JetBlue Airlines 2014 Annual Report Download - page 4

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Our launch of Fly-Fi™, real broadband internet in the sky, is another example. This onboard innovation delivers
an online experience much like you would expect at home or work. While other airlines look to charge customers
for slower, bandwidth constrained wifi, our basic in-flight broadband internet has the ability to be used by
everyone onboard and is provided free of charge. We plan to cover the broadband costs of Fly-Fi™ in 2015
through corporate partnerships. Over time, we will be able to deliver more personalized and relevant content
to our customers.
High-Value Geography
JetBlue’s high-value network continues to expand and diversify. We continue to maintain and grow a strong
presence in highly populated, lucrative travel markets. This targeted growth has been and will continue to be
accretive to shareholder returns.
In 2014, we started service to five new BlueCities; by the end of the year we served 87 BlueCities in 18 countries.
All six of our focus cities were profitable in 2014. We see terrific opportunities for growth in the years ahead.
As we look to 2015, most of our capacity growth is expected to be in the transcontinental market as we continue
to rollout Mint and in Fort Lauderdale-Hollywood (FLL), which remains a central component of our long term,
domestic and international growth strategy. JetBlue landed the first flight on FLL’s new runway in September and
we look forward to benefiting over the next few years from major enhancements being made by the Broward
County Aviation Department at that airport.
Another 2014 investment highlight was the opening of T5i, our international facility at JFK. T5i provides
international customers the ability to arrive or transfer to other JetBlue flights within one terminal and includes
six international arrivals gates and state-of-the-art customs and federal inspection facilities. Our facilities at
JFK epitomize accessibility and convenience in New York with the maximum time to any gate from the TSA
checkpoint of approximately five minutes.
Competitive Costs
Maintaining our cost advantage over larger legacy airlines is an imperative to profitable growth without
compromising our ability to provide an industry-leading product at an attractive fare.
We have initiatives across the company to manage our costs and our 16,000 Crewmembers are energized
to drive results from them. These initiatives range from fleet investments (like the introduction of Sharklets and
Airbus A321s), to fuel conservation programs (such as single-engine taxi and a new flight planning solution), to
maintenance changes (including expanding power-by-the-hour agreements and reducing inventory) to leveraging
IT investments (such as our customer technology refresh).
Managing Our Capital
We continue to strengthen our balance sheet while investing for the future. In 2014, we reduced our overall debt
balance while growing our fleet, improved our net-debt-to-capital ratio, and increased our liquidity including
adding to our lines of credit and unencumbering additional aircraft.
As we look into 2015, we anticipate lower non-aircraft capital expenditures as we reap the benefits from prior
investments such as T5i and technology programs. Additionally, we intend to pay for 2015 aircraft deliveries
with cash on hand rather than with debt financing and will look to opportunistically pre-pay other debt.
Finally, in June we completed the sale of our wholly-owned subsidiary LiveTV to Thales Group which, among other
financial benefits for JetBlue, lowered ongoing unit costs and reduced future capital expenditure requirements.
Further, the proceeds from the sale were used to pre-pay nearly $300 million in debt, thereby reducing future
interest expense. Additionally, JetBlue maintains its deep relationship with LiveTV, enabling us to continue to
provide customers differentiated, industry-leading inflight entertainment and connectivity products.
A Look Ahead
At our 2014 Investor Day, we detailed our goal to improve our return on invested capital (ROIC) to greater than
10% by the end of 2017. We outlined a number of specific initiatives including:
•
Fare Families: Beginning in the second quarter of 2015, customers will be able to choose between three
fare options. The first will be designed for customers who do not plan to check a bag, while the latter two
will offer one and two free checked bags, respectively, along with other benefits, such as additional TrueBlue
points and increased flexibility. Fare families will enable JetBlue to tailor its offering to individual customers’
needs in a simple and transparent way while generating more than $200 million in incremental operating
income by 2017.