JetBlue(JBLU) - 2025 Q2 - Quarterly Report

Forward-Looking Information This section identifies forward-looking statements and outlines risks that could cause actual results to differ from projections Summary of Forward-Looking Information This section provides a safe harbor statement, identifying forward-looking statements and key risks impacting actual results - The report contains forward-looking statements covered by safe harbor provisions, identifiable by terms such as "expects," "plans," "intends," and "anticipates"[8] - Forward-looking statements involve risks and uncertainties, including those related to strategic operating plans, the competitive industry, fuel prices, maintenance costs, labor costs, the wind-down of the Northeast Alliance (NEA), cybersecurity, and global economic conditions[8] - Actual results may differ materially from forward-looking statements due to many factors, and readers are cautioned not to place undue reliance on these statements[8] Where You Can Find Other Information This section directs readers to the company's website and the SEC for additional public filings and information Availability of Company Information This section directs readers to the company's website and the SEC for access to public filings - JetBlue's website (www.jetblue.com) provides free downloads of SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K[9] - All SEC filings, including exhibits, are also available on the SEC's website at www.sec.gov[9](index=9&type=chunk) PART I. FINANCIAL INFORMATION This part presents JetBlue's condensed consolidated financial statements, including balance sheets, operations, cash flows, and notes Item 1. Financial Statements This section presents the condensed consolidated financial statements, including balance sheets, operations, cash flows, and related notes - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, reflecting all necessary adjustments for interim periods[28] - JetBlue operates as one reportable operating segment, air transportation services, managing business activities on a consolidated basis across various geographic regions[86][87] Consolidated Balance Sheets This section presents the consolidated balance sheets, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets Highlights (millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------------------- | :---------------------- | | Total Assets | $16,903 | $16,841 | | Total Current Assets | $3,807 | $4,258 | | Total Property and Equipment, net | $10,853 | $10,656 | | Total Liabilities | $14,495 | $14,190 | | Total Current Liabilities | $4,319 | $3,881 | | Long-Term Debt & Finance Lease Obligations | $7,740 | $8,147 | | Total Stockholders' Equity | $2,408 | $2,641 | - Total current assets decreased by $451 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in investment securities[11] - Total current liabilities increased by $438 million, mainly driven by higher air traffic liability and an increase in current maturities of long-term debt[14] Consolidated Statements of Operations This section presents the consolidated statements of operations, detailing revenues, expenses, and net income or loss for Q2 and H1 2025 and 2024 Consolidated Statements of Operations Highlights (Three Months Ended June 30, millions) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | | Total Operating Revenues | $2,356 | $2,428 | $(72) | (3.0)% | | Total Operating Expenses | $2,350 | $2,371 | $(21) | (0.9)% | | Operating Income (Loss) | $6 | $57 | $(51) | (89.5)% | | Net Income (Loss) | $(74) | $25 | $(99) | (396.0)% | | Basic EPS | $(0.21) | $0.07 | $(0.28) | (400.0)% | Consolidated Statements of Operations Highlights (Six Months Ended June 30, millions) | Metric | 2025 | 2024 | Change | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | | Total Operating Revenues | $4,496 | $4,637 | $(141) | (3.0)% | | Total Operating Expenses | $4,664 | $5,300 | $(636) | (12.0)% | | Operating Income (Loss) | $(168) | $(663) | $495 | 74.7% | | Net Income (Loss) | $(282) | $(691) | $409 | 59.2% | | Basic EPS | $(0.79) | $(2.02) | $1.23 | 60.9% | - Net loss for Q2 2025 was $74 million, a significant decline from $25 million net income in Q2 2024, primarily due to lower revenue and higher interest expense[110] Consolidated Statements of Comprehensive Income and Loss This section presents the consolidated statements of comprehensive income and loss for Q2 and H1 2025 and 2024 Comprehensive Income (Loss) Highlights (Three Months Ended June 30, millions) | Metric | 2025 | 2024 | | :-------------------------- | :---------------- | :---------------- | | Net Income (Loss) | $(74) | $25 | | Total Other Comprehensive Income (Loss) | $0 | $0 | | Comprehensive Income (Loss) | $(74) | $25 | Comprehensive Income (Loss) Highlights (Six Months Ended June 30, millions) | Metric | 2025 | 2024 | | :-------------------------- | :---------------- | :---------------- | | Net Loss | $(282) | $(691) | | Total Other Comprehensive Income | $5 | $3 | | Comprehensive Loss | $(277) | $(688) | - For the six months ended June 30, 2025, other comprehensive income was $5 million, primarily from changes in fair value of available-for-sale securities and derivative instruments[20] Condensed Consolidated Statements of Cash Flows This section presents the condensed consolidated statements of cash flows, detailing cash movements from operating, investing, and financing activities for H1 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, millions) | Metric | 2025 | 2024 | Change | | :-------------------------------------- | :---------------- | :---------------- | :---------------- | | Net cash provided by (used in) operating activities | $(1) | $190 | $(191) | | Net cash provided by (used in) investing activities | $429 | $(668) | $1,097 | | Net cash provided by (used in) financing activities | $(206) | $607 | $(813) | | Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | $222 | $129 | $93 | | Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | $2,370 | $1,446 | $924 | - Operating cash flow decreased by $191 million for H1 2025, primarily due to operating losses and net changes in working capital[144] - Investing activities generated $429 million in H1 2025, a significant improvement from a $668 million outflow in H1 2024, driven by net proceeds from investment securities and sale-leaseback transactions[145][146] Consolidated Statements of Stockholders' Equity This section presents the consolidated statements of stockholders' equity, detailing changes in equity components for Q2 and H1 2025 and 2024 Stockholders' Equity Highlights (June 30, 2025 vs. Dec 31, 2024, millions) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :----------------------- | :---------------------- | :---------------- | | Common Stock, par value | $5 | $5 | $0 | | Treasury stock, at cost | $(2,013) | $(2,005) | $(8) | | Additional paid-in capital | $3,372 | $3,320 | $52 | | Retained earnings | $1,037 | $1,319 | $(282) | | Accumulated other comprehensive income | $7 | $2 | $5 | | Total Stockholders' Equity | $2,408 | $2,641 | $(233) | - Retained earnings decreased by $282 million for the six months ended June 30, 2025, primarily due to the reported net loss[25] - Additional paid-in capital increased by $52 million for the six months ended June 30, 2025, driven by stock compensation expense and stock issued under the crewmember stock purchase plan[25] Notes to Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, covering accounting policies, revenue, debt, and other disclosures Note 1 - Summary of Significant Accounting Policies This note outlines the company's primary business activities and confirms the unaudited nature and preparation basis of the financial statements - JetBlue Airways Corporation provides air transportation services across the United States, Latin America, the Caribbean, Canada, and Europe[27] - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, reflecting all necessary adjustments for interim periods[28] Note 2 - Revenue Recognition This note details revenue recognition policies, breaking down operating revenues by source and discussing contract liabilities and loyalty program impacts Revenue by Source (Three Months Ended June 30, millions) | Revenue Source | 2025 | 2024 | | :-------------------------- | :---------------- | :---------------- | | Passenger travel | $1,998 | $2,085 | | Loyalty revenue - air transportation | $181 | $180 | | Loyalty revenue (other) | $128 | $114 | | Other revenue | $49 | $49 | | Total operating revenue | $2,356 | $2,428 | - Contract liabilities, primarily air traffic liability for passenger travel and loyalty programs, totaled $2,703 million at June 30, 2025, up from $2,614 million at December 31, 2024[32] - TrueBlue points redeemed for passenger travel were $357 million in H1 2025, while TrueBlue points earned and sold were $381 million[34] Note 3 - Long-term Debt, Short-term Borrowings and Finance Lease Obligations This note details long-term debt, short-term borrowings, and finance lease obligations, including principal payments and available credit facilities - Principal payments of $228 million were made on outstanding debt and finance lease obligations during the six months ended June 30, 2025[35] Long-term Debt and Finance Lease Obligations (June 30, 2025 vs. Dec 31, 2024, millions) | Category | June 30, 2025 | Dec 31, 2024 | | :-------------------------------------- | :----------------------- | :---------------------- | | Secured Debt | $7,090 | $7,189 | | Unsecured Debt | $1,431 | $1,429 | | Total debt and finance lease obligations | $8,521 | $8,618 | | Less: Debt issuance costs | $(70) | $(79) | | Less: Current maturities | $(711) | $(392) | | Long-term debt and finance lease obligations | $7,740 | $8,147 | - The company has undrawn revolving credit facilities with Citibank ($600 million) and Morgan Stanley (up to $200 million), with no outstanding balances as of June 30, 2025[42][43][45] Note 4 - Earnings (Loss) Per Share This note presents basic and diluted earnings per share (EPS) for current and prior periods, including anti-dilutive common stock equivalents - Basic and diluted loss per common share for Q2 2025 was $(0.21), compared to earnings of $0.07 in Q2 2024[47] - Basic and diluted loss per common share for H1 2025 was $(0.79), compared to $(2.02) in H1 2024[47] - Anti-dilutive common stock equivalents excluded from diluted loss per share computation increased significantly in 2025 due to the 2.50% convertible senior notes due 2029[46] Note 5 - Crewmember Retirement Plan This note details company contributions to the crewmember retirement plan, including 401(k) matching and non-elective pilot contributions - Total 401(k) company match and non-elective crewmember contribution expense was $74 million for Q2 2025 (up from $61 million in Q2 2024) and $149 million for H1 2025 (up from $127 million in H1 2024)[52] - Pilots receive a non-elective Company contribution of 17% of eligible compensation per their collective bargaining agreement[51] Note 6 - Commitments and Contingencies This note outlines significant commitments, including flight equipment purchases and aircraft deliveries, and discusses ongoing legal proceedings Flight Equipment Commitments (millions) | Year | Total | | :---------------- | :------ | | Remainder of 2025 | $496 | | 2026 | $717 | | 2027 | $359 | | 2028 | $420 | | 2029 | $324 | | Thereafter | $3,775 | | Total | $6,091 | Committed Aircraft Deliveries | Year | Airbus A220 | Airbus A321neo | Total | | :---------------- | :----------- | :------------- | :---- | | Remainder of 2025 | 12 | 1 | 13 | | 2026 | 16 | 1 | 17 | | 2027 | 7 | — | 7 | | 2028 | 9 | — | 9 | | 2029 | 7 | — | 7 | | Thereafter | 1 | 44 | 45 | | Total | 52 | 46 | 98 | - The company entered into definitive agreements to sell its remaining owned Embraer E190 fleet (25 airframes, 59 engines), with sales expected from Q3 2025 through Q2 2026[55] - A lawsuit was filed by American Airlines on April 28, 2025, alleging breach of contract under a revenue-sharing agreement related to the Northeast Alliance (NEA), which JetBlue disputes[68] Note 7 - Fair Value This note explains fair value measurement hierarchy (Level 1, 2, 3) and the classification of cash equivalents and investment securities - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs for similar assets/liabilities), and Level 3 (unobservable inputs)[71] - Cash equivalents and restricted cash equivalents are primarily classified as Level 1, while available-for-sale investment securities are mostly Level 2, with some Level 3[72][73][74] Note 8 - Investments This note details the investment portfolio, including available-for-sale and held-to-maturity debt securities, and equity investments Investments in Debt Securities (June 30, 2025 vs. Dec 31, 2024, millions) | Category | June 30, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------------------- | :---------------------- | | Available-for-sale investment securities | $885 | $1,609 | | Held-to-maturity investment securities | $342 | $404 | | Total investment in debt securities | $1,227 | $2,013 | - A gain of $5 million on available-for-sale securities was recorded in Q2 and H1 2025[79] - Total equity investments were $197 million at June 30, 2025, including equity method investments ($97 million) and JetBlue Ventures equity investments ($88 million)[81] Note 9 - Accumulated Other Comprehensive Income (Loss) This note details accumulated other comprehensive income (loss), primarily driven by changes in fair value of available-for-sale securities - Accumulated other comprehensive income was $7 million at June 30, 2025, up from $2 million at December 31, 2024, primarily due to changes in fair value of available-for-sale securities[25][83] - As of June 30, 2025, there were no outstanding fuel derivative contracts[83] Note 10 - Special Items This note details special items impacting financial results, including voluntary opt-out costs and prior period Spirit-related expenses Special Items (Three Months Ended June 30, millions) | Special Item | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Voluntary opt-out costs | $24 | $1 | | Spirit-related costs | $0 | $0 | | Embraer E190 fleet transition costs | $0 | $0 | | Total special items | $24 | $1 | Special Items (Six Months Ended June 30, millions) | Special Item | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Voluntary opt-out costs | $24 | $16 | | Spirit-related costs | $0 | $532 | | Embraer E190 fleet transition costs | $0 | $15 | | Total special items | $24 | $563 | - Spirit-related costs of $532 million were recognized in H1 2024 due to the termination of the Merger Agreement, including the write-off of prepayment and breakup fees[85] Note 11 - Operating Segments and Geographic Information This note confirms the company operates as a single air transportation segment and provides operating revenues by geographic region - JetBlue operates as a single reportable operating segment: air transportation services, managed on a consolidated basis[86] Operating Revenues by Geographic Region (Three Months Ended June 30, millions) | Region | 2025 | 2024 | | :-------------------------- | :---------------- | :---------------- | | Domestic & Canada | $1,443 | $1,504 | | Caribbean & Latin America | $772 | $777 | | Atlantic | $141 | $147 | | Total operating revenue | $2,356 | $2,428 | - Domestic & Canada revenue decreased by $61 million (4.1%) in Q2 2025, while Caribbean & Latin America and Atlantic regions also saw slight declines[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and results of operations, covering performance, strategic developments, revenues, expenses, and liquidity - Operating results are expected to fluctuate significantly due to economic conditions, weather, fuel costs, and other factors outside of control, making quarter-over-quarter comparisons potentially not meaningful[93] - The company expects expenses to continue increasing due to wage rate pressures, additional aircraft acquisitions, and fleet aging[93] Overview This section provides an overview of Q2 2025 results, recent strategic developments, operational performance, and the company's liquidity - Q2 2025 operating income was $6 million, down from $57 million in Q2 2024, primarily due to softening demand and lower consumer confidence, partially mitigated by lower aircraft fuel costs[94] - JetForward, the company's strategic framework, focuses on reliable service, building the best east coast leisure network, offering valuable products, and securing a financial future[96] - As of June 30, 2025, eight aircraft were grounded due to FAA-mandated Pratt & Whitney engine inspections, with groundings expected to peak in 2025 and resolve by the end of 2027[107][108] Second Quarter 2025 Results This section summarizes key operating metrics and financial performance for Q2 2025, highlighting changes from the prior year Q2 2025 Key Operating Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | System ASMs (capacity) | -1.5% | N/A | -1.5% | | Operating revenue | $2.4 billion | $2.428 billion | -3.0% | | Operating expense | $2.4 billion | $2.371 billion | -0.9% | | Operating expense, excluding special items | $2.3 billion | $2.370 billion | -1.9% | | CASM | 14.13 cents | 14.04 cents | +0.6% | | CASM ex-fuel | 10.86 cents | 10.24 cents | +6.0% | - Operating income for Q2 2025 was $6 million, a decrease from $57 million in Q2 2024, primarily due to softening demand[94] Recent Developments This section highlights recent operational improvements, network adjustments, new strategic collaborations, and current liquidity - On-time performance improved to 77.3% in Q2 2025 (from 74.8% in Q2 2024), and completion factor increased to 99.6% (from 98.8%)[98] - Network adjustments include ending service to Miami, shifting Seattle to seasonal, and launching new seasonal Mint service from Newark and Orlando to Las Vegas, as well as new transatlantic routes[100][101] - New collaborations include Blue Sky with United Airlines for expanded flight options and loyalty benefits, and the rebranding of JetBlue Travel Products to Paisly, LLC, a full-service managed travel services company[102] - At June 30, 2025, liquidity was $3.4 billion, including unrestricted cash, cash equivalents, short-term investments, and long-term marketable securities, plus a $600 million undrawn Citibank line of credit[106] Results of Operations (Three Months Ended June 30, 2025 vs. 2024) This section analyzes financial performance for Q2 2025 vs. 2024, detailing revenues, expenses, and net results - Reported a net loss of $74 million and operating income of $6 million for Q2 2025, compared to net income of $25 million and operating income of $57 million for Q2 2024[110] - Adjusted net loss was $58 million and adjusted operating income was $30 million for Q2 2025, compared to adjusted net income of $26 million and adjusted operating income of $58 million for Q2 2024[110] Operating Revenues This section details operating revenues for Q2 2025, analyzing changes in passenger and other revenue streams Operating Revenues (Three Months Ended June 30, millions) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Passenger revenue | $2,179 | $2,265 | $(86) | (3.8)% | | Other revenue | $177 | $163 | $14 | 8.1% | | Total operating revenues | $2,356 | $2,428 | $(72) | (3.0)% | - Passenger revenue decreased by 3.8% due to a 1.5% reduction in capacity (ASMs) and a 3.9% reduction in revenue passengers[111] - Other revenue increased by 8.1%, primarily driven by higher customer spend related to loyalty revenue from TrueBlue points[111] Operating Expenses This section analyzes operating expenses for Q2 2025, focusing on changes in fuel, labor, maintenance, and special items Operating Expenses (Three Months Ended June 30, millions) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Aircraft fuel | $504 | $626 | $(122) | (19.4)% | | Salaries, wages and benefits | $852 | $784 | $68 | 8.5% | | Maintenance, materials and repairs | $198 | $150 | $48 | 31.9% | | Special items | $24 | $1 | $23 | NM | | Total operating expenses | $2,350 | $2,371 | $(21) | (0.9)% | - Aircraft fuel expense decreased by 19.4% due to a 16.2% decrease in average fuel price and a 3.8% decrease in fuel consumption[113] - Salaries, wages and benefits increased by 8.5% due to a 9% pilot union contract wage rate increase effective August 2024[114] Other Income (Expense) This section details other income and expenses for Q2 2025, including interest expense, interest income, and investment gains or losses Other Income (Expense) (Three Months Ended June 30, millions) | Category | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Interest expense | $(147) | $(63) | $(84) | NM | | Interest income | $33 | $18 | $15 | 86.8% | | Gain (loss) on investments, net | $3 | $(2) | $5 | NM | | Total other expense | $(100) | $(26) | $(74) | NM | - Interest expense increased by $84 million, primarily due to the financing of the TrueBlue program, new equipment notes, and incremental failed aircraft sale-leaseback transactions[121] - Interest income increased by 86.8% due to an increase in short-term investments from TrueBlue Financings proceeds[121] Results of Operations (Six Months Ended June 30, 2025 vs. 2024) This section analyzes financial performance for H1 2025 vs. 2024, detailing revenues, expenses, and net results - Reported a net loss of $282 million and operating loss of $168 million for H1 2025, significantly improved from net loss of $691 million and operating loss of $663 million in H1 2024[124] - The $409 million decrease in net loss year-over-year was primarily due to the $532 million write-off of Spirit-related costs in March 2024, which did not recur in H1 2025[124] Operating Revenues This section details operating revenues for H1 2025, analyzing changes in passenger and other revenue streams Operating Revenues (Six Months Ended June 30, millions) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Passenger revenue | $4,149 | $4,319 | $(170) | (4.0)% | | Other revenue | $347 | $318 | $29 | 9.5% | | Total operating revenues | $4,496 | $4,637 | $(141) | (3.0)% | - Passenger revenue decreased by 4.0% due to a 2.9% reduction in capacity (ASMs) and a 3.6% reduction in revenue passengers[125] - Other revenue increased by 9.5%, primarily from higher loyalty revenue from TrueBlue points[125] Operating Expenses This section analyzes operating expenses for H1 2025, focusing on changes in fuel, labor, depreciation, maintenance, and special items Operating Expenses (Six Months Ended June 30, millions) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Aircraft fuel | $1,015 | $1,251 | $(236) | (18.9)% | | Salaries, wages and benefits | $1,714 | $1,607 | $107 | 6.7% | | Depreciation and amortization | $339 | $322 | $17 | 5.4% | | Maintenance, materials and repairs | $389 | $283 | $106 | 37.6% | | Special items | $24 | $563 | $(539) | (95.8)% | | Total operating expenses | $4,664 | $5,300 | $(636) | (12.0)% | - Aircraft fuel expense decreased by 18.9% due to a 14.9% decrease in average fuel price and a 4.7% decrease in fuel consumption[128] - Special items decreased significantly by $539 million (95.8%) due to the $532 million Spirit-related costs in H1 2024 not recurring in H1 2025[134][138] Other Income (Expense) This section details other income and expenses for H1 2025, including interest expense, interest income, and investment gains or losses Other Income (Expense) (Six Months Ended June 30, millions) | Category | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Interest expense | $(295) | $(115) | $(180) | NM | | Interest income | $71 | $37 | $34 | 90.6% | | Gain (loss) on investments, net | $4 | $(23) | $27 | NM | | Total other expense | $(197) | $(73) | $(124) | NM | - Interest expense increased by $180 million, primarily due to the financing of the TrueBlue program, new equipment notes, and incremental failed aircraft sale-leaseback transactions[136] - Gain on investments, net, was $4 million in H1 2025, a significant improvement from a $23 million loss in H1 2024, which was primarily due to a mark-to-market adjustment on JBV equity investments[137] Operational Statistics This section presents key operational statistics for Q2 and H1 2025, including passenger numbers, capacity, load factor, and unit costs Key Operational Statistics (Three Months Ended June 30) | Metric | 2025 | 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Revenue passengers (thousands) | 9,973 | 10,375 | (3.9)% | | ASMs (millions) | 16,634 | 16,887 | (1.5)% | | Load factor | 81.9% | 84.0% | (2.1) pts | | Operating revenue per ASM (cents) | 14.17 | 14.38 | (1.5)% | | Operating expense per ASM (cents) | 14.13 | 14.04 | 0.6% | | Operating expense per ASM, excluding fuel (cents) | 10.86 | 10.24 | 6.0% | | Average fuel cost per gallon | $2.40 | $2.87 | (16.2)% | Key Operational Statistics (Six Months Ended June 30) | Metric | 2025 | 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Revenue passengers (thousands) | 19,237 | 19,960 | (3.6)% | | ASMs (millions) | 32,242 | 33,200 | (2.9)% | | Load factor | 81.3% | 81.9% | (0.6) pts | | Operating revenue per ASM (cents) | 13.95 | 13.97 | (0.2)% | | Operating expense per ASM (cents) | 14.47 | 15.96 | (9.4)% | | Operating expense per ASM, excluding fuel (cents) | 11.15 | 10.40 | 7.1% | | Average fuel cost per gallon | $2.48 | $2.92 | (14.9)% | - Aircraft utilization decreased by 1.9% for Q2 and 2.9% for H1 2025, with an average of 286 operating aircraft in Q2 2025[139] Liquidity and Capital Resources This section discusses liquidity, capital resources, and future financing plans, including cash flow and working capital analysis - At June 30, 2025, the company had $3.4 billion in liquidity (unrestricted cash, equivalents, investments) and a $600 million undrawn Citibank line of credit, deemed sufficient for the next 12 months[142] - Future financing may involve issuing capital stock, debt, or other equity securities, which could dilute existing stockholders or impose restrictive covenants[141] Analysis of Cash Flows This section analyzes cash flows from operating, investing, and financing activities for H1 2025 - Cash flows from operating activities were $(1) million for H1 2025, a decrease from $190 million in H1 2024, primarily due to operating losses and changes in working capital[144] - Investing activities generated $429 million in H1 2025, driven by net proceeds from investment securities and sale-leaseback transactions, a significant improvement from a $668 million outflow in H1 2024[145] - Financing activities resulted in a net outflow of $206 million in H1 2025, mainly due to $228 million in payments on outstanding debt and finance lease obligations[147] Working Capital This section discusses working capital position, detailing the deficit and factors contributing to its decrease as of June 30, 2025 - Working capital deficit was $512 million at June 30, 2025, a decrease of $889 million from a $377 million surplus at December 31, 2024[150] - The decrease in working capital is attributed to fewer investment securities, higher current air traffic liability (seasonal), and an increase in current maturities of long-term debt ($325 million convertible senior notes becoming current)[150] Other (Shelf Registration) This section notes the filing of an automatic shelf registration statement for future securities offerings to fund corporate purposes - An automatic shelf registration statement was filed on February 27, 2025, allowing for future offerings of various securities to fund development, commercialization, debt repayment, or general corporate purposes[152] Contractual Obligations This section details material cash requirements for contractual obligations, including debt, leases, and purchase commitments, and confirms covenant compliance Material Cash Requirements for Contractual Obligations (millions) | Obligation Type | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :-------------------------- | :---------------- | :--- | :--- | :--- | :--- | :--------- | :---- | | Debt and finance lease obligations | $473 | $1,255 | $934 | $1,011 | $2,215 | $5,816 | $11,704 | | Operating lease obligations | $76 | $137 | $127 | $109 | $93 | $1,024 | $1,566 | | Flight equipment purchase obligations | $496 | $717 | $359 | $420 | $324 | $3,775 | $6,091 | | Other obligations | $297 | $405 | $403 | $435 | $297 | $11 | $1,848 | | Total | $1,342 | $2,514 | $1,823 | $1,975 | $2,929 | $10,626 | $21,209 | - The company was in compliance with the material covenants of its debt and lease agreements as of June 30, 2025[154] Aircraft This section details the operating fleet composition, ownership, average age, and committed future aircraft deliveries Operating Fleet as of June 30, 2025 | Aircraft Type | Aircraft Count | | :-------------------------- | :------------- | | Airbus A220 | 48 | | Airbus A320 | 10 | | Airbus A320 Restyled | 119 | | Airbus A321 | 28 | | Airbus A321 with Mint | 35 | | Airbus A321neo | 16 | | Airbus A321neo with Mint | 10 | | Airbus A321neoLR with Mint | 11 | | Embraer E190 | 9 | | Total | 286 | - Of the operating fleet, 266 aircraft are owned, 19 are operating leases, and one is a finance lease; the average age of the operating fleet was 12 years[156] - Committed aircraft deliveries total 98 aircraft, including 52 Airbus A220s and 46 Airbus A321neos, with deliveries scheduled through 2029 and thereafter[157] Off-Balance Sheet Arrangements This section confirms no material changes to off-balance sheet arrangements from previous 2024 Form 10-K disclosures - There have been no material changes to off-balance sheet arrangements from the information provided in the 2024 Form 10-K[160] Critical Accounting Policies and Estimates This section confirms no material changes to critical accounting policies and estimates from previous 2024 Form 10-K disclosures - There have been no material changes to critical accounting policies and estimates from the information provided in the 2024 Form 10-K[161] Regulation G Reconciliation of Non-GAAP Financial Measures This section provides reconciliations of non-GAAP financial measures, such as operating expenses and CASM ex-fuel, to comparable GAAP measures - Non-GAAP financial measures, such as Operating Expenses ex-fuel and CASM ex-fuel, are presented to provide useful supplemental information by excluding items beyond the company's control (e.g., fuel costs) or non-recurring special items[163][165] Reconciliation of Operating Expense and CASM, Excluding Fuel (Three Months Ended June 30) | Metric | 2025 ($ millions) | 2024 ($ millions) | Change (%) | 2025 (cents/ASM) | 2024 (cents/ASM) | Change (%) | | :-------------------------------- | :---------------- | :---------------- | :--------- | :----------------- | :----------------- | :--------- | | Total operating expenses | $2,350 | $2,371 | (0.9) | 14.13 | 14.04 | 0.6 | | Less: Aircraft fuel | $504 | $626 | (19.4) | 3.03 | 3.71 | (18.2) | | Less: Other non-airline expenses | $16 | $15 | 4.1 | 0.10 | 0.09 | 5.7 | | Less: Special items | $24 | $1 | NM | 0.14 | — | NM | | Operating expenses, excluding fuel | $1,806 | $1,729 | 4.4 | 10.86 | 10.24 | 6.0 | Reconciliation of Operating Expense and CASM, Excluding Fuel (Six Months Ended June 30) | Metric | 2025 ($ millions) | 2024 ($ millions) | Change (%) | 2025 (cents/ASM) | 2024 (cents/ASM) | Change (%) | | :-------------------------------- | :---------------- | :---------------- | :--------- | :----------------- | :----------------- | :--------- | | Total operating expenses | $4,664 | $5,300 | (12.0) | 14.47 | 15.96 | (9.4) | | Less: Aircraft fuel | $1,015 | $1,251 | (18.9) | 3.15 | 3.77 | (16.5) | | Less: Other non-airline expenses | $32 | $32 | 1.1 | 0.10 | 0.10 | 4.1 | | Less: Special items | $24 | $563 | (95.8) | 0.07 | 1.69 | (95.7) | | Operating expenses, excluding fuel | $3,593 | $3,454 | 4.0 | 11.15 | 10.40 | 7.1 | Adjusted Net Income (Loss) and EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :---------------------------------------------------------------- | :----- | :----- | | Net income (loss) | $(74) | $25 | | Add back: Special items | $24 | $1 | | Less: Income tax benefit related to special items | $6 | $1 | | Less: Gain (loss) on investments, net | $3 | $(2) | | Less: Income tax benefit (expense) related to gain (loss) on investments, net | $(1) | $1 | | Net income (loss) excluding special items and gain (loss) on investments | $(58) | $26 | | Basic EPS excluding special items and gain (loss) on investments | $(0.16) | $0.08 | | Diluted EPS excluding special items and gain (loss) on investments | $(0.16) | $0.08 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details market risk exposure, focusing on financial impact from fluctuations in aircraft fuel prices and interest rates - No material changes in market risks from the 2024 Form 10-K, except as described in this section[178] Aircraft Fuel This section assesses the financial impact of hypothetical changes in aircraft fuel prices and confirms no outstanding fuel hedging contracts - A hypothetical 10% increase in the June 30, 2025, cost per gallon of fuel would increase aircraft fuel expense by approximately $189 million over the next 12 months[179] - As of June 30, 2025, the company did not have any outstanding fuel hedging contracts[179] Interest This section analyzes the impact of hypothetical interest rate changes on variable-rate debt and investment income - $6.8 billion of debt and finance lease obligations have fixed interest rates, while the remaining $1.7 billion have floating interest rates[180] - A hypothetical 100 basis point increase in interest rates year-over-year would increase annual interest expense by approximately $17 million[180] - A hypothetical 100 basis point decrease in interest rates would decrease interest income from cash and investment balances by approximately $16 million[181] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and reports no material changes in internal control over financial reporting - Management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[182] Disclosure Controls and Procedures This section describes the design of disclosure controls and procedures and management's conclusion on their effectiveness - Disclosure controls and procedures are designed to ensure that information required for SEC reports is recorded, processed, summarized, and reported timely to management[182] Changes in Internal Control Over Financial Reporting This section reports no material changes in internal control over financial reporting during Q2 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[183] PART II. OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, other disclosures, and a list of exhibits filed with the report Item 1. Legal Proceedings This section refers to Note 6 for details on legal proceedings and claims, generally incidental to ordinary business - The company is party to various legal proceedings and claims, mostly in the ordinary course of business, with additional information provided in Note 6 of the financial statements[184] Item 1A. Risk Factors This section confirms no material changes to risk factors previously disclosed in the 2024 Form 10-K - There have been no other material changes from the risk factors associated with the business previously disclosed in the 2024 Form 10-K[185] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section reports no unregistered sales of equity securities, use of proceeds, or issuer purchases during the period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the period[186] Item 5. Other Information This section confirms no 8-K disclosures, no material changes to board nominee procedures, and no insider trading arrangements - No disclosures in lieu of reporting on a Current Report on Form 8-K were made[187] - No material changes to the procedures by which security holders may recommend nominees to the board of directors occurred[187] - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[188] Item 6. Exhibits This section lists all exhibits filed as part of the 10-Q report, including certifications, XBRL taxonomy, and compensatory plans - The report includes exhibits such as Form of Performance Stock Unit Award Agreement, List of Subsidiaries, Rule 13a-14(a)/15d-14(a) Certifications of the CEO and CFO, and XBRL taxonomy documents[189] SIGNATURE This section contains the formal signature, certifying the report has been duly authorized and signed on behalf of the company Report Signature This section contains the formal signature, certifying the report has been duly authorized and signed on behalf of the company - The report is formally signed by Dawn Southerton, Vice President, Controller (Principal Accounting Officer) on July 29, 2025[193]