JetBlue Airlines 2004 Annual Report Download - page 50

escrow with a depositary. As aircraft are delivered, the cash proceeds are utilized to purchase our
secured equipment notes issued to finance these aircraft.
We currently have shelf registration statements on file with the Securities and Exchange
Commission related to the issuance of $1 billion aggregate amount of common stock, preferred stock,
debt securities and/or pass-through certificates. The net proceeds of any securities we sell under these
registration statements may be used to fund working capital and capital expenditures, including the
purchase of aircraft and construction of facilities on or near airports. Through December 31, 2004, we
had issued $498.2 million in pass-through certificates under these registration statements.
Financing activities during 2003 consisted primarily of (1) the public offering of 4,485,000 shares of
our common stock at $28.33 per share, as adjusted for our November 2003 stock split, raising net
proceeds of $122.5 million, (2) our issuance of $175 million of 31⁄2% convertible notes due 2033, raising
net proceeds of $170.4 million, (3) the sale and leaseback over 20 years of seven aircraft for
$265.2 million with a U.S. leasing institution, (4) the incurrence of $270.5 million of 10- to 12- year
floating rate equipment notes issued to various European banks secured by eight aircraft, (5) net
short-term borrowings of $8.2 million, and (6) the repayment of $57.0 million of debt. Net proceeds
from our equity and notes offerings are being used to fund working capital and capital expenditures,
including capital expenditures related to the purchase of aircraft and construction of facilities on or
near airports.
None of our lenders or lessors are affiliated with us. Our short-term borrowings are part of a
floating rate facility with a group of commercial banks to finance aircraft predelivery deposits.
Capital Resources. We have been able to generate sufficient funds from 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 aircraft, of which 25
are financed under operating leases with the remaining 44 financed by secured debt. At December 31,
2004, secured debt financing has been arranged for all of our Airbus A320 aircraft deliveries scheduled
for 2005. Lease financing has been arranged for the first 30 of our Embraer E190 aircraft deliveries.
Although we believe that debt and/or lease financing should be available for our remaining aircraft
deliveries, we cannot assure you that we will be able to secure financing on terms attractive to us, if at
all. While these financings may or may not result in an increase in liabilities on our balance sheet, our
fixed costs will increase significantly regardless of the financing method ultimately chosen. To the extent
we cannot secure financing, we may be required to modify our aircraft acquisition plans or incur higher
than anticipated financing costs.
Working Capital. Our working capital was $29.1 million and $276.1 million at December 31, 2004
and December 31, 2003, respectively. We expect to meet our obligations as they become due through
available cash and internally generated funds, supplemented as necessary by debt and/or equity
financings and proceeds from aircraft sale and leaseback transactions. We expect to continue generating
positive working capital through our operations. However, we cannot predict whether current trends
and conditions will continue or what the effect on our business might be from the extremely
competitive environment we are operating in or from events that are beyond our control, such as
increased fuel prices, the impact of airline bankruptcies or consolidations, U.S. military actions, or acts
of terrorism. We have obtained financing for all of our aircraft deliveries scheduled for 2005. Assuming
that we utilize the predelivery short-term borrowing facility available to us, we believe the working
capital available to us will be sufficient to meet our cash requirements for at least the next 12 months.
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