JetBlue Airways Corp (JBLU) 2004 Q3 法說會逐字稿

Good morning everyone and welcome to JetBlue's third quarter 2004 earnings conference call. We have on the call today David Neeleman, JetBlue's Chief Executive Officer, and John Owen, the Company's Chief Financial Officer.

As a reminder, this call contains statements of a forward-looking nature which represent managements beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties, and assumptions, and are based on information currently available. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including, without limitation, the extremely competitive industry, the Company's ability to implement it's growth strategy, including the integration of EMBRAER 190 aircraft enters operations, the Company's significant fixed obligations and its reliance on high daily aircraft utilization, increases in maintenance costs, fuel prices and interest rates, the Company's dependence on the New York market, seasonal fluctuations and its operating results, it's reliance on sole suppliers, government regulation, the loss of key personnel and potential problems with its workforce, the potential liability associated with the handling of the Company's consumer data and future acts of terrorism, or the threat of such acts or escalation of U.S. military involvement overseas.

Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission's filing, including but not limited to, the Company's 2003 annual report on Form 10- K and quarterly reports on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this call. At this time, I would like to turn the call over to David Neeleman for opening remarks.

Thank you, Anthony and thank you everyone for joining us today. As most of you have seen, we have released our third quarter results for today. Although we are not completely happy with the results given a lot of challenging things that we had happen to us in the third quarter. I think particularly after listening to portions of yesterday's calls and earnings announcements, we are, I think, feeling relatively better and are of course disproportionately better than, you know, a lot of folks in our industry. So I guess we are happy about that and you know, I think that's a credit to our product and brand and our people and just a tremendous job that they are doing to take care of our customers. I think when it is all said and done, I think that is what makes us feel best about our Company is the tremendous amount of loyalty we have from our our customers.

I wanted to talk first about the hurricanes. Obviously, four major hurricanes that effected our Florida markets, which account for almost 40% of our total ASMs, and of course we were impacted by that. We certainly had a drop of revenue from people who would have gone to Florida and didn't book, obviously. We canceled 464 flights because of it, and those of you who fly on JetBlue know that that's one thing we hate to do. We hate to cancel flights. We were able to add some extra sections to help our -- run some rescue missions down in Florida to get people out of there, and did that I think quite aggressively. But in doing so, we ran a lower load factor on those flights, especially on the southbound portion of them. So that could have affected our load factor a little bit.

It is really tough to tell of the exact impact of the hurricane on our revenue, but we have done our best to estimate it at about $8 - $10 million of revenue. We also had some increased costs, some over-time pay, and some interrupted trip expense, and estimated that at about $1million. So it was tough. Particularly on our completion. We really pride ourselves in never cancelling flights and having close to 100%, or 99.9% of our flight completed and obviously our completion suffered in the quarter with 464 canceled flights.

I want to talk a little bit about fuel. Obviously, like the rest of the industry, we are suffering from the impact of increasing fuel prices. We had an average price per gallon in the third quarter of $1.08, which compared obviously negatively to the $0.81 we had last year at the same time. We did a little fuel neutral calculation, and obviously figured that our operating margin would have been 4.5 points higher - 4.5 points higher had it not been for that difference in the fuel price that we had year-over-year which would have been about $17 million and would have lowered our CASM by $0.29.

It's interesting to note, and John will go over this more in high comments, but on a fuel neutral basis our CASM was actually down year-over-year, which is a great sign and really speaks to our focus on costs, about 2.4%. So we are rabidly focused on cost here and obviously the run-up in fuel costs have only heightened our focus on that. We are working on all kind of things to lower our fuel consumption. We think there are some things we can do on some AFU [ph] usage and some single engine taxis and some other things. But our flight ops department and our system operations have done a fantastic job in doing everything we can do to help us with our fuel conservation during this really expensive time. Our fuel represented 23% of our third quarter operating expenses and you know, with crude topping $50 a barrel, we are obviously making every effort possible, like I said, to be more fuel efficient. It is just going to become more difficult as we go forward.

Just to review our hedge position for the fourth quarter, I will talk more about the fourth quarter in a minute. We have about 35% of our -- of what we expect to use in the fourth quarter just over $25 a barrel and then in 2005, we are 20% hedged at $30 a barrel. You know, obviously we are looking to add to those positions but not at these levels and we are pretty happy to see the pull back in fuel the last couple of days and hope it continues. And we are looking forward to that eventuality, if it happens, and if do, we will certainly go a lot deeper and wider on our fuel hedges. I think all of us have learned a big lesson from this run-up in prices.

Obviously -- also negatively impacted in the third quarter was a tough yield environment. You know, yield in RASMs are down year-over-year. That was obviously primarily impacted on our Trans Con [ph] market. We had a great third quarter last year and Trans Con [ph] did very, very well. It wasn't until the fourth quarter of last year that we started to see that market deteriorate with the increased capacity that was added in the fourth quarter. So obviously, going forward to the fourth quarter those comparisons get a lot easier, and I will talk more about that when I talk about the fourth quarter.

But, you know, what we are seeing obviously in the revenue environment, we've seen a lot of capacity, like I said, in transcon and we've seen some really low pricing in Florida. I think that's probably a lot of it is a result of people trying to stimulate Florida again, and what we are calling the post hurricane hangover. Where people are trying to decide, is it good to go back to Florida? Is it something that we really want to do at this point in time. Particularly from our competitors' standpoint , we have seen some really low fares. Some fares even as low as $39 to Fort Lauderdale, by one of our competitors in particular, and we've had to get close to matching. which has obviously had effect on our revenues. Like I mentioned on the last phone call, we are committed to staying competitive for our customers.

Now, as we go forward, I think there maybe a silver lining, I think in this whole run-up in fuel prices. We are starting to see some really rationality when it comes to capacity and we are seeing some good stuff on the Trans Con [ph], really good stuff. American has decided to discontinue their JFK Long Beach service. It is interesting to note that last year they had 3 flights a day in that market -- JFK Long Beach, and they also had 3 to Orange County. We had 8 Long Beaches at this time last year. So that's a total of 14 flights. If you look at -- as of November 1-- now there will be no Orange County flights, there will be on American, no Long Beach flights on American, and we will only have 6. From 14 to 6, that's a tremendous difference in capacity and kind of that south of L.A. market, and we'll be the only ones that have nonstop service south of L.AX from New York on a nonstop basis. So we are happy about that. We're also seeing some pull backs on some of American's service out of Boston to Fort Lauderdale, and some LaGuardia - Fort Lauderdale, and some Laguardia - Fort Lauderdale, and some Fort Lauderdale - LAX, and LaGuardia - MCO.

Also, I think on the transcon United is going to their PS service on the transcon and by our calculations, we are trying to -- coach seats will be down 42% by the time we get through the end of the first quarter when that service is fully on board, which lowers the New York to San Francisco by 10% of all seats, and 5% in the New York - LA market. That also is kind of on the heels of America West that had at the peak December, 12 transcon flights from both New York and the West Coast, and Washington and the West Coast. They had 12 flights a day and they are down to about five. So a lot of capacity coming out and I think it's obviously -- some of it has to do with the fuel prices. It is making people get a lot more rational.

I think in one area where we are not seeing a lot of rational behavior is Delta. We have seen some substantial losses from Delta and, you know, even with I guess the tentative pilot agreement they announced today, if you look at the losses that they experienced in the quarter, and even minus obviously the pilot deal, whatever that number would be in quarters. You are still seeing they would obviously be losing money and we just got some second quarter data on -- O&D data from JFK to Fort Lauderdale, West Palm Beach, Orlando, Tampa and Fort Myers, and in all those markets we have better RASM premiums than [indiscernible ] does. 29% in Fort Lauderdale, 53% in West Palm Beach, 33% in Orlando, 36% in Tampa, and 105% better RASM in Fort Myers. We also have better First Boston numbers, and although our RASM was a bit lower than Delta's we see that their RASMs declined 17% in Fort Lauderdale, 16% in Orlando, and 14% in Tampa.

I guess the bottom line is -- like I started the call by telling you, we've got a great product. People love flying us and there is some irrational behavior in our markets with the high fuel prices, we don't think it is sustainable over the long term, and when the market turns, I think we are going to be well positioned for it.

I will talk a little bit --just another minute about Florida capacity. Because there is a lot of talk about that. How this is the next transcon and we feel really good about our position in the New York to Florida market, vis-a-vis capacity. It is true that we have added a lot of capacity in our New York to Florida markets. We think they needed the capacity increases. We've done very well there in their markets. We do well in the winter and in the summer, but if you look at our capacity increases, year-over-year and in New York to Florida, let's just talk about the first quarter of '05 versus the first quarter of '04.

In Fort Lauderdale, we are up 32%, but the market is only up 11%. In Orlando we are up 30% in our Orlando seats but the market is still minus two on the seats which means the market is down and the increase, our increase only brings the market -- still makes it down 2%, if that makes sense. Sorry for all these numbers. In West Palm Beach, we are up 37%; markets only up 10%. In Tampa, we are up 10% and the market is only up 3%. So the capacity increases I guess, all told, much higher in Fort Meyers because [indiscernible ] added the 2 flights there. We are up 43% and the market is up 52 percent. But all told, the capacity increases in Florida are us, basically and it is by design. We have done well in those markets. We will continue to add capacity and we are seeing some good bookings into the fourth quarter.

Let me turn a little bit to the fourth quarter . You probably don't want to hear about how we are doing in the fourth quarter. I will talk first about revenue in the fourth quarter. October -- we had a kind of a tough start in October. In fact, our RASM numbers and our booking numbers because of the post hangover from the hurricanes, look a lot like September's number do, which is unusual for us. Usually we do a lot better in October than we September. But in the aftermath of the hurricanes it is understandable.

Although we are booked today at 82.5% load factor after the month of October, we are obviously experiencing a lot lower average fares because of the low fares that are in the market and what we've had to do to stimulate. One thing we are going to do to help the revenue situation going forward and in the fourth quarter, currently we have a $3 internet discount if you book on-line. About 75% of the bookings today are on line. That is set to expire on October 31st.

We have extended that for a lot of years now. But I think with the rising fuel prices and the really low fares out there we think it's prudent to let that expire and I think that will have a positive affect on our revenues. It shouldn't effect our [indiscernible ] percentage that much. Our customers are accustomed to booking on-line. For True Blue members, they are still going to get double points for booking on- line. Shouldn't have a lot of effect there.

So we are playing a little bit of catch up from October. We are certainly going to -- we are down October year-over-year. November is looking better. We are quite pleased with the bookings over the last week in particular, last few weeks. If you looked at the bookings last week and just compared them to year-over-year, we're up 52% in segments on our bookings. We are up 41% in revenues and our capacity is up 38%. We are making up for some of the lost ground that we experienced during the hurricanes, and we expect our load factors to be up in November year-over-year. [indiscernible] so that the RASM will be down a bit in November.

December -- we had a good December last year and we will expect load factors to be up as well, but average fares to be down a bit and so it is coming back. We feel good about our Florida bookings but we still have this, so that's kind of the revenue side. John will give you more guidance on the revenue side for the fourth quarter.

From the cost side, we again are projecting, and John will go over this in more detail, some are non -- kind of a fuel neutral cost will be down in the fourth quarter, which is still a good time. We plugged in about a $1.30 to our fuel cost for the fourth quarter. As we move that up from 108 and put it at 120, then 125, then 130, obviously we've watched our margins dwindle away as we keep adding cost of fuel, which is obviously you know a little bit discouraging but again, I think it is causing some rationality in the market from some of our competitors. By the way, the $1.30 that we put in for the fourth quarter equates to about a real price of $1.55 so the effective hedge is about $0.25 that we have -- the 35% hedge that I talked about. So in plugging in the $1.30 and then looking at the revenue picture, which is an improving revenue picture, we have still are coming up with a margin that is just about at zero.

So in a traditional range that we are going to give you is somewhere between a plus 1 and minus 1 on our margin on that $1.30 fuel which hopefully won't be at a $1.30 when it is all said and done. But based on what we've done for October, we think that's the best number we could use at this point in time.

One thing I did mention is that in November and December, our transcon and our west business is looking better year-over-year. We are seeing RASM improvements in both November and December year-over-year. Any RASM decline we have we are still kind of -- you know --the post hurricane and trying to get average fares up and be trying to be competitive with our competitors.

Just a couple of other things might be of interest to you. Before I leave the fourth quarter, we are looking at a small RASM decline from the third to the fourth quarter but not as significant of a decline as we had last year from the third to the fourth quarter. So when you look at the margin guidance and what we did in margin for the third versus that margin what we did in the fourth, it is really a fuel driven number, it is something that you know, with $0.22 higher fuel than we had in the third quarter, it's certainly going to bring the down.

Another point of interest I think which has been really good news for us is our LaGuardia start. We are very happy with our business that considering we started it kind of sandwiched in between two hurricanes and started from 0 to 7 flights a day from Laguardia to Fort Lauderdale, it's been amazing. I mean we basically have reached the loads and average fare levels that we had at Kennedy within the first few weeks of operation there. In fact, as we look out into December and January, we are actually running a little bit higher fare in LaGuardia than we are at Kennedy, primarily because we don't do connections out of LaGuardia and those connection fares are a little bit lower. And we are most importantly seeing little or no effect on our JFK bookings because of the 7 flights that we added out of LaGuardia, which means that we are introducing a lot of new people to JetBlue. A lot of new customers are on board, and I was on one of those flights recently and I asked for a show of hands of those that had never flown JetBlue before and was actually surprised at how many people were on board that had never flown us before. That's great and we are excited about that service.

Just a couple of other things of note before I turn the time over to John. We are chugging along trying to get all of our planes retro fitted with the new TVs and with the new movie channels. We have 4 new movie channels, 2 of them that will be provided by Fox and then 12 additional channels of live TV. We expect to have 42 of those airplanes completed by years-end of our 69, and then sometime by the end of the first quarter or early second we will have the whole fleet done and that's a good product improvement. Our customers like those extra channels and they like the movies, especially if you are on the long haul flights.

We have improved the functionality of the kiosks so you can check in bags now from the kiosks which we think will lower our costs and improve our efficiency at the airports and eliminate a lot of the lines there. A lot of the airlines have that but we were excited to get that going finally.

We also have the ability -- our customers now can make changes on the Web, they can make changes and cancellations -- I think in the second week we had that going. 20% of all our changes were done on-line. So we think that is going to help our costs going forward and help us to do better.

We recently announced a partnership with American Express where our True Blue members will be able to gross up their points using membership reward points and exchange them for True Blue points and that's going to be a good enhancement to our program, and just anectdotally hearing from customers just in the last few days they are very excited about that.

We also have our Company Blue, which is our ability for companies to book on-line directly with us is making great progress. Over the quarter we've already registered and signed over 750 companies that will be booking on-line with us directly. Those are some of the really good points.

Again, just to an summarize, difficult industry environment relative to the industry, particularly those in our peers, we are doing much better than others. We always have. We expect to do better because I think we have -- we've built a great company with great people that are providing great customer service. And we are in challenging times, but we were built for challenging times. That's why we built JetBlue with our capital structure, with our cost structure, and with our product. I really believe that we've got the best product in the industry and those things come in handy when you are f fighting for revenue dollars like we are today and where we are having a sustainable -- it's not obviously sustainable from our competitors so we can do this for a long time. I want to do it, but we can't. With that, I'll turn the time over to John and he will go in more detail on the financials.

Thank you, David. As you all know from the press release, we had a 7.1% operating margin for the quarter. That was certainly lower than we had projected at the out set of the quarter,r but consistent with the mid-quarter revised guidance that we gave, and again it was a profit in a very difficult quarter. Not the kind of profitability we would have liked, but nevertheless in spite of all of the adverse things that we had to deal with between the weak yield environment, fuel prices, and four major hurricanes, we nevertheless prevailed and turned a profit in the quarter.

Capacity was up 33% to 4.9 billion ASMs. Departures were up the same percentage. We had slightly higher aircraft utilization. Year-over-year 13.6 hours versus 13.2 in the prior year. Load factor was 84.9, that's down 2.8 points year-over-year for the quarter, but that was from an extremely strong third quarter load factor performance in 2003. We saw a 26% increase in revenue passengers carried during the quarter.

We reallocated the way we describe capacity in various regions, so I am going to walk through and explain. For the third quarter we had 58% of our capacity in the east/west. Twenty-nine north/south, about 8.5% to the Carribean, 2.7% in the northeast shout haul and 1.6% in the west shout haul. We didn't used to break out Carribean, with with the addition of the two Dominican Republic markets and Aguidilla in Puerto Rico this year, we decided to split that out. So for those of you who track things year-over-year, had we split out last year's that way, it would be 61% east/west, 27% north/south, about 6.5% to the Carribean, 2.7% to the northeast short haul and 2.5 in the west short haul. That will give you an apples to apples basis year-over-year.

Revenues for the quarter increased 18% to 323.2 million, on a 29% increase in RPMs. Third quarter yield was down 8.8% year-over-year on a 2.7% increase in average length of haul. It was at 7.43 in the third quarter.

RASM for the quarter was down 11.4% over 2003 on a 3.7% increase in average stage length. RASM was 6.54.

As you know, we like to talk about same-store sales. If you look at markets we were in for over a year, on a same-store sales basis RASM was down only 8.4%, while ASMs in those particular markets were up 11%. Most of that same-store sales RASM decline was, as you might have guessed, in transcon markets, but also in and JFK and San Juan. During the quarter we put 3 new aircraft into service, all of which were financed with escrowed funds from the EETC transaction that we did back in March. That transaction was designed to fund all the aircraft deliveries we have for the entire year.

At the end of the third quarter, we had 63 aircraft in the fleet, all A320s of course, of which 28 were owned, 25 leased under operating leases. Average fleet age of 2.2 years. Looking at costs, excluding fuel our cost performance was very strong overall.

Operating expenses totaled 300 million, up 37%, with a CASM of 6.08 which was a 2% increase year-over-year. That CASM increase year-over-year is principally attributed to a higher fuel price and to a lesser extent, to some higher maintenance costs.

On a fuel neutral basis using last year's fuel price, however, CASM was actually down 2.4%. So we are very comfortable with the fact that we are maintaining very good cost control on the things that we can control, outside of the fuel area. Fuel neutral CASM as I said was down 2.4%.

That decline would have been even larger but for the fact that we of course at this point last year started removing seats out of our airplanes and switched to 156 seats instead of 162 seats for airplanes. That was effective the 6th of September a year ago. So a substantial portion of the year-ago period was calculated on 162 seats.

Generally, as I said, we are very encouraged about the cost performance. Solid cost control is to us one of the keys to our long term success, as David said, great cost control, great product and great service by our crew members and those are the things that we think help make us stand out compared to the competitors.

Some significant differentials on the cost side, sales and marking expense was actually down 27% on a unit cost basis year-over-year in the third quarter. Mostly because with average fares trending so low and so many sale fares that we were matching in markets all over the system, we really didn't see a lot of need to advertise to attract customers so we pulled back on ad spending there. We booked 75% of our reservations through jetblue.com in the quarter, That was flat compared with last year, and True Blue, our flight gratitude program is now at 1.7 million total members.

Maintenance materials and repairs is another item on the cost side that had a significant change. It was up 50% year-over-year on a unit cost basis. That is principally due to having completed 10 airplane checks, 3 of which were the heavier seat floor checks this year compared to 9 last year, of which none were the heavier seat floor checks.

Tax rate for the quarter was down slightly to 39% and we should see that up slightly from that in the fourth quarter. The other income and expense line had no gains or losses in it of any substance for hedging ineffectiveness during the quarter. All of our hedge gains were actually sitting in the fuel line.

Turning to the balance sheet, as David said, we like a good strong capital structure, we had $752 million of total equity at the end of the quarter and we ended the quarter with plenty of liquidity at $516.7 million in cash and short-term investments.

Looking at the operating performance, as David said, there were a lot of challenges in the quarter. In addition to those four hurricanes, we also had a lot of nasty thunderstorm weather in July and August that didn't help us out as well. But it speaks to the very high standards that the crew members have set for themselves that they did such an outstanding job of managing through that kind of adversity. There were a lot of instances where it would have been far easier for us to simply cancel flights like a lot of our competitors, and strand customers, but we have a corporate philosophy in not doing that and our crew members all pulled together and did the right thing getting customers where they needed to be as on time as we can get them and with their bags.

Our President, Dave Barger, likes to say that anybody can run a good airline operation on a clear day, and that the real key that sets airlines apart, is service recovery when things go wrong. To that end, I think we need to recognize the tremendous efforts of all our JetBlue crew members, particularly those folks who lived through the hurricanes in our 5 Florida cities, our 2 Blue cities in Puerto Rico, our 2 Blue cities in the Dominican Republic, and our live TV operation in Melbourne, Florida as well. Because all those people were impacted, not just because of the operational issues but personal issues. People without power and water in their own homes and things like that, and yet we managed to get the operation right back up and running very swiftly, and not just do that but particularly in the case of Francis where we canceled so many, we did a tremendous number of extra sessions where people were working over time and having to try to deal with flights that weren't part of their normal schedule. I think overall across the entire Company, from scheduling and system operations on through just about every department you could imagine, we just did a great job of accommodating customers, taking care of crew members and so my hat's off to everybody for the great operating performance.

Having said that completion factor was 97.9 for the quarter which is probably about the worst we've reported ever that I can think of. I haven't gone back and verified that. I can't think of a time when we had it that low. That completion factor again was due almost entirely to hurricanes where we simply couldn't operate except on the hurricane basis, it was our usual high standards on a completion factor.

On-time performance was 79%. Mishandled bags was 3.4 per thousand customers and complaints to the DOT was very low, .36 per 100,000.

From a guidance perspective, as David mentioned, bookings are showing some good strength in November and December but October was a difficult month. We continue to forecast a weak yield environment with RASM in the fourth quarter down in the mid to high single digit percentages compared to RASM a year ago system wide.

From an ASM perspective we expect ASMs in the fourth quarter to be up 34 to 36% year-over-year. I will give the airplane deliveries in a moment. Average stays length is projected to be just under 1,400 miles in the fourth quarter, with aircraft utilization remaining above 13 hours. As David referenced before, we now expect our operating margin for the fourth quarter to be somewhere between a positive 1 and a negative 1. Given our usual two-point range and that is again based on an all-in net of hedges fuel price of $1.30 a gallon, which as near as we can determine equates roughly to an assumed $54 WTI price for the entire quarter.

We have adjusted that margin range downward obviously to reflect both the revenue issue and the fuel issue. The upside in this forecast would certainly be most likely if fuel prices came in lower than that assumed average $54 a barrel of crude that we've assumed in the fuel price fare.

By way of comparison, in prior quarters and in our last conference call we used a $0.92 a gallon fuel price which obviously is way out the window at this point. But if we were to run that forecast for the fourth quarter at $0.92, our margin guidance would be somewhere in the vicinity of a 6% operating margin. From a CASM perspective we expect fourth quarter CASM to be up 6% year-over-year. Again, based on that $1.30 net of hedges fuel price, and virtually all of that growth in CASM is attributed to the fuel price, although there is also some increase in maintenance there. But to put that in perspective on a fuel neutral basis we would have CASM down year-over-year in the fourth quarter if we had last year's fourth quarter fuel price. So again, on a non fuel basis we are managing things pretty nicely on a cost perspective.

From a maintenance perspective, we'll see one- time increases in maintenance in the fourth quarter related to the modification of our airplanes that David was talking about for improvements in the live TV and flight entertainment system. We're adding capability to do 12 more channels of TV as well as for movies of a video server on board.

New aircraft that we've got coming for delivery have been for some undergoing this upgrade upon delivery, so they start that way but we have to go through and retrofit the other airplanes in the fleet. We expect to have at least 2 aircraft undergoing modification on therefore out of service at any one time for about 2/3 of the quarter. That obviously is another contributor to why we see CASM up year-over-year in the quarter is simply not having the utilization capability of those 2 airplanes as we go nose to tail doing modifications.

Now, some of the costs associated with this upgrade to the airplane will be capitalized, but a significant piece of it will also be expensed. So that is going to contribute to an increase in maintenance costs during the quarter. The end of September, we had only completed 2 of these modifications of the aircraft. As of this morning, we had completed another 6. We expect to perform a total of 14 in the fourth quarter, and as David said we'll have 42 aircraft with 36 channels and 4 movies at year-end. Then we'll continue that process next year until we've got it done.

With this in mind, we expect fourth quarter maintenance an a unit cost basis will increase about 35% over 2003 4th quarter. During the quarter we expect to perform 11 seat checks, 2 of which will be the heavier seat floor checks compared to 11 seat checks, only 1 of which was a C4 in the same period last year.

For fuel hedging, we're roughly 35% hedged for the fourth quarter, in swaps accrued at 25, 35 a barrel and in 2005 we are roughly 20% hedged at just under $30 a barrel. Aircraft deliveries, 3 in October, 2 in November, 1 in December for the current quarter. That would bring us to 16 aircraft total additions during '04 and an end of year fleet of 69. In '05 we are planning to taking delivery of 15 A320s and our first 7 EEBRAER E190s later in the year. That would produce ASM growth in 2005. It is forecasted to be up 26 - 28%.

From capital spending perspective we have about $200 million in capital spending on aircraft and progress payments for the fourth quarter of the year. Average debt rate at the end of the third quarter was 3.7% and our average interest rate returned on investments was 1.5%. From a shares outstanding perspective, our estimated shares outstanding for year-end is based on no additional shares assumed from our option exercises. 17.9 million options outstanding at 15.50 average strike price.

No market appreciation through the balance of the fourth quarter and that gets us to a fourth quarter weighted average shares outstanding of 103.8 million, which would be both your basic and diluted number of shares outstanding, given that with margin guidance and such that David gave in the expectation of a net loss for the quarter that you really wouldn't have a difference between the basic and the fully diluted. Excuse me me the diluted.

Just one note, we do have one convertible issue outstanding, $175 million. It does have the contingent convertible feature in it under the newly proposed EITF 0408 relating to that. There is a change in the way we will account for that starting with the fourth quarter of the year related to dilution related to that and we do not expect at this point that it will have any kind of significant impact at all on our EPS.

With that, I think David and I have covered our prepared remarks and we will be glad Anthony, to open things up to questions.

Thank you. [OPERATOR INSTRUCTIONS] Our first question is coming from William Green [ph] of Morgan Stanley.

Yeah, good morning. David, can I ask you to comment on the growth of 26 - 28% in '05 given the outlook that you just kind of set forth for the fourth quarter. Is there any reason to think perhaps that might be even too fast and perhaps it needs to pull back a bit or you're still comfortable that despite where fuel is, that's still okay.

Bill that's a good question. We looked at -- we're in the throws of our budgeting sessions for next year and have put all kinds of fuel numbers in and all kinds of yield numbers in and stressed every which we know, and with the capital markets open to us to be able to add and and finance these airplanes and with the uncertainty in the market rounding our industry, I guess, surrounding lots of airlines that are kind of teetering on bankruptcy, or some that are questionable, it's a good time to grow. I think we have a great plan.

Frankly, I wish we had a couple more airplanes right now to take advantage of some things that we think are some opportunities and without being specific. We are really looking forward to the 190s. They are going to give us a fresh revenue stream from markets that we haven't been able to reach so far. There is a long list of cities that those airplanes are going to go into and it will also open up more opportunities for the 320s, and we've got a lot of things planned for the 320s next year. So no, at this time, no pull back in capacity. I think during these difficult times for the industry and I think these are times that we can make some great strides and we're looking forward to it. These are times we can make some great [indiscernible] and we are looking for.

Okay, and then John, can you comment. What is the total all-in debt to total capital ratio including the off balance sheet. Do you have a rough estimate.

I haven't calculated that as of the end of the third quarter, but I think you can work that calculation yourself if you want to use the standard 8 times aircraft rents to capital the leases and work it off the balance sheet.

I guess what my question is-- based on what you've got coming for next year, are you comfortable that you can finance all of that with debt or is it implicit that leverage is getting to a point where we've got to consider other forms.

First of all we are comfortable that we have financial markets open to us and debt financed the capital spending that we have coming next year. So, that's one part of your question.

Second part of your question is if you add that debt, what does that do to the debt to total capital ratio and our prior comments that we wanted to try to keep it within a particular range. We strongly believe that it is important for us to try to keep control of our debt to total capital ratio and not let it get out of line so many other carriers have done. As we've said before, if we see it getting out of line we will raise additional equity if that is what needs to be done for the long term for the Company.

Okay. Thanks for your help.

Our next question is coming from Tony Cristello [ph] of BB&C Capital Markets.

Thank you, I am just wondering if we should start thinking about next year with maintenance in the fourth quarter here, you set up 35% year-over-year. Is this going to be sort of now ongoing to where we are going to have quarter-over-quarter. More of the heavier checks so that next year you're not going to get as much ability to sort of drive your unit costs down. You are doing a great job. Another operating [indiscernible] fuel but we are going to still see those 4 or 5% down quarters or are we sort of reaching a level where we've bottomed out some.

I think given how low we've already driven unit cost that it's hard to see that we can drive it radically lower. We have kind of written the book on low unit costs at this point. And we are continuing to work on the improvement in unit costs in a lot of areas in the Company. A lot of ways to try to automate things that are manual and other things so there's a lot of different initiatives going on. But my guess is that most of the other initiatives that we do will be offset over time as maintenance costs go up.

The other thing to remember for next year is that the CASM for the EMBRAER 190 will be higher. Both because it is a small airplane and because of the shorter average stay length that we intend to be flying compared to the A320. So as we start taking in EMBRAER 190s and operating them in the latter half of next year, you will start to see some year-over-year comparisons in CASM that will not be a complete apples and apples because there will be a blend of A320s and 190s in the second half of next year versus all A320s this year.

And of course we will get revenue premium for that. It is better for the Company.

Do you think then the operating margins of 12 to 14% and down to 10 to 12%, do you now see that maybe that range is going to be sub 10% at least for the foreseeable future in this environment and maybe even longer term. Is it going to be harder for you to get back up to those levels of operating margin that you had several quarters ago.

I think it all depends on fuel prices and it all depends on the sustainability of our competitors. You know, we have looked at next year's numbers and we kept a $55-barrel in for the whole year and then tweeked yield down -- let's take it down a little more. Basically I'm saying I don't think those two things can co-exist. Because if the fuel price stays up I think yields will eventually go up. Because of you know, increases in fares and I think, I just don't think it is sustainable.

What you are seeing today, with Independence Air and ATA and others, it is pretty --some pretty big losses that these people are experiencing. [indiscernible] you see what the price of fuel has done to us from 108 to 130 just for us, imagine what it is doing for everybody else. I don't think they coexist. So I think a lot of it has to do with fuel and a lot of it has to do who are the competitors going to be. And what type of irrational behavior is going to be out there. It becomes a lot more difficult to do when these fuel prices are this high. And that's the silver lining, I think.

Thank you.

Thank you, our next question is coming from Jim Parker of Raymond James.

Good morning, David and John. Some questions just regarding consolidation and industry which appears to be underway in first of all U.S. Airways looks like they could liquidate. Are there any assets and perhaps the shuttle in particular which would be of interest to JetBlue

I think we've said publicly before and we will continue to say so, there are some assets there that are of interest to us. They have a lot of assets at LaGuardia, New York is our home and as I mentioned we are doing well out of LaGuardia, so it's something we certainly need to keep our eye on. How we would integrate that into our operation is something that we will be very careful about though.

If someone is in bankruptcy, there is some protection for creditors to maybe an orderly transfer of maybe some of the slots to give us some time to work into them. Those are things we are studying and we look at every day and we are thinking about and there are some pieces of U.S. Airways. But we don't like to think about -- have people failing obviously, but we certainly have to be prepared if that's the eventuality. I mentioned on the last call--it's something that we didn't necessarily want to happen because it will create maybe some upheaval but I think given these really hefty fuel prices, if they stay at these levels in the mid 50s, I think, you know, it changes a lot of thoughts that we had before about who will be around and who won't be around.

I appears that Independence Air's R J low fair operation is not working at least that's what the numbers would suggest and I would like to know if you have estimated the impact of Independence Air's R J operation on your business?

You know, we haven't, Jim, I think the impact would probably get greater as they go on. If started to add a lot of A319s particularly to the west. But if you look at maybe Dulles to LAX or SFO. There could be some impact there because of our service into Long Beach and Oakland. When they start adding their Florida service. It may effect some of our connecting business from upstate New York down to Florida if they keep the fare levels at these levels that they have been charging. Could have some impact there.

But I think until now, I don't think our impact has been that great. I think the impact could be greater but based on the losses that we saw yesterday from them. I am not sure what they are doing is sustainable.

Right. John, have you estimated the EMBRAER start up cost for '05 that you can share with us.

Jim, we are not really in a position to share that. Because we are still working our way through our 2005 budget process. Only way we can really get a good estimate of that is to take all the various expenses and kinds of different budget categories and aggregate them and we are still in the budget process and haven't had the variety of the second round budget meetings with various departments. Sorry, I just don't have a good answer for you on that one.

Okay, we'll save that question for a while. Thanks.

We don't have a good answer much we don't expect it to have a huge impact. We've had a team of people working on the 190 for a year and a half now. Certainly when we take people off line and retrain them. Some of our [indiscernible] first officers to be captains. We've got some down time, I would suspect and it's improving runs and wouldn't expect it to be a huge number. Certainly manageable.

Okay. Thanks you.

Thank you. Our next question is coming from Michael Linberg [ph] from Merrill Lynch.

Hey, David, John. I guess two questions. I know David, for some time you've tried to get into the Chicago market and I think your preference may have in the past been at O'Hare. But i now appears there may be an opportunity at Midway. Is Midway a JetBlue type market or are you looking more at the O'Hare's of maybe the DFWs.

I think you're right Michael, I think ATA and Southwest over at Midway, it seems like it wasn't -- you know-- maybe we had a better opportunity over at O'Har. But obviously with the uncertainty surrounding ATA and with their filing, I think we are probably a little more focused on Midway. I think it's interesting though, in kind of reading the press reports about the [indiscernible] or whatever they are calling it agreement with the flights at LaGuardia, the way we read the law and all kind of strange and unusual things come out of bankruptcy. At least to our knowledge. AK doesn't have any slots but LaGuardia all had a slot exemptions but those exemptions can't be sold by law. So, if that service were to go away, it would say, we would be interested in serving JFK to Midway and also be interested in getting our slot exemptions. We can go to 20 out of LaGuardia; I think we are at 12 or 13 today. We can add some more and we are interested in adding more service out of LaGuardia so if those slot exemptions we're in line to get some of those so we are looking forward to adding more service out of there if they do come back.

My second, typically or at least in the past when you would give us a heads up on the number of cities you were planning to add in the future, it was sort of a 1, 2, maybe as many as 3. Yet as you start bringing in the ERJ190s as you said earlier, you have a long list of cities. When we get to the latter part next year, should we anticipate, are we going to see more than your sort of traditional 2, 3 cities per year. Could we see 5, 6, 7 type cities. With respect to that, should we anticipate that maybe we are going to see, airport costs and you know, ramping up new cities, the additional costs associated with that, are we going to see something on the facility line. Is that something we should be ready for for the second half of the year? I realize you are still very early in the budget process.

Michael, we are forecasting from a budget perspective 2 new cities for next year. That's the statistics that we have passed around to all of our departments. Those are new cities that would be flown to by A 20s. Remember that in '05, we don't get our first E190 until August. We will be doing, improving runs with the FAA during September and it won't enter service until sometime in October, potentially November. So we have a total of 7 deliveries from August through the end of the year, but we really aren't expecting to operate much in the way of capacity with those aircraft. Only in November and December. It is our intent with a new airplane, you want to be careful with new airplanes and keep them close to maintenance bases until you work out any kinks in a new airplane because that's inevitable with just about any delivery from any manufacturer.

So our intention is to at least at this point to start the 190s in existing markets. Flying to existing JetBlue cities so we have minute maintenance personnel near by and can get to them easily should we have a problem because we want a clean entry into service. '06 would be the year that you would start seeing additional new cities as a result of EMBRAER 190.

Existing cities would be increased frequency to some of the update cities and connecting the dots that we're flying. Doing some of that stuff as John mentioned, kind of keeping them close to home.

Very good. Thank you.

You're welcome.

Thank you our next question is from Jamie Baker from J.P. Morgan.

John, at the industry level the first quarter is generally weaker than the fourth. Given your bias towards Florida, I am not sure if that's necessarily the case for JetBlue. Can you comment as to your quarterly seasonality. Without making any assumptions to fuel or competition.

Quarterly seasonality here has changed a bit over time as we have balanced things out between transcon that are on peak during the summer and Florida that is on peak during the winter. So, it is hard to extrapolate from past experience because those percentages do change over time, but I think the better thing to say about about us from a seasonality perspective is that these swings from best quarter to worst quarter are much lower on that balance of seasonality in our business than what you would typically see in a U.S. Air carrier.

David, you know, we are on the record I suppose at being some what critical of JetBlue given an apparent unwillingness to enter the hubs the of your competitors. I think at last stab there was about $3 or $4 billion of New York demand that is still on the table. Times have clearly changed, your competition is weaker than ever. The market seems to be shrugging off your fuel related losses. When do you start service to Houston?

I don't know. I certainly -- when you look at those average fares and those markets. And you look at-- we are flying transcon for $99 and [indiscernible] the average fares in Houston and the average fares in Dallas, and some of the other places that we don't fly today, it certainly --give you a pause and from time to time, but I think we have really been on a course of growing these markets that we feel are going to be successful in the long term.

I think if we spread ourselves little bit too thin to get some short term profits, add some new cities then maybe we can grab those. I don't think it is in our long term best interest. I think the 190 is going to give us a lot flexibility to do those types of things. This isn't your traditional regional jet where you are flying in kind of cramped quarters and you can fly long distances with that airplane. I think kind of an entry into service to some of those. High end high cost business hub markets. It may make more sense with the 190, start with a larger number frequency than we would maybe on the 320. . Those are the things we are kind of noodling over. That said, the 190s got secondary Florida cities we can do that don't have any competition. There are mid-Altantic cities that are wide open charging average fares that are kind of obscene and a lot of Midwest cities that we haven't made our way into either and a lot of stuff to the north. There is going to be a lot of competing interest for those airplanes and that's why we are not even contemplating any kind of slow growth because we do have a lot of things that we can do.

Finally just a housekeeping item. Southwest has taken a number of fare increases as have Air Tran as have the Legacy carriers as of late. Have there been any broad base increases at JetBlue that I might have inadvertently missed.

I mentioned earlier in the call that we are going to expire our 3% discount on the Web, and that's a significant number. In effect it's like a $2 fair increase on all our fares because--more than $2 because it's a high percentage of our bookings that are done on-line. But we still have the double points on-line. But we will continue to look at it. What we are seeing in our markets is that we are not seeing as much of a desirability to raise fares because of the heated nature of what is going on in our market. What we like to do is set up the range, a fare range that is fair and if there is more demand, we raise the fares based on taking people up the next available bucket. That's how you base fares and it's all based on demand. So I think doing this thing with the internet and keeping a close look at the market will maybe give us some opportunities to maybe move our fares up a little quicker with you know, if the demand really increases in Florida like we expect it to. It is coming on pretty strong right now.

Thank you, David. Thank you, John.

Thank you. Our next question is coming from Ray Neidl of Calyon Securities.

I just wanted to verify one quick number. I was jotting down a lot of numbers here and-- you mentioned that the operating margins would be up 1 or down 1 versus -- was that third quarter or was that fourth quarter of last year?

That's our guidance for fourth quarter of this year. For the current quarter that we are now in is that we expect the operating margin to be somewhere between a positive 1 and a negative 1.

More general question, now, David, are you getting nervous with what is happening down in Atlanta. It appears that Delta is going to be getting some significant cost cutting beginning with their pilots union and that's going to run throughout their whole system. Are they going to be a tougher competitor?

Yes, I think it is expected. Obviously there is a bankruptcy that could happen or could have happened with a lot of restructuring, there is some pilot salary cuts and there's a billion dollars of savings as it's being reported. By my math, if you took the almost 500 million-dollar, [indiscernible] by 4 which is a pretty good quarter, the third quarter, there is still a lot of things that need to be done at Delta to get them back to zero in addition to the pilot salaries. Some of it should be some rationalization on some of their non core flying. That is something they have to address going forward. Because if you are competing against a JetBlue with still lower costs and better product, it's a pretty tough road to hoe and we are committed to this market. We are committed to growing New York, we're continuing to add more capacity here and we have the wherewithal to do it and they have to get their costs in line but they also have to obviously take a look at some of the things they are doing and some of the places they are flying and some of the RASMs that they are getting on that flying, regardless of what their costs are. It's something they have to take a look at.

David, assuming U.S. Airways survives, evidently they want to build a Carribean hub in Fort Lauderdale. And I think Spirit Airlines is trying to do the same thing. Is that going to create an excess of competition in Fort Lauderdale and probably even more importantly, is it going to cause congestion at the airport since I think there is only one runway there now.

I think I am more concerned about the latter. The congestion there because it is an important airport for us. We have no intention, we have actually done a lot of analysis on south Florida to the Carribean, with American's presence in Miami. You know what is going on there, didn't really seem all that attractive to us and kind of surprised to see all the interest there. Kind of going south doesn't forecast all that well. So it is not going to effect us. I see U.S. Airways adding some service from LaGuardia down to Fort Lauderdale. Obviously will have a little bit of effect and some Spirit flying from Providence I think is where they are looking at doing it . Not really effecting New York to Florida but I think the operational issue is a concern and we have been down at that airport and talked to the officials and they have to get going building the second runway. They do have a second runway, but it is a little bit short. They can have a lot of the smaller planes land on that runway but we do need to get that second runway down there under construction because it will become tight. If they don't there are other areas in south Florida that we can move some of our traffic to if we have to.

Finally I am wondering have you done your financing yet or planned for your financing yet for the RJs or the EMBRAER.

The first 30 we have already completed financing on.

Is that manufacturers financing?

It is through GE and we get 25 through the end of '06 so we are basically mid '07 before we need to do any financing on those airplanes.

Thanks a lot.

Thank you. Our next question is coming from David Strine of Bear Stearns.

Thanks, good morning. David, I think you addressed the question a bit in response to an earlier question but I wanted to go into your thoughts a bit more on how the potential for some capacity coming out of the system or somewhat of a vacuum in the mid Atlantic could effect the business. I know that from a new aircraft delivery perspective you are a bit constrained to hop in. As you see it, are there any places in the business now where you could see yourself shifting assets a bit to try and capitalize on a potential opportunity and secure yourself a position before others may do that.

I think we are, --we would be much more prepared to do that after we get through next year. We could do a shifting of maybe 3 or 4 airplanes or you know, 1 or 2 more. Yeah, in '05 we can do shifting. We have a schedule. We are getting 15 airplanes, actually 22 if you count the 190s so by the time we get through the end of '05 we have a lot more flexibility to do things than we say do today. As we get more into '05, we're more prepared to shift. We could pull back some frequencies. Even '04 or early '05 and free up 2 or 3 airplanes but without taking on some additional airplanes, our flexibility it is not as good as it will be as we get through the year and into '06.

Are there particular areas where you think it would make sense if the opportunity presented itself to pull back on the frequencies.

We have 71 flights a day to Florida during the peak and that's a lot of service, but we make -- we do really well on that. Transcon eased up a lot of airplanes. Flying the numbers of frequencies we have out there wouldn't be radical changes in frequency but maybe changing a frequency here and a frequency there and if you market you can free up 2 or 3 airplanes. But obviously we would rather not do that. That's why we like status quo but we have to deal with the situation. We don't have any control over that and we'll just do the best we can. I mentioned earlier -- the developments over in Chicago, to see if we need to jump in that market and that is something we we would do if we needed to.

Okay. Thanks.

Thank you, our next question is coming from Gary Chase of Lehman Brothers.

Good morning guys.

Good morning.

Just actually two kind of unfair questions given you know the environment you have been operating in and I apologize if I missed this first one in your prepared remarks. Can you give us a sense of how things are going operationally at LaGuardia?

Knock on wood, they are doing quite well actually but it's been a pretty good -- once we got through the hurricanes. It has been a pretty good month from an operational standpoint. We were talking to the President, Dave Barger yesterday, and we're 84% on time out of there which kind of mirrors our system for the month.

We were just slightly below the system average for the month for on time performance. It is really one where when the weather is good it operates just fine. It is kind of binary, it is great or awful, but so far it hasn't been terribly problematic for us.

We had one or two days where we had some delays that were a little bit more than Kennedy. We kind of severed that operation. It is kind of in itself. It doesn't really affect the rest of our operation. It does on a flight or two a day. But we will like to keep those separate so that if those customers are experiencing those delays it doesn't effect those people that are at Kennedy. So we try to do that as much as possible.

Also, David, was just curious on the last call you kind of said Boston was a little spotty at the beginning. You had some success in some markets. Is that all still building well. Of course understanding the markets you're in have been very challenged in the last quarter, but any color there would be helpful.

We did really well in the first quarter in Florida there. Frankly this summer didn't do that great to Florida but it started our transcon business and high load factors in those markets maybe could have gotten a little more in the yield side.

But we're building. Whenever you are in the market for the first six months or eight months, you are fighting your way in and trying to establish yourself and so you know, we are going to focus on those a lot. We spent a lot of time talking about it yet and I think probably we haven't done enough advertising up there. I think we need to give it a little bit more focus and we will, it's on our radar screen in a big way and we are going to, we've got some new Fort Myers service which is doing very well there. We are looking at increasing both our Oakland and Long Beach service to three day next summer and we've got some build ups, going for this winter based on our experience of last year of what we are going to do. I think we saw, I think I mentioned this that American is pulling their Fort Lauderdale service out of there. So, it's a new market, not as good as Kennedy. I think it will be become as good as Kennedy. We just have to give a little more time and a little more attention. From what I'm hearing anectodely from board members that we have in that area, the customers love us up there. We are making some really good inroads.

Thanks a lot guys.

Next question is Hellen Becker [ph]of Benchmark Brokerage.

Thank you very much, operator. Hi guys. This is my question. In terms of opportunity looking forward. International has been a big discussion for some of the other carriers, I recognize with the fleet you are not looking at things into Europe. What about Canada and Mexico. I would think that especially Canada there would be some good opportunities for you out of New York. To Florida and to Florida. Could you maybe address that thought.

Yes, I think whenever you go into new markets you obviously have a risk of you know, not doing as well. It is always a little bit of a guessing game of where you go. That's one of the reasons that we're pretty dang excited about the 190 is that it allows us to go into markets with more frequency and less risk on a trip cost basis. Then also adjust for seasonality. I think Canada, at least in the New York area, if you look at it, it is a very strong seasonally strong in the summertime and weaker in the wintertime. You can say maybe it is strong in the wintertime going to Florida. So those are things we will sort out. We are not interested as you mentioned in getting a third aircraft flying to Europe. We are just swallowing this one now and we also did our first foray into the Dominican Republic and got plenty to deal with on that but we did cut our teeth on international flying and so we feel confident with it now. Canada is a good market because you can do pre-clear in Canada and it doesn't effect the operation in Kennedy. Again, it is on our long list of cities where the 190s could go. Possibly 320s. Mexico as well. My family loves going to Cancun, we love that place and a lot of New Yorkers would too. That's also a market that we could serve over time and other places in Mexico make a lot of sense to us as well as the Carribean. Places like St. Thomas and others are very attractive.

My follow up question I think probably for John, did you say what your sensitivity to fuel is. I think I heard either you or David say that you had planned the fourth quarter guidance was $54 WTI. But if it averages as something less, you obviously had some sensitivity to that. Did you indicate what that was.

No, we didn't give a gallon quantity for the quarter. If you like we can follow up with that. We figured as people model things they can take a ratio of what they think the probable fuel price net of hedges is to our assumed $1.30 net of hedges that we provided and do the math that way.

Thank you for your help then.

You're welcome.

Thank you, our next question is coming from Daniel MacKenzie [ph] of Citigroup Smith Barney.

Thanks operator. Good morning, guys. David, just beating a horse to death here but looking at your growth at 2005 and just thinking about revenue diversification from a conceptual standpoint and I realize you guys have a lot of routes in mind. But looking at the new terminal at JFK, should investors assume you know, that JetBlue would probably want to build on it core competencies northeast of Florida and you know, sort of east coast west coast flying you know, or are there, should investors sort of assume that you know, there would be some greater revenue diversification as we look ahead to '05 and '06, and revenue diversification, assuming that no carrier exits the industry. Obviously if a carrier exits there would be some opportunities. Just wondering if you could add more color on that from that angle.

I think you know, heretofore with the [indiscernible] 20, again, it is a big airplane, 156 seats going into a market. That's a lot of seats to fill. Some of these markets that we have been looking at that are tantalizing require --there's some frequency requirements. They aren't cities you can go into one or maybe two times a day. They need frequency of three or four time as day. That's the primary reason we went out and got the 190. There are a lot of markets that you know, we would probably never get to or take us a long time to get to. Most possibly and most probably will be will become 320 markets over time but we can develop them with a lot less risk. So the answer to your question, even though you won't see a lot of it this year, you're going to see a lot of capacity on east west, more capacity on north south. Building the franchise there. I should mention that this summer I think we had 93 departures out of Kennedy in the summer.

Next summer our schedule calls for 125 flights a day or 120 or 125 flights a day which pretty much maxes out our gates but we are building on kind of a temporary--we are adding six or seven that will be alongside the terminal and bridge the gap between the old terminal and new terminal, which should get us up to 180 or 200 before we move into the new terminal and that would take us to 250. We are serious about New York to lots of places. The 190 will help us get through. Couldn't be more crazy. When you look at the route map, there is a lot of dark space between here and Florida and lots of dark space between here and the west coast. Lots of cities that would like to have access to New York.

That's very helpful. Thanks very much.

Our next question is coming from Travis Anderson [ph].

Hi, I was wondering if you could talk about what happens to the economics of the 190 at you know $50 fuel or $40 fuel. Am I right in thinking they are more thirsty than a 320?

I think they are more thirsty. Travis, you are right but not to where 52 is. You are seeing independence. There is disproportion and a lot more difficult. If you take the gallon burned per hour and divided it by number of seats on the airplane, you may have-- I think the number is right at -- I think we have approximately 40% less seats. About 30%. But you do have economies there. But those are just much worse when you go to a 50 seater. But still, we are still real comfortable with that. The economics of 190. If you take the best markets and sack them out. They would do well at the $50 price of oil if that's still the case when they arrived next November.

Great.

Thank you, we have time for one final question that comes from Susan [indiscernible] from Global.

I wanted you to circle back to Florida. I mean do you feel the snow birds are coming back to Florida? Can you comment also on the two coasts. Any differences there?

Not really seeing a big difference on the coasts from the east and west coast. I mean, we have really good presence on both sides. Fort Myers and Tampa on the west, and then the three I guess in Orlando and then we have got West Palm and Fort Lauderdale. The Fort Lauderdale-- and in some markets it is just the average fares and we are coaxing people back from the relatives and all that. I think we are going to be okay. I don't know the answer to this. I think one of the thoughts I had was with this 110 year cycle of hurricanes, people who were thinking of moving to Florida from New York. Are they thinking of moving somewhere else? Because they are [indiscernible] about being in hurricane alley. What is the dpr growth rate. Is it the same and we will monitor that and we have been adding a lot of capacities down there. And maybe we can could put the capacity out. That's the place to put it but right now loads are good. Fares are down and we expect it to really go out there as we get into the winter. We are hoping for really cold weather in the northeast and lots of blowing and not much snow. That's what we are hoping.

You would say modestly coming back.

It is coming back. Over to next year, to last year, we had a really good year in Florida last year. Yes, they are down but we are talking, I think John said, for the whole quarter. High single digits, mid to high, our RASM decline. So that is assuming that obviously we are going to have low fares. Because factors will be high in November and December.

Thank you.

Thank you. At this time, I would like to turn the floor back over to Mr. David Neeleman for closing remarks.

Just in closing I wanted to echo John's comment and let our, just let our employees know what a tremendous job they did. We have -- we are speaking to crew members on the call as we did to the other investors because of the repurchase plan we had, 80% of the crew members that were shareholders. I wanted to thank them for their sacrifice in the quarter and some personal challenges, as John mentioned. That the strength of JetBlue is in the operation and day to day contact that the crew members have with our customers and the loyalty they have. We built this for difficult times. I didn't realize how difficult it would be with the things we had happen to the Company over the five years. With a strong balance sheet at very low costs and the best product in the industry, and we felt good about the future and looking forward to getting through this fourth quarter and getting on to next year and bringing on the 190, and our future is really price. We are excited about the business and the future. With that, we will talk to you next quarter and we hope oil prices keep coming down.

Thank you, callers this concludes the conference. You may disconnect your lines and have a wonderful day.