JetBlue Airlines 2014 Annual Report Download - page 38

JETBLUE AIRWAYS CORPORATION-2014Annual Report32
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
Although we experienced revenue growth in 2014, this trend may not
continue. We expect our expenses to continue to increase significantly
as we acquire additional aircraft, as our fleet ages and as we expand the
frequency of flights in existing markets as well as enter into new markets.
Accordingly, the comparison of the financial data for the quarterly periods
presented may not be meaningful. In addition, we expect our operating
results to fluctuate significantly from quarter-to-quarter in the future as a result
of various factors, many of which are outside our control. Consequently,
we believe quarter-to-quarter comparisons of our operating results may
not necessarily be meaningful and you should not rely on our results for
any one quarter as an indication of our future performance.
Liquidity and Capital Resources
The airline business is capital intensive. Our ability to successfully execute
our profitable growth plans is largely dependent on the continued availability
of capital on attractive terms. In addition, our ability to successfully
operate our business depends on maintaining sufficient liquidity. We
believe we have adequate resources from a combination of cash and
cash equivalents, investment securities on-hand and two available lines of
credit. Additionally, as of December 31, 2014, we had 39 unencumbered
aircraft and 33unencumbered spare engines which we believe could be
an additional source of liquidity, if necessary.
We believe a healthy cash balance is crucial to our ability to weather any
part of the economic cycle while continuing to execute on our plans for
profitable growth and increased returns. Our goal is to continue to be
diligent with our liquidity, maintaining financial flexibility and allowing for
prudent capital spending. We expect these goals will lead to improved
returns for our shareholders. As of December 31, 2014, our cash and
cash equivalents balance increased by 52% to $341 million. We believe
our current level of unrestricted cash, cash equivalents and short-term
investments of approximately 12% of trailing twelve months revenue,
combined with our $600 million in available lines of credit and portfolio of
unencumbered assets, provides us with a strong liquidity position and the
potential for higher returns on cash deployment. We believe we have taken
several important actions during 2014 in solidifying our strong balance
sheet and overall liquidity position. Our highlights for 2014 included:
•Reduced our overall debt balance by $352 million.
•Prepaid approximately $308 million in debt resulting in 14 Airbus A320
aircraft and five spare engines becoming unencumbered. The majority
of this prepayment was from the proceeds of the sale of LiveTV in June
2014. This will result in 2015 interest expense savings of $7 million and
total interest expense savings of $28 million.
• Increased the number of unencumbered aircraft from 23 as of
December31, 2013, to 39 as of December 31, 2014.
•
In March 2014, we completed a $226 million Enhanced Equipment
Trust Certificate offering, or EETC, in pass-through certificates which
was secured by 14 previously unencumbered Airbus A320 aircraft. This
coincided with the final payment on the Series 2004-1 EETC of $188
million which resulted in 13 Airbus A320 aircraft becoming unencumbered.
• We took delivery of nine Airbus A321 aircraft, two of which were financed
with capital leases.