JetBlue Airlines 2005 Annual Report Download - page 68

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of Director approval, is distributed on a pro rata basis based on employee compensation. These
contributions vest immediately. Our contributions expensed for the Plan in 2005, 2004 and 2003 were
$8 million, $19 million and $35 million, respectively. Our 2005 contributions were all related to our
401(k) plan match.
Note 11—Commitments
At December 31, 2005, our firm aircraft orders consisted of 98 Airbus A320 aircraft, 94
EMBRAER 190 aircraft and 34 spare engines scheduled for delivery through 2012. Committed
expenditures for these aircraft and related flight equipment, including estimated amounts for
contractual price escalations and predelivery deposits, will be approximately $1.12 billion in 2006,
$1.17 billion in 2007, $1.20 billion in 2008, $1.23 billion in 2009, $1.18 billion in 2010, and $0.54 billion
thereafter. We have options to purchase 50 A320 aircraft scheduled for delivery from 2008 through
2013 and 100 EMBRAER 190 aircraft scheduled for delivery from 2011 through 2016. Debt financing
has been arranged for 11 of our 16 Airbus A320 deliveries scheduled for 2006. Lease financing has
been arranged for the next 24 EMBRAER 190 aircraft deliveries, scheduled for delivery through
March 2007.
Our commitments also include those of LiveTV, which has several noncancelable long-term
purchase agreements with its suppliers to provide equipment to be installed on its customers’ aircraft,
including JetBlue’s aircraft. Committed expenditures to these suppliers are approximately $37 million
in 2006, $5 million in each of 2007 and 2008, $3 million in 2009 and $1 million in 2010.
We enter into individual employment agreements with each of our FAA-licensed employees,
which include pilots, dispatchers and technicians. Each employment agreement is for a term of five
years and automatically renews for an additional five-year term unless either the employee or we elect
not to renew it by giving at least 90 days notice before the end of the relevant term. Pursuant to these
agreements, these employees can only be terminated for cause. In the event of a downturn in our
business, we are obligated to pay these employees a guaranteed level of income and to continue their
benefits if they do not obtain other aviation employment. None of our employees are covered by
collective bargaining agreements with us.
Note 12—Contingencies
The Company is party to legal proceedings and claims that arise during the ordinary course of
business. We believe that the ultimate outcome of these matters will not have a material adverse
effect upon the Company’s financial position, results of operations or cash flows.
We self-insure a portion of our losses from claims related to workers’ compensation,
environmental issues, property damage, medical insurance for employees and general liability. Losses
are accrued based on an estimate of the ultimate aggregate liability for claims incurred, using standard
industry practices and our actual experience.
The Company is a party to many routine contracts under which it indemnifies third parties for
various risks. These indemnities consist of the following:
All of the Company’s bank loans, including its aircraft and engine mortgages, contain standard
provisions present in loans of this type which obligate the Company to reimburse the bank for any
increased costs associated with continuing to hold the loan on its books which arise as a result of
broadly defined regulatory changes, including changes in reserve requirements and bank capital
requirements. These indemnities would have the practical effect of increasing the interest rate on our
debt if they were to be triggered. In all cases, the Company has the right to repay the loan and avoid
the increased costs. The term of these indemnities matches the length of the related loan up to
12 years.
Under both aircraft leases with foreign lessors and aircraft and engine mortgages with foreign
lenders, the Company has agreed to customary indemnities concerning withholding tax law changes
under which the Company is responsible, should withholding taxes be imposed, for paying such
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