. This compares to adjusted net loss of $116 million, adjusted operating loss of $132 million, adjusted operating margin of (8.3)%, and adjusted loss per share of $(0.42) for the three months ended March 31, 2020.

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

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

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

PART I. FINANCIAL INFORMATION

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

Operating Expenses

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

(in millions; per ASM data in cents; percent changes based on unrounded numbers)			Three Months Ended March 31,												Year-over-Year Change												Cents per ASM
			2021						2020						$						%						2021						2020						% Change
Aircraft fuel and related taxes			$	193					$	365					$	(172)					(47.0)		%				2.13						2.45						(13.2)		%
Salaries, wages and benefits			521						601						(80)						(13.2)						5.74						4.04						42.2
Landing fees and other rents			115						112						3						3.0						1.26						0.75						68.8
Depreciation and amortization			125						139						(14)						(10.4)						1.37						0.93						46.8
Aircraft rent			25						21						4						14.9						0.27						0.14						88.2
Sales and marketing			23						53						(30)						(57.2)						0.25						0.35						(29.8)
Maintenance, materials and repairs			104						160						(56)						(34.9)						1.15						1.07						6.7
Other operating expenses			210						269						(59)						(22.1)						2.31						1.82						27.7
Special items			(289)						202						(491)						(242.6)						(3.18)						1.36						(333.6)
Total operating expenses			$	1,027					$	1,922					$	(895)					(46.6)		%				11.30						12.91						(12.5)		%
Total operating expenses excluding special items(1)			$	1,316					$	1,720					$	(404)					(23.5)		%				14.48						11.55						25.3		%

Aircraft Fuel and Related Taxes

Aircraft fuel and related taxes decreased by $172 million, or 47.0%, for the three months ended March 31, 2021 compared to the same period in 2020. The average fuel price for the three months ended March 31, 2021 decreased by 7.4% to $1.72 per gallon. Our fuel consumption decreased by 42.8%, or 85 million gallons, due to capacity reductions in response to lower demand as a result of the COVID-19 pandemic. We expect our fuel consumption to gradually increase in 2021 as we begin to recover from the pandemic and add capacity back into the system.

Salaries, Wages and Benefits

Salaries, wages and benefits decreased by $80 million, or 13.2%, for the three months ended March 31, 2021 compared to the same period in 2020, driven primarily by our actions as a result of decreased demand for air travel due to the COVID-19 pandemic. In June 2020, we announced a voluntary separation program to our crewmembers, with most departures occurring in the third quarter of last year. As of March 31, 2021, we have approximately 20,000 crewmembers compared to approximately 22,500 crewmembers at March 31, 2020.

Landing Fees and Other Rents

Landing fees and other rents increased by $3 million, or 3.0%, for the three months ended March 31, 2021 compared to the same period in 2020 primarily due to increases in rates partially offset by fewer departures and passengers.

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 $14 million, or 10.4%, for the three months ended March 31, 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.

The decreases described above were partially offset by additional depreciation expenses related to four new aircraft that were placed into service since March 31, 2020. The average number of aircraft increased by 2.7% during the three months ended March 31, 2021 as compared to the same period in 2020.

Aircraft Rent

Aircraft rent increased $4 million, or 14.9%, for the three months ended March 31, 2021 compared to the same period in 2020. As discussed above, we executed a number of 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 decreased $30 million, or 57.2%, for the three months ended March 31, 2021 compared to the same period in 2020 driven by lower credit card fees and computer reservation system charges as demand declined amid the pandemic.

Maintenance Materials and Repairs

Maintenance materials and repairs decreased $56 million, or 34.9%, for the three months ended March 31, 2021 compared to the same period in 2020, primarily driven by the reduction in flying and timing of heavy maintenance visits and engine maintenance.

We expect expenses relating to maintenance, materials, and repairs to increase throughout 2021 with the increase in aircraft utilization as capacity returns to pre-pandemic levels.

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 decreased $59 million, or 22.1%, for the three months ended March 31, 2021 compared to the same period in 2020 due to capacity reductions in response to the decline in demand beginning in the second half of March 2020 coupled with the benefits from cost saving initiatives implemented during the pandemic.

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

Special Items

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

•Contra-expense of $288 million, which represents the amount of federal payroll support grants utilized during the period; and

•Contra-expenses of $1 million related to the recognition of Employee Retention Credits provided by the CARES Act.

For the three months ended March 31, 2020, special items include the impairment charge of $202 million on our Embraer E190 fleet.

The following table sets forth our operating statistics for the three months ended March 31, 2021 and 2020:

			Three Months Ended March 31,												Year-over-Year Change
(percent changes based on unrounded numbers)			2021						2020						%
Operational Statistics
Revenue passengers (thousands)			4,463						8,150						(45.2)
Revenue passenger miles (RPMs) (millions)			5,808						10,392						(44.1)
Available seat miles (ASMs) (millions)			9,090						14,891						(39.0)
Load factor			63.9		%				69.8		%				(5.9)			pts
Aircraft utilization (hours per day)			5.9						10.6						(44.3)
Average fare			$	149.97					$	185.44					(19.1)
Yield per passenger mile (cents)			11.52						14.54						(20.8)
Passenger revenue per ASM (cents)			7.36						10.15						(27.5)
Operating revenue per ASM (cents)			8.06						10.67						(24.5)
Operating expense per ASM (cents)			11.30						12.91						(12.5)
Operating expense per ASM, excluding fuel(1)			12.25						9.01						36.0
Departures			44,049						83,295						(47.1)
Average stage length (miles)			1,277						1,160						10.1
Average number of operating aircraft during period			266.0						259.1						2.7
Average fuel cost per gallon, including fuel taxes			$	1.72					$	1.86					(7.4)
Fuel gallons consumed (millions)			112						197						(42.8)
Average number of full-time equivalent crewmembers			14,493						18,698

Historical trends may not continue. The ongoing COVID-19 pandemic continues to cause disruptions in our operations during the three months ended March 31, 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.