Good morning, ladies and gentlemen, and welcome to JetBlue Airways Fourth Quarter and Full Year 2011 Earnings Conference Call. Today's call is being recorded. We have on the call today, Dave Barger, JetBlue's CEO; and Mark Powers, JetBlue's CFO. Also 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 very much, Sandra. Good morning, everyone, and thank you, all for joining us today. We're pleased to announce another profitable quarter for JetBlue. This morning we reported a fourth quarter profit of $23 million, an improvement of $15 million compared to the fourth quarter of 2010 and our highest fourth quarter profit in our history. Despite higher fuel expense of more than $500 million for the full year 2011, we reported net income of $86 million or $0.28 per diluted share. Looking back at 2011, it was a very good year for JetBlue. In addition to running a solid operation, we executed on our network strategy and key markets such as Boston and the Caribbean, while maintaining our cost advantage. These actions resulted in record revenues and one of the most profitable years in our company's history. At the same time, a continued focus on disciplined capital spending helped drive our third consecutive year of positive free cash flow, an important goal for JetBlue. We also maintained strong liquidity throughout 2011 ending the year with approximately $1.2 billion in unrestricted cash and short-term investments or 27% of trailing 12 months revenue. These results of course, would not have been possible without the hard work and dedication of JetBlue's 14,000 crew members, who bring the JetBlue brand to life everyday in delivering the JetBlue experience to our customers, an experience that is unrivaled in the industry and well-deserving of our seventh consecutive J.D. Power Award for Service Excellence. I'd like to take this opportunity to thank our crew members for achieving these strong results and we are pleased to reward our crew members for their contribution to our financial success. Our 2011 results include a $31 million profit-sharing payout to be paid to our crew members in March. Despite…

Thank you, Dave. Good morning, everyone. Thank you again for joining us today. I join Dave in congratulating our crew members on another great quarter. Today, we reported the best fourth quarter performance in our history, with operating income of $83 million. Despite having paid $128 million more for fuel, we improved year-over-year quarterly operating results by $28 million. Record fourth quarter revenues grow strong revenue performance as we outperformed the A for A domestic industry average. Year-over-year, our average one-way fare increased 11.4% to $156, driving fourth quarter passenger year-over-year unit revenue up 11.8%. Even with 10.5% more capacity, fourth quarter yield was up 11.3%. Load factor was up 0.3 points. This unit revenue growth is impressive, given our capacity growth during the same period. While capacities -- while capacity growth typically puts downward pressure on unit revenues, we were able to increase capacity in Boston and in the Caribbean while growing unit revenues. As Dave mentioned, we're very pleased with our fourth quarter revenue performance, especially during the off-peak travel periods. We believe improving revenue performance during these periods is essential to revenue and margin growth. Given JetBlue's strong leisure focus, we have always performed well during peak holiday periods such as Christmas and Thanksgiving. We believe we have ongoing potential for significant improvement in off-peak travel periods, as we harvest the product in network investments targeted to attract high -- higher-yielding business traffic, particularly, in Boston. As such, we were especially encouraged by our PRASM performance during the 3 weeks of November and the beginning of December, as closing demand in our shorter haul business markets accelerated. We're also very pleased with our revenue performance over peak holiday travel periods. In fact, holiday bookings at the end of December came in stronger than expected. Unusually mild, but…

[Operator Instructions] And the first question is from Michael Linenberg from Deutsche Bank.

This is actually Richa Talwar, his associate just filling in for Mike. One of my first question, I was hoping you could talk about your recently announced partnership with Hawaiian Airlines a little bit more and on your other partnerships that you've been announcing. Can you tell us if you could quantify at all the impacts in these arrangements on other payors? or Just calculated them to be at all accretive and also on the Hawaiian partnership, I was hoping you could just share what the dynamics of the code share are, like, when you think it would be possible to implement that and if it would be a one or two-way code share?

This is Dave. First of all, with our 15th partnership with Hawaiian, this is implementing on a strategy that the foundations been laid with our network as well as investments such as with Sabre previously. This is our 15th partnership and while we'll certainly share more on this at Investor Day regarding additional color on the type of traffic that we're seeing and also in terms of what this means in terms of revenue for us. I'd start to say, that really inside of each of these partnerships, the numbers are quite confidential, right? Because obviously, this is pretty significant to our business model. So on this call, we'll go into specifics in terms of any of the 15 partnerships. Now with regard to Hawaiian and we have interline over LAX today, effective June 5 with their inaugural. As we have an interline relationship partnership with Hawaiian and one-way code, which we believe makes a great deal of sense for our model, we tend to extract the greatest benefits with both of those in place and some of the sectors from a revenue perspective. We're really excited about what this means. This is the first nonstop in a long time on this side of the Hudson and with our network behind it and the ability to catch the mid Atlantic, the Northeast and even Florida and some of the Caribbean, it's quite positive in terms of what it means and again 5 to 7 additional partnerships over the course of 2012 and not just at JFK but also across places like Boston. As we mentioned LAX, places like Orlando as well so, more on this as we get into Investor Day here February 15 in New York.

The next question is from Jamie Baker from JPMorgan. Jamie N. Baker - JP Morgan Chase & Co, Research Division: David, you cited some business traveler metrics but it still doesn't seem that your share of the wallet in New York and Boston is where it could be. I do realize you're pretty aggressive with upsells and what have you, but it still doesn't seem to be much of a recognition of your most loyal higher-yielding passengers, no elite program, for example, I guess, I'm just surprised, it almost seems as if you're letting it happen naturally as opposed to really being out there and courting higher-yielding business travelers. Is my understanding incorrect in that regard?

Jamie. It's actually, I believe so, to be candid with you, and when we look at really, our mix, the problem that we're trying to solve is really the trough period, right? Historically the troughs, the peaks just screamed and the troughs were weak and so as we invest in more of a network, a business model in places like Boston. And now we're seeing 30% type traffic on business, in and out of Boston, that's significantly enhanced from what we see across the rest of the network at 15% to 20% and so keep in mind, if you're talking about those markets that are now starting to mature into year 2 are harvesting some of the investments that are taking place. Listen, when you look at the history of some of the other carriers in Boston, as we're flying to places like O'Hare, as we're flying to places in the mid-Atlantic as an example into a Newark, certainly the investment that's taking place previously at Reagan National and potentially more. Clearly, I think, that are operating in addition to TrueBlue, in addition to Even More is quite a nice offering. it's a little bit contrarian [ph], Jamie from --. By the way, the platinum, the -- the platinum, the gold, the silver, by the way, here's the club experience. Our model is a little bit different along those lines and so, I think, what we're seeing, the trajectory is quite solid in places like Boston. With regard to Kennedy and when you're really look at our franchising in Kennedy. we take a look at this airport differently because of its geography versus the La Guardia and versus a Newark. And as such, we certainly see our fair share business customers but that network is really positioned for the leisure traffic, for the VFR traffic and so it's kind of nice. I think what I've seen really with this year-over-year PRASM growth during the troughs, we're really pleased with and we saw it again in early November, the first 3 weeks and we saw it in the early part of December. It's a little bit of a tougher comp, but quite pleased with what we're seeing on our investment, Jamie.

The next question is from Gary Chase from Barclays Capital.

Just wanted to see you -- see if I could ask one of Mark and then maybe one for Dave and Robin. The first, Mark, as we're sort of running through the numbers and we did this quickly based on your 2/3 comment on the maintenance issue. It looks like it's somewhere between $50 million and $90 million of additional expense that you'll be incurring in 2012 versus '11 on maintenance and I know you've described this in the past that sort of, the contracts were set up in a way that rewarded growth that didn't ultimately materialize. When you think about this problem, can maintenance costs actually go down? Or what we really talking about is really just a smoothing out of this process and I guess, maybe another way to ask it is. When you look at maintenance that you'll actually spend in 2012, is it an appropriate level or was it and therefore was too low last year or are you paying too much now and you need to rationalize that?

So, I think, your observation is right. The range is probably on the high side that you sighted, but certainly that's kind of the order of magnitude, decreased a little bit. We are -- I would think, Gary, that this is one of those areas that we are willing actually to spend and invest to reduce the amount and change the shape of that curve going forward. I'll give you a very specific example. In the fourth quarter and the first quarter of this year, we purchased 6 spare engines, new spare engines, from IAE to put into the MTU engine pool and take 6 other engines out. That had the effect of essentially reducing the flight hour -- effective flight hour improvement under the MTU agreement. Now the terms within MTU are not fully documented but they're nearly complete. But recognizing, as you said that these are high costs, that's the kind of investment we're willing to make to essentially bend the shape of that curve. Having said that, the fleet is, it's a fact, the fleet is growing older. So the rates in honeymoon that we enjoyed prior to this period of time are in the past. You'll recall as well, that when we're taking 36 aircraft a year, that mix -- that honeymoon mix much different than what you see today. So this is in some respects the other side of the benefits of slowing the growth and generating free cash flow.

So it sounds like you're really just catching up of where there isn't much opportunity. It's not like you feel your '12 maintenance-expenses are going to be too high for what your -- for the maintenance that you're actually performing.

No I think it's again, it's the adjustments that we'll make will be in the millions of dollars but it won't be 50% type of cuts -- structural cuts.

For Dave and Robin, if I could just pick up with one quick follow-up on that last question that Jamie asked. I mean, you did mention the Boston markets having a higher business mix than New York, at least on our numbers when you look at the RASM numbers and try to index them, it doesn't look like they're outperforming New York. When you take stock of typical spool and development, whatever you want to call it, market maturation. Do you have line of sight on this higher business mix outperforming what you have in New York or is it comparable or inferior?

I'm Robin, let me take that. As we think about the investments we've made in Boston. We had 2 years of very significant new network investments building a sale force there in terms of going in and winning corporate contracts. I think, we've told before that the ramp up period on these markets are -- it takes longer. And I think, we've been able to offset some of those investments with very successful and profitable flying to additional markets in Florida and the Caribbean, and I think, what we're now seeing and I think, Dave made these comments in his call. As we looked at quarter 4, if you looked at what were the best performance for us in terms of year-over-year growth, it really was the shorter [ph] markets out of the Northeast, predominantly Boston. So we feel very good that for the last 2 years we've been making some major investments and as I look to 2012 and beyond, slowing the growth slightly just because we've been accelerating that at such a tremendous rate. As we have more markets in the mature phase, I see our ability to reap the rewards from those investments and maybe just touching on Jamie's earlier question about shared wallet, I mean, I agree if you look at where we are in Boston, which is how I look at this. We're still under indexed in terms of shared wallet of the very high frequency business traveler. We've made great inroads and we're doing really well in this sort of low to medium frequency. And with things like the network development that Dave talked about, the security check line improved terminal security [ph] in Boston and we are, as we said before, we are planning this year to make some changes to our TrueBlue program. But we think we'll better motivate [ph] very good small group of very high frequency business travelers, particularly flying in and out of Boston.

The next question is from Bill Greene from Morgan Stanley.

Hey Mark, I was wondering if I can ask your thoughts on the EMBRAERs. I realize you adjusted the fleet plan last year, but I've got to believe that over $100, we've got to start asking again, do the EMBRAERs work? I realize you said some of the shorter haul markets, you saw some of the best RASM improvements and that of course, would make sense given that, you would also assume that some of your least efficient flying from a fuel perspective. So is there a price point where we have to revisit that fleet plan again? Do we have to think about that? Or did you sort of set that last year and you feel pretty good even at substantially higher fuel prices?

Well, the flip answer is that -- Bill, the flip answer is, I think about it all the time. I think about the A320 all the time, as well as the A321 all the time. So we are constantly in the state of looking at what this network wants in terms of fleet demands. And absolutely, as we look at higher fuel prices. You know there's the calculus is absolutely right. Does the fleet want to be 50, does it want to be 75 or does it want the full 100 that we have on for motor [ph]. As we've discussed in the past, we have been working with as part of, again, the more recent A320 [indiscernible] resizing the E190 fleet down to 75. Is it going to be really 70 or 80? We're fine tuning that with the network constantly asking the precise questions to do that. Did you add anything else to that?

Bill, the only thing I would add in addition to that, when we look at that gauge aircraft and what we've been able to do in a place that Boston but also let me take you down to some of the shorter haul in the Caribbean, which we launched in St. Thomas and St. Croix and St. Maarten and potentially other locations across that part of the world. That gauge -- that size gauge aircraft is actually has been very beneficial for us to literally this Boston 150 plan that we're talking about by 2015, the 100C gauge was really important to us in terms of frequencies to the Buffaloes, to the Raleighs, to the O'Hares of the world. So Mark, I think, you captured it. Bill, your calculus is right on, but at the same time we're committed to the aircraft this size of what looks like 75 into the fleet and deploying that it now and into the future.

And then you were successful, obviously, at keeping your relationship direct with your pilots. How should we be thinking about that what that implies for labor CASM but even broadly, not just the pilots but also just how should we think about labor inflation costs for 2012?

Sure, you got it Bill. First of all, this was not a -- this was significant in 2011 and a threat to our culture, I'm just going to be candid with a third-party with something that's very significant to building our culture that's collaborative history that we've had. And so again, I think the ability to just educate our pilots and the rest of our crew members about our model. And there's plenty of room for other models at other companies in this industry, but our model has been pretty special for us. Now all that said, now specific to comp and benefits, across all of our workgroups, we have a history of pure competitive compensation and benefits and actually, when you start to take a look at, as we are growing in this year and we start to take a look at, even internally, unit costs from a labor perspective, we're quite pleased with what we're seeing over the course of 2012 and I won't go specific on individual areas. But I will be -- I'll add color into areas such as when you look peer competitive and benefits, there's no doubt that we look at pilots with pure competitive retirement and this is discussions that we've had with our pilot group in the past, as well as the team here at Forest Hills. So when Mark talks about 2% to 5% as we're giving guidance on ex fuel CASM, including maintenance material and repairs, clearly, as he highlighted, we have some growth investments in there tied into comp and benefits and also things such as profit-sharing. When we take a look at our 5% guarantee, so it's -- I think we're right sized as we look at 2012, Bill. The fact that, I think, what you're maybe asking is, are we inefficient because we have a direct relationship and we're absolutely not.

Sorry, no, I actually was just trying to figure out if that means we should see a step up in labor inflation costs? That's all I was getting at.

I think we feel good about labor over the course of this year.

The next question is from Glenn Engel from Bank of America-Merrill Lynch.

You talked about competitive capacity in the Caribbean in 2011. Can you go through your major markets transcon the Caribbean, Florida and how competitive capacity looks early in 2012?

Glenn, it's Robin. In terms of, I think, right now we just got insight into the first 2 quarters of the year. It's hard really to tell second half the year exactly what's going to happen, it takes you into the fold [ph] there which tend to be kind of sensitive time [indiscernible] some capacity and I think we feel good in terms of seep [ph] into competitive markets that we're going to see continued capacity reductions, we're kind of looking at between 1% to 2% for the first quarter in terms of, if we look, just to give you a couple of examples, Boston, we're currently seeing competitive [ph] capacity down 3.6% quarter 1, Caribbean nearly 7% in quarter 1, mostly reductions like changes on Boston DCA [ph] it just would be JetBlue and US Air flying that market and we continue to see other airlines pull out of markets in the into the Caribbean, for example, [indiscernible] announcing last week they're talked about pulling out of [ph] someone. So still feel pretty good about competitive change in our ability to influence in some of our core markets.

In Florida?

Florida, we saw some increases there and some that has been coming out again.

And that was one market that I thought yields had been lagging behind over the last couple of years versus the others. Is there any sign that that's catching up?

I think there was a couple of factors. I think, first of all, very mature market that we've been serving a long time. And secondly, we did see some additional capacity go in that started to come out again. So more recently, as you just this week seeing Southwest [ph] announcement to withdraw from the Whiteplains [ph] into Florida market. So I think we are -- we're still very encouraged by what we see at Florida and it's still very possible to pull [ph] that franchise.

The next question is from Duane Pfennigwerth from Evercore Partners.

Wondering if you could just dial back to December, it sounded like in the commentary you're pleased with the first half of December, maybe I'm reading too far into it but did December close the way that you anticipated?

December was great. I think the point that was being made in the earnings call was really as we -- what we saw our chances in December has always been the first 2 weeks not the second 2 weeks and as we have gotten better and better at filling the off-peak periods, we were very pleased with both the first 2 weeks of December that was sort of 10, 11 days of December and the peaks performed very well as well. The only thing that surprises about December was the ability to run a completion factor that was close to 100%, which is significantly higher than we planned. If you remember last December, there was a major event that didn't happen this year and I think that was only thing that surprised us about December.

And I understand visibility is probably a bit limited into March, but it seems like most industry folks have talked about March maybe being a little bit of a tougher comp given the fare increased activity that started to take hold last year, so how should we be thinking about the March comp for JetBlue?

I think as Mark said, our visibility beyond February is very limited. I would just point to you though in previous years, I think, the unique thing about our business model versus others is, I think, we're having great success in filling some of the off-peak months with different business.

Fair enough. And then just lastly, just going back to engine maintenance, can you just remind us sort of what percentage of your fleet is on power by the hour agreements and sort of when you started to layer those on and thanks for taking the questions.

The D2500, which is the mainstay of our fleet, of course, is covered under AFR by a power by the hour agreement. The CF34s [ph] and the E190s are currently time and materials and we're looking at power by the hour options on that engine. So the proponents of our fleet are need to be covered by FHAs.

So is the issue for this year going back to when these -- when these aircraft were ready [ph] . Is the issue that you are not under power by the hour back then, or that it relates specifically to the 190s?

So the D2500 power by the hour looking is at least 5 years old. I'm looking at Dave for validation because I wasn't here but I think it's already 6 years old. So it's not a recent contract, it's a contract that we've had and the rates and charges under that contract are have essentially the buckets under that are largely a function of hours and a timeline on the engines themselves. So it's a little bit [ph] similar to some of the engine contracts that you might be thinking of, which are just flat rate over the full term and in this case, with MTU [ph] the rates are variable based upon a number of factors.

The next question is from Dan McKenzie from Rodman & Renshaw. Daniel McKenzie - Rodman & Renshaw, LLC, Research Division: Wanted to circle back with the network question and I understand the growth at San Juan, Boston and New York and going back to just a couple of years ago, one market that had a really big spotlight was Latin America, particularly the Bogota and today pricing in the market has really kicked in. So I guess what I'm wondering is with just with Bogota, looks like you've given up on what appears to be a pretty high margin geography and I guess, I'm just wondering what's the difficulty of doing business in that part of the world and what's holding you back from building out more to that region?

And as I recall, it was probably a year ago where you asked a similar question regarding maybe experience anecdotally that you had Orlando to Bogota. I would say that Latin America, the Caribbean/Latin America is obviously the region. Some are very much different than others when you think about VFR traffic, [ph], etc. Bogota and the Latin America route stand at the top, the top, when we look at margins at this company and so similar to maybe reference to Boston it takes time where you can start to harvest some of the -- reap the benefits of what's taking place, for example, in Bogota, you can certainly draw the conclusion that we're going to continue to invest in that part of the world. This is a company that was -- at its heritage a young company that was going to fly domestic, everything was in and out of New York. And then when I look at our first foray into Santo Domingo, which we closed, we went into Santo Domingo, it was too hard, if you will, when we looked at the operations in and out of Santo Domingo from Kennedy, we went back in, in a significant way. We're the largest airline to and from the Dominican Republic. We're the largest airline to and from the Commonwealth of Puerto Rico and growing both of these locations. We're in 5 locations in the DR, 3 in the Commonwealth, there's potentially other locations. Bogota, Cartagena, you start to take a look at Callie and others within the geography, the range of our current fleet, listen, this has been very good for our company and it took a period of time to understood how do you sell in another country? How do you sell through the travel agencies and collect taxes in another country? Do you have the systems in place? And so it's been very pleasing. I take you over to Costa Rica, San Jose Juan and Liberia, now nonstop out of Kennedy. So we couldn't be more pleased with what's happening down in the Caribbean and Latin America and specifically, Latin America, Dan. Daniel McKenzie - Rodman & Renshaw, LLC, Research Division: I guess I could focus my second question domestically, here looking at Orlando and Fort Lauderdale and you folks have called those 2 cities out in particular as focus cities. But when I look at what's happening there, it looks like growth is really tapering off and so I guess I'm wondering if you are all concluding that essentially you're full up at those cities at those focus markets.

If I may, Dave and Robin jump in, the answer is fort Lauderdale-Hollywood, the south runway, Rob was down there, our Chief Operating Officer, with the investment that's taking place by the FAA and Broward county to extend that runway, which is very nice when you think about its geography versus Miami and versus West Palm Beach. Or I should say in addition to obviously in the TBI. Lauderdale is open for business and we're going to keep growing it and as we talk about Bogota to Fort Lauderdale and as we're working our final flight schedule, as we're taking a look at additional flying from Fort Lauderdale down to the Caribbean. Interesting, a large competitor that is a discount carrier in JetBlue markets on a year-over-year basis is down close to 30% ASMs in similar markets. I don't think that that's just a happenstance. As those airplanes are flying elsewhere. Let's go up to Orlando and our investments that have taken place in Orlando with by the way the 190s and the 320s over time including South and so we're very much committed to both of these locations and by the way, the geography and the purpose within our network that both of these locations are considerably different. They're destinations, of course, but there's certainly quite a bit of origin [ph] traffic and a lot of VFR traffic as well. You look across central Florida and the second-largest Puerto Rican population in the United States across from Tampa to Daytona Beach with Orlando right in the middle. That's just terrific geography. We're going to keep growing those locations, Dan. Robin, anything else you want to add?

Just to stress that Fort Lauderdale, I think we are going to continue to see low single-digit ASM growth there this year. We start in Jamaica end of April and that is certainly affects us. Orlando, too without going into too much detail we have some sort of infrastructure challenges with the airport that we're working through before we can grow further but once we overcome there we think that's going to be useful.

The next question is from [indiscernible] from Raymond James.

Was wondering if you made a decision on the additional fleets -- EMS fleets on the E190s?

That reconfiguration is due to happen second to third quarter this year to provide an extra 8 Even More Space seats per 190.

To all of them?

Yes.

And what's the general premium versus the regular tickets on those?

Even More Space seat goes from anything from $10 up to I think it's $65 or $70.

And just one last one, it looks like -- if you look at unit cost, ex fuel unit cost, they seem to be growing every quarter for the past few years and then we saw them decline last 2 quarters of 2011 and it looks like it was helped maybe by kind of the labor cost per unit cost perhaps coming down. Just wondering, was kind of a onetime thing or once the maintenance costs stop being such a big headwind we'll see that continuing?

If you look at our year-over-year CASM ex fuel and you made accommodation for some of the maintenance costs that we've been talking about, I'm quite pleased to see that we are very, very flat really a credit to a lot of Crew Members around this table as well as all of our Crew Members and productivity. So I think it's really -- you're really seeing a lot of maintenance issues that we need to work through but beyond that, it seems pretty flat to us.

So in a kind of high single digit growth capacity growth environment you think you can keep ex fuel CASM flat?

That is certainly one of our goals. Again covering out the topics that we've been talking about earlier today.

And that was our last question.

Great. Sandra, thanks so much. Let me just close by saying, I'd like to thank everyone for joining us on our call this morning highlighting the fourth quarter and the full year 2011. I'd also like to close by thanking our 14,000 crew members for a tremendous performance over the course of the past year. We're very excited about 2012, and we look forward to talking to you all again as we close the first quarter. Thank you. Have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.