JetBlue Airlines 2004 Annual Report Download - page 26

resources, even before the new services commence. Expansion is also dependent upon our ability to
maintain a safe and secure operation and will require additional personnel, equipment and facilities.
An inability to hire and retain personnel, timely secure the required equipment and facilities in a
cost-effective manner, efficiently operate our expanded facilities, or obtain the necessary regulatory
approvals may adversely affect our ability to achieve our growth strategy. In addition, our competitors
have often chosen to add service, reduce their fares and/or offer special promotions following our entry
into a new market. We cannot assure you that we will be able to successfully expand our existing
markets or establish new markets in this increased competitive environment, and if we fail to do so our
business could be harmed.
Expansion of our markets and services may also strain our existing management resources and
operational, financial and management information systems to the point that they may no longer be
adequate to support our operations, requiring us to make significant expenditures in these areas. We
expect that we will need to develop further financial, operational and management reporting systems
and procedures to accommodate future growth. While we believe our current systems and procedures
are adequate, we cannot assure you that we will be able to develop such additional systems or
procedures to accommodate our future expansion on a timely basis, and the failure to do so could
harm our business.
We have a significant amount of fixed obligations and we will incur significantly more fixed obligations,
which could harm our ability to meet our growth strategy and impair our ability to service our fixed
obligations.
As of December 31, 2004, our debt of $1.54 billion accounted for 67.1% of our total capitalization.
Most of our long-term and short-term debt has floating interest rates. In addition to long-term debt, we
have a significant amount of other fixed obligations under operating leases related to our aircraft,
airport terminal space, other airport facilities and office space. As of December 31, 2004, future
minimum lease payments under noncancelable operating leases with initial or remaining terms in excess
of one year were approximately $502 million for 2005 through 2009 and an aggregate of $533 million
for the years thereafter.
As of December 31, 2004, we had commitments of approximately $7.28 billion to purchase 214
additional aircraft and other flight equipment over the next seven years, including estimated amounts
for contractual price escalations. We have commenced construction 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 aircraft through either secured debt or
lease financing. Although we believe that debt and/or lease financing should be available for our
aircraft deliveries, we cannot assure you that we will be able to secure such financing on terms
acceptable to us or at all.
Our high level of debt and other fixed obligations could:
• impact our ability to obtain additional financing to support capital expansion plans and for
working capital and other purposes on acceptable terms or at all;
• divert substantial cash flow from our operations and expansion plans in order to service our
fixed obligations;
• require us to incur significantly more interest or rent expense than we currently do, since most
of our debt has floating interest rates and five of our aircraft leases have variable-rate rent; and
• place us at a possible competitive disadvantage compared to less leveraged competitors and
competitors that have better access to capital resources.
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