JetBlue Airlines 2005 Annual Report Download - page 2

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In our greatest accomplishment last year, we introduced the EMBRAER 190 to our fleet. Our
customers love the roomy interior and the expanded in-flight entertainment as our E190s, powered by
General Electric engines, have more than 100 channels of XM Satellite Radio in addition to our
signature 36 channels of DIRECTV programming. As the worldwide launch customer for this brand
new aircraft type, we experienced operational integration issues not uncommon for the introduction of
a new aircraft type. In retrospect, we were too aggressive in our initial implementation plan for a
newly certified aircraft. Now, with more than five months of operating experience with the aircraft, we
are confident that the E190’s operational reliability will continue to improve to the levels our
customers have come to expect from us. In fact, our airline has achieved the highest technical dispatch
reliability rating for our A320 fleet, according to Airbus Industries — which is an accomplishment
made even more special considering JetBlue is the second largest A320 operator in the world with
extraordinarily high utilization.
We were also very pleased with the successful outcome of Flight 292, which experienced a nose gear
issue shortly after take-off en route to New York from Burbank, CA last September. As millions
around the country experienced the same tense moments waiting for Flight 292 to land in Los
Angeles, we all collectively cheered in admiration for the heroic actions of our crewmembers — not
only for the precision landing, but for keeping our customers well-informed and prepared for the
landing. We heard from people throughout the country and across the world who sent us notes of
praise for our crewmembers. All of the training and dedication to safety excellence came together on
that evening to produce a safe landing. JetBlue and Airbus have since addressed and remedied the
mechanical issues that led to the incident.
Reliable service is a key element of the JetBlue Experience. We had the highest completion factor in
the industry, again demonstrating our commitment to operating flights even with a delay, rather than
canceling the flight for the schedule’s convenience. Our on-time arrival percentage was not up to the
high standards we have set for ourselves and that we have historically been able to achieve. The
primary cause of this decline was a combination of internal and external factors, including challenging
weather conditions in our key markets, air traffic control congestion — mainly in the Northeast where
the majority of our flights operate — and our preference for not canceling flights. To improve our
on-time arrival performance we are looking to revitalize our efficiency on the ground, termed the
‘‘BlueTurn,’’ which will assist us greatly in our focus to keep our aircraft’s ground time to a minimum.
We are also working closely with the FAA and others to improve upon airport congestion and air
traffic delays. Staying true to our commitment to our customers, we were ranked in the top tier among
major airlines in the United States for our favorable baggage handling rates, low complaints to the
DOT and zero incidents of involuntary denied boarding.
We were also impacted significantly in 2005 by three hurricanes: Katrina, Rita and Wilma.
Unfortunately, our on-time percentage rates and completion factors suffered greatly because of the
geographic concentration of our route network in the impacted areas. In the aftermath of Hurricanes
Katrina and Rita, many Gulf Coast refineries went off-line and their overall output was reduced,
thereby driving oil prices up as demand exceeded supply. Already high fuel costs suffered
considerably, and in a matter of weeks in late October, we saw jet fuel prices skyrocket to over $3.00
per gallon at several airport locations. Our revenues suffered as a result of the storms as well. Lost
bookings to and from the impacted areas combined with cancelled flights due to airport closures had a
substantial effect on our results.
During the year we accomplished many notable infrastructure initiatives which will support us for
many years to come. We were pleased with the successful, on-time conversion to SAP’s finance and
human resource system in early 2006. As an integrated product, this software package will support
many fundamental administrative functions as our crewmember population increases. Additional
infrastructure accomplishments for the year include the opening of our Orlando, Florida hangar, which
principally supports LiveTV. Shortly following our Orlando hangar opening, we also opened our new
JFK hangar. This state-of-the art facility allows us to efficiently and effectively maintain our fleet of
Airbus A320s and E190s at our home base of operations.
Last April, more than 200 LiveTV teammembers and their families met at the new LiveTV hangar in
Orlando to celebrate a new home, the company’s growth and a redefined identity. When JetBlue