JetBlue Airlines 2006 Annual Report Download - page 71

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on employee compensation. These contributions vest immediately. Our contributions expensed for the
Plan in 2006, 2005 and 2004 were $13 million, $8 million and $19 million, respectively. Our 2005
contributions were all related to our 401(k) plan match.
Note 11—Commitments
At December 31, 2006, our firm aircraft orders consisted of 82 Airbus A320 aircraft, 78
EMBRAER 190 aircraft and 29 spare engines scheduled for delivery through 2014. Committed
expenditures for these aircraft and related flight equipment, including estimated amounts for
contractual price escalations and predelivery deposits, will be approximately $775 million in 2007,
$835 million in 2008, $965 million in 2009, $1.03 billion in 2010, $1.00 billion in 2011 and $1.10 billion
thereafter. We have options to purchase 48 Airbus A320 aircraft scheduled for delivery from 2009
through 2013 and 100 EMBRAER 190 aircraft scheduled for delivery from 2008 through 2015. Debt
financing has been arranged for seven of our twelve Airbus A320 aircraft deliveries, and lease
financing has been arranged for eight of our ten EMBRAER 190 aircraft deliveries scheduled for
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 $36 million
in 2007, $6 million in 2008, $4 million in 2009 and $3 million in both 2010 and 2011.
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 that would require a reduction in work hours, we are obligated to pay these employees a
guaranteed level of income and to continue their benefits. 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 our 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.
We are a party to many routine contracts under which we indemnify third parties for various
risks. These indemnities consist of the following:
All of our bank loans, including our aircraft and engine mortgages, contain standard provisions
present in loans of this type which obligate us to reimburse the bank for any increased costs
associated with continuing to hold the loan on our 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, we have 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, we have agreed to customary indemnities concerning withholding tax law changes under
which we are responsible, should withholding taxes be imposed, for paying such amount of additional
rent or interest as is necessary to ensure that the lessor or lender still receives, after taxes, the rent
stipulated in the lease or the interest stipulated under the loan. The term of these indemnities matches
the length of the related lease up to 18 years.
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