JetBlue Airlines 2007 Annual Report Download - page 66

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Future minimum lease payments under noncancelable operating leases with initial or remaining
terms in excess of one year at December 31, 2007, are as follows (in millions):
Aircraft Other Total
2008............................................ $ 187 $ 56 $ 243
2009............................................ 177 40 217
2010............................................ 156 38 194
2011............................................ 144 35 179
2012............................................ 129 31 160
Thereafter ...................................... 821 398 1,219
Total minimum operating lease payments ........... $1,614 $598 $2,212
We hold variable interests in 44 of our 53 aircraft operating leases, which are owned by single
owner trusts whose sole purpose is to purchase, finance and lease these aircraft to us. Since we do not
participate in these trusts and we are not at risk for losses, we are not required to include these trusts
in our consolidated financial statements. Our maximum exposure is the remaining lease payments,
which are reflected in the future minimum lease payments in the table above.
Note 4—Assets Constructed for Others
In November 2005, we executed a lease agreement with the Port Authority of New York and
New Jersey, or PANYNJ, for the construction and operation of a new terminal at JFK. Under this
lease, we are responsible for construction of a 635,000 square foot 26-gate terminal, a parking garage,
roadways and an AirTrain Connector, all of which will be owned by the PANYNJ and which are
collectively referred to as the Project. The lease term ends on the earlier of the thirtieth anniversary
of the date of beneficial occupancy of the new terminal or November 21, 2039. We have a one-time
early termination option five years prior to the end of the scheduled lease term.
The aggregate cost of the Project is estimated at $740 million and is expected to be completed in
late 2008. We are making various payments under the lease, including ground rents for the new
terminal site which began on lease execution, and facility rents that are anticipated to commence upon
the date of beneficial occupancy. The facility rents are based on the number of passengers enplaned
out of the new terminal, subject to annual minimums. The PANYNJ reimburses us for the costs of
constructing the Project in accordance with the lease, except for approximately $80 million in
leasehold improvements that will be provided by us.
We have evaluated this lease and have concluded that we bear substantially all of the construction
period risk, as defined in Emerging Issues Task Force Issue 97-10, The Effect of Lessee Involvement in
Asset Construction. As a result, we are considered the owner of the Project for financial reporting
purposes only and are required to reflect an asset and liability for in-process construction related to
the Project on our balance sheets. To date, we have paid $457 million in Project costs and have
capitalized $34 million in interest, which are reflected as Assets Constructed for Others in the
accompanying consolidated balance sheets. Reimbursements from the PANYNJ and financing charges
totaled $452 million through December 31, 2007 and are reflected as Construction Obligation in our
consolidated balance sheets net of $14 million in scheduled prepayments to the PANYNJ. Following
the construction period, we do not currently anticipate that we will have satisfied the sale and
leaseback accounting criteria outlined in Statement of Financial Accounting Standards No. 98,
Accounting for Leases, due to our continuing involvement in the property; therefore, the completed
project and related liability will remain on our balance sheets and be accounted for as a financing.
Assets Constructed for Others will be amortized over the shorter of the lease term or their
economic life. Facility rents will be recorded as debt service on the Construction Obligation, with the
portion not relating to interest reducing the principal balance. Ground rents are being recognized on a
straight-line basis over the lease term and are reflected in the future minimum lease payments table
included in Note 3. Minimum estimated facility payments, including escalations, associated with this
lease are estimated to be $6 million in 2008, $22 million in 2009, $30 million in 2010, $35 million in
2011, $38 million in 2012 and $892 million thereafter.
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