JetBlue Airlines 2013 Annual Report Download - page 20

JETBLUE AIRWAYS CORPORATION-2013Annual Report14
PART I
ITEM1ARisk Factors
curbing greenhouse emissions, our conservation efforts and our social
responsibility efforts.
Foreign Ownership: Under federal law and the DOT regulations, we
must be controlled by U.S. citizens. In this regard, our president and at
least two-thirds of our board of directors must be U.S. citizens. Further,
no more than 24.99% of our outstanding common stock may be voted by
non-U.S. citizens. We believe we are currently in compliance with these
ownership provisions.
Other Regulations: All airlines are subject to certain provisions of the
Communications Act of 1934 due of their extensive use of radio and
other communication facilities. They are also required to obtain an
aeronautical radio license from the FCC. To the extent we are subject to
FCC requirements, we will take all necessary steps to comply with those
requirements. Our labor relations are covered under Title II of the Railway
Labor Act of 1926 and are subject to the jurisdiction of the National
Mediation Board. In addition, during periods of fuel scarcity, access to
aircraft fuel may be subject to federal allocation regulations.
Civil Reserve Air Fleet: We are a participant in the Civil Reserve Air
Fleet Program, which permits the U.S. Department of Defense to utilize
our aircraft during national emergencies when the need for military airlift
exceeds the capability of military aircraft. By participating in this program,
we are eligible to bid on and be awarded peacetime airlift contracts with
the military.
Insurance
We carry insurance of types customary in the airline industry and at amounts
deemed adequate to protect us and our property as well as comply with
both federal regulations and certain credit and lease agreements. As a result
of the terrorist attacks of September 11, 2001, aviation insurers significantly
reduced the amount of insurance coverage available to commercial airlines
for liability to persons other than employees or passengers for claims
resulting from acts of terrorism, war or similar events (war risk coverage).
At the same time, these insurers significantly increased the premiums for
aviation insurance in general. The U.S. government has agreed to provide
commercial war-risk insurance for U.S. based airlines, currently through
September 30, 2014, covering losses to employees, passengers, third
parties and aircraft. We currently have such coverage in addition to our
overall hull and liability insurance coverage. If the U.S. government were
to cease providing such insurance in whole or in part, it is likely we would
be able to obtain comparable coverage in the commercial market, the
premiums will likely be lower but with some more restrictive terms.
Iran Sanctions Disclosure
Pursuant to Section 13(r) of the Securities Exchange Act of 1934, or the
Exchange Act, if during 2013, JetBlue or any of its affiliates have engaged
in certain transactions with Iran or with persons or entities designated under
certain executive orders, JetBlue would be required to disclose information
regarding such transactions in our Annual Report as required under
Section 219 of the Iran Threat Reduction and Syria Human Rights Act
of 2012, or ITRA. During 2013, JetBlue did not engage in any reportable
transactions with Iran or with persons or entities related to Iran.
Deutsche Lufthansa AG, or Lufthansa, is a stockholder of approximately
16% of JetBlue’s outstanding shares of common stock and has two
representatives on our Board of Directors. Accordingly, it may be deemed
an “affiliate” of JetBlue, as the term is defined in Exchange Act Rule 12b-2.
In response to our inquiries, Lufthansa informed us it does not engage in
transactions that would be disclosable under ITRA Section 219. However,
Lufthansa informed us it does provide air transportation services from
Frankfurt, Germany to Tehran, Iran pursuant to Air Transport Agreements
between the respective governments. Accordingly, Lufthansa may have
agreements in place to support such air transportation services with the
appropriate agencies or entities, such as landing or overflight fees, handling
fees or technical/refueling fees. In addition, there may be additional civil
aviation related dealings with Iran Air as part of typical airline to airline
interactions. In response to our inquiry, Lufthansa did not specify the
total revenue it receives in connection with the foregoing transactions, but
confirmed the transactions are not prohibited under any applicable laws.
Where You Can Find Other Information
Our website is www.jetblue.com. Information contained on our website is
not part of this report. Information we furnish or file with the SEC, including
our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and any amendments to or exhibits included in these
reports are available for download, free of charge, on our website soon
after such reports are filed with or furnished to the SEC. Our SEC filings,
including exhibits filed therewith, are also available at the SEC’s website
at www.sec.gov. You may obtain and copy any document we furnish or
file with the SEC at the SEC’s public reference room at 100 F Street, NE,
Room 1580, Washington, D.C. 20549. You may obtain information on
the operation of the SEC’s public reference facilities by calling the SEC
at 1-800-SEC-0330. You may request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC at its principal office
at 100 F Street, NE, Room 1580, Washington, D.C. 20549.
ITEM1A. Risk Factors
Risks Related to JetBlue
We operate in an extremely competitive industry.
The domestic airline industry is characterized by low profit margins, high
fixed costs and significant price competition in an increasingly concentrated
competitive field. We currently compete with other airlines on all of our routes.
Most of our competitors are larger and have greater financial resources
and name recognition than we do. Following our entry into new markets
or expansion of existing markets, some of our competitors have chosen
to add service or engage in extensive price competition. Unanticipated
shortfalls in expected revenues as a result of price competition or in the
number of passengers carried would negatively impact our financial results
and harm our business. The extremely competitive nature of the airline
industry could prevent us from attaining the level of passenger traffic or
maintaining the level of fares required to maintain profitable operations