JetBlue Airlines 2006 Annual Report Download - page 58

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JETBLUE AIRWAYS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006
JetBlue Airways Corporation is a low-cost passenger airline that provides high quality customer
service at low fares primarily on point-to-point routes. We offer our customers a high quality product
with new aircraft, leather seats, free in-flight entertainment 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 62%of our flights. We currently serve 50 destinations in 21 states, Puerto
Rico, Mexico and the Caribbean. 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 2006, 2005 and 2004. Accordingly, segment
information is not provided for LiveTV.
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 cost of securities sold is based on specific
identification.
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.
Estimated useful lives and residual values for our property and equipment are as follows:
Estimated Useful Life Residual Value
Aircraft .................................. 25years 20%
In-flight entertainment systems ............. 12years 0%
Aircraft parts ............................. Fleet life 10%
Flight equipment leasehold improvements.... Lease term 0%
Ground property and equipment ............ 3-10 years 0%
Leasehold improvements................... Lower of 15 years or lease term 0%
Buildings on leased land ................... Lease term 0%
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