JetBlue Airlines 2014 Annual Report Download - page 57

JETBLUE AIRWAYS CORPORATION-2014Annual Report 51
PART II
ITEM 8Financial Statements and Supplementary Data
As of December 31, 2014, we believe we were in compliance with all of our covenants in relation to our debt and lease agreements. Maturities of long-term
debt and capital leases, including the assumption our convertible debt will be redeemed upon the first put date, for the next five years are as follows (in millions):
Year Maturities
2015 $ 265
2016 464
2017 216
2018 227
2019 227
Thereafter 834
Aircraft, engines, and other equipment and facilities having a net book value of $3.25 billion at December 31, 2014 were pledged as security under various
loan agreements. Cash payments for interest related to debt and capital lease obligations, net of capitalized interest, aggregated $102 million, $117 million and
$136 million in 2014, 2013 and 2012, respectively.
The carrying amounts and estimated fair values of our long-term debt at December 31, 2014 and 2013 were as follows (in millions):
December 31, 2014 December 31, 2013
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Public Debt
Floating rate enhanced equipment notes
Class G-1, due 2016 $ 35 $ 35 $ 55 $ 54
Class G-2, due 2016 185 180 373 365
Fixed rate special facility bonds, due through 2036 77 78 78 68
6.75% convertible debentures due in 2039 86 283 162 297
5.5% convertible debentures due in 2038 68 241 68 134
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023 217 224 — —
Floating rate equipment notes, due through 2025 276 277 634 645
Fixed rate equipment notes, due through 2026 1,119 1,211 1,110 1,161
TOTAL $ 2,063 $ 2,529 $ 2,480 $ 2,724
The estimated fair values of our publicly held long-term debt are classified as
Level 2 in the fair value hierarchy. The fair values of our EETC transactions
and our special facility bonds were based on quoted market prices
in markets with low trading volumes. The fair value of our convertible
debentures was based upon other observable market inputs since they
are not actively traded. The fair value of our non-public debt was estimated
using a discounted cash flow analysis based on our borrowing rates for
instruments with similar terms and therefore classified as Level 3 in the fair
value hierarchy. The fair values of our other financial instruments approximate
their carrying values. Refer to Note 14 for additional information on fair value.
We have financed certain aircraft with EETCs as one of the benefits is
being able to finance several aircraft at one time, rather than individually.
The structure of EETC financing is that we create pass-through trusts in
order to issue pass-through certificates. The proceeds from the issuance
of these certificates are then used to purchase equipment notes which
are issued by us and are secured by our aircraft. These trusts meet the
definition of a variable interest entity, or VIE, as defined in the Consolidations
topic of the Codification, and must be considered for consolidation in our
consolidated financial statements. Our assessment of the EETCs considers
both quantitative and qualitative factors including the purpose for which
these trusts were established and the nature of the risks in each. The main
purpose of the trust structure is to enhance the credit worthiness of our
debt obligation through certain bankruptcy protection provisions, liquidity
facilities and lower our total borrowing cost. We concluded that we are
not the primary beneficiary in these trusts due to our involvement in them
being limited to principal and interest payments on the related notes, the
trusts were not set up to pass along variability created by credit risk to
us and the likelihood of our defaulting on the notes. Therefore, we have
not consolidated these trusts in our consolidated financial statements.
Short-term Borrowings
We have several lines of credit which bear interest at a floating rate based upon LIBOR plus a margin range of between 1.0% and 2.75%.
Morgan Stanley Line of Credit
In July 2012, we entered into a revolving line of credit with Morgan Stanley
for up to approximately $100 million. This was subsequently increased to
$200 million in December 2012. This line of credit is secured by a portion
of our investment securities held by them and the amount available
to us under this line of credit may vary accordingly. This line of credit
bears interest at a floating rate based upon LIBOR, plus a margin. As of
December 31, 2014 and 2013, we did not have a balance outstanding
under this line of credit.
Citibank Line of Credit
In April 2013, we entered into a Credit and Guaranty Agreement consisting
of a $350 million revolving credit and letter of Credit Facility with Citibank,
N.A. as the administrative agent which was scheduled to terminate in 2016.
In November 2014, the available line was increased to allow for borrowings
up to $400 million. Concurrent with the increase in borrowing capacity, we
also extended the term of the facility by an additional two years through to
April 2018. Borrowings under the Credit Facility bear interest at a variable
rate equal to LIBOR, plus a margin. The Credit Facility is secured by Slots