JetBlue Airlines 2003 Annual Report Download - page 31

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have required significant expenditures. We expect to continue to incur expenses in connection with
complying with government regulations. Additional laws, regulations, taxes and airport rates and
charges have been proposed from time to time that could significantly increase the cost of airline
operations or reduce the demand for air travel. If adopted, these measures could have the effect of
raising ticket prices, reducing revenue and increasing costs. We cannot assure you that these and other
laws or regulations enacted in the future will not harm our business.
Our insurance costs have increased substantially and further increases could harm our business.
The U.S. government provides coverage to domestic airlines for liabilities from claims resulting
from acts of terrorism, war or similar events via authority granted to it under the Homeland Security
Act of 2002. The Emergency War Time Supplemental Appropriations Act of 2003 required the
government to extend these policies through August 2004 and permits such coverage to be extended
through December 2004. JetBlue has elected this coverage, with our current policies in effect until
August 31, 2004. It is expected that should the government stop providing war risk coverage to the
airline industry, the premiums charged by commercial aviation insurers for this coverage will be
substantially higher than the premiums currently charged by the government. Significant increases in
insurance premiums could harm our financial condition and results of operations.
ITEM 2. PROPERTIES
Aircraft
As of December 31, 2003, we operated a fleet consisting of 53 Airbus A320 aircraft, each powered
by two IAE International Aero Engines V2527-A5 engines, as follows:
Seating Operating Average Age
Aircraft Capacity Owned Leased Total in Months
Airbus A320 ......................... 156 29 24 53 20.8
In June 2003, we placed an order for 100 new EMBRAER 190 jet aircraft, with options for an
additional 100 new aircraft, with Empresa Brasileira de Aeronautica S.A., or Embraer. This new order
is intended to supplement our existing fleet of Airbus A320 aircraft, which in April 2003 we agreed to
expand through our order for 65 additional aircraft through an amendment with AVSA, S.A.R.L., an
affiliate of Airbus Industrie, or Airbus.
Our aircraft leases expire as follows: one in 2009, one in 2010, two in 2012, four in 2013, one in
2015, two in 2018, two in 2019, one in 2020, three in 2022 and seven in 2023. All 29 owned aircraft are
subject to secured debt financing. We have taken delivery of three aircraft in 2004, two of which have
begun scheduled service. Two were financed through debt and one was leased under a 12-year
operating lease.
As of December 31, 2003, we had on order 99 Airbus A320 aircraft and 100 EMBRAER 190
aircraft with options to acquire 50 additional Airbus A320 aircraft and 100 additional EMBRAER 190
28