JetBlue Airlines 2004 Annual Report Download - page 45

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Other Income (Expense). Interest expense increased 85.1% primarily due to our debt financing of
15 additional aircraft and interest on our 31⁄2% convertible notes, resulting in $24.6 million of additional
interest expense. Interest income increased by $3.2 million due to higher interest rates. Other
income also includes the ineffective gains(losses) on our derivative contracts, which were de minimis in
2004 and resulted in a gain of $2.2 million in 2003.
Our effective tax rate declined to 38.2% in 2004 compared to 40.8% in 2003 primarily as a result
of $2.2 million in California State Enterprise Zone tax credits in 2004.
Year 2003 Compared to Year 2002
Our net income for the year 2003 increased to $103.9 million from $54.9 million for the year 2002.
We had operating income of $168.8 million, an increase of $63.8 million over 2002, and our operating
margin was 16.9%, up 0.4 points from 2002. Our effective tax rate was 40.8% in 2003 compared to
42.2% in 2002. During 2003, we incurred additional amortization, depreciation and salaries and benefits
expense, which was offset by a reduction in other operating expenses where the expense for payments
by JetBlue under its long-term contractual agreement to LiveTV were previously recorded.
Diluted earnings per share was $0.96 and $0.56 for the years ended 2003 and 2002, respectively.
Our results for 2003 included $22.8 million in Emergency War Time Act compensation which, net of
income taxes and profit sharing, amounted to $11.5 million, or $0.11 per diluted share. Our earnings
per share for 2003 reflect an increased number of weighted average shares outstanding compared to
2002 as a result of our capital raising efforts, including 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, or $422.1 million, partially offset by a 7.0% decrease in yield, or
$72.2 million, drove the increase in passenger revenue of $349.9 million for the year 2003. Other
revenue increased 66.1%, or $13.3 million, primarily due to increased change fees of $6.5 million
resulting from more passengers, LiveTV third party revenues of $3.2 million and concession sales from
Terminal 6 at JFK of $1.2 million.
Operating Expenses. Operating expenses increased 56.5%, or $299.4 million, primarily due to
operating an average of 17.0 additional aircraft, which provided us with higher capacity. Operating
capacity increased 65.5% to 13.6 billion available seat miles due to scheduled capacity increases and
increased transcontinental flights over 2002.
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