Welcome to the Jet Blue Airways Corporation first quarter 2008 earnings conference call. Today’s call is being recorded. We have on the call today Dave Barger, Jet Blue CEO and Ed Barnes, Jet Blue CFO. As a reminder this morning’s call include 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 & Exchange Commission. At this time I would like to turn the call over to Dave Barger. Please go ahead sir.

Thank you Natasha. Good morning everyone and thank you all for joining us today. In the first quarter Jet Blue had an operating margin of 2.2% resulting in a net loss of $8 million or $0.4 per diluted share. This loss was driven primarily by the unprecedented spike in fuel which cost us an additional $180 million compared to the first quarter of 2007. I am pleased however to note that apart from fuel we maintained our low cost disciplines throughout the quarter as our ex –fuel CASM was slightly over the year. Additionally unit revenues continued to show impressive growth. First quarter revenue performance exceeded our expectations and the guidance we provided you in January. Passenger revenue prevail able seat miles or PRASM grew 16.5 % year-over-year and RASM also gained almost 18%. This first quarter PRASM increase was driven by a 20% increase in yield. Fortunately the holidays reasonably spaced throughout the quarter were strong demand clustered around the President Day and Easter holidays. This helped increase our average fare $25 to about $135 and that’s a 22% increase over first quarter 2007. To be fair, revenue comparisons are helped by the extraordinary revenue impact of last years’ ice storm, but even normalizing for this event we had a very strong revenue performance. The demand momentum that began during the December 2007 holiday period continued throughout the entire quarter across all of our markets. We are particularly pleased with our strong revenue performance in March. A 13% year-over-year increase in PRASM driven by a 17% increase in yield. Jet Blues’ average fare during the month of March was $138 our highest monthly average fare average ever. We also continued to benefit from reduced industry capacity which was basically flat in all of our markets on a year-over-year basis.…

Thanks Dave. Good morning everyone. As Dave mentioned, we are pleased with our strong revenue performance and cost discipline during the quarter. Despite higher than expected fuel which was $0.15 per gallon higher than our issued guidance, we beat or met all of our guidance ranges with the exception of CASM. Accordingly, we believe we are well positioned to weather these difficult times with strong financial discipline and solid cash position. We ended the quarter with $713 million in cash and cash equivalents. This cash balance excludes $313 million in student loan related auction-rate securities. Consistent with other carriers, we have reclassified these securities as long-term investments during the quarter. As we disclosed in our 10-K, our auction-rate securities are collateralized by student loans and guaranteed by the United States government. Auctions for these securities began to fail in mid-February due to overall market liquidity, not due to defaults or the underlying collateral. Our investments in these securities are now earning higher interest rates due to their failure at auction. We believe with these higher rates, insurers are intended to find alternatives and refinance. Although we have classified these securities as long-term investments, we expect with regard to the majority of these investments that within the next 12 months a secondary market will develop that insurers will call the securities or liquidity will return to the market. In fact, we have had approximately $6 million of our securities called at par by insurers since late February. Even excluding these auction-rate securities, our current cash represents about 25% of our trailing 12 months revenue, amongst the highest liquidity coverage ratios of the major carriers. However, we believe that preserving liquidity is prudent in the current environment. Let me take a moment to walk you through some of the key features of…

Now we will begin the 30 min question-and-answer session for investors and analysts. We would like to ask everyone to please limit themselves to one or two questions with a brief follow up so that we can accommodate as many as possible. Your first question comes from Mike Linenberg of Merrill Lynch.

Yeah, good morning all. Just a couple of questions on the average fair. I think you had indicated that through the GDS’s you were pleased with the, what -- sort of the revenue that you were seeing. Can you give us a sense of may be how that average fairs to the GDS and compares to your overall average fair?

Yeah, it’s usually about $30 higher than an average fair.

Okay and then my second question regards the Lufthansa agreement Dave. I think you said that you were hopeful that you could get something together by the end of 2008 and I am just curious, there is a lot of room between now and the end of the 2008. Is this partially a function of may be different IT platform different culture or could this also be a possibility of may be the extent of the potentials relationship -- when you are ready to announce should we expect it to be something bigger than may be what you have with air lenders.

Yeah Mike thanks. I appreciate the questions. Regarding Lufthansa I think we are just being realistic from the stand point of mainly as we take a look at commercial opportunities how do the technology platforms really work and so we have teams from Lufthansa group as well as Jet Blue that are meeting on a regular basis rotating between Europe and here in the States for meetings, one was held yesterday here in the New York area and so I think it’s just being realistic from the timing perspective. Looking at things, we believe we will look very much like what we are seeing with Aer Lingus. Aer Lingus has not been out there for a long period of time so we are also this continued proof of concept will start to actually start to fly customers here at the end of April what the Aer Lingus agreement and that just I think allows us to have some actual operating history as we move forward with Lufthansa. So I think it could just be more realistic with timing.

Okay and then just one last one on your terminal 5. I mean we sort of watched DA move to their T5 and it looks like significant cost and disruption, sort of what are you doing and should we anticipate that there will be some onetime costs associated with the move. I mean when I say onetime, sizable onetime cost as you move into the new terminal and potentially experienced deeding problems etc?

Yeah Mike, thanks for the question. All the additional cost of moving into T5 or in our CASM guidance that we issued today. We are going to go through obviously immense testing of our systems and of our operations as we transition wanting to learn from what happened with the other T5 so we are pretty confident that we have the cost in our guidance that we will incur.

In fact Mike its -- we have baggage going through the system on a test basis right now. We are pressuring the terminal. It’s -- we want to make sure that we do make the cut that it’s as seamless as possible. Any time you make a transition there is going to be some unexpected situations that come up. At the same team that is really driving the construction bringing it in early on budget very much involved with Continental Global gateway of project over a newer successful opening and lessons learned whether its Denver or whether its London to make sure that we don’t repeat it here.

Okay very good thank you.

Thanks Mike

Thank you your next question comes from Jamie Baker of JP Morgan.

Yeah good morning everybody. Thanks for the whole bag of detail that you gave. I didn’t catch if you indicated whether there was a material adverse change clause in the processing agreement nor when the agreement was up for renegotiation?

Yeah Jami, we haven’t disclosed any of the details regarding our processing agreement and at the request of the processors we won’t discuss that.

Okay, I have a quick follow up. Are proceeds from the planned aircraft sales this year in the guidance?

Yes they are.

Any rough approximation?

The cash proceeds from our aircraft sales? Yeah we guided to -- we were going to generate $300 million in cash and with the repayment of debt of $200 million it was going to result in a net $100 million cash gain.

Okay thanks a lot.

Yeah thanks Jamie.

Thank your next question comes from Ray Neidl of Calyon Securities.

Yes, regarding your partnerships if you wanted to join worldwide partnership one of the three main worldwide partnership, I don’t know if you would want to join them or not but if you did are there limitations in the technology that you are putting in place for Lufthansa and Aer Lingus or will that technology allow you to do other partnerships.

Ray it’s -- we have Cape Air, Aer Lingus and now obviously we are working with the Lufthansa group on a partnership and so there is a lot of lessons learning with Cape Air and Aer Lingus from an IT perspective and so from a standpoint of joining more of the three global alliances, we haven’t had discussions internally regarding that as a strategic next step for us and so I think that we are very pleased with everything its on our plane right now with the Lufthansa group to make sure that that cut over is very seamless. It’s not just New York with Lufthansa. They and Swiss and I mean they operate to 17 locations here in the United States and 22 in North America. So, there is lot’s of opportunities whether it’s Boston, Orlando or New York so plenty on our plate right now.

Okay and as it appears we are about to head into a major restructuring of the US airline industry between mergers and liquidations and bankruptcies and so forth. There is going to be loose assets probably becoming available. What would Jet Blues interests be in – potential interests be in some of these assets.

Ray, it’s a -- I think number one. We want to ensure that we have a strong balance sheet and that we are really preserving the liquidity, so that to the extent that opportunities are available whether it’s gates, whether it’s slots in key airports that are of interest to us that we will be able to move forward; I am bidding for something like that and so it’s that loss on us at all regarding the MNA activity that’s in the news, whether it’s announced or rumored, our goal is still one of growing organically and with our partners if you will as previously discussed but you bet we want to make sure that if something like that materializes on the landscape we can bid for it.

Good, thank you very much.

Thanks Ray.

Thanks Ray.

Thank you. Your next question comes from William Green of Morgan Stanley.

Hi, this is actually John filling in for Bill. I set a couple of questions here. First of all over the past few years you have been able to offset some your exterior inflation with a lot of employee productivity initiative and you have made a lot of progress on FTE’s per aircraft. As you sole capacity is our improvement on FTE’s per aircraft possible or should we think about that as something that might increase your view in ’08.

John, I think certainly it’s possible but obviously as you slow the growth that is harder to reduce costs, but I think it’s safe to say that as Dave indicated. We currently have a higher increase in place for really our corporate positions and we will be responsible with regard to FTE’s going forward. So there will be a lot of pressure on head count as we move forward.

Great, and just aside from selling aircraft and potential strategic alternatives for live TV. Do you have any additional assets that we might not be thinking about that you might consider monetizing in the future?

I wouldn’t say we have any material assets that we are considering on monetizing at this point of time, but certainly we have other opportunities to obtain liquidity.

Now for the temporary facilities that you have at JFK is that something that is monetizable once the new terminal is finalized?

I don’t believe so. I mean those are really temporary facilities that we’ve have built at JFK, so we will probably reconstruct those and as we move into the new terminal.

Great thanks a lot.

Thank you. Your next question comes from Gary Chase of Lehman Brother.

Good morning guys it’s Dave Simpson from Lehman; a couple of quick questions here. On the March horizon, do you guys have any sense of how much revenue shifted into March from April as a result of the earlier holiday? Any help how we should think about that?

Yeah, its -- thanks Dave. Certainly we had the benefit of Easter shifting into the left but we really take a look at probably a 25 to 4% gain if you will as a result of Easter falling in the first quarter.

Great, and the fourth quarter capacity decline, just is that principally -- are you thinking that principally a utilization sort of dialing back some of the red eyes etc or do you think there is opportunities to make some changes to the network in terms of route and foot print etc. What kind of changes can we expect there?

Yeah, I think while I will tell you from a network prospective, we are obviously evaluating every station that we are flying to and whether it’s been around for period of time or whether its relatively new because the cost of energy totally changes if you will the route P&L, so we are evaluating that. So, potentially depending on what happens with oil as well as the landscape you bet we could adjust that as we move into the second semester this year. I think I would like you think of actually this negative growth if you will in the fourth quarter as really getting better at managing some of the trout periods and so that stay of week that could be some of the red eye markets that we are flying to and by the way that could be in Transcon markets, it could be a day or week on some of the short haul markets as well or even a day of weekend into the Florida markets or Caribbean and so just getting smarter about what kind of demand are we seeing over the course of seven days and be much more surgical if you will putting that capacity out there and so that’s the net of what we are seeing in right now into the fourth quarter.

Great and then just last; I think you mentioned this but I may have missed it. The change in 2008, the fuel CASM guidance, is that a function of the capacity outlook changing or there is some other things changing within that guidance?

No, definitely in the near term it’s pretty much all capacity related.

Okay great, thanks guys.

Thanks Dave.

Thank you your next question comes from Frank Boroch of Bear Stearns.

Maybe Ed you could give us some color around the Transcon markets and then just more generically may be just looking back at the first quarter where you were seeing more support of the fair environment from legacy competitors or fellow low cost airlines?

Yeah -- good morning Frank. Just little bit of color on Transcon markets. It’s -- we continue to see it as a percent of our ASMs; they are declining and in fact in the first quarter just under 40% of our ASMs were on the Transcon markets and that’s down really over the course of the last year, year and half that was north of 50% of our ASMs into the Transcon markets. So, when we take a look at the RASAM, the PRASM, year-over-year improvements that we saw in the first quarter generally speaking it was really strong across the system whether it was short haul or longer haul or into the Transcon markets as well. Is there impact of energy on the Transcons more so? You bet, or new entrance competitors in the Transcons you bet as we talked about in the past, so just a little color on both the network as well as Transcons.

Okay, great and I guess as you think about fleet flexibility is there one type of aircraft that you think you have more flexibility to push back or you are more inclined to make changes with to the other?

Well, I think that we would consider both group types and anything that we do to pull down capacity; traditionally we have UBA 320 as well as the pro’s with both the A320 and E190 to cut it down and our capacity increases but moving forward will just -- we will be looking at both markets and where we see strength and one versus the other that’s probably where we would head.

And think if I may just a little bit more I mean adding on to that topic. The ability to have the 320 and the 190 and the fleet and the flexibility that it provides us from a stand point of building the network or just into the seasonality of the network really important couple of examples. Some of the significant amount of what we call flyovers that routes such as below into then Portland down to Orlando or up state New York, Buffalo down into Fort Meyers as an example why planes to Fort Meyers? All examples of 190 flying and it’s a really nice tool to open up a new market next to that and cities where we have relevance today and then seasonally adjust into bigger appliances necessary such as places like Buffalo, Orlando this is the first time we have flown to right down South, but we did that with an A320. So, it’s the ability to go into a place like Austin Texas and to do that with the 190 and to balance it with the 320 really important 204’s.

Could you use some of the 190s to help Davis Neelemans new adventure in Brazil to get off the ground sooner?

Frank, I think he is actually already has obligations remember with the 195 family of aero plans to support his growth plans. It’s a -- and we had previously slowed down our 190 orders in the course of 2008 as well, so I think Dave is all set for -- I haven’t heard an announcement Dave but we are wishing them well.

Great thank you.

Thank you.

Thank you your next question comes from Kevin Crissey of UBS.

What fuel price would have you reconsidered the free TV. I mean I think it comes in our planes they charge for the TV or it’s my assumption. Why not just charge for a TV? It seems like a easy way to generate cash.

Kevin, we -- I’ll tell you. We debate that and it’s part of the brand since day one has really been free TV?(Inaudible) a free TV is the same sentence if you will and we also know that fuel in our environment was $0.60 per gallon and so but if they are a large part of the brand. With that sad it’s a -- there is no doubt but we know that there is opportunities if you will to drive ancillary revenues through charging for the TV, but we also know that we have -- we believe embedded in our average fare dollars as a result of the TV already being baked into our products and so we look at this more of a with TV, with radio. We have some -- we have the Premium Entertainment options on board the aero plan as well. As we work with live TV at some point with new operating, nothing like if you are at home, you have a basic package and why can’t you upgrade to something where it might be a more of a paper view type of a package. That’s the kind of options that we have with the Live TV groups, so I think my last thought, everything is on the table as we take a look at liquidity as we take a look at this environment which is unprecedented including things such as offering Live TV.

Do you, when you -- thank you. When you are thinking about Live TV and offering it to Continental, what were the competitive -- it seems like that would be somewhat of a cannibalism of your advantage on the east coast. What were your thoughts and concerns when you looked selling it to Continental?

Yeah I think it’s a -- we are looking at that as really at some point when the dust settles if you will, a little bit of a new normal on the landscape it’s going to be the cost of entry in the domestic landscape and so you should take a look at -- we used the example on the past business class internationally if you don’t have large flight, you really not considered competitive as you try and fly across the world markets, the long haul markets and so we saw this with Delta respectively with a strong unit and it was pretty obvious that there were work arounds that were available other options if you’ll and so if this is really going to be the new normal where everybody is going to have it at some point then I don’t know is it five years down the road, ten years down the road. It certainly makes sense to have a piece of that business as we are moving forward into the future. LiveTV -- we really think -- I mean the LiveTV group with where the leadership team. Nate Quigley, our CEO; Glen Lara, John Frisco, the founders down there. It’s not just TVs and it’s not just radios; It’s things like it’s an awful lot of information that goes to the airplane as cash less cabin, it’s cabin surveillance, it’s the ability to take a look at wireless at altitude as well so we think there is a nice business model there that we can participate in.

Thanks very much.

You got it, thanks.

Thank you. Your next question comes from Jim Parker of Raymond James.

Good morning guys. Just pursuing LiveTV a bit further; you mentioned that you are considering strategic alternatives and that must mean value for shareholders and cash for the company. Can you give us some idea as to the revenue and earnings or value to the shareholders to the company that might come from the disposition of LiveTV ?

Jim, its really premature. I mean we have always incorporated the LiveTV numbers into the airline numbers as well but it’s -- what we have seen over the almost six years with the purchase of LiveTV as a wholly owned subsidiary, just a tremendous growth in the business and not just for outfitting our airline but airlines such as the Continental announcement or could be Virgin Blue or Air One, I mean different parts of the world as well. So not prepared right now to provide further transparency on the numbers Jim, respectfully.

All right, a question for Ed, at what price of oil and crack spread are you burning cash from operations, ex your aircraft sales, what price level are you burning cash?

Yeah, Jim, I don’t think that we have a definitive number on that. I mean obviously there is lot of factors that you would have to consider such as competitor’s response, what’s happening in the general economy, but I think everyone in the marketplace right now is burdened with the same fuel and so we don’t feel like we are necessarily at a competitive disadvantage but we are mindful of the need to cover that cost.

Okay, thanks.

Yep.

Thank you. Your next question comes from Dan McKenzie of Credit Suisse.

Hi, good morning, thanks. I just wonder if you can provide some perspective about the progress of Orlando and -- I guess at this point wondering if the level of commitment might change in light of the fuel environment or the competitive dynamics.

Yean, Dan, good morning. Orlando was announced as our seventh focus city and so from that commitment and growing Orlando. Recently we opened international service down to Cancun as well as Santo Domingo. I believe March was actually the first full month of operation from the stand point of our numbers and so that commitment is continuing as we’re working with Greater Orlando airport authority, gate relocation as well additional gates. We think that Orlando makes a great deal of sense based on what we have seen in our numbers over the year is to continue to grow both domestically and internationally. Dan there is also, we have Aer Lingus, it’s newest city in North America is Orlando. Lufthansa’s newest city in North America is Orlando and so as we take a look at tentative approval to fly in South America with (inaudible) the ability to take a look at those type of opportunities, not just for our route system but to also partner with these other carriers, you bet that makes sense for us. Now all that said, we have a training centre down there and we have a goal to try and at the same time with the Jet Blue large down there how are crew remembers that are in training and sometimes more cost effective if you will then placing them in disparate hotels in the Orlando area, so that’s an example of something that we are evaluating right now -- is there other better options if you will from the standpoint of financing that growth. But our commitment to Orlando remains advanced.

Okay, thanks. And you may have answered this previously indirectly but with respect to other ancillary revenue opportunities on the EML initiative, I was just wondering how willing you would be to be a little more aggressive with pricing. I believe right now you’re charging $20 for a 38 inches of seat pitch at transcon?

Yeah. I think of that as -- we want to get some visibility and some trial, not that you don’t get trial when you have pretty close to 80% load factor but the acceptance that we have seen with EML on short, medium, and long haul really bode really well for us to respectfully if you will adjust that price point. The feedback has been really well received and both by our customers and our crew members and people say “hey listen I don’t have a problem at all paying after that service” and that is our philosophy. Here’s the Jet Blue experience. If we are trying to charge you for something that’s for a very small population that are doing it like second bag or if you want an additional service such as say refundable fares after that out there in the marketplace or EML.

Okay, good. Thanks a lot.

You got it. Thanks Dan.

Thank you. Your next question comes from Bob McAdoo of Avondale Partners.

Hi just a quick one on the fares year-over-year, you were up $25 or 22% or something like that. Can you break that out as to how much of that might have come from the shift of Easter back into the quarter versus the fact that a lot of -- your fares might have been depressed extremely because of the ice storm of prior year and versus just of kind of other changes. How would you slice that?

Bob, we don’t necessarily look at that way. We know that we saw a 2% to 4 % year-over-year PRASM growth in Q1 ’08 over ‘08 because of the holiday. Maybe another way to look at it as remember, we presented in the fourth quarter was approximately $130 average fare which is now over $135 average fare across the system, so to exactly put a number to it it’s unnecessarily the way we looked at it, it was more year-over-year PRASM growth.

Maybe ask you another way. How much did the ice storm last year depress your average fare? Did you get a sense of that? I mean a bunch of free tickets that you gave out afterwards, I am trying to figure out --

I think probably the March over March performance which I have the opening comments and just to reflect upon is we ended up with a 13% year-over-year increase in PRASM, so without we are more stable if you will from the stand point of March, a normal schedule as opposed to what happened in the February timeframe and that’s without the benefit of holiday and then this March our average fair was the highest we’ve ever had at a $138.00. So in the average fair Bob, we can certainly get it for you in terms of what we saw a year ago February and it was certainly depressed but I think it was more a reflection of just fights we didn’t fly as opposed to what kind of fairs.

Okay and this $25.00, 22% increase is just so much more than anybody else. I am just kind of curious as to where it was coming from. How do -- was it particular routes or what -- how do you -- it just seems so much -- your performance is superior to other people. I an just trying to get a sense of maybe how you did it.

Yeah, I know, I appreciate that Bob and its -- I’ll tell you. I think that as we have taken a look at a lot of difference pieces of the fair structure and the group is running the different revenue initiatives and our Vice President of Revenue Management, Rex who has now been here for a couple of years and Rex benefit into our organization of looking at what’s the low fair, what’s the high fair in the market, the ability to adjust the top end with significant periods of demands such as Easter. It’s -- it wasn’t that long ago where we had an average Transcon fair of 299 and that went in the 500’s and add another 300 bucks almost to that. So, I really credit recon the team taking a much more surgical look at what’s out there, plus Bob we just don’t have as many markets that are maturing from the stand point of new markets. Right now on a year-over-year basis what use to be 24% of our ASM’s in new markets is 10%, that’s a big benefit.

That’s a real deal, yeah. Alright cool thanks.

Thanks Bob.

Thank you your next question comes from Bill Master of Broad Point Capital.

Thank you. Ed were any of our aircraft sales -- did they affect any of the WETC’s that you currently have outstanding?

No, not right now.

Okay, you’ve talk extensively about kind of your liquidity parameters that you like to maintain 25% of LTM sales, what about a leverage target. Where do you want to be comfortably in this type of environment? And I’m also -- please include off balance sheet aircraft leases.

Yeah, I’m not necessarily sure that we have a target. I mean obviously we’d like to less leverage in this environment. We’d like to maintain a lot of liquidity and a high cash balance, but I don’t think I could provide you with the target.

Okay and then finally I assume that your 3.5 is right on the plan to take it out with cash the ones that are probably going to be put in July. Those are included in your current maturities, do I have that correct?

That’s correct.

Okay thank you.

You bet.

Thank you. This concludes our session with investors and analysts. With that we will turn it over to Dave Barger for closing remarks.

Thank you so much Natasha. Just in closing, briefly I’d like to thank our crew members for their support and also at this time I think it’s very important to say a thank you to David Neeleman our founder and we wish him all the best with his new airline venture down in Brazil and wholeheartedly thank him for creating Jet Blue. I think it’s a very appropriate message just as we close this call. Thank you operator, thank you everybody for dialing in. Have a good day.

Thank you. This concludes today’s conference call. You may now disconnect.