JetBlue Airlines 2008 Annual Report Download - page 21

Our aircraft fuel purchase agreements do not protect us against price increases or guarantee the
availability of fuel. Additionally, some of our competitors may have more leverage than we do in obtaining
fuel. We have and may continue to enter into crude oil and heating oil option contracts and swap agreements
to partially protect against significant increases in fuel prices; however, such contracts and agreements do not
completely protect us against price increases, are limited in fuel volume and duration, and can be less effective
during volatile market conditions. Under the fuel hedge contracts that we may enter into from time to time,
counterparties to those contracts may require us to fund the margin associated with any loss position on the
contracts if the price of crude oils falls below specified benchmarks. Meeting our obligations to fund these
margin calls could adversely affect our liquidity.
Due to the competitive nature of the domestic airline industry, we have not been able to adequately
increase our fares to offset the increases in fuel prices and we may not be able to do so in the future. Future
fuel increases, continued high fuel price volatility or fuel supply shortages may result in a curtailment of
scheduled services and could have a material adverse effect on our financial condition and results of
operations.
If we fail to successfully implement our growth strategy, our business could be harmed.
We have grown, and expect to continue to grow our business by increasing the frequency of flights to
markets we currently serve, expanding the number of markets we serve and increasing flight connection
opportunities. Increasing the number of markets we serve depends on our ability to access suitable airports
located in our targeted geographic markets in a manner that is consistent with our cost strategy. We may also
need to obtain additional gates at some of our existing destinations. Any condition that would deny, limit or
delay our access to airports we currently serve or may seek to serve in the future would constrain our ability
to grow. Opening new markets requires us to commit a substantial amount of resources, even before the new
services commence. Expansion is also dependent upon our ability to maintain a safe and secure operation and
requires additional personnel, equipment and facilities. An inability to hire and retain personnel, timely secure
the required equipment and facilities in a cost-effective manner, efficiently operate our expanded facilities, or
obtain the necessary regulatory approvals may adversely affect our ability to achieve our growth strategy,
which could harm our business. In addition, expansion to new international markets may have other risks due
to factors specific to those markets. We may be unable to foresee all of the risks attendant upon entering
certain new international markets or respond adequately to these risks, and our growth strategy and our
business may suffer as a result.
Due primarily to higher fuel prices, the competitive pricing environment and other cost increases, it has
become increasingly difficult to fund our growth profitably. As a result, in 2006 we began modifying our growth
plans by deferring some of our scheduled deliveries of new aircraft, selling or terminating our leases for some of
our aircraft, and leasing aircraft to other operators. We may further reduce our future growth plans from
previously announced levels. In addition, our competitors often add service, reduce their fares and/or offer special
promotions following our entry into a new market. We cannot assure you that we will be able to profitably
expand our existing markets or establish new markets, and if we fail to do so, our business could be harmed.
LiveTV has contracts to provide in-flight entertainment products and services with eleven other airlines.
At December 31, 2008, LiveTV services were available on 358 aircraft under these agreements, with firm
commitments for 405 additional aircraft through 2015, with options for 191 additional installations through
2017. Performance under these agreements requires that LiveTV hire, train and retain qualified employees,
obtain component parts unique to its systems and services from their suppliers and secure facilities necessary
to perform installations and maintenance on those systems. Should LiveTV be unable to satisfy its
commitments under these third party contracts, our business could be harmed.
We have a significant amount of fixed obligations and we will incur significantly more fixed
obligations, which could harm our ability to meet our growth strategy and impair our ability to service our
fixed obligations.
As of December 31, 2008, our debt of $3.15 billion accounted for 71% of our total capitalization. In
addition to long-term debt, we have a significant amount of other fixed obligations under leases related to our
aircraft, airport terminal space, other airport facilities and office space. As of December 31, 2008, future
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