Welcome to JetBlue Airways Corporation second quarter 2008 earnings conference call. (Operator Instructions) 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.

This morning we announced our financial results for the second quarter. We reported an operating margin of 2.4% resulting in a net loss of $7 million or $0.03 per diluted share. Our second quarter results were inline with all of our guidance ranges despite higher than expected fuel, which was about $0.08 higher than our issued guidance. Year revenues continued to show impressive growth during the second quarter. Passenger revenue per available seat mile or PRASM grew 9.8% year-over-year and RASM, which includes our ancillary revenues gained over 13% on a year-over-year basis. Unfortunately year revenue gains have been far from sufficient to keep pace from the extraordinary increase in the price of fuel. JetBlue’s average fuel price increased nearly 60% or over $1 per gallon versus the second quarter of 2007. Record fuel prices have transformed the industry landscape not only because of the magnitude of the run up in the price of fuel, but also because of the pace of this increase. On our last earnings call I outlined several key actions JetBlue has been taking to adapt to what we call the "new normal". We believe this industry environment creates opportunities for those who maintain adequate liquidity, capacity control and service quality. With respect to service quality I would like to first thank our 11,500-crew members for all of their hard work. Record fuel costs and an uncertain economy are not an excuse to provide anything less then the JetBlue experience. I am pleased that in the face of this industry turmoil, JetBlue recently achieved the number one customer service ranking among the low cost carriers from J.D. Power and Associates for the fourth year in a row. This award is a true testament for the dedication of our crew members who continue to deliver exceptional customer…

We are pleased to report another quarter of industry growth and unit revenue performance. Strong revenue growth however was in no way sufficient to offset the impact of record fuel costs which in the second quarter were nearly 60% higher than last year. Had the price of jet fuel stayed constant to where it was in the second quarter of 2007 our fuel expenses would have been about $135 million lower. Escalating fuel cost continued to pressure the business, not just for JetBlue, but also for the entire industry. Fortunately, we are well positioned with a solid cash position and as Dave just indicated we have a strong commitment for liquidity preservation. We ended the second quarter with $846 million in cash and cash equivalents. These cash balance excludes $300 million in student loan related auction rate securities. These securities substantially, all of which are guaranteed by the United States Government continue to maintain a high credit rating and we continued to believe these securities which will eventually clear and be called at par. Even excluding these auction-rate securities, our cash position as of the end of the second quarter represents about 27% of our trading 12 months revenues amongst the highest liquidity coverage ratios of the major carriers. Additionally this morning we announced that we obtained a new $110 million line of credit with Citigroup Global Markets. The credit facility is secured by a portion of our auction-rate securities that expires next July. We plan to use the funds for general corporate purposes including working capital and capital expenditures. In the current environment we believe it is essential to continue to take more financial conservative approach to managing our business. For JetBlue that means mitigating the risk and preserving liquidity. During the second quarter we took several steps to…

(Operator Instructions) Your first question comes from William Greene - Morgan Stanley. William Greene – Morgan Stanley: I’m just wondering on the 8% to 10% CASM ex-fuel guidance that you gave, it seems like that’s a rather high inflation rate since the capacity growth rate if I recall correctly is about flat. So, can you just talk a little bit about what the pressures are there? Is that the right run rate you should use for your cost inflation?

I think that the CASM guidance that we gave is really reflecting the significant pull-downs that we had in both the third and the fourth quarter in our capacity and as we continue to try to manage the trough periods more aggressively, it’s just taking us a little longer to get the costs set out that we have in the system, but I think Dave and myself and the entire company is committed to right sizing our cost structure for our growth plans. William Greene – Morgan Stanley: When we turn to liquidity other than maybe LiveTV and aircraft sales, are there any other assets you have there that you can monetize that we wouldn’t normally think about?

I don’t think that there is any other significant asset that I would be thinking about. I would like to clarify once statement that said during the call though which I may have just misread. In the second quarter we completed four aircraft sales with proceeds of about $130 million and we paid down $85 million in debt. So, resulting in $45 million positive cash flow, I think I may have said 185. William Greene – Morgan Stanley: In your capacity outlook for 2009, what fuel price do you assume? How did you decide what the capacity should be with the fuel price?

We haven’t given any guidance for 2009, so I think we’re just assuming that it’s the current market rate. William Greene – Morgan Stanley: So like 125, 130?

In that range.

Your next question comes from Duane Pfennigwerth - Raymond James.

Wondering on the ancillary revenue line, if you could segment what’s driven the incremental $4 year-to-year and of the initiatives that you’ve outlined, how many do not have a full quarter’s contribution here in the second quarter?

The $8 over $4 figure and we’re really using that too, across the airline as well as a means of educating the value of fees as well as other revenues and so with the contribution on that number, a tremendous amount that’s the fee package that we commented on as well as the second bag fee and things like Even More Legroom tends to be into the revenue figure if you will, but there is still plenty of upside that we think that we see as the landscape revenues really across our business model.

So, paying up for more legroom that’s going to flow though the fare as opposed to the ancillary?

Yes, that’s in the average fare for the quarter, that’s correct.

Since there is no update really here on LiveTV, should we read anything into that in terms of interest from other parties or where are you in that evaluation process?

LiveTV as we commented previously, as we engaged on our financial adviser Morgan Stanley, a rather robust process that’s been taking place over the last 90 days since the last call and so nothing material to share today in terms of how that process is as we have Duane, but we’re quite pleased with again more we’re seeing with a perspective interest to at least grant us options to evaluate should we want to pursue them. I think at the end of the day, again this wholly owned subsidiary of LiveTV we think is a very, very important asset that of the company and we certainly value it that way and not just in terms of the brand, but also values of the company.

On the sales and marketing line in terms of the year-to-year growth there, could you just talk about what’s driving that increase and when we might round trip some of that to step up?

I think again its important to comment that year-over-year results specific to that line, we were on the back side of the events from last February, so it’s a little bit of an apples and orange comparison. We also made the investment to move forward with our Jetting advertising marketing campaign, really called a brand campaign because we think we’re declaring a new space from a brand perspective and one that is multi-year if you will as opposed to a normal advertising campaign that runs its due course. It’s a little bit early in terms of providing what fruit that we’re seeing as a results of that, but the basis behind it, again and why would we do this at this point in time with oil burdening the airline and the industry, we are doing because we want to investment in the brand, we want awareness to be out there in markets such as Austin to the West Coast, Austin to Florida; from Seattle to San Diego and Long Beach, down into the Caribbean.

Your next question comes from Gary Chase - Lehman Brothers.

Ed, just to get this one out of the way if you do the quick math on what you described, the $35 million and 15%, about $200 million of additional exposure, what triggers should we be thinking would prompt you to need to move towards that $200 million of additional opening?

Second, shifting gears when we take a look at the fourth quarter capacity reduction that you’ve already talked to, the 6% to 9% and you roll that into 2009 you are obviously on a much different run rate and I know you’ve said you are going to be flat or no growth in ’09. Should we interpret that as flat or should we be thinking that the run rate from where you leave the fourth quarter is a better guesstimate of what ’09 will actually be?

Yes, I think as we continue to look at just planning for 2009 right now the only thing that we are comfortable with saying is that we are going to be not growing ASMs in 2009 or at least we don’t plan to at this point in time. I think we’ll be able to get more granular on that as we get a little bit closer to 2009.

As we talked about Bill's earlier question about CASM guidance and there’s year-over-year reduction in the transcons, which makes absolute sense based on what we’re doing or what we’re seeing with the cost of fuel and as opportunities present themselves such as what we’re doing down in San Juan, down in Santa Domingo, as well as recently we added service from Washington Dulles down into the Florida market as well as White Plains. It’s fair to say that to look at ’09 we’re really right in the midst of evaluating not just our own markets but also what’s happening in the landscape and we’re optimistic as we take a look at some of these opportunities. The brand is stronger and it’s well known in these markets and we’ll seize upon those opportunities.

Dave you’d mentioned that you were ready to pounce on the deliveries if opportunities present themselves, just given the macro backdrop and the fact that you’ve been doing the opposite. I was just curious, if you could give us some additional color., what’s it going to take to get JetBlue to really start dialing growth back up again.

You’re right. We do want to have that opportunity to pounce and I think the flexibility in the order book and the relationship that we have with Embraer as evidenced by today’s announcement as well as Airbus and the recent companies that we work with and we have that, we have that flexibility. I think it’s as much being governed now Gary by just how much industry capacity is going to be coming out and so while we’re seeing in our own market that reduction to a lesser extent in Q3 and Q4 and we’ve all seen what the other carriers are highlighting for ’09. Is it 10%, is it 20%, I think I remember 125 to 130 with a crack spread at 30 plus and if that’s a new normal we’ll adjust accordingly and I would fully expect that we’ll be able to revenue manage through that and dial growth back up.

But that’s not the base case expectation right now?

I think right now we’re into this liquidity and as very, very important preserve cash and invest in certainly the culture brand and lets take advantage of opening up the new terminal in New York which is under slot constraints and as well as a city like Boston, where we are now the largest airline and fly to more non-stop cities or Washington, Orlando, Ft. Lauderdale. So base case really right now Gary is well, this is a good time to be a conservative.

Your next question comes from Mike Linenberg - Merrill Lynch. Michael Linenberg - Merrill Lynch & Company: Yes, David as you were going though, given the changes in the transcon you have a significant reduction coming later this year and you give us the share. Can you give us what the geographic breakdown is at that point, what JetBlue looks like as you scale back where the focus will be?

Mike, I think the highlight really is one of this ‘08, Q4 over Q7 with the transcons where it was 45% that becomes 30%. I think that because we sensationalize so much across our route system, we are obviously going to be dialing back up transcons as we go into that peak summer timeframe, but I think if there’s color there that I could add, it’s more focused more south, not just the East Coast, but more along the West Coast. We are much smaller out west with the south that we are on the east and it’s certainly from Boston and New York and Washington down to Florida, but I think the highlight that I would share would be into the Caribbean and the international markets and across Mexico, North and South America and Central America and that’s really where I’d add color too how I want you to be thinking about how we’re looking at the future. Michael Linenberg - Merrill Lynch & Company: You talk about zero growth or no growth in 2009. I think, you’re planning to start service to Bogotá, I don’t know if it’s later this year, maybe it’s going to get pushed back to 2009. When we think about city adds in 2009 even though you’re taking about a no growth plan, there are markets that you’ve pulled out or are in the process of pulling out. Despite zero growth could we see new cities in 2009 and I’m not saying on a net basis, but additional new dots on the JetBlue map.

Absolutely, Mike, in fact with Bogotá’s we requested a deferral on the startup of service. When we hit the peak time of the year we’ll if in fact, we’re granted that authority. Not a lot unlike other airlines; Philadelphia over to Beijing and also Chicago, San Francisco over into Guangzhou, so I think we are optimistic that we’ll be granted that delay. But I think as we dial back the transcon as we look at opportunities, specifically say at Kennedy under this new slot program that we have in place. That granted that it sunset in October of ’09, but I think we are thinking its going to be a continuance in some fashion, but in view of that we are looking into new locations whether its tied into New York or whether its tied into, recently as we cut the ribbon on Orlando into markets that we currently fly to Cancun and Santa Domingo, but cities like Bogotá. I see us definitely opening in new cities in ’09.

Your next question comes from Jamie Baker - JP Morgan.

At the end of your first quarter you had a fair value of I think it was $313 million or so in your auction-rate securities, just curious how much of that was actually used to secure the $110 million line of credit, also any color as to the advance rate into the borrowing costs would be greatly appreciated?

We used about two thirds of the auction-rate securities to secure that line. We are going to add more details on the exact terms of the line in our 10-Q, because it’s through market rates I think anything that we would borrow underneath it.

What level of net aircraft sale proceeds are incorporated into the second half guidance?

Let me get back to you on that one Jamie. I don’t have the number exactly in front of me.

Your next question comes from Ray Neidl - Calyon Securities.

Yes in more general terms your second equipment set to E190. If fuel prices were to reverse and start going back up again, would it reach the point where that equipment type might become non-economical or uneconomical for your operations or could you possibly decide to contract that out to a third party?

It’s interesting to talk about fuel being in at $180 and going back up right from something that’s just below $130, it’s just a new normal that we’re in. I think headline, let me go to the second question first and we do not have any discussions across JetBlue about somebody else flying that airplane for us. We believe that it makes sense to have our own crew members and supporting the JetBlue experience on any fleet type that’s part of our mix and so that’s how we are viewing the 190 on a go forward basis. I think with the fuel costs, first of all we have that technology as part of our order book and an airplane that is roughly 575 gallons per hour burn for 100 seats. It’s certainly best in class as we’re sitting here in today’s environment, but anything from the OEMs; 100 seat type of class and our ability to really deploy that airplane and I think again to revenue manage and I really just want to take the opportunity to highlight Rick Zeni, who heads up revenue management, Marty St. George, our network planning group and then Mark Powers with his work with the OEMs that I think that airplane is a really important part of our tool account on a go forward basis, very confident with it.

In terms of partnerships, if you want to give us an update on what’s going on there and then in particular the Southwest and WestJet partnering up, do you think JetBlue would be a good third party to that arrangement?

Yes, I think with Southwest and WestJet, I’m not surprised that ultimately we’re starting to see lets say traditional low cost carriers that tended to build their own market base for it and we’re seeing that type of creativity and I would use the word, I’m excited about that prospect and I wouldn’t draw conclusions, that’s meaningful for us at this point in time. But I think that those are the like type brands that this industry is moving into this next chapter if you well with WestJet customers connecting to Southwest. I think that’s a very interesting prospect for us as we look into future. Specific to what we’re doing today, we’re now into really into year three with Cape Air and as well as almost closing the first quarter if you will of Aer Lingus. We are right on target with the revenue plans that we were estimating as a result of both Cape and Aer Lingus and so we are pleased with those results and a little bit color on Lufthansa and Swiss. If you purchase their travel across north Atlantic, at the end of June or at the end of July, where vouchers are due in for future travel depending on how you’d purchase your ticket, so we’re starting to get the brands out there cooperatively, which is exciting.

Your next question comes from Kevin Crissey - UBS. Kevin Crissey – UBS: Can you talk about how your participation in the GDS has helped or where you are in terms of fares through GDS?

Kevin, I think we’re really pleased that we’re in the GDS and about 7% of our bookings are coming through the GDS and what we’re seeing is something that looks like $35 to $45 higher average fare through the GDS. So this is just one more way for us to penetrate in a small-medium size business flyer or non-discretionary flyer and not unlike what we’re doing with refundable fares. And we are just being more business friendly if you will and that certainly key to us as we take a look at the trough periods and this product works in the discretionary markets and certainly work in the non-discretionary markets as well.

And can you talk about your no furlough policy and I understand that you’re in a smaller airline relative to some similar ones that are laying off, but think about an airline without unions and they’re not having layoffs and those that have are, so can you talk about that?

When we started the airline back in 2000 and I certainly won’t go into that long of a story. But I think we looked at what business models and what has driven failure if you will in the industry and the ability to create a model whereby you have trust in the organization, those delivering the products at the front lines, the senior executives at the airline building trust and just through integrity and honestly and quality of life and taking care of one another. Now that translates into a better product, that translates into productivity, efficiency and I think there is a reason why we saw a 2% improvement in fuel burn on a year-over-year basis through working with our team. I think there is a reason why J.D. Power for the fourth year bestowed the best-in-class and so that is absolutely core, this relationship with our front line on a go forward basis. Regarding a direct relationship, regarding unionized or non-unionized I think at the end of the day a direct relationship with our staff, so we’re welcome in the cockpit and the break rooms and at crew member meetings, that is truly a differential as we take at look at not just our success today, but our plans in the future.

Your final question comes from Daniel McKenzie - Credit Suisse.

JetBlue is the first to link capacity cuts with the specific PRASM improvement and I wonder if you can provide some perspective about how much of the increase is tied to a reduction in the worst PRASM flying versus the amount say tied to revenue initiatives?

Dan I’d probably take a look at those markets that from your comment worst PRASM type of a market that we have, it really it’s difficult. We make decisions such as we announced today with Ontario, we’ve been flying there for eight years. Ontario and Nashville are our two sound partners within North Americas that would be the time to open a new market. It’s clearly these decision are made on the fact that where are we maturing on a month-over-month, quarter-over-quarter basis, whatever the case might to offset this new normal. And by definition what we’re seeing across the rest of the airline is we believe that everything else is on track to work as we’re looking at this new normal as there is strategic importance to it, so I think that to link if you will, what we’re doing with capacity reductions and PRASM and how we balance ancillary, its all in.

I wondered if you can provide some perspective about the competitive/revenue dynamic in the markets that you are latter seeing and you use that E190, so primarily the latest in network, so I’m wondering if the deferral of the 190 suggests that you have any concerns about latticing the network in general.

No, we don’t Dan. We are pleased with what we are seeing in latticing the network and whether it’s what we affectionately call the over flies or the under flies, here they aren’t making their way through Kennedy and so the recent announcement last week Richmond to Orlando we’re pleased with what we’re seeing with that latticing. The color that I would add to today’s announcement where the Embraer goes right back as our goal is liquidity and preservation of cash. We have a great business relationship with Embraer and let’s take advantage of the being able to predict what type of growth we want to see or not over the course of the near-term as opposed to having to relay on aircraft sales.

This concludes our session with investors and analysts.

In closing there is no doubt that many challenges lie ahead for JetBlue. Fortunately we believe our airline is well prepared for this environment. We have a strong cash position, an award winning product, exceptional crew members and a team that’s willing to make the difficult, the necessary decisions in response to these unprecedented challenges. Thanks everyone for joining us today on this call. Have a great day.