JetBlue Airlines 2005 Annual Report Download - page 3

purchased LiveTV a little over three years ago, we were their only customer with 30 aircraft in
service. Today, LiveTV is recognized as a world leader in providing satellite entertainment on
commercial aircraft, with seven different products, five airline customers (AirTran, Frontier, JetBlue,
Virgin Blue and WestJet) on seven different aircraft types and over 300 aircraft in service. LiveTV is
unique in that it designs, manufactures, installs, maintains and provides content for the entire system.
We are pleased that LiveTV has grown to be an industry leader and has successfully defined a unique
position within the inflight entertainment industry.
Also in 2005, we officially opened our new JetBlue University training facility in Orlando. In 2006, we
will break ground on a new crewmember housing facility, named the JetBlue Lodge, adjacent to the
training center in Orlando. We expect this decision to be cost-effective in the long term, given our
large training requirements in Orlando. The Greater Orlando Aviation Authority and many others in
and around the City of Orlando were instrumental in partnering with our airline to ensure the proper
long-term infrastructure is in place to support our airline well into the future.
With an eye on the future, we broke ground for our new terminal facility at JFK’s Terminal 5 in
December 2005, which will be connected to the historic Saarinen building. This new facility and the
supporting infrastructure will host 26 gates, and we expect to operate roughly 10 flights a day from
each gate when the new terminal is completed in early 2009. This will give us the potential of 250
departures per day from JFK, capable of handling up to 20 million customers a year. We are already
the largest airline at JFK and this new terminal will further cement our leadership position at our
hometown airport. This effort was only possible through our partnership with the Port Authority of
New York and New Jersey, and we are very thankful for their ongoing vision in leading the world’s
largest airport system forward into the future.
Looking ahead, our challenge will be to improve upon our revenue performance, further improve our
low cost structure and keep the JetBlue Experience fresh and attractive as we grow our network. We
believe we can improve the management of our inventory through a better fare mix on every flight,
without significantly changing our fare range. We are also keenly focused on determining the
appropriate fare structures to meet the sustained high fuel prices, as well as revamping frequencies in
certain markets to optimize our revenue. In addition, we will continue to utilize leading-edge
technology in our marketing efforts. In 2005, we initiated new online marketing tools that are not only
cost-effective, but also produce higher booking rates. In early 2006, we launched a new advertising
campaign with J. Walter Thompson and, later this year, we plan to implement Navitaire’s New Skies
reservation system, the next-generation booking system that will allow us to introduce new features
for our customers and permit more customization of our web site and kiosks.
We remain committed to maintaining a strong balance sheet as we grow our airline. To that end, our
liquidity position remains solid. Key to balance sheet stability is of course, profitability. As we face
what appears to be the ‘‘new normal’’ for record-high fuel prices we know there are many challenges
to overcome. And even though our operating margin in 2005 was higher than most other major
airlines in the United States it simply was not where we would like it to be. We have committed
ourselves as a company to return to profitability and intend to do everything we can to achieve this
goal as quickly as possible. An important factor in this commitment is advancing our revenue
management to the next level. An increased internal focus on implementing a combination of higher
average fares, improved capacity alignment and diversification into new markets will assist us in our
goal to enhance our revenue performance.
We continue to look for opportunities to diversify into higher-yielding markets and are shifting our
focus to short and medium haul cities where decreased competition, especially from bankrupt
competitors, will allow us to command a revenue premium. Of course, we are very excited about
having the A320 and E190 as part of our fleet, as the two aircraft will be instrumental in balancing the
seasonality of markets, stimulating demand in smaller markets and adjusting aircraft size to
accommodate varying demands during the course of an operational day.
On the cost side, we are more committed than ever to be diligent in the items we can control. With
our second greatest cost being labor, we are looking for innovative ways in which we can enhance
productivity, improve business practices and increase our technology initiatives to help mitigate cost