JetBlue Airlines 2010 Annual Report Download - page 70

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Operating Leases as Lessor: In 2008, we leased two of our owned EMBRAER 190 aircraft, each with a
lease term of 12 years. The net book value of these two aircraft was approximately $48 million and
$50 million as of December 31, 2010 and 2009, respectively, and is included in other assets on our
consolidated balance sheet. Under the terms of these leases, we recorded approximately $6 million, $6 million,
and $2 million in rental income during 2010, 2009 and 2008, respectively. Future lease payments due to us
under these leases are approximately $6 million per year through 2020.
Note 4—JFK Terminal 5
In October 2008, we began operating out of our new Terminal 5 at JFK, or Terminal 5. The construction
and operation of this facility is governed by various lease agreements with the PANYNJ. Under the terms of
the facility lease agreement, we were responsible for the construction of a 635,000 square foot 26-gate
terminal, a parking garage, roadways and an AirTrain Connector, all of which are owned by the PANYNJ and
which are collectively referred to as the Project. We are responsible for various payments under the lease,
including ground rents for the new terminal site which began on lease execution in 2005 and are reflected in
the future minimum lease payments table in Note 3, and facility rents which commenced in 2008 when we
took beneficial occupancy of Terminal 5, and are included below. The facility rents are based on the number
of passengers enplaned out of the new terminal, subject to annual minimums. The lease terms end in 2038 and
we have a one-time early termination option in 2033.
We are considered the owner of the Project for financial reporting purposes only and have been required
to reflect an asset and liability for the Project on our consolidated balance sheets since construction
commenced in 2005. Since certain elements of the Project, including the parking garage and AirTrain
Connector, are not subject to the underlying ground lease, following their delivery to and acceptance by the
PANYNJ in October 2008, we removed them from our consolidated balance sheets. Our continuing
involvement in the remainder of the Project precludes us from sale and leaseback accounting; therefore the
cost of these elements of the Project and the related liability will remain on our consolidated balance sheets
and be accounted for as a financing.
Through December 31, 2010, total costs incurred for the elements of the Project which are subject to the
underlying ground lease were $636 million, $558 million of which is reflected as Assets Constructed for
Others and $78 million of which are leasehold improvements included in ground property and equipment in
our consolidated balance sheets. These amounts reflect a non-cash $133 million reduction in 2008 for costs
incurred for the elements that were not subject to the underlying ground lease. Assets Constructed for Others
are being amortized over the shorter of the 25 year non-cancelable lease term or their economic life. We
recorded $22 million, $21 million and $5 million in amortization expense during 2010, 2009 and 2008,
respectively.
The PANYNJ has reimbursed us for the amounts currently included in Assets Constructed for Others,
exclusive of capitalized interest of $68 million. These reimbursements and the capitalized interest are reflected
as Construction Obligation in our consolidated balance sheets. As facility rents are paid, they are treated as
debt service on the Construction Obligation, with the portion not relating to interest reducing the principal
balance. Minimum estimated facility payments, including escalations, associated with the facility lease are
estimated to be $38 million in 2011, $39 million in 2012, $40 million in each of 2013 through 2015 and
$737 million thereafter. The portion of these scheduled payments serving to reduce the principal balance of
the Construction Obligation is $10 million in 2011, $12 million in 2012, $13 million in 2013, $14 million in
2014 and $14 million in 2015. Payments could exceed these amounts depending on future enplanement levels
at JFK. Scheduled facility payments representative of interest totaled $27 million, $32 million and $6 million
in 2010, 2009 and 2008, respectively.
We have subleased a portion of Terminal 5, primarily space for concessionaires. Minimum lease
payments due to us are subject to various escalation amounts through 2019 and also include a percentage of
gross receipts, which may vary from month to month. Future minimum lease payments due to us are estimated
to be $10 million per year over each of the next five years.
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