JetBlue Airlines 2005 Annual Report Download - page 57

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
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 60%of our flights. We
currently serve 34 destinations in 15 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 2005, 2004 and 2003. Accordingly, segment
information is not provided for LiveTV. Certain prior year amounts have been reclassified to conform
to the current year presentation.
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) auction rate securities
with auction reset periods less than 12 months, classified as available-for-sale securities and stated at
fair value; (b) investment-grade interest bearing instruments maturing in 12 months or less, classified
as held-to-maturity investments, and stated at amortized cost; and (c) financial derivative instruments
settling within 12 months, stated at fair value. The fair values of our financial derivative instruments
are estimated through the use of standard option value models and/or present value methods since
these instruments are not actively traded on a market exchange.
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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