JetBlue Airlines 2004 Annual Report Download

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20APR200409520546
Dear Fellow Stockholders:
What a difference five years makes. On February 11, 2005, JetBlue Airways celebrated its five-year
anniversary. As we reflect on this occasion, we have much to celebrate and even more to look forward
to. Thanks to the dedicated efforts of our outstanding crewmembers, 2004 was another very solid year
for us; our fourth straight year of profitability. We closed the year having reported sixteen consecutive
quarters of profitable results. In 2004, five airlines, representing 24% of industry capacity, were
operating under bankruptcy protection. Collectively, U.S.-based airlines lost $5.2 billion for the year.
Considering this, together with the escalating cost of fuel and the weak revenue environment that
permeated the industry, our success in running a profitable airline was no small feat. As we move
through 2005, we are confident that our business plan is strong and believe we are capable of
continuing to deliver on the goal we set out with five long years ago: delivering profits for our
stockholders and crewmembers while offering an excellent experience for our customers.
A key part of JetBlue’s success is our devotion to keeping the brand fresh and, based on customer
feedback, the continual improvement of our industry-leading product. Consistent with our original
goals, our service continues to focus on taking the hassle out of air travel by offering customers what
they want, and nothing they don’t. Customers today enjoy low, easy-to-understand fares, convenient
flights, and pre-assigned leather seats with up to 34 inches of seat pitch. Additionally, we now offer up
to 36 channels of free DIRECTVprogramming as well as Fox Premium Entertainmentmovies for a
nominal fee. Later this year we will provide up to 100 channels of XM Satellite Radioand wider
screens for viewing. Most importantly, friendly, courteous and compassionate service will continue to be
our trademark. The caring service provided by our crewmembers has clearly resonated among the
traveling public: in 2004, JetBlue achieved the highest load factor of any major U.S. carrier with 83.2%
and accommodated close to 12 million customers. Our loyalty program, True Blue, also continues to
grow nicely; we now have over 2.2 million participants. JetBlue is now part of the American Express
Membership Rewardsprogram. Soon we plan to announce a strategic partnership to offer a JetBlue
affinity credit card and we intend to make available all-inclusive travel packages later this year with air
travel, car rentals and hotels offered via our website.
Another critical component of our success is our operational integrity. In 2004, JetBlue achieved
industry-leading operating metrics as measured by the Department of Transportation, or DOT. In the
five reportable categories, our airline placed first in four categories and third in the fifth, when
compared to other major U.S. airlines. We achieved a 99.4% completion factor, or operation of
scheduled flights, ranking in first place despite the impact of several hurricanes in August and
September. In fact, our team achieved the highest technical reliability of A320 aircraft operators
world-wide. We placed first in on-time performance, with an 81.6% performance despite our
concentration in the congested air traffic corridors in and near New York. We had the fewest number
of baggage mishandlings, 2.99 per 1,000 customers boarded, and we endeavor to deliver all inbound
baggage to the carousel within 20 minutes of flight arrival. As our policy is to not oversell flights, we
easily led the industry with the fewest oversales. Finally, we placed third in complaints to the DOT with
0.27 reports per 100,000 customers boarded. This equates to one complaint per 400,000 customers in
our system. While we know that strong operating performance is essential to running a good airline, we
continue to emphasize the importance of managing the customers’ experience instead of simply
managing a metric. Of course, our number one priority will always be safety and to this end, the
Federal Aviation Administration (FAA) continues to be an invaluable business partner.

Table of contents

  • Page 1
    ... Rewards↦ program. Soon we plan to announce a strategic partnership to offer a JetBlue affinity credit card and we intend to make available all-inclusive travel packages later this year with air travel, car rentals and hotels offered via our website. Another critical component of our success...

  • Page 2
    ..., leather seats and an in-flight entertainment system identical to our A320s. The critical addition of the E190 to our fleet will provide an avenue in which to stimulate air travel in markets that are not served by true low-fare airlines. As such, we believe our revenue per available seat mile (RASM...

  • Page 3
    ...as a low-cost, low-fare airline, our experienced team is working hard to ensure that the latest in security enhancements, and the amenities and functions that today's traveling public expects of a modern airport terminal are all in place when we inaugurate our new home in 2008. The new terminal will...

  • Page 4
    ... Leadership class, or POL, a five day leadership development curriculum, remains crucial to the successful growth of our airline. More than 1,000 leaders across JetBlue have attended POL to learn the five tenets: inspire greatness in others, communicate with your team, do the right thing, treat your...

  • Page 5
    ... the last reported sale price on the Nasdaq National Market on that date). The number of shares outstanding of the registrant's common stock as of January 31, 2005 was 104,348,189 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Proxy Statement for the 2005 Annual Meeting of...

  • Page 6
    EXPLANATORY NOTE JetBlue Airways Corporation is filing this Amendment No. 1 on Form 10-K/A to our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission on February 14, 2005, to reflect certain financial statement reclassifications affecting...

  • Page 7
    ......High Quality Customer Service ...Safety and Security ...Marketing and Distribution ...Customer Loyalty Program ...Pricing ...Yield Management ...People ...Maintenance ...Aircraft Fuel ...LiveTV, LLC ...Government Regulation ...Risks Related to JetBlue ...Risks Associated with the Airline Industry...

  • Page 8
    ... Officers of the Registrant . . Executive Compensation ...Security Ownership of Certain Beneficial Owners and Stockholder Matters ...Certain Relationships and Related Transactions ...Principal Accountant Fees and Services ...Management ...and Related ...73 74 74 74 74 FORWARD-LOOKING INFORMATION...

  • Page 9
    ... BUSINESS JetBlue Airways Corporation, or JetBlue, is a major low-cost passenger airline that provides high-quality customer service at low fares primarily on point-to-point routes. As of February 10, 2005, we operated a total of 280 daily flights. We focus on serving markets that previously...

  • Page 10
    ... currently serve seven cities from Boston with a total of 20 daily departures. We intend to further penetrate our key markets by increasing the number of flights per day as demand warrants. We believe that this is important to customers who choose airlines based on low fares and convenient schedules...

  • Page 11
    ... our aircraft in early 2005. Later in 2005, we plan to further expand our in-flight entertainment offerings across our fleet with the addition of free XM Satellite Radio. Our Competitive Strengths Low Operating Costs. For the year ended December 31, 2004, our airline cost per available seat mile of...

  • Page 12
    ... passengers per day each way, and is a significant segment of the U.S. domestic market. We believe that many mid-sized markets are currently underserved and/or have high average fares. We plan to use this aircraft to stimulate demand in these markets by offering our low fare point-to-point service...

  • Page 13
    .... In order to reach more customers in the New York metropolitan area, we expanded our presence in 2004 by adding service out of LaGuardia Airport, which currently has seven daily flights to Ft. Lauderdale, Florida. While LaGuardia has increased our access to the New York market, it has also made us...

  • Page 14
    ... are fare pricing, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, code-sharing relationships, in-flight entertainment systems and frequent flyer programs. Our competitors and potential competitors include major U.S. airlines, low-fare airlines...

  • Page 15
    ... major airlines created their own low-fare operations. During 2004, American announced plans to exit certain of its markets and concentrate on expanding operations out of its Dallas Ft. Worth hub and Delta announced plans to significantly decrease its operations out of its Dallas Ft. Worth hub and...

  • Page 16
    ... Round Trip Flights Scheduled Per Day Service Commenced Fort Lauderdale, Florida ...Buffalo, New York ...Tampa, Florida ...Orlando, Florida ...Ontario, California ...Oakland, California ...Rochester, New York ...Burlington, Vermont ...West Palm Beach, Florida ...Salt Lake City, Utah ...Fort...

  • Page 17
    ... base of operations, Long Beach, as of February 10, 2005, for destinations other than JFK and Boston: Destination Round Trip Flights Scheduled Per Day Service Commenced Washington, D.C. (Dulles Oakland, California ...Las Vegas, Nevada ...Salt Lake City, Utah ...Fort Lauderdale, Florida Airport...

  • Page 18
    ...an Alertness Management Program, which will be used to educate our pilots about fatigue and its impact on flying operations. Also in 2004, JetBlue became the first U.S. passenger airline to equip its entire fleet with the Emergency Vision Assurance System (EVAS), which provides our flight crews with...

  • Page 19
    ... to increase travel on JetBlue and provides our customers with additional conveniences and features. TrueBlue members earn points for each one-way trip flown based on the length of the trip. Points are accumulated in an account for each member and expire after twelve months. A free round trip award...

  • Page 20
    Pricing Our low cost structure allows us to offer simplified, everyday low fares to our customers. We offer a range of fares, including 14-day, 7-day and 3-day advance purchase fares and a ''walkup'' fare in each of our markets. Our fares increase as the number of days prior to travel decreases, ...

  • Page 21
    ...We assist our employees by offering them flexible work hours, initial paid training, free uniforms and benefits that begin on the date they start work. We also provide extensive training for our pilots, flight attendants, technicians, customer service agents, dispatchers and reservation agents which...

  • Page 22
    ...-seat satellite television system with Frontier Airlines and WestJet Airlines. In 2004, LiveTV entered into a contract with AirTran Airways for the installation, programming and maintenance of XM Satellite Radio Service. LiveTV continues to pursue additional customers. Government Regulation General...

  • Page 23
    ... noise, which can include limits on the number of hourly or daily operations and the time of such operations. These limitations serve to protect the local noise-sensitive communities surrounding the airport. Our scheduled flights at Long Beach and San Diego are in compliance with the noise curfew...

  • Page 24
    ... Long Beach Municipal Airport and will initiate two new flights this spring. Of the 17 remaining non-commuter slots not assigned to us, 12 are used for domestic passenger service and five are used by cargo operators. In April 2003, the FAA approved a settlement agreement among the City of Long Beach...

  • Page 25
    ... passenger traffic required to maintain profitable operations in new markets and impede our growth strategy, which would harm our business. The airline industry also encounters extensive price competition and is characterized by low profit margins and high fixed costs. Our ability to meet this price...

  • Page 26
    ... of a hangar at JFK and a training facility and hangar in Orlando, Florida and plan to construct a new terminal at JFK. We will incur additional debt and other fixed obligations as we take delivery of new aircraft and other equipment and continue to expand into new markets. We typically finance our...

  • Page 27
    ... fail to maintain the strength of our company culture, our competitive ability and our business may be harmed. If we fail to successfully take delivery of, place into service and integrate into our operations the new Embraer E190 aircraft we agreed to purchase, our business could be harmed. In June...

  • Page 28
    ...the air carrying passengers. High daily aircraft utilization allows us to generate more revenue from our aircraft and is achieved in part by reducing turnaround times at airports so we can fly more hours on average in a day. The expansion of our business to include a new fleet type, new destinations...

  • Page 29
    ...and deliver important flight information. Substantial or repeated website, reservations system, telecommunication systems, kiosk or in-flight entertainment systems failures, could reduce the attractiveness of our services and could result in our customers purchasing tickets from another airline. Any...

  • Page 30
    ..., reconfiguring flight schedules, furloughing or terminating employees, as well as other efficiency and cost-cutting measures. Two major airlines have reexamined their traditional business models and have created their own low-fare operations. Despite these actions, several airlines have sought...

  • Page 31
    ...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...

  • Page 32
    ... each of the airports we serve that provide for the non-exclusive use of runways, taxiways and other facilities. Landing fees under these agreements are based on the number of landings and weight of the aircraft. Our principal base of operations is Terminal 6 at JFK, which is operated under a lease...

  • Page 33
    ... at JFK and our finance and scheduling departments are based in Darien, Connecticut. Our office in Salt Lake City, Utah contains a core team of employees who are responsible for group sales, customer service and at-home reservation agent supervision, as well as revenue management and credit card...

  • Page 34
    ...age 47, is our President and Chief Operating Officer and has served in this capacity since August 1998. He is also a member of our board of directors. From 1992 to 1998, Mr. Barger served in various management positions with Continental Airlines, including Vice President, Newark hub. He held various...

  • Page 35
    .... Anderson was with Boeing Commercial Airplane Group where his positions included Sales Director. He joined JetBlue in early 1999 as Director, Aircraft Programs. Tim Claydon, age 40, is our Senior Vice President Sales and Marketing. He has served in this capacity since July 2003 when he was promoted...

  • Page 36
    ... Nasdaq National Market under the symbol JBLU. The following table below shows the high and low sales prices for our common stock, as adjusted for our November 2003 three-for-two stock split. High Low 2003 Quarter Ended March 31 ...June 30 ...September 30 ...December 31 ...2004 Quarter Ended March...

  • Page 37
    ... ...Operating income (loss) ...Government compensation(l) ...Other income (expense) ...Income (loss) before income taxes ...Income tax expense (benefit)(2) ...Net income (loss) ...$ Earnings (loss) per common share: Basic ...$ Diluted(3) ...$ Other Financial Data: Operating margin ...Ratio of...

  • Page 38
    ...) Airline operating expense per ASM (cents)(5) ...Departures ...Average stage length (miles) ...Average number of operating aircraft during period ...Full-time equivalent employees at period end(5) ...Average fuel cost per gallon ...Fuel gallons consumed (000) ...Percent of sales through jetblue.com...

  • Page 39
    ...average number of block hours operated per day per aircraft for the total fleet of aircraft. ''Average fare'' represents the average one-way fare paid per flight segment by a revenue passenger. ''Yield per passenger mile'' represents the average amount one passenger pays to fly one mile. ''Passenger...

  • Page 40
    ...San Jose, CA, Phoenix, AZ, Aguadilla, Puerto Rico, Santo Domingo and Santiago, Dominican Republic and Nassau, The Bahamas, and from Boston's Logan International Airport to Fort Lauderdale, Fort Myers, Orlando and Tampa, FL, Oakland and Long Beach, CA and Denver, CO. In addition, we initiated service...

  • Page 41
    ... entertainment systems sold to other airlines. Other components include concession sales at our terminal at JFK, excess baggage charges, mail revenue, commissions from website travel sales and revenue from the sale of liquor in-flight. We have low operating expenses because we operate a single type...

  • Page 42
    ... Air Lines' recently changed fare structure, could also impact our revenues and operating margins. We expect to take delivery of our first Embraer E190 aircraft beginning in August 2005 and plan to place it into service in the fourth quarter of 2005. The addition of the Embraer E190 to our fleet...

  • Page 43
    ... miles due to scheduled capacity increases and increased transcontinental flights over 2003. Operating expenses per available seat mile increased 0.3% to 6.10 cents. In detail, operating costs per available seat mile were (percent changes are based on unrounded numbers): Year Ended December 31, 2004...

  • Page 44
    ... 2004 compared to 20.8 in 2003. Cost per available seat mile decreased 15.5% due to higher capacity and a smaller percentage of our fleet being leased. Sales and marketing expense increased 17.9%, or $9.6 million, due to higher credit card fees resulting from increased passenger revenues. On a cost...

  • Page 45
    ... our follow-on public offering of common stock in July 2003. Operating Revenues. Operating revenues increased 57.2%, or $363.2 million, primarily due to an increase in passenger revenues. Increased passengers resulting from a 51.6% increase in departures and a 1.5 point increase in load factor...

  • Page 46
    ... credit card fees resulting from increased passenger revenues. These increases were offset by lower travel agent commissions following their elimination in April 2002. On a cost per available seat mile basis, sales and marketing expense decreased 27.0% primarily due to the increase in available seat...

  • Page 47
    ... variable costs associated with increased capacity and number of passengers served. Cost per available seat mile decreased 24.2% as a result of our fixed costs being spread over higher capacity, better bad debt experience and the consolidation of LiveTV's operations in 2003. Other Income (Expense...

  • Page 48
    ...) ...Airline operating expense per ASM (cents)(2) Departures ...Average stage length (miles) ...Average number of operating aircraft during period . Average fuel cost per gallon ...Fuel gallons consumed (000) ...Percent of sales through jetblue.com during period . Full-time equivalent employees at...

  • Page 49
    ... engine notes totaling $9.1 million, (4) scheduled maturities of $67.4 million of debt and (5) net short-term borrowings of $13.7 million. On March 24, 2004, we completed a public offering of $431.0 million of pass-through certificates, Series 2004-1, to finance 13 new Airbus A320 aircraft, all of...

  • Page 50
    ... operations to meet our working capital requirements. We do not currently have any lines of credit and almost all of our property and equipment is encumbered. We typically finance our aircraft through either secured debt or lease financing. At December 31, 2004, we operated a fleet of 69 Airbus A320...

  • Page 51
    ...scheduled for delivery as follows: 22 in 2005, 35 in each of 2006, 2007 and 2008, 36 in each of 2009 and 2010, and 15 in 2011. We meet our predelivery deposit requirements for our Airbus A320 aircraft by paying cash, or by using a short-term borrowing facility, for deposits required 24 and 12 months...

  • Page 52
    ... at JFK that is scheduled to be completed in the second quarter of 2005. In 2004, we began construction of a flight training center as well as a hangar for installation and maintenance of our LiveTV in-flight satellite television system and aircraft maintenance at Orlando International Airport, both...

  • Page 53
    ... the same or similar aircraft types and our anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations and changes in our maintenance program or operations could result in changes to these estimates. Our purchased technology, which resulted from...

  • Page 54
    ... financial statements for accounting policies and additional information. Aircraft fuel. Our results of operations are affected by changes in the price and availability of aircraft fuel. To manage the price risk, we use crude oil option contracts and swap agreements. Market risk is estimated...

  • Page 55
    JETBLUE AIRWAYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Year Ended December 31, 2003 2002 2004 OPERATING REVENUES Passenger ...Other ...Total operating revenues ...OPERATING EXPENSES Salaries, wages and benefits ...Aircraft fuel ...Landing fees and ...

  • Page 56
    ...8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA JETBLUE AIRWAYS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2004 2003 ASSETS CURRENT ASSETS Cash and cash equivalents ...Investment securities ...Receivables, less allowance (2004-$622; 2003-$903) Inventories...

  • Page 57
    JETBLUE AIRWAYS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2004 2003 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable ...Air traffic liability ...Accrued salaries, wages and benefits . Other accrued liabilities ...Short-term ...

  • Page 58
    ... expenditures ...Predelivery deposits for flight equipment ...Purchase of held-to-maturity investments ...Proceeds from maturities of held-to-maturity investments Decrease (increase) in available-for-sale securities ...Acquisition of LiveTV, LLC, net of cash acquired ...Other, net ...CASH FLOWS FROM...

  • Page 59
    ... Paid-In Shares Stock Capital Balance at December 31, 2001 ...Net income ...Change in fair value of derivatives, net of $125 in taxes ...Total comprehensive income ...Accrued undeclared dividends on preferred stock ...Proceeds from initial public offering, net of offering expenses ...Conversion...

  • Page 60
    ... 31, 2004 JetBlue Airways Corporation offers low-fare, low-cost passenger air transportation service and provides high-quality customer service primarily on point-to-point routes. We offer our customers a differentiated product, with new aircraft, low fares, leather seats, free LiveTV (a direct...

  • Page 61
    ...December 31, 2004 Note 1-Summary of Significant Accounting Policies (Continued) Estimated useful lives and residual values for our property and equipment are as follows: Estimated Useful Life Residual Value Aircraft ...In-flight entertainment systems ...Aircraft parts ...Flight equipment leasehold...

  • Page 62
    JETBLUE AIRWAYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2004 Note 1-Summary of Significant Accounting Policies (Continued) than the fair value of our common stock on the grant date. The following table illustrates the effect on net income and earnings per ...

  • Page 63
    ... a public offering of $498.2 million of pass-through certificates, Series 2004-2G-1, 2004-2G-2 and 2004-2C, to finance all of the 15 new Airbus A320 aircraft scheduled to be delivered in 2005. Separate trusts were established for each class of these certificates. The Class G-1 certificates totaling...

  • Page 64
    ... among other things, a requirement to maintain certain financial ratios. Aircraft, engines and predelivery deposits having a net book value of $1.78 billion at December 31, 2004, were pledged as security under various loan agreements. Maturities of long-term debt for the next five years are as...

  • Page 65
    ... in pass-through certificates under these registration statements. Note 3-Leases We lease aircraft, as well as airport terminal space, other airport facilities, office space and other equipment, which expire in various years through 2036. Total rental expense for all operating leases in 2004, 2003...

  • Page 66
    ...with the offering. Net proceeds were invested in short-term, investment-grade, interest-bearing instruments. Unvested shares of common stock purchased by certain members of management in 1998 were subject to repurchase by the Company upon their termination at the original purchase price. At December...

  • Page 67
    ... no event will any such annual increase exceed 6.1 million shares. The plan will terminate no later than the last business day of April 2012. The plan has a series of successive overlapping 24-month offering periods, with a new offering period beginning on the first business day of May and November...

  • Page 68
    ... the number of shares reserved for issuance was increased by 3,127,097 shares. The fair value of each purchase right is estimated at the inception of each offering period using the Black-Scholes option pricing model. The following table shows our assumptions and weighted average fair values of stock...

  • Page 69
    JETBLUE AIRWAYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2004 Note 6-Stock-Based Compensation (Continued) The following is a summary of stock option activity for the years ended December 31: 2004 Weighted Average Exercise Price 2003 Weighted Average Exercise ...

  • Page 70
    JETBLUE AIRWAYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2004 Note 6-Stock-Based Compensation (Continued) following table discloses the number of options granted and certain weighted-average information of options granted: Number of Options Fair Value Exercise...

  • Page 71
    JETBLUE AIRWAYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2004 Note 7-Earnings Per Share (Continued) 2004 2003 2002 Denominator: Weighted-average shares outstanding for basic earnings per share ...Effect of dilutive securities: Employee stock options ......

  • Page 72
    ... rate for the years ended December 31 for the following reasons (in thousands): 2004 2003 2002 Income tax expense at statutory rate ...Increase resulting from: State income tax, net of federal benefit ...Other, net ...Total income tax expense ... $ 26,888 1,088 1,379 $ 29,355 $ 61,404 8,709 1,428...

  • Page 73
    ... tax assets and liabilities as of December 31 are as follows (in thousands): 2004 2003 Deferred tax assets: Net operating loss carryforwards ...Employee benefits ...Gains from sale and leaseback of aircraft . Tax credit carryforwards ...Rent expense ...Organization and start-up costs ...Other...

  • Page 74
    ... our technical support operations personnel at JFK in mid-2005. In 2004, we began construction at Orlando International Airport of a flight training center as well as a hangar for the installation and maintenance of our LiveTV in-flight satellite television system and aircraft maintenance, both of...

  • Page 75
    ... or in shortterm duration high-quality debt securities. Investments in highly-liquid debt securities are stated at fair value, which approximates cost. The majority of our receivables result from the sale of tickets to individuals, mostly through the use of major credit cards. These receivables are...

  • Page 76
    ... Management (Continued) Investment securities, excluding fuel hedge derivatives, at December 31, 2004 and 2003 consisted of the following (in thousands): 2004 2003 Available-for-sale securities: Student loan bonds ...Asset-backed securities ...Held-to-maturity securities: Corporate bonds ...Total...

  • Page 77
    JETBLUE AIRWAYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2004 Note 12-Financial Instruments and Risk Management (Continued) We are exposed to the effect of changes in the price and availability of aircraft fuel. To manage this risk, we periodically purchase ...

  • Page 78
    ...17 (1) Government compensation recorded in other income (expense) was $22.8 million in the second quarter of 2003. (2) During the fourth quarter of 2004, we recorded additional passenger revenue of $3.5 million to recognize expired customer credits based on stated terms. We also recorded other non...

  • Page 79
    ... accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of JetBlue Airways Corporation's internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control- Integrated Framework issued by the...

  • Page 80
    ...Registered Public Accounting Firm The Board of Directors and Stockholders JetBlue Airways Corporation We have audited management's assessment, included in Item 9A, Management's Report on Internal Control Over Financial Reporting, that JetBlue Airways Corporation maintained effective internal control...

  • Page 81
    ... the meaning of Item 406(b) of SEC Regulation S-K. This Code of Ethics applies to our principal executive officer, principal financial officer and principal accounting officer. This Code of Ethics is publicly available on our website at investor.jetblue.com. If we make substantive amendments to...

  • Page 82
    ...519,748 The number of shares reserved for issuance under our Crewmember Stock Purchase Plan and 2002 Stock Incentive Plan automatically increases on January 1 each year by three and four percent, respectively, of the total number of shares of our common stock outstanding on the last trading day in...

  • Page 83
    ... completed public offering of pass-through certificates. • Current Report on Form 8-K dated November 19, 2004 reporting under Item 8.01. ''Other Events'' filing information regarding JetBlue's entry into non-material amendments to its purchase agreements with AVSA, S.A.R.L. and IAE International...

  • Page 84
    ...the undersigned thereunto duly authorized. JETBLUE AIRWAYS CORPORATION (Registrant) Date: March 8, 2005 By: /s/ HOLLY NELSON Vice President and Controller (principal accounting officer) Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following...

  • Page 85
    Signature Capacity /s/ MICHAEL LAZARUS Michael Lazarus Director /s/ NEAL MOSZKOWSKI Neal Moszkowski Director /s/ JOEL PETERSON Joel Peterson Director /s/ ANN RHOADES Ann Rhoades Director /s/ FRANK SICA Frank Sica Director 77

  • Page 86
    EXHIBIT INDEX Exhibit Number 2.1 Membership Interest Purchase Agreement among Harris Corporation and Thales Avionics In-Flight Systems, LLC and In-Flight Liquidating, LLC and Glenn S. Latta and Jeffrey A. Frisco and Andreas de Greef and JetBlue Airways Corporation, dated as of September 9, 2002 ...

  • Page 87
    ...-1G-1-O and the issuance of Three-Month LIBOR plus 0.375% JetBlue Airways Pass Through Trust, Series 2004-1G-1-O, Pass Through Certificates-incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K dated March 24, 2004(1). Revolving Credit Agreement (2004-1G-1), dated as of March 24...

  • Page 88
    ... Agent for the JetBlue Airways Corporation Pass Through Trust 2004-1G-1-O - incorporated by reference to Exhibit 4.14 to our Current Report on Form 8-K dated March 24, 2004(2). Schedule to the ISDA Master Agreement, dated as of March 24, 2004, between Morgan Stanley Capital Services Inc., as Above...

  • Page 89
    ..., JetBlue Airways Corporation and Wilmington Trust Company, as Subordination Agent - incorporated by reference to Exhibit 4.24 to our Current Report on Form 8-K dated March 24, 2004. MBIA Insurance Corporation Financial Guaranty Insurance Policy, dated March 24, 2004, bearing Policy Number 43567...

  • Page 90
    ...-1-O and the issuance of Three-Month LIBOR plus 0.375% JetBlue Airways Pass Through Trust, Series 2004-2G-1-O, Pass Through Certificates-incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K dated November 9, 2004(3) . Revolving Credit Agreement (2004-2G-1), dated as of November...

  • Page 91
    ...Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities, Inc., as Underwriters, Wilmington Trust Company, as Pass Through Trustee for and on behalf of JetBlue Airways Corporation Pass Through Trust 2004-2G-2-O, as Pass Through Trustee, and Wilmington Trust Company, as Paying Agent...

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    ... Airways Corporation and Wilmington Trust Company, as Subordination Agent and Trustee - incorporated by reference to Exhibit 4.21 to our Current Report on Form 8-K dated November 9, 2004. MBIA Insurance Corporation Financial Guaranty Insurance Policy, dated November 15, 2004, bearing Policy Number...

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    ...-incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the year ended December 31, 2003. Amendment No. 19 to Airbus A320 Purchase Agreement between AVSA, S.A.R.L. and JetBlue Airways Corporation, dated June 4, 2004-incorporated by reference to Exhibit 10.1 to our Quarterly...

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    ... General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation, dated November 19, 2004-incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K dated November 19, 2004. Amendment and Restated Agreement between JetBlue Airways Corporation and LiveTV, LLC...

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    ... Form S-1, as amended (File No. 333-82576). 2002 Crewmember Stock Purchase Plan-incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1, as amended (File No. 333-82576). JetBlue Airways Corporation 401(k) Retirement Plan-incorporated by reference to Exhibit 10.19 to the...

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    ... JetBlue Airways Corporation-incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated March 24, 2004. Computation of Ratio of Earnings to Fixed Charges. List of Subsidiaries Consent of Ernst & Young LLP. Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer...

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    ... of Three-Month LIBOR plus 0.420% JetBlue Airways Pass Through Trust, Series 2004-1G-2-O and Three-Month LIBOR plus 4.250% JetBlue Airways Pass Through Trust, Series 2004-1C-O. Pursuant to Instruction 2 of Item 601 of Regulation S-K, Exhibit 99.1, incorporated by reference to our Current Report on...

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    ... provided on behalf of the JetBlue Airways Corporation Pass Through Trust 2004-2G-2-O and the JetBlue Airways Corporation Pass Through Trust 2004-2C-O. Pursuant to Instruction 2 of Item 601 of Regulation S-K, Exhibit 99.2, incorporated by reference to our Current Report on Form 8-K dated November...

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    Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders JetBlue Airways Corporation We have audited the consolidated financial statements of JetBlue Airways Corporation as of December 31, 2004 and 2003, and for each of the three years in the period ended ...

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    JETBLUE AIRWAYS CORPORATION SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Charged to Costs and Charged to Expenses Other Accounts Description Balance at Beginning of Period Deductions Balance at End of Period Year Ended December 31, 2004 Allowances deducted from asset ...

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    Exhibit 12.1 JETBLUE AIRWAYS CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (in thousands, except ratios) Year Ended December 31, 2003 2002 2001 2004 2000 Earnings: Income before income taxes ...Less: capitalized interest ...Add: Fixed charges ...Amortization of capitalized ...

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    ... management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of JetBlue Airways Corporation, included in this Annual Report (Form 10-K/A) for the year ended December 31, 2004. /s/ Ernst & Young LLP New...

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    Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer I, David Neeleman, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K/A of JetBlue Airways Corporation; Based on my knowledge, this report does not contain any untrue statement of a material fact or ...

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    ... financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 8, 2005 /s/ JOHN OWEN John Owen Executive Vice President and Chief Financial Officer

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    ... in the Report fairly presents, in all material respects, the financial condition and results of operations of JetBlue Airways Corporation. Date: March 8, 2005 By: /s/ DAVID NEELEMAN David Neeleman Chief Executive Officer Date: March 8, 2005 By: /s/ JOHN OWEN John Owen Executive Vice President and...

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