Welcome to JetBlue Airways Corporation Fourth Quarter and Full Year 2007 Earnings Conference Call. Today’s call is being recorded. We have on the call today Dave Barger, JetBlue’s CEO; and Ed Barnes, JetBlue’s CFO. As a reminder, this morning’s call includes forward-looking statements about future events. Actual results may differ from those expressed in forward-looking statements due to many factors and therefore investors should not place undue reliance on these statements. For additional information, please refer to the company’s periodic filings with the Securities and Exchange Commission. At this time, I would like to turn the call over to Dave Barger.

Thank you, Jackie. Good morning everyone and thank you all for joining us. We’re very pleased to report an $18 million profit for 2007. This is an $18 million improvement over 2006 and our first full year of profit since 2004. We believe these results are impressive considering that in 2004 oil averaged about $40 a barrel, a far cry from the $90 a barrel prices we saw during 2007. And that we also experienced a $40 million negative revenue impact as a result of the severe ice storm in New York last February. We made significant operational improvements after that February event, including strengthening our operations team and making important changes to the way we respond to weather and other operational irregularities. These changes quickly produced results and by the second half of the year, we improved our DOT rankings across all operational metrics. To the credit of our team, we believe we are now a much stronger, more competitive airline today than we were a year ago. For the fourth quarter, we reported an operating margin of 4.1% and a net loss of $4 million. Our fourth quarter results were largely impacted by the sharp rise in the price of fuel. Had our fuel price per gallon remained at last year’s fourth quarter levels, our 2007 fourth quarter fuel expense would have been approximately $50 million lower. Despite record high fuel prices, JetBlue delivered solid cost performance and productivity improvements. The cost cutting initiatives that we began in 2006 have further helped institutionalize JetBlue’s low-cost culture and we continue to believe that our ability to deliver exceptional service at low cost differentiates us from the rest of the industry. I could not be more proud of our 11,000-plus crew members and I’d like to take this opportunity to…

Thanks, Dave. Good morning, everyone. As Dave mentioned, we’re very pleased with our full-year results especially when considering the negative revenue impact associated with the February ice storm and the record high fuel prices we faced during the year. The full-year profit we announced today is a direct result of the dedication of our crew members who continue to maintain their focus on improving productivity and cost efficiency throughout the year. Before we take a more detailed look at the quarter, I would like to briefly discuss our planned fleet growth. Last October we announced plans to sell two A320s during the second quarter of this year. We are pleased to announce today that we now have commitments to sell one additional A320 in the second quarter, one A320 in the third quarter, and two A320s in the fourth quarter. In total, we currently have commitments to sell six A320s in 2008. We’ve also entered into an agreement with Airbus to defer the delivery of 16 A320 aircraft originally scheduled for delivery between 2010 and 2011, to the period 2012 and 2013. This deferral will provide a firm delivery stream more in line with our current annual delivery schedule. As we said in the past, we believe our order book with both EMBRAER and Airbus is a major asset. And assuming conditions remain favorable, we expect to continue to take advantage of the strength of the worldwide aircraft market to manage our fleet growth through aircraft sales and order deferrals as necessary. We intend to continue to aggressively manage our growth plans depending on changing economic factors and therefore we may announce additional sales in the future. In addition to fleet management, aircraft sales also strengthen our financial position. Since we generally sell older aircraft, aircraft sales help lower the…

(Operator Instructions) Your first question is from Bill Greene - Morgan Stanley.

More color around the RASM guidance. Even if we add back in $40 million to the first quarter of ‘07, I guess for the challenges you had last year, we still come up with an acceleration in RASM growth in the first quarter versus fourth quarter. So I’m still trying to understand kind of why you think that’ll happen. Is it just all the timing of the holiday or is there something else that you see in your markets?

Yes, good morning, Bill. There’s a lot of moving pieces from the standpoint of what’s happening with RASM, and when Q1 over Q1, just even independent of the storm. First of all, the holidays, the way that they played with even New Year’s onto a Tuesday, with our demographics, the Martin Luther King holiday in mid-January, as we then moved into Presidents’ Weekend, it spaced nicely with Easter, which is obviously earlier this year, but also again with demographics with Passover into April, very strong for our route network. I think it’s also important to note that, we’re just doing a better job. I think just on blocking and tackling from the perspective of managing the troughs better. And I mean not just the super troughs that we’ve had in the past, but, two weeks here and there, or a day of week flying. Things like seeing the benefit of the OTA’s, if you will, to help during these mini troughs. Entry into the GDS, the deployment of the 190 into markets that, clearly have a higher level of business line, and, wrapped in there as well is, there are customers who now know that JFK is starting to move back to a level of predictability. And I think that we suffered with that over the course of the past year with JFK in the news, and what was happening with congestion, and not that the slots are in play right now just yet, but clearly, we’re not in that summer peak time of the year. So there’s a lot of different pieces that are playing, and, Ed, you want to involve or add from the standpoint of RASM?

Nothing just as well as maturing markets, adding 16 cities in 2006 and five cities in 2007, I think has really allowed a lot of our markets to mature.

What was same-store sales RASM?

Yes, I don’t think we specified that Bill. We can follow-up. I think what we mentioned though is that the level of maturing markets less than 12 months is now down to 10%, it was double that as we look at same timeframe year-over-year.

And my last question is on CASM. How much of the growth in CASM for 2008, for the full-year number ex-fuel, is related to the new terminal?

That’s not really having a significant impact on our CASM in 2008. We’re opening the terminal late in the third quarter of 2008, and the differential between the rest just isn’t that significant to our CASM.

So, that’s really a 2009 event?

Sure.

Thank you. Your next question is from Jamie Baker - JP Morgan.

Thanks for that clarification on the out-of-period hedge gains. I’m curious at the announcement of refundable fares, implies that you’re going to begin overbooking.

At this point, Jamie, there’s not a plan to. Refundable fares, we’ve been testing through our CompanyBlue product and obviously as we start to penetrate more into the business market, our product, American Express, the OPEN card program, we’re very encouraged with the test that we did. We rolled this out yesterday, and, it’s incredible, to see what people are looking for flexibility in their travel schedule. And, one day’s number is anecdotal, so we’ve got to get a trend, but very, very pleased. No plans to overbook at this time.

And I haven’t had a chance to look at where the fare levels are compared to your existing Y levels, on average how much of a premium is one paying for the flexibility? I can look it up if you don’t have that at your fingertips that is.

Yes, from the standpoint of a premium, of course it depends on the market, but between $50 and $100, Jamie.

Okay, sounds fair. And secondly, you hinted at an enhanced front cabin. I’m curious at the development of this, if it’s already incorporated into your RASM guidance and possibly your CASM guidance if there’s any change to the aircraft configuration. Or will the announcement in coming weeks be something we should consider as incremental to our forecast?

Yes, from the standpoint of seats on aircraft, 150 or 100 seats. There is no change in the number of seats that we’re going to have across the fleet. And I think also in the spirit of being transparent, we’ve talked about our game that we’ve executed to over the last year. And using the space on specifically on the A320, today with that level of pitch on the airplane, 36 and 34, we just think we’ve got a smarter design that again, is going to be of great interest, we believe to say, the nondiscretionary traveler or somebody who’s looking to buy up, if you will, from the JetBlue experience. So some of those numbers have been conservative, but they’re baked in from the standpoint of RASM, and again, no change to the number of seats on the fleet.

Thank you. Your next question is from Jim Parker - Raymond James.

In uncertain economic times, investors are often interested in what assets may underlie a company and its share price. And I’m curious, what is your assessment of the valuation of your new JFK Terminal? What do you think that’s worth?

I don’t think we’ve really put any numbers to the JFK Terminal and what it’s worth. I think what it’s worth to JetBlue is another enhancement to the JetBlue experience, getting out of T6, which is not the best operational situation for us, and our ability to drive incremental revenues from our terminal as well.

And a second question, I’m curious, you have this substantially greater exposure and capacity in the Caribbean, then you’re overflying JFK going to Florida, a couple of questions in that regard. One, are you becoming more of a leisure-type carrier? And then secondly, what happens in the summer with all of this Florida traffic?

And obviously I look forward to seeing you later this week. By the way, with the JFK Terminal as well, as Ed mentioned, just that ability to sort of even connect traffic in one building as opposed to what we’re doing today. Just all that upside with the JetBlue experience, we’re so positive about it. It’s roughly about three times the acreage and the ability to operate out of those 26 gates. Just a comment on the capacity, what we’re doing in the Caribbean, it’s natural from the standpoint of New York connecting down into the Caribbean. We’re now growing significantly from Orlando into the Caribbean. And what we’ve seen with these markets, now that we’ve got year-over-year comparisons, is they’re strong, Jim. When we start to take a look at, peaks versus troughs, the natural catchment or communities of interest between, specifically New York is very, very solid on a year round basis. By the way, for example, St. Maarten, cutting the ribbon down there two weeks ago, the ability to go off-peak with the 190 full over-water capability, the aircraft capable of that mission, to dial-back gauge, we can certainly do that or add capacity as necessary during the holidays. I think we’re just getting smarter about what we’re doing with capacity and taking advantage of some of these peaks or Super Bowl extra sections. It’s the kind of stuff we can do with our two largest operations in the Super Bowl. With the example of the overflying, New England, upstate New York down into Florida, again it, what we see is year round market and it’s not necessarily just the discretionary customer. The ability to put a pattern of service where a business flyer can come up to New York and not pay $400 to $500 for a hotel room, or Boston, or wherever it might be, has been pretty powerful. So, it’s the beauty of the 150 and the 100-seat airplane.

Thank you. Your next question is from Frank Boroch - Bear Stearns.

Good morning. Dave, I was curious if you could shed some light on the 19% threshold or the stake that Lufthansa has taken. And does that suggest that JetBlue is open to, you know, further foreign carrier stakes up to the 25% limit?

You know, Frank, we’re certainly well aware of the 24.9% voting shareholder, foreign ownership in a carrier. And so, from Lufthansa, it’s probably a better question for them if there’s interest in that. But we thought that that was a level that we could commit to and agree to from the standpoint of their ownership, and also work through Washington with approval. And now, we enter into that next chapter from the standpoint of what our synergies, not just as an investor, but what are synergies between the two companies.

Okay. And I know if you’ve had some experience domestically with partnerships with Cape Air, anything on the horizon with other domestic, maybe larger domestic carriers?

Well I think with regard to Cape Air, first of all, very pleased with how that played up in New England. Cape Air is a really solid business partner, and so potentially, not that there’s a plan just yet, there could be additional, I guess, overlap of the network if you will with Cape Air. But nothing else is really planned from a domestic perspective at this point, Frank. It’s again, I think we’ve been, take Aer Lingus. We’ve talked a good story over the past year but we haven’t executed to it. And so I think we’re just, let’s really take a look at what the time lines are and let’s make good on the commitment. Let’s do it right like with Cape Air this past summer, and let’s expand it where it makes sense. And that’s exactly the philosophy now behind, okay, what’s the next step with Aer Lingus and also with Lufthansa. By the way, I think that’s plenty of partnership to digest for us over a period of time.

And lastly, if anyone could maybe just give some comments on how the transcon markets have been performing?

Yes, I think that I would look at the transcons as holding their own. And we know that the transcons, we’ve dialed back the percent of ASMs in the transcon, 3% on a year-over-year basis. No surprise that we have a new competitor that’s been out there since the August timeframe into the transcon markets, and so that’s still a significant portion of our business, not just from Kennedy, but Boston, Dulles, down into Florida as well. And I think the transcons are holding their own, and we’re also getting smarter. When you get into these troughs, just day of week, you don’t have to operate every flight seven days of the week. And that’s started to play nicely from the standpoint of the year-over-year RASM improvement as well as just becoming smarter with how we’re scheduling the fleet.

Thank you. Your next question is from Gary Chase - Lehman Brothers.

A couple for you, first, I’m wondering if there’s any significant stage length reduction in 2008 as we talk about a little bit of network reconfiguration as well as mix of E190s versus A320s changing?

Gary, our stage length is actually going to be pretty flat year-over-year.

Okay. And then, when you mentioned a number of things that were in CASM that included some, presumably there is going to be some configuration cost for this front cabin stuff that you’re describing. You also mentioned LiveTV investment. What kind of impact are those having on CASM?

I think pretty much all of our CASM increase year-over-year is related to primarily four different things. It’s going to be the pull-downs that we’re doing, which are going to add negative impact on year-over-year CASM; the aging of our aircraft, and really specifically our E190s, who are going to have their first full year of heavy maintenance this year; IT investments that we’re making to really be able to execute on some of our marketing and sales initiatives, as well as to get back to operational efficiencies; and then LiveTV and the investment that we’re making there.

But the last two, Ed, IT and LiveTV, are those a significant component of the cost growth?

They are. LiveTV, we’re going have to spend some money on LiveTV to get ready for the Continental installations, and on the IT side we need to continue to build the infrastructure as we build the airline.

And is there any operational improvement? Is there a block time reduction assumed from in the second half for what’s going to be playing out at JFK?

We haven’t assumed anything yet. We’re pretty optimistic about it, but we didn’t want to make assumptions without kind of seeing what was actually going to play out.

Okay. And then just last one. Just as a follow-up, I think Bill Greene was asking this earlier, about the RASM performance in the first quarter. I was interested in that, but I think it’s more interesting that you have got an accelerating trend through the course of the year. So in other words, if you strip out the Valentine’s Day impact from last year, that was 7% roughly in RASM comp, yet if you look at what’s going on for the remainder of the year, you’ve got into what we think is a harder comp from an industry perspective. You have got an accelerating performance, and I’m just wondering what’s in there. By your own admission, Easter is going to be a big impact in your first quarter, yet that’s going to be, if I’m reading this right, pretty significantly your lowest RASM quarter of the year. So how does that, just can you walk us through that?

Gary, there’s, I think, certainly momentum continuing from many of the initiatives laid out, and as I lay out in the first quarter. But also, I mean what’s really significant is just the market maturation. We had so much drag on this company from the standpoint of opening in 16 new markets back in 2006. And there were people who, Columbus, Nashville, tough decision. And granted, we had visibility into potentially what was going to play with Lufthansa as well as we take a look at our route network, and what that could potentially mean. But there was just so much drag on the P&L from opening that level of activity, jumping from; I believe the number was from 37 to 53 cities, literally in one year. And so we don’t have that type of drag in 2008.

But just to be clear, the stuff that you’ve described as potential, I mean, I assume there’s no impact from JFK capacity constraint, and I assume there’s no assumption in the guidance for Lufthansa commercial agreement, whatever we want to call it, a code-share.

Yes, I mean, at the end of the day with the New York airports all becoming slot constrained from a macro perspective, plus capacity, really coming out disciplined, capacity being reduced domestically as you take a look at what other carriers are doing. We take that into our 2008 plan. As Ed mentioned, we’ve been conservative, because again JFK’s a little bit of an unknown going from, I mean, it literally turned on a, it almost did a 180 from 2006 to 2007 from how bad it started to operate. And so we’re just conservative. But yes, so those are baked in at a macro level.

Code-share as well?

No, no benefits of code-share at this point in time. The only thing that’s really in there in a very small way is Cape Air because that’s really year-over-year from the start of the summer.

Thank you. Your next question is from Mike Linenberg - Merrill Lynch.

I just have two questions. First, you know, Ed, on the pre-tax guidance, does that include the gain that you’ll take on the six aircraft?

Yes, sir.

Okay, and then my second question is to Dave. And Dave, with LiveTV, Continental’s a big customer. At what point will you be providing more information out there? I mean, revenue base of LiveTV, you did indicate that you were going to turn it up a couple of notches and, based on some of the comments from Ed, that there is going to be some CapEx there. So it looks like it will potentially be a growing part of your business, which sort of results in two questions. One is that, is the current management team at risk of having resources being pulled from the airline to LiveTV; and two, is that as that business grows, at what point does it make sense to bring in a risk-sharing partner? Bottom line is that you want this business to grow and prosper down the road. This could be a large; this could be worth a lot in the marketplace, your thoughts on that?

Yes, Mike, it’s specific to any contract. I’m not going to go into any specifics on the contract. At some point, I’m sure there’ll be greater visibility tied into LiveTV. I think the headline is, is this company that we purchased over five years ago is a significant asset, and we’ve been hard at work not just with JetBlue, TVs, radios, second-fleet type, Beta Blue, as we’re working with that new spectrum. But investing from the standpoint of resources, our new CEO has been there for a year now, Nate Quigley one of the founders, Glenn Latta as President in the team, working down in Orlando; a proper capital investment to support them as well. We thought it prudent to share it. It’s time to now market yourself. And delighted that Continental signed the agreement from that perspective, because we are also of the opinion that it’s going to be ubiquitous across the skies here before too long, at least in the United States. So, from at what point is there, I think your last comment, was a risk-sharing partner. Early to say at this point in time Mike, but we truly value LiveTV and what it means to JetBlue and our customers.

Thank you. Your next question is from Robert Barry - Goldman Sachs.

Good morning, this is actually Chris filling in for Rob. Just had a couple of questions. First, in the past, JetBlue, you’ve talked about funding your business from cash flow for operations. Just wanted to get a sense of what’s your timing on that goal? How are you thinking about that going forward?

Well, I think that’s always our goal. Certainly the economic environment and the fuel prices in the last year have kind of had an impact on that. But we always strive to be cash-flow positive, and I think we’ve taken the right steps to do that, from cutting cost to increasing revenues to focusing more on our ancillary revenues. I think you’ll see a lot of that in 2008.

And I was just going to say, to what degree can you at all sort of quantify, at least in terms of orders of magnitude, all of these revenue initiatives that you have in place, whether it’s the cashless cabins, the GDS, the refundable fares. Just give us a better sense of what kind of impact project that’s having on your RASM or will have on your RASM?

Well, I think it’s, obviously, not just with RASM but overall revenue, there’s two pieces there, Chris. I think there’s in orders of magnitude, when we looked at, first of all, ancillary revenues on a year-over-year basis, I think we provided transparency roughly of 50%, just on a raw number year-over-year. But there’s a significant focus on ancillary revenues. And it’s been very beneficial to the company, and without really customers voicing negative opinion. And it’s the many fees that we talked about, it’s the, as you alluded to, cashless cabin. It’s the change fees that we changed twice. The res fee that we put into place, different baggage fees. Believe it or not the number of pets that travel between this part of the country and Florida is just an incredible number. It’s just that the discipline to also collect them as well. Cashless cabin also provides us the platform to start to look at purchase on board. Yesterday with refundable fares as well as what we’re talking about with an enhanced change to the configuration of the aircraft, there’s all of these opportunities that are working across the world and they’re certainly working for us too. From the standpoint of core revenue as we talked about earlier, from a magnitude perspective, I think you can see that just in terms of the guidance we’re providing on a year-over-year basis.

Okay, thank you. Just one last quick one in terms of, you alluded to competitor capacity cuts or discipline. Just curious as you look across your network, where are you seeing sort of the marginal, the cuts if you will, if you look across the network? Where are the big guys in terms of competitor capacity?

Yes, it really is across the board, Chris. It’s not that there’s double-digit reductions in any one area. It’s really minor, small reductions of capacity. Not unlike what you’re hearing from a macro perspective from all the other airlines about what they’re doing with U.S. capacity.

Your next question comes from Ray Neidl - Calyon Securities.

Yes, just to clarify what might happen with the Lufthansa agreement. I know it’s a little bit early. But, if you do have an operational agreement with them, might you divert some of your assets to some of the other Lufthansa cities that they fly to in this country, possibly joining now JFK in the process?

Yes, Ray, I can’t speak highly enough about Lufthansa, the pace at which this moved. And by the way, it wasn’t something that was just over the last 90 days. I believe it’s happened over the last three years, four years worth of relationship. So, they’re big in Kennedy. And obviously, they have Swiss involved as well, 30% ownership in BMI, large presence along other East Coast ports. Whether it’s Boston, whether it’s down in Orlando and certainly, when you start to move West, and not just in the United States. So, possibly, that could happen. It’s just; this is a very can-do company. It’s just, I mean, from a Lufthansa perspective, and obviously JetBlue couldn’t be more delighted with discussions that are taking place.

And with your capacity growth slowing down in the later part of this year, I know it’s too early for 2009, but if we have roughly same conditions with high fuel prices, going forward, might we see JetBlue moving down into the single-digit capacity growth in years going out? And if that’s the case, you’ll probably be showing some, continue to sell some older aircraft, and I’m wondering what are you seeing for the market for the A320s, is that holding up worldwide?

Well, we are seeing the market hold up for A320s at the current time. One of the nice things about having a flexible fleet is that we can ratchet up and down our growth. And so, we’ll just see how the economy pans out. We’re pretty optimistic right now with what we’re seeing in the first quarter. But if things turn for the worst, we can certainly sell additional aircraft and we’ve shown our willingness to do that.

Thank you. Your final question is from Dan McKenzie - Credit Suisse.

Hi, good morning. Most of my questions have been answered, but maybe just a couple of clarifications here. Does the revenue guidance include the revenue potential from the refundable fare structure? I missed that.

The answer is yes. It’s fair to say we say we’re conservative because we didn’t know how it would play. But yes, that is baked into our guidance.

But it does not include the guidance, say, from an international co-chair such as Aer Lingus or Lufthansa.

Yes, they are very, very minor from the perspective of K-fare. Certainly, Lufthansa, we’re working on that right now. And Aer Lingus, it’s not meaningful really from that perspective. We’ve been talking about Aer Lingus, I think, for like three years and finally, I think we’ll close on that and move forward.

And then just one more quick follow-up here, I’m wondering if you can provide some more color on cost and revenue trends in the markets that you are now latticing? And I guess in particular, what’s the competitive dynamic like in those markets and what are your biggest worries looking ahead?

Yes, it’s the latticing, connecting the dots. It’s what we’re seeing is, we’re connecting dots from a position of strength. And so, Dan, as I take a look at Upstate New York connecting it down into Florida, for eight years, we’ve been connecting customers 876. Depending on which station you talk about, Buffalo, Rochester, Syracuse over Kennedy, the ability to start to blend in a nonstop even though we may not be the first nonstop in the market, the brand is very well known when we start to look at those cities, the Portlands or Burlingtons of the world. Fair to say it’s a bit early with the Richmonds and the Charlottes and the Raleigh because we opened those stations later. But again, we’re very positive from this perspective. Latticing, connecting the dots, more efficient ways of adding flying as opposed to new stations will definitely be part of the philosophy on a go-forward basis.

This concludes our session with investors and analysts. With that, we will turn the call over to Dave Barger for closing remarks.

Just in closing, I want to once again thank our 11,000 crew members for all their hard work during 2007, our first profitable year since 2004. Despite the challenges that lie ahead, we’re very optimistic about 2008. And again, thank you all for joining us on the call today. Have a great day. Thank you.