JetBlue in Public Offerings of Secured Convertible Debentures and Common Stock

Cleary Gottlieb advised the underwriters, Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated, in a registered public offering by JetBlue Airways Corporation of $201,250,000 aggregate principal amount of 5.50% convertible debentures due 2038, divided equally into two series. Cleary Gottlieb also advised the underwriter of a concurrent registered public offering of 44,864,059 shares of JetBlue common stock, which were issued pursuant to a share lending agreement between JetBlue and an affiliate of Morgan Stanley. The debenture offering, including full exercise of the related over-allotment option, and the common stock offering closed simultaneously on June 4.

Both series of the debentures benefit from security arrangements: JetBlue used a portion of the net proceeds from the debenture offering to fund escrow accounts securing the first six scheduled semi-annual interest payments for each of the two series of debentures.

Because the common stock offering was conducted pursuant to a share lending agreement, JetBlue received only a nominal share lending fee from that offering. The common stock offering facilitated the debenture offering, though, by making shares available for hedges by investors purchasing debentures. While the common stock sold in the offering will be considered issued and outstanding for corporate law purposes, JetBlue does not consider those shares to be outstanding for accounting purposes because the Morgan Stanley affiliate that borrowed the shares must ultimately return them and must make specified payments until then.

JetBlue is a passenger airline that provides award-winning customer service at low fares primarily on point-to-point routes. For the year ended December 31, 2007, JetBlue was the 8th largest passenger carrier in the United States based on revenue passenger miles.