David Fintzen - Director, IR Robin Hayes - CEO Marty St. George - EVP, Commercial & Planning Steve Priest - EVP & CFO Joanna Geraghty - President & COO

Hunter Keay - Wolfe Research Michael Linenberg - Deutsche Bank Jamie Baker - JPMorgan Savi Syth - Raymond James Duane Pfennigwerth - Evercore ISI Kevin Crissey - Citigroup Daniel McKenzie - Buckingham Research Helane Becker - Cowen Joseph DeNardi - Stifel

Good morning. My name is James. I would like to welcome everyone to JetBlue Airways Third Quarter 2018 Earnings Conference Call. As a reminder, today's call is being recorded. At this time all participants are in a listen-only mode. I would now like to turn the call over to JetBlue's Director of Investors Relations, David Fintzen. Please go ahead.

Thanks, James. Good morning, everyone and thanks for joining us for our third quarter 2018 earnings call. This morning we issued our earnings release, our investor update and a presentation that we'll reference during this call. All of those documents are available on our website at investor.jetblue.com and have been filed with the SEC. Joining me here in New York to discuss our results are Robin Hayes, our Chief Executive Officer; Marty St. George, EVP, Commercial and Planning; Steve Priest, our EVP and CFO; and Joanna Geraghty, our President and Chief Operating Officer. 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 a 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 CEO.

Good morning everyone, good morning Dave, and thanks for joining us today. This morning we reported our results for the third quarter of 2018. Before we start and then, as usual, I'd like to thank you our 22,000 crew members across our network for their hard work delivering the JetBlue experience every day to our customers. Starting on Slide 4 of our presentation; our third quarter adjusted operating income was one $195 billion, our adjusted pretax margin was 9%, and our adjusted earnings per share was $0.43. This quarter our financial performance was impacted by higher fuel prices which increased approximately 37% year-over-year. At our Investor Day in early October, we showed our plan to help us improve our margins and achieve our 2020 EPS target of between $2.50 and $3 per share. A higher oil environment pressures margins at least temporarily but we have built a plan to improve our earnings by focusing on the areas we can control. Executing that plan we believe we'll expand margins in 2019 and again in 2020. We have been taking actions to recapture higher fuel cost price [ph] both with fare increases over recent months and through ancillary revenue initiatives. During 2019, we expect to see further earnings benefit from our network reallocations, as well as from ancillary revenue initiatives. We are already seeing the benefits of building relevance in our primary focused cities as RASM continues to show strength during the second half of the year. At Investor Day we talked about our expectation to add 1 to 1.5 points of RASM benefit for calendar year 2019 from both our network and product building blocks. As we look to 2019, we plan to balance near fuel term pressure with the RASM benefit that comes from greater relevance in our focused cities. We continue to expect capacity growth of between 5% and 7%. Turning to our fleet and cost building blocks; we are making investments in margin accretive aircraft and finding ways to reduce our controllable cost to support earnings growth. I'm particularly pleased with the progress we are making on the structural cost program in securing over $173 million in 2020 cost savings. We are on-track to hit our 2018 CASM ex-fuel guidance despite pulling capacity in the second half for the year to respond to higher fuel prices. We are taking measurable actions as it relates to our long-term strategy through environmental, social and governments or ESG initiatives. We are lining our efforts to mitigate the impact of changes in the fuel market by flying more efficient aircraft and optimizing our fleet -- fuel consumption. We assigned a renewable jet fuel purchase agreement for a total of 330 million gallons or about 4% of our network consumption. We recently took delivery of an A321 aircraft that was powered with renewable jet fuel blend; this has given us hands-on exposure and experience with infrastructure for renewable jet fuel in the eastern U.S. where we are the leading low cost carrier. We've also announced our plans to retrofit our entire Airbus fleet with vortex generators to reduce noise in the communities where our customers and crew members live and work. We estimate that this will help us address pending local regulation. Before I pass the call over to Marty, I'm pleased with the progress we are making on our building blocks we laid out at Investor Day. Since 2014, we have a track record of executing our plan and through revenue initiatives and improving cost control we have a part to increase our margins. Although it is hard to predict the exact price of oil, I'm optimistic we will see an improvement in our absolute margins in 2019. I feel strongly that achieving this margin expansion in 2019 is essential on our part to achieve the EPS goals we laid out in 2020. We have the culture, the brand and the geography we need to be successful. We believe that realizing the opportunities through our revenue performance and cost initiatives will sustain higher earnings growth and improve our returns for years to come. Marty, over to you. Marty St. George: Thank you, Robin. Let me start with our capacity outlook on Slide 6. We continue to grow our capacity on the lower and our mid-to-high single-digit range. During the third quarter, our flown ASMs grew by 8.7%, slightly above the midpoint of our guidance range of 7.5% to 9.5%. Our scheduled capacity growth for fourth quarter is approximate 6%. We expect flown capacity growth a 7.5% to 9.5% in the fourth quarter 2018 as we lap the 2.9 points of storm impact in the fourth quarter 2017. Our capacity in the fourth quarter includes a previously announced 2 point ASM growth reduction to mitigate the impact of higher oil, and follows as a 0.5 point reduction we made for the third quarter. Turning to our network; we continue to up-gauge both our New York and Boston markets with our margin accretive A321 all-core aircraft. And Fort Lauderdale, RASM outperformed a system average for the sixth consecutive quarter as it's growing relevant to translating into revenue strength. Our Transcon franchise including both, Mint and non-Mint markets remained strong. We rather performed beating our expectations in the quarter. Moving on the network; in the Caribbean and Latin region, we made tactical adjustments to address RASM trends and we are seeing improvement in the fourth quarter revenue trends. With Mexico, we announced a series of important changes that relate to our network reallocation building block as discussed at our Investor Day. We are reallocating underperforming routes to our three primary focuses and expect revenue benefits of $100 million to $120 million by 2020. We have a list of opportunities to support RASM and managing growth in our primary focused cities. As we recently announced, we will be closing three blue cities; Washington Dulles, St.Croix and Daytona Beach. We're trying to convert a fourth blue city, Portland Maine to seasonal service, and we are reducing frequencies to Mexico City from both, Fort Lauderdale and Orlando. These network changes follow our recent redeployments from Long Beach to Trans-Atlantic [ph] markets which mean [indiscernible] and take effect throughout the fourth quarter. We do not take these changes lightly as we know these reallocations impact a number of our crew members. Turning to Slide 7 in the revenue outlook; third quarter RASM grew 1.7% which is above the midpoint of our updated guidance of 1% to 3% on excluding the 0.4 point impact from severe weather during September. We are pleased that our quarter RASM which was in-line with the 2.2% achieved during the first half of the year, despite a 4.0 point of employee headwinds that we called out during our last earnings call. During the quarter we saw close-in demand trends improve across the network; to manage, July and August was strong, we were encouraged to see stronger off-peak demand than we saw in the first half of the year. September started and ended extremely well, although bookings to weather impacted destinations did slow temporarily as storms pass-through. By market, RASM was driven by strength in New York and Fort Lauderdale, as well as in Transcon. We continue to see RASM pressure in Boston-leisure markets and some pressure in Orlando. We're encouraged that Boston-leisure trends continue to improve sequentially. Orlando is a highly price elastic market with strong leisure demand, and it has a history of absorbing initial capacities very well. Our margin in Orlando remained near system average even with high competitor capacity growth. For the fourth quarter, we expect RASM growth between 1% and 4% year-over-year which will represent sequential accelerating of RASM growth in the fourth quarter, even with a 1 point tougher comparison. The temperature trends have carried into October and bookings for Thanksgiving are strong, but we only have about one-third of December booked, trends so far are very encouraging. In the fourth quarter, we also expect to see initial revenue benefits from our network in ancillary revenue changes launched in the third quarter. Our West Coast network reallocation is performing according to expectations; the ancillary changes are ramping and are expected to attribute approximately $8 million in revenue during the fourth quarter. Before I turn it over to Steve, I would like to add my thanks to our crew members for the hard work. We are confident in our plan and in the investments we are making in the network to make JetBlue more relevant to our customers and more profitable for our owners. Steve, over to you?

Thank you, Marty. Good morning everyone and thank you for joining us. I'll start on Slide 9 with some highlights from the third quarter. Revenue was $2 billion, up 10.5% year-over-year. Adjusted pre-tax margin was 9%, down 7.3 percentage points from the third quarter of last year, mainly due to higher fuel prices. Adjusted EPS was $0.43 per diluted share. Our adjusted effective tax rate this quarter was 26%, and we expect our effective tax rate to be approximately 26% for the fourth quarter of 2018. We reported a $0.16 GAAP EPS, including one-time costs related to the E190 fleet transition on the pilot contract. We are successfully managing near-term margin pressure from higher fuel through pricing, capacity and network adjustments we ramped up through the fourth quarter. At our Investor Day earlier this month, we laid out our five building blocks to underpin our long-term plan to improve our margins and returns with a target of $2.50 to $3 in EPS for 2020. Moving to Slide 10; during the third quarter CASM ex-fuel increased 3.2% year-over-year on the lower end of our updated guidance of 3% to 5%. The third quarter unit costs included 2 point headwind from the recently signed pilot contract. Looking into the fourth quarter, we expect CASM ex-fuel growth to range between minus 3.5% to minus 1.5% including 3 points of pressure related to pilot deal. We see a positive impact on cost from our investors through investments in the operations. Our on-time performance initiatives and efforts to mitigate ATC challenges in the northeast have improved a 8-14 gap versus our peers, and are helping us to achieve our CASM targets. In our two largest focused cities; New York and Boston, a 8-14 gap versus our peers has increased approximately 5 points compared to 2017. Back in January, we laid out our 2018 cost guidance including a second half inflection point in our underlying CASM ex-fuel growth trend. I'm delighted to say that we are on-track since our plan despite the added pressure from reducing our capacity in the second half. I want to thank the teams within JetBlue that have put so much effort into signing added cost savings needed whilst at lower capacity. We will continue to find opportunities to mitigate these pressures in addition to the savings and the structured cost program that build each quarter. We continue to see sequential improvement in our underlying non-fuel costs and have made great progress during the second half of this year as we execute on our structural cost program. We're confident we can deliver on our 2019 commitments made at Investor Day and are on-track to achieve our zero CASM ex-fuel CAGR through 2020. Turning to Slide 11; we are thrilled that last week we closed our 250 aircraft delivery. We anticipated ending 2018 with 253 aircraft. [Indiscernible] we have included our anticipated order book in the appendix section. We believe our fleet is critical to improving returns. Starting with the A320s, we expect to have 11 restyled aircrafts by the year end and anticipate to see the benefit of at least 60 additional restyled aircraft in 2019. Next year, we expect to take our first A320 need to help us up-gauge our primary focused cities. These aircraft have the latest technology and fuel efficiency on our new core product. The majority our CapEx is used to grow our fleet and enable our mid-to-high single-digit growth to build relevance to our focused cities. CapEx also helps us invest in our engines, transition as E190 fleets, and executes on our A320 restyling. Our CapEx guidance for 2018 ranges between $1 billion and $1.2 billion, comprised of upto $895 million to $1.1 billion in aircraft and the remainder for non-aircraft spend. Turning to Slide 12; the strength of our balance sheet allows us to invest in the business and return excess capital to our owners. We've executed $375 million worth of share repurchases from the $750 million authorization. This quarter we paid $54 million in debt and raised nearly $261 million in secured aircraft debt. We closed the quarter with an adjusted debt-to-cap ratio of 32.7% and our cash on investments for 12.6% of trailing 12 months revenue. Lastly, we plan to continue our policy of opportunistic hedging to help protect our margins given the current oil price environment. This quarter we executed hedges for 7.7% of our expected fuel consumption for the rest of 2018 and 7.5% for the first half of 2019, in-line with prior hedging positions. We're excited about the opportunities in front of us to improve both margins and returns. As we build relevance in our focused cities, it is critical that we execute in our plan to improve cost control so to better convert growth and RASM strength into margins and EPS. I would like to thank all of our crew members for helping us carry our momentum into the next couple of years with our five building blocks, and for working every day to create value for all of our stakeholders. We will now take your questions.

Thanks, everyone. James, we're ready now for the Question-and-Answer Session with the analysts. Please go ahead with the instructions.

[Operator Instructions] Your first question comes from the line of Hunter Keay of Wolfe Research.

Robin, I'm not sure if you're prepared to discuss this but I'd be curious to know kind of what the early discussions have been like with the board with the new addition to Ben and Sara [ph]. The questions really are, are they still sort of an information gathering mode or they kind of coming in already sort of challenging some of the existing status quo?

No, I would say they were both were engaged in the first board meetings. Lots of questions -- I mean, I think you know Ben as well as I do, he is not a shrinking violet [ph]. And, you know, it's great to have them on the board. I mean, I think we have a strong board, we have a board that is very focused on delivering this plan; and I think having Ben and Sara join our board makes it even stronger.

Steve, a little bit more of a follow-up from the Analyst Day; when you talked about renegotiating some of these maintenance agreements, you mentioned OEMs but do these negotiations also involve some of your aftermarket providers? I'm kind of curious to know who exactly are you negotiating with and what are you looking to get other than just cost savings? Thanks.

Yes, just to give full transparency; as I've mentioned, when we look across our fleet we have some newer aircraft to newer engines coming into the fleet, and obviously we've got existing E190s and existing fleet of basically of around 190 aircraft. When it comes to looking at both, the airframe and the engine maintenance as we go forward, we have been engaging both, in the market -- we've been engaging both the OEMs and the MRS. In terms of what we are looking at, it's a balanced approach, it's not just about cost but it's about absolute quality because if these assets that we go forward with have a life of around 25 years, we have to make sure that the engineering remains in some of the airframes in the engines, a top notch, make sure that we get the right turnaround times with such partners because obviously the more the aircraft are flying, the more they are driving returns and margins for JetBlue. And so, they are the heart of a lot of what we're doing and some of interiors we showed at the Investor Day, we have seen significant CASM ex-inflation pertaining some mountains past since 2010 and so that is a critical and core part of the discussions and the negotiations that we're having.

Your next question comes from the line of Michael Linenberg of Deutsche Bank.

Just -- I guess to Marty, with respect to the network realignment, I guess another phase is kicking in in January of '19 or the March quarter of '19. Is that what's already been announced what you -- the big press release that had a lot of the changes or is there another phase subsequent to that that we should anticipate? Marty St. George: What's kicking in in the first half of 2019 are the things we've already announced. So it's obviously depending on seasonality, certain things make during certain times but when we laid out that run rate of $100 million to $120 million, that was inclusive of everything that we had laid out at Investor Day.

Robin, I think you basically said that you were optimistic with respect to margin expansion in '19 and I thought I heard you qualify it by saying ex-fuel margin expansion. How are you thinking about just overall margin expansion; are you cautious, do you think it's a reach or am I reading too much into that?

Just to clarify, I wasn't saying ex-fuel, I was just sort of -- I made a comment that probably being in this industry for 30 years you never know where our fuel is going to go, there may be some from extreme state. But I'm very pleased, I mean we've seen an uptick in fuel in the second half of the year, I think JetBlue has been very proactive on capacity reductions, I think we've been very proactive on fare increase, I think we've been very proactive on ancillary revenue changes to driving weekend and mitigate the cost of higher fuel, you know we don't want to use that as an excuse. And margin expansion 2019; even in a higher fuel environment I'm very very optimistic about because we have a pathway to get there to layout the 2020 EPS goal -- the five building blocks that we laid out; many of those start to kick-in in the early part of 2019. We have the network building blocks that you just asked Marty about, we have the structural cost program that continues to have added by as we go through, just like we said it would. And so -- yes, we are very confident that we will see absolute margin expansion in 2019 even if fuel was to rise from here.

Your next question comes from the line of Brandon Oglenski of Barclays.

I was hoping you could talk about the competitiveness at high level in the largest three focused cities; JFK and Boston, Fort Lauderdale. It seems like there is a decent amount of growth from some competitors in those markets. And then, as aside, you know, could that potentially impact some of the commercial initiatives that were recently announced? Marty St. George: So let's talk about the three focused cities independently. New York, obviously being a smart-controlled market, the real action we see in New York in gauge-related and we've been partaking in that pretty aggressively with the introduction of the out-core A321, highly margin accretive and it's been very helpful for us to continue to capture the normal day-to-day growth of – I'm not sure, about 18 million people without it being able to grow departures because of small constraints. I'll talk about Lauderdale and Boston separately. First of all, Lauderdale; obviously it's been a very competitive market for many many years. We have been competing against the U.S. LLC [ph] for quite a while pretty aggressively. I'd say, more recently we've seen growth coming from another LCC. I think if you look at the data that we put out in both, the 2016 and the 2018 Investor Day desks, you can see that from a RASM performance, and you can back-in the margin performance to that, we compete extremely well against those carriers. And certainly, I'd say not just on RASM but also on margin, if you [indiscernible]. So we feel very confident about our short-term and long-term prospects in Fort Lauderdale. I think if you look at the change that we announced, we have added a couple of more destinations from Fort Lauderdale through the network reallocation, and the biggest constraint we have at Fort Lauderdale is date availability, but we're very very interested in more growth at Fort Lauderdale. I'll take Boston next. Boston, we've been working for many many years with Massport [ph] to make sure that we can secure the gates we need to get to the 200-flight a day level in Boston that we think the market requires, and courtesy of Massport, we actually now have secured gate space and we can get there. We are very very confident in our position in Boston right now. I did call out that we have -- had some RASM challenges in Boston, mostly on Boston-leisure tied to growth from a legacy airline. And frankly, if you look at our RASM results, we see some nice RASM acceleration in those markets over the last probably two quarters. And then I think if you get in the first quarter 2019 the competitive capacity trend -- actually it turns to be nicely for us. So we're optimistic that we have the formula to be successful in Boston. Given the geographic location, the market is absolutely positively made for an airline that specializes in point-to-point -- as a business model, that specializes in point-to-point; combining that with the product advantage that we have, whether it's free Wi-Fi, Live TV, on mainline aircraft, you name it, we're very upbeat in Boston.

As a quick follow-up; we talk a lot tech-ops being the largest portion of the structural cost initiatives but -- and there is the second largest component -- kind of the corporate proportion also has a lot of work of them, maybe the most work remaining. Could you give a quick update on that? And then maybe potential timing?

We continue to make progress on all four of the pillars of the structural cost program. Following the update we gave back at Investor Day and 2Q earnings, we have -- continue to make some progress. So the corporate pillar itself, that's obviously the support center -- to support our frontline crew members who supply our customers. And as you're probably aware, we want through a recent reorganization in our support senses that impacted around 10% of our crew members, these initiatives are never easy and it's a challenge as we go through those because it impacts some of our leaders and crew members but we've gone through that. In addition, a big part of the corporate initiative is associated with sourcing. So we have gone through suit-to-nice [ph] approach with regards to RFPs and looking at all of the $1.5 billion of third-party business partners spend that we have across JetBlue. And we're going back to both sides at contract-by-contract to make sure that we go through that and drive same as JetBlue. The final item really pertains to some of our IT infrastructure, the way we have that data, the way we support the overall business and initiatives that we take in there. So they are the primary three key blocks within the corporate pillar; and again, I'm pleased with the progress we're making, not only in the core initiatives but also while the problem as a whole. And as we talked about today, we're up $273 million of the $250 million to $300 million by 2020; so well on-track and happy with the progress we've made.

Your next question comes from the line of Jamie Baker of JPMorgan.

First, for Steve on the pilots; now that we're driving, you've got -- I guess about three or four months of operations, I guess three months of operation under your belt. Are there any inherent efficiencies that you're realizing or that you would expect to realize going forward relative to the -- sort of pre-contract construct? Also any commentary on pilot hiring challenges? Thanks in advance.

In terms of efficiencies, you know, the contract was just signed this past summer; so we're in the process of implementing a number of the IT changes to support the work role changes that we have ahead of us. So we're very early in terms of that part of the process. In terms of the pilot hiring, no, I mean we're confident with our pilot hiring plan, we are not seeing any challenges around the pipeline for pilots, we actually just announced late last this week that we're hiring, so if anybody is interested on the phone -- I'm only kidding, but yes, I know we're not seeing any challenges on the pilot pipeline either.

Follow-up probably for Robin; the topic of lifting the LaGuardia perimeter rule hasn't come up in a while, I know at one point JetBlue was somewhat against the idea but your fleet plan has changed somewhat since then. Any change in your personal view; I would think that particularly given the strength of meeting the Transcon that -- LaGuardia Transcons could be potentially lucrative?

No, my view hasn't changed. I mean, just for those who don't know the permits of role that Jamie is referring to; it's a port role, so it's different from the way -- the way the permits work in PCI, Port Authority of New York and New Jersey. I think we've been very vocal about that the airports in New York work in a comparative balance [ph], and if you were to lift the perimeter wall at LaGuardia, there would be a significantly more interest in LaGuardia to serve other markets and so the airlines like JetBlue have a very small slot portfolio, and we would be concerned that would put us at disadvantage. So we are open to conversation or not but we do think that any lifting the perimeter rule have to come with some kind of divestiture or slots to make sure LaGuardia pays with more competitive idol [ph] such that with all the construction going on on both, LaGuardia and JFK; LaGuardia at the moment and JFK is planned, now is really not the time to be making that change.

Your next question comes from the line of Savi Syth of Raymond James.

Steve, I wonder if you could help us think about the unit cost progression in 2019? Just entering kind of the first half phase, you know, more pilot cost pressure; and I think it gets better as you get into the second half. But any thoughts there and how we should think about that?

I'm very pleased with the progress that we've made during '18 and how we're finishing the year as we go into '19. I'm particularly pleased with the inflection that we saw at the back end of '18 as we go through quarter four because if you think about the capacity pulls that we took, both in Q3 and Q4, and you look at the original plan that we laid out back in January, we're absolutely executing to that. And the reason I say that is that we're coming out of '18 in a strong position as we enter into '19 where the structural cost program that continues to run as we go forward. If you think about the headwinds that we have from the upper contracts, the upper contracts gives us a 3 point headwind in the first half of next year but you can sort of see the guide that we gave at Investor Day in terms of [indiscernible] to 2019 CASM which absorbs that. And as we set a cycle through 2019, the structural cost program continues to ramp, will continue to have more P&L benefits associated with structural cost program but will continue to offset the cost headwind that we have with the upper contract. In addition, as I mentioned in my prepared comments; we will close 2018 with 11 restart aircraft and we'll be restarting it to 60 and 60 next year. So again, not from a tailwind perspective, we'll continue to help us with our CASM progression. So both as well being talked about in terms of the building blocks again drive margins up in 2019, the CASM contribution -- the CASM ex contribution to that will remain critical, and we're very pleased with the execution that we've seen so far at this structural cost program.

On the fuel side; how should we think about fuel efficiency, it seems like fuel efficiency is pretty flat here in 2018-2019. I know there has been some, and maybe last minute -- the capacity or instruments that makes that a little tougher as well and storm. How should we think about…

I think your comments are right, it's been sort of pretty flat in terms of how it's been going forward. The good news though is, you do see further fuel efficiency as we bring more A321s into the fleet, we're going to see something more near aircraft coming during 2019 as we start to take deliveries of those, and also with the restart of A320 fleet as that starts to ramp. On another same basis, you're going to see more fuel efficiency going forward. So I think the story has been sort of pretty flat but we're confident that we'll continue to see more efficiency as we migrate and go forward through to 2019.

Should we assume that 2020 should see a bigger improvement than 2019 or is 2019 a big year?

I think you will continue to see the ramp because as we mentioned, we will have the full impact of the restarting completed; as we go into 2020 you will have the full year impact of the additional shelves that we're restarting in 2019. We'll have a great proportion of NEOs [ph] in the fleet at that point from the deliveries we're taking next year, a greater proportion of 321s overall. So you will see sequential improvement in terms of benefits, in terms of fuel consumption by per RASM on an average basis as you migrate through the back of '18 through '19 onto '20.

Your next question comes from the line of Duane Pfennigwerth of Evercore ISI.

Most of my questions have been asked but I wanted to go back to one of the charts you showed at Investor Day showing the margin outperformance of the high density A321s. Margin improvement of Mint, as well as high density; what did you intend to communicate with that slide? And are you in any way sort of deemphasizing premium, deemphasizing Mint going forward? Thanks for taking the question.

At Investor Day we wanted to just illustrate how critical the A321 aircraft has been to our fleet; it's a fantastic aircraft, both in the mid-configuration, and also in the high density configuration, we have announced and deployed the first and second phase of our mint cities and may have done remarkably well from a margin perspective, and now as we look to the best and highest view to that asset, we're looking at the higher density version and actually the margin on that in terms of where we are deploying it largely be of our markets and single-day flight leisure markets. The margin is actually exceeding that on our Mint route; so it's really -- just a great news story all around, both in the mid-configuration but also in the all density configuration.

So we shouldn't have interpreted that you're going to be pulling down mint aircraft, replacing them with high density, it's just a different objective?

Yes, just a different objective and we are just trying to ensure that we put these planes and use them in the best and highest possible way out there.

Your next question comes from the line of Kevin Crissey of Citi.

On the 320 restyling, given the limited number of aircraft currently restyled, are you able to sell them as 162 seats yet or not? Marty St. George: Yes, we do have among close rotations and we take them -- we basically schedule them as they come out of the factory and we are [indiscernible].

And maybe a question for Joanna; now that you've been in your expanded role for a bit, can you talk about the changes you've been leading and how far along they are or maybe how you see things changing -- big picture discussion of what you see maybe different in the future than maybe the way things operated in the past? Thanks.

I mean, from my perspective there has been a few key areas that we are really drilling down on; first is cost. Obviously, we are absolutely aware of -- our investors use on cost also as we compare ourselves to other carriers, we need to start resetting our cost base for the future. We've done I think a really good job on revenue historically, and really growing RASM, also growing capacity; and at the end of the day we need to continue to do that. So as you see sort of both, top line and bottom line growth, we want to expand those margins. Part of the network changes has been sort of under my leadership along with rolling out and announcing the evolution of our fair options. So primary focus is cost, also looking at how do we continue to drive new revenue initiatives, and then the third point is operational performance. We are very mindful of the air space we operate into and ensuring that we continue to make investments to tactically improve our operational performance in our key focused cities.

JetBlue vacations for Q4; is there anything of note in terms of pluses and minuses for RASM in Q4 as it relates to vacations?

We're still working on closing out some of the operations -- some of the technical issues with our platform. We're a little bit behind in fourth quarter but we have other parts of the revenue mix that are over performing and that's what's created the guide that we laid out. The most important thing for us to make sure that we're ready for the first week of January because that is by far the biggest booking week of the year, and everything we're seeing right now makes us very confident that we're in a good spot. I think the other thing I'd add to that Kevin, if I may, because I think Marty made a great point about the challenges we've had with the cutover but I feel very confident about having everything in place for a strong 2019. As Marty says, we've got our leadership team in place now, and we're working through some of those cutover issues and so I expect 2019 to be a very strong year for vacations.

Your next question comes from the line of Dan McKenzie of Buckingham Research.

I'm wondering if you can just give us some insight into what the revenue contribution is from even more in mint-to-overall results today. So $7.7 billion in total revenue for this year, you know what percent of that comes from the premium cabin? And then I appreciate the shift to the denser aircraft but it doesn't -- it's not like the premium cabin growth is helping here; so I'm just wondering if you can just help us understand how you're thinking about the growth in the premium cabin space next year? So contribution today and growth next year is really what I'm trying to get at here. Marty St. George: We don't actually break out the Mint specifically, we definitely breakout even more and even more has been a fantastic contributor for us, it's well over $300 million right now. I think if you look at what's happened in the most recent quarter, our mid revenues -- and again, we don't want the growth this year, and then -- so I think it's important to make it clear I'm looking at the same-store sales because we can't take credit for all the new Mint routes. But for routes that has been open at least a year, Mint revenue was up 14%, and actually during that same period even more revenue was up 16%. So that actually has been very nicely accretive to our results. And I think back to the point that Joanna made earlier; what we laid out in Investor Day about the challenge of picking between high density 321 and the mid-configured 321 is the definition of a high-class problem, and we have two really good use to the airplane and our job is best and highest use, that's the most important thing for us. I'll also mention that specifically with Mint, we're very happy with the acceptance on the new route that we've added in, certainly the secondary cities from Boston and New York, and I think that really ties to the corporate account strength that we've been able to get from having such a high quality product. Certainly, we been to very very good corporate conference in Boston and a significantly improved corporate conference in New York from corporate customers who are travelers, sort of really desperately angling to get on the mint product.

And then, Marty the growth in premium cabinet where this motion met even more together, growth rate next year versus this year? Marty St. George: Actually, I don't want you guide that because we haven't even given the overall guidance but I will say we're very optimistic about what we're seeing right now as both of those -- I think it ties to more the scenes we've heard in earning season in general which is overall strength of the corporate market, and certainly mint and even more other areas where we're heavily exposed in a good way to that growth.

Second question here, this is really an IT question so I don't know if Esha [ph] is there or not but I'm just -- the question really is just about challenges in implementing the IT infrastructure necessary to troll out fair families 2.0. So I guess, I know it's probably year-off before you can execute on that but I'm just wondering what some of the factors might be that could accelerate or potentially delay that rollout?

We have been scoping the implementation requirements for -- involving corruption 2.0, perhaps we have several IT platforms involved; Datalex provides the shopping platform, Faber [ph] provides the reservation and booking platform behind it; those two systems need to speak in order for this to work. So we've been working with both business partners in earnest for the last several months trying to make sure that all the requirements are fully outlined, consistent with how we want to roll, and how we want to roll this out. So, yes, IT is a big list here, it's a long pole in the tent but we are confident that we're well on the path to ensuring that we can implement these changes in 2019.

And how many IT systems are involved Joanna?

I'm not the IT expert, so I'd say there is still at least Datalex and Faber [ph], I'm sure there's a few other systems that support those systems behind the scenes but those are the primary -- I think IBM as well, those are the primary systems that are involved in making this change.

Dan, I think the only other thing I would add to that are those not directly linked to the 2.0. We are also going through a RFP for new PSS or CFS as we call it because we never used the word passenger in JetBlue, we say customer but it's the same system. Hitch [ph] and his team have done a great job over the last several years moving our dependency of that core system away from the original holes that we have Datalex now for retailing, we have the IBM we do a lot of our self-service kiosks, we build our web services live on top of that. So all of those things mean that if we do make a decision to change CFS provider, it is nothing as -- I don't want to underplay that it would be significant but it will not be as significant as what we had to go back in the 2010 cover. So we're also navigating map at the same time as this to make sure that the timeline at the fair options is not jeopardized by any potential change in the CFS.

What's the timeframe for that decision possibly in rollout if you do make a change?

I'd say we haven't -- these things kind of -- you want to move -- you want to get the decisions quickly as you can but these are complex negotiations, there's lots of -- as we still with our E20 decision, there was a lot of value in letting it take as long as it took and to a certain extent I feel the same about this. So we're -- the teams are working through it, I would say we're definitely near the end of the process than the start, but I don't want to put an exact timeline on it because there are still lots of conversations ahead of us with the various parties that we're talking to.

Your next question comes from the line of Helane Becker of Cowen.

I think Robin last year or maybe Joanne, you had just talked about operational issues and the improvement that you've seen in; I know last year you had cited ATC issues in New York as one of the third quarter issue. So I was wondering if you could -- I don't know maybe quantify the improvement on your basis that you saw from either revenue terms or cost terms?

We made a number of strategic investments going into the summer, we tried to alleviate some of the operational concerns we had in the summer of 2017, those included very tactical off-conscious [ph] investments, so don't think about it as kind of spreading the creamy peanut butter over everything; it was adding some time on West Coast red eyes, we added some additional time for technicians to have access to the aircraft perform overnight maintenance, and we identified certain flights that had challenges with broken crew pairings; those are just some examples of what we did going to the summer. And if you look at the summer, we've also been working proactively with the FAA to try to get ahead of any ATC challenges that are actually present, I will point out that. August actually was a worst traffic control month than what we saw in August of 2017, and I think given some of the investments that we made, we did see some progress in terms of how JetBlue performed overall. We've seen an improvement of about 5 points compared to where we were last year on A14, and we've also held our completion factors. So I think all things trending in the right direction but the reality is that, JetBlue flies into the most congested airspace in the United States, and we need to be very mindful of the types of investments that we do make because just adding block does not solve ATC challenges. Robin and I were actually with the administrator last week, and I think we continue to focus on infrastructure investments, nextgen investments, focusing on the northeast corridor and how we can make improvements there because obviously, JetBlue benefits significantly from that. So, a multi-pronged approach but we are seeing improvements and have seen improvements this summer.

And then just on the fuel comment that was made earlier, I think 4% of fuel was -- I guess alternative, is that the right word to use. And I'm just kind of wondering, is that a scalable number? Can you get to something that is meaningful in terms of cost prediction using an alternative fuel blend?

I think with sustainable fuel, there are two sort of issues that you have to work through. First of all, to make sure that source of the fuel is truly sustainable, and something that can go overtime. And secondly, that the cost of getting that by fuel blend is equivalent or better to what you would get to sort of normal jet purchase. And we kind of took our time getting into this; Sophia Mendelsohn, who is our Director of Sustainability, she really understands this space very well. We've ended up with a business partner and a plan that we think overtime can scalp but we want to do it in a series of thoughtful steps to make sure we don't either A) jeopardize supply or B) Crave a cost to the airplane that's greater than what we would otherwise expect.

So just to follow-up briefly; is that like a 10-year thing or 5-year thing, how should we -- I mean, it's so small right now that obviously has the potential to really be meaningful to your costs.

No, I mean it will -- we haven't sort of shared sort of our internal forecast of how we think that will ramp up but it's definitely a priority for us to increase overtime. Also working with the worst fuel farms and infrastructure in different airports to make sure that we can supply into there as well.

Your next question comes from the line of Joseph DeNardi of Stifel.

Marty, just wondering if you could talk about demand for a second; it would seem like the incremental revenue you're expecting from the ancillary changes would suggest that consumer behavior hasn't changed a whole lot. So I'm wondering if you could just -- kind of talk to what that says about demand and should we look at that as effectively a fare increase which would kind of mitigate further pressure on fares or do you think that that's incremental to what you guys can do? Thank you. Marty St. George: I mean, honestly, I think if you look at the revenue environment we see right now I think the entire industry is trying to react to what we're seeing as far as a run-up in fuel prices. I don't really look at the bag fee as being a sign of lack of pricing strength. I think with what we're seeing in demand right now, especially in peak periods, we're definitely seeing prices rise. In the third quarter we led several fare increases that were successful in addition to change the inflary [ph] world. I don't -- my view is, in the environment that the industry is in right now we do need to recapture the impact of the fuel run-up; and I think if you look at the progression that we're showing right now between third quarter, you can back into the fourth quarter which -- based on the guidance we gave, the fuel price and RASM is sort of like 40% recapture. I think we're optimistic of good trajectory right now; so no, I don't look at it as a substitute at all.

I guess what I was asking was, it would seem like the incremental revenue you're expecting from that would suggest that demand can absorb that additional fare; is that what you're -- or that additional increase fare if you want to look at it that way, is that what you're saying? Marty St. George: No, I definitely agree with that, I think you're absolutely right and I think it's what we're seeing in the demand environment overall. And I think if you look at what we -- how we describe the more recent demand versus what we said earlier is that, during the peak -- the true peak period we're seeing acceleration and I think what they could be more interested in is that -- even in the trunk period we're starting to see demands [ph]. So I think you're absolutely right on that.

And then, Steve, just on the CapEx profile; I think there are some concern about what that looks like maybe beyond 2020 as the 2020 start to ramp up. So can you just talk about maybe your flexibility whether it be from a deferral standpoint or just aircraft/non-aircraft about your ability to kind of manage that down if the economic environment changes? Thank you.

We always look to build flexibility into the future order book. You'll recall, we have [indiscernible] a little bit over the last sort of 15 to 18 months. We deferred 13 aircrafts, nearly parts of last year, we then migrated through the 190 decision and we looked at the replacement aircraft as we went forward. So it's critical for me that we maintain a flexibility for every eventuality, and we work very closely with the OEMs when we put these contracts together. We have obviously outlined our CapEx guide, we would be very transparent with the order book, you can see that in the appendix of the materials we shared this morning. But we will and continue to maintain flexibility in terms of the delivery schedules and have a very post-symbiotic relationship with the OEMs that we deal with.

Your next question comes from the line of Susan [ph] Macquarie Capital.

All my questions were answered. Thank you.

And that concludes our third quarter 2018 conference call. Thanks for joining us. Have a great day.

And again, that will conclude today's conference. Thank you for your participation.