JetBlue Airlines 2004 Annual Report Download - page 60

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 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 satellite TV
service) at every seat, pre-assigned seating and reliable performance. We commenced service in
February 2000 and established our primary base of operations at New York’s John F. Kennedy
International Airport, or JFK, which serves as the origination or destination for 75% of our flights. We
currently serve 30 destinations in 12 states, Puerto Rico, the Dominican Republic and The Bahamas.
LiveTV, LLC, or LiveTV, a wholly owned subsidiary, provides in-flight entertainment systems for
commercial aircraft, including live in-seat satellite television, digital satellite radio, wireless aircraft data
link service and cabin surveillance systems.
Note 1—Summary of Significant Accounting Policies
Basis of Presentation: Our consolidated financial statements include the accounts of JetBlue
Airways Corporation, or JetBlue, and our subsidiaries, collectively ‘‘we’’ or the ‘‘Company’’, with all
intercompany transactions and balances having been eliminated. Air transportation services accounted
for substantially all the Company’s operations in 2002, 2003 and 2004. Accordingly, segment
information is not provided for LiveTV. Certain prior year amounts have been reclassified to conform
to the current year presentation, including the reclassification to investment securities of $467.9 million
of auction rate securities, which were included in cash and cash equivalents at December 31, 2003.
Use of Estimates: We are required to make estimates and assumptions when preparing our
consolidated financial statements in conformity with accounting principles generally accepted in the
United States that affect the amounts reported in our consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash equivalents consist of short-term, highly liquid investments which
are readily convertible into cash with maturities of three months or less when purchased.
Investment Securities: Investment securities consist of the following: (a) investment-grade interest
bearing instruments maturing in 12 months or less, classified as held-to-maturity investments, and stated
at amortized cost; (b) auction rate securities with auction reset periods less than 12 months, classified
as available-for-sale securities and stated at fair value; and (c) fuel hedge derivative contracts settling
within 12 months, stated at fair value.
Inventories: Inventories consist of expendable aircraft spare parts, supplies and aircraft fuel. These
items are stated at average cost and charged to expense when used. An allowance for obsolescence on
aircraft spare parts is provided over the remaining useful life of the related aircraft.
Property and Equipment: We record our property and equipment at cost and depreciate these
assets on a straight-line basis to their estimated residual values over their estimated useful lives.
Additions, modifications that enhance the operating performance of our assets, and interest related to
predelivery deposits to acquire new aircraft and for the construction of facilities are capitalized.
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