JetBlue Airlines 2013 Annual Report Download - page 38

JETBLUE AIRWAYS CORPORATION-2013Annual Report32
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
Although we experienced significant revenue growth in 2013, 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 and 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, 2013, we had 23 unencumbered aircraft and 30
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,
which in turn we expect to lead to improved returns for our shareholders. As
of December 31, 2013 our cash and cash equivalents balance increased by
24% to $225 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 other available line 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 2013 in solidifying our strong balance sheet
and overall liquidity position. Our highlights for 2013 included:
•Reduced our overall debt balance by $266 million.
•Prepaid approximately $94 million in debt resulting in four Airbus A320
aircraft becoming unencumbered. This will result in 2014 interest savings
of $5 million and total interest expense savings of $25 million.
•
Increased the number of unencumbered aircraft from 11 as of December
31, 2012 to 23 as of December 31, 2013 and extended the operating
leases on eight aircraft.
•
We entered into a $350 million revolving credit and letter of credit facility
with Citibank.
•
We signed a $226 million Enhanced Equipment Trust Certificate, or
EETC, offering, in pass-through certificates which will be secured by
14 unencumbered Airbus A320 aircraft. Funding for the pass-through
certificates is scheduled for March 2014.
•The Greater Orlando Aviation Authority, or GOAA, issued $42 million in
special purpose airport facility revenue bonds to refund bonds issued
to us in 2005, interest savings will be approximately $1 million per year.