JetBlue Airlines 2011 Annual Report Download - page 56

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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 CodificationTM, 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-Thüringen Girozentrale and Morgan
Stanley Capital Services Inc. The liquidity providers for the Series 2004-2 aircraft certificates are Landesbank
Baden-Württemberg 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
prepare our financial statements. We believe that our estimates and judgments are reasonable; however, actual
results and the timing of recognition of such amounts could differ from those estimates. In addition, estimates
routinely require adjustment based on changing circumstances and the receipt of new or better information.
Critical accounting policies and estimates are defined as those that are reflective of significant judgments
and uncertainties, and potentially result in materially different results under different assumptions and conditions.
The policies and estimates discussed below have been reviewed with our independent registered public
accounting firm and with the Audit Committee of our Board of Directors. For a discussion of these and other
accounting policies, see Note 1 to our consolidated financial statements.
Passenger revenue. Passenger ticket sales are initially deferred in air traffic liability. The air traffic
liability also includes customer credits issued and unused tickets whose travel date has passed. Credit for unused
tickets and customer credits can each be applied towards another ticket within 12 months of the original
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