David Fintzen - JetBlue Airways Corp. Robin Hayes - JetBlue Airways Corp.

Martin J. St.

George - JetBlue Airways Corp. Mark D.

Powers - JetBlue Airways Corp. James E.

Leddy - JetBlue Airways Corp.

Michael Linenberg - Deutsche Bank Securities, Inc. Julie Yates - Credit Suisse Securities (USA) LLC (Broker) Jamie N.

Baker - JPMorgan Securities LLC Savanthi N. Syth - Raymond James & Associates, Inc.

Joseph DeNardi - Stifel, Nicolaus & Co., Inc. Andrew George Didora - Bank of America Merrill Lynch Duane Pfennigwerth - Evercore ISI Helane Becker - Cowen & Co.

LLC Rajeev Lalwani - Morgan Stanley & Co. LLC Dan J.

McKenzie - The Buckingham Research Group, Inc. Darryl Genovesi - UBS Securities LLC Hunter K.

Keay - Wolfe Research LLC

Thanks, Lashonda. Good morning, everyone.

Thanks for joining us for our third quarter 2016 earnings call. Joining me here in New York to discuss our results are Robin Hayes, our President and CEO; Marty St.

George, EVP, Commercial & Planning; and Mark Powers, our CFO. 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 our press release, 10-Q and other reports filed with the SEC. Also, during the course of our call, we may discuss several non-GAAP financial measures.

For reconciliation of these non-GAAP measures to GAAP measures, please refer to the tables at the end of our earnings release, a copy of which is available on our website. And now, I'd like to turn the call over to Robin Hayes, JetBlue's President and CEO.

Good morning, everyone, and thank you for joining us. Earlier today, we reported our results for the third quarter.

In the quarter, net income was $199 million or $0.58 per diluted share. I'd like to start this morning by thanking our nearly 20,000 crew members for our continued and profitable growth and success with controlling initiatives like Mint.

This would not be possible without their hard work and dedication. Also, a special thanks to our crew members who worked tirelessly during Hurricane Matthew to support fellow crew members and customers, and who ensured a safe and secure operation throughout the storm.

Hurricane Matthew forced us to suspend operations for a time in two focus cities, as well as a number of other impacted cities. The storm moved up to Florida coast just ahead of a holiday weekend.

That timing made up for a larger financial impact than the 585 cancellations might suggest and ultimately negatively impacted pre-tax profit by about $13 million. Mark will provide greater detail on unit revenue and cost impact shortly.

We made some exciting network announcements in the third quarter and we continued to build out our six focus cities. The intense focus on an individual new route or new city often misses the boarder financial success we've been able to accomplish.

Over the last decade, in an ever competitive industry, we steadily built a number one position in both Boston and Fort Lauderdale. These are just two examples that have grown to complement our hometown of New York City.

10 years ago, JFK represented just over 60% of our seat miles. Today, JFK remains our largest single airport operation that contributes about 40% of our seat miles.

Our recently announced routes alone fuel growth to five of our six focus cities and include leisure markets such as Fort Lauderdale to Aruba, transcon markets such as Orlando to Los Angeles, midmarket, and of course, business markets such as Boston to Atlanta. As we've diversified our network and product, we've also diversified our customer base.

Mint is a great example of this success and continues to be a RASM and margin builder. In the third quarter, our three current Mint routes were among the 10 most profitable in our network.

We're particularly pleased to see the strength of Boston to San Francisco with third quarter margins rivaling those in New York Mint markets. This month, we began Mint service from Boston to Los Angeles, and bookings are again exceeding our expectations.

Next year, we're anticipating launching Mint from Fort Lauderdale to Los Angeles in March and to San Francisco in May. We also expect to add our fourth daily flight between Boston and San Francisco in July.

Competition, of course, comes and goes, but we believe a better product delivers with a better service and fantastic crew members, but all provided at a reasonable price will always win. The improvement in our pre-tax margins relative to our peers in recent years provides confidence our model can compete effectively for a range of customers.

We were immensely proud this quarter to have operated the first commercial flight from the United States to Cuba in 50 years with our inaugural Fort Lauderdale to Santa Clara flight on August 31. We are also incredibly excited for the launch of scheduled service to three more cities in Cuba during the fourth quarter, including in late November, Havana.

We believe we are in a great position to be the carrier of choice given our strong presence in Florida, long-standing Cuban charter experience, and our success in similar markets such as the Dominican Republic. We're pleased to announce an agreement today to make a minority equity investment in JetSuite, the Californian-based private jet operator.

JetSuite recently launched JetSuiteX, a public charter operation using a fleet of 33 jets outfitted with private jet-like amenities at commercial ticket prices. As a public charter operator, JetSuiteX operates out of private terminals, allowing travelers to arrive just 15 minutes ahead of departure.

We believe JetSuite is changing the game in short haul air travel on the West Coast and complements JetBlue's expansion in the region, which we outlined earlier in the year. While this investment is not material from a financial disclosure standpoint, we believe it demonstrates our ongoing consideration of potentially disruptive changes to our industry, particularly in those shorter haul markets.

I'd like to close by highlighting an investment in our crew members which we communicated internally earlier this month. Specifically, effective January 1, 2017, our crew members who qualified for profit sharing will receive an 8% raise.

At the same time, we're also modifying our profit sharing formula to bring it in line with prevailing industry practice. To help with modeling, our current 15% profit share rate will change to 10%, up to an 18% pre-tax margin with a 20% profit share on any pre-tax margin above 18%.

These changes would impact profit sharing earned in 2017 and beyond, and this will be payable in 2018 and beyond. We believe these changes reflect industry trends and ensure our crew member conversations remains fair and competitive.

Just as we invest in our fleet, our network and our customer experience, we are pleased to make meaningful investments in our crew members too, as they make it all happen. Of course, we remain focused on balancing our investments in order to maintain a lower cost structure than our competitors and an appropriate rate of return to shareholders.

Before I turn the call over to Marty, a little bit of an advert, we are looking forward to seeing all of you at our Investor Day on December 13, right here in New York City.

Thank you, Robin. Good morning, everyone.

Thanks for joining us. I'm going to start by giving a bit more detail on network initiatives before turning to the revenue environment.

Starting in Boston, our growth strategy in Boston continues to pay off. As we've added new destinations and more flights, we've seen the overall Boston market strengthen.

This gives us even more confidence as we now target growing to roughly 200 flights per day within the next several years from the current peak of 140 daily flights. As part of this growth, we will launch up to six daily flights to LaGuardia next week and plan to launch next March up to five daily flights to our 63rd nonstop destination from Boston, Atlanta.

These are markets that our Boston business customers in particular have been asking us to fly for some time. By March of 2017, we plan on offering Boston business and leisure customers, nonstop service through 24 of the 25 largest metro areas within range of our current fleet.

We continue to grow our South Florida footprint as well. Within the next few years, we plan to grow to approximately 140 daily departures from Fort Lauderdale.

As Robin mentioned, we expect to begin mid-service to the West coast in March of 2017. Our success in growth in Fort Lauderdale allows us to open new Blue cities with more than just Boston and New York service, and provides both market and airport benefits.

In Fort Lauderdale, our branded products resonate very well, which goes a long way to explain our 11% unit revenue premium. Finally, we're incredibly pleased that our partner Emirates is expecting to launch service from Fort Lauderdale to Dubai in December.

In Long Beach, we are encouraged by the recent airport feasibility study which concluded that an international terminal and FIS facility would likely not violate noise ordinance and would generate millions of dollars of spending by international travelers. We will continue to work hard to bring a new customs facility to the airport.

In January, we expect to re-enter nonstop service from Long Beach to San Jose and plan to increase flights to Las Vegas, San Francisco, and Salt Lake City. This will take us to 35 daily departures from Long Beach.

Moving to revenue performance. In the third quarter, top-line revenue growth was 2.6%.

Unit revenue decreased 3.5% on capacity growth of 6.3%. We were encouraged by the improvement in close-in yields in recent weeks making for a much better September than we had expected on our last earnings call.

Prices are still lower than last year, but the trend has noticeably improved from what we've seen earlier in the third quarter and throughout much of 2016. This fairly recent improvement in books will continue into October.

In the third quarter, we again saw outside unit revenue strength in Boston business markets and in Mint with Mint particularly strong in September. We also saw improvements in markets such as Colombia where we reduced capacity given economic and currency weakness.

We continue to see some mixed performance across Latin America and the Caribbean, although the Dominican Republic continues to be noticeably strong. Many of you are focused on the counter impacts for September through year-end.

We estimate the shift of Jewish holidays to October this year had a marginal impact on September and a similar marginal impact on October, which we believe is immaterial to the fourth quarter. Looking further in the fourth quarter, Christmas is falling on a Sunday this year, which will compress the holiday peak travel period making for a longer trough period between Thanksgiving and Christmas.

We think this less favorable Christmas placement versus last year may negatively affect December year-over-year RASM growth by approximately three points. Finally, I'd like to echo Robin and thank our crew members for their award-winning service.

None of our achievements will be possible without them. And with that, I'll turn the call over to Mark to provide further details on the results.

Thank you, Marty and Robin. Good morning, everyone.

Thank you for joining us. This morning, we've reported third quarter operating income of $354 million.

Pre-tax income for the quarter was $330 million. Operating margin was 20.5%, and pre-tax margin was 19.1%, both approximately flat to last year.

As to costs, as anticipated, the third quarter saw acceleration in our unit cost trends as capacity growth slowed. Excluding fuel and profit sharing, year-over-year unit costs increased 3.1%.

This was slightly above our July guidance range of 1% to 3% growth. Maintenance materials and repairs year-on-year unit expense grew approximately 9% due to earlier-than-expected parts replacement affecting airframes and engines.

Turning to fuel. Fuel prices have, of late, been rising, but remain a positive year-over-year for the quarter.

Including taxes, our fuel price in the quarter was $1.48 per gallon, down 20% from last year's per gallon price of $1.85. Based on the forward curve as of October 14, we expect our fourth quarter fuel price per gallon, including the impact of hedges and taxes, to be approximately $1.63 per gallon.

Over the past three months, our hedging positions have not changed. Hedges cover about 25% of our expected fourth-quarter 2016 fuel consumption and 10% of our expected 2017 fuel consumption.

For more specific details regarding these fuel hedge positions, please refer to our Investor Update, which was filed with the SEC and made available on the Investor Relations Section of JetBlue's website prior to the start of today's call. Moving on to the balance sheet, we ended the quarter with $1.5 billion in cash and short-term investments.

During the third quarter, we made scheduled debt and capital lease payments of $61 million. In the fourth quarter, we expect to reduce our debt by an additional $306 million.

At the close of third quarter 2016, our adjusted debt-to-cap ratio was 39% compared to 57% at the end of the third quarter 2014. We continue to expect the year-end 2016 ratio will be below 40%, well within our goal of managing our adjusted debt-to-cap ratio between 30% and 40%.

With respect to CapEx and fleet, JetBlue ended the quarter with 222 aircraft including 32 A321s, 16 of which are in Mint configuration. We purchased three A321 aircraft in the third quarter with cash.

In the fourth quarter, we expect to take delivery of five A321s, one of which will be in the Mint configuration. Given the strength of our liquidity and cash from operations, we anticipate we'll continue to pay cash for the remaining 2016 deliveries.

Additionally, we have bought out leases on four A321 aircraft in the fourth quarter for a total of over $70 million and are actively looking at further buyout options. These transactions drive future annual aircraft rent savings of over $8 million and mitigate future return condition expense.

Aircraft leases represent our highest cost of debt and this buyout offers an accretive use of our cash. In the fourth quarter, we now project total CapEx between $450 million and $460 million, of which approximately $380 million relates to aircraft.

For the full year 2016, we now expect total CapEx of approximately $1.02 billion to $1.07 billion, reflecting the additional expense of aircraft lease buyouts. At the end of the third quarter, over 30% of our fleet or 70 aircraft was unencumbered.

Again, more specific details regarding our order book, fleet plan and CapEx are found in our Investor Update. Turning to guidance, we expect capacity growth in the fourth quarter of 2016 of 3% to 5% and 8.5% to 9% for the full year.

Hurricane Matthew negatively impacted our fourth quarter capacity by approximately 0.5 percentage point. Turning to the revenue outlook, October performance was negatively impacted by approximately two points due to Hurricane Matthew.

We expect October RASM to decrease year-over-year by approximately 3.5% to 4% including the storm impact. We continue to monitor the recent improvement in close-in yields noted by Marty and anticipate providing fourth quarter RASM guidance with our November traffic release.

We currently expect December RASM will show the largest year-over-year decline of the quarter. This includes, among other factors, the negative impact from the unfavorable Christmas calendar placement this year.

Moving to the cost outlook, in the fourth quarter, we expect year-over-year CASM, ex-fuel and profit sharing, to grow between 4.5% and 6.5%. Hurricane Matthew raised our unit cost trends in the fourth quarter by an estimated 0.5 percentage point.

As for full-year 2016, we expect CASM, ex-fuel and profit sharing, to grow between 0% and 1.5%. This is in line with previous guidance.

We continue to work to come in at the lower end of that range. Much will depend on the exact timing of some ongoing efforts.

This includes reviewing opportunities to lower a long-term V2500 engine maintenance expenses. This is just one part of a portfolio of multiyear cost initiatives we expect to detail at our December Investor Day.

This concludes my formal remarks. As previously announced at the end of this month, I will no longer be JetBlue's CFO.

This is therefore my final earnings call as your CFO. I'd like to spend a minute or two to address our nearly 20,000 crew members, over half of whom are also JetBlue shareholders.

This, I think, may be the highest crew member percent ownership amongst U.S. carriers.

On today's and prior earnings calls, we focus on fairly tactical metrics such as unit costs and unit revenue trends over the short term. After 10 years with the company, five of which have been as your CFO, let's take a longer term look.

Over this period, we've built a healthy, sustainably growing investment-worthy business. Specifically since 2006, we grew our revenues by over $4.4 billion, driven in part by the addition of 100 new aircrafts.

But at the same time, we've reduced total debt by $800 million and improved our debt-to-cap ratio by over 35 points. Liquidity is strong and affords us the ability to continue to evolve, adapt and mitigate unknown but certain risks.

We've grown pre-tax margins to a level better than most of our peers. Additionally, you have improved free cash flow by over $1.6 million and added nearly 12 points to ROIC.

Very impressive. During this 10-year period, together we faced challenges including tough competitors, a recession, financial crisis, ice storms, fuel spikes and hurricanes; yet, we've never resorted or even considering furloughs or pay freezes.

And we've always remained committed to investing in new crew members, our culture and our customers. I'd like to thank Robin for his vision and drive.

I'd also like to acknowledge JetBlue's finance team who continue to provide the tools and resolve to drive JetBlue's continued evolution. I'll leave this team in the very capable and talented and thoughtful hands, of my friend, Jim Leddy.

The rule of CFO is 24/7. Terry, if you're listening, there are no words that can express what I feel.

Finally, thanks to all of you and your families for building a company, even the many crew members to come and proud to work for and our customers look forward to flying. Thank you very much.

Robin?

Before we move to Q&A, I want to thank Mark both personally, but also on behalf of all of our crew members for his many contributions to JetBlue over the years. Mark joined JetBlue in 2006 at a very challenging time in our industry and for our company, a period where most U.S.

airlines were shutting down, merging, filing for bankruptcy or laying their employees off. Many questioned if tiny JetBlue would have the financial strength to live to see a second decade.

Under Mark's leadership, we've not only survived, but thrived and have built one of the better financial positions in the U.S. airline industry.

Mark has been a champion of our culture and steadfast supporter of our mission and values. You may not have seen him in that Tech Ops hangar at midnight talking about maintenance cost with our amazing tech ops and materials crew members, or cleaning up an airplane and collecting the thrash assisting our in-flight crew members that we have.

Mark has also built a strong finance team which will serve JetBlue well into the future. We're excited that Mark can pursue his other passion, which is teaching.

We congratulate Mark on his plan to join the faculty of the A.B. Freeman School of Business of Tulane University in the great city of New Orleans.

Of course, it's not a goodbye. I appreciate Mark agreeing to serve as an adviser for the next 12 months.

Mark, from all of us here at JetBlue, thank you and congratulations. And with that, we're ready for questions.

Thanks, everyone. Lashonda, we're ready for question-and-answer session with analysts.

Please go ahead with the instructions.

Oh. Hey, two quick ones here.

Just back to the guidance on RASM, I think, Mark, you had said the December quarter or the month of December would show a largest – it'd be the largest year-over-year decline for the quarter. Now is that comparing to an October that's down, the 3.5% to 4% or is that comparing to an October that has been adjusted for the two points of headwind?

I just want a clarification on that.

Hi, Mike. It's Marty.

Oh. Hey, Marty.

I mean, actually, it's compared to – we don't really guide December, which I think is why I feel funny giving too clear a number. It clearly will be the – of the three months in the quarter, it will be the lowest month of the quarter.

And obviously, the 3 points of contribution to the holiday is a big chunk of that. I think, in general, I should talk about all three months of the quarter, specifically the call we're seeing in December, specifically.

We, obviously, look at our data. We look at industry data.

I think if you look at the industry ACT (24:05) data for December, so the industry revenue for December for domestic actually is looking a little bit soft. It's definitely at a different trajectory than October-November are.

And we watched this for a little while. Now, at the same time, of the last three – certainly, September-October, as we've said, we have seen closed-in strength.

So, from that perspective, I think it's a little bit early to call it. We've got about a one-third of our revenue for December on the books right now, so I guess it's a little bit too early to say, but we're certainly watching December closely.

Okay. And then just my second question, and actually, before I go, I'd just say, Mark, we go back before 2006, so it's been a lot of fun.

But my last question, just with respect to the 8% increase, Robin, I think you indicated that it was every group that currently receives profit sharing. What groups don't receive profit sharing?

No – great question, Michael. The vast majority of our crew members receive profit sharing.

So, to keep it sort of simple, it's really sort of managers and above in the company that are on a sort of individual performance pay scheme. So, for the purposes of modeling, the vast majority of our crew members would receive that 8% adjustment.

Okay, very good. Thank you.

Good morning. Thanks for taking my question, and congratulations, Mark, and best wishes.

Thank you.

Do you guys have the quantification of the 8% increase on 2017 CASM ex-growth? Are you ready to give guidance on a core basis and then what the labor impact is?

Yeah, no. Thank you.

I'll take that, if that's okay. Yeah, this isn't a quarter we normally provide 2017 guidance on.

That is something that we will be signing to. We actually normally do it on the January call.

I suspect with our Investor Day coming up in December, we'll be providing more clarity at that meeting in terms of 2017 impact. So, we'll give you more there.

Okay, understood. And then, Robin, the last Investor Day that was held in late 2014 was a meaningful catalyst for the stock and there were a number of key initiatives announced, how should investors be thinking about what we'll hear on December 13th?

No. That's what I meant – I would say that the focus of our 2014 event was very much on the revenue side, and I think we rolled out a number of self-help initiatives and it was a great opportunity to explain that, put those into context and certainly, we'll be updating on that at this Investor Day as well.

When I think about the 2016 Investor Day, I think our focus is very much on the other half of that equation, which is our cost structure. And somebody thinks that that we have been doing and we'll be doing over time to ensure that we maintain our cost structure advantage against the peer set that we compare ourselves to.

We see our cost advantage versus the legacy carriers, for example, is something that powers our growth and that it's something that we are looking forward to explaining more about at our Investor event in the December timeframe.

Excellent. Thanks very much.

Hey. Good morning, everybody.

Turning to costs for a moment, it's not unusual to see ex-fuel CASM growth of JetBlue's magnitude elsewhere in the industry. But in those cases, it's exclusively driven by new labor contracts.

If I look past over the last, I don't know, 11 years, you haven't demonstrated even a single example on an annual basis of reducing costs. Then I get it, you've been young, you've been in growth mode.

Mint adds a little bit of cost pressure, but it's accretive. But you're also facing inevitably higher pilot costs at some point in the reasonable future.

With densification under way, is 2017 potentially the year in which we finally begin to see some better cost control or should we push that phenomenon out even further in our models, maybe to the time that you became transatlantic flying given that presumably there'd be a stage-length benefit that would afford some cost relief?

Hi, Jamie. I'd take a little bit of this.

And I know, Robin, you can add in on that as well. The source of our costs in this quarter candidly was largely related to maintenance timing.

And without again stealing thunder from the forthcoming Investor Day, as Robin said, we are more than mindful that our ability to grow successfully is in part a function of lower relative CASM. And the planning that we include or the planning as we think about our cost includes the recent announcement on compensation.

And as I also mentioned, we will continue to work tirelessly particularly on ways to really address the variability of our maintenance costs. Next, you will recall, in fact, I would urge you to look at the Investor Update which outlines the schedule of the density program or the restyling program.

Not all the A320s will be done in rapid fashion, it'll be over a year or so period.

Right. Right.

So, the dividend of that actually won't, if you will, be realized fully in 2017.

Hey, Jaime. It's Robin.

Let me just build on that. Again, thanks for the opportunity to talk to about cost and I always love how you get to the heart of the issue very quickly.

I think that when we laid out our plan at Investor Day at the end of November 2014, we made a commitment to keep our ex-fuel, ex-profit share unit cost growth down below 2%. We have done that since.

We delivered that last year. Despite the timing issue Mark outlined, we have maintained our cost guidance this year of 0% to 1.5%, which is at the midpoint, obviously 0.75%.

As we said before, we're working to get to the lower side of that. We actually think that will allow us to grow that cost gap this year versus the legacy peer set.

And we look forward to Investor Day to lay out sort of a structural part. Just as JetBlue, has – as a growth carrier, had some investments to make...

Sure.

...as we've grown, there's also some opportunities, because as we mature and as we grow, we have opportunities to kind of think about the way we look at some of the higher-cost contracts differently, and that's what we're looking forward to sharing more with you in December.

Excellent. I appreciate the clarity.

Look forward to December.

Thank you.

Hey. Good morning.

Just a quick clarification on the December impact. Is that – I know there's a bit of a compression in demand as well due to the timing.

Is this three-point drag, is that a loss – does that include a loss or do we see that three point then show up in January?

Hi, Savi. It's Marty.

Thanks for – actually, thanks for asking that question. That's a good chance to clarify.

I think it's too soon to say how much of that we will get back in January, but it will definitely not be all three of those points. Fundamentally, there's a pretty significant compression of the holidays this year, schools in the Northeast – with Christmas on Sunday, schools in the Northeast are – and really more of them are still in session until the Friday.

So, the overall compression of the holiday we do think will create overall less travel. Based on what we see in – based on what we see in previous years with Christmas layouts like this.

Okay. And in previous years, have you – it's still hard to say how much of that you regain in January?

I think one of the challenges we have now is – and I think it's something you saw specifically the performance we saw in September and October --we have a good bit higher business mix now than we have historically. So think we're getting more and more nervous about our true ability to call things like that.

Specifically, you talked about the performance we saw in September, we talked about on the last earnings call versus what came through, what we saw was much better business demand that we had originally forecasted. So we're generally not in the habit of getting too far out on a limb for guidance especially in a period when our – what we see as far as our patterns are changing a little bit differently.

Look, (33:16) fundamentally, it is a short break, so we do think it will – we will not get all that back.

That makes sense and helpful. If I may ask just on the different regions.

I was wondering if you could comment on just the competitive capacity dynamics that you're seeing.

Yeah. In terms of competitive capacity as we look by region, nothing really sticks out dramatically.

I think we're really focused more on our own growth patterns. We talked about the growth that we're planning in Boston and Fort Lauderdale, which we're very excited about.

We're looking forward to the opportunities we're going to get in Southern California once the FIS is built at Long Beach Airport. But I don't look at competitive ads by other airlines and see if there's anything really sticking out dramatically.

Yeah. I mean, Savi, let me just build on that, because, obviously, we hear the comments from other airlines in terms of what they're looking to grow.

And I want to go back to the point that we keep making is that, I think we've been very successful in diversifying our network, and we will always see pockets of competitive capacity kind of pop up, and we've seen that in our past whether that's here in New York, for example. But I think the more diversified structure to our network means that in terms of the overall impact, it wouldn't have the impact it had several years ago.

But of course, we notice it and we're not blind to the comments that are made out in the market.

That's fair. All right.

Great. Thank you.

Yeah. Thanks very much.

Just had a couple questions on the CapEx guidance increase relative to last quarter. I guess $70 million of it came from buying out the lease extensions.

But what was in the plan previously? And should we think about that as adding to capacity growth for next year?

No. So, I think, what we're saying is there – we have $70 million.

There's – we've completed $70 million, there's more in the offing. They haven't completed.

So obviously, I can't give you number on what Jim and his team are looking at in terms of additional aircraft lease buy-outs. I do believe we also have that in the Investor Update, so in some excruciatingly good detail.

Okay. Yeah.

I mean, it looked like the CapEx guidance went up by $200 million. You said $70 million in the quarter from buying out lease extensions; is the other $130 million from more lease extensions being bought out?

A part of it is.

Okay. And does that add to capacity growth for next year?

No, no, no, no. These are airplanes that are in the fleet.

It's just we're converting rent to owned aircraft.

Okay. I'm just trying to understand if the prior plan was for those leases to be returned.

No, no. It was not.

Okay. Thanks.

It – look, it was – I mean, we've always opportunistically looked at the ability to buy these things off in a favorable way.

Hi. Good morning, everyone.

Marty, the – for the Atlanta flying outside of the Boston routes, the number of frequencies and start dates in your Investor Update are still TBD. Are there restrictions you're working through here?

Any seasonality issues you're considering with these flights, and can you give us kind of a timeframe of when you think you'll make a – reach a decision on when these routes will take form?

Hi, Andrew. Thanks for the question.

It's actually a much simpler answer than that. They're outside our current open for sale window.

I think once we extend our schedule into the period, when we'll be starting the Fort Lauderdale and Orlando service from Atlanta, we'll update those with real dates. But putting a date out there now that no one could actually buy doesn't really do anybody any good.

This is the normal course of business as far as when we extend our schedule. And I should also mention JFK too, by the way, all three of those routes are detailed as future growth in Atlanta.

Okay. That is simple.

And then, second, just I think your fleet plans contemplate somewhere in the range of kind of 6% to 7% fleet growth for 2017. Is this a good kind of base rate that we should consider for capacity growth next year or is there some reason it would be lower or higher than that?

I actually want to be reluctant to give you any more precision on capacity growth rather than to say, I think, we'll sort of stick with our often-used phrase of high mid-single-digit type of thing. But...

Yeah. We did – just a reminder.

We did say last time that the capacity growth in 2017 will be a couple of points lower than 2016. So, for modeling purposes, I would use that.

Okay. Thank you.

Hey, thanks. Mark, congrats on the next chapter in your career.

Thanks, Duane.

Robin, I wondered if you could speak maybe more directly on the status of the CFO search.

No. Duane, I – you always get my favorite question award.

No. Look, it's obviously something that we have underway.

We want to bring it to a conclusion as quickly as possible. We have a strong bench of internal candidates.

Strong, I'm expecting a very strong bench of external candidates. And when we have more to say, we will say it.

Thank you for that. At least I didn't ask a monthly RASM question, which I'm conscious I'm not going to...

No. I think, someone got in before you.

You must be disappointed.

It wasn't because of that. It wasn't because of that.

Yeah.

Just a second question, a little modeling question here. It looks like fuel efficiency ticked down a bit in the third quarter, perhaps that's a mix issue with E190 flying.

Any color you could offer?

That's largely driven by stage length, which is a little shorter by about 0.3%.

Okay. Thank you.

Thanks, operator. Hi, guys.

Mark, congratulations.

Thank you.

Well deserved. I'm looking forward to stalking you and perhaps taking that class.

Question about the E190 fleet. I noticed like in the order book, you've got aircraft going from 2020 through 2022.

Are those aircraft that are going to continue to be on the order book, or are they aircraft that have been deferred? Can you just talk about your commitment to the 190 fleet?

Yeah. They were deferred, but they are still on the order book as E190s and the dash one.

No changes – no change has been made to those, but that resulted from a deferral – I'm trying to remember – at least a couple years ago.

Okay. And then just a follow-up question on the salary increases.

Do you normally give everybody a salary increase in – every January, or is this something that's being done out of order, so to speak?

Helane, that's a great question. Let me just take you through a little bit the process for the majority of our crew members.

I'll exclude the pilots because obviously, we are in a collective bargaining negotiation with that and don't really quite know what the timeline will be. But, we did and by the way, we did give the 8% increase to the pilots as well.

But in terms of the rest of work groups, we do compensation reviews every two years, where we benchmark all of the airlines. We work with our crew members directly on it and we then implement whatever we need to implement to keep our compensation competitive.

What – the reason we did that this time a little bit differently with the 8% is that first of all, we've seen some very significant adjustments in other airlines. And so, we were seeing that move very – much more quickly than we normally do in terms of the peer set.

And secondly, we wanted to make the change to the profit share program, which obviously runs in the 1st of January. And so, in order to make these changes concurrently with the changes of profit share program, we implemented the – implemented them on the 1st of January.

So, we don't normally do it like that, we normally do it sort of on a rolling two-year basis by work group. But in this case, because of the change to profit share, we did make the change concurrently from the 1st of January.

Can I just ask a follow-up on the pilots? Are you allowed to give them a pay increase even though you're in negotiation on that initial contract?

So, we offered it and ALPA is putting that to their pilots. And if the pilots vote in favor of the 8%, then it will be awarded.

Thank you for that (42:55). Yeah.

Okay. Great.

Great. Thanks for that clarification.

Hi. Thanks for the time.

Marty, earlier, you talked about your shift over to the corporate side. Can you maybe provide some color as we look forward as to what impact that's going to have on maybe RASM and your performance?

Hi, Rajeev. Thanks for the question.

Yeah. I mean, it's a great question.

It's one that I'm not sure I can give a heck a lot more guidance than some of the stuff we've seen recently. The one thing I would stress is that when it comes to the performance that we're seeing right now, I cannot overestimate the benefit we're getting from the growth in Mint.

As you know, we – this year, we've announced the next tranche of 321s coming in Mint configuration, and we see that as being a very, very positive story for the stock and for accretion. I think, what's also important to mention is that – and I think, it's sort of the unexpected surprise of what we're seeing in Mint is that as we have – that core of Mint customer on these routes like Kennedy LA and Kennedy San Fran, we're seeing some real significant impact in RASM on the core cabin, the coach cabin on those airplanes, driven, I think, by the higher frequency.

It's funny. We're at a point now where Kennedy LA and Kennedy San Fran are our two – our number one and number two highest revenue markets in the company and they weren't even top 10 before.

And that's made a really significant change for us. And a lot of that change is coming with business customers.

Now, I still don't think we're going to be in a position to call this business airline for a very long time. I mean, leisure, visiting friends and relatives, that is still the core of our customer base, and I think, it will be for a very, very long time.

But I will say that our ability to capture business customers has and especially core – coach business customers, I think, is sort of the unexpected good guy of the Mint growth.

And on Mint, have you quantified or can you quantify what the impact was in 3Q from the overall system?

We haven't actually released that. I'm looking at Dave Fintzen trying to figure out at some point – I think at some point the public data we have we'll show pretty clearly and I think we do need to find a way to give a little more color on that.

I will say it's 0.5% of our seats, and I would say that those two routes and actually I'll add Boston-San Fran to that mix now. The three core business net routes, we're seeing impact, again, it's not just in the front of airplanes, it's in the coach cabin too.

Okay. And then if I can a question on LatAm.

The industry is seeing a benefit to figures in the third quarter and as we look forward. Is that something that you're seeing or will see or will it be somewhat limited for you just given the resiliency you've seen to-date?

Well, I think it's a good question about LatAm. First of all, we're seeing a lot of benefit from some of the capacity changes that we've made in places like Puerto Rico, Colombia, Peru.

We're starting to see those markets lap that, and I think we're seeing some good benefit there. One market that continues to be a sore point for us continues to be Mexico.

One of the big challenges we're having in Mexico is we're still having an awful struggle getting spots at Mexico City that we think are commercially viable. Right now we're the carrier of choice if you want to fly at 5:00 AM, but we really don't think that that's a great opportunity for our customers.

The pleasant surprise is we have no trouble filling the airplanes, because JetBlue offers a fantastic product and customers from Orlando and Fort Lauderdale are certainly finding the products attractive. But we think we it'd be that much better if we can actually fly when it's daylight out.

Great. Thank you, and congrats, Mark.

Thank you.

Hey. Good morning.

Thanks, guy. Mark, congrats on the retirement.

Frank made a great hire 30 years ago or so I think. Anyways, Marty, my questions were really along the same lines as Rajeev, and just looking at the overhang from LatAm flying this year and looking at Mint, I guess I'm just wondering why JetBlue's revenue performance shouldn't continue to improve relative to the industry just given that we are seeing a LatAm recovery.

Yes. Thanks, Dan.

I think two things I'd say. First of all is that I don't think we fell as far as our competitors with the LatAm because we do have a very strong base.

I will continue the call for strength we see in the Dominican Republic. Dominican has continued the reform very well for us.

And although we've seen a reduction in Puerto Rico, Puerto Rico still remains strongly profitable. The second issue is I think if you go into the detail on the call in the transcripts, a lot of that strength was coming from Brazil which, as of now, is a market we don't play in.

That may change at some point in the future but not any time soon. So I think we're in a little bit different place than they are.

Understood. Okay.

And then with respect to JetSuite, what percent of the charter company does JetBlue own exactly? And is there an appetite to increase that stake over time?

And then I guess just how should we think about that opportunity longer term? What's the vision here?

No, thanks, Dan. We haven't disclosed the percentage.

It is a minority investment. I think that we set up JetBlue Tech Ventures last year.

We are very active in thinking about how this industry could change and be disrupted over the next few years, and Tech Ventures was already I think – we learned so much. I think in terms of the JetSuite opportunity, we just see a great opportunity on the West Coast in terms of offering customers a much more convenient alternative in terms of how to fly.

We think the JetSuiteX model has plenty of potential to grow. It's very exciting when you can offer customers private jet-type amenities at a commercial airfare from very convenient airports.

And so we certainly wanted to be part of that. We saw an opportunity for our customers.

What we announced today is an equity investment. We are now working with the JetSuite team to put a commercial agreement in place that will allow JetBlue customers to continue to benefit from a very creative and disruptive set of travel options.

It's a small investment, but can it grow? Of course, and we're going to work hard to really help the JetSuite team execute well in making this a much bigger proposition in the West Coast.

So is the goal to take it from being a charter airline to be a scheduled airline, where you could actually upload some of this pricing on the GDS systems?

I don't want to talk about where it might go. I mean, right now, it's what's called a public charter option.

They sell tickets on their website, and that I think in itself is a great opportunity. And of course, what we can bring to JetSuite is great access to a bigger customer base and distribution.

But tickets are purchased through their website right now.

Understood. Thank you.

Hi, guys. Thanks for the time.

Hey, Marty, I think we've grown accustomed to seeing at least in most cases major disruptions related to weather, typically being accretive to RASM, while this one you're calling out is being 200 basis points dilutive. Would you describe why Hurricane Matthew is different?

Hi, Darryl. Thanks.

Yeah. It's actually an easy explanation.

Two things. First of all, we did have two of our focus cities shutdown for a pretty significant part of the period during the hurricane and maybe a little bit longer than we prefer.

But I think more importantly, it came right at the beginning of the only peak in the month of October. The Columbus Day weekend is sort of the only peak period we have.

And it's funny because what we found was as people were reaccommed, they ended up just not taking their trips at all. I'll give you the one tidbit that sort of blew us away.

If you look at the Monday return of Columbus Day, week-over-week, I think our actual load factor dropped about seven points from Northeast to Florida during that time period. So, those were just incredibly melt away.

When people didn't take the outbound, they didn't take the returns.

Okay. Great.

Thank you.

Thanks. Good morning.

Hey, Marty. We're hearing comments and email from a lot of airlines talking about strength in close-in yields.

So, I think you tend to give great color. So, I'll ask you this question.

How much of that has been driven purely by sort of just marginal capacity reductions? And how much of it has been more sort of tactical like relating to airlines working to trade a little bit of volume for price and minimize things like fare dilution?

And to be clear, I'm asking what you've already seen, not what you're seeing in the future. Thanks.

All right. Thank you for that clarification, Hunter, because you (52:59) the first thing I was going to say, so now I don't have to say it.

So, I think it's a good question. I mean, I think-- let me just sort of an overall give what we're seeing as far as the revenue strength.

I think there were two things that I talk about that have created the strength. The first is we have seen a lot of strength in the transcon, and primarily on the Mint competitive routes but not exclusively in the Mint competitive routes.

The second thing is, we've seen a pretty significant change in the pricing environment. Again, looking backwards in pricing environment, prices are still down versus what they were quarter of 2015.

But sequentially throughout the year, we're certainly seeing – we're seeing some pricing strength we hadn't seen before. So from that perspective, I think they are both (53:41) combining pretty nicely to create some of that close-in strengths.

So, it's nothing really overly complicated. It's just a little bit of just old-fashioned fare improvements then sort of across the booking curve?

I think that's fair, yeah.

Okay. And then, Robin, I can point to a whole lot of things that you've done since the Virgin merger that are pretty disruptive.

And you've already used the word disruptive at least three times this call that I can count. And I know that you're emboldened by a lot of your success recently, but scale can be a very scary thing if you're on the business end of it.

So, how do you balance prudence with the desire to be disruptive in big markets that are dominated by big competitors that have a lot more scale than you?

No. I think, again, Hunter, thanks for the question.

I know it's something that we've discussed before. I think our plan has historically been very prudent.

I mean, we have focused on for several years now in terms of building our focus city presence. We had a lot of questions on Boston-Atlanta, for example.

That has really been the biggest ass (54:55) for our Boston business travel community. So I think we continue to run the airline prudently focused on our strategy and the need to build more network relevance for our customers.

In terms of the theme of disruption, I think that's something that JetBlue has always tried to be in the forefront of. I mean, when David Neeleman and Dave Barger and others founded this airline many years ago, the first airline to put LiveTV on, then sort of changes like even more creating, not our word, but word of the industry as a hub here in New York City at JFK when folks said it couldn't work.

Then, Boston – can you really become a profitable airline in Boston? I think we proved that wrong.

We sat out Wi-Fi until we had a great sort of broadband solution that had the ability to transform the onboard experience of our customers. We've continued to focus very much on culture and really put the crew member at the heart of what we do, which sometimes has been challenging for other airlines to do.

And so, when I think about Tech Ventures and when I think about JetSuite, I just think these are more current and more modern manifestations of what we've been doing for 16 years. It's certainly not intended to poke anyone in the eye, but it is intended to make sure that we stay at the forefront.

And that, I think there's a lot of complacency out there that says this airline industry can't get disrupted. But I mean we disagree with that.

And we see some things that are emerging to our Technology Ventures Group out in Silicon Valley led by Bonny Simi that has the potential at least in part to change this industry. And so, we're pleased that we're part of that, because we are much more smarter by being so than assuming it couldn't happen to us.

Thank you.

Hey. Robin, I know you weren't willing to disclose the stake in JetSuite.

When we're going forward, how are you going to account for that? Is that going to just be accounted as an investment or is that going to be accounted under the equity method and it's going to run through the P&L?

Can you just give us some color there?

Equity method.

Mark, I want to – I think this is the last question, so I'm actually going to let Mark answer the last question on his last earnings call, plus he knows the answer. So, it's always a good start.

Mark, over to you.

Actually, I think it would be elegant if we turned it over to the Interim, the soon to be Interim CFO.

Okay. There's a ceremonial passing of the baton here, and I'd like to introduce...

...in front of everybody.

...Jim Leddy onto the core, our Interim CFO, welcome, Jim.

Hey, Mike. It's Jim.

How are you?

Jim...

We don't plan to consolidate the investment, it would be an equity method pickup.

Okay. Great.

Thank you.

Sure.

Well, this concludes our third quarter 2016 conference call. Thanks for joining us and have a great day.