JetBlue Airlines 2010 Annual Report Download - page 48

PANYNJ has reimbursed us for costs of this project in accordance with the terms of the lease, except for
approximately $78 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
$1.21 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 2011 are
projected to be approximately $125 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 the employee is terminated for cause or the employee elects 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.
Off-Balance Sheet Arrangements
None of our operating lease obligations are reflected on our balance sheet. Although some of our aircraft
lease arrangements are with variable interest entities, as defined by the Consolidations topic of the Financial
Accounting Standards Board’s, or FASB, Accounting Standards Codification
TM
, or Codification, none of them
require consolidation in our financial statements. The decision to finance these aircraft through operating
leases rather than through debt was based on an analysis of the cash flows and tax consequences of each
option and a consideration of additional liquidity requirements. We are responsible for all maintenance,
insurance and other costs associated with operating these aircraft; however, we have not made any residual
value or other guarantees to our lessors.
We have determined that we hold a variable interest in, but are not the primary beneficiary of, certain
pass-through trusts which are the purchasers of equipment notes issued by us to finance the acquisition of new
aircraft and certain aircraft spare parts owned by JetBlue and held by such pass-through trusts. These pass-
through trusts maintain liquidity facilities whereby a third party agrees to make payments sufficient to pay up
to 18 months of interest on the applicable certificates if a payment default occurs. The liquidity providers for
the Series 2004-1 aircraft certificates and the spare parts certificates are Landesbank Hessen-Thu
¨ringen
Girozentrale and Morgan Stanley Capital Services Inc. The liquidity providers for the Series 2004-2 aircraft
certificates are Landesbank Baden-Wu
¨rttemberg and Citibank, N.A.
We use a policy provider to provide credit support on our Class G-1 and Class G-2 floating rate enhanced
equipment notes. The policy provider has unconditionally guaranteed the payment of interest on the
certificates when due and the payment of principal on the certificates no later than 18 months after the final
expected regular distribution date. The policy provider is MBIA Insurance Corporation (a subsidiary of MBIA,
Inc.). Financial information for the parent company of the policy provider is available at the SEC’s website at
http://www.sec.gov or at the SEC’s public reference room in Washington, D.C.
We have also made certain guarantees and indemnities to other unrelated parties that are not reflected on
our balance sheet which we believe will not have a significant impact on our results of operations, financial
condition or cash flows. We have no other off-balance sheet arrangements. See Notes 2, 3 and 12 to our
consolidated financial statements for a more detailed discussion of our variable interests and other
contingencies, including guarantees and indemnities.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with generally accepted accounting principles
requires management to adopt accounting policies and make estimates and judgments to develop amounts
reported in our financial statements and accompanying notes. We maintain a thorough process to review the
application of our accounting policies and to evaluate the appropriateness of the estimates that are required to
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