JetBlue Airlines 2011 Annual Report Download - page 53

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(5) the net borrowings of $88 million under our corporate purchasing line for purchase of jet fuel, (6) the
repayment of $10 million in principal related to our construction obligation for Terminal 5 and (7) the acquisition
of $4 million in treasury shares related to the withholding of taxes, upon the vesting of restricted stock units.
Financing activities during 2010 consisted primarily of (1) the required repurchase of $156 million of our
3.75% convertible debentures due 2035, (2) the net repayment of $56 million on our line of credit collateralized
by our auction rate securities, or ARS, (3) scheduled maturities of $177 million of debt and capital lease
obligations, (4) our issuance of $47 million in fixed rate equipment notes and $69 million in non-public floating
rate equipment notes secured by four EMBRAER 190 aircraft and five spare engines, (5) the reimbursement of
construction costs incurred for Terminal 5 of $15 million and (6) the repayment of $5 million in principal related
to our construction obligation for Terminal 5.
We may in the future issue, in one or more public offerings, debt securities, pass-through certificates,
common stock, preferred stock and/or other securities. At this time, we have no plans to sell any such securities.
None of our lenders or lessors are affiliated with us.
Capital Resources. We have been able to generate sufficient funds from operations to meet our working
capital requirements. Substantially all of our property and equipment is encumbered, excluding one aircraft and
10 spare engines which we own. We have historically financed our aircraft through either secured debt or lease
financing. At December 31, 2011, we operated a fleet of 169 aircraft, of which 60 were financed under operating
leases, four were financed under capital leases and all but one of the remaining 105 were financed by secured
debt. We are working on securing committed financing for the four EMBRAER 190 aircraft scheduled for
delivery in 2012. We may purchase some or all of the seven Airbus A320 aircraft scheduled for delivery in 2012
with cash and will only finance these aircraft at favorable borrowing terms relative to our weighted average cost
of debt. Although we believe that debt and/or lease financing should be available for our remaining aircraft
deliveries, we cannot give assurance that we will be able to secure financing on terms attractive to us, if at all.
While these financings may or may not result in an increase in liabilities on our balance sheet, our fixed costs
will increase significantly regardless of the financing method ultimately chosen. To the extent we cannot secure
financing, we may be required to pay in cash, further modify our aircraft acquisition plans or incur higher than
anticipated financing costs.
Working Capital. We had working capital of $216 million at December 31, 2011, compared to $267
million at December 31, 2010. Our working capital includes the fair value of our short-term fuel hedge
derivatives, which was a net liability of $4 million at December 31, 2011 and an asset of $19 million at
December 31, 2010.
In September 2011, we executed a corporate purchasing line with American Express, which allows us to
borrow up to a maximum of $125 million. Borrowings cannot exceed $30 million per week and may only be
used for the purchase of jet fuel. Borrowings on this corporate purchasing line are subject to our compliance with
the terms and conditions of the credit agreement, including certain financial covenants which include a
requirement to maintain certain cash and short-term investment levels and a minimum earnings before income
taxes, interest, depreciation and amortization, or EBITDA, margin, as well as customary events of default.
Borrowings, which are to be re-paid monthly, are subject to a 6.9% annual interest rate subject to certain
limitations. This borrowing facility will terminate no later than December 31, 2014. Since opening the line in
September 2011, our average outstanding daily balance was $50 million. As of December 31, 2011, we had $88
million drawn under this revolving credit facility. As of January 31, 2012, we had $44 million outstanding on the
corporate purchasing line, which was paid in full in early February 2012.
We expect to meet our obligations as they become due through available cash, investment securities and
internally generated funds, supplemented as necessary by financing activities, as they may be available to us. We
expect to continue to generate positive working capital through our operations. However, we cannot predict what
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