JetBlue Airlines 2015 Annual Report Download - page 36

JETBLUE AIRWAYS CORPORATION-2015Annual Report32
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
we realized $84 million in proceeds from the issuance of stock related
to employee share-based compensation. In the future we may issue, in
one or more offerings, debt securities, pass-through certificates, common
stock, preferred stock and/or other securities. During 2015, $68 million
of Series B 5.5% convertible debentures were converted by holders, as a
result, we issued approximately 15 million shares of our common stock.
Financing activities during 2014 consisted ofthe scheduled repayment of
$394 million relating to debt and capital lease obligations and $308 million
of debt prepayment. We issued $342 million in fixed rate equipment notes
secured by 18 aircraft, acquired $82 million in treasury shares, including
$73 million related to our share buyback program and $9 million in shares
withheld for tax purposes upon vesting of RSUs. We repaid $14million
in principal related to our construction obligation for T5. We issued $41
million in common stock mainly due to stock options being exercised
as our stock price continued to increase in 2014. In the future we may
issue, in one or more offerings, debt securities, pass-through certificates,
common stock, preferred stock and/or other securities.
Financing activities during 2013 consisted of scheduled maturities of $392
million of debt and capital lease obligations. We issued $350 million in
fixed rate equipment notes secured by 12 aircraft and prepaid $94 million
in high-interest debt secured by four Airbus A320 aircraft and $119 million
relating to our 2006 Spare Parts EETC. It also included the refunding of our
Series 2005 GOAA bonds with proceeds of $43 million from the issuance
of new 2013 GOAA bonds,the repayment of $13million in principal related
to our construction obligation for T5 andthe acquisition of $8million in
treasury shares primarily related to our share repurchase program and
the withholding of taxes upon the vesting of RSUs.
In February 2015, we filed an automatic shelf registration statement with
the SEC.This registration statement covered the resale of up to 46.7
millionshares of our common stock, par value $0.01per share, by persons
who received suchshares upon exchange of their 0.75% exchangeable
notes due 2017, issued by Lufthansa Malta Blues LP (adirectly-owned
subsidiary of Deutsche Lufthansa AG) on April5, 2012and sold by the
initial purchasers of the notes in transactions exempt from registration
requirements of the Securities Act, to persons reasonably believed by the
initial purchasers to be qualified institutional buyers as defined by Rule144A
under the Securities Act that were also qualified purchasers as defined
in the U.S. Investment CompanyAct of 1940. We did not receive any of
the proceeds from the sale of the notes and did not receive any financial
benefit from the exchange of notes forshares of our common stock.
We did not sell anyshares of our common stock under this registration
statement and did not receive any of the proceeds from the sale ofshares
by any of the selling stockholders.
In November 2015, we filed an automatic shelf registration statement with the
SEC. Under this shelf registration statement, we have the capacity to offer
and sell from time to time one or more selling security holders, of common
stock, preferred stock, debt securities, depositary shares, warrants, stock
purchase contracts, stock purchase units, subscription rights, and pass-
through certificates. The net proceeds of any securities we sell under this
registration statement may be used for general corporate purposes, including
among other possible uses, the acquisition of aircraft and construction of
facilities on or near airports, the repayment or repurchase of short-term
or long-term debt or lease obligations and other capital expenditures. We
may also use the proceeds for temporary investments until we need them
for general corporate purposes. We will not receive any of the proceeds
from the sale of securities by any selling security holders who may be
named in a prospectus supplement. Through to December 31, 2015, we
had not issued any securities under this registration statement and at this
time we have no plans to sell any such securities under this registration
statement. We may utilize this universal shelf registration statement in the
future to raise capital to fund the continued development of our products
and services, the commercialization of our products and services or for
other general corporate purposes.
None of our lenders or lessors are affiliated with us.
Capital Resources
We have been able to generate sufficient funds from operations to meet our
working capital requirements and we have historically financed our aircraft
through either secured debt or lease financing. As of December31, 2015,
we operated a fleet of 215 aircraft which included 17 Airbus A321 aircraft
and 44 Airbus A320 aircraft that were unencumbered. Of our remaining
aircraft, 54 were financed under operating leases, six were financed under
capital leases and 94 were financed by private and public secured debt.
Additionally we have 33 unencumbered spare engines. Approximately
44% of our property and equipment is pledged as security under various
loan arrangements.
Dependent on market conditions, we anticipate paying cash for the 10
Airbus A321 aircraft scheduled for delivery in 2016. To the extent we
cannot secure financing on terms we deem attractive, we may be required
to pay in cash, further modify our aircraft acquisition plans or incur higher
than anticipated financing costs. Although we believe debt and/or lease
financing should be available to us if needed, we cannot give assurance
we will be able to secure financing on terms attractive to us, if at all.
Working Capital
We had a working capital deficit of $902 million as of December 31,
2015 compared to a deficit of $736 million as of December 31, 2014
and a deficit of $818 million as of December31, 2013. Working capital
deficits can be customary in the airline industry since air traffic liability is
classified as a current liability. Our working capital deficit increased $166
million in 2015 mainly due to several factors including an increase in the
balances of current debt maturities, air traffic liabilities and record profit
sharing partially offset by an overall increase in our cash and short term
investment balances.
In 2012, we entered into a revolving line of credit with Morgan Stanley for
up to $100 million which was subsequently increased to $200 million in
December 2012. This line of credit is secured by a portion of our investment
securities held by Morgan Stanley and the borrowing amount may vary
accordingly. This line of credit bears interest at a floating rate of interest
based upon the London Interbank Offered Rate, or LIBOR, plus a margin.
During 2013, we borrowed $190 million on this line of credit, which was
fully repaid, leaving the line undrawn as of December 31, 2013. We did
not borrow on this facility in 2015 or 2014 and the line was undrawn as
of December 31, 2015.
In April 2013, we entered into a Credit and Guaranty Agreement which
consisted of a revolving credit up to $350 million and letter of credit facility
with Citibank, N.A. as the administrative agent. In November 2014, we
increased the Credit Facility to $400 million. Borrowing under the Credit
Facility bears interest at a variable rate equal to LIBOR, plus a margin.
The Credit Facility is scheduled to terminate in 2018. The Credit Facility
is secured by Slots at JFK, Newark, LaGuardia, Reagan National and
certain other assets. The Credit Facility includes covenants that require
us to maintain certain minimum balances in unrestricted cash, cash
equivalents, and unused commitments available under all revolving credit
facilities. In addition, the covenants restrict our ability to incur additional
indebtedness, issue preferred stock or pay dividends. During 2015 and
2014, we did not borrow on this facility and the line was undrawn as of
December 31, 2015.
We expect to meet our obligations as they become due through available
cash, investment securities and internally generated funds, supplemented
as necessary by financing activities, as they may be available to us. We
expect to generate positive working capital through our operations.
However, we cannot predict what the effect on our business might be from
the extremely competitive environment we are operating in or from events
beyond our control, such as volatile fuel prices, economic conditions,
weather-related disruptions, the spread of infectious diseases, the impact
of airline bankruptcies, restructurings or consolidations, U.S. military actions
or acts of terrorism. We believe there is sufficient liquidity available to us
to meet our cash requirements for at least the next 12months.