JetBlue Airlines 2008 Annual Report Download - page 46

The interest rates are fixed for $1.58 billion of our debt and capital lease obligations, with the remaining
$1.45 billion having floating interest rates. The floating interest rates adjust quarterly or semi-annually based
on the London Interbank Offered Rate, or LIBOR. The weighted average maturity of all of our debt was nine
years at December 31, 2008. We are not subject to any financial covenants in any of our debt obligations,
except for the requirement to maintain $300 million in cash and cash equivalents related to our $110 million
line of credit agreement entered into in July 2008. Our spare parts pass-through certificates issued in
November 2006 require us to maintain certain non-financial collateral coverage ratios, which could require us
to provide additional spare parts collateral or redeem some or all of the related equipment notes. At
December 31, 2008, we were in compliance with all covenants of our debt and lease agreements and 89% of
our owned property and equipment was collateralized.
We have operating lease obligations for 55 aircraft with lease terms that expire from 2009 to 2025. Five
of these leases have variable-rate rent payments that adjust semi-annually based on LIBOR. We also lease
airport terminal space and other airport facilities in each of our markets, as well as office space and other
equipment. We have $27 million of restricted assets pledged under standby letters of credit related to certain
of our leases which will expire at the end of the related lease terms.
Including the effects of the 2008 amendments to our Airbus and EMBRAER purchase agreements, our
firm aircraft orders at December 31, 2008 consisted of 58 Airbus A320 aircraft and 70 EMBRAER 190
aircraft scheduled for delivery as follows: 11 in 2009, 6 in 2010, 9 in 2011, 23 in 2012, 25 in 2013, 24 in
2014, 20 in 2015, and 10 in 2016. We meet our predelivery deposit requirements for our aircraft by paying
cash or by using short-term borrowing facilities for deposits required six to 24 months prior to delivery. Any
predelivery deposits paid by the issuance of notes are fully repaid at the time of delivery of the related
aircraft.
We also have options to acquire 22 additional Airbus A320 aircraft for delivery from 2011 through 2015
and 86 additional EMBRAER 190 aircraft for delivery from 2009 through 2015. We can elect to substitute
Airbus A321 aircraft or A319 aircraft for the A320 aircraft until 21 months prior to the scheduled delivery
date for those aircraft not on firm order.
In October 2008, we began operating out of our new Terminal 5 at JFK, or Terminal 5, which we had
been constructing since November 2005. The construction and operation of this facility is governed by a lease
agreement that we entered into with the PANYNJ in 2005. We are responsible for making various payments
under the lease, including ground rents for the new terminal site which began on lease execution in 2005 and
facility rents that commenced in October 2008 upon our occupancy of the new terminal. The facility rents are
based on the number of passengers enplaned out of the new terminal, subject to annual minimums. The
PANYNJ has reimbursed us for costs of this project in accordance with the terms of the lease, except for
approximately $76 million in leasehold improvements that have been provided by us. For financial reporting
purposes, this project is being accounted for as a financing obligation, with the constructed asset and related
liability being reflected on our balance sheets. Minimum ground and facility rents for this terminal totaling
$1.29 billion are included in the commitments table above as lease commitments and financing obligations.
Anticipated capital expenditures for facility improvements, spare parts and ground purchases in 2009 are
projected to be approximately $185 million. 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.
We enter into individual employment agreements with each of our FAA-licensed employees. 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. 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. As
we are not currently obligated to pay this guaranteed income and benefits, no amounts related to these
guarantees are included in the table above.
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