During the nine months ended September 30, 2024, we entered into $607 million of sale-leaseback transactions. These transactions did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipment and the related liabilities under the lease are classified within debt and finance leases obligations. These transactions are treated as cash from financing activities on our condensed consolidated statements of cash flows.
Short-term Borrowings
Citibank Line of Credit
As previously disclosed, on October 21, 2022, JetBlue entered into the $600 million Second Amended and Restated Credit and Guaranty Agreement (the "Facility"), among JetBlue, Citibank N.A., as administrative agent, and the lenders party thereto.
On July 29, 2024, the Company entered into the Second Amendment to the Second Amended and Restated Credit and Guaranty Agreement, which modifies the Facility to, among other things, (i) extend the final maturity of the Facility to October 21, 2029; provided that if the Company’s 0.50% convertible senior notes due 2026 are not extended, refinanced or paid off, subject to a specified minimum outstanding principal amount thereof, then the Facility expiration will be automatically shortened to December 31, 2025; (ii) adjust the margin and the minimum liquidity requirements of the Company; (iii) replace the sustainability adjustment mechanism; (iv) allow for certain additions of eligible collateral; and (v) remove provisions relating to the terminated merger agreement with Spirit Airlines, Inc. ("Spirit").
As of and for the periods ended September 30, 2024 and December 31, 2023, we did not have a balance outstanding or any borrowings under the Facility.
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 (or such replacement index as the bank shall determine from time to time in accordance with the terms of the agreement), plus a margin. As of and for the periods ended September 30, 2024 and December 31, 2023, we did not have a balance outstanding or any borrowings under this line of credit.
2022 $3.5 Billion Senior Secured Bridge Facility
JetBlue entered into a Second Amended and Restated Commitment Letter (the "Commitment Letter"), dated July 28, 2022, with Goldman Sachs Bank USA; BofA Securities, Inc.; Bank of America, N.A.; BNP Paribas; Credit Suisse AG, New York Branch; Credit Suisse Loan Funding LLC; Credit Agricole Corporate and Investment Bank; Natixis, New York Branch; Sumitomo Mitsui Banking Corporation; and MUFG Bank, Ltd. (collectively, the "Commitment Parties"), pursuant to which the Commitment Parties committed to provide a senior secured bridge facility in an aggregate principal amount of up to $3.5 billion to finance the acquisition of Spirit under the Agreement and Plan of Merger (the "Merger Agreement"). The Commitment Letter was terminated on March 4, 2024. Prior to its termination, we did not have a balance outstanding or any borrowings under this facility. Please refer to Note 12 for additional details on the termination of the Merger Agreement.
Note 4 - Loss Per Share
Basic loss per share is calculated by dividing net loss by the weighted average number of shares outstanding. Diluted loss per share is calculated similarly but includes potential dilution from restricted stock units, the crewmember stock purchase plan, convertible notes, warrants issued under various federal payroll support programs, and any other potentially dilutive instruments using the treasury stock and if-converted method. Anti-dilutive common stock equivalents excluded from the computation of diluted loss per share amounts were 4.4 million and 2.7 million for the three months ended September 30, 2024 and September 30, 2023, respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted loss
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
per share amounts were 3.9 million and 2.0 millionfor the nine months ended September 30, 2024 and September 30, 2023, respectively.
The following table shows how we computed loss per common share for the three and nine months ended September 30, 2024 and 2023 (dollars and share data in millions):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net loss
$
(60)
$
(153)
$
(751)
$
(207)
Weighted average basic shares
346.9
333.3
344.0
331.0
Effect of dilutive securities
—
—
—
—
Weighted average diluted shares
$
346.9
$
333.3
$
344.0
$
331.0
Loss per common share
Basic
$
(0.17)
$
(0.46)
$
(2.18)
$
(0.63)
Diluted
$
(0.17)
$
(0.46)
$
(2.18)
$
(0.63)
Note 5 - Crewmember Retirement Plan
We sponsor a retirement savings 401(k) defined contribution plan (the "Plan"), covering our U.S. and Puerto Rico crewmembers, where we match 100% of our eligible crewmember's contributions up to 5% of their eligible wages. Employer contributions vest after three years of service and are measured from a crewmember's hire date. Crewmembers are vested immediately in their voluntary contributions.
Certain Federal Aviation Administration ("FAA") licensed crewmembers received a discretionary contribution of 3% of eligible compensation, which we refer to as Retirement Advantage. As of January 2024, the Retirement Advantage program ended and these licensed Crewmembers now receive a discretionary contribution of 8% of eligible compensation, which we refer to as Retirement Non-elective Licensed Crewmember contributions. System Controllers also receive a Company discretionary contribution of 5% of eligible compensation, referred to as Retirement Non-elective Crewmember contributions.The Company’s non-elective contributions vests after three years of service.
Our Pilots receive a non-elective Company contribution of 16% of eligible compensation per the terms of the finalized collective bargaining agreement between JetBlue and the Air Line Pilots Association ("ALPA"), in lieu of the above 401(k) Company matching contribution, Retirement Non-elective, and Retirement Advantage contributions. The Company's non-elective contribution of eligible Pilot compensation vests after three years of service.
Total 401(k) company match and non-elective crewmember contribution expense for the three months ended September 30, 2024 and 2023 was $68 million and $75 million, respectivelyand for the nine months ended September 30, 2024 and 2023 was $195 million and $213 million, respectively.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 6 - Commitments and Contingencies
Flight Equipment Commitments
As of September 30, 2024, our committed expenditures for aircraft and related flight equipment, including estimated amounts for contractual price escalations and pre-delivery deposits, are set forth in the table below (in millions):
Flight Equipment Commitments
Year
Total
Remainder of 2024
$
283
2025
986
2026
723
2027
192
2028
262
Thereafter
3,959
Total
$
6,405
Our firm aircraft orders include the following aircraft:
Firm Aircraft Orders (1)
Year
Airbus A220
Airbus A321neo
Total
Remainder of 2024
6
1
7
2025
20
4
24
2026
20
—
20
2027
5
—
5
2028
7
—
7
Thereafter
4
44
48
Total (2)
62
49
111
(1) The aircraft orders stated above represents the current delivery schedule set forth in our Airbus order book as of September 30, 2024.
(2) In addition, we have options to purchase 20 A220-300 aircraft in 2027 and 2028.
Other Commitments and Contingencies
We utilize several credit card processors to process our ticket sales. Our agreements with these processors do not contain covenants, but do generally allow the processor to withhold cash reserves to protect the processor from potential liability for tickets purchased, but not yet used for travel. While we currently do not have any collateral requirements related to our credit card processors, we may be required to issue collateral to our credit card processors, or other key business partners, in the future.
As of September 30, 2024, we had $72 million in restricted cash and cash equivalents held as a reserve for principal and interest payments associated with the financing of the TrueBlue® program. We also had $59 million for letters of credit relating to a certain number of our leases, which will expire at the end of the related lease terms as well as a $65 million letter of credit relating to our 5% ownership in JFK Millennium Partner LLC, a private entity that will finance, develop, and operate John F. Kennedy International Airport ("JFK") Terminal 6. The letters of credit are included in restricted cash and cash equivalents on the consolidated balance sheets. Additionally, we had $9 million cash pledged primarily related to other business partner agreements, which will expire according to the terms of the related agreements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Labor Unions and Non-Unionized Crewmembers
As of September 30, 2024, 52% of our full-time equivalent crewmembers were represented by labor unions. The pilot group, which represents 23% of our full-time equivalent crewmembers, is covered by a collective bargaining agreement ("CBA"). Negotiations for an amended CBA began in May 2024. Our pilots are represented by ALPA. Our inflight crewmembers and flight instructors are represented by the Transport Workers Union of America ("TWU"); our other frontline crewmembers do not have third party representation.
ALPA
In January 2023, JetBlue pilots ratified a two-year contract extension effective March 1, 2023, which included a ratification payment and adjustments to paid-time-off accruals resulting from the pay rate increases of $95 million. JetBlue pilots received an additional pay rate increase in August 2024 from this ratification, which resulted in an adjustment to paid time-off accruals of $26 million. These expenses are included within special items.
TWU
On July 14, 2022, TWU filed a representation application with the National Mediation Board ("NMB") seeking an election among the 35 pilot instructors (called "Flight Instructors"). JetBlue disputed TWU’s application alleging that "Flight Instructors" do not constitute a craft or class. On October 26, 2023, the NMB notified the participants that it rejected JetBlue’s argument and ordered an election. The Flight Instructors voted for TWU representation. Contract negotiations for an initial CBA are ongoing and began in April 2024.
Non-Unionized Crewmembers
We enter into individual employment agreements with each of our non-unionized FAA-licensed crewmembers, which include dispatchers, technicians, inspectors, and air traffic controllers. Each employment agreement is for a term of five years and automatically renews for an additional five years unless either the crewmember or we elect not to renew it by giving at least 90 days' notice before the end of the relevant term. Pursuant to these agreements, these crewmembers 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 crewmembers a guaranteed level of income and to continue their benefits if they do not obtain other aviation employment.
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 condensed 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 condensed consolidated results of operations, liquidity, or financial condition.
As previously disclosed, in July 2020, JetBlue and American Airlines Group Inc. ("American") entered into the Northeast Alliance (the "NEA"), which was designed to optimize our respective networks at JFK Airport, LaGuardia Airport, Newark Liberty International Airport, and Boston Logan International Airport. On September 21, 2021, the United States Department of Justice, along with the Attorneys General of six states and the District of Columbia filed suit against JetBlue and American seeking to enjoin the NEA, alleging that it violated Section 1 of the Sherman Act. The court issued a decision on May 19, 2023, permanently enjoining the NEA, and shortly thereafter we initiated a wind down of the NEA. On July 28, 2023, the court issued its Final Judgement and Order Entering Permanent Injunction, which took effect on August 18, 2023 (the "Final Injunction"). The wind down of the NEA is substantially complete, but remaining impacts could require us to incur additional costs and
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
therefore have an impact on our financial condition and results of operations.
In December 2022 and February 2023, four putative class actions lawsuits were filed in the United States District Court for the Eastern District of New York ("EDNY") and the United States District Court for the District of Massachusetts, respectively, alleging that the NEA violates Sections 1 and 2 of the Sherman Act. Among other things, plaintiffs seek monetary damages on behalf of a putative class of direct purchasers of airline tickets from JetBlue and American and, depending on the specific case, other airlines on flights to or from NEA airports from July 16, 2020 through the present. Plaintiffs in these actions also seek to enjoin the NEA. JetBlue moved to dismiss the claims. In September 2024, the court issued its Decision and Order denying JetBlue’s motion to dismiss the consolidated NEA civil class action cases pending in the EDNY. We continue to believe these lawsuits are without merit.
For information on legal proceedings related to our previously planned acquisition of Spirit, see Note 12.
Note 7 - Fair Value
Under Topic 820, Fair Value Measurement of the FASB Accounting Standards Codification (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 required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of September 30, 2024 and December 31, 2023 (in millions):
September 30, 2024
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
2,286
$
—
$
—
$
2,286
Restricted cash equivalents
72
—
—
72
Available-for-sale investment securities
—
1,317
16
1,333
December 31, 2023
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
$
724
$
—
$
—
$
724
Available-for-sale investment securities
—
314
16
330
Aircraft fuel derivatives
—
4
—
4
Refer to Note 3 for fair value information related to our outstanding debt obligations as of September 30, 2024 and December 31, 2023.
Cash Equivalents and Restricted 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 and recorded within cash and cash equivalents on our consolidated balance sheets. Restricted cash equivalents are composed of money market securities held as a reserve for principal and interest payments
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
associated with the financing of the TrueBlue® program.
Available-for-Sale Investment Securities
Our available-for-sale investment securities include investments such as time deposits, commercial paper, and convertible debt securities. The fair value of time deposits and commercial paper is based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy. The fair value of convertible debt securities is based on unobservable inputs and is classified as Level 3 in the hierarchy.
Aircraft Fuel Derivatives
Our aircraft fuel derivatives include call spread options which are not traded on public exchanges. Their fair values are determined using a market approach based on inputs that are readily available from public markets for commodities and energy trading activities; therefore, they are classified as Level 2 inputs. The data inputs are combined into qualitative models and processes to generate forward curves and volatility related to the specific terms of the underlying hedge contracts. Aircraft fuel derivatives are included in prepaid expenses and other within current assets of our consolidated balance sheets.
Held-to-Maturity Investment Securities
Our held-to-maturity investment securities consist of corporate bonds, which are stated at amortized cost. If the corporate bonds were measured at fair value, they would be classified as Level 2 in the fair value hierarchy, based on quoted prices in active markets for similar securities.
We do not intend to sell these investment securities.The carrying value and estimated fair value of our held-to-maturity investment securities were as follows (in millions):
September 30, 2024
December 31, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
Held-to-maturity investment securities
$
175
$
175
$
234
$
231
Note 8 - Investments
Investments in Debt Securities
Investments in debt securities consist of available-for-sale and held-to-maturity investment securities. The carrying amount is recorded within investment securities in the current assets section of our consolidated balance sheets if the remaining maturity is less than twelve months. Maturities greater than twelve months are recorded within investment securities in the other assets section of our consolidated balance sheets.The aggregate carrying values of our short-term and long-term debt investment securities consisted of the following at September 30, 2024 and December 31, 2023 (in millions):
September 30, 2024
December 31, 2023
Available-for-sale investment securities
Time deposits
$
1,310
$
290
Commercial paper
7
24
Debt securities
16
16
Total available-for-sale investment securities
1,333
330
Held-to-maturity investment securities
Corporate bonds
175
234
Total held-to-maturity investment securities
175
234
Total investments in debt securities
$
1,508
$
564
When sold, we use a specific identification method to determine the cost of the securities. Refer to Note 7 for an explanation of the fair value hierarchy structure.
We recorded a gain of $1 million on our available-for-sale securities in gain (loss) on investments, net on our consolidated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
statement of operations during the three and nine months ended September 30, 2024 and nine months ended September 30, 2023. We did not record any material gains or losses on our held-to-maturity investment securities during the three or nine months ended September 30, 2024 and 2023.
Equity Investments
The aggregate carrying values of our equity investments are recorded in other assets on the consolidated balance sheets and consist of the following at September 30, 2024 and December 31, 2023 (in millions):
September 30, 2024
December 31, 2023
Equity method investments (1)
$
71
$
43
JetBlue Ventures equity investments (2)
78
96
TWA Flight Center (3)
13
14
Total equity investments (4)
$
162
$
153
(1)We have the ability to exercise significant influence over these investments and therefore they are accounted for using the equity method in accordance with Topic 323, Investments - Equity Method and Joint Ventures of the FASB Codification. Our share of our equity method investees’ financial results is included in other income on our consolidated statement of operations.
(2)Our wholly owned subsidiary JetBlue Technology Ventures LLC ("JBV") has equity investments in emerging companies which do not have readily determinable fair values. In accordance with Topic 321, Investments - Equity Securities of the FASB Codification, 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. Refer to the table below for investment gain (loss) activity during the three or nine months ended September 30, 2024 and 2023.
(3) We have an approximate 10% ownership interest in the TWA Flight Center Hotel at JFK, which is accounted for under the measurement alternative described above. We did not record any material gains or losses on our TWA Flight Center Hotel during the three or nine months ended September 30, 2024 and 2023.
(4) As of September 30, 2024 and December 31, 2023, we had an immaterial amount of equity securities recorded within investment securities in the current asset section of our consolidated balance sheets. Our equity securities include investments in common stocks of publicly traded companies which are stated at fair value. Refer to the table below for investment gain (loss) activity during the three or nine months ended September 30, 2024 and 2023 (in millions):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
JBV Equity Investments
Realized loss recognized in gain (loss) on investments, net
$
(3)
$
(1)
$
(5)
$
(1)
Unrealized loss recognized in gain (loss) on investments, net (1)
—
—
(21)
—
Equity Securities
Realized gain recognized in gain (loss) on investments, net
—
—
—
4
Unrealized gain recognized in gain (loss) on investments, net
—
—
—
2
(1) The net unrealized loss primarily relates to a mark-to-market adjustment on our preferred shares of one of our JBV equity investments.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 9 - Financial Derivative Instruments and Risk Management
As part of our risk management techniques, we periodically purchase over the counter energy derivative instruments to manage our exposure to the effect of changes in the price of aircraft fuel. Prices for the underlying commodities have historically been highly correlated to aircraft fuel, making derivatives of them effective at providing short-term protection against sharp increases in average fuel prices. We do not hold or issue any derivative financial instruments for trading purposes.
Aircraft Fuel Derivatives
We attempt to obtain cash flow hedge accounting treatment for each fuel derivative that we enter into. This treatment is provided for under the Derivatives and Hedging topic of the FASB Codification which allows for gains and losses on the effective portion of qualifying hedges to be deferred until the underlying planned aircraft fuel consumption occurs, rather than recognizing the gains and losses on these instruments into earnings during each period they are outstanding.
For the effective portion of hedges, when aircraft fuel is consumed and the related derivative contract settles, any gain or loss previously recorded in other comprehensive income (loss) is recognized in aircraft fuel expense. All cash flows related to our fuel hedging derivatives are classified as operating cash flows.
Ineffectiveness occurs, in certain circumstances, when the change in the total fair value of the derivative instrument differs from the change in value of our expected future cash outlays for the purchase of aircraft fuel. If a hedge does not qualify for hedge accounting, the periodic changes in its fair value are recognized in other income (expense).
Our current approach to fuel hedging is to enter into hedges on a discretionary basis. We view our hedge portfolio as a form of insurance to help mitigate the impact of price volatility and protect us against severe spikes in oil prices, when possible.
The following table illustrates the approximate hedged percentages of our projected fuel usage by quarter as of September 30, 2024 related to our outstanding fuel hedging contracts that were designated as cash flow hedges for accounting purposes.
Aircraft fuel call option spread agreements
Fourth quarter 2024
20
%
The table below reflects quantitative information related to our derivative instruments and where these amounts are recorded in our financial statements (dollar amounts in millions):
September 30, 2024
December 31, 2023
Fuel derivatives
Asset fair value recorded in prepaid expenses and other current assets (1)
$
—
$
4
Longest remaining term (months)
3
3
Hedged volume (barrels, in thousands)
1,000
2,706
Estimated amount of existing gains (losses) expected to be reclassified into earnings in the next 12 months
$
(2)
$
(3)
(1) Gross asset or liability of each contract prior to consideration of offsetting positions with each counterparty and prior to impact of collateral paid.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Fuel derivatives
Hedge effectiveness gains (losses) recognized in aircraft fuel expense
$
(3)
$
7
$
(7)
$
3
Hedge losses on derivatives recognized in comprehensive income (loss)
$
5
$
21
$
6
$
10
Percentage of actual consumption economically hedged
20
%
30
%
26
%
23
%
Any outstanding derivative instrument exposes us to credit loss in connection with our fuel contracts in the event of nonperformance by the counterparties to our agreements; however, 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 September 30, 2024 and December 31, 2023.
Note 10 - Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes changes in fair value of our aircraft fuel derivatives which qualify for hedge accounting and unrealized gain (loss) on available-for-sale securities. A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the three months ended September 30, 2024 and 2023 is as follows (in millions):
Aircraft fuel derivatives (1)
Available-for-sale securities
Total
Balance of accumulated loss, at June 30, 2024
$
—
$
(1)
$
(1)
Reclassifications into earnings, net of taxes of $0
2
—
2
Change in fair value, net of taxes of $(1)
(4)
—
(4)
Balance of accumulated loss, at September 30, 2024
$
(2)
$
(1)
$
(3)
Balance of accumulated loss, at June 30, 2023
$
(5)
$
(1)
$
(6)
Reclassifications into earnings, net of taxes of $(2)
(5)
—
(5)
Change in fair value, net of taxes of $6
15
—
15
Balance of accumulated income (loss) at September 30, 2023
$
5
$
(1)
$
4
(1) Reclassified to aircraft fuel expense.
A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the nine months ended September 30, 2024 and 2023 is as follows (in millions):
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Aircraft fuel derivatives (1)
Available-for-sale securities
Total
Balance of accumulated loss, at December 31, 2023
$
(3)
$
(1)
$
(4)
Reclassifications into earnings, net of taxes of $1
6
(1)
5
Change in fair value, net of taxes of $(1)
(5)
1
(4)
Balance of accumulated loss, at September 30, 2024
$
(2)
$
(1)
$
(3)
Balance of accumulated income (loss), at December 31, 2022
$
1
$
(1)
$
—
Reclassifications into earnings, net of taxes of $(1)
(2)
—
(2)
Change in fair value, net of taxes of $4
6
—
6
Balance of accumulated income (loss), at September 30, 2023
$
5
$
(1)
$
4
(1) Reclassified to aircraft fuel expense.
Note 11 - Special Items
The following is a listing of special items presented on our consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 (in millions):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Special items
Union contract costs (1)
$
26
$
8
$
26
$
104
Voluntary opt-out costs (2)
1
—
17
—
Spirit-related costs (3)
—
25
532
64
Embraer E190 fleet transition costs (4)
—
—
15
—
Total special items
$
27
$
33
$
590
$
168
(1) Union contract costs primarily relate to pilot ratification payments and adjustments to paid-time-off accruals resulting from pay rate increases. See Note 6 for further discussion.
(2) Voluntary opt-out costs relate to severance and benefit costs associated with the Company's opt-out program for eligible crewmembers in the airports, customer support, JetBlue Travel Products and support center workgroups.
(3) As a result of the termination of the Merger Agreement in March 2024, we wrote off the Spirit prepayment and breakup fee discussed in Note 12. These costs include Spirit-related consulting, professional, and legal fees. Spirit costs in 2023 primarily relate to consulting, professional and legal fees.
(4) Embraer E190 fleet transition costs relate to the early termination of a flight-hour engine services agreement.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 12 - Termination ofMerger Agreement with Spirit
The Merger Agreement
As previously disclosed, on July 28, 2022, JetBlue entered into the Merger Agreement with Spirit and Sundown Acquisition Corp., formerly a Delaware corporation and a direct wholly owned subsidiary of JetBlue ("Merger Sub"), pursuant to which and subject to the terms and conditions therein, Merger Sub would merge with and into Spirit, with Spirit continuing as the surviving corporation (the "Merger").
On March 1, 2024, JetBlue, Spirit and Merger Sub entered into a Termination Agreement (the "Termination Agreement"), pursuant to which the parties agreed to terminate the Merger Agreement, effective immediately, subject to limited exceptions related to JetBlue’s previously agreed indemnification obligations.Pursuant to the Termination Agreement, JetBlue agreed to pay the $69 million breakup fee on March 5, 2024, which was recorded in special items on the consolidated statement of operations. The parties also agreed to release each other from claims, demands, damages, actions, causes of action and liability relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby.
In accordance with the terms of the Merger Agreement, on a monthly basis between January 2023 and February 2024, JetBlue paid to the holders of record of outstanding Spirit shares an amount in cash equal to $0.10 per Spirit share (such amount, the "Additional Prepayment Amount", and each such monthly payment, an "Additional Prepayment"). In 2024, JetBlue made an aggregate of $22 million in Additional Prepayments to Spirit shareholders resulting in a total prepayment of $425 million. These Additional Prepayments were written off in March 2024, in addition to the $25 million reimbursement payment to Spirit in connection with the Frontier transaction costs as a result of the termination of the Merger Agreement. The write off is recorded in special items on the consolidated statement of operations.
In March 2024, the Company recorded a valuation allowance of $134 million related to the tax impact of the Spirit transaction costs.
Refer to Note 3 for further detail of the $3.5 billion Senior Secured Bridge Facility commitment to fund the purchase of Spirit, which was terminated concurrently with the termination of the Merger Agreement.
Legal Proceedings Related to the Merger
As previously disclosed, in March 2023, the U.S. Department of Justice ("DOJ"), along with the Attorneys General of six states and the District of Columbia (the "AGs"), filed suit in the U.S. District Court for the District of Massachusetts against JetBlue and Spirit, seeking a permanent injunction preventing the Merger (the "Government Merger Lawsuit"). The trial commenced on October 31, 2023 and on January 17, 2024, the Court issued its Final Judgment and Order granting the plaintiffs' request for a permanent injunction of the Merger. On January 19, 2024, JetBlue and Spirit filed a Notice of Appeal with respect to the January 17, 2024 Final Judgment and Order and the Court’s corresponding January 16, 2024 Findings of Facts and Conclusion of Law, which the parties then moved to dismiss following their entrance into the Termination Agreement. On March 5, 2024, the Court approved JetBlue and Spirit's voluntary dismissal of the appeal. Subsequent to this decision, JetBlue and Spirit reached a tentative settlement with the AGs for legal fees related to their joining the DOJ in this lawsuit.
As also previously disclosed, on November 3, 2022, 25 individual consumers filed suit in the U.S. District Court for the Northern District of California against JetBlue and Spirit seeking to enjoin the Merger, alleging that it violates Section 7 of the Clayton Act (the "Private Merger Lawsuit"). On March 29, 2023, the Private Merger Lawsuit was transferred to the U.S. District Court for the District of Massachusetts. The trial in the Private Merger Lawsuit was stayed pending resolution of the Government Merger Lawsuit. Following the execution of the Termination Agreement, JetBlue and Spirit moved to dismiss all proceedings related to the Private Merger Lawsuit in the U.S. District Court for the District of Massachusetts and the United States Court of Appeals for the First Circuit. The motions were granted by the United States Court of Appeals for the First Circuit and the U.S. District Court for the District of Massachusetts on April 29, 2024 and June 18, 2024, respectively. The plaintiffs' subsequently moved for recovery of attorneys' fees related to the lawsuit. On September 5, 2024, Judge Young of the U.S. District Court of Massachusetts denied the plaintiffs' motion for legal fees. On September 13, 2024, the plaintiffs filed a notice of appeal of Judge Young's order in the United States Court of Appeals for the First Circuit. JetBlue continues to believe that the plaintiffs' request for legal fees and the related appeal is without merit.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part I, Item 2 of this Report should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Report and our audited consolidated financial statements and related notes included in our 2023 Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A "Risk Factors" of our 2023 Form 10-K and in Part II, Item 1A "Risk Factors" and other parts of this Report.
OVERVIEW
Third Quarter 2024 Results
In the third quarter of 2024, we incurred $60 million in net loss, compared to a net loss of $153 million for the same period in 2023. We continued to progress on our revenue initiatives in the third quarter. We saw revenue strength in our premium product offerings, with Even More Space, preferred seating, and Mint performing well. Also, our Blue Basic carry-on bag changes implemented this quarter, helped bolster our revenue results. In addition, improvements in our operational metrics resulted in greater cost efficiencies. Fuel prices declined over the quarter and we continued to make progress on our cost savings programs, allowing us to maintain low costs for the quarter.
Our third quarter 2024 highlights include the following:
•Third quarter 2024 system available seat miles ("ASMs" or "capacity") decreased by 3.6% compared to the third quarter of 2023.
•Systemwide on-time performance for thethird quarter 2024 was 70.7% compared to 58.5% for the same period in 2023.
•Completion factor increased to 98.1% in the third quarter of 2024 from 96.3% in the same period in 2023.
•Operating revenue for the third quarter of 2024 was $2.4 billion, an increase of $12 million, or 0.5% compared to the third quarter of 2023.
•Operating expense for the third quarter of 2024 was $2.4 billion, a 4.2% decrease year-over-year.
•Operating expense, excluding special items, for the third quarter of 2024 decreased 4.1%(1) year-over-year.
•Operating expense per available seat mile ("CASM") for the third quarter of 2024 decreased by 0.7% year-over-year to 14.35 cents compared to the third quarter of 2023.
•Our operating expense for the third quarter of 2024 and 2023 included the effects of special items. Excluding aircraft fuel, special items, and operating expenses related to our non-airline businesses, our operating expense (1) was $1.8 billion, an increase of 1.1% year-over-year.
•Excluding fuel, special items, and operating expenses related to our non-airline businesses, our cost per available seat mile ("CASM ex-fuel") (1) increased by 4.8% to 10.62 cents in the third quarter of 2024 compared to the third quarter of 2023.
•For the third quarter of 2024 and 2023, our reported loss per share was $0.17 and $0.46, respectively. Excluding special items, our adjusted loss per share (1) for the third quarter of 2024 and 2023 was $0.16 and $0.39, respectively.
Recent Developments
JetForward
In July 2024, JetBlue announced JetForward, our strategic framework focused on four priority moves: delivering reliable and caring service, building the best east coast leisure network, offering products and perks customers value, and providing a secure financial future. Our JetForward plan, which is designed to support our long-term profitability goals, reflects various assumptions regarding factors that may impact our operational and financial performance. For further information on potential factors that could affect the success of our strategic initiatives, including JetForward, see our 2023 Form 10-K.
The sections below highlight some additional changes made to support these priority moves during the quarter.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Network
We are committed to refocusing our network in 2024 to high-performing leisure, visiting-friends-and-relatives and transcontinental routes in core geographies like New York, New England, Florida, and Puerto Rico.
In the first nine months of 2024, we announced a number of network changes, which included 15 station closures and over 50 route exits.
During the quarter, we redeployed aircraft to leisure-focused routes originating from Northeast airports, such as Rhode Island's T.F. Green International Airport and Connecticut's Bradley International Airport.
Customer Experience and Products
During the quarter, we continued to make enhancements to our customer experience by increasing the value of our product offerings and customer experience.
We announced plans for the opening of airport lounges at John F. Kennedy International Airport (JFK) Terminal 5 and Boston Logan International Airport (BOS) Terminal C. The JFK lounge is expected to open in late 2025, with the BOS lounge expected to follow shortly thereafter.
We implemented a baggage policy update to the Blue Basic fare, which now includes a free carry-on bag. We also expanded the co-brand portfolio with the announcement of a premium co-branded credit card. Furthermore, we announced plans to improve the Even More Space booking process and onboard soft product experience.
Sustainability
We signed a new commercial agreement to purchase, during the initial 12-month period, approximately 3.3 million gallons of blended sustainable aviation fuel (with an option to purchase up to an additional 13.3 million gallons).
Liquidity
At September 30, 2024, we had $4.1 billion in liquidity, which included unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities. In addition, we had a $600 million Citibank line of credit.
For the nine months ended September 30, 2024, we completed the following financing transactions:
•raised approximately $2.8 billion in proceeds through the issuance of 9.875% senior secured notes due 2031 ("TrueBlue® Notes") and borrowings under a new senior secured term loan facility due 2029 (the "TrueBlue® Term Loan Facility", collectively the "TrueBlue® Financings");
•issued $460 million of 2.50% convertible senior notes;
•issued $350 million in floating rate equipment notes;
•entered into $607 million of sale-leaseback transactions; and
•repaid $631 million on our outstanding debt and finance lease obligations, including the early retirement of $425 million related to our existing 0.50% convertible senior notes.
Refer to Note 3 to ourcondensed consolidated financial statements included in Part I, Item 1 of this Report for additional information on these financing transactions.
Pratt & Whitney
In July 2023, Pratt & Whitney, a division of RTX Corporation, announced the requirement, mandated by the Federal Aviation Administration ("FAA"), for removal of certain engines for inspection due to a rare condition in powdered metal used to manufacture certain engine parts on the PW1100G and PW1500G engine types. These engines power our Airbus A220 and Airbus A321neo fleets. The rare condition powdered metal affects engines manufactured between October 2015 and September 2021. Engines are now required to be inspected after they have reached a reduced number of cycles dependent on the fleet type. As a result of these required inspections and other engine reliability deficiencies, as of September 30, 2024, we had 11 aircraft
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Other Income (Expense)
(in millions; percent changes based on unrounded numbers)
Three Months Ended September 30,
Year-over-Year Change
2024
2023
$
%
Interest expense
$
(100)
$
(53)
$
(47)
89.0
%
Interest income
30
19
11
55.0
Capitalized interest
3
5
(2)
(32.3)
Gain (loss) on investments, net
(2)
—
(2)
NM
(2)
Gain on debt extinguishments
22
—
22
NM
Other
7
11
(4)
(41.8)
Total other expense
$
(40)
$
(18)
$
(22)
NM
(2) Not meaningful or greater than 100% change.
Interest Expense
Interest expense increased by $47 million, or 89.0%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily due to incremental aircraft sale-leaseback transactions, new equipment notes, and the financing of our TrueBlue® program. These increases were partially offset by commitment fees incurred in 2023 related to the $3.5 billion Senior Secured Bridge Facility, but canceled in March 2024 in connection with the termination of the merger with Spirit.
Interest Income
Interest income increased by $11 million, or 55.0%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily driven by an increase in short term investments due to the proceeds received from the TrueBlue® Financings.
Gain on Debt Extinguishments
Gain on debt extinguishments increased by $22 million, for the three months ended September 30, 2024 compared to the same period in 2023. This gain was due to the early retirement on a portion of our 0.50% convertible senior notes, due 2026.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2024 vs. 2023
Overview
We reported a net loss of $751 million, an operating loss of $700 million and an operating margin of (10.0)% for the nine months ended September 30, 2024. This compares to a net loss of $207 million, an operating loss of $163 million and an operating margin of (2.2)% for the nine months ended September 30, 2023. Loss per share was $2.18 for the nine months ended September 30, 2024 compared to a loss per share of $0.63 for the same period in 2023.
Our reported results for the nine months ended September 30, 2024 included the effects of special items and certain gains and losses on investments. Adjusted for these items, our adjusted net loss (1) was $173 million, adjusted operating loss (1) was$110 million, adjusted operating margin (1) was (1.6)%, and adjusted loss per share (1) was $0.50 for the nine months ended September 30, 2024.
Our reported results for the nine months ended September 30, 2023 included the effects of special items and certain gains and losses on investments. Adjusting for these items, our adjusted net loss (1) was $74 million, adjusted operating income(1) was $5 million, adjusted operating margin (1) was 0.1%, and adjusted loss per share (1) was $0.22 for the nine months ended September 30, 2023.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating Revenues
(Revenues in millions; percent changes based on unrounded numbers)
Nine Months Ended September 30,
Year-over-Year Change
2024
2023
$
%
Passenger revenue
$
6,518
$
6,842
$
(324)
(4.7)
%
Other revenue
484
448
36
8.2
Total operating revenues
$
7,002
$
7,290
$
(288)
(3.9)
%
Average fare
$
213.31
$
211.77
$
1.54
0.7
%
Yield per passenger mile (cents)
15.64
15.93
(0.29)
(1.8)
Passenger revenue per ASM (cents)
13.05
13.29
(0.24)
(1.8)
Operating revenue per ASM (cents)
14.02
14.16
(0.14)
(1.0)
Average stage length (miles)
1,290
1,223
67
5.5
Revenue passengers (thousands)
30,556
32,309
(1,753)
(5.4)
Revenue passenger miles (millions)
41,685
42,950
(1,265)
(2.9)
Available seat miles (ASMs) (millions)
49,940
51,484
(1,544)
(3.0)
Load factor
83.5
%
83.4
%
0.1
pts.
Passenger revenue is our primary source of revenue, which includes seat revenue and baggage fees, as well as revenue from our ancillary product offerings such as Even More® Space. The decrease in passenger revenue of $324 million, or 4.7%, for the nine months ended September 30, 2024 compared to the same period in 2023 is due to a 3.0% reduction in capacityand a 1.8% decrease in yield per passenger mile.
Other revenue is primarily comprised of the marketing component of the sales of our TrueBlue® points. It also includes revenue from the sale of vacation packages, airport concessions and advertising revenue. The year-over-year increase in other revenue of $36 million, or 8.2%, was principally driven by an increase in TrueBlue® marketing revenue due to higher customer spend as well as an increase in our vacation bookings.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating Expenses
In detail, our operating costs per ASM, were as follows:
(in millions; per ASM data in cents; percent changes based on unrounded numbers)
Nine Months Ended September 30,
Year-over-Year Change
Cents per ASM
2024
2023
$
%
2024
2023
% Change
Aircraft fuel
$
1,835
$
2,108
$
(273)
(12.9)
%
3.67
4.09
(10.3)
%
Salaries, wages and benefits
2,434
2,304
130
5.7
4.88
4.47
8.9
Landing fees and other rents
518
499
19
3.8
1.04
0.97
7.0
Depreciation and amortization
487
462
25
5.5
0.98
0.90
8.7
Aircraft rent
73
99
(26)
(26.2)
0.15
0.19
(23.9)
Sales and marketing
245
237
8
3.2
0.49
0.46
6.4
Maintenance, materials and repairs
442
512
(70)
(13.7)
0.89
1.00
(11.0)
Special items
590
168
422
NM (2)
1.18
0.33
NM
Other operating expenses
1,078
1,064
14
1.4
2.16
2.07
4.5
Total operating expenses
$
7,702
$
7,453
$
249
3.4
%
15.42
14.48
6.5
%
Total operating expenses excluding special items (1)
$
7,112
$
7,285
$
(173)
(2.4)
%
14.24
14.15
0.7
%
(2) Not meaningful or greater than 100% change.
Aircraft Fuel
Aircraft fuel decreased by $273 million, or 12.9%, for the nine months ended September 30, 2024 compared to the same period in 2023. The average fuel price for the nine months ended September 30, 2024 decreased by 9.0% to $2.83 per gallon and fuel consumption decreased by 4.4%, or 30 million gallons.
Salaries, Wages and Benefits
Salaries, wages and benefits increased by $130 million, or 5.7%, for the nine months ended September 30, 2024 compared to the same period in 2023, driven by wage rate increases. The wage rate increases were primarily due to the new pilot union contract effective March 1, 2023, which included an initial pay rate increase of 14% and additional pay rate increases of 3% and 9% in August 2023 and August 2024, respectively.
Depreciation and Amortization
Depreciation and amortization increased by $25 million, or 5.5%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase was primarily driven by the induction of new aircraft.
Aircraft Rent
Aircraft rent decreased $26 million, or 26.2%, in the nine months ended September 30,2024 compared to the same period in 2023 as a result of fewer leases for the Airbus A320 aircraft and the Embraer E190 aircraft. The Company purchased certain Airbus A320 aircraft off lease and certain Embraer E190 aircraft leases reached their lease expiration and were returned to the lessor as part of the Company's fleet transition plan.
Maintenance, Materials and Repairs
Maintenance, materials and repairs decreased$70 million, or 13.7%, for the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to a lower volume of Airbus A320 engine repairs and the termination of the Embraer E190 flight-hour engine services agreement.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Items
For the nine months ended September 30, 2024, special items included the following:
•$532 million relating to Spirit-related costs;
•$26 million relating to union contract costs;
•$17 million relating to voluntary opt-out costs; and
•$15 millionrelating to Embraer E190 fleet transition costs.
For the nine months ended September 30, 2023, special items included the following:
•$104 million relating to union contract costs; and
•$64 million relating to Spirit-related costs.
Other Income (Expense)
(in millions; percent changes based on unrounded numbers)
Nine Months Ended September 30,
Year-over-Year Change
2024
2023
$
%
Interest expense
$
(215)
$
(145)
$
(70)
47.7
%
Interest income
66
50
16
34.5
Capitalized interest
12
14
(2)
(17.2)
Gain (loss) on investments, net
(25)
6
(31)
NM
(2)
Gain on debt extinguishments
22
—
22
NM
Other
26
14
12
91.1
Total other expense
$
(114)
$
(61)
$
(53)
(84.1)
%
(2) Not meaningful or greater than 100% change.
Interest Expense
Interest expense increased by $70 million, or 47.7%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase was primarily due to incremental aircraft sale-leaseback transactions, new equipment notes, and the financing of our TrueBlue® program. These increases were partially offset by commitment fees incurred in 2023 related to the $3.5 billion Senior Secured Bridge Facility, but canceled in March 2024 in connection with the termination of the merger with Spirit.
Interest Income
Interest income increased by $16 million, or 34.5%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase was primarily driven by an increase in short term investments from the proceeds received from the TrueBlue® Financings
Gain (Loss) on Investments, Net
Gain (loss) on investments, net resulted in $25 million loss for the nine months ended September 30, 2024. This loss primarily relates to a mark-to-market adjustment on our preferred shares of one of our JetBlue Technology Ventures LLC ("JBV") equity investments. For the nine months ended September 30, 2023, gain (loss) on investments resulted in a $6 million gain on certain equity securities.
Gain on Debt Extinguishments
Gain on debt extinguishments increased by $22 million, for the nine months ended September 30, 2024 compared to the same period in 2023. This gain was due to the early retirement on a portion of our 0.50% convertible senior notes, due 2026.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operational Statistics
The following table sets forth our operating statistics for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,
Year-over-Year Change
Nine Months Ended September 30,
Year-over-Year Change
(percent changes based on unrounded numbers)
2024
2023
%
2024
2023
%
Operational Statistics
Revenue passengers (thousands)
10,596
10,911
(2.9)
30,556
32,309
(5.4)
Revenue passenger miles (RPMs) (millions)
14,491
14,777
(1.9)
41,685
42,950
(2.9)
Available seat miles (ASMs) (millions)
16,740
17,362
(3.6)
49,940
51,484
(3.0)
Load factor
86.6
%
85.1
%
1.5
pts
83.5
%
83.4
%
0.1
pts
Aircraft utilization (hours per day) (2)
10.2
10.7
(4.7)
10.2
10.9
(6.4)
Average fare
$
207.46
$
201.73
2.8
$
213.31
$
211.77
0.7
Yield per passenger mile (cents)
15.17
14.89
1.9
15.64
15.93
(1.8)
Passenger revenue per ASM (cents)
13.13
12.68
3.6
13.05
13.29
(1.8)
Operating revenue per ASM (cents)
14.13
13.55
4.3
14.02
14.16
(1.0)
Operating expense per ASM (cents)
14.35
14.45
(0.7)
15.42
14.48
6.5
Operating expense per ASM, excluding fuel (1)
10.62
10.13
4.8
10.48
9.96
5.2
Departures
80,037
85,971
(6.9)
241,161
262,488
(8.1)
Average stage length (miles)
1,298
1,253
3.6
1,290
1,223
5.5
Average number of operating aircraft during period
286
283
1.2
286
281
1.8
Average fuel cost per gallon
$
2.67
$
3.04
(12.2)
$
2.83
$
3.11
(9.0)
Fuel gallons consumed (millions)
219
230
(5.1)
647
677
(4.4)
Average number of full-time equivalent crewmembers
19,788
20,661
(4.2)
20,036
20,706
(3.2)
(2) Includes aircraft temporarily removed from service, including aircraft impacted by the Pratt & Whitney engine groundings and lack of engine availability.
We expect our operating results to significantly fluctuate from quarter-to-quarter in the future due to factors such as economic conditions, weather events, cost of aircraft fuel, and various other factors, many of which are outside of our control. As an example, air traffic controller shortages in the Northeast and Florida continue to cause disruptions in the industry, resulting in the FAA waiving the minimum usage requirement and permitting us to voluntarily turn in up to 10% of our slots in the New York area to help protect our operations. Even with a reduced number of flights, we experienced and continue to expect challenges in the operating environment. 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. Except for uncertainty related to the cost of aircraft fuel, we expect our expenses to continue to increase as we acquire additional aircraft and as our fleet ages.
Operational challenges have impacted our business in 2024 and may impact our business in the future. Additionally, reliability challenges with some of our aircraft engines using new technology have led to grounded aircraft events. These challenges have resulted - and are expected to continue to result - in flight delays and cancellations.
LIQUIDITY AND CAPITAL RESOURCES
The airline business is capital intensive. Our ability to successfully execute our growth plans is largely dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business depends on maintaining sufficient liquidity. We believe we have adequate resources from a combination of cash and cash equivalents, investment securities on hand, and available lines of credit. Additionally, our unencumbered assets could be an additional source of liquidity, if necessary.
(1) Refer to "Regulation G Reconciliation of Non-GAAP Financial Measures" at the end of this section for more information on this non-GAAP measure.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In July 2024, we entered into an amendment to the Second Amended and Restated Credit and Guaranty Agreement (the “Facility”), dated July 29, 2024, among JetBlue, Citibank N.A., as administrative agent, and the lenders party thereto (the "Second Amendment"), which modifies the Facility to, among other things, (i) extend the final maturity of the Facility to October 21, 2029; (ii) adjust the margin and the minimum liquidity requirements of the Company; (iii) replace the sustainability adjustment mechanism; (iv) allow for certain additions of eligible collateral; and (v) remove provisions relating to the terminated merger agreement with Spirit.
In August 2024, we raised approximately $2.8 billion in proceeds through the issuance of the TrueBlue® Financings, which in each case are secured by collateral consisting of assets related to our TrueBlue® loyalty program. We also raised $460 million in proceeds through the issuance of 2.50%convertible senior notes, due 2029. The initial net proceeds from the 2.50% convertible senior notes were used to retire a portion of our existing 0.50% convertible senior notes, due 2026. Refer to Note 3 to ourcondensed consolidated financial statements included in Part I, Item 1 of this Report for additional information on these financing transactions.
In the future, we may decide to seek additional financing or to further increase our capital resources by issuing shares of our capital stock, offering debt or other equity securities or refinancing outstanding debt or securities. Issuing additional shares of our capital stock, other equity securities or additional securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of our common stock, or both. Our debt agreements contain various affirmative, negative and financial covenants and complying with certain of these covenants, or entering into agreements with additional covenants, may restrict our ability to pursue our strategy or otherwise constrain our operations. Failure to comply with these covenants could lead to an event of default under the agreements, which may result in, among other things, an acceleration of outstanding obligations under such agreements. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the availability, amount, timing, or nature of our future offerings. As a result, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their percentage ownership.
At September 30, 2024, we had unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities of $4.1 billion, which we believe will be sufficient to satisfy our liquidity needs for at least the next twelve months from the date of this Report, and we expect to meet our long-term liquidity needs with our projected cash from operations, available lines of credit and debt financing.
We believe a healthy liquidity position is a crucial element of our ability to weather any part of the economic cycle while continuing to execute on our plans for profitable growth and increased returns. Our goal is to continue to be diligent with our liquidity, maintain financial flexibility, and be prudent with capital spending.
Analysis of Cash Flows
Operating Activities
We rely primarily on operating cash flows to provide working capital for current and future operations. Cash flows from operating activities were $161 million and $486 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in operating cash flow is driven by the change in working capital and Spirit merger termination.
Investing Activities
During the nine months ended September 30, 2024, flight equipment capital expenditures included $992 million related to the purchase of aircraft and spare engines as well as aircraft interior modifications. Flight capital expenditures also included $65 million in spare part purchases. Other property and equipment capital expenditures included ground equipment purchases and facilities improvements for $70 million. Investing activities for the current year period also included $942 million in net purchases of investment securities, $75 million in aircraft pre-delivery deposit payments and $22 million in Spirit shareholder payments.
During the nine months ended September 30, 2023, flight equipment capital expenditures included $618 million related to the purchase of aircraft and spare engines as well as aircraft interior modifications. Flight capital expenditures also included $42 million in spare part purchases. Other property and equipment capital expenditures included ground equipment purchases and facilities improvements for $90 million. Investing activities also included $98 million in Spirit shareholder payments, $53 million in net purchases of investment securities and $23 million in aircraft pre-delivery deposit payments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financing Activities
Financing activities for the nine months ended September 30, 2024 primarily consisted of $2.8 billion in proceeds from the TrueBlue® Financings, $460 million from the issuance of the 2.50%convertible senior notes, $607 million in proceeds from sale-leaseback transactions, and $350 million in proceeds from the issuance of equipment notes to finance certain aircraft. Additionally, we issued $31 million of common stock relating to our crewmember stock purchase plan. These proceeds were partially offset by $631 million in payments on our outstanding debt and finance lease obligations, which includes the retirement of a portion of our existing 0.50% convertible senior notes.
Financing activities for the nine months ended September 30, 2023 primarily consisted of proceeds from sale-leaseback transactions of $523 million, issuance of $78 millionin equipment notes to finance certain aircraft and issuance of common stock of $31 million related to our crewmember stock purchase plan. These proceeds were partially offset by $254 million in payments on our outstanding debt and finance lease obligations.
Working Capital
We had working capital of $800 million and a working capital deficit of $1.5 billion at September 30, 2024 and December 31, 2023, respectively. Our working capital increased by $2.3 billion primarily due to an increase in cash and investment securities from raising $2.8 billion in proceeds from the TrueBlue® Financings and raising $460 million in proceeds from the issuance of the 2.50% convertible senior notes. These increases were offset in part by $631 million in payments on our outstanding debt and finance lease obligations, which included an early retirement of a portion of our 0.50% convertible senior notes.
