Overview

JetBlue Airways Corporation is a passenger airline that we believe has established itself as a “value airline” which, reflective of its customer base and network, provides a superior core product for a price and at a cost that enables JetBlue to profitably grow. Known as much for its award-winning customer service and free TV as for its competitive fares, JetBlue believes it offers its customers the best main cabin product in markets it serves with a strong core product and reasonably priced optional upgrades. JetBlue operates primarily on point-to-point routes with its fleet of 120 Airbus A320 aircraft and 49 EMBRAER 190 aircraft — one of the youngest and most fuel-efficient fleet of any major U.S. airline. As of December 31, 2011, we served 70 destinations in 22 states, Puerto Rico, Mexico and 12 countries in the Caribbean and Latin America. JetBlue is New York’s Hometown Airline ™ with most of our flights having as an origin or destination New York or one of our other focus cities: Boston, Fort Lauderdale, Los Angeles, Orlando or San Juan, Puerto Rico. By the end of 2011, we operated an average of 700 daily flights. For the year ended December 31, 2011, JetBlue was the 6 ^th largest passenger carrier in the United States based on revenue passenger miles as reported by these passenger airlines. As used in this Form 10-K, the terms “JetBlue”, “we”, “us”, “our” and similar terms refer to JetBlue Airways Corporation and its subsidiaries, unless the context indicates otherwise.

JetBlue was incorporated in Delaware in August 1998 and commenced service February 11, 2000. Our principal executive offices are located at 118-29 Queens Boulevard, Forest Hills, New York 11375 and our telephone number is (718) 286-7900. As of March 5, 2012, our principal executive offices are moving to 27-01 Queens Plaza North, Long Island City, New York 11101.

Where You Can Find Other Information

Our website is www.jetblue.com. Information contained on our website is not part of this report. Information that we furnish or file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to or exhibits included in these reports are available for download, free of charge, on our website soon after such reports are filed with or furnished to the SEC. Our SEC filings, including exhibits filed therewith, are also available at the SEC’s website at www.sec.gov. You may obtain and copy any document we furnish or file with the SEC at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330. You may request copies of these documents, upon payment of a duplicating fee, by writing to the SEC at its principal office at 100 F Street, NE, Room 1580, Washington, D.C. 20549.

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Our Value Proposition

Our mission is to bring humanity back to air travel. We continue to work toward our goal to become “the Americas’ Favorite Airline” – for our employees (whom we refer to as Crewmembers), customers and shareholders. We believe achieving this goal is dependent upon continuing to provide superior customer service in delivering the JetBlue Experience while maintaining financial strength and a cost structure that enables profitable growth in the markets we serve. To do this, we aim to leverage three main building blocks of our business model: culture, offerings and foundations. Culture involves our people and we believe ours is one of our key differentiators in the airline industry. Offerings encompass how and where we offer the JetBlue Experience to our customers and other stakeholders through our strong network and award-winning product and service. Foundations are the basis upon which our airline runs, including processes and systems, and a strong financial foundation, with a strong balance sheet, liquidity and cost structure. We strive to maintain our strong and vibrant service-oriented company culture built around our five key values: Safety, Caring, Integrity, Fun and Passion.

Our History

JetBlue began operations in 2000 as a well-funded start-up, which afforded us the ability to make significant investments in our product offerings, including all new aircraft equipped with leather seats and LiveTV. This product investment combined with superior customer service at low fares led to early success, predominantly with leisure travelers in New York. By the end of 2006, JetBlue employed over 10,000 Crewmembers, operated 500 daily flights with a fleet of 119 aircraft and generated annual revenues exceeding $2 billion. However, a heavy debt load taken on to finance our rapid growth, a wide-spread economic recession and record high energy prices led to two consecutive years of annual losses. It was clear that this rate of growth, as then reflected in our aircraft order book, if not interrupted, was unsustainable. We adjusted our business model first by selling used aircraft and by significantly reducing and deferring a portion of our aircraft order book. Additionally, we began to invest in offerings targeted to attract a higher mix of business travelers, particularly in Boston.

We are the only major U.S. airline which began operations post-deregulation to survive into a second decade of operation on our own. Our continued success is dependent upon our ability to adapt to an ever-changing environment and we believe we are well positioned to do just that.

Culture

We believe one of our competitive strengths is our service-oriented culture. Our company culture places value upon and stresses the importance of providing high quality customer service through a productive, engaged workforce that helps keep our costs low and, ultimately, achieve our financial goals. Our success depends on our people and their capabilities, individually and collectively, living our values and delivering the best customer service experience. We believe we carefully select, train and maintain a flexible and diverse workforce of caring, passionate, fun and friendly people who want to provide our customers with the best experience possible. Further, our historical experience and numerous surveys indicate that customer satisfaction and the likelihood of returning customers can be directly linked to experiences with happy and engaged employees.

Our ability to continue hiring, retaining, and developing people who are committed to delivering the JetBlue Experience to our customers is a key component to maintaining the culture we have built. Our culture is first introduced to all new employees through a screening process and an extensive orientation program which emphasizes the importance of customer service, productivity and cost control. We reinforce the importance of this culture by providing continuous training for our employees, including technical training, a leadership program, training that is focused on the safety value and front line training for our customer service teams.

We are focused on the efficiency and productivity of our Crewmembers. Flexible and productive work rules, effective use of part-time employees and increasing use of technology to automate tasks each contribute to workforce productivity. We are continually looking for ways to make our workforce more efficient through the

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use of technology without compromising our commitment to customer service or safety. Through ongoing collaboration with our internal Values Committees, which have been established for each of our major work groups, we ensure we have the input of peer-elected frontline Crewmembers to help us manage and run the business in the most productive and efficient way.

None of our employees are currently unionized. We believe a direct relationship between JetBlue employees and its leaders – not third-party representation – is in the best interests of our employees, customers and shareholders. We enter into individual employment agreements with each of our Federal Aviation Administration, or FAA, licensed employees, which consist of pilots, dispatchers, technicians and inspectors. These agreements are intended to drive higher levels of engagement and alignment with the Company’s financial success. Each employment agreement is for a term of five years and renews for an additional five-year term unless the employee is terminated for cause or the employee elects not to renew. Pursuant to these agreements, these employees can only be terminated for cause. In the event of a downturn in our business that would require a reduction in work hours, we are obligated to pay these employees a guaranteed level of income and to continue their benefits. In addition, we provide what we believe to be industry-leading job protection language in the agreements in the event of a merger or acquisition, including the establishment of a legal defense fund to use for seniority integration negotiations.

Our leadership team has extensive and diverse airline industry experience. They strive to communicate on a regular basis with all JetBlue employees. They believe in maintaining a direct relationship with all employees and keeping them informed about results and challenges affecting the airline. Effective and frequent communication throughout the organization is fostered through various means, including periodic employee satisfaction surveys, a quarterly magazine, active leadership participation in new hire orientations and periodic open forum meetings across our network, called “pocket sessions,” which are often videotaped and posted on our intranet. By soliciting feedback for ways to improve our service, teamwork and work environment, our leadership team strives to keep Crewmembers engaged and make our business decisions transparent.

Our full-time equivalent employees at December 31, 2011 consisted of 2,168 pilots, 2,326 flight attendants, 3,560 airport operations personnel, 509 technicians (whom others refer to as mechanics), 805 reservation agents, and 2,726 management and other personnel. At December 31, 2011, we employed 10,243 full-time and 3,779 part-time employees.

Offerings

We believe we offer our customers a distinctive flying experience, which we refer to as the “JetBlue Experience” by offering what we believe to be the best domestic core product and providing our customers more value for their purchases. Our marketing objectives are to attract new customers to our brand and give our current customers reasons to come back to us time and time again. A key objective of ours is that competitive fares and quality air travel need not be mutually exclusive. Our competitive fares, high quality product and outstanding customer service create the overall JetBlue Experience that we believe is unique in the domestic airline industry. Key to what we offer to our customers is how and where we offer our service while maintaining a low cost structure relative to our network and superior product level.

High Quality Service and Product.     Onboard JetBlue, customers enjoy new aircraft with roomy leather seats and more legroom than other domestic airlines provide in their coach (and on some, premium) service. Our aircraft’s inflight entertainment systems include 36 channels of free DirecTV ^® , 100 channels of free XM satellite radio and premium movie channel offerings from JetBlue Features ^® , our source of first run films. Our onboard offerings also include an assortment of free and unlimited brand name snacks and beverages. Additionally, customers can purchase premium beverages and food selections and specially-tailored products for overnight flights.

All of our aircraft are equipped with leather seats in a comfortable single class layout. Our Airbus A320 aircraft, with 150 seats, has a wider cabin than both the Boeing 737 and 757, aircraft operated by many of our

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competitors. Our EMBRAER 190 aircraft each have 100 seats that are wider than industry average for this type of aircraft and are arranged in a two-by-two seating configuration. We offer the most legroom in the main cabin of all U.S. airlines in our Even More Space rows.

We believe our strong brand and the JetBlue Experience are key elements of our continued success. To that end, we continually seek to enhance and refine our product and service offerings. During 2011, we re-branded and expanded our popular Even More Legroom offering, now known as Even More Space, to include extra legroom plus early boarding and early access to overhead bin space. Additionally, we introduced Even More Speed, which offers customers the option to enjoy an expedited security experience in select JetBlue airports. Throughout 2011 and 2012, we began offering the Even More Speed expedited security option in over 30 cities. We will continue to offer this convenient service in additional cities as we work with airport authorities to introduce. During 2011, we executed an agreement with ViaSat Inc. to develop and introduce state of the art in-flight Ka broadband connectivity technology, offering the most speed and flexibility of any wi-fi technology currently available, which we plan to introduce on our aircraft beginning in late 2012.

We strive to communicate openly and honestly with customers about delays and service disruptions. We introduced the JetBlue Airways Customer Bill of Rights in 2007 which provides for compensation to customers who experience avoidable inconveniences (as well as some unavoidable circumstances) and commits us to perform at high service standards and holds us accountable if we do not. We are the first and currently the only U.S. major airline to provide such a fundamental benefit to customers. In 2011, we completed 98.2% of our scheduled flights. Unlike most other airlines, we have a policy of not overbooking our flights.

We market our services through advertising and promotions in various media forms, including using increasingly popular social media outlets. We engage in large multi-market programs, as well as many local events and sponsorships and mobile marketing programs. Our targeted public and community relations efforts reflect our commitment to the communities that we serve as well as promoting brand awareness and complementing our strong reputation.

The integrated customer service systems, which we implemented in early 2010, have enabled us to increase our capabilities including growing our current business, providing for more commercial partnerships and allowing us to attract more business customers. We continue to focus on ways to innovate and offer additional ancillary products that will be value added for our customers. We believe selective innovation and expansion of our offerings is critical to our future success.

Our primary and preferred distribution channel is through our website, www.jetblue.com , our lowest cost channel which is also designed to ensure our customers have as pleasant an experience booking their travel as they do in the air. Our participation in global distribution systems, or GDSs, supports our profitable growth in the corporate market, as business customers are more likely to book through a travel agency or booking product that uses a GDS platform. Although the cost of sales through this channel is higher than through our website, the average fare purchased through this channel is generally higher and often covers the increased distribution costs. We currently participate in four major GDSs (Sabre, Galileo, Worldspan and Amadeus) and four major online travel agents, or OTAs (Expedia, Travelocity, Orbitz, and Priceline).

We sell vacation packages through JetBlue Getaways ^TM , a one-stop, value-priced vacation website designed to meet customers’ demand for self-directed packaged travel planning. Getaways packages offer competitive fares for air travel on JetBlue and a selection of JetBlue-recommended hotels and resorts, car rentals and attractions. We also offer a la carte hotel and car rental reservations through our website, which generates ancillary service revenues.

Brand Strength.     JetBlue is a widely recognized and respected global brand, which we believe differentiates us from our competitors and identifies us as a safe, reliable, value-added airline. Our brand has become an important and valuable asset. Similarly, we believe customer awareness of our brand has contributed

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to the success of our marketing efforts and enables us to market ourselves as a preferred marketing partner with companies across many different industries. In 2011, we received several prestigious awards, including being voted “Top Low Cost Airline for Customer Satisfaction” by J.D. Power and Associates for the seventh consecutive year. We also earned distinctions as the “Best Coach-Class Experience”, “Most Customer-Friendly Airline” and “Best Value Airline-Domestic” in the SmarterTravel Editor’s Choice Awards for 2011.

Our customers have told us the JetBlue Experience is an important reason why they choose us over other airlines. We measure and monitor our customer feedback regularly to continuously improve customer satisfaction, a primary goal of ours. One way we do so is by measuring our net promoter score, or NPS, which is a standard metric used by many industries to gauge customer experience. According to Satmetrix, we were recognized as the leader in the 2011 Net Promoter Industry Benchmarks for customer loyalty in the airline category for the second consecutive year. Many of the leading brands which consumers are most familiar with receive high NPS scores and are recognized for great customer service. We believe a higher NPS score leads to customer loyalty and increased revenue.

Route Network.     We believe knowing our customers and understanding the purpose of their travel helps us optimize destinations, strengthen our route schedules and increase unit revenues. Historically, we have been a strong leisure focused airline, which resulted in high seasonality in our business. In recent years, we have become focused on increasing our relevance to the business customer, particularly in Boston, in order to balance some of this seasonality. Additionally, we have continued to profitably grow in Latin America and the Caribbean region, with a mix of leisure and visiting friends and relatives, or VFR, travelers. VFR travelers tend to be slightly less seasonal and more recession resistant than traditional leisure destinations. We have also expanded our portfolio of strategic commercial partnerships in recent years, which generate incremental customers throughout our network and help to balance our off-peak travel periods. We are focused on continuing to diversify our network and further reduce the seasonality by offering the optimal mix for those travelling for leisure, business, or visiting friends and relatives. Our operations primarily consist of transporting passengers on our aircraft with domestic U.S. operations, including Puerto Rico, accounting for 85% of our capacity in 2011. The historic distribution of our available seat miles, or capacity, by region is:

As of December 31, 2011, we provided service to 70 destinations in 22 states, Puerto Rico, Mexico, and 12 countries in the Caribbean and Latin America. We have begun service to the following new destinations since December 31, 2010:

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In 2011, we acquired eight take-off and landing slots at each of New York’s LaGuardia Airport and Washington D.C.’s Ronald Reagan National Airport. We plan to begin our expanded service at each of these airports in 2012. Further, we intend to begin service between Dallas/Fort Worth, TX and Boston in May 2012.

In considering new markets, we generally focus on those markets that are either underserved or have high average fares. As a part of this process, we analyze publicly available data from the Department of Transportation, or DOT, showing the historical number of passengers, capacity and average fares over time. Using this data, combined with our knowledge and experience about how comparable markets have reacted in the past when prices were increased or decreased, we forecast the expected level of demand that may result in a particular market from our introduction of service and lower prices, as well as the anticipated response of existing airlines in that market.

We are the leading carrier in number of flights flown per day between the New York metropolitan area and Florida. We also offer service to the most non-stop destinations of any carrier out of Boston. During 2011, we also became the largest carrier offering service in San Juan, Puerto Rico as well as in the Dominican Republic.

In October 2008, we commenced operations at our new 26-gate terminal centrally located at JFK’s Terminal 5. Terminal 5 has an optimal location with convenient access to active runways which we believe increases the efficiency of our operations. We believe this terminal with its modern amenities, concession offerings and passenger conveniences has also improved the overall efficiency of our operation and, more importantly, has significantly enhanced the ground experience of our customers. The Terminal 5 experience has received numerous awards since its opening in 2008, most recently of which was being named one of the “World’s Most Beautiful Airport Terminals” by Frommer’s Travel in 2012.

Our revamped TrueBlue customer loyalty program, the added benefits of our new customer service system implemented in early 2010, and product enhancements have allowed us to build our relevance to business customers, especially in Boston, where there is a significant business travel presence.

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Commercial Partnerships.     Airlines frequently participate in marketing alliances which generally provide for code-sharing, frequent flyer program reciprocity, coordinated flight schedules that provide for convenient connections and other joint marketing activities. These commercial agreements are typically structured in one of three ways: 1) an interline agreement which allows for a customer to book one ticket with itineraries on multiple airlines; 2) a codeshare in which one airline places its name and flight number on flights operated by another airline; and 3) capacity purchase agreements. The benefits of broad networks offered to customers could attract more customers to these networks as well as our growing network. We currently participate in several marketing partnerships, primarily interline agreements, and will continue to seek additional strategic opportunities as they arise to leverage our strong network and drive incremental traffic and revenue. We believe these commercial partnerships help with yield management, which is improved with our commercial partnerships in a variety of ways, including the more advanced purchase than is typical of our own booking curve, the array of new destinations that we can provide to customers via connections to our airline partners, and the different of travel period helps us improve our off-peak periods.

Our partnerships, of which there are currently 16, are structured primarily using our New York’s JFK gateway with additional focus on Boston’s Logan International Airport, Newark, NJ’s Newark International Airport, Orlando, FL’s Orlando International Airport, Fort Myers, FL’s Southwest Florida International Airport, San Juan, Puerto Rico’s San Juan International Airport, Los Angeles, CA’s Los Angeles International Airport or Washington D.C.’s Dulles International Airport, allowing international travelers, whom we do not otherwise serve, to easily access many of our key domestic and Caribbean routes. Our partners include many notable international carriers, and we plan on continuing to add partners throughout 2012.

Customer Loyalty Program.     TrueBlue is an online program designed to reward and recognize our most loyal customers. The program offers incentives to increase members’ travel on JetBlue. TrueBlue members earn points based upon the amount paid for the flight. Member accounts accumulate points which do not expire as long as new flight points are earned at least once in a 12-month period. Redemption of points for a one-way flight can begin once a member attains as few as 5,000 points. There are no black-out dates or seat restrictions and any JetBlue destination can be booked if the member has enough points to exchange for the value of an open seat.

There were approximately 580,000 travel segments flown during 2011. TrueBlue award miles flown represent approximately 2% of our total revenue passenger miles. Since re-launching the TrueBlue program in November 2009, membership has increased approximately 30%.

We have an agreement with American Express under which they issue JetBlue co-branded American Express credit cards, allowing cardmembers to earn TrueBlue points. We have a separate agreement with American Express, which allows any American Express cardholder to convert their Membership Rewards points into TrueBlue points. Additionally, we have agreements with other loyalty partners, including hotels and car rental companies, which allow their customers to earn TrueBlue points through participation in the partners’ programs. We intend to pursue other loyalty partnerships in the future.

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Foundations

A strong financial foundation is vital to us in the realization of our profitable growth plans. A strong financial foundation is characterized by a strong liquidity position, a sustainable cost structure and active management of business risks, such as high jet fuel prices and interest rate risks among others.

Maintaining a strong financial foundation affords us staying power when entering and developing new markets and the flexibility to seize opportunities when presented, as was demonstrated by our slot purchases at LaGuardia and Reagan National Airports. Our solid liquidity has allowed us to invest in our service offerings, including inflight connectivity and the opportunistic investments in our route network. We believe a healthy cash balance is crucial to maintaining the ability to weather any part of the economic cycle while continuing to execute on our network strategy. We believe foundations are more than just financial and also include our underlying systems and processes, which enable us to deliver on the high quality customer service which is so important to our culture. Continued focus on our foundations is a critical component of our value proposition, including:

Low Cost Advantage.     Historically, our cost structure has allowed us to offer fares lower than many of our competitors. Our network strategy and growth requires a low cost platform. Therefore, we believe maintaining a low cost structure is fundamental to our sustainable growth and profitability. For the year ended December 31, 2011, our cost per available seat mile, excluding fuel, of 6.76 cents is among the lowest reported by all other major U.S. airlines. However, as our fleet and workforce age, it is increasingly difficult to maintain this marginal advantage relative to our competitors. Some of the factors that contribute to our cost advantage include:

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Prudent investments. We believe in making investments that will deliver future benefits, preserve our low cost advantage and drive efficiency. In 2010, we implemented and integrated several customer service systems, including a reservations system, revenue management system, revenue accounting system and a customer loyalty management system among others. The integration of these systems has enabled us to increase our capabilities including growing our current business, providing for more commercial partnerships and allowing us to attract more business customers. We are investing in improved kiosk technology at our airports, which will result in increased airport efficiencies. We continue making infrastructure investments across our network. We plan to continue to make the necessary investments in Boston that will allow us to reach 150 flights per day and in San Juan that will allow us to reach 50 flights per day. We also plan to make substantial investments to several operational systems we use as well as to operational procedures that we believe will help to increase overall operational efficiencies.

Our Industry and Competition

The passenger airline industry in the United States is an extremely competitive and volatile industry, highly sensitive to GDP and economic perspectives. Traditionally, our industry has been dominated by the major U.S. airlines, the largest of which are United Air Lines, Delta Air Lines, American Airlines, Southwest Airlines and US Airways. The DOT defines the major U.S. airlines as those airlines with annual revenues of at least $1 billion; there are currently 12 passenger airlines, including us, meeting this standard. Five of the other major U.S. airlines are larger, have greater financial resources and serve more routes than we do. Passenger airlines can further be defined as either network, low-cost or regional airlines. Network carriers operate a significant portion of their flights using at least one hub where connections are made for flights on a spoke system. Low-cost carriers are those that the industry recognizes as operating under a low-cost business model, with lower infrastructure and aircraft operating costs and with less reliance on the hub-and-spoke system. Regional carriers provide service from small cities, using primarily regional jets to support the network carriers’ hub and spoke systems.  

Following the September 11, 2001 terrorist attacks, low-cost airlines, including ourselves, were able to fill a significant capacity void left by traditional network airline flight reductions. Lower fares and increased low-cost airline capacity created an unprofitable operating environment for the traditional network airlines. Since 2001, the majority of traditional network airlines have undergone significant financial restructuring, including bankruptcies, mergers and consolidations. In the past three years, there have been three significant mergers, which have changed the airline landscape: Delta Air Lines and Northwest Airlines merged in 2009; United Airlines and Continental Airlines merged in 2010; and Southwest Airlines merged with AirTran Airways in 2011. Most recently, American Airlines filed for bankruptcy protection in November 2011. Restructurings typically result in a reduction of labor costs, restructuring of debt, modification or termination of pension plans and general reductions in cost structure, increased workforce flexibility and innovative offerings similar to those of the low-cost airlines while anticipating significant opportunities to realign the expansive route networks, alliances and frequent flier programs.

While our costs remain lower than those of our largest competitors, the difference in the cost structures and the competitive advantage previously enjoyed by us and other low-cost airlines has diminished. Further industry consolidation or restructuring may result in our competitors having a more rationalized route structure and lower operating costs, enabling them to compete more aggressively.

The challenges of the airline industry are numerous. It is one of the most heavily taxed industries, extremely capital and energy intensive and it has a unique susceptibility to economic downturns, inclement weather, international events, natural disasters and acts of terrorism. The highly competitive nature of the airline industry makes airline profits sensitive to even slight changes in fuel costs, average fare levels and passenger demand. The principal competitive factors in the airline industry are fares, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, code-sharing and interline relationships, capacity,

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in-flight entertainment systems and frequent flyer programs. In addition to the above challenges, industry capacity and pricing actions taken by other airlines historically have significantly influenced passenger demand and fare levels. During 2009, most traditional network airlines began to reduce capacity to overcome some of these challenges, particularly economic conditions and high fuel costs. Industry wide capacity discipline has continued throughout 2011, and we believe it will continue in 2012.

Price competition occurs through price discounting, fare matching, increased capacity, targeted sale promotions, ancillary fee additions and frequent flyer travel initiatives, all of which are usually matched by other airlines in order to maintain their share of passenger traffic. A relatively small change in pricing or in passenger traffic could have a disproportionate effect on an airline’s operating and financial results. Our ability to meet this price competition depends on, among other things, our ability to operate at costs equal to or lower than our competitors, including only charging for fees that we believe carry an intrinsic value for the customer. All other factors being equal, we believe customers often prefer JetBlue and the JetBlue Experience.

Aircraft Fuel

Fuel costs continue to be our largest operating expense, representing nearly 40% of our total operating costs in 2011. Fuel prices and availability are subject to wide fluctuations based on geopolitical factors and supply and demand that we can neither control nor accurately predict. We use a third party fuel management service to procure most of our fuel. Our historical fuel consumption and costs were as follows for the years ended December 31:

Total cost and average price per gallon each include related fuel taxes as well as effective fuel hedging gains and losses.

Our goal with fuel hedging is to provide protection against significant and sharp increases in fuel prices by entering into a variety of hedging instruments including swaps, call options and collar contracts with underlyings of jet fuel and crude and heating oil. At December 31, 2011, we had hedged approximately 27% of our projected 2012 fuel requirements. We had no collateral posted related to margin calls on our outstanding fuel hedge contracts as of December  31, 2011.

Maintenance

Our FAA-approved maintenance program is administered by our technical operations department. Consistent with our core value of safety, we use qualified maintenance personnel, ensure they have comprehensive training and maintain our aircraft and associated maintenance records in accordance with, if not exceeding, FAA regulations.

The maintenance work performed on our fleet is divided into four general categories: aircraft line, aircraft heavy, component and power plant. The bulk of line maintenance requirements are handled directly by JetBlue technicians and inspectors and consist of daily checks, overnight and weekly checks, “A” checks, diagnostics and routine repairs. All other maintenance activity is sub-contracted to qualified business partner maintenance, repair and overhaul organizations.

Aircraft heavy maintenance checks consist of a series of more complex tasks that take from one to four weeks to accomplish. The typical frequency for these events is once every 15 months. We send our aircraft to FAA approved Aeroman facilities in El Salvador, Pemco in Tampa, Florida, Timco in Lake City, Florida and Embraer Aircraft Maintenance Services in Nashville, Tennessee. In all cases this work is performed with oversight by JetBlue personnel.

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Component and power plant maintenance, repairs and overhauls on equipment such as engines, auxiliary power units, landing gears, pumps and avionic computers are performed by a number of different FAA-approved repair stations. For example, maintenance of our V2500 series engines on our Airbus A320 aircraft is performed under a 15-year service agreement with MTU Maintenance Hannover GmbH of Germany. Many of our maintenance service agreements are based on a fixed cost per flying hour, which can vary based upon the age of the related component. Required maintenance that is not covered by one of our agreements is performed on a time and materials basis.

LiveTV, LLC

LiveTV, LLC, a wholly-owned subsidiary of JetBlue, provides in-flight entertainment, voice communication and data connectivity services for commercial and general aviation aircraft. LiveTV’s assets include certain tangible equipment and interests in systems installed on its customers’ aircraft, system components and spare parts in inventory, an air-to-ground spectrum license granted by the Federal Communications Commission, a network of approximately 80 ground stations across the continental U.S., and rights to certain patents and intellectual property. LiveTV’s major competitors in the in-flight entertainment systems market include Rockwell Collins, Thales Avionics and Panasonic Avionics. Only Panasonic is currently providing in-seat live television. In the voice and data communication services market, LiveTV’s primary competitors are GoGo, Row 44, Panasonic, OnAir and Aeromobile.

LiveTV has agreements with six other domestic and international commercial airlines for the sale and installation of certain hardware, programming and maintenance of its live in-seat satellite television as well as XM Satellite Radio service and certain other products and services. LiveTV also has general aviation customers to which it supplies voice and data communication services. LiveTV continues to pursue additional customers and related product enhancements. In 2011, JetBlue partnered with ViaSat Inc. to develop in-flight broadband connectivity, which LiveTV will help us to introduce on our aircraft beginning in 2013. LiveTV is also working with ViaSat Inc. to support inflight connectivity for other airlines in the future.

Government Regulation

General.     We are subject to regulation by the DOT, the FAA, the Transportation Security Administration, or TSA, and other governmental agencies. The DOT primarily regulates economic issues affecting air service such as certification and fitness, insurance, consumer protection and competitive practices. The DOT has the authority to investigate and institute proceedings to enforce its economic regulations and may assess civil penalties, revoke operating authority and seek criminal sanctions. In February 2000, the DOT granted us a certificate of public convenience and necessity authorizing us to engage in air transportation within the United States, its territories and possessions.

The FAA primarily regulates flight operations and, in particular, matters affecting air safety such as airworthiness requirements for aircraft, the licensing of pilots, mechanics and dispatchers, and the certification of flight attendants. The FAA requires each airline to obtain an operating certificate authorizing the airline to operate at specific airports using specified equipment. We have and maintain FAA certificates of airworthiness for all of our aircraft and have the necessary FAA authority to fly to all of the cities we currently serve.

Like all U.S. certified carriers, we cannot fly to new destinations without the prior authorization of the FAA. The FAA has the authority to modify, suspend temporarily or revoke permanently our authority to provide air transportation or that of our licensed personnel, after providing notice and a hearing, for failure to comply with FAA regulations. The FAA can assess civil penalties for such failures or institute proceedings for the imposition and collection of monetary fines for the violation of certain FAA regulations. The FAA can revoke our authority to provide air transportation on an emergency basis, without providing notice and a hearing, where significant safety issues are involved. The FAA monitors our compliance with maintenance, flight operations and safety regulations, maintains onsite representatives and performs frequent spot inspections of our aircraft, employees and records.

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The FAA also has the authority to issue airworthiness directives and other mandatory orders relating to, among other things, inspection of aircraft and engines, fire retardant and smoke detection devices, collision and windshear avoidance systems, noise abatement and the mandatory removal and replacement of aircraft parts that have failed or may fail in the future.

The TSA operates under the Department of Homeland Security and is responsible for all civil aviation security, including passenger and baggage screening, cargo security measures, airport security, assessment and distribution of intelligence, and security research and development. The TSA also has law enforcement powers and the authority to issue regulations, including in cases of national emergency, without a notice or comment period.

In December 2009, the DOT issued a rule, which among other things, requires carriers not to permit domestic flights to remain on the tarmac for more than three hours (the “Tarmac Delay regulations”). The rule became effective in April 2010. Violators can be fined up to a maximum of $27,500 per passenger. The new rule also introduces requirements to disclose on-time performance and delay statistics for certain flights. This new rule may have adverse consequences on our business and our results of operations. In October 2011, several airport and navigational system outages combined with a severe winter storm impacted the northeast which resulted in numerous flight diversions, by us and other domestic and international carriers, to Hartford, CT’s Bradley International Airport. Due to weather, field and airport terminal conditions, five of our six diverted flights were held on the tarmac for times which exceeded the DOT’s established tarmac delay limits. As a result, the DOT is formally investigating these incidents and we may be subject to a penalty.

As part of an additional set of so-called passenger protection rules issued by the DOT, as of January 2012, the DOT requires any advertised price for airfare or a tour package including airfare (e.g., a hotel/air vacation package) to be the total price to be paid by the customer, including all government taxes and fees. The new policy applies to all U.S. and foreign air carriers and ticket agents that advertise in the U.S. (including via the internet). Under the new rule, carriers and ticket agents are permitted to include a statement informing customers of the base fare versus government taxes and fees, but such a break-down cannot be more prominent than the advertised total price. Failure to comply could result in fines and penalties by the DOT as well as reputational damage, particularly in light of the substantial media coverage on the new rule and the perception that total price advertising is in the best interest of the customer.

We believe that we are operating in material compliance with DOT, FAA, TSA and applicable international and foreign regulations and hold all necessary operating and airworthiness authorizations and certificates. Should any of these authorizations or certificates be modified, suspended or revoked, our business could be materially adversely affected.

We are also subject to state and local laws and regulations in a number of states in which we operate.

Airport Access.     Since 2008, JFK has been a slot-controlled airport during the majority of the day, from 6:00 a.m. to 10:59 p.m. Due to airspace congestion in the northeast, especially in the New York metropolitan region, and during inclement weather, delays remain among the highest in the nation.

At LaGuardia Airport, where we maintain a small presence, the FAA replaced the High Density Rule with a temporary rule continuing the strict limitations on operations during the hours of 6:00 a.m. to 9:59 p.m. Should new slot auction rules be implemented in whole or in part, our ability to maintain a full schedule at LaGuardia would likely be impacted.

Westchester County Airport in White Plains, NY is also a slot-controlled airport. We have 26 slots available for use and currently operate 13 weekday round trip flights from White Plains, NY to six destinations.

Long Beach (California) Municipal Airport is a slot-controlled airport as a result of a 1995 court settlement. We have 32 slots available for use and currently operate 30 weekday roundtrip flights from Long Beach Municipal Airport to 12 domestic cities.

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Environmental.     We are subject to various federal, state and local laws relating to the protection of the environment, including the discharge or disposal of materials and chemicals and the regulation of aircraft noise administered by numerous state and federal agencies.

The Airport Noise and Capacity Act of 1990 recognizes the right of airport operators with special noise problems to implement local noise abatement procedures as long as those procedures do not interfere unreasonably with the interstate and foreign commerce of the national air transportation system. Certain airports, including San Diego and Long Beach, California, have established restrictions to limit noise which can include limits on the number of hourly or daily operations and the time of such operations. These limitations serve to protect the local noise-sensitive communities surrounding the airport. Our scheduled flights at Long Beach and San Diego are in compliance with the noise curfew limits but when we experience irregular operations, on occasion, we may violate these curfews. We have agreed to a payment structure with the Long Beach City Prosecutor for any violations which we pay quarterly to the Long Beach Public Library Foundation and is based on the number of infractions in the preceding quarter. This local ordinance has not had, and we believe it will not have, a negative effect on our operations.

Foreign Operations .     International air transportation is subject to extensive government regulation. The availability of international routes to U.S. carriers is regulated by treaties and related agreements between the United States and foreign governments. We currently operate international service to The Bahamas, the Dominican Republic, Bermuda, Aruba, the Netherlands Antilles, Mexico, Colombia, Costa Rica, Jamaica, Barbados, Saint Lucia, the Turks and Caicos Islands and the U.S. Virgin Islands. To the extent we seek to provide air transportation to additional international markets in the future, we would be required to obtain necessary authority from the DOT and the applicable foreign government.

Foreign Ownership.     Under federal law and the DOT regulations, we must be controlled by United States citizens. In this regard, our president and at least two-thirds of our board of directors must be United States citizens and not more than 24.99% of our outstanding common stock may be voted by non-U.S. citizens. We believe we are currently in compliance with these ownership provisions.

Other Regulations.     All air carriers are also subject to certain provisions of the Communications Act of 1934 because of their extensive use of radio and other communication facilities, and are required to obtain an aeronautical radio license from the FCC. To the extent we are subject to FCC requirements, we will take all necessary steps to comply with those requirements. Our labor relations are covered under Title II of the Railway Labor Act of 1926 and are subject to the jurisdiction of the National Mediation Board. In addition, during periods of fuel scarcity, access to aircraft fuel may be subject to federal allocation regulations. We are also subject to state and local laws and regulations at locations where we operate and the regulations of various local authorities that operate the airports we serve.

Civil Reserve Air Fleet.     We are a participant in the Civil Reserve Air Fleet Program, which permits the United States Department of Defense to utilize our aircraft during national emergencies when the need for military airlift exceeds the capability of military aircraft. By participating in this program, we are eligible to bid on and be awarded peacetime airlift contracts with the military.

Insurance

We carry insurance of types customary in the airline industry and at amounts deemed adequate to protect us and our property and to comply both with federal regulations and certain of our credit and lease agreements. As a result of the terrorist attacks of September 11, 2001 (the Terrorist Attacks), aviation insurers significantly reduced the amount of insurance coverage available to commercial air carriers for liability to persons other than employees or passengers for claims resulting from acts of terrorism, war or similar events (war-risk coverage). At the same time, these insurers significantly increased the premiums for aviation insurance in general. The U.S. government has agreed to provide commercial war-risk insurance for U.S. based airlines, currently through

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September 30, 2012, covering losses to employees, passengers, third parties and aircraft. We currently have such coverage as part of our overall hull and liability insurance coverage. If the U.S. government were to cease providing such insurance in whole or in part, it is likely that we could obtain comparable coverage in the commercial market, but we would likely incur substantially higher premiums and more restrictive terms.