JetBlue Airlines 2005 Annual Report Download - page 28

could be below the expectations of investors and any published reports or analyses regarding JetBlue.
In that event, the price of our common stock could decline, perhaps substantially.
We are subject to the risks of having a limited number of suppliers for our aircraft, engines and a key
component of our in-flight entertainment system.
Our current dependence on two types of aircraft and engines for all of our flights makes us
particularly vulnerable to any problems associated with the Airbus A320 aircraft or the IAE
International Aero Engines V2527-A5 engine, and the EMBRAER 190 aircraft or the General
Electric Engines CF-34-10 engine, including design defects, mechanical problems, contractual
performance by the manufacturers, or adverse perception by the public that would result in customer
avoidance or in actions by the FAA resulting in an inability to operate our aircraft. Carriers that
operate a more diversified fleet are better positioned than we are to manage such events.
One of the unique features of our fleet is that every seat in each of our aircraft is equipped with
free LiveTV. An integral component of the system is the antenna, which is supplied to us by EMS
Technologies, Inc. If EMS were to stop supplying us with its antennas for any reason, we would have
to incur significant costs to procure an alternate supplier.
Our business could be harmed if we lose the services of our key personnel.
Our business depends upon the efforts of our Chief Executive Officer, David Neeleman, and our
President and Chief Operating Officer, David Barger. The loss of the services of either of these
individuals could harm our business.
Our reputation and financial results could be harmed in the event of an accident or incident
involving our aircraft.
An accident or incident involving one of our aircraft, or an aircraft containing LiveTV equipment,
could involve significant potential claims of injured passengers or others in addition to repair or
replacement of a damaged aircraft and its consequential temporary or permanent loss from service.
We are required by the DOT to carry liability insurance. Although we believe we currently maintain
liability insurance in amounts and of the type generally consistent with industry practice, the amount
of such coverage may not be adequate and we may be forced to bear substantial losses from an
accident. Substantial claims resulting from an accident in excess of our related insurance coverage
would harm our business and financial results. Moreover, any aircraft accident or incident, even if fully
insured, could cause a public perception that we are less safe or reliable than other airlines, which
would harm our business.
Risks Associated with the Airline Industry
The airline industry has incurred significant losses resulting in airline restructurings and
bankruptcies, which could result in changes in our industry.
In 2005, the domestic airline industry reported its fifth consecutive year of losses, which is causing
fundamental and permanent changes in the industry. These losses have resulted in airlines
renegotiating or attempting to renegotiate labor contracts, reconfiguring flight schedules, furloughing
or terminating employees, as well as consideration of other efficiency and cost-cutting measures.
Despite these actions, several airlines, including Delta Air Lines and Northwest Airlines in
September 2005, have sought reorganization under Chapter 11 of the U.S. Bankruptcy Code
permitting them to reduce labor rates, restructure debt, terminate pension plans and generally reduce
their cost structure. In the fall of 2005, US Airways, which had been in bankruptcy, and America West
completed a merger, which may enable the combined entity to have lower costs and a more
rationalized route structure and therefore be better able to compete. It is foreseeable that further
airline reorganizations, bankruptcies or consolidations may occur, the effects of which we are unable
to predict. We cannot assure you that the occurrence of these events, or potential changes resulting
from these events, will not harm our business or the industry.
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