Good morning ladies and gentlemen and welcome to the JetBlue Airways fourth quarter and full year 2010 earnings conference call. Today's call is being recorded. On the call today is Dave Barger, JetBlue's CEO and Ed Barnes, JetBlue's CFO. On the call for Q&A is Robin Hayes, JetBlue's Chief Commercial Officer. As a reminder, this morning's call includes forward-looking statements about future events. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, and therefore, investors should not place undue reliance on these statements. For additional information concerning factors that could cause results to differ from the forward-looking statements, please refer to the company's annual and periodic reports filed with the Securities and Exchange Commission. At this time, I would like to turn the call over to Dave Barger. Please go ahead, sir.

Thank you, Christine. Good morning everyone and thank you for joining us today. This morning we reported fourth quarter net income of $9 million or earnings of $0.03 per diluted share. For the full year of 2010, we reported a net income of $97 million or $0.41 per diluted share, an improvement of $36 million compared to full year 2009. We're very pleased with our year-over-year progress, particularly in light of significantly higher fuel prices and the challenges we faced in the first half of the year as we transitioned to a new reservation system and we operated without the benefit of JFK airports most important runway at our home base of operations in New York. Our crewmembers are the reason behind our success in 2010. In addition to successfully transitioning to a new reservations system, we worked hard to enhance our liquidity, optimize our network, maximize revenue and maintain our costs advantage. These actions resulted in record revenues and one of our most profitable years in our company's history. Our 2010 results reflect the hard work of everyone at JetBlue and I'd like to take this opportunity to thank our 13,000 plus crewmembers for helping us achieve these strong, impressive results. Our 2010 results include a $29 million profit sharing path to be paid to our crewmembers in March. Throughout 2010, we maintained a strong liquidity position. We ended the year with approximately $1 billion in unrestricted cash and short-term investments, or 25% of trailing 12 months revenue, which reflects our continued solid financial health and stability. Given the volatility and the price of fuel and the uncertainty that presents, we believe a strong cash balance remains important. In addition to maintaining strong liquidity in 2010, we generated $225 million of positive free cash flow, which we define as…

Thank you Dave. Good morning everyone and thanks again for joining us today. As Dave said, we are very pleased with the results we reported this morning. Our entire team has done a tremendous job running a great airline. I would like to take a moment to thank all of our crewmembers for their efforts during a very busy year. The actions we have taken to build our brand, control growth, bolster liquidity and strengthen our financial position has helped us to meet the challenges of this industry. We reported fourth quarter operating income of $57 million, a decrease of $8 million year-over-year. Driven primarily by a $58 million increase in fuel expense and a $30 million reduction in revenue due to the December storm in the North East. Overall, our operating margin for the quarter was 6.2% We earned record revenues during both the fourth quarter and full year, driven by a strong revenue environment and the ongoing development of our network strategy and revenue initiatives. Fourth quarter passenger unit revenues increased 7.4% compared to a year ago. Yield during the fourth quarter was up 4.1% and load factor was up about 2.5 points on 7% more capacity. As we previously disclosed, our fourth quarter revenue results were significantly impacted by the December storm. And our revised counting treatment of expiring true blue points. Overall, we were very pleased with our fourth quarter revenue performance, especially during trough travel periods, an area of significant focus for JetBlue. We believe improving revenue performance during off-peak travel period is key to sustaining new growth. In October, which is generally an off-peak travel period for JetBlue, PRASM increased 9% on 13% more capacity. November revenue results were weaker than we expected at the beginning of the quarter, primarily due to lower yield…

Thank you. We will now begin the Question-and-Answer session for investors and analysts. We'd like to ask everyone to please limit themselves to one or two questions with a brief follow-up so we can accommodate as many as possible. (Operator Instructions). The first question comes from Michael Linenberg from Deutsche Bank. Please go ahead.

Oh hey, good morning everyone. I had two questions here. From, I think Dave in your comments you talked about the improvement in the higher yielding business customers through the build up of Boston and complementing New York and also the transition to SABRE. Can you provide us with any sort of metric? Do you have like a percentage of close end bookings or maybe full wide passengers? I mean, what that number is, maybe what percentage of that mix for you today versus maybe a year ago? Any data on that would be helpful?

Good morning, Michael. This is your first question so the higher yielding business customers, I think the headline really, Boston our plan is working nicely and the balance of the Embraer with the Airbus to really offer the frequency, with the 100 seat platform. And what we're doing with the investments and the network and just the sponsorships marketing in Boston. I think it's working quite nicely with the business customers. We're still at a macro level, 15% to 20% of our traffic is core business. We know that it's higher than that. I'm not going to add color to where we think that number is but it's trending quite nice. In Boston Mike, and as we work with Massport in Boston, with our current operation and we're very hopeful about plans to continue to expand into all of Terminal C. We're really excited about what we're seeing in Boston. We're adding that level of capacity but we're seeing unit growth outstrip. It's racing ahead of what the capacity we're giving up in Boston up 30% year-over-year. We're going to be up another 20% this year on a year-over-year basis. We're very excited about what's happening up there.

Okay, and then just my second question. When we look at guidance for capacity. The 1% to 3% in the March quarter. Ed, I guess to Ed, you indicated that that was maybe a bit of a pull back to re-accommodating some of the pilot training on new airplanes? But you're still sort of targeting the 7% to 9%. Can you give us a feel for how that ramps up through the year and the fact that that also coincides with what I believe is going to be a lot higher fuel price just based on the guidance that you've given us? We could be looking at a sizable capacity growth in the second half of the year with some of the highest fuel prices. You would think that at those levels, at that level of fuel prices, all things being equal that that would maybe be a catalyst to maybe rethink those higher growth rates? But I don't know what the growth rates are until you provide me some color on what you think the capacity will be in the second half, if you can do that? That would be great.

Well, I think Michael, you probably need to take a look at our delivery schedule which will be in our investor update but obviously, slight pullback as you mentioned in the first quarter. We did indicate that we're going to be watching fuel prices and general market conditions on our capacity for the second half of 2011. So it's about all the color I can give you at this point. Obviously we're going to continue to pound Boston and the Caribbean with that additional capacity. So it's going to be very focused investments.

Okay. Okay. Very good. Thank you.

Thanks, Michael.

The next question comes from Jamie Baker from J.P. Morgan. Please go ahead.

Hey guys.

Morning Jamie.

Hey David, I don't want to shift the focus away from JetBlue but I do want to discuss GDS and online agencies. You're obviously aware of what's going on at the industry level. Obviously at one time you didn't participate in the GDS, now you do but you're somewhat unique at having a direct connect model. I guess I'm just curious whether distribution savings are something we should think about longer term for JetBlue? And what impediments, if any, does your current connectivity result in, in terms of being able to unbundle the product, push EML through corporate agencies and so forth? Any thoughts on this sort of hot industry topic at the moment?

Yes. Thank you. Good morning Jaime. I'll also key Robin up for comments as we lead Robin into the mix with Q&A. Obviously you have met and Robin's met the analysts in the past as well. I think to headline this direct model, that hasn't changed it's right in the fabric of our DNA since day one and even with the conversion to SABRE and as we're in the GDS world, the OGA world and I mean, the direct model certainly has not changed. Granted, we've seen percentage shifts over a period of time but I think again headline, that's not going to shift for us. Robin, color on the GDS environment. What's happening in the landscape.

Sure. Good morning, Jaime. I'll show business through the GDS channel, while it's significantly grown it's still a small slice of the pie. We remain and continue to remain a largely consumer direct business. So to some extent we don't have the same skin in the game as some of the more traditional airlines have. I would say as far as GDS is we've seen a strong yield premium from the distribution that we have added to some of the corporate agency channels. We still have the capability to add EML to that channel. We can do that within the GDS infrastructure. We don't need direct connect for that. I think the online travel agents, we said before, the jury is still out. We are not sure how much of that distribution is truly incremental and so a lot of focus from us on making sure that channel, if we're going to participate in it, is at the right level of cost for us.

Got it. And as a follow-up, USAir identified yesterday a year-to-date improvement in the booking environment. They believe potentially related to corporate budgets now being in a new year, having reset versus 2010, which reflected budgeting from 2009 when the world was ending. You had mentioned your pursuit of higher yield traffic last November didn't quite work out as hoped. I'm wondering if you're seeing anything year-to-date that's similar that might otherwise rekindle your optimism in terms of sort of the pursuit of the last minute booking?

Just to clarify it. The issue we had last November was really linked to more of a leisure fares over Thanksgiving that we were hoping to get, that didn't come in. Our performance during the first half of November, as we start to build the business base, was extremely strong. As we look forward, I would describe myself as being positive about the outlook, the industry has absorbed a lot of fare increases. Not all of them have started with a significant amounts of as we go the back half of quarter four into January. And I think that's an encouraging sign.

Okay. Excellent. Thanks, gentlemen.

Thanks Jaime.

The next call comes from Bill Green with Morgan Stanley. Please go ahead.

Hi. Good morning. Given the cost pressures including rising fuel, do you think maybe it's time to revisit the first seed bag question?

Just a headline Bill and good morning. It's, our position right now with the second bag, we feel very good about it. And are we looking at the different levers we can pull? You bet. But we have not had discussions recently in terms of what do you do with the first bag. We're pleased with what's happening, the customer reception to it. People understand what's happening from our product perspective. And as you'll note in the comments today with fuel surcharge that we've put into place, this is another lever that we added into the Puerto Rico markets, the Caribbean markets as well. So, it's the rising cost of energy is certainly not lost on us in terms of what makes sense to share some of those expenses with our customer base.

Yes. I would think just something that affected most of the customers would be more effective rather than just some of the customers in non-U.S. markets but how about in the first quarter? Do you have an estimate for the cost of the storms? And in your CASM guidance for the first quarter, can you remind us if the comparison with last year will exclude any one-time charges from SABRE?

Hi Bill. Morning. The storm really didn't have a meaningful impact on first quarter CASM for the most part. That was all absorbed in the fourth quarter. I'll wait to see how many more storms we have this quarter. On the comparisons to last year, they did include the one time cost from last year. They also include some of the one timesavings from last year as well. In the first quarter of last year we tended to relax a lot of our marketing events just to, what we knew would be a difficult conversion period.

Okay, so none that you don't feel there was sort of an elevate CASM level last year?

There was a slightly elevated CASM level certainly but it wasn't as significant because there were some offsets to it.

Okay. Thank you for the time.

Thanks Bill.

Your next question comes from the line of Duane Pfennigwerth with Raymond James. Please go ahead.

Hi. Good morning, guys.

Good morning.

Just wondering in your January PRASM, was there any carry over from sort of December passengers that couldn't get out in December?

No, that wasn't a significant part of our January PRASM guidance.

Okay. Thanks and just with respect to the pipeline for additional airline partnerships? Wonder if you could comment at this point who is your largest contributor and maybe not from a contribution perspective at this point but are there other airlines in the pipeline that you foresee partnerships with as probable that are similar in scale as to an American?

Hi Duane. It's Robin. I'll take that. In terms of airline partnerships, that has something that thing that we haven't broken out to date. For the foreseeable future we won't do that. I think, I would say we're very pleased with the, all the partnerships we have to date. As we look into 2011, Dave made a comment in his remarks earlier that our plan is to announce our next partner within the next month. And as I look ahead at 2011, I wouldn't be surprised if we closed 2011 with a further six partnerships or so.

And any commentary on perhaps the size of those airlines? Are there any whales in the pipeline?

At the moment that's not something that we choose to get into

Thanks.

Thanks Dwayne. Look forward to seeing you soon.

The next question comes from Hunter Keay from Stifel Nicolaus. Please go ahead.

Thank you. Good morning.

Good morning.

I'm wondering if you guys can give us some specific measurable goals that we can look for in 2011? What are your goals that you can share with us and how the current capacity plans supports that? So is it to be free cash flow positive, integral earnings, is it top line, is it market share? Anything that you can quantify for us?

Good morning, Hunter. I think certainly when you go into the year planning for free cash flow, obviously fuel has escalated quite significantly in the current period. So we'll have to see how oil behaves through the rest of the year and maybe how revenues react to that. Other goals that I would provide and then Dave and Robin, you may have some Robin you may have some input here as well but just to continue to build on our strength in Boston and build on our strength in the Caribbean so that's a lot, as I said before, a lot of our capacity increases in a beat.

Yes Hunter and I think, obviously as the industry looks at return in capital and plenty of discussion on that. Free cash flow and so even versus the plans that we had resolved by the board at the end of the December timeframe, right the cost of energy. It went up above 90 back to 86, 87 today but (inaudible) moving. So that's some of the leverage that again we look at like the fuel surcharge that we put into play. And these different levers that we can pull. So specific leadership goals, certainly the financial metrics are very, very important to us and whether it's operating margin, ex Fuel CASM and free cash flow but this leadership team is also focused on customer metrics and crewmember metrics as well. So that's how we grow our business and in tandem, I should say with all three components, of the investors as well as the customers and the crewmembers being in really part of this three-legged approach.

Okay. Thank you for that color. Maybe one for Robin. I'm going to try and press some more on this business travel stuff. Robin, maybe can you try to provide a little bit of color on how much the improvement that you're seeing in business travel is maybe due to your own specific market share gains versus just an overall rebound because some of the other carriers right now that are still business travel, very heavy business travelers, still reporting year-over-year growth in the 20% to 30% range still. So are you exceeding that clip or is this just sort of participation a broader industry trend?

You know, I think it's both Hunter and I can't break that out for you. I think the Boston story is the story that's very unique to JetBlue. That is a market where we are putting a lot of focus and effort into. In fact, I'm hoping to leave here today and head up to Boston where we are part of an event tonight with 150 company's that are based in Boston. I think clearly in Boston that we are seeing some significant market share gains above and beyond what we're seeing in the industry. I think as I look across the rest of the network where most of what we take. Actually, more of what I call a spill business traffic. I think they're, what we're seeing is more sort of a lean to the way the general industry shifts are rising.

Okay. Great and one last question. When was that fuel surcharge implemented?

That was filed this week.

Great. Thank you.

Thanks Hunter.

The next question comes from Gary Chase from Barclays Capital. Please go ahead.

Morning everybody.

Morning Gary.

Wanted to see if I could ask Robin to follow up a little bit on December. You talked about, or Ed did in his prepared remarks about some of the issues that you ran into in November. As you approach the December peak, did you have that issue resolved? I mean if you kind of x out the storm, were things progressing better in December or you still didn't have that quite right?

No, I think if I look at December and I put the storm impact to one side. I think we saw some fair activity on the transcom going into the peak that we didn't expect that we had to respond to. And I think on Florida, we were probably more optimistic than we shareholder should have been about our ability to price into that peak. I think we've learned from that. I look at Presidents Day into February, personally I'm very pleased with the way that's building. And I think, what some of the issues around the November December peak took away from, I think was some of our very strong success in building into the trough into those two months, which have been previously a tougher period for JetBlue.

Then if I could shift gears for one, again Ed about the other revenue and expense lines combined. I'm wondering, as you look into 2011 if we should be thinking that there's a story there with LiveTV. The other expense certainly was lower than I was thinking it would be for the fourth quarter so I'm wondering if the activity level at LiveTV is winding down a little bit? And we'll see that affected in both of these line items or whether there was some other issue that might have helped on that item for the quarter?

Yes. I can't think of anything specifically in those line items related to why we think LiveTV continues to be a very good business for us. They continue to work on the installations on the Continental fleet. I mean that's going very well so I don't think any specific color that I would give.

So, no decline in the rate of activity with Continental?

No.

Thanks very much, guys.

Thanks Gary.

The next question comes from Dan Mckenzie from Hudson Securities. Please go ahead.

Thank you. Good morning everybody.

Morning Dan.

Following up on the LiveTV. I know that you guys tabled plans to take it public but given the recovery in the capital market, is that something that you're reconsidering?

Well I think right now Dan we're very focused on completing our commitment to the Continental Airlines, now United Airlines. In figuring out what they want to do with what is now a mixed (inaudible)? The second thing I would mention is that in our recent announcement of our partnership with ViaSat and offering a new product there. So I think there's plenty of things to grow that business right now and we're not really focused on (inaudible) itself.

Understood. And then, I guess for my second question if I could shift gears a little bit. Following up on the San Juan growth comments. AMR is downsizing San Juan by 35% the second quarter and obviously you guys have picked up on that. And I guess looking at that, I'm wondering if that city makes more sense as a regional focus city rather than say Ft. Lauderdale or Orlando, given South West's merger and AMR's buildup at Miami and Spirit's buildup at Ft. Lauderdale and or I guess to ask the same question more differently, given the San Juan's opportunity, does that change your level of commitment to fairly crowded markets in Orlando and Miami?

Yes. Hi, it's Robin. Ill take that. I think they all serve different purposes. If we look at Orlando it's really a market that people fly into it. It's a destination and it seems to be a market that performs very well for us whenever we fly it. Our flight south from Orlando is fairly limited. Markets like Costa Rico, Bogota, which also perform well. Ft. Lauderdale, again another very strong market for JetBlue and really only plans to grow that. Really San Juan I think we have plans to grow this market anyway. It's a very successful market for us. I think America's decisions to pull down capacity, I think it will only really help maybe speed up what would have happened anyway. It continues to be a very strong market for us.

Okay. Thank you

Thanks Dan.

The next question comes from Helane Becker from Dahlman Rose & Co. Please go ahead. Helane Becker - Dahlman Rose & Co.: Thank you very much, operator. Hi gentlemen.

Good morning, Helene. Helane Becker - Dahlman Rose & Co.: So can you update us now, the business has shifted so much. Can you kind of give us your capacity by region, number one? And number two, can you say from a geographical standpoint where your next interline partner is coming from or if you don't want to be that specific, can you just mention the geographies that you would like to be in generally speaking? Thank you.

I'll take that. It's Robin. In terms of capacity, your first question. First, as we look into next year, I think you can look at Florida, Transcom and our Latin America business as sort of the three largest chunks. And then the rest combined to kind of make up the 100%. So, Florida you can expect probably over 30%. Transcom will probably be slightly under and then Latin America will probably grow to about 25%. 2011, in terms of geography I'm not going to be specific. I think that what we are trying to do though is connect customers into our core networks and so if I look at JFK, if I look at Boston to market today, we have a partnership with South African Airways into Washington Dulles. And we've just moved out situation in Orlando to a different part of the airport, which is going to allow better international connectivity down there. And on the West coast, if I look to LAX you'll see opportunities there. Without being specific on the geography you'll see us build partners that help us connect into our core focused city market. Helane Becker - Dahlman Rose & Co.: Okay, can I just follow-up with that on the LAX specifically, that market. Does your interline agreement with American include that market?

No. Helane Becker - Dahlman Rose & Co.: Okay. Thank you. So anything you did there, you would have to have a separate agreement with American for or is that agreement expandable?

I think it would be a different discussion with American. At the moment the focus with American being very much focused on New York and Boston. There are a number of airlines that fly into LAX that I think would make good partners. Helane Becker - Dahlman Rose & Co.: Great. Okay. Thank you for your help. Have a nice day.

You too Helene. Thanks.

The next question comes from Glenn Engel from Bank of America-Merrill Lynch. Please go ahead.

Good morning.

Morning.

A couple of questions. One, can you give me what the Caribbean-Latin gains were in the fourth quarter?

No, we don't break that out by region.

Two, can you give me what JetBlue.com sales were the fourth quarter versus what they were a year ago?

Nice try, but we don't break that out by region either.

On the cost side, when do the maintenance cost PRASM start to level out?

Hi Glenn, good morning. I think, obviously our fleet continues to age. Aircrafts come off of warranty so I think we're going to see escalations this year that look a lot like last year. And I think we're looking more towards 2012 to 2013 as they kind of start to moderate a little bit more.

So what's driving the big rate of cost acceleration in 2011 then?

Well I think that there's a couple of things that. You know it's really kind of some of the one-time investments that we made last year really having a full year impact this year. So we spent the last two years making some investments in our crewmembers, making investments in our infrastructure, incurring some additional distribution costs and I think all of those are starting to level off a little bit more.

Okay. Thank you.

Thanks Glenn.

The next question comes from Will Randow from Citigroup. Please go ahead.

Good morning.

Good morning.

Wanted to get on January and February that you mentioned. Just wanted to get a sense of one, in terms of capacity growth in the next quarter, is it pretty constant, I call it up 2% year-over-year per month? And then also, just thinking about it a bit differently you said the comps get pretty hard in March and if I look at the multi year comps is it possible for March to be in the negative territory for PRASM year-over-year?

Hi Will. It's Robin. Yes, I would assume that it's sort of capacity quarter one, you should look at that as fairly consistent. I think the comp does get harder in March for a couple of reasons. One we don't have some of the favorable SABRE comps that we're seeing in January and February, run into March. Secondly, both Passover and Easter have been slipped well into April whereas last year, we had some of the outbound travel for those holidays in March. As we look at the rest of the year, then some of the comps do get harder as you get into quarter two and quarter three but I wouldn't expect March into negative territory.

Appreciate that. And then just in terms of, Dave on the business model. Are you starting to rethink things like seating density and reducing your order book respectively just so you get a little more capacity and lower cost to improve as well as, you mentioned business, are you thinking about a priority security line, like Terminal Five for instance?

Well to follow-up on that last comment on things like priority security. Yes we are and that's the way that we can further add value with a bundle product, if you will. Such as with EML. So there’s other enhancements that we can roll out now that the TrueBlue program was rolled out last year. That changed what we're doing with EML. As we're now having priority boarding for this group as well. So yes, we are looking at that, not at Kennedy but at other locations. I think that would be a very nice benefit for the consumer. I think in terms of the business model Will, no the business mode we believe is working. And from the standpoint that, I don't mean that in an arrogant sense. Of course we're focused on metric. We're a much younger company, I think than many other company's that are there with the assets that they've been deploying over decades. When you look at our competitive landscape and we're now successfully into our second decade so I think that RIC, free cash flow, the business model and the business model not just domestically or across the America's, as we call it but also now into six continents with our interline partners. And the 150-seat capacity on the 320, we believe is a real good fit for us. We think the 100-seat capacity on the 190's a good fit for us. I mean we're real excited about things like wing (inaudible) and let's see what the new engine option could mean on the Airbus. But I think from a density perspective, we're quite pleased with what we're seeing.

Okay and if I could just slip one in on priority security? What are the timing of some of those initiatives when you start making decisions?

Hi Will. It's Robin. We successfully introduced early boarding for our Even More Leg Room customers from the first of September and that's been received extremely well. We probably needed to allow six months to let that settle down. What I'd say is the teams are hard at work to bring this priority security product to market at selected airports. I think we'll be able to give you more news on that in a couple of months.

Okay. Appreciate the time. Thanks guys.

Thank you, Will.

Today's last question comes from Kevin Crissey from UBS. Please go ahead.

Good morning. Thanks for sneaking me in here.

Sure. Good morning.

If I think about it maybe in terms of same store, not your growth markets but the markets you've been in for a while, what percentage of them lose money at this fuel price and how long do you give them before you think about reduction of capacity in those markets?

Kevin, I tell you and good morning. We're pleased with the cities that are part of our network. And so I think we've built a model that's quite (inaudible) with oil at this level as it moves north, as the forward curve is showing. And so apparently with 63 locations, we've announced as well 64, with the Turks and Caicos, Seasonal Anchorage as well as Martha's Vineyard. And so again, from the standpoint of our business model, our cost of energy, our cost structure, feel good about the contribution that we're seeing across the network so, granted this is, a couple of years ago we had experience with oil at $147 and change but it's a different ball game altogether but really quite well positioned with a band around the current price of energy and higher.

Okay. Thank you

Sure.

That was the last question. Please go ahead with any final remarks.

Thanks Christine. I'd like to thank everybody for joining us today as we reviewed the fourth quarter and 2010. Also, for our crewmembers who are listening or on archive, we look forward to seeing you at our state of the airline conference taking place on February 8. Thank you and have a great day. Thanks Christine.

You're welcome. Thank you for participating in today's JetBlue Airways fourth quarter and full year 2010 earnings conference call. This concludes the conference for today. You may all disconnect at this time.