JetBlue Airlines 2012 Annual Report Download - page 55

JETBLUE AIRWAYS CORPORATION-2012 10K 51
PART II
ITEM 8Financial Statements and Supplementary Data
The carrying amounts and estimated fair values of our long-term debt at December31, 2012 and 2011 were as follows (in millions):
December 31, 2012 December 31, 2011
Carrying
Value Estimated FairValue Carrying Value Estimated FairValue
Public Debt
Floating rate enhanced equipment notes
Class G-1, due 2013, 2014, and 2016 $ 173 $ 164 $ 202 $ 185
Class G-2, due 2014 and 2016 373 351 373 316
Class B-1, due 2014 49 48 49 47
Fixed rate special facility bonds, due through 2036 82 82 83 76
6.75% convertible debentures due in 2039 162 225 162 214
5.5% convertible debentures due in 2038 123 173 123 162
Non-Public Debt
Floating rate equipment notes, due through 2025 816 776 743 712
Fixed rate equipment notes, due through 2026 960 1,050 1,192 1,293
TOTAL $ 2,738 $ 2,869 $ 2,927 $ 3,005
The estimated fair values of our publicly held long-term debt are classifi ed
as Level 2 in the fair value hierarchy. The fair values of our enhanced
equipment notes and our special facility bonds were based on quoted
market prices in markets with low trading volumes. The fair value of our
convertible debentures was based upon other observable market inputs
since they are not actively traded. The fair value of our non-public debt
was estimated using a discounted cash fl ow analysis based on our
borrowing rates for instruments with similar terms and therefore classifi ed
as Level 3 in the fair value hierarchy. The fair values of our other fi nancial
instruments approximate their carrying values. Refer to Note 14 for
additional information on fair value.
We utilize a policy provider to provide credit support on the Class G-1 and
Class G-2 certifi cates. The policy provider has unconditionally guaranteed
the payment of interest on the certifi cates when due and the payment of
principal on the certifi cates no later than 18 months after the fi nal expected
regular distribution date. The policy provider is MBIA Insurance Corporation
(a subsidiary of MBIA, Inc.).
We have determined that each of the trusts related to our aircraft EETCs
meet the defi nition of a variable interest entity as defi ned in the Consolidations
topic of the Codifi cation and must be considered for consolidation in
our fi nancial statements. Our assessment of the EETCs considers both
quantitative and qualitative factors, including whether we have the power
to direct the activities and to what extent we participate in the sharing of
benefi ts and losses. We evaluated the purpose for which these trusts were
established and nature of risks in each. These trusts were not designed
to pass along variability to us. We concluded that we are not the primary
benefi ciary in these trusts due to our involvement in them being limited
to principal and interest payments on the related notes and the variability
created by credit risk related to us and the likelihood of our defaulting
on the notes. Therefore, we have not consolidated these trusts in our
fi nancial statements.
Short-term Borrowings
Unsecured Revolving Credit Facility
In September 2011, we entered into 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 fi nancial 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 paid monthly, are subject to a 6.9% annual
interest rate but could be higher if borrowing activity does not reach certain
levels. This borrowing facility will terminate no later than January5, 2015.
As of December31, 2012, we did not have a balance outstanding under
this line of credit.
Morgan Stanley Line of Credit
In July 2012, we entered into a revolving line of credit with Morgan Stanley
for up to approximately $100 million, and in December 2012, the available
line was increased to allow for borrowings up to $200 million. This line of
credit is secured by a portion of our investment securities held by them and
the amount available to us under this line of credit may vary accordingly.
This line of credit bears interest at a fl oating rate based upon LIBOR plus
100 basis points. As of December31, 2012, we did not have a balance
outstanding under this line of credit.