JetBlue Airlines 2014 Annual Report Download - page 17

JETBLUE AIRWAYS CORPORATION-2014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 2010, while we have invested
over $3.2 billion in capital assets, we have also generated approximately
$3.5billion in cash from operations, resulting in over $285 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 2010, we have also reduced
our total debt balance by nearly $1.1 billion.
LiveTV
LiveTV, LLC, or LiveTV, was formerly a wholly owned subsidiary of JetBlue.
It provides in-flight entertainment and connectivity solutions for various
commercial airlines including JetBlue. In June 2014, we sold LiveTV and
its subsidiaries LTV Global, Inc, and LiveTV International, Inc., to Thales
Holding Corporation, or Thales. In September 2014, following the receipt
of regulatory approval, we sold LiveTV Satellite Communications, LLC, a
subsidiary of LiveTV, to Thales. Following the completion of these sales,
these LiveTV operations ceased to be subsidiaries of JetBlue and are no
longer presented in our consolidated financial statements. 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™.
JetBlue expects to continue to be a significant customer of LiveTV through
its in-flight entertainment and onboard connectivity products and services.
Culture
Our People
Our success depends on our Crewmembers delivering the best customer
service experience in the sky and on the ground. One of our competitive
strengths is a service orientated culture grounded in our five key values
of safety, caring, integrity, passion and fun. We believe a highly productive
and engaged workforce enhances customer loyalty which in turn increases
shareholder returns. Our goal is to hire, train and retain a diverse workforce
of caring, passionate, fun and friendly people who share our mission to
inspire humanity.
Our culture is first introduced to new Crewmembers during the screening
process and then at an extensive new hire orientation program. The
orientation focuses on the JetBlue strategy and emphasizes the importance
of customer service, productivity and cost control. We provide continuous
training for our Crewmembers including technical training, a specialized
captain leadership training program unique in the industry, a leadership
program for current company managers, an emerging managers program,
regular training focused on the safety value and front line training for our
customer service teams. Our growth plans necessitate and facilitate
opportunities for talent development.
We believe a direct relationship between Crewmembers and our leadership
is in the best interest of our Crewmembers, our customers and our
shareholders. Except for our pilots, our Crewmembers do not have third-
party representation. In April 2014, JetBlue pilots elected to be solely
represented by the Air Line Pilots Association, or ALPA. The National
Mediation Board, or NMB, has certified ALPA as the representative body
for JetBlue pilots and we plan to work with ALPA to reach our first collective
bargaining agreement. We have individual employment agreements with
each of our non-unionized FAA licensed Crewmembers which consist
of dispatchers, technicians, inspectors and air traffic controllers. Each
employment agreement is for a term of five years and renews for an
additional five-year term, unless the Crewmember is terminated for cause
or the Crewmember elects not to renew. Pursuant to these employment
agreements, Crewmembers can only be terminated for cause. In the event
of a downturn in our business, resulting in a reduction of flying and related
work hours, we are obligated to pay these Crewmembers a guaranteed
level of income and to continue their benefits. We believe that through
these agreements we provide what we believe to be industry-leading job
protection language. We believe these agreements provide JetBlue and
Crewmembers flexibility and allow us to react to Crewmember needs
more efficiently than collective bargaining agreements.
Another aspect of the direct relationship with our Crewmembers are
our Values Committees. These Value Committees are made up of peer-
elected frontline Crewmembers from each of our major work groups,
except pilots. They represent the interests of our workgroups and help
us run our business in a productive and efficient way. We believe this
direct relationship drives higher levels of engagement and alignment with
JetBlue’s strategy, culture and overall goals.
We believe the efficiency and engagement of our Crewmembers is a result of
our flexible and productive work rules. We are cognizant of the competition
for productive labor in key industry positions and new government rules
requiring higher qualifications as well as more restricted hours that may
result in potential labor shortages in the upcoming years.
Our leadership team communicates on a regular basis with all Crewmembers
in order to maintain this direct relationship with our people and to keep
them informed about news, strategy updates and challenges affecting the
airline. Effective and frequent communication throughout the organization
is fostered through various means including email messages from our CEO
and other senior leaders at least weekly, weekday news updates to all
Crewmembers, employee engagement surveys, a quarterly Crewmember
magazine and active leadership participation in new hire orientations.
Leadership is also heavily involved in periodic open forum meetings across
our network, called “pocket sessions” which are often videotaped and
posted on our intranet. By soliciting feedback for ways to improve our
service, teamwork and work environment, our leadership team works
to keep Crewmembers engaged and makes our business decisions
transparent. Additionally we believe cost and revenue improvements are
best recognized by Crewmembers on the job.
Our average number of full-time equivalent employees, excluding
employees of LiveTV, LLC, for the year ended December 31, 2014
consisted of2,609pilots, 2,769 flight attendants, 3,626 airport operations
personnel, 540 technicians (whom other airlines may refer to as mechanics),
1,120reservation agents, and 2,616 management and other personnel.
For the year ended December 31, 2014, we employed an average
of11,352full-time and 3,982 part-time employees.
Crewmember Programs
We are committed to supporting our Crewmembers through a number
of programs including:
•
Crewmember Resource Groups (CRGs) – These are groups of
Crewmembers formed to act as a resource for both the group members as
well as JetBlue. The groups serve as an avenue to embrace and encourage
different perspectives, thoughts and ideas. At the end of 2014, we had
three CRGs in place: JetPride, Women in Flight, and Vets in Blue. Starting
in 2015, we will have a new CRG for anyone interested in Latin cultures.
•
JetBlue Crewmember Crisis Fund (JCCF) – This organization was
formed in 2002 as a non-profit corporation and recognized by the IRS as
of that date as a tax-exempt entity. JCCF was created to assist JetBlue
Crewmembers and their immediate family members (IRS Dependents) in
times of crisis. Funds for JCCF grants come directly from Crewmembers via
a tax-deductible payroll deduction. The assistance process is confidential
with only the fund administrator and coordinator knowing the identity of
the Crewmembers in need.