JetBlue Airlines 2010 Annual Report Download - page 25

culture could otherwise be adversely affected by our growing operations and geographic diversity. If we fail to
maintain the strength of our company culture, our competitive ability and our business may be harmed.
Our results of operations fluctuate due to seasonality and other factors.
We expect our quarterly operating results to fluctuate due to seasonality including high vacation and
leisure demand occurring on the Florida routes between October and April and on our western routes during
the summer. Actions of our competitors may also contribute to fluctuations in our results. We are more
susceptible to adverse weather conditions, including snow storms and hurricanes, as a result of our operations
being concentrated on the East Coast, than some of our competitors. As we enter new markets we could be
subject to additional seasonal variations along with any competitive responses to our entry by other airlines.
Price changes in aircraft fuel as well as the timing and amount of maintenance and advertising expenditures
also impact our operations. As a result of these factors, quarter-to-quarter comparisons of our operating results
may not be a good indicator of our future performance. In addition, it is possible that in any future period our
operating results could be below the expectations of investors and any published reports or analyses regarding
JetBlue. In that event, the price of our common stock could decline, perhaps substantially.
We are subject to the risks of having a limited number of suppliers for our aircraft, engines and a key
component of our in-flight entertainment system.
Our current dependence on two types of aircraft and engines for all of our flights makes us vulnerable to
significant problems associated with the Airbus A320 aircraft or the IAE International Aero Engines
V2527-A5 engine and the EMBRAER 190 aircraft or the General Electric Engines CF-34-10 engine, including
design defects, mechanical problems, contractual performance by the manufacturers, or adverse perception by
the public that would result in customer avoidance or in actions by the FAA resulting in an inability to operate
our aircraft. Carriers that operate a more diversified fleet are better positioned than we are to manage such
events.
One of the unique features of our fleet is that every seat in each of our aircraft is equipped with free in-
flight entertainment including DirecTV». An integral component of the system is the antenna, which is
supplied to us by KVH Industries Inc, or KVH. If KVH were to stop supplying us with its antennas for any
reason, we would have to incur significant costs to procure an alternate supplier.
Our reputation and financial results could be harmed in the event of an accident or incident involving
our aircraft.
An accident or incident involving one of our aircraft, or an aircraft containing LiveTV equipment, could
involve significant potential claims of injured passengers or others in addition to repair or replacement of a
damaged aircraft and its consequential temporary or permanent loss from service. We are required by the DOT
to carry liability insurance. Although we believe we currently maintain liability insurance in amounts and of
the type generally consistent with industry practice, the amount of such coverage may not be adequate and we
may be forced to bear substantial losses from an accident. Substantial claims resulting from an accident in
excess of our related insurance coverage would harm our business and financial results. Moreover, any aircraft
accident or incident, even if fully insured, could cause a public perception that we are less safe or reliable than
other airlines which would harm our business.
An ownership change could limit our ability to utilize our net operation loss carryforwards.
As of December 31, 2010, we had approximately $519 million of estimated federal net operating loss
carryforwards for U.S. income tax purposes that begin to expire in 2023. Section 382 of the Internal Revenue
Code imposes limitation on a corporation’s ability to use its net operating loss carryforwards if it experiences
an “ownership change”. In the event an “ownership change” were to occur in the future, our ability to utilize
our net operating losses could be limited.
Our business depends on our strong reputation and the value of the JetBlue brand.
The JetBlue brand name symbolizes high-quality friendly customer service, innovation, fun, and a
pleasant travel experience. JetBlue is a widely recognized and respected global brand; the JetBlue brand is one
of our most important and valuable assets. The JetBlue brand name and our corporate reputation are powerful
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