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JETBLUE AIRWAYS CORPORATION-2013Annual Report 11
PART I
ITEM 1Business
Financial Health
We strive to maintain financial strength and a cost structure that enables
us to grow profitably and sustainably. In the first years of our history, we
relied upon financing activities to fund much of our growth. Starting in
2007, as our airline matured, growth has largely been funded through
internally generated cash from operations. Since 2009, while we have
invested over $2.7 billion in capital assets, we have also generated nearly
$3.1billion in cash from operations resulting in over $300 million in free
cash flow. Our improving financial results have resulted in better credit
ratings, which have in-turn resulted in more attractive financing terms when
we do not purchase assets for cash. Since 2009, we have also reduced
our total debt balance by $570 million.
* 2012 includes $200M unscheduled aircraft pre-delivery deposits, in exchange for favorable pricing terms.
** We have adjusted debt and capitalization for the significant financing obligations of our aircraft operating leases,
which aren’t reflected on our balance sheets. In making these adjustments, we used a multiple of 7 times the
applicable annual aircraft rent expenses as this is the multiple which is routinely used within the airline community
to represent the financing component of aircraft operating lease obligations.
*** See non-GAAP reconciliation of Free Cash Flow in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, Liquidity and Capital Resources.
CASH FROM
OPERATIONS
TOTAL CAPITAL
EXPENDITURES
POSITIVE FREE
CASH FLOW ***
NEGATIVE FREE
CASH FLOW ***
DEBT TO CAPITALIZATION
RATIO
2009 2010 2011 2012* 2013
In Millions ($)
Debt to Cap Ratio **
$700
$200
80%
60%
40%
LiveTV
LiveTV, LLC is a wholly-owned subsidiary of JetBlue, provides in-flight
entertainment, voice communication and data connectivity services and
solutions for commercial and general aviation aircraft. LiveTV’s largest
customer for its core products and services is JetBlue with a further six
agreements with other domestic and international commercial airlines. It
also has general aviation customers to which it supplies voice and data
communication services. LiveTV continues to pursue additional customers
and related product enhancements. JetBlue, ViaSat Inc. and LiveTV have
worked together to develop and support in-flight broadband connectivity
for JetBlue which is being marketed as Fly-Fi
™
. LiveTV is also working with
ViaSat Inc. to support in-flight connectivity for other airlines in the near future.
LiveTV’s major competitors in the in-flight entertainment systems market
include Rockwell Collins, Thales Avionics and Panasonic Avionics; however,
only Panasonic is currently providing in-seat live television. In the voice
and data communication services market, LiveTV’s primary competitors
are GoGo, Row 44 and Panasonic.