David Barger - Chief Executive officer, President, Director and Member of Airline Safety Committee Mark D. Powers - Chief Financial Officer, Senior Vice President and Treasurer Robin Hayes - Chief Commercial Officer and Executive Vice President

Hunter K. Keay - Wolfe Trahan & Co. Michael Linenberg - Deutsche Bank AG, Research Division Jamie N. Baker - JP Morgan Chase & Co, Research Division Duane Pfennigwerth - Evercore Partners Inc., Research Division David E. Fintzen - Barclays Capital, Research Division John D. Godyn - Morgan Stanley, Research Division Glenn D. Engel - BofA Merrill Lynch, Research Division Kevin Crissey - UBS Investment Bank, Research Division Savanthi Syth - Raymond James & Associates, Inc., Research Division Raymond Neidl - Maxim Group LLC, Research Division

Good morning, ladies and gentlemen and welcome to the JetBlue Airways Second Quarter 2012 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 pay undue reliance on these statements. For additional information concerning factors that could cause results to differ materially from forward-looking statements, please refer to the company's annual and periodic reports filed with the Securities and Exchange Commission. I would now like a turn the call over to your host, Dave Barger. Please go ahead, sir.

Thank you, John, and good morning, everyone, and thank you for joining us today. This morning, we are pleased to report record second quarter net income of $52 million or $0.16 per diluted share, an improvement of $27 million compared to the second quarter of 2011. This marks our ninth consecutive quarter of profitability. We achieved a 10.2% operating margin, a 2.7 point improvement over last year. We're particularly pleased with the margin expansion we are able to achieve as we generated record revenues, evidence that our network strategy is working. JetBlue ended the quarter with approximately $1.2 billion in unrestricted cash and short-term investments or 25% of trailing 12 months revenue. Due to our strong liquidity position, we're able to strengthen our balance sheet during the quarter by reducing debt, including approximately $170 million in debt prepayments. These results would not have been possible without the hard work and dedication of JetBlue's 14,000 crew members who deliver an unrivaled customer experience to our customers each day. As a testament to our high-quality product and the experience that our crew members delivered to our customers, we recently earned the highest customer service ranking among low-cost carriers by J.D. Power and Associates for the eighth consecutive year. We're very pleased to be honored with this award along with some of the most respected brands in the world. I'd like to congratulate our crew members for this remarkable achievement and thank them for their continued excellent work in running a safe, reliable operation. Demand trends remain solid throughout the quarter as we saw strength in all regions. Our year-over-year PRASM growth of 6% exceeded our expectations with strong traffic in the second half of June. During the quarter, East Coast short-haul markets, specifically our business markets from Boston, continued to outperform the rest of our network from a unit revenue growth perspective. We are very pleased with our results in Boston as new markets mature and our share of business traffic increases, resulting in improved profitability. Customer response to our growth in both new and existing business markets within our network continues to serve JetBlue very well. Bolstering the success, we recently announced plans to introduce a new tier within our TrueBlue frequent flyer program called TrueBlue Mosaic, which will recognize and reward our most frequent and high-valued customers. We believe the program's enhancements, including Even More Speed and dedicated 24-hour customer service lines, will help us strengthen and deepen our relationship with our customers. We continue to profitably grow in the Caribbean and Latin America, an area of significant focus for JetBlue. We recently announced plans to begin our third Colombian route with nonstop service to Cartagena, Colombia from JFK later this year, pending government approval. We also announced plans to begin serving Samana, our sixth destination in the Dominican Republic, as well as Grand Cayman in the Cayman Islands, JetBlue's 23rd Caribbean destination, both pending receipt of government approval. During the quarter, we announced 3 new interline partnerships agreements with Air China, LOT Polish Airlines and Turkish Airlines. And just yesterday, we announced that partnership with Cathay Pacific, our 21st partner. We've been very pleased with the growth trajectory of our partnership traffic and remain on track with our target of adding between 7 and 9 total interline agreements in 2012. During the quarter, we deepened several of our existing partnerships. We recently began providing reciprocal precompiler mileage benefits with Emirates with whom we have a one-way co-chair agreement. We also began handling Hawaiian Airlines fights at our JFK terminal and have plans to begin servicing Aer Lingus' operations from JFK Terminal 5 to Dublin and Shannon in early 2013. These relationships not only bring incremental traffic and improved facility utilization for JetBlue, but also generate high-margin ancillary revenue through airport concessions. As we grow, we believe continued focus and discipline around cost is critical to our success. Mark will discuss our cost performance in detail, however, I would like to highlight some of the steps we've recently taken to help reduce our largest expense, which, of course, is fuel. JetBlue is the first FAA certified A320 carrier in the United States to use satellite-based special required navigation performance with authorization required, also known as RMPAR, approaches at 2 of JFK's prime and most used runways, runways 13 left and 13 right. The unique procedures associated with this technology allow for shorter flight times and reduce greenhouse emissions. We estimate this could result in fuel savings of approximately 3,000 gallons per day. Additionally, we continue to look for ways to improve operational efficiency on the ground. To that end, we recently announced plans to construct a new international arrivals facility at our JFK Terminal 5. A new federal inspection site to handle United States customs and immigration checks will be constructed, eliminating the need for JetBlue international arrivals that don't preclear customs to be processed at JFK Terminal 4. With approximately 20% of our JFK flights serving international destinations, we believe consolidation of flight operations in Terminal 5 will allow us to save nearly the equivalent of one aircraft through less time spent taxing from Terminal 4 to Terminal 5. In addition, we believe these new facilities will improve the overall experience for our international customers and further strengthen JetBlue's competitive advantage as a carrier of choice for airline partnerships at JFK. We intend to break ground on this project in a few weeks and hope to welcome our first customers in early 2015. In closing, I'd like to once again thank our 14,000 crew members for their excellent work during the quarter and helping us achieve record second quarter profitability. We believe that our standalone path of organic growth through the combination of an award-winning customer service and product offering, a low cost structure, a strong balance sheet, a profitable network positions us well. We remain committed to profitable growth, generating free cash flow, improving margins and delivering improved returns for our owners. And with that, I'd like to turn the call over to Mark for a more detailed review of our financial results. Mark D. Powers: Thank you, Dave. Good morning, everyone, and thank you for joining us again today. Today, we reported the best second quarter performance in our history with operating income of $130 million. This $44 million year-over-year improvement in operating income was driven primarily by $126 million of higher revenue, offset by higher operating expenses of $82 million as prices remain relatively flat year-over-year. Specifically as to revenue, once again, JetBlue outperformed the A4A domestic industry average during the quarter as second quarter year-over-year passenger unit revenues increased 6%. This passenger unit revenue growth is impressive given our 5% capacity growth during the same period. Yield improvement helped drive the quarter solid revenue performance, as did load factor improvements of 3.8 points. Additionally our average one-way fare increased 1% year-over-year to $106. Passenger unit revenue was up April, 9%; May, 3%; and June, 6%. June's pressing results in particular exceeded expectations, as Dave noted, primarily driven by close in demand strength towards the end of the month. In addition, nearly a point of June's year-over-year PRASM improvement was driven by flight cancellations resulting from the FAA air traffic control outage in severe thunderstorms in the Northeast during the weekend of June 22. Since we generally have a strong ability to recapture revenue when we cancel flights by reaccommodating customers on other flights, these types of events typically have a positive impact on PRASM. As to ancillary revenues, contributing to record second quarter revenue performance was a 10% increase in overall ancillary revenue. During the second quarter, ancillary revenue per passenger was about $20. Recall, ancillary revenues measured as the combination of ancillary revenue reported in passenger revenue such as Even More and other revenue. We continue to be pleased with strong customer response to our Even More offering. This is on track to generate nearly $150 million this year. We have made significant progress on the E190 Even More seat retrofits, previously announced. We expect to begin selling this additional inventory in early August. Other revenue growth has been trending slightly lower than passenger revenue growth, primarily due to 3 key factors: one, we postponed regularly scheduled American Express cobranded card acquisition campaign during the second quarter, resulting in lower marketing fees; two, aircraft's lease rental income was lower than expected due to the sale of 2 E190s, previously leased to a third-party airline. The sale, by the way, resulted in a gain of approximately $2 million recorded in other operating revenue; and third, the termination of LiveTV's contract with AirTran. Turning to costs. Quarterly operating expenses increased 8% year-over-year or $82 million. While fuel prices declined year-over-year, fuel remains approximately 40% of our total operating expense. As such, we continued to employ a variety of operating procedures and techniques to conserve fuel. Our young fuel efficient fleet with an average age of only 6.3 years positions us well in this regard. We also continued to hedge fuel as a form of insurance against sudden price spikes. To this end, in the second quarter, we hedged approximately 27% of our fuel consumption. We recorded $1 million loss related to fuel hedges settled during the quarter, bringing our year-to-date hedging gains to $8 million. In addition, we recorded a mark-to-market noncash loss of $4 million in nonoperating expenses due to the decreased value of WTI crude oil hedges, which we de-designated at the end of 2011 due to the deteriorating price correlation between WTI and Jet fuel. Including the impact of fuel hedging taxes, our fuel price in the second quarter was $322 per gallon. We have hedged 27% of our anticipated jet fuel requirements for both the third and fourth quarters. In addition to fuel hedging, we have recently begun managing fuel volatility through fixed forward price agreements, or FFPs, which are essentially forward contacts for the delivery at specific locations of physical jet fuel. These FFPs continue -- currently cover approximately 18% of our projected fuel consumption for the remainder of the year at an average price of the $2.94 per gallon. The underlying details of the FFPs and our hedge positions as of last Friday, July 20, will be more specifically detailed in our investor update, which will be filed later today. Brent crude, based on the forward curve as of last Friday, July 20, is averaging about $109 per barrel for the full year 2012 and the crude to heating oil crack is averaging about $15 a barrel. Based on these curves, including the impact of hedges, FFPs and taxes, we are estimating a third quarter fuel price of $3.13 per gallon and a full year per gallon price of $3.18. Excluding fuel, year-over-year second quarter unit costs increased by 5.6%. The majority of this year-over-year increase was driven by maintenance expense, which increased 50% year-over-year on a unit cost basis. As we've discussed on prior calls, this increase was primarily driven by the aging of a cluster of our A320s delivered in the mid-2000. Additionally, as our fleet ages, repairs have become more costly, particularly engine repairs. To put this in context, however, please note maintenance expense comprised only 7% of overall second quarter CASM. That said, we've taken several actions designed to manage our maintenance costs. First, in an effort to address future hourly maintenance rates, we sold 6 older A320s spare engines during the second quarter and replaced them with new engines purchased at the end of 2011 and earlier this year. By the way, we reported gain of $8 million in connection with these engine sales. This gain was recorded in other operating expenses. We may continue to opportunistically bend the engine maintenance cost curve by selling other older engines in the future. Second, we negotiated a long-term flight hour maintenance agreement covering the E190 engines, the terms of which we believe should lead to smoother, more predictable maintenance expense in the future on this CF34 fleet. Third, we're pleased to report progress in our negotiations to obtain replacement flight hour agreements in the aftermath of the Aveos liquidation that occurred in the first quarter. We expect agreements to be in place by the end of the third quarter, thereby minimizing the duration of the impact of this event. In the meantime, of course, we'll continue to pay higher rates on the related aircraft component repairs. I should note the other significant driver of the second quarter 5.6% year-over-year x fuel CASM growth was profit sharing. This increased approximately $7 million year-over-year, while profit sharing is calculated as the greater of 15% of pre-tax income or 5% of eligible wage dollars. As for the balance sheet. As Dave noted, we ended the quarter with unrestricted cash and short-term investments of approximately $1.2 billion. Not included in this balance is an undrawn corporate fuel purchasing line we have with American Express of up to $125 million. Also not included in this balance is a new line of credit with Morgan Stanley for up to $100 million secured by a portion of our short-term investments. During the second quarter, we took several steps to further strengthen the balance sheet. Specifically, we made debt and capital lease payments of approximately $220 million including approximately $170 million in debt prepayments. These were secured by 5 A320 aircraft as well as the 2 E190s sold during the quarter. The A320 aircraft are now completely unencumbered bringing our current unencumbered A320 aircraft to 7, up from 1 at the beginning of the year. We recorded a $2 million gain in nonoperating income related to these debt prepayments. The interest rate on this retired debt was significantly higher than our weighted average cost of debt. Further, we expect to benefit from future lower interest expense of approximately $6 million per year. We believe these debt payments are consistent with our goal to increase returns on invested capital by at least 1 point per year. We remain on track to achieve this goal. We lowered our overall debt balance in excess of $100 million during the second quarter while purchasing 3 additional aircraft. Despite making more than $200 million in debt and capital lease payments, we ended the quarter with virtually no change to our cash balance. Since the end of 2010, we lowered our total debt balance by approximately $140 million while taking 15 additional aircraft. Debt payments for the rest of the year remained very manageable. We expect to meet them from cash from operations. Third quarter scheduled principal payments on debt and capital leases are expected to be only $45 million. As to CapEx and fleet. During the second quarter, JetBlue took delivery of 2 A320s and 1 E190, bringing our total fleet size to 175 aircraft. For the remainder of 2012, we expect to take 4 A320s and 1 E190. We're currently evaluating financing options for these remaining aircraft deliveries, again with a focus on ROIC and managing our weighted average cost of debt. In the second quarter, we spent approximately $125 million in aircraft CapEx and $35 million in nonaircraft CapEx, while generating approximately $200 million in operating cash flow. We estimate capital expenditures of about $120 million in the third quarter, $180 million in the fourth and $650 million for the full year. With manageable debt maturities and capital commitments for the remainder of the year, JetBlue is well-positioned in 2012 to generate positive free cash flow and maintain strong liquidity. We expect to end the year with the cash as a percentage of trailing 12 revenue in the range of 23%, 25%. Turning to capacity. We expect to increase third quarter ASMs between 7% and 9% year-over-year. As in previous quarters, most of this growth is driven by our focus on the Caribbean and Latin America, which we expect to be up approximately 10% year-over-year. Boston capacity will be up approximately 7% year-over-year. Our full-year ASMs are expected to increase between 6.5% and 8.5%. This is up slightly from previous guidance due to: one, higher than expected completion factor during the first half of the year; and two, additional flying in our business markets during September and October. That said, Airbus has indicated possible manufacturing delays, which could impact our 4 remaining 2012 deliveries and our capacity guidance. Turning to the revenue outlook. As in the past, while visibility generally remained somewhat limited, we're pleased with the forward bookings. We expect the solid demand environment to continue to the third quarter. We currently expect July PRASM to be up between 3% to 4% year-over-year. Consistent with our current revenue guidance practice, we're not providing specific guidance for August on today's call. Recall, however, 2 events in August 2011 that will impact year-over-year comparisons: one, we benefited from the several weak lapse of the federal excise tax; and two, we canceled approximately 1,400 flights as a result of Hurricane Irene. Together, these 2 items increased August PRASM last year by approximately 3 points. Despite more challenging comparisons, we believe the network changes made in the markets such as San Juan and Boston will continue to produce solid revenue results. Finally, with respect to CASM outlook. For the third quarter, we expect x fuel CASM to increase between 4.5% and 6.5% year-over-year. Maintenance and profit sharing expenses accounted for most of the expected increase. Our full-year x fuel CASM guidance is between 2.5% and 4.5%. This is versus the 3% and 5% previously provided. We project all-in CASM to increase between 1% and 3% year-over-year for both the third and the full year -- third quarter and the full year. In closing, JetBlue had a really strong second quarter. We continue to grow and to do so profitably. Thanks in large part to the outstanding efforts of our crew members. As our markets mature, we continue to develop high-quality, high-margin revenue opportunities while making balance sheet improvements increasing -- and increasing operational efficiencies. We believe we are well-positioned to generate appropriate returns for our shareholders. And with that, John, Dave, Robin and I are happy to take questions.

[Operator Instructions] And we do have a question from Hunter Keay from Wolfe Trahan. Hunter K. Keay - Wolfe Trahan & Co.: So, Mark or David, what would be your thoughts on maybe some 2013 commentary on capacity and CASM. You're taking 9 planes next year including barring any kind of Airbus to use as you mentioned, Mark, including I think 4 A321s so which, obviously are larger gigs -- so I'm wondering if there's a -- is it fair to think that capacity could maybe hit something close to a double-digit rate on a year-over-year basis? And if so, is it possible that we look at sort of the decline in year-over-year CASM x fuel, given that potential growth rate? Mark D. Powers: First of all, I'd note that the deliveries next year are basically back-end loaded, including notably the A321s. So I think they're all mainly concentrated in the fourth quarter or so. That probably gives you a little bit of guidance as to what the CASM picture's going to be in that period of time. Again, and I'm looking also at Robin Hayes, but the balance between capacity market demand is something that we're very careful to measure between, and that capacity coming in next year is paced to respond to what we believe, particularly with the A321s, are market demand, which, by the way, will be a terrific airplane for some of our high-density routes from New York to Florida and the Caribbean as an instance. High market demand there. So I think there's appropriate match of that in this increase of capacity. Robin, you want to add anything else to that?

Now I'll just quickly say that we talked before about sort of a long-term projected growth rate in the sort of the mid-single-digits and what's we're not specifically guiding for 2013. I'm not looking at 2013 being a significant outlier to a sort of long-term assumption. Hunter K. Keay - Wolfe Trahan & Co.: Okay, that's really helpful. And Dave, one for you. As you guys have turned to more towards to the ROIC conversation, which, again, people appreciate, I can absolutely tell you unequivocally. Dave, has there been any discussion of this in the board meetings including this as a component in variable comp at the executive level? Or is that something that maybe we should think about longer term? Has it been longer term? Has it been discussed at all?

Oh yes, it has been discussed. I think we've been transparent about that at when we had our investor day and all of you were present as well. And so as we have our current goals that are in there, we just want to maintain them for couple of years so we have some continuity. We just start talking about things like x fuel CASM and you start looking at operating margin. By the way, a commentary on the customer goal as well what you wrote about, which we think is very important, what net promoter score also, but as part of conversations, that would be a surprise that it makes it way into goals as well. Specifically, it's in a couple of the key leader's goals including mine, right, and Mark's. So there's plenty of visibility on it within the leadership team and also across the board.

Our next question is from Michael Linenberg. Michael Linenberg - Deutsche Bank AG, Research Division: Two questions here. Mark, you talked about return on invested capital and the improvement at -- I think you indicated you were well onto your way of achieving your 1 point goal for this year. Where -- just to give us -- to put some context around it, based on how you guys define it, what was the base number at year-end 2011? Mark D. Powers: So anticipating that question, we will actually in the -- on our website today, be including our definition of ROIC. I know there's a whole variety of ROIC types of definitions roaming around amongst the airlines, but that will be included. But at Investor Day, we announced that year-end ROIC was 4%, applying this formula, which, again, for your convenience, will be included on our Investor section of jetblue.com today. Michael Linenberg - Deutsche Bank AG, Research Division: Okay, great, much appreciated. And just my second question and I guess this is either to Robin or Dave. Can you give us a mix of where your capacity split is now? I mean you have a lot coming on in Boston and the Caribbean. Or maybe give us what the mix should look like at a year-end 2012 versus year-end 2011 because it has been a lot of growth, but it's been very much targeted in, really, international markets.

Sure, Michael, I'll do that. In terms of how it's split, I think we have been fairly consistent in the last couple of years, and roughly speaking that we end up with about 1/3 into the Florida area, 1/3 into Latin America and then the 1/3 the rest is a mixture of short-haul East and West Coast and transcon. And that really hasn't changed that much, I mean the -- as a percentage, transcon continues to edge down slightly as we kind of focus growth mainly in 2 markets, which is Boston and the Caribbean and Latin America from a number of different points in the U.S. And I think you're going to see that continue. We grew Boston this year, we grew Caribbean and Latin America this year. The new markets we have announced to the end of this year very much in that footprint as well, and that we also did add Florida to Providence, south of both Orlando and of all of the islands there. No surprises, I mean, I think it's going to continue be very much as we've told you it's going to be as we think about next year as well, which is continue to grow our business travel footprint out of Boston and continue to grow in the Caribbean and Latin American markets from a number of U.S. focuses is.

Our next question is from Jamie Baker. Jamie N. Baker - JP Morgan Chase & Co, Research Division: David, I'm curious if JetBlue has received it's NDA from American and if so, if you could comment on any terms or conditions that the NDA might place on you?

Jamie, we're really not going to operate any color in terms of that topic that American has talked about, right? So as we take a look at -- again, we've been very forthright about our standalone plan, organic growth, our own people, our own airplanes, right? So I mean that's been the case since we started. Continues to be the case today, right? So we'll see what happens as the months play out. Jamie N. Baker - JP Morgan Chase & Co, Research Division: All right. It was precisely because of your views that I thought you might be willing to comment on the merits of the NDA, but that's okay. Skipping to the second question, you want to add 7 to 9 interline partners. You talked about increased passengers [indiscernible] actual dollar figure around that. How much financial benefit was there in the second quarter or better yet, what's your sort of hard bid [indiscernible] for 2013 when some of your more recent agreements have time to mature?

Hey, Jamie, a little bit of a break up, but I think I have it. Robin, feel free to offer some commentary. So yes, we're on track for the second interline partner. And, again, interline for us, it's quite a bit different. It's considerably different than interline of the past when we look at certain sectors and these partnerships that we have. So we're not going to get inside specific commentary regarding, now, 21 partners of the number of customers, the revenue commentary, but it's a -- I'll tell you across Kennedy, certainly across Boston and other locations as well, it's been very helpful to us. Robin, we just announced Cathay Pacific yesterday as well, additional commentary?

I mean I assume a lot of public statements in this were the ones that we shared at the Investor Day and it's something we've come to maybe update annually when we speak to the analysts and investors and probably not get too much into a quarterly dialogue on it. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Well just a quick follow-up, I mean, if 21 partners currently -- I'm just trying to figure out whether that's risen to a sufficient level of materiality that in your monthly RASM, as you forecast RASM out there, there could actually be some material forecast errors since after all you probably don't have, maybe you do, but you don't have interline models. You don't know cap a bookings, all that kind of stuff. I'm just trying to figure out whether this is going to cause RASM deviation in your guidance. That's all.

I think our ability to continue to produce strong RASM results is predicated on a number of things. I look at mainly what we're doing in Boston and Caribbean and Latin America and the rest of the network is at the most important parts of that. But certainly, the -- what we're doing in terms of partnership interline and co-chair is going to very nicely and it's going to continue to grow.

The next question is from Duane Pfennigwerth. Duane Pfennigwerth - Evercore Partners Inc., Research Division: I wanted to ask you about your comps for August and September. Sounds like you think August comparison is tougher optically. It looks like September is tough as well. In the past, you indicated a greater ability to drive unit revenue improvement in the shoulder periods, but wondering if we may be round tripping some of those efforts from last year. Any comments you have would be helpful.

I think July and August, you just touched on it, both strong months for JetBlue, continues to be a both strong and so the demand pattern that we understand very well being primarily leisure and visiting friends and family. I think as we look at September, October, historically, weaker months for JetBlue, what we've continued to see over the last few years is our ability to fill in those troughs with a more sort of a high percentage of business particularly what we are doing in Boston. And I think that's going to continue. Now clearly, we're lacking against harder and harder comp, but we still think there is some significant headwind in the ability to fill in troughs and outperform our traditional stronger months in the peak. Duane Pfennigwerth - Evercore Partners Inc., Research Division: And can you say if there are any other gains embedded in your cost guidance for the rest of the year aircraft sale gains? Mark D. Powers: None that I know of. I think I indicated, though, I will opportunistically look for occasions to do that. Particularly, as we did in the past help suspend some of the maintenance cost curves and that our managers of fleet expenses moving forward. But there's nothing -- so we had a flurry of activity the last week of the quarter and so pretty much cleaned up our transactions. Duane Pfennigwerth - Evercore Partners Inc., Research Division: And then just lastly, wonder, as you look at the world, could you give us your idea sort of total capacity and competing capacity in the second half, maybe 3Q, 4Q and how that compares to what you saw in the second quarter?

Certainly. I think we probably more focused on quarter 3. I mean, it's always tricky sort of looking 2 quarters out because you did find there tend to be a lot of changes. But if we think about third quarter over second quarter, I actually think, it could be largely back in terms of total seats in the JetBlue markets. But I think it's not very significant. Not to draw any attention, I think we are still seeing some positive competitive reductions in markets like Boston and to some degree, Florida. I think Carribean and Latin America has stabilized more somewhat. So I don't think I would sort of characterize it as we're not thinking about Q3 being too much different than Q2 in terms of overall competitive capacity.

Our next question is from David Fintzen. David E. Fintzen - Barclays Capital, Research Division: Maybe first one for Robin. I'm curious, the June walk-up demand being better than you thought, could you just give some color on -- was that business, was that leisure? What kind of geography, New York or Boston? And then most importantly, did that carry into July or was just -- that's just something of the one-off towards the end of June?

No. Of course, I think -- we saw the late strength in June really across both our business and leisure segments. I think the business months tend to book late so that was a nice surprise to the upside. On the leisure side, I think we were pleasantly surprised with the amount of last-minute leisure bookings heading into the summer. And also, I'll just to draw your attention to the comment made on the script as well that there was also part of our upside was driven by the storm here in the Northeast and the FAA filed the facility in New Jersey towards end of June. So for transparency, that was part of the upside. But notwithstanding that, we did see a nice bump into June. Obviously, we're setting guidance in July later in the month because we provided on the earnings call as opposed to when we issued traffic and so the numbers firmed up to a higher degree than when we set guidance on a -- with the traffic release. David E. Fintzen - Barclays Capital, Research Division: Right, okay. And then just thinking through sort of your business, your business leisure traffic mix in Boston versus New York. Is there a way to quantify, maybe relative to where you think the industry is at sort of your business and leisure mix in Boston? I mean how -- is it more normal relative to the industry? And the reason I'm asking here is should we be -- to the extent demand starts to slow and we start seeing the economic softening, should we be thinking: is there enough business travel in Boston now that is a little different relationship with the industry in the slowing economic environment than we've seen in the past?

No, I think we still feel that the business market in Boston continues to perform. We really haven't seen any strength. We're still in a state where we are winning new corporate accounts and winning new business. So we're very much in that sort of acquisition part of the cycle rather than just in a mature phase where we're trying to [indiscernible] and maintain existing accounts. So I still think that's still upside. And in addition, I think we're a brand that does well in the downturn. I mean there is a retreat to the value segment when the economy gets tougher. We saw that back in 2008, 2009, and I think we're going to continue to see that here if that happens. But again, I'd point to the very diversified market we have in Boston, it's business and leisure and the ability for one to support the other if one starts to slightly underperform. David E. Fintzen - Barclays Capital, Research Division: And do you think in -- than the first part of that, do you think in Boston you're sort of -- is a typical for the industry? Is it still a little bit more leisure heavy than the average industry? Is there any -- just the sense of waiting, anything you can provide?

Yes, Dave. When I think about a couple of days ago being up in Boston with The Global Business Travel Association, right, I mean, it's the largest gathering of corporate travel managers and they happen to be in Boston this year. And with our relevance that we have up there, the newest service being Dallas/Fort Worth. The diversity of the economy in Boston, we start looking at businesses, inside of businesses, whether it's technology, whether it's educational, whether it's financial, the strength of economy in places like Boston as we are latticing in partners like Japan Airlines with their first 787 ever right flying from Tokyo into places like Logan Airport and connect into our to the earlier question that we had on partnerships. We've really significant relevance the we have going on up there plus our own growth in the business markets. So I think the only additional comment that I'll offer in addition to Robin is you're going to have the seasonality of this time of the year. Many people are there out in the Cape, right? They in Nantucket, in the Vineyard, right? So traditional seasonality that business is alive and well up in Boston.

And just one other final point. I do think to build on Dave's point, we are -- we do look at the Boston and the New England economy as sort of doing one of areas in the corporate travel segment is probably doing better than a lot of parts of the rest of U.S. and so I think the geographies are also kind to us as well.

The next question is from John Godyn. John D. Godyn - Morgan Stanley, Research Division: Just want to follow up on some of the PRASM and demand commentary we're hearing. I understand that June benefited from some onetimers. The 3% to 4% in July, though, were there any kind of a negative onetimers that weigh that result down? Just so we sort of know what the core number would've been southwest reference to place in July 4th in the month. I don't know if that hit you guys if there's anything else that you'd know?

No, not really. I mean just going back to the strengthening in June. I think positively waddling to the July 4 came. So I think back to my comment earlier about some of the leisure of strength there. But, no, in July, there's no sort of -- there's no one-offs. There's no surprises lurking in there. I think it's a core sort of demand issue. John D. Godyn - Morgan Stanley, Research Division: Okay. And you're helpful and that you highlighted some onetimers in August and quantified them at 3 points. Is that the same impact in September as well because, of course, that's a tax holiday and I think some of the hurricane hit that number, too? And are there any onetimers that you'd highlight like holiday placement? Anything like that in September just so that we kind of understand what the clean trend might look like?

John, I'll jump in on that. This is Dave. It's a -- the better part of that impact was the excise tax as well as Hurricane Irene was in August. So there's still an impact into September. Labor Day is a little bit different this year. Year-over-year, a little bit of an impact, but it's definitely less than the 3 points that Mark had in the script. John D. Godyn - Morgan Stanley, Research Division: Okay, that's helpful. And then just last question on just overall demand trends. Dave and Mark, I heard you guys used the word "solid" a lot to describe demand. Last quarter, you were using the words like strong a lot. I might be reading too much into this, solid feels a little bit less exciting than strong. Are you seeing macro way on anything on the margin? Or am I reading too much into some of the commentary that I'm hearing?

Yes, John, probably reading a little bit too much into it, but it is fascinating because our weekly and commercial discussion, and I know that many of our leaders listen to the earnings calls. We talked a lot about what's the word, what's the difference between solid and strong. They're really synonymous. I think you're reading too much into it. We're really seeing solid, really, revenue trends across our network right now. And I'm, personally, I think we all are really looking forward to seeing what happens in September because of the investments that we've made, the last to say, if you will, in the business markets as well. I mean we talked about Boston, but I mean, and bringing national at 10 a day. We tell you now Boston and DCA, I mean, these are significant, significant investments. So, very excited, but reading a little bit too much into it, John.

The next question is from Glenn Engel. Glenn D. Engel - BofA Merrill Lynch, Research Division: Question on cost and a question on revenue. On the cost side, can you talk about how much the Aveos' problems cost you in the second quarter and the impact in the third? Mark D. Powers: Yes, I think what I've said -- you recall last quarter's call, I indicated that this was probably a double-digit problem. I think with the progress we've made in terms of our negotiations, the problem itself is now downsized to a single-digit number. And knock wood that we'll have this thing cured with alternate sources of flight hours to fly by the end of this third quarter. Glenn D. Engel - BofA Merrill Lynch, Research Division: So single-digit hit over 2 quarters? Mark D. Powers: Since -- during the duration of their liquidation. Glenn D. Engel - BofA Merrill Lynch, Research Division: Second question I'm going to have is on the RASM side for Robin. One, it seems like there's a fair amount of transcon capacity being added this summer. Are you seeing that market lag? And two, proceeding back to the last question, I know your July was what you'd expect, but was the 1st week of July, given the July 4th holiday, noticeably weaker than what you expect the full month to be in terms of your year-over-year gains?

Let me -- in terms of the -- let me answer the second part of your question first, Glenn. No, not really. I mean I think we've seen pretty much the same strength throughout all of July. So not the first week. In terms of the first part of your question, I mean, you're correct. I think transcon is one of the areas where we have seen capacity creep back in, not necessarily a concern during the summer peak months because it tends to do well. There's plenty of demand that are higher fares. I think it will be interesting to see what stuff happened in some of the shoulder and tough months and whether that capacity stays in or start to come out again.

The next question is from Kevin Crissey. Kevin Crissey - UBS Investment Bank, Research Division: What's your -- I guess this is probably for Mark, what's your weighted average cost of capital, roughly? Mark D. Powers: I'm hesitant to mention what I think the cost of capital is. I'm happy to talk about our cost of debt, which is all in with attendance fees, 4.5%. I think it would define a somebody a lot smarter than I in this low interest rate environment to try perfect risk free rate is for you or your clients. I'll defer to you in terms of the pricing of the equity side. Kevin Crissey - UBS Investment Bank, Research Division: Yes. I mean sort of what I'm getting at is do you believe that your return on investment capital, you're 4% is meaningfully below where it should be to be generating returns? Mark D. Powers: You're asking the CFO, of course, I do. And that's why we're vigorously working to close that gap in 2 ways. Number one, obviously working on bettering our margins and secondly, reducing our invested capital. Kevin Crissey - UBS Investment Bank, Research Division: I mean I understand. I just with me when I say -- so why is 1% -- I mean maybe it's just a matter of that's all that you're able to do, but when I look at you guys are growing and you're growing faster than GDP and if there is a meaningful gap between your cost of capital and your return on capital, a 1% improvement per year, if say, the gap is 4%, is going to be 4 years. There's probably not much analyst out here who have numbers for years out that we feel particularly able to rely on and so therefore, it becomes questionable as to whether you close that gap entirely? Mark D. Powers: Well I hope we can over deliver, for sure. But recall, this is a commitment that we made to The Street earlier this year during the analyst day session. And trust me, I'm mindful of the overall gap between whatever that cost of capital and our actual ROIC may be. So we're clearly going to try to go to exceed expectations on that number, but at the time when we made the commitment to you and others on The Street, that was a number we felt comfortable with. Keep in mind as well that, that is a number that is not adjusted for fuel.

Next question is from Savi Syth. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Just looking at the load factor in the second quarter, it seems much higher than what we've seen historically for second quarter. And then looking at yield, it looked like the yield growth has moderated from what we've seen the past several quarters. I was wondering if that was a kind of a mix issue that resulted in that or why that might be?

No. Every time we kind of plan ahead, we're always looking at how do we optimize both yield and volume for RASM. There's a couple of different levers that we can pull. I think what you saw in the last quarter has primarily driven that to load factor adds because when look to what we did last year, we saw the opportunity to do that. Now you also will note there has been a general slowing of industry fare increases. We've kind of gone into the year, so you have definitely seen that slow down and there was a fairly broad-based price increase that took effect in a sort of a fairly elongated process last week. Sort of 3 days, but that slowed down. So I think we look to the opportunity. Yes, there was some yield increases, but it was primarily load factor driven. What I would say, those came together to allow us to deliver another quarter of industry-leading RASM performance. Savanthi Syth - Raymond James & Associates, Inc., Research Division: That makes sense. And my second question is kind of 2 parts and it relates to I think that's the fare increases having driven by this kind of the rising fuel prices. As you see fuel is going to have pullback and now at this level, one is at what point do we start to see unit revenue growth? Do they really start to flatten out and maybe even decline or will we see that? And the second part is have you done any kind of changes in how you think of capacity as a response, or have you seen any competitors change in capacity as a response?

Obviously, where we see competitor capacity changes either not entirely clear what's on that mind -- on their mind or one to speculate. I think in terms of JetBlue, no, not really. I mean, fuel really isn't a guide for us on capacity. We really look at our core demand and what we try to achieve in each market. And as we've said, we've added slightly into the September, October trough. We've been very encouraged by what we've seen in some of our other trough months for business demands in Boston. Some are also similar other non-Boston business travel markets. And so, we just tweak September and October a little bit in order to add sort of a more profitable flying. But really, no major change then. And in terms of fuel, again, I think the fare environment is much more driven by just core supply and demand issues, not necessarily, worrying too much about fuel. Mark D. Powers: Yes. And partly to add to that, I don't think we're -- just because fuel has been flat quarter-over-quarter, I don't think we're prepared to take a victory lap. Except we were -- or as an industry, if we look at it from a little bit longer historical perspective, fuel still remains high. And so it's no cause to celebrate great the resurgence of lower fuel prices. And it's still also very volatile. I mean our brand index from last Friday's changed $5. So it's still a very strange world when it comes to fuel out there. Savanthi Syth - Raymond James & Associates, Inc., Research Division: So if you don't see fare increases there, do at some point, even the margin might expand, do we see unit revenue become flattish to maybe even declining year-over-year?

I mean, yes, one can't know for sure that's going to happen in the future, but it's not something I foresee or expect.

The next question is from Ray Neidl. Raymond Neidl - Maxim Group LLC, Research Division: Just to clarify a couple of things. Your heavy growth in Boston, the Caribbean is really what's driving of the company's growth. And I'm just wondering if when American reorganizes and comes back, a lot of those markets were American markets before, taking back with a lower cost structure. One, do you see tougher competition in these growth markets that you're going into or are you too well-established already? Number two, while you still have a cost advantage and basically, do you see that as a threat and tied in with that, I just wanted to clarify what you said before is no talks going on with American right now about a partnership or coaching or things like that?

Along those lines, well first of all, we start talking about your last question. American is a partner of ours. We have discussions with all of our partners, right? And so when you get into specifics of discussions, we're not going to disclose those, right? But right now, what we have is feed to their international markets from our domestic markets, right? We're very pleased with what we're seeing with that partnership. When you get inside of your comments about Boston and the Caribbean, are we concerned? Always concerned about the competitive landscape, right? And so whether that's American, or reorganized American or you name it in terms of that landscape or our other focus cities or across our network. And so all that said, it's really tied into an earlier question regarding growth. Our growth has been very targeted underneath the headline of return on invested capital to seize upon opportunities and that we've really earned, I believe, with specifically in Boston, we're now 100 a day and growing. And the support of Massport for us to allow that growth is relevant. Other airlines closing crew bases, moving their regional flying totally out of that market. I mean that we are affecting change that are in the significant way. And the Caribbean is very similar, 23rd destination announced with Grand Cayman. And when we look at our relevance, San Juan, we just moved into Terminal A, a building that literally was 6 years ago, construction commenced down in San Juan and our entire operation right now about 40 departures a day. I believe the summer number is 38, departing on a Terminal A. So you bet, we're going to capitalize on that. But always, always ears and open an eye is also looking at the landscape from the standpoint of competitive pressures, right, I mean that's the landscape we live in. Raymond Neidl - Maxim Group LLC, Research Division: Okay, that sounds logical. Tied in with that, your key base still remains JFK and you did talk about the terminal expansion at Terminal 5, I guess, over Terminal 6. But what is the plan for that? Are you going to cover all the land in Terminal 6, build additional gates besides international custom center? Is that going to be for JetBlue growth at JFK or is it going to be primarily for some of your partners?

Well I think really what we're doing with Terminal 5, that footprint with this additional expansion and use of our capital in terms of investing and building that facility. We're going to -- we plan to move our operation, our international arrivals from Terminal 4 and to Terminal 5 with the expansion. By the way, we believe this is much more cost-effective even though Terminal 4 has been terrific for us, but it's no secret with the growth that's happening over there. And we believe that we get at least one aircraft out of it at the end of the day because we're not towing aircraft back and forth. And then we also have a in-facility transfer of our own customers and additional customers. So it's a -- Hawaiian is in there today, that's not international. Aer Lingus will be moving in Q1, that will be international either because it'll be precleared, but it's nice to have optionality for our new partners as well as for our own expansion happening at Kennedy. Kennedy, we have our focus cities, but Kennedy is our home base of operations. It's very important to us. Raymond Neidl - Maxim Group LLC, Research Division: Okay. And then lastly, you sound very optimistic about the third quarter. Does that include post Labor Day and the fall seasons? I know it's too early to really to look out to see what the demand is but the economy seems to be weakening by the day as we move into the fall. And basically, have you any signs yet of what has been might be post-Labor Day?

I think how well our visibility as we said before just tends to be a couple of months out. I think we've been here before though. I mean if the economy does hurt, take a turn for the worse, I think we've shown during 2008, 2009 that JetBlue can sell-through that with great success that we have a retreat the brands that offer value if that happens. And I think we have a geography in part of the country that is likely to weather that better than most. And so no, we still feel very good. Again, don't forget our strategy is a little bit different. We are in a phase of growth particular with the corporates where we are, acquiring new accounts, we are building new business, we are stealing share from our competitors. So I think the opportunity for us to grow through is a significant.

Our last question is from Lynn Baker.

Most have been asked and answered, but 2, I think these are pretty easy. On the unit cost growth, can you say how much of that is the higher than what you would have expected maintenance cost because of Aveos going away and can you say how much of it is related to the length of hugging shorter with some of these new roots coming out of Boston and the Caribbean? Mark D. Powers: I could certainly address on the maintenance side. We're looking at as much as 50% of the x fuel CASM increases attributable to maintenance costs. And as I said, we've already guided -- our guidance is already included sort of on the way high side of the obvious bad guy and that will probably get a little bit better as we move forward and work through that. I'd also remind you that another key element of CASM x fuel is sort of a, if you will, high-class problem at least for those crew members on the [ph] and that's profit-sharing. I'm not really in a position to -- because it's not a legitimate cost, though, I haven't done that calculation lately because I don't think the likes of that actually that much, anyway. So it's pretty immaterial.

Yes, it's relatively the same on a year-over-year basis, right? So and the mix is of the same with the 190s and the 320s as well.

Okay. So it's mostly -- so there's no way you can say what unit cost would have been had your maintenance provider knock on the away like what the increase would have been?

We can back into that number, but again, we've sort of guided full-year impact of a single million dollars -- single-digit may dollar impact. Mark D. Powers: We extend in the whole context of all of our cost, is it's probably not immaterial in the full flavor of total CASM.

No, but I would've expected the CASM not to increase as much given the increase in the capacity, right? You would have expected unit cost or CASM still to come down a little bit. Mark D. Powers: Again, as I know you've modeled, don't forget a big chunk of this CASM maintenance increase is not because of Aveos, but it's because of the general aging of the fleet and the fact that at least on the CF34 until now, we do not have those engine repairs covered by flat out agreement, which as of July 1, we will have.

Okay. So yes. So for the second half, that gets a little bit better.

John, I believe that's the end of the questions. Correct? Great. Thanks so much, John, and for those of you dialing in today to our earnings call, we appreciate it very much. And of course in closing, to our 14,000 crew members, thanks for a terrific quarter and thank you for delivering a safe reliable operation and for J.D. Power. We look forward to talking to all of you next 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.