Annual Report
2020
Dear fellow owners:
As I reflect on 2020, I am humbled and amazed by our 20,000 crewmembers and their relentless dedication
through the most challenging time in our company’s history. They responded with incredible passion and
determination, continuing to put our values front and center as we deliver on our mission to Inspire Humanity.
We are grateful to our crewmembers for their personal sacrifices and commitment to JetBlue, all while juggling
the many challenges the pandemic presented in their personal lives.
The COVID-19 pandemic touched our company in ways we never could have imagined just one year ago, including
the loss of 11 fellow crewmembers to the coronavirus. We will forever remember them and their contributions
to JetBlue.
I am extremely proud of what we accomplished this year by working together. Throughout 2020, we demonstrated
our decisiveness to protect crewmember jobs, preserve the financial sustainability of JetBlue and take actions
to set the foundation for our recovery and future success.
Some of the key highlights of our work in 2020 include:
•• We introduced “Safety from the Ground Up,” a multi-layer approach that encompasses enhanced safety measures
on our flights, at our airports and in our offices.
•• We were the first airline in the U.S. to waive change and cancel fees to give more flexibility to customers and
were the first to require the use of masks onboard the aircraft.
•• We reduced our full year capacity by 49% year over year to align flying with demand and parked a portion of
our fleet on a short-term basis.
•• We temporarily consolidated our operations in certain cities with multiple airports; renegotiated service rates
with business partners and extended payment terms; instituted a company-wide hiring freeze; and implemented
salary reductions for a portion of our crewmembers.
•• We achieved operating cost savings of approximately $2.3 billion, or 32% year over year.
•• We reduced our average daily cash burn from $18 million in the second half of March to under $7 million in the
fourth quarter of 2020.
•• We amended our purchase agreement with Airbus, resulting in a reduction of approximately $2 billion in capital
expenditures through 2022.
•• Excluding federal aid, we successfully raised over $3 billion in liquidity in the capital markets, including loan
agreements and executing an equity transaction for nearly $600 million.
•• We maintained unencumbered assets over $1 billion, in addition to our TrueBlue® loyalty program and our
subsidiaries.
•• More than 6,600 crewmembers took voluntary time off and opt-out programs.
•• We protected jobs and doubled down on our no-furlough commitment for our crewmembers. We are proud to
be the only airline in the U.S. that has not issued WARN notices or furloughed any crewmembers during the
pandemic, maintaining a record that extends throughout our 21-year history.
Looking back at our work in 2020, I could not be more confident in our future. Our team not only managed through
the ongoing demand challenges, but also made important progress on strategic initiatives we had in place prior
to the pandemic – including revenue, capacity and cost actions to improve our margins. Through continuing this
work, we believe we will emerge as a stronger JetBlue.
Emerging Stronger from the Crisis
We are setting the stage for JetBlue to leave this crisis in a stronger position than we entered it. We have taken
necessary actions to preserve our company during this difficult period, while pursuing unique opportunities that
would not have been available to us before the pandemic – all to set up JetBlue for long-term success.
While we are still in the midst of the pandemic, over the past year we have focused on three steps building our
path to financial recovery: reducing our cash burn, rebuilding our margins, and repairing our balance sheet.
At the onset of the crisis, we immediately took steps to reduce cash burn and raise liquidity to protect JetBlue.
Today, we believe we have adequate liquidity, as well as access to additional cash if needed, allowing us to focus on
executing network, fleet, revenue and cost initiatives key to our long-term success. These initiatives will serve as
the building blocks that will help us produce superior margins and repair our balance sheet in the years to come.
Growing and Strengthening our Network
JetBlue’s network strategy is built on serving point-to-point routes from our focus cities – Boston, Fort Lauderdale,
Los Angeles, New York, Orlando and San Juan – and we believe that building relevance in these key markets creates
value for our customers and strengthens our business. The ongoing pandemic presented unique opportunities
to play offense and further expand that relevance in our high-value geographies.
In 2020, we announced more than 80 new routes across our network, consisting of leisure or visiting friends and
relatives (“VFR”) markets, to generate cash through the crisis and into recovery and to respond to current travel
demand trends. Notably, we added Miami to our route map, one the busiest U.S. airports not previously served
by JetBlue. Our new Miami service, together with existing presence in Fort Lauderdale and West Palm Beach,
will further expand our relevance and success in South Florida.
In addition to responding to the crisis with new routes, we took bold network actions to strengthen our focus
cities. We solidified our position in Newark, focusing on flying new transcontinental markets and adding our
award-winning Mint experience to a second New York-area airport. On the West Coast, we relocated our main
base of operations from Long Beach to Los Angeles (LAX). We expect our expanded presence at both airports
will drive efficiencies and serve as a platform for longer-term transcontinental and international growth.
We launched the first phase of our Northeast Alliance with American Airlines in February 2021, following an
exhaustive review by the U.S. Department of Transportation. We believe that the alliance will help accelerate
our recovery and set JetBlue up for long-term success, while bringing our trusted brand, low fares, and award-
winning customer service to more people. This alliance provides a path for JetBlue to profitably grow over the
coming years, better utilizing scarce infrastructure at JFK, LaGuardia, Newark and Boston airports.
Finally, in 2020 we continued to prepare for European operations. In the third quarter of 2021, we plan to begin
flying our customers across the Atlantic to London, the most popular destination that we do not yet serve from
Boston and New York.
Investing in our Fleet to Improve our Margins
We believe our fleet plan will set JetBlue up for long-term success, as it will allow us to execute our network plan
while producing structurally better margins. Over the next few years we will be taking on next generation aircraft
that are more fuel-efficient, lowering our direct operating costs and reducing our CO2 emissions.
In 2020 we took delivery of seven all-core A321neos and our first A220, ending the year with 267 aircraft. We are
excited about the economics of the A220 fleet, which has 30% lower direct cost per seat than the E190s and will
be instrumental in keeping our low cost structure. In 2021, we expect to receive additional A321neo aircraft and
our first long-range A321neo, both of which include the next generation of our award-winning Mint experience.
We plan to fly these aircraft in our transcontinental and transatlantic markets, respectively, starting later this
year. Our reimagined Mint cabin will further improve the customer experience and allow us to compete effectively,
disrupting the industry with our lower fares.
Enhancing our Revenue Base
While navigating the current demand environment, we have continued to roll out a comprehensive plan to grow
our revenue for the long-term. After our successful launch of Fare Options over five years ago, we made strategic
enhancements to our offering to give customers the flexibility, choices and low fares they want. Our relaunched
Fare Options, announced in February 2021, will allow JetBlue to cater to price-sensitive customers, while still
offering the best product and value proposition in the market.
We made substantial progress in preparing for a strong recovery in leisure travel with our JetBlue Travel
Products subsidiary. Last year, we relaunched JetBlue Vacations, including new benefits, such as best price
guarantee, personalized service from local experts at major Caribbean destinations, and payment flexibility. We
also enhanced our product offering and made investments in our digital platform so customers can easily add
products to their JetBlue travel plans. We are now focused on scaling our bookings platform, which we expect
will increase attach rates and drive high-margin revenue.
Across JetBlue, we will continue to advance our technology and the digital experience to support our goals,
including launching a brand new optimized booking experience for customers on jetblue.com. Fully functional
across desktop and mobile, this new experience includes advanced merchandising capabilities and a shopping
cart so that customers can pick up where they left off. Along with an upcoming refresh of the jetblue.com
homepage and a new in-app notification platform, a number of new selling opportunities are coming in 2021 and
beyond. We also recently announced our upgrade to Sabre’s new revenue management system, which enables
improved booking flow, better demand forecasting, machine learning, as well as Electronic Miscellaneous
Document capabilities.
Lastly, we plan to continue to innovate in our TrueBlue® loyalty program to build greater value for JetBlue and
our customers. We have launched an RFP for our cobrand credit card partnership to enhance the economics of
our program and to help us meaningfully grow our loyalty revenue base over the coming years.
Reshaping our Cost Structure
Low costs remain a strategic focus at JetBlue. Our low-cost model allows us to offer low fares for our customers,
expand our network and create value for our owners. In early 2020, we announced the completion of our Structural
Cost Program, with run-rate savings of over $300 million in our cost structure, after incredible teamwork and
focus by crewmembers across our company.
Given the unprecedented demand environment in 2020, we aggressively adjusted our variable cost base with
lower capacity and reduced our fixed cost structure to protect the financial health of JetBlue. We continue to
align our cost structure to lower flying. Our current plan is to achieve between $150 and $200 million in fixed cost
reductions during 2021, aiming to bring our non-fuel unit costs below pre-pandemic levels by 2022. While we
work toward bringing back capacity, we will focus on further rationalizing our support footprint, consolidating
real estate assets where possible and driving additional productivity and efficiencies across JetBlue.
Our ability to compete with low fares requires a laser focus on costs. We remain committed to keeping our costs
low and ensuring that our efforts across JetBlue translate into better margins and higher earnings. We look
forward to continuing the momentum and controlling our unit cost trajectory over the next few years.
Committed to Repairing our Balance Sheet
We have managed our balance sheet conservatively over the past few years, and ended 2019 with an adjusted
debt-to-cap ratio of 34%. After we raised over $3 billion of liquidity to protect JetBlue in 2020, our adjusted
debt-to-cap ratio rose to 57% by the year end. Despite this increase, we continue to have one of the best balance
sheets in the industry, second only to one other airline. At year-end, we had $3.1 billion in cash, cash equivalents,
and short-term investments, equivalent to 38% of our 2019 revenue.
As we navigate through recovery, we plan to maintain a balanced approach to our capital allocation, investing in
margin-accretive aircraft to rebuild our margins, while reducing debt. We are committed to achieving pre-pandemic
balance sheet metrics by 2023 or 2024, aiming to reach investment grade levels.
Continuing and Expanding our ESG Strategy
JetBlue has continued to lead the industry with our comprehensive Environmental, Social and Governance (“ESG”)
strategy. We continue to use Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-
related Financial Disclosures (“TCFD”) reporting frameworks to monitor our ESG progress and accomplishments.
Addressing climate change risk and emerging social changes is a critical element of our strategy, to protect our
long-term financial returns and mitigate business risks. We are investing in programs that will accelerate our
de-carbonization strategy, and re-invigorating our diversity, equity and inclusion initiatives (“DEI”) across JetBlue.
Regarding our commitment to reduce carbon emissions, in 2020 we became the first and only U.S. airline to
achieve carbon neutrality for all domestic flights, by offsetting all emissions from jet fuel used on domestic
flights starting on July 1. We also began flying regularly on sustainable aviation fuel (“SAF”) out of San Francisco
International Airport from partner Neste, bringing an 80% reduction in lifecycle emissions per gallon before
blending with conventional fuel. While today we meet carbon neutrality through the purchase of third-party
audited and verified carbon offsets, we plan to ramp down usage of carbon offsets over time with expanded
use of SAF and increasing fuel efficiency of our aircraft and operations. We have committed to achieve net zero
carbon emissions across all our operations by 2040, ten years ahead of the Paris Agreement.
With respect to DEI, we are evolving our strategy and concentrating on three areas: people, sourcing and brand.
Regarding our people, we have committed to increase our minority and female representation in officer and
director ranks through the end of 2025. We are also reinforcing our commitment to invest in our crewmembers
and improve their access to development opportunities by creating new pathways from the frontline to our
support centers and into pilot and maintenance roles. Regarding sourcing, we have committed to growing
our spend with underrepresented and disadvantaged business partners by 5% by the end of this year. Lastly,
regarding our brand, we will continue to enhance our trust and build lasting connections with diverse customer
segments in the communities we serve, further driving inclusive representation.
An early look into 2021
We believe JetBlue is well positioned for the eventual leisure-led recovery given our low-cost, low-fare, leisure
model. We expect 2021 will be another challenging year, but we are starting to see the light at the end of the
tunnel. COVID-19 case counts continue to decline, quarantines are being relaxed and vaccination rates have
increased. While bookings in the early part of the year have been choppy, we are optimistic that these signs of
improvement signal a strong rebound of leisure travel, especially in the second half of this year. We will continue
to be nimble and decisive with changing conditions and demand trends.
As we navigate the current year, we are optimistic about our future. We will continue to make the changes
needed to weather the crisis, while staying true to our values and our mission, and placing people and culture
at the heart of our company. We have a truly great opportunity and have laid the foundation to emerge from the
crisis as a stronger airline.
Thanks to our 20,000 crewmembers for their outstanding service despite the tremendous difficulties of 2020.
Of course, thanks also to our owners for your continued support.
Most sincerely,
Robin Hayes
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ______________
Commission file number 000-49728
JETBLUE AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
27-01 Queens Plaza North, Long Island City, New York
(Address of principal executive offices)
87-0617894
(I.R.S. Employer Identification No.)
11101
(Zip Code)
(718) 286-7900
(Registrant's telephone number, including area code:)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.01 par value
JBLU
The NASDAQ Stock Market LLC
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark
YES
NO
■■ if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
■■ if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
■■ whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
■■ whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
■■ whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of ''large accelerated filer,” “accelerated filer'', “smaller reporting company,”
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
■■ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act.
■■ whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report.
■■ whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of June 30, 2020 was
approximately $3.0 billion (based on the last reported sale price on the NASDAQ Global Select Market on that date). The number
of shares outstanding of the registrant's common stock as of January 31, 2021 was 316,028,908 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Designated portions of the Registrant's Proxy Statement for its 2021 Annual Meeting of Stockholders, which is to be filed
subsequent to the date hereof, are incorporated by reference into Part III of this Annual Report on Form 10-K, or the Report, to
the extent described therein.
TABLE OF CONTENTS
PART I
Item 1. Business
Overview
JetBlue Experience
Operations and Cost Structure
Human Capital Management
Regulation
Where You Can Find Other Information
Item 1A. Risk Factors
Risks Related to JetBlue
Risks Associated with the Airline Industry
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity; Related
Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Results of Operations
Liquidity and Capital Resources
Contractual Obligations
Off-Balance Sheet Arrangements
Critical Accounting Policies and Estimates
Regulation G Reconciliation of Non-GAAP
Financial Measures
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Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public
Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive
(Loss) Income
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders’ Equity
Notes to Consolidated Financial Statements
Item 9.
Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate
Governance
Item 11. Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions,
and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
www.jetblue.com
Forward-Looking Information
Statements in this Report (or otherwise made by JetBlue or on
JetBlue’s behalf) contain various forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, which
represent our management’s beliefs and assumptions concerning
future events. These statements are intended to qualify for the
“safe harbor” from liability established by the Private Securities
Litigation Reform Act of 1995. When used in this document and in
documents incorporated herein by reference, the words “expects,”
“plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,”
“outlook,” “may,” “will,” “should,” “seeks,” “targets” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements involve risks, uncertainties and
assumptions, and are based on information currently available
to us. Actual results may differ materially from those expressed
in the forward-looking statements due to many factors, including,
without limitation, the coronavirus (“COVID-19”) pandemic and the
outbreak of any other disease or similar public health threat that
affects travel demand or behavior; restrictions on our business
related to the financing we accepted under the CARES Act; our
significant fixed obligations and substantial indebtedness; risk
associated with execution of our strategic operating plans in the
near-term and long-term; the recording of a material impairment
loss of tangible or intangible assets; our extremely competitive
industry; volatility in financial and credit markets which could
affect our ability to obtain debt and/or lease financing or to raise
funds through debt or equity issuances; volatility in fuel prices,
maintenance costs and interest rates; our reliance on high daily
aircraft utilization; our ability to implement our strategy; our
ability to attract and retain qualified personnel and maintain our
culture as we grow; our reliance on a limited number of suppliers,
including for aircraft, aircraft engines and parts and vulnerability
to delays by those suppliers; our dependence on the New York
and Boston metropolitan markets and the effect of increased
congestion in these markets; our reliance on automated systems
and technology; our being subject to potential unionization, work
stoppages, slowdowns or increased labor costs; our presence
in some international emerging markets that may experience
political or economic instability or may subject us to legal
risk; reputational and business risk from information security
breaches or cyber-attacks; changes in or additional domestic
or foreign government regulation, including new or increased
tariffs; changes in our industry due to other airlines' financial
condition; acts of war or terrorism; global economic conditions
or an economic downturn leading to a continuing or accelerated
decrease in demand for air travel; adverse weather conditions or
natural disasters; and external geopolitical events and conditions.
It is routine for our internal projections and expectations to
change as the year or each quarter in the year progresses,
and therefore it should be clearly understood that the internal
projections, beliefs and assumptions upon which we base our
expectations may change prior to the end of each quarter or year.
Given the risks and uncertainties surrounding forward-looking
statements, you should not place undue reliance on these
statements. You should understand that many important factors,
in addition to those discussed or incorporated by reference in this
Report, could cause our results to differ materially from those
expressed in the forward-looking statements. Potential factors
that could affect our results include, in addition to others not
described in this Report, those described in Item 1A of this Report
under “Risks Related to the COVID-19 Pandemic”, “Risks Related
to JetBlue”, and “Risks Associated with the Airline Industry.” In
light of these risks and uncertainties, the forward-looking events
discussed in this Report might not occur. Our forward-looking
statements speak only as of the date of this Report. Other than
as required by law, we undertake no obligation to update or
revise forward-looking statements, whether as a result of new
information, future events, or otherwise.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
3
PART I
ITEM 1
BUSINESS
Overview
General
JetBlue Airways Corporation, or JetBlue, is New York's Hometown
Airline®. As of December 31, 2020, JetBlue served 98 destinations
in the United States, the Caribbean and Latin America.
JetBlue was incorporated in Delaware in August 1998 and
commenced service on February 11, 2000. We believe our
differentiated product and culture combined with our competitive
cost structure enables us to compete effectively in the high-value
geographies we serve. Looking to the future, we plan to continue
to grow in our high-value geographies, invest in industry leading
products and provide award-winning service by our 20,000
dedicated employees, whom we refer to as crewmembers. Going
forward, we believe we will continue to differentiate ourselves
from other airlines, enabling us to continue to attract a greater
mix of customers, and to drive further profitable growth. We
are focused on delivering solid results for our shareholders, our
customers, and our crewmembers.
As used in this Report, the terms “JetBlue,” the “Company,” “we,”
“us,” “our” and similar terms refer to JetBlue Airways Corporation
and its subsidiaries, unless the context indicates otherwise. Our
principal executive offices are located at 27-01 Queens Plaza
North, Long Island City, New York 11101 and our telephone number
is (718) 286-7900.
Our Industry and Competition
The U.S. airline industry is extremely competitive and challenging,
and results are often volatile. It is uniquely susceptible to
external factors such as fuel costs, downturns in domestic and
international economic conditions, weather-related disruptions,
the spread of infectious diseases, such as COVID-19, and
associated stay at home orders and travel restrictions, the
impact of airline restructurings or consolidations, and military
actions or acts of terrorism. We operate in a capital and energy
intensive industry that has high fixed costs, as well as heavy
taxation and fees. Airline returns are sensitive to slight changes
4
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
in fuel prices, average fare levels, and passenger demand. The
industry's principal competitive factors include fares, brand
and customer service, route networks, flight schedules, aircraft
types, safety records, codeshare and interline relationships,
inflight entertainment and connectivity systems, and frequent
flyer programs.
The Coronavirus (COVID-19) Pandemic
The unprecedented coronavirus ("COVID-19") pandemic and the
related travel restrictions and physical distancing measures
implemented throughout the world have significantly reduced
demand for air travel. Beginning in March 2020, large public
events were canceled, governmental authorities began imposing
restrictions on non-essential activities, businesses suspended
travel, and popular leisure destinations temporarily closed to
visitors. Certain countries have imposed bans on international
travelers for specified periods or indefinitely.
Demand for air travel began to weaken at the end of February 2020.
The pace of decline accelerated throughout March into April 2020
and demand remained depressed throughout the rest of
2020. This decline in demand has had a material adverse impact
on our operating revenues and financial position. Our capacity
and operating revenues for the year ended December 31, 2020
declined by 48.8% and 63.5% year-over-year, respectively.
Although demand began to improve as the year progressed, it
remained significantly lower than in prior years. The exact timing
and pace of the recovery is uncertain given the significant impact
of the pandemic on the overall U.S. and global economy.
In response to the COVID-19 pandemic, since March 2020 we have
implemented a number of measures to focus on the safety of our
customers, our crewmembers, and our business. We expect the
demand environment to remain depressed until the majority of
the U.S. population is vaccinated against COVID-19. Our response
to the pandemic and the measures we take to secure additional
liquidity may be modified as we have more clarity on the timing
of demand recovery.
Jetblue Experience
We offer our customers a distinctive flying experience which we
refer to as the "JetBlue Experience''. We believe we deliver award-
winning service that focuses on the entire customer experience,
from booking an itinerary to arrival at the final destination.
Typically, our customers are neither high-traffic business
travelers nor ultra-price sensitive travelers. Rather, we believe
we are the carrier of choice for the majority of travelers who have
been underserved by other airlines as we offer a differentiated
product and award winning customer service.
Differentiated Product and Culture
Delivering the JetBlue Experience to our customers through
our differentiated product and culture is core to our mission to
inspire humanity. We look to attract new customers to our brand
and provide current customers with a reason to come back by
continuing to innovate and evolve the JetBlue Experience. We
believe we can adapt to the changing needs of our customers and
a key element of our success is the belief that competitive fares
and quality air travel need not be mutually exclusive.
Our award winning service begins from the moment our customers
purchase a ticket through one of our distribution channels such
as www.jetblue.com, our mobile applications, or our reservations
centers. Customers can purchase one of four branded fares: Blue
Basic, Blue, Blue Extra, and in select markets, Blue Plus. Each fare
includes different offerings such as priority boarding, advance
seat selections, free checked bags, reduced change fees, and
additional TrueBlue® points, with all fares including our core
offering of free inflight entertainment, free brand name snacks,
and free non-alcoholic beverages. Customers can choose to “buy
up” to an option with additional offerings. These different fares
allow customers to select the products or services they need or
value when they travel, without having to pay for the things they
do not need or value.
Upon arrival at the airport, our customers are welcomed by our
dedicated crewmembers and can choose to purchase one or
more of our ancillary options such as Even More® Speed, allowing
them to enjoy an expedited security experience in most domestic
JetBlue locations. Customers who select our Blue Extra option or
purchase a Mint® seat receive Even More® Speed as part of their
fare. We additionally have mobile applications for both Apple and
Android devices which have robust features including real-time
flight information updates and mobile check-in for certain routes.
Our applications are designed to enhance our customers’ travel
experience and are in keeping with the JetBlue Experience.
Our self-service layout in select BlueCities redesigned the
way our customers travel through the airport lobby. Our user-
friendly kiosks are the first point of contact for each customer
traveling through the airport lobby and allow for contact-less
service. While all customers are encouraged to use the kiosks,
our lobby layout allows them to choose the check-in experience
they prefer. Customers who choose to use our kiosk receive a
virtually queue-less experience. For customers who prefer a more
traditional experience, our Help Desk offers full-service check-
in. The self-service model allows crewmembers to get out from
PART I | ITEM 1 BUSINESS
behind the ticket counter and move through the lobby to guide our
customers through the check-in process. The self-service lobby
opens up the opportunity for our crewmembers to make personal
connections with our customers, to assist with bag tagging, to
answer customer questions and to direct them to their next step
in the travel experience.
Once onboard our aircraft, customers enjoy seats in a comfortable
layout with the most legroom in the main cabin of all U.S. airlines,
based on average fleet-wide seat pitch. Our Even More® Space
seats are available for purchase across our fleet, giving customers
the opportunity to enjoy additional legroom. Customers on certain
transcontinental or Caribbean flights have the option to purchase
our premium service, Mint®, which has 16 fully lie-flat seats,
including four suites with privacy doors.
In February 2021, we unveiled a reimagined version of our Mint®
experience. The new service includes a completely refreshed
cabin design featuring private suites with a sliding door for
every Mint® customer. Each Mint® aircraft will also include two
Mint® Studio suites which offers the most space in a premium
experience from any U.S. airline based on personal square footage
per passenger seat. We expect to debut this new premium service
with a 16-seat individual suite layout on a limited number of flights
between New York and Los Angeles in 2021. For our anticipated
transatlantic flights to London, the new Mint® experience will
include 24 individual suites.
Our inflight entertainment system onboard the majority of our
Airbus A320 and Embraer E190 aircraft includes 36 channels of free
DIRECTV®, 100+ channels of free SiriusXM Radio® and premium
movie channel offerings from JetBlue Features. Customers on
our Airbus A321 aircraft and certain restyled Airbus A320 aircraft
have access to 100+ channels of DIRECTV®, 100+ channels of
SiriusXM Radio® and premium movie channel offerings from
JetBlue Features. Our Mint® customers enjoy 15-inch flat screen
televisions to experience our inflight entertainment offerings.
Our entire fleet is equipped with Fly-Fi®, a broadband product
that allows gate-to-gate Wi-Fi at every seat. Customers also have
access to the Fly-Fi® Hub, a content portal where customers can
access a wide range of movies, television shows, and additional
content from their own personal devices.
All customers may enjoy an assortment of free and unlimited
brand name snacks and non-alcoholic beverages and have
the option to purchase additional products such as blankets,
pillows, headphones, premium beverages and premium food
selections. Our Mint® customers have access to an assortment
of complimentary food, beverages and products including a small-
plates menu, artisanal snacks, alcoholic beverages, a blanket,
pillows, and headphones.
Our Airbus A321 aircraft in a single cabin layout have 200 seats
and those with our Mint® offering have 159 seats. Our Airbus A320
aircraft in the classic configuration have 150 seats while our
Embraer E190 aircraft have 100 seats. Those A320 aircraft which
have gone through our cabin restyling program have 162 seats. We
believe our multi-year restyling program will allow us to increase
capacity in a capital-efficient and customer-focused way. Our
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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first restyled Airbus A320 aircraft entered into revenue service
in April 2018. As of December 31, 2020, we had 72 restyled Airbus
A320 aircraft in service. In December 2020, we took delivery of
our first airbus A220 aircraft with a cabin configuration of 140
seats.
Because of our network strength in leisure destinations, we also
sell vacation packages through our wholly owned subsidiary,
JBTP, LLC, or JetBlue Travel Products, a one-stop, value-priced
vacation service for self-directed packaged travel planning. These
packages offer competitive fares for air travel on JetBlue along
with a selection of JetBlue-recommended hotels and resorts, car
rentals, and local attractions.
We work to provide a superior air travel experience, including
communicating openly and honestly with customers about delays
and service disruptions. We have a Customer Bill of Rights which
was introduced in 2007 to provide compensation to customers
who experience inconveniences. This Customer Bill of Rights
commits us to high service standards and holds us accountable
if we fall short.
Our customers have repeatedly indicated the distinctive JetBlue
Experience is an important reason why they select us over other
carriers. We measure and monitor customer feedback regularly
which helps us to continuously improve customer satisfaction.
One way we do so is by measuring our net promoter score, or NPS.
This metric is used by companies in a broad range of industries
to measure and monitor the customer experience. Many of the
leading consumer brands that are recognized for great customer
service receive high NPS scores. We believe a higher NPS score
has positive effects on customer loyalty and ultimately leads to
increased revenue.
Network
We are a predominately point-to-point system carrier, with the
majority of our routes touching at least one of our six focus
cities: New York, Boston, Fort Lauderdale-Hollywood, Orlando,
Los Angeles, and San Juan, Puerto Rico.
Leisure traveler focused airlines are often faced with high
seasonality. As a result, we continually work to manage our mix
of customers to include both business travelers and travelers
visiting friends and relatives, or VFR. VFR travelers tend to be
slightly less seasonal and less susceptible to economic downturns
than traditional leisure destination travelers. Understanding the
purpose of our customers’ travel helps us optimize destinations,
strengthen our network, and increase unit revenues. All six of our
focus cities are in regions with a diverse mix of traffic.
As of December 31, 2020, our network served 98 BlueCities in 30
states, the District of Columbia, the Commonwealth of Puerto
Rico, the U.S. Virgin Islands, and 23 countries in the Caribbean
and Latin America.
We group our capacity distribution based upon geographical
regions rather than on a mileage or a length-of-haul basis. The
historic distribution of ASMs, or capacity, by region for the years
ending December 31 was:
Capacity Distribution
Transcontinental
Caribbean & Latin America(1)
Florida
East
Central
West
TOTAL
2020
31.7 %
31.4
27.4
4.5
4.0
1.0
2019
32.0 %
31.2
25.2
6.0
4.0
1.6
2018
31.3 %
28.7
27.3
6.5
4.0
2.2
100.0 %
100.0 %
100.0 %
(1) Domestic operations as defined by the U.S. Department of Transport, or DOT, include Puerto Rico and the U.S. Virgin Islands, but for the purposes of the capacity
distribution table above, we have included these locations in the Caribbean and Latin America region.
We made numerous adjustments to our network in response to
the dynamic environment created by the COVID-19 pandemic. At
the onset of the pandemic, we significantly reduced our capacity
to a level that maintained essential services to align with the
precipitous decline in demand. We temporarily consolidated our
operations in certain cities that contain multiple airport locations
and parked a portion of our fleet.
As the pandemic progressed, we launched new routes to serve
customers in markets where leisure and VFR travel showed
signs of recovery. These new routes offered us the opportunity
to generate revenue, bring aircraft back into service, and added
more flying opportunities for our crewmembers and customers.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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We expect to resume our plans to increase our presence in our focus cities and diversify our network as we recover from the pandemic.
We have previously announced service to the following new destinations:
Destination
Key West, Florida
Miami, Florida
Guatemala City, Guatemala(*)
Los Cabos, Mexico(*)
(*) Subject to receipt of government operating authority.
Service Expected to Commence
February 11, 2021
February 11, 2021
April 15, 2021
June 17, 2021
We also anticipate launching service from Boston and JFK to London in 2021. London will be our first BlueCity in Europe.
Airline Commercial Partnerships
Airlines frequently participate in commercial partnerships with
other carriers in order to increase customer convenience by
providing interline-connectivity, codeshare, complementary
flight schedules, frequent flyer program reciprocity, and other
joint marketing activities. As of December 31, 2020, we had 48
airline commercial partnerships. Our commercial partnerships
typically begin as an interline agreement allowing a customer to
book a single itinerary with tickets on multiple airlines. On their
day of travel, they enjoy a simplified airport experience with single
check-in and bag drop.
In July 2020, we announced our intention to enter into a strategic
relationship with American Airlines Group Inc. (“American”). This
arrangement, once fully implemented, will include an alliance
agreement with reciprocal code sharing on domestic and
international routes from or connecting through New York (John
F. Kennedy International Airport (“JFK”), LaGuardia Airport, and
Newark Liberty International Airport) and Boston, excluding
JetBlue’s future European transatlantic flying. We believe this
partnership will create more capacity, seamless connectivity for
travelers in the northeast, and offer more choices for customers
across the networks of both airlines. In addition, we believe this
relationship will also accelerate our recovery as the travel industry
adapts to new trends as a result of the COVID-19 pandemic. Pursuant
to federal law, American and JetBlue submitted this proposed
alliance arrangement to the Department of Transportation (“DOT”)
for review. After American, JetBlue and the DOT agreed to a series
of commitments, the DOT terminated its review of the proposed
alliance. The commitments include growth commitments to ensure
capacity expansion, slot divestitures at JFK and at Reagan National
Airport near Washington, D.C. and antitrust compliance measures.
Beyond this agreement with the DOT, American and JetBlue will
also be limiting their coordination on certain city pair markets
within the scope of the alliance. In addition to the DOT review, the
Department of Justice and the New York Attorney General, the
Massachusetts Attorney General, and the Attorneys General of
certain other state and local jurisdictions are investigating this
proposed alliance, which are ongoing. American and JetBlue intend
to cooperate with those investigations, but are proceeding with
plans to implement this alliance.
In 2021, we expect to continue to seek additional strategic
opportunities through new commercial partners as well as
assess ways to deepen existing airline partnerships. We plan to
do this by expanding codeshare relationships and other areas
of cooperation such as frequent flyer programs. We believe
these commercial partnerships allow us to better leverage our
strong network and drive incremental traffic and revenue while
improving off-peak travel.
Marketing
JetBlue is a widely recognized and respected global brand.
JetBlue created a new category in air travel and our brand stands
for high service quality at a reasonable cost. We believe this brand
has evolved into an important and valuable asset which identifies
us as a safe, reliable, high value airline. Similarly, we believe
customer awareness of our brand has contributed to the success
of our marketing efforts. It enables us to promote ourselves as
a preferred marketing partner with companies across many
different industries.
We market our services through advertising and promotions
in various media forms including popular social media outlets.
We engage in large multi-market programs, local events and
sponsorships across our route network as well as mobile
marketing programs. Our targeted public and community
relations efforts reflect our commitment to the communities we
serve, promote brand awareness, and complement our strong
reputation.
Distribution
Our primary and preferred distribution channel to customers is
through our website, www.jetblue.com, our lowest cost channel.
Our website allows us to more closely control and deliver the
JetBlue Experience while also offering the full suite of JetBlue
Fare Options, Even More® Space and Speed, and other ancillary
services.
Our participation in global distribution systems, or GDS, supports
our profitable growth, particularly in the business market. We find
business customers are more likely to book through a travel agency
or a booking product which relies on a GDS platform. Although
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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the cost of sales through this channel is higher than through our
website, the average fare purchased through a GDS is generally
higher and often covers the increased distribution costs. We
currently participate in several major GDS and online travel agents,
or OTA. Due to the majority of our customers booking travel on our
website, we maintain relatively low distribution costs despite our
increased participation in GDS and OTA in recent years.
Customer Loyalty Program
TrueBlue® is our customer loyalty program designed to reward
and recognize loyal customers. Members earn points based
upon, among other methods, the amount paid for JetBlue flights
and services from certain commercial partners. Our points do
not expire, the program has no black-out dates, points can be
redeemed for any open seat, and any JetBlue destination can be
booked if the TrueBlue® member has enough points to exchange
for the value of an open seat. Mosaic® is an additional level for
our most loyal customers who (1) fly a minimum of 30 times with
JetBlue and acquire at least 12,000 base flight points within a
calendar year, (2) accumulate 15,000 base flight points within a
calendar year, or (3) in certain circumstances, qualify through a
minimum credit card spend of $50,000 in a calendar year.
We made several updates to our TrueBlue® program in response
to the COVID-19 pandemic. These include extending the status of
all current Mosaic® customers through 2021 and also reducing the
qualification requirements for customers trying to earn Mosaic®
status by 50% in 2021. Under the updated program, customers
can now enjoy Mosaic® benefits by either (1) flying a minimum of 15
times with JetBlue and acquiring at least 6,000 base flight points
within a calendar year or (2) accumulating 7,500 base flight points
within a calendar year. These reduced qualification requirements
are effective through the end of 2021.
We currently have co-branded loyalty credit cards available
to eligible U.S. residents, as well as co-brand agreements in
Puerto Rico and the Dominican Republic to allow cardholders
to earn TrueBlue® points. Our co-branded credit cards in the
United States are issued in partnership with Barclaycard® on the
MasterCard® network. We also have co-branded loyalty credit
cards issued by Banco Popular de Puerto Rico and MasterCard® in
Puerto Rico as well as Banco Popular Dominicano and MasterCard®
in the Dominican Republic. These credit cards allow customers in
Puerto Rico and the Dominican Republic to take full advantage of
our TrueBlue® loyalty program.
We have various agreements with other loyalty partners, including
financial institutions, hotels, and car rental companies, that allow
their customers to earn TrueBlue® points through participation
in our partners’ programs. We intend to continue to develop the
footprint of our co-branded credit cards and pursue other loyalty
partnerships in the future.
Operations and Cost Structure
Historically, our cost structure has allowed us to price fares lower
than many of our competitors and was a principal reason for our
profitable growth prior to the onset of the COVID-19 pandemic
in 2020. Our cost advantage relative to some of our competitors
was due to, among other factors, high aircraft utilization, new
and efficient aircraft, relatively low distribution costs, and a
productive workforce. Because our network initiatives and
growth plans require a low cost platform, we strive to stay focused
on our competitive costs, operational excellence, efficiency
improvements, and enhancing critical elements of the JetBlue
Experience. We will remain nimble and continue to execute on
our cost plan in the face of changing customer behaviors as we
navigate through the COVID-19 pandemic.
Route Structure
JetBlue’s point-to-point system is the foundation of our
operational structure, with the majority of our routes touching
at least one of our six focus cities. This structure allows us to
optimize costs as well as accommodate customers’ preference
for nonstop itineraries. A vast majority of our operations are
centered in the heavily populated northeast corridor of the U.S.,
which includes the New York and Boston metropolitan areas. This
airspace is some of the world’s most congested and drives certain
operational constraints.
Our peak levels of traffic over the course of the typical year
vary by route; the East Coast to Florida/Caribbean routes
peak from October through April and the West Coast routes
peak in the summer months. Generally speaking, many of our
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
areas of operations in the Northeast experience poor winter
weather conditions, resulting in increased costs associated
with de-icing aircraft, canceled flights, and accommodating
displaced customers. Many of our Florida and Caribbean routes
experience bad weather conditions in the summer and fall due
to thunderstorms and hurricanes. As we enter new markets we
could be subject to additional seasonal variations along with
competitive responses by other airlines.
Our flying in 2020 did not follow the typical historical patterns and
was instead shaped by our responses to the significant declines
in demand for air travel and changes in travel behavior triggered
by the COVID-19 pandemic and associated government travel
restrictions in the U.S. and international destinations we serve.
■■ New York metropolitan area - We are New York’s Hometown
Airline®. Approximately one-half of our flights originate from
or are destined for the New York metropolitan area. JFK is
New York’s largest airport, and we are the second largest
airline at JFK as measured by domestic seats. Our 2020
operations accounted for 39% of seats offered on domestic
routes from JFK. We also serve New Jersey’s Newark Liberty
International Airport, or Newark, New York City’s LaGuardia
Airport, or LaGuardia, New York’s Stewart International Airport,
or Newburgh, and New York’s Westchester County Airport, or
White Plains.
■■ Boston - We are the largest carrier at Boston’s Logan
International Airport, or Boston. At the end of 2020, we flew
to 70 nonstop destinations from Boston and our operations
accounted for 31% of all seats offered in Boston.
■■ Caribbean and Latin America - At the end of 2020, we had 35
BlueCities in the Caribbean and Latin America. San Juan, Puerto
Rico is our only focus city outside of the Continental U.S. We
are a leading carrier in Puerto Rico serving three airports. We
are also the largest airline in the Dominican Republic, serving
four airports.
■■ Fort Lauderdale-Hollywood - We are a leading carrier at
Fort Lauderdale-Hollywood International Airport, or Fort
Lauderdale-Hollywood, with approximately 19% of all seats
offered in 2020.
■■ Orlando - We are the leading carrier measured by seats at
Orlando International Airport, or Orlando. At the end of 2020,
we served 33 nonstop destinations from Orlando and our
operations accounted for 10% of all seats offered in Orlando
in 2020.
■■ Los Angeles area - We are the sixth largest carrier in the Los
Angeles area measured by seats, operating from Los Angeles
International Airport, or LAX, Burbank’s Bob Hope Airport,
or Burbank, and Ontario International Airport, or Ontario.
In July 2020, we announced our plans to make LAX a focus
city and our primary base of operations on the west coast.
To enable this shift, we relocated our operations from Long
Beach Airport along with our crew and maintenance bases in
October 2020. We believe this move will enable us to embark
on a strategic expansion over the next five years with plans to
reach approximately 70 flights per day by 2025.
Fleet Structure
We currently operate Airbus A321, Airbus A320, and Embraer E190
aircraft types. As of December 31, 2020, our fleet had an average
age of 11.3 years. We took delivery of our first Airbus A220 aircraft
in December 2020. We expect this aircraft to enter into service
in early 2021.
The reliability of our fleet is essential to ensuring our operations
run efficiently and we are continually working with our aircraft and
engine manufacturers to enhance our performance.
We continue to work with the Federal Aviation Administration,
or FAA, in efforts towards implementing the Next Generation
Air Transportation System, or NextGen. NextGen technology is
expected to improve operational efficiency in the congested
airspaces in which we operate. NextGen is a multi-year
modernization project with a target of having all major
components in place by 2025. As part of NextGen, our aircraft
will be outfitted with the following:
■■ Automatic Dependent Surveillance-Broadcast Out (“ADSB-
Out”): ADSB-Out is a global positioning system (“GPS”)
surveillance technology that give air traffic controllers the
precise location of aircraft every second. The goal of this
technology is to safely boost the capacity of our airspace.
PART I | ITEM 1 BUSINESS
■■ Satellite-based Communications: We are putting satellite-
based voice and data communications (“SATCOM”) on our Airbus
fleet. As planned, every aircraft will be assigned a unique phone
number, similar to a cell network, aimed at giving us positive
contact with our aircraft anywhere in the world.
■■ Data Comm: Data Comm makes departures more efficient by
dramatically speeding up the process of aircraft pilots obtaining
clearance from air traffic controllers. With Data Comm,
controllers can simply push clearance details to the aircraft
and dispatcher, which the pilot can confirm and automatically
input into the flight computer with the push of a button.
Fleet Maintenance
Consistent with our core value of safety, our FAA-approved
maintenance programs are administered by our technical
operations department. We use qualified maintenance personnel
and ensure they have comprehensive training. We maintain our
aircraft and associated maintenance records in accordance with,
if not exceeding, FAA regulations. As a result of the significant
reduction in demand expectations and lower capacity driven
by the COVID-19 pandemic, we have temporarily parked a
portion of our fleet throughout 2020 and continuing into 2021.
Fleet maintenance work is divided into three categories: line
maintenance, heavy maintenance, and component maintenance.
The bulk of our line maintenance is handled by JetBlue technicians
and inspectors. It consists of daily checks, overnight and weekly
checks, or “A” checks, diagnostics, and routine repairs.
Heavy maintenance checks, or “C” checks, consist of a series of
more complex tasks taking from one to four weeks to complete
and are typically performed once every 15 months. All of our
aircraft heavy maintenance work is performed by third party FAA-
approved facilities such as Aeroman (an MRO Holdings company),
Flightstar (an MRO Holdings company), and PEMCO World Air
Services (an Airborne Maintenance and Engineering Services,
Inc. company), and are subject to direct oversight by JetBlue
personnel. We outsource heavy maintenance as the costs are
lower than if we performed the tasks internally.
Component maintenance on equipment such as engines, auxiliary
power units, landing gears, pumps, and avionic computers are all
performed by a number of different FAA-approved third party
repair stations. We have time and materials agreements with
MTU Aero Engines, Lufthansa Technik AG, and International
Aero Engines AG (“IAE”) for the repair, overhaul, modification,
and logistics of our Airbus aircraft engines. We also have a
maintenance agreement with GE Engine Services, LLC for our
Embraer E190 aircraft engines and IAE for our Airbus A321neo
aircraft engines. Many of our maintenance service agreements
are based on a fixed cost per flight hour. These fixed costs vary
based upon the age of the aircraft and other operating factors
impacting the related component. Required maintenance not
otherwise covered by these agreements is performed on a time
and materials basis. All other maintenance activities are sub-
contracted to qualified maintenance, repair and overhaul facilities.
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Aircraft Fuel
Aircraft fuel continues to be one of our largest expenses. Its
price has been extremely volatile due to global economic and
geopolitical factors which we can neither control nor accurately
predict. Our 2020 fuel consumption decreased by 53.4%
compared to 2019 due to capacity reductions in response to lower
demand as a result of the COVID-19 pandemic. We use a third party
to assist with fuel management service and to procure most of
our fuel. Our historical fuel consumption and costs for the years
ended December 31 were:
Gallons consumed (millions)
Total cost (millions)(1)
Average price per gallon(1)
Percent of operating expenses
2020
412
631
1.53
$
$
2019
885
1,847
2.09
$
$
2018
849
1,899
2.24
$
$
13.5 %
25.3 %
25.7 %
(1) Total cost and average price per gallon each include related fuel taxes as well as effective fuel hedging gains and losses.
We attempt to protect ourselves against the volatility of fuel
prices by entering into a variety of derivative instruments. These
include call spread options, call options, swaps, caps, collars, and
basis swaps with underlyings of jet fuel, crude and heating oil.
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 on financing activities to fund much of
our growth. Starting in 2007, our growth has largely been funded
through internally generated cash from operations.
In response to the travel restrictions, decreased demand, and
other effects the COVID-19 pandemic has had and is expected to
continue to have on the Company's business, we have secured
over $4 billion in net proceeds through various debt and equity
financing activities in 2020. We believe the additional liquidity will
allow us to navigate through the pandemic in the short-term. We
will continue to evaluate future financing opportunities to build
additional levels of liquidity as needed. Due to the impact that the
demand environment has had on our financial condition, our credit
ratings were downgraded during 2020. Our current ratings from
the three major credit rating agencies are summarized below:
Rating Agency
Fitch
Moody's
Standard & poor's
Current Rating
BB-
Ba2
B+
Outlook
Negative
Negative
Negative
JetBlue Technology Ventures
JetBlue Technology Ventures, LLC, or JTV, is a wholly owned
subsidiary of JetBlue. JTV invests in and partners with early
stage startups with goals of improving the travel, hospitality,
and transportation industries. The investment focus of JTV is
as follows:
■■ Seamless Customer Journey: Solutions that brighten the
journey and enable a seamless travel experience throughout
every part of the customer's trip.
■■ Reimagining the Accommodation Experience: Evolutions in
hospitality, including alternative accommodations, and the
underlying products and services that power the industry.
■■ Next-Generation Aviation Operations and Enterprise Tech:
Innovations that enhance safety, improve operations, and drive
enterprise-wide efficiencies.
■■ Innovation in Loyalty, Distribution, and Revenue: Technologies
that personalize and diversify commerce, simplify payments,
and improve revenue opportunities.
■■ Sustainable Travel: Advanced methods of measuring and
reducing emissions, improved environmental protections,
and game-changing transportation powered by alternative
propulsion systems.
JetBlue Travel Products
In 2018, we launched JBTP, LLC, or JetBlue Travel Products,
which includes our JetBlue Vacations® brand and other non-air
travel products such as travel insurance, cruises, and car rental.
With its Inspiration Center headquartered in Fort Lauderdale,
we believe JetBlue Travel Products will play an important role in
delivering our vision of inspiring humanity, extending our reach
further across the travel ribbon to offer customers an even more
seamless travel experience.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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TWA Flight Center Hotel
In 2015, the Board of Commissioners of the Port Authority of
New York & New Jersey, or the PANYNJ approved a construction
plan to redevelop the TWA Flight Center at JFK on its nearly
six-acre site into a hotel with over 500 rooms, meeting spaces,
restaurants, a spa and an observation deck. As part of the
plan, a 75-year lease agreement was entered into between the
PANYNJ and the Flight Center Hotel, LLC, a partnership of MCR
Development, LLC and JetBlue. The TWA Flight Center Hotel
opened for business in 2019. As of December 31, 2020, we have
an approximate 10% ownership interest in the hotel.
Human Capital Management
Our People and Culture
We believe our success depends on our crewmembers delivering
the JetBlue Experience in the sky and on the ground. One of our
competitive strengths is a service oriented culture grounded in
our five key values: safety, caring, integrity, passion, and fun. We
believe a highly productive and engaged workforce enhances
customer loyalty. 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.
We first introduce our culture to new crewmembers during the
screening process and then at an extensive new hire orientation
program at JetBlue University, our training center in Orlando.
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, various leadership training programs, and
regular training focused on the safety value and front line training
for our customer service teams.
Our historical and, post-pandemic, future growth plans
necessitate and facilitate opportunities for talent development.
In 2016, we launched Gateway Select, a program for prospective
pilots to join us for a rigorous, approximately four-year training
program in partnership with CAE Inc. that incorporates classroom
learning, extensive real-world flying experience and instruction
in full flight simulators.
We believe a direct relationship between crewmembers and
our leadership is in the best interests of our crewmembers,
our customers, and our shareholders. Except for our pilots and
inflight crewmembers, our crewmembers do not have third-party
representation. In 2014, JetBlue’s pilots voted for, and the National
Mediation Board, or NMB, certified the Air Line Pilots Association,
or ALPA, as the representative body for JetBlue pilots after
winning a representation election. We reached a final agreement
for our first collective bargaining agreement which was ratified
by the pilots in 2018. The agreement is a four-year renewable
contract effective August 1, 2018. In April 2018, JetBlue inflight
crewmembers elected to be solely represented by the Transport
Workers Union of America, or TWU. The NMB certified the TWU
as the representative body for JetBlue inflight crewmembers. In
November 2020, our inflight crewmembers voted to decline the
ratification of a tentative collective bargaining agreement between
JetBlue and TWU. We are currently working with TWU to determine
next steps. As of December 31, 2020, approximately 51 percent
of our full-time equivalent crewmembers were represented by
unions. The following table sets forth our crewmember groups and
the status of their respective collective bargaining agreements.
Crewmember Group
Representative
Crewmembers(1)
Amendable Date(2)
Pilots
Inflight
Air Line Pilots Association (ALPA)
Transport Workers Union (TWU)
3,715
3,572
August 1, 2022
In negotiations
(1) Approximate number of active full-time equivalent crewmembers as of December 31, 2020.
(2) Our relations with our labor organizations are governed by Title II of the Railway Labor Act of 1926, pursuant to which the collective bargaining agreements between us and
these organizations do not expire but instead become amendable as of a certain date if either party wishes to modify the terms of the 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 provide what we
believe to be industry-leading job protection through these
agreements. We believe these agreements provide JetBlue and
crewmembers flexibility and allow us to react to crewmember
needs more efficiently than collective bargaining agreements.
A key feature of the direct relationship with our crewmembers
is our Values Committees which are made up of peer-elected
frontline crewmembers from each of our major work groups, other
than pilots and inflight crewmembers. They represent the interests
of our workgroups and help us run our business in a productive
and efficient manner. We believe this direct relationship with
crewmembers drives higher levels of engagement and alignment
with JetBlue’s strategy, culture, and overall goals.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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PART I | ITEM 1 BUSINESS
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.
All JetBlue crewmembers have the right to an open and
respectful workplace. Our Code of Conduct prohibits all forms
of discrimination, and we promote open communication to
resolve any discrimination concerns. Every JetBlue director-level
crewmember and above is required to participate in unconscious
bias training.
Our leadership team communicates on a regular basis with all
crewmembers in order to maintain a direct relationship and
to keep them informed about news, strategy updates, and
challenges affecting the airline and the industry. 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, crewmember engagement surveys, 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 crewmembers for the
year ended December 31, 2020 consisted of 3,714 pilots, 4,308
inflight (whom other airlines may refer to as flight attendants),
2,745 airport operations personnel, 653 technicians (whom other
airlines may refer to as mechanics), 849 reservation agents,
and 3,181 management and other personnel. For the year ended
December 31, 2020, we employed an average of 16,228 full-time
and 4,514 part-time crewmembers.
Our average number of full-time equivalent crewmembers
decreased by 16.6% compared to 2019 as a result of various
voluntary separation and time off programs implemented in
response to the drastic decline in demand for air travel brought
on by the COVID-19 pandemic.
Diversity and Inclusion
Every day we aim to live our mission of inspiring humanity, driving
inclusion both inside and outside the Company. While we recognize
that there is a lack of diversity in certain areas of the commercial
aviation industry, we are taking steps to address that challenge.
Our efforts to promote diversity and inclusion are centered around
three key pillars: (1) representative leadership; (2) an open culture;
and (3) commercial impact. This focus starts at the top.
As leadership opportunities emerge, we will continue to seek
qualified diverse candidates to propel our Company forward.
To this end, we have expanded our recruitment streams for
diverse talent through partnerships with the National Gay
Pilots Association, Boston Pride, and the Organization of Black
Aerospace Professionals, among others. In 2018, we appointed
our first female President and Chief Operating Officer, Joanna
Geraghty. Today, women account for more than one-third of our
Board of Directors and approximately one-fifth of our senior
leadership team.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
Crewmember Programs
We are committed to supporting our crewmembers through a
number of programs including:
■■ Crewmember Resource Groups (CRGs) - We encourage
crewmembers to celebrate their individuality and build
camaraderie through our various CRGs. CRGs spearhead
programs to embrace and encourage the sharing of different
perspectives, thoughts, and ideas. At the end of 2020, we had
six CRGs which include:
■— Blue Aviasian: Celebrates the history of Asians, Asian
Americans and Pacific Islanders. The group offers immersive
cultural experiences, networking, and career development
events.
■— Blue Conexión: Shares the Latino culture and language in the
workplace and community.
■— JADE (JetBlue African Diaspora Experience): Explores the
rich cultures of the African diaspora. JADE leads cultural
events during Black History Month and hosts TravelCon, a
day-long event for crewmembers to learn about the diverse
experience of Black travelers, among other events.
■— JetPride: Offers professional development opportunities for
LGBTQ+ crewmembers and their allies. During Pride Month,
crewmembers march across the network to celebrate
diversity, equality and acceptance.
■— Vets in Blue: Provides a forum for crewmembers who
honorably serve or have served in the Armed Forces. Vets
in Blue strengthens JetBlue’s efforts to employ and retain
members of the military through outreach, networking
events, career fairs, and mentoring opportunities. Many
former service members enjoy second careers with JetBlue
in airport operations, corporate security, inflight, flight
operations and more.
■— Women in Flight: Provides members with educational
networking opportunities that inspire career and personal
growth. Typically, the group hosts our annual Fly Like a Girl
event, teaching young girls about different career paths in
aviation.
■■ JetBlue Crewmember Crisis Fund (JCCF) - This organization,
originally formed in 2002, is a non-profit corporation independent
from JetBlue and recognized by the IRS as a tax-exempt entity.
JCCF was created to assist JetBlue crewmembers and their
immediate family members (IRS Dependents) with short-term
financial support in times of crisis and unexpected emergencies
when other resources are not available. Funds for JCCF grants
come directly from crewmember donations 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.
PART I | ITEM 1 BUSINESS
■■ JetBlue Scholars - Developed in 2015, this program offers a new
and innovative model to our crewmembers wishing to further
their education. Crewmembers enrolled in the program can
earn an undergraduate degree through self-directed online
college courses facilitated by JetBlue. This reemphasizes our
continuous effort to help provide assistance to our most valued
asset, our people. To build on the program, we introduced the
Master’s Pathway program in 2019 which is designed to help
crewmembers who would like to advance their education even
further by pursuing a master’s degree. The Master’s Pathway
program partners with reputable institutions to provide a
variety of benefits to crewmembers including tuition discounts,
scholarships, and access to specialized support services.
■■ Lift Recognition Program - Created in 2012, this crewmember
recognition program encourages crewmembers to celebrate
their peers for living JetBlue’s values by sending e-thanks
through an on-line platform. Our leadership team periodically
hosts an event for the crewmembers who receive the highest
number of Lift award recognitions in each quarter of the year.
In 2020, we saw more than 100,000 Lift awards.
Response to the COVID-19 Pandemic
In response to the COVID-19 pandemic, we continued to prioritize
the safety of our crewmembers while continuing to support the
needs of our operations during this period. Some of the steps we
have taken include:
■■ Introduced “Safety from the Ground Up”, an initiative with a
multi-layer approach that encompasses enhanced safety and
cleaning measures on our flights, at our airports, and in our
offices;
■■ Instituted temperature checks for all of our customer-facing
and support-center crewmembers;
■■ Updated our sick leave policy to provide up to 14 days of paid
sick leave for crewmembers who were diagnosed with COVID-19
or were required to quarantine;
■■ Partnered with Northwell Direct to provide a comprehensive
set of COVID-19 services and programs to support our
crewmembers;
■■ Implemented a framework for internal contact tracing,
crewmember notification, and a return to work clearance
process for all crewmembers, wherever they may be located;
Community Programs
JetBlue is committed to supporting the communities and
BlueCities we serve through a variety of community programs
including:
■■ Corporate Social Responsibility (CSR) - The CSR strategy,
JetBlue For Good, focuses on three areas that our customers
and crewmembers are passionate about: (1) youth and
education, (2) community, and (3) environment.
■— Youth and Education: As a pillar of JetBlue For Good, our
youth and education efforts focus on providing children from
underserved areas the resources needed to obtain a quality
education and sustainable careers. We do this through
various initiatives including donating age-appropriate books
to areas where books are scarce outside of school walls. We
also host regular career days that help expose young adults
to the careers available to them upon graduation and beyond.
■— Community: We have a longstanding tradition of supporting
the dedicated community organizations that make our
BlueCities better. We show our support through partnerships,
donations and more than the 1 million-plus volunteer hours
logged by our crewmembers since 2011.
■— Environment: JetBlue’s primary environmental sustainability
priority is reducing and managing carbon emissions from jet
fuel. We are committed to investing in more fuel-efficient
technologies, renewable fuels, electric ground service
equipment, logistics and other measures to reduce our
carbon footprint.
■■ JetBlue Foundation - Created in 2013 as a 501(c)(3) non-profit
corporation, the JetBlue Foundation is a JetBlue-sponsored
organization focused on raising awareness for careers in
science, technology, engineering and math (STEM) and aviation.
The JetBlue Foundation focuses on four main areas:
■— Partnering with organizations and communities to provide
access to STEM programs for students from traditionally
underserved communities;
■— Investing in programs geared toward students from diverse
backgrounds to create a lifelong interest in STEM as early as
possible in a student’s academic career;
■— Creating equal opportunities and increasing access for all
students to spark a passion for STEM; and
■■ Administered more frequent disinfecting of common surfaces
■— Building a more diverse talent pipeline for the aviation
and areas with high touchpoints in our facilities; and
industry.
■■ Conducted regular virtual “pocket sessions” to provide
company-wide updates to our crewmembers as we navigate
through the pandemic.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
13
PART I | ITEM 1 BUSINESS
Regulation
Airlines are heavily regulated, with rules and regulations set by
various federal, state and local agencies. We also operate under
specific regulations due to our operations within the high density
airspace of the northeast U.S. Most of our airline operations are
regulated by U.S. governmental agencies including:
DOT
The DOT primarily regulates economic issues affecting air
service including, but not limited to, certification and fitness,
insurance, consumer protection and competitive practices.
They set the requirement that carriers cannot permit domestic
flights to remain on the tarmac for more than three hours. The
DOT also requires that the advertised price for an airfare or a tour
package including airfare (such as a hotel/air vacation package)
has to be the total price to be paid by the customer, including all
government taxes and fees. It has the authority to investigate
and institute proceedings to enforce its economic regulations
and may assess civil penalties, revoke operating authority and
seek criminal sanctions.
FAA
The FAA primarily regulates flight operations, in particular,
matters affecting air safety. This includes but is not limited
to airworthiness requirements for aircraft, the licensing of
pilots, mechanics and dispatchers, and the certification of
flight attendants. It requires each airline to obtain an operating
certificate authorizing the airline to operate at specific airports
using specified equipment. Like all U.S. certified carriers, JetBlue
cannot fly to new destinations without the prior authorization of
the FAA. After providing notice and a hearing, the FAA has the
authority to modify, suspend temporarily or revoke permanently
our authority to provide air transportation or that of our
licensed personnel for failure to comply with FAA regulations.
It can additionally assess civil penalties for such failures as
well as institute proceedings for the imposition and collection
of monetary fines for the violation of certain FAA regulations.
When significant safety issues are involved, it can revoke a U.S.
carrier’s authority to provide air transportation on an emergency
basis, without providing notice and a hearing. It monitors our
compliance with maintenance as well as flight operations and
safety regulations. It maintains on-site representatives and
performs frequent spot inspections of our aircraft, crewmembers
and records. The FAA also has the authority to issue airworthiness
directives and other mandatory orders. This includes the
inspection of aircraft and engines, fire retardant and smoke
detection devices, collision and wind shear avoidance systems,
noise abatement, and the mandatory removal and replacement
of aircraft parts that have failed or may fail in the future. We
have and maintain FAA certificates of airworthiness for all of our
aircraft and have the necessary FAA authority to fly to all of the
destinations we currently serve.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
Transportation Security Administration and
U.S. Customs and Border Protection
The Transportation Security Administration, or TSA, and the
U.S. Customs and Boarder Protection, or CBP, operate under the
Department of Homeland Security and are responsible for all civil
aviation security. This includes passenger and baggage screening;
cargo security measures; airport security; assessment and
distribution of intelligence; security research and development;
international passenger screening; customs; and agriculture.
It also has law enforcement powers and the authority to issue
regulations, including in cases of national emergency, without a
notice or comment period. It can also assess civil penalties for
such failures as well as institute proceedings for the imposition
and collection of monetary fines for the violation of certain
regulations.
Taxes & Fees
The airline industry is one of the most heavily taxed in the U.S.,
with taxes and fees accounting for approximately 15% of the total
fare charged to a customer. Airlines are obligated to fund all of
these taxes and fees regardless of their ability to pass these
charges on to the customer. The September 11 Security Fee
which is set by the TSA and is passed through to the customer,
is currently $5.60 per enplanement, regardless of the number of
connecting flights and a round trip fee is limited to a maximum of
$11.20. Effective December 28, 2015, the Animal and Plant Health
Inspection Service Aircraft Inspection fee increased from $70.75
to $225 per international aircraft arriving in the U.S.
State and Local
We are subject to state and local laws and regulations in a number
of states in which we operate and the regulations of various local
authorities operating the airports we serve.
Airport Access
JFK, LaGuardia, and Ronald Reagan Washington National Airport,
or Reagan National, are slot-controlled airports subject to the
“High Density Rule” and successor rules issued by the FAA, or
Slots. These rules were implemented due to the high volume of
traffic at these popular airports located in the northeast corridor
airspace. The rules limit the air traffic in and out of these airports
during specific times; however, even with the rules in place, delays
remain among the highest in the nation due to continuing airspace
congestion. Additionally, we have Slots at other Slot-controlled
airports governed by unique local ordinances not subject to the
High Density Rule, such as Westchester County Airport in White
Plains, NY. Gate access is another common issue at certain
airports.
Foreign Operations
International air transportation is subject to extensive
government regulation. The availability of international routes
to U.S. airlines is regulated by treaties and related agreements
between the U.S. and foreign governments. We currently
operate international service to Antigua and Barbuda, Aruba, the
Bahamas, Barbados, Bermuda, the Cayman Islands, Colombia,
Costa Rica, Cuba, Curaçao, the Dominican Republic, Ecuador,
Grenada, Guadeloupe, Guyana, Haiti, Jamaica, Mexico, Peru,
Saint Lucia, St. Maarten, Trinidad and Tobago, and the Turks and
Caicos Islands. We anticipate further expanding our network to
Guatemala in 2021 and intend to begin service to London, our
first destination in Europe. To the extent we seek to provide air
transportation to additional international markets in the future,
we would be required to obtain necessary authority from the
DOT and the FAA as well as the applicable foreign government.
During 2020, our flight operations to many of these countries
were disrupted by travel restrictions that were implemented in
response to the COVID-19 pandemic.
We believe we are operating in material compliance with DOT,
FAA, TSA, CBP and applicable international regulations as well as
hold all necessary operating and airworthiness authorizations and
certificates. Should any of these authorizations or certificates be
modified, suspended, or revoked, our business could be materially
adversely affected.
Other
ENVIRONMENTAL
We are subject to various federal, state and local laws relating to
the protection of the environment. This includes the regulation
of greenhouse gas (“GHG”) emissions, the discharge or disposal of
materials and chemicals, as well as the regulation of aircraft noise
administered by numerous state and federal agencies.
The Airport Noise and Capacity Act of 1990 recognizes the right of
airport operators with special noise problems to implement local
noise abatement procedures as long as those procedures do not
interfere unreasonably with the interstate and foreign commerce
of the national air transportation system. Certain airports,
including San Diego airport in California, have established
restrictions to limit noise which can include limits on the number
of hourly or daily operations and the time of such operations.
These limitations are intended to protect the local noise-sensitive
communities surrounding the airport. Our scheduled flights at
San Diego airport are in compliance with the noise curfew limits,
but on occasion when we experience irregular operations, we may
violate these curfews.
Concern over climate change, including the impact of global
warming, has led to significant U.S. and international legislative
and regulatory efforts to limit GHG emissions, including our
aircraft and ground operations emissions. In October 2016,
the International Civil Aviation Organization (“ICAO”) passed
a resolution adopting the Carbon Offsetting and Reduction
Scheme for International Aviation (“CORSIA”), which is a global,
market-based emissions offset program intended to promote
carbon-neutral growth beyond 2020. CORSIA is scheduled to be
PART I | ITEM 1 BUSINESS
implemented through multiple phases beginning in 2021. ICAO
continues to develop details regarding implementation, but we
believe compliance with CORSIA will increase our operating costs.
As part of our sustainability and environmental strategy, we
are embracing new technologies and making changes that
will ultimately benefit our crewmembers, customers, and
shareholders. Some of our sustainability initiatives include:
Reducing and Managing Carbon Dioxide (“CO2”) Emissions
We are committed to reducing our contribution to global warming
and climate change. We have been purchasing CO2 offsets since
2008. In 2020, we began offsetting our CO2 emissions from jet fuel
for all domestic flights and became the first major U.S airline to
achieve carbon neutrality on all domestic flying. Our target is to
achieve net zero carbon emissions by 2040, ten years ahead of
the Paris Climate Agreement. To reach net zero carbon emissions,
we plan to continuously increase the fuel-efficiency of our
operations, expand usage of sustainable aviation fuels, explore
alternative power aircraft technology such as electric aircraft for
short-hauls, and offset any remaining emissions.
Sustainable Aviation Fuel
As announced in January 2020, we have agreed to purchase
sustainable aviation fuel produced from waste and residue raw
materials. We began flying regularly with sustainable aviation fuel
on flights from San Francisco International Airport in July 2020.
We believe making the switch will help us significantly reduce
CO2 emissions and our environmental footprint, with no impact
on performance or safety.
Operating a More Sustainable Fleet
We are working closely with the FAA towards implementing
NextGen. NextGen will allow us to fly more efficient routes
thereby reducing fuel burn and resulting emissions. Our Airbus
A321neo aircraft will help reduce CO2 emissions with improved
fuel economy through newly designed engine technology and
cabin changes. In addition, our incoming Airbus A220 aircraft
will reduce emissions by approximately 40% per seat compared
to the older aircraft they will replace.
Electric Ground Service Equipment
In 2019, we began replacing our gas-powered Ground Service
Equipment (“GSE”) at JFK with electric-powered versions, known
as eGSE, to reduce fuel consumption, noise, and GHG emissions.
We anticipate similar conversions to eGSE to be implemented
at our other focus cities in the future. Our goal is to significantly
expand our eGSE fleet by converting 40% of our three most
commonly owned GSE vehicles (baggage tractors, belt loaders,
and push back tugs) to electric by 2025 and 50% by 2030.
Reporting
We report annually on environmental, social, governance (“ESG”)
issues using the Sustainable Accounting Standards Board and
Task Force on Climate-related Financial Disclosures frameworks.
The report can be found on our Investor Relations website at
http://investor.jetblue.com.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
15
PART I | ITEM 1A RISK FACTORS
FOREIGN OWNERSHIP
Under federal law and DOT regulations, JetBlue must be controlled
by U.S. citizens. In this regard, our chief executive officer 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 to their extensive use of radio and other
communication facilities. They are also required to obtain an
aeronautical radio license from the Federal Communications
Commission, or FCC. To the extent we are subject to FCC
requirements, we 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 NMB.
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
ITEM 1A RISK FACTORS
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 U.S. military.
Insurance
We carry various types of insurance 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.
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.
We are subject to various risks that make an investment in our
securities risky. The events and consequences discussed in
these risk factors could, in circumstances we may or may not be
able to accurately predict, recognize, or control, have a material
adverse effect on our business, liquidity, financial condition,
and results of operations. In addition, these risks could cause
results to differ materially from those we express in forward-
looking statements contained in this Annual Report or in other
Company communications. These risk factors do not identify
all risks that we face; our operations could also be affected by
factors, events, or uncertainties that are not presently known to
us or that we currently do not consider to present significant risks
to our operations.
Risks Related to the COVID-19 Pandemic
The global COVID-19 pandemic has had, and
is expected to continue to have, a material
adverse impact on the travel industry generally
and, as a result, on our business and results of
operations, and these impacts may persist for
an extended period of time or become more
pronounced over time.
The global spread and impact of the COVID-19 pandemic is
complex, unpredictable, and continuously evolving and has
resulted in significant disruption and additional risks to our
business; the travel and hospitality industries; and the global
economy. The COVID-19 pandemic has led governments and
other authorities around the world to impose measures intended
to control its spread, including restrictions on large gatherings
of people, travel bans, border closings and restrictions, business
closures, quarantines, shelter-in-place orders, and social
distancing measures. As a result, the COVID-19 pandemic and
its consequences have significantly reduced global passenger
air travel and have had a material detrimental impact on global
commercial activity across the travel and hospitality industries, all
of which has had, and is expected to continue to have, a material
adverse impact on our business, operations, and financial results.
The extent, duration, and magnitude of the COVID-19 pandemic’s
effects will depend on various factors, all of which are highly
uncertain and difficult to predict, including, but not limited to, the
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
impact of the pandemic on global and regional economies, travel,
and economic activity, as well as actions taken by governments,
businesses, and individuals in response to the pandemic, any
additional resurgence, or COVID-19 variants. These factors
include the impact of the COVID-19 pandemic on unemployment
rates and consumer discretionary spending; governmental or
regulatory orders that impact our business and our industry; the
demand for air travel; levels of consumer confidence; the ability
to effectively and widely manufacture and distribute vaccines
and broad acceptance of the vaccine by the general population;
and the pace of recovery when the pandemic subsides. Moreover,
even after shelter-in-place orders and travel bans and advisories
are lifted and vaccines are more widely distributed and available,
demand for air travel may remain depressed for a significant
length of time, and we cannot predict if and when demand will
return to pre-COVID-19 levels. In addition, we cannot predict
whether business travel for in-person meetings will decrease
over the long-term due to technological advancements in, and
consumer acceptance and adaptation to, virtual meetings and/or
changes in customer preferences.
The COVID-19 pandemic has subjected our business, operations,
and financial condition to a number of significant risks:
DEMAND, CAPACITY, REVENUES AND EXPENSES
With the global spread of COVID-19 beginning in March 2020, the
Company began experiencing a significant decline in international
and domestic demand related to COVID-19 during the first quarter
of 2020, and this reduction in demand has continued through the
date of this report and is expected to continue for the foreseeable
future. The decline in demand caused a material deterioration
in our revenues, resulting in a net loss of $1.4 billion for the year
ended December 31, 2020. The Company expects its results
of operations for full-year 2021 to be materially impacted. The
continued decline in demand, which is expected to continue for
the foreseeable future, is expected to have a material adverse
impact on our business, operating results, financial condition,
and liquidity.
The COVID-19 pandemic has caused us, and could continue to
cause us, to incur additional expenses. While governments
have and may continue to implement various stimulus and relief
programs, it is uncertain whether and to what extent we will be
eligible to participate in, or successfully access, such programs,
whether conditions or restrictions imposed under such programs
will be acceptable, and whether such programs will be effective
in avoiding or significantly mitigating the financial impacts of
the COVID-19 pandemic. Further, we have incurred additional
costs related to severance payments and may incur additional
expenses related to restructuring activities in future periods.
Even after the COVID-19 pandemic subsides, we could experience
other short or longer-term impacts on our costs, including, for
example, the need for enhanced health and hygiene standards
or certifications, social distancing requirements or other
precautionary measures in response to the health and safety
challenges presented by the COVID-19 pandemic. These effects
could impact our ability to generate profits even after revenues
improve. The Company have and expect to continue to focus on
reducing expenses and managing liquidity. While we lowered our
PART I | ITEM 1A RISK FACTORS
cash burn from an average of approximately $18 million per day at
the end of March 2020 to approximately $ 6.7 million per day in in
the fourth quarter ended December 31, 2020, we may not be able
to continue to reduce cash burn at the same rate in the future.
Refer to our “Regulation G Reconciliation of Non-GAAP Financial
Measures” provided in “Part II - Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations”
within this Report for our definition of “cash burn”.
OPERATIONS
In response to the significant decline in demand for air travel
across our system, we have taken actions and continue to evaluate
spending to manage operating expenses and optimize our
financial resources. These actions include a permanent reduction
in our workforce across our BlueCities and our support centers,
eliminating non-essential spending and corporate initiatives, and
reducing costs. We have received, and may continue to receive,
demands or requests from labor unions that represent our
colleagues, whether in the course of our periodic renegotiation of
our collective bargaining agreements or otherwise, for additional
compensation, healthcare benefits, or other terms that could
increase costs, and we could experience labor disputes or
disruptions as we continue to implement our mitigation plans.
Further, once the effects of the pandemic subside, the recovery
period could be extended and we expect that certain operational
changes, particularly with respect to enhanced health and safety
measures and global care and cleanliness certifications, will be
necessary over the long-term.
Further, certain employees of the Company, its suppliers and
its business partners, such as airport, air traffic personnel, and
those working on certain production lines, have tested positive
for or been suspected of having COVID-19, which has resulted in
facility closures, reduction in available staffing, and disruptions to
the Company’s overall operations as well as that of our suppliers.
The Company’s operations may be further impacted in the event
of additional instances of actual or perceived risk of infection
among employees of the Company, its suppliers or its business
partners, and this impact may have a material and adverse effect
if the Company is unable to maintain a suitably skilled and sized
workforce and address related employee matters.
FINANCIAL CONDITION AND INDEBTEDNESS
As we manage through the effects of the pandemic, our level of
indebtedness has increased and may continue to increase. To
enhance our liquidity profile and cash position in response to the
COVID-19 pandemic, the Company suspended share repurchases
under its share repurchase program, executed two new term loan
agreements and immediately drew down on these facilities for
the full amount available, borrowed on its existing $550 million
revolving credit facility, completed the public placements of
equipment notes in an aggregate principal of $923 million,
completed a public offering of 42 million shares of our common
stock for net proceeds of $583 million, executed a number of
aircraft sale-leaseback transactions, and temporarily grounded a
portion of its fleet. There is no guarantee that debt financings will
be available in the future to fund our obligations or will be available
on terms consistent with our expectations. We also expect the
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
17
The impact of the COVID-19 pandemic is continuously evolving,
and the continuation of the pandemic, any additional resurgence,
or COVID-19 variants could precipitate or aggravate the other risk
factors included in this annual report, which in turn could further
materially adversely affect our business, financial condition,
liquidity, results of operations, and profitability, including in ways
that are not currently known to us or that we do not currently
consider to present significant risks.
COVID-19 has materially disrupted our
strategic operating plans in the near-term,
and there are risks to our business, operating
results, liquidity and financial condition
associated with executing our strategic
operating plans in the long-term.
COVID-19 has materially disrupted our strategic operating plans,
and there are risks to our business, operating results and financial
condition associated with executing our long-term strategic
operating plans. In recent years, we have announced several
strategic operating plans, including several revenue-generating
initiatives and plans to optimize revenue, such as our plans to add
capacity, including international expansion and new or increased
service to mid-size airports, initiatives and plans to optimize and
control our costs and opportunities to enhance our segmentation
and improve the customer experience at all points in air travel.
Most recently, in July 2020, we announced a strategic partnership
with American Airlines Group Inc. (“AAL”), designed to optimize the
Company and AAL’s network through certain flights operated by
us and AAL to and from John F. Kennedy International Airport,
LaGuardia Airport, Newark Liberty International Airport and
Boston Logan International Airport. In developing our strategic
operating plans, we make certain assumptions, including, but
not limited to, those related to customer demand, competition,
market consolidation, the availability of aircraft and the global
economy. Actual economic, market and other conditions have
been and may continue to be different from our assumptions.
The COVID-19 pandemic has materially disrupted the execution
of our strategic operating plans, including plans to add capacity
in 2020. If we do not successfully execute or adjust our strategic
operating plans in the long-term, or if actual results continue to
vary significantly from our prior assumptions or vary significantly
from our future assumptions, our business, operating results and
financial condition could be materially and adversely impacted.
PART I | ITEM 1A RISK FACTORS
impact of the COVID-19 pandemic on the financial markets could
adversely affect our ability to raise equity financing. Changes in
the credit ratings of our debt, including our revolving credit facility
and outstanding senior notes, could have an adverse impact
on our interest expense. As a result of the general economic
uncertainty and the impact of the COVID-19 pandemic, our
credit ratings have been downgraded. If our credit ratings were
to be further downgraded, or general market conditions were to
ascribe higher risk to our credit rating levels, our industry, or our
Company, our access to capital and the cost of debt financing
would be negatively impacted.
The Company may also take additional actions to improve its
financial position, including measures to improve liquidity,
such as the issuance of additional unsecured and secured
debt securities, equity securities and equity-linked securities,
the sale of assets and/or the entry into additional bilateral and
syndicated secured and/or unsecured credit facilities. There can
be no assurance as to the timing of any such issuance, which may
be in the near term, or that any such additional financing will be
completed on favorable terms, or at all. Any such actions may
be material in nature and could result in significant additional
borrowing. The Company’s reduction in expenditures, measures
to improve liquidity or other strategic actions that the Company
may take in the future in response to COVID-19 may not be
effective in offsetting decreased demand, and the Company will
not be permitted to take certain strategic actions as a result of
the CARES Act, which could result in a material adverse effect on
the Company’s business, operating results, liquidity and financial
condition.
GROWTH
The COVID-19 pandemic has negatively impacted, and could
continue to impact, the pace and timing of our growth. As a
result of the COVID-19 pandemic, the Company reduced its
planned capital expenditures and operating expenditures in 2020
(including by postponing projects deemed non-critical to the
Company’s operations), suspended share repurchases under its
share repurchase program, and grounded or redeployed aircraft.
CAPITAL MARKETS IMPACT
The global stock markets have experienced, and may continue
to experience, significant volatility as a result of the COVID-19
pandemic, and the price of our common stock has been volatile
since the onset of the pandemic. The COVID-19 pandemic and the
significant uncertainties it has caused for the global economy,
business activity, and business confidence have had, and are likely
to continue to have, a significant effect on the market price of
securities generally, including our securities. In addition, certain
debt covenants restrict our ability to engage in share repurchase
activity.
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PART I | 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 in new and existing markets and could impede our
profitable growth strategy, which would harm our business.
Furthermore, there have been numerous mergers and
acquisitions within the airline industry over the years. The
industry may continue to change. Any business combination could
significantly alter industry conditions and competition within
the airline industry and could cause fares of our competitors to
be reduced. Additionally, if a traditional network airline were to
fully develop a low cost structure, or if we were to experience
increased competition from low cost carriers or new entrants,
our business could be materially adversely affected.
We may be subject to competitive risks due to
the long-term nature of our fleet order book.
At present, we have existing aircraft commitments through
2027. As technological evolution occurs in our industry, through
the use of composites and other innovations, we may be
competitively disadvantaged because we have existing extensive
fleet commitments that would prohibit us from adopting new
technologies on an expedited basis.
Operational Risks
Our business is highly dependent on the
availability of fuel and fuel is subject to price
volatility.
Our results of operations are heavily impacted by the price and
availability of fuel. Fuel costs comprise a substantial portion of
our total operating expenses. Historically, fuel costs have been
subject to wide price fluctuations based on geopolitical factors
as well as supply and demand. The availability of fuel is not only
dependent on crude oil but also on refining capacity. When even
a small amount of the domestic or global oil refining capacity
becomes unavailable, supply shortages can result for extended
periods of time. The availability of fuel is also affected by demand
for home heating oil, gasoline and other petroleum products, as
well as crude oil reserves, dependence on foreign imports of
crude oil and potential hostilities in oil producing areas of the
world. Because of the effects of these factors on the price and
availability of fuel, the cost and future availability of fuel cannot
be predicted with any degree of certainty.
Our aircraft fuel purchase agreements do not protect us against
price increases or guarantee the availability of fuel. Additionally,
some of our competitors may have more leverage than we do in
obtaining fuel. We have and may continue to enter into a variety
of option contracts and swap agreements for crude oil, heating
oil, and jet fuel to partially protect against significant increases
in fuel prices. However, such contracts and agreements do not
completely protect us against price volatility, are limited in volume
and duration in the respective contract, and can be less effective
during volatile market conditions and may carry counterparty
risk. Under the fuel hedge contracts we may enter from time to
time, counterparties to those contracts may require us to fund
the margin associated with any loss position on the contracts.
Meeting our obligations to fund these margin calls could adversely
affect our liquidity.
Due to the competitive nature of the domestic airline industry, at
times we have not been able to adequately increase our fares to
offset the increases in fuel prices nor may we be able to do so in
the future. Future fuel price increases, continued high fuel price
volatility or fuel supply shortages may result in a curtailment of
scheduled services and could have a material adverse effect on
our financial condition and results of operations.
Our maintenance costs will increase as our
fleet ages.
Our maintenance costs will increase as our fleet ages. In the past,
we have incurred lower maintenance expenses because most of
the parts on our aircraft were under multi-year warranties, but
many of these warranties on JetBlue’s existing fleet types have
expired. If any maintenance provider with whom we have a flight
hour agreement fails to perform or honor such agreements,
we could incur higher interim maintenance costs until we
negotiate new agreements. Furthermore we expect to continue
to implement various fleet modifications over the next several
years to ensure our aircraft’s continued efficiency, modernization,
brand consistency and safety. Our plans to continue to restyle
our Airbus A320 aircraft with new cabins, for example, require
significant modification time. These fleet modifications require
significant investment over several years, including taking aircraft
out of service for several weeks at a time.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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PART I | ITEM 1A RISK FACTORS
Our salaries, wages and benefits costs will
increase as our workforce ages.
As our crewmembers’ tenure with JetBlue matures, our salaries,
wages and benefits costs increase. As our overall workforce ages,
we expect our medical and related benefits to increase as well,
despite an increased corporate focus on crewmember wellness.
Because we derive a portion of our revenues
from operations outside the United States,
the risks of doing business internationally, or
in a particular country or region, could lower
our revenues, increase our costs, reduce our
profits, or disrupt our business.
We currently operate in 98 airports in 24 countries around the
world. Our available seat miles that take off or land outside the
United States represented approximately 36% of our revenues
for the year ended December 31, 2020. Over the long term, we
expect our international operations may account for an increasing
portion of our total revenues and available seat miles.
Expansion into new international emerging markets may have
risks due to factors specific to those markets. Emerging markets
are countries which have less developed economies and may be
vulnerable to economic and political instability, such as significant
fluctuations in gross domestic product, interest and currency
exchange rates, civil disturbances, government instability,
nationalization and expropriation of private assets, trafficking
and the imposition of taxes or other charges by governments.
The occurrence of any of these events in markets served by us
and the resulting instability may adversely affect our business.
We have expanded and expect to continue to expand our service
to countries in the Caribbean and Latin America, some of which
have less developed legal systems, financial markets, and
business and political environments than the United States, and
therefore present greater political, legal, regulatory, economic
and operational risks. We emphasize legal compliance and have
implemented and continue to implement and refresh policies,
procedures and certain ongoing training of crewmembers with
regard to business ethics and compliance, anti-corruption
policies and many key legal requirements; however, there can be
no assurance our crewmembers or third party service providers
in such locations will adhere to our code of business conduct,
anti-corruption policies, other Company policies, or other legal
requirements. If we fail to enforce our policies and procedures
properly or maintain adequate record-keeping and internal
accounting practices to accurately record our transactions,
we may be subject to sanctions. In the event we believe or have
reason to believe our crewmembers have or may have violated
applicable laws or regulations, we may be subject to investigation
costs, potential penalties and other related costs which in
turn could negatively affect our reputation, and our results of
operations and cash flow.
In addition, to the extent we continue to grow our business both
domestically and internationally, opening new markets requires us
to commit a substantial amount of resources even before the new
services commence. Expansion is also dependent upon our ability
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
to maintain a safe and secure operation and requires additional
personnel, equipment, and facilities.
As a result, we are subject to the risks of doing business outside
the United States, including:
■■ the costs of complying with laws, regulations, and policies
(including taxation policies) of foreign governments relating
to investments and operations, the costs or desirability of
complying with local practices and customs, and the impact of
various anti-corruption and other laws affecting the activities
of U.S. companies abroad;
■■ evolving local data residency requirements that require data to
be stored only in and, in some cases, also to be accessed only
from within, a certain jurisdiction;
■■ U.S. taxation of income earned abroad;
■■ import and export licensing requirements and regulations,
as well as unforeseen changes in regulatory requirements,
including imposition of tariffs or embargoes, export regulations,
controls, and other trade restrictions;
■■ political and economic instability;
■■ fluctuations in GDP, interest and currency exchange rates,
civil disturbances, government instability, nationalization and
expropriation of private assets, trafficking and the imposition
of taxes or other charges by governments;
■■ health and safety protocols, including global care and
cleanliness certifications, at the airports in which we operate;
■■ the complexity of managing an organization doing business in
many jurisdictions;
■■ uncertainties as to local laws and enforcement of contract and
intellectual property rights and occasional requirements for
onerous contract clauses; and
■■ rapid changes in government, economic, and political policies;
political or civil unrest; acts of terrorism; or the threat of
international boycotts or U.S. anti-boycott legislation.
While these factors and the impact of these factors are difficult to
predict, any one or more of them could lower our revenues, affect
our operations, increase our costs, reduce our profits, or disrupt
our business. For example, in 2020, our financial results were
materially adversely affected by the global COVID-19 pandemic.
The occurrence of any of these events in markets served by us
and the resulting instability may adversely affect our business.
Our comparatively high aircraft utilization rate
helps us keep our costs low, but also makes us
vulnerable to delays and cancellations; such
delays and cancellations could reduce our
profitability.
We maintain a comparatively high daily aircraft utilization
rate which is the amount of time our aircraft spend in the air
carrying passengers. High daily aircraft utilization is achieved
in part by reducing turnaround times at airports so we can fly
more hours on average in a day. Aircraft utilization is reduced
by delays and cancellations from various factors, many of which
are beyond our control, including adverse weather conditions,
security requirements, air traffic congestion, and unscheduled
maintenance events. The majority of our operations are
concentrated in the Northeast and Florida, which are particularly
vulnerable to weather and congestion delays. Reduced aircraft
utilization may limit our ability to achieve and maintain profitability
as well as lead to customer dissatisfaction.
Our business is highly dependent on the New
York metropolitan market and increases in
competition or congestion or a reduction
in demand for air travel in this market, or
governmental reduction of our operating
capacity at JFK, would harm our business.
We are highly dependent on the New York metropolitan market
where we maintain a large presence with approximately one-half
of our daily flights having JFK, LaGuardia, Newark, Westchester
County Airport, or Newburgh’s Stewart International Airport as
either their origin or destination. We have historically experienced
an increase in flight delays and cancellations at these airports due
to airport congestion which has adversely affected our operating
performance and results of operations. Our business could be
further harmed by an increase in the amount of direct competition
we face in the New York metropolitan market or by continued
or increased congestion, delays or cancellations. Our business
would also be harmed by any circumstances causing a reduction
in demand for air transportation in the New York metropolitan
area, such as adverse changes in local economic conditions,
health concerns, including COVID-19, negative public perception
of New York City, acts of terrorism, or significant price or tax
increases linked to increases in airport access costs and fees
imposed on passengers.
Extended interruptions or disruptions in service
at one or more of our focus cities could have a
material adverse impact on our operations.
Our business is heavily dependent on our operations in the New
York Metropolitan area, particularly at JFK, and at our other focus
cities in Boston, Orlando, Fort Lauderdale, the Los Angeles basin,
and San Juan, Puerto Rico. Each of these operations includes
flights that gather and distribute traffic to other major cities. A
significant interruption or disruption in service at one or more
of our focus cities could have a serious impact on our business,
financial condition and results of operations.
We may be impacted by increases in airport
expenses relating to infrastructure and
facilities.
In order to operate within our current markets as well as continue
to grow in new markets, we must be able to obtain adequate
infrastructure and facilities within the airports we serve. This
includes gates, check-in facilities, operations facilities, and
landing slots, where applicable. The costs associated with
these airports are often negotiated on a short-term basis with
the airport authority and we could be subject to increases in
costs on a regular basis with or without our approval. There is
a possibility that airport authorities, suffering from revenue
PART I | ITEM 1A RISK FACTORS
shortfalls due to the pandemic, may attempt to recover those
shortfalls by passing along the costs or increasing rents or fees
to airline tenants. In addition, our operations concentrated in
older airports may be harmed if the infrastructure at those older
airports fails to operate as expected due to age, overuse, or
significant unexpected weather events.
Our results of operations fluctuate due to
seasonality, weather, and other factors.
We expect our quarterly operating results to fluctuate due to
seasonality including high vacation and leisure demand generally
occurring on our Florida routes between October and April
and on our western routes during the summer. Actions of our
competitors and the impact of COVID-19 and travel restrictions
may also contribute to fluctuations in our results. We are more
susceptible to adverse weather conditions, including snow storms
and hurricanes, as a result of our operations being concentrated
on the East Coast, than some of our competitors. Our Florida and
Caribbean operations are subject to hurricanes. As we enter new
markets we could be subject to additional seasonal variations
along with any competitive responses to our entry by other
airlines. Price changes in aircraft fuel as well as the timing and
amount of maintenance and advertising expenditures also impact
our operations. As a result of these factors, quarter-to-quarter
comparisons of our operating results may not be a good indicator
of our future performance. In addition, it is possible in any future
period our operating results could be below the expectations of
investors and any published reports or analysis regarding JetBlue.
In such an event, the price of our common stock could decline,
perhaps substantially. In addition, the effects of the COVID-19
pandemic has and may continue to disrupt traditional seasonality
in our industry and geographies due to quarantines, rising case
counts and changes in governmental travel related regulation.
We are subject to the risks of having a limited
number of suppliers for our aircraft, engines,
and our Fly-Fi® product.
Our current dependence on five types of aircraft and engines
for all of our flights makes us vulnerable to significant problems
associated with the Pratt & Whitney Geared Turbofan Engines,
or PW1133G-JM engine on our A321neo fleet, International Aero
Engines, or IAE V2533-A5 engine on our Airbus A321 fleet, the
International Aero Engines, or IAE V2527-A5 engine on our Airbus
A320 fleet, the Pratt & Whitney Geared Turbofan Engines, or
PW1524G-3 engine on our A220 fleet, and the General Electric
Engines CF34-10 engine on our Embraer E190 fleet. This could
include design defects, mechanical problems, contractual
performance by the manufacturers, or adverse perception by the
public which would result in customer avoidance or in actions by
the FAA resulting in an inability to operate our aircraft. Carriers
operating a more diversified fleet are better positioned than we
are to manage such events.
Our Fly-Fi® service uses technology and satellite access through
our agreement with Thales Avionics, Inc., or Thales. An integral
component of the Fly-Fi® system is the antenna, which is supplied
to us by Thales. If Thales were to stop supplying us with its
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
21
PART I | ITEM 1A RISK FACTORS
antennas for any reason, we would have to incur significant costs
to procure an alternate supplier. Additionally, if the satellites
Fly-Fi® uses were to become inoperable for any reason, we would
have to incur significant costs to replace the service.
Tariffs imposed on commercial aircraft and
related parts imported from outside the United
States, or tariffs that may be escalated over
time, may have a material adverse effect on
our fleet, business, financial condition and
results of operations.
Certain of the products and services that we purchase, including
aircraft and related parts, are sourced from suppliers located
outside the United States, and the imposition of new tariffs, or
any increase in existing tariffs, by the U.S. government on the
importation of such products or services could materially increase
the amounts we pay for them. On October 2, 2019, the World
Trade Organization ruled that the United States could impose
up to $7.5 billion in retaliatory tariffs in response to European
Union subsidies to Airbus. On October 18, 2019, the United States
imposed these tariffs on certain imports from the European Union,
including an ad valorem duty of 10% on commercial aircraft and
related parts. On February 14, 2020, the United States announced
it would increase the tariff to 15% with an effective date of March
18, 2020. As of January 12, 2021, the tariff also applies to certain
aircraft parts imported from specific countries into the United
States for consumption. These tariffs apply to aircraft and other
parts that we are already contractually obligated to purchase. The
imposition of these tariffs could substantially increase the cost
of, among other things, new Airbus aircraft and parts, which in
turn could have a material adverse effect on our fleet, business,
financial condition and results of operations. We may also seek
to postpone or cancel delivery of certain aircraft currently
scheduled for delivery, and we may choose not to purchase in
the future as many aircraft as we intended. In addition, should
additional or different retaliatory tariffs be imposed, our business
could be harmed. Any such action could have a material adverse
effect on the size of our fleet, business, financial condition and
results of operations.
Data and Information Security Related Risks
Our reputation and business may be harmed
and we may be subject to legal claims
if there is loss, unlawful disclosure or
misappropriation of, or unsanctioned access
to, our customers’, crewmembers’, business
partners’ or our own information or other
breaches of our information security.
In the current environment, there are numerous and evolving risks
to cybersecurity and privacy, including criminal hackers, hacktivists,
state-sponsored intrusions, industrial espionage, employee
malfeasance, and human or technological error. High-profile
security breaches at other companies and in government agencies
have increased in recent years, and security industry experts and
government officials have warned about the risks of hackers and
cyberattacks targeting businesses such as ours. Computer hackers
routinely attempt to breach our networks. When the Company learns
of security incidents, we investigate the incident, which includes
making reports to law enforcement, as appropriate.
We also are aware that hackers may attempt to fraudulently
induce crewmembers, customers, or others to disclose
information or unwittingly provide access to systems or data.
We make extensive use of online services and centralized data
processing, including through third party service providers or
business providers. The secure maintenance and transmission
of customer and crewmember information is a critical element
of our operations. Our information technology and other systems
and those of service providers or business partners, that maintain
and transmit customer information, may be compromised by a
malicious third party penetration of our network security, or of
a business partner, or impacted by deliberate or inadvertent
actions or inactions by our crewmembers, or those of a business
partner. The risk of cyberattacks to our Company also includes
attempted breaches of contractors, business partners, vendors,
and other third parties. As a result, personal information may
be lost, disclosed, accessed, or taken without consent. We
transmit confidential credit card information by way of secure
private retail networks and rely on encryption and authentication
technology licensed from third parties to provide the security
and authentication necessary to effect secure transmission and
storage of confidential information.
While the Company makes significant efforts to ensure the
security of its computer network, we cannot provide any
assurances that our efforts will defend against all cyberattacks.
Any compromises to our security or computer network could have
a material adverse effect on the reputation, business, operating
results, and financial condition of the Company, and could result
in a loss of customers. Additionally, any material failure by the
Company to achieve or maintain compliance with the Payment
Card Industry, or PCI, security requirements or rectify a security
issue may result in fines and the imposition of restrictions on the
Company’s ability to accept credit cards as a form of payment.
Any such loss, disclosure or misappropriation of, or access to,
customers’, crewmembers’ or business partners’ information
or other breach of our information security can result in legal
claims or legal proceedings, including regulatory investigations
and actions, may have a negative impact on our reputation,
may lead to regulatory enforcement actions against us, and
may materially adversely affect our business, operating results,
and financial condition. Furthermore, the loss, disclosure or
misappropriation of our business information may materially
adversely affect our business, operating results, and financial
condition. The regulations in this area continue to develop and
evolve. International regulation adds complexity as we expand
our service and include more passengers from other countries.
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PART I | ITEM 1A RISK FACTORS
Data security compliance requirements could
increase our costs, and any significant data
breach could disrupt our operations and harm
our reputation, business, results of operations
and financial condition.
The Company is subject to increasing legislative, regulator,
and customer focus on privacy issues and data security. Our
business requires the appropriate and secure utilization of
customer, crewmember, business partner, and other sensitive
information. We cannot be certain that advances in criminal
capabilities (including cyberattacks or cyber intrusions over the
Internet, malware, computer viruses, and the like), discovery of
new vulnerabilities or attempts to exploit existing vulnerabilities
in our systems, other data thefts, physical system or network
break-ins or inappropriate access, or other developments will not
compromise or breach the technology protecting the networks
that access and store sensitive information. The risk of a security
breach or disruption, particularly through cyberattack or cyber
intrusion, including by computer hackers, foreign governments,
and cyber terrorists, has increased as the number, intensity, and
sophistication of attempted attacks and intrusions from around
the world have increased.
Furthermore, there has been heightened legislative and
regulatory focus on data security in the U.S. and abroad, including
requirements for varying levels of customer notification in the
event of a data breach. Many of our commercial business partners,
including credit card companies, have imposed data security
standards that we must meet. In particular, we are required by
the Payment Card Industry Security Standards Council, founded
by the credit card companies, to comply with their highest level
of data security standards. The Company will continue its efforts
to meet its privacy and data security obligations; however, it is
possible that certain new obligations may be difficult to meet and
could increase the Company’s costs.
A significant data security breach or our failure to comply with
applicable U.S. or foreign data security regulations or other
data security standards may expose us to litigation, claims for
contract breach, fines, sanctions or other penalties, which could
disrupt our operations, harm our reputation, and materially and
adversely affect our business, results of operations, and financial
condition. The costs to remediate breaches and similar system
compromises that do occur could be material. In addition, as cyber
criminals become more frequent, intense, and sophisticated,
the costs of proactive defensive measures may increase. Failure
to address these issues appropriately could also give rise to
additional legal risks, which, in turn, could increase the size and
number of litigation claims and damages asserted or subject us
to enforcement actions, fines and penalties, and cause us to incur
further related costs and expenses.
We rely heavily on automated systems to
operate our business; any failure of these
systems could harm our business.
We are dependent on automated systems and technology to
operate our business, enhance the JetBlue Experience, and
achieve low operating costs. The performance and reliability
of our automated systems and data centers is critical to our
ability to operate our business and compete effectively. These
systems include our computerized airline reservation system,
flight operations system, telecommunications systems, website,
maintenance systems, check-in kiosks, and our primary and
redundant data centers. Our website and reservation system
must be able to securely accommodate a high volume of
traffic and deliver important flight information. These systems
require upgrades or replacement periodically, which involve
implementation and other operational risks. Our business may
be harmed if we fail to operate, replace or upgrade our systems
or data center infrastructure successfully.
We rely on third party providers of our current automated
systems and data center infrastructure for technical support.
If our current providers were to fail to adequately provide
technical support for any one of our key existing systems or if
new or updated components were not integrated smoothly, we
could experience service disruptions, which could result in the
loss of important data, increase our expenses, decrease our
revenues and generally harm our business, reputation and brand.
Furthermore, our automated systems cannot be completely
protected against events beyond our control, including natural
disasters, computer viruses, cyberattacks, other security
breaches, or telecommunications failures. Substantial or
sustained system failures could impact customer service and
result in our customers purchasing tickets from other airlines.
We have implemented security measures and change control
procedures and have disaster recovery plans. We also require
our third party providers to have disaster recovery plans; however,
we cannot assure you these measures are adequate to prevent
disruptions, which, if they were to occur, could result in the loss
of important data, increase our expenses, decrease our revenues,
and generally harm our business, reputation, and brand.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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PART I | ITEM 1A RISK FACTORS
Human Capital Related Risks
If we are unable to attract and retain qualified
personnel or fail to maintain our company
culture, our business could be harmed.
We compete against other major U.S. airlines for pilots,
mechanics, and other skilled labor; some of them offer wage and
benefit packages exceeding ours. As more pilots in the industry
approach mandatory retirement age, the U.S. airline industry may
be affected by a pilot shortage. We may be required to increase
wages and/or benefits in order to attract and retain qualified
personnel or risk considerable crewmember turnover. In addition,
we have had crewmembers take opt out packages to reduce our
costs and we may continue to lose crewmembers due to the
impact of COVID-19 on aviation and we may lose crewleaders
as a result of restrictions imposed under the CARES Act. If we
are unable to hire, train, and retain qualified crewmembers
representing diverse backgrounds, experiences, and skill sets,
our business could be harmed and we may be unable to implement
our growth plans. In addition, our business may be harmed if we
lose too many individuals with institutional knowledge.
We believe one of our competitive strengths is our service-
oriented company culture which emphasizes friendly, helpful,
team-oriented, and customer-focused crewmembers. Our
company culture is important to providing high quality customer
service and having a productive workforce in order to help keep
our costs low. As we experience turnover, we may be unable
to identify, hire, or retain enough people who meet the above
criteria, including those in management or other key positions.
Our company culture could otherwise be adversely affected by our
growing operations and broader geographic diversity. If we fail to
maintain the strength of our company culture, our competitive
ability and our business may be harmed.
Reputational Risks
Our reputation and financial results could be
harmed in the event of an accident or incident
involving our aircraft.
An accident or incident involving one of our aircraft could involve
significant potential claims of injured passengers or others in
addition to repair or replacement of a damaged aircraft and its
consequential temporary or permanent loss from service. We
are required by the DOT to carry liability insurance. Although we
believe we currently maintain liability insurance in amounts and of
the type generally consistent with industry practice, the amount
of such coverage may not be adequate and we may be forced to
bear substantial losses from an accident or incident. Substantial
claims resulting from an accident or incident in excess of our
related insurance coverage would harm our business and financial
results. Moreover, any aircraft accident or incident, even if fully
insured, could cause a public perception we are less safe or
reliable than other airlines which would harm our business.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
We may be subject to unionization, work
stoppages, slowdowns or increased labor
costs and the unionization of the Company’s
pilots and inflight crewmembers could result in
increased labor costs.
Our business is labor intensive and the unionization of any of our
crewmembers could result in demands that may increase our
operating expenses and adversely affect our financial condition
and results of operations. Any of the different crafts or classes
of our crewmembers could unionize at any time, which would
require us to negotiate in good faith with the crewmember group’s
certified representative concerning a collective bargaining
agreement. In addition, we may be subject to disruptions by unions
protesting the non-union status of our other crewmembers. Any
of these events would be disruptive to our operations and could
harm our business.
In general, unionization has increased costs in the airline industry.
In 2014, our pilots voted to be represented by the Airlines Pilot
Association, or ALPA and our first collective bargaining agreement
was ratified by the pilots and became effective on August 1, 2018.
In April 2018, JetBlue inflight crewmembers elected to be solely
represented by the Transport Workers Union of America, or
TWU. The NMB certified the TWU as the representative body for
JetBlue inflight crewmembers. In November 2020, our inflight
crewmembers voted to decline the ratification of a tentative
collective bargaining agreement between JetBlue and TWU. We
are currently working with TWU to determine next steps. If we are
unable to reach agreement on the terms of a collective bargaining
agreement, or if we were to experience widespread crewmember
dissatisfaction, we could be subject to adverse actions.
Our business depends on our strong reputation
and the value of the JetBlue brand.
The JetBlue brand name symbolizes high-quality friendly customer
service, innovation, fun, and a pleasant travel experience. JetBlue
is a widely recognized and respected global brand; the JetBlue
brand is one of our most important and valuable assets. The
JetBlue brand name and our corporate reputation are powerful
sales and marketing tools and we devote significant resources to
promoting and protecting them. Adverse publicity, whether or not
justified, relating to activities by our crewmembers, contractors,
or agents could tarnish our reputation and reduce the value of our
brand. Damage to our reputation and loss of brand equity could
reduce demand for our services and thus have an adverse effect
on our financial condition, liquidity, and results of operations, as
well as require additional resources to rebuild our reputation and
restore the value of our brand.
PART I | ITEM 1A RISK FACTORS
Financing and Financial Risks
We have a significant amount of fixed
obligations and we will incur significantly more
fixed obligations which could harm our ability
to service our current obligations or satisfy
future fixed obligations.
As of December 31, 2020, our debt of $4.9 billion accounted for 55%
of our total capitalization. In addition to long-term debt, we have
a significant amount of other fixed obligations under operating
leases related to our aircraft, airport terminal space, airport
hangars, other facilities and office space. As of December 31,
2020, future minimum payments under non-cancelable leases
and other financing obligations were approximately $3.2 billion
for 2021 through 2025 and an aggregate of $1.4 billion for the years
thereafter. T5 at JFK is under a lease with the PANYNJ that ends
on the 28th anniversary of the date of beneficial occupancy of T5i.
The minimum payments under this lease have been included in
the future minimum payment totals above.
As of December 31, 2020, we had commitments of approximately
$8.2 billion to purchase 141 additional aircraft and related flight
equipment through 2027, including estimated amounts for
contractual price escalations and pre-delivery deposits. We
may incur additional debt and other fixed obligations as we
take delivery of new aircraft or finance unencumbered aircraft
in our fleet and other equipment and continue to expand into
new or existing markets. In an effort to limit the incurrence of
significant additional debt, we may seek to defer some of our
scheduled deliveries, sell or lease aircraft to others, or pay cash
for new aircraft, to the extent necessary or possible. The amount
of our existing debt, and other fixed obligations, and potential
increases in the amount of our debt and other fixed obligations
could have important consequences to investors and could
require a substantial portion of cash flows from operations for
debt service payments, thereby reducing the availability of our
cash flow to fund working capital, capital expenditures and other
general corporate purposes.
Our level of debt and other fixed obligations could:
■■ impact our ability to obtain additional financing to support
capital expansion plans and for working capital and other
purposes on acceptable terms or at all;
■■ divert substantial cash flow from our operations, execution
of our commercial initiatives and expansion plans in order to
service our fixed obligations;
■■ require us to incur significantly more interest expense than we
currently do if rates were to increase, since approximately 34%
of our debt has floating interest rates; and
■■ place us at a possible competitive disadvantage compared to
less leveraged competitors and competitors with better access
to capital resources or more favorable financing terms.
Our ability to make scheduled payments on our debt and other
fixed obligations will depend on our future operating performance
and cash flows, which in turn will depend on prevailing economic
and political conditions and financial, competitive, regulatory,
business and other factors, many of which are beyond our control.
We are principally dependent upon our operating cash flows and
access to the capital markets to fund our operations and to make
scheduled payments on debt and other fixed obligations. We
cannot assure that we will be able to generate sufficient cash
flows from our operations or from capital market activities to
pay our debt and other fixed obligations as they become due. If
we fail to do so our business could be harmed. If we are unable
to make payments on our debt and other fixed obligations, we
could be forced to renegotiate those obligations or seek to obtain
additional equity or other forms of additional financing.
Our level of indebtedness may limit our
ability to incur additional debt to meet future
financing needs.
We typically finance our aircraft through either secured debt,
lease financing, or through cash from operations. The impact
on financial institutions from global economic conditions,
including COVID-19, may adversely affect the availability and
cost of credit to JetBlue as well as to prospective purchasers of
our aircraft should we undertake to sell in the future, including
financing commitments we have already obtained for purchases
of new aircraft or financing or refinancing of existing aircraft.
To the extent we finance our activities with additional debt, we
may become subject to financial and other covenants that may
restrict our ability to pursue our strategy or otherwise constrain
our operations.
Our liquidity could be adversely impacted
in the event one or more of our credit card
processors were to impose material reserve
requirements for payments due to us from
credit card transactions.
We currently have agreements with organizations that process
credit card transactions arising from purchases of air travel
tickets by our customers. Credit card processors have financial
risk associated with tickets purchased for travel which can occur
several weeks after the purchase. Our credit card processing
agreements provide for reserves to be deposited with the
processor in certain circumstances. We do not currently have
reserves posted for our credit card processors. If circumstances
were to occur requiring us to deposit reserves, the negative
impact on our liquidity could be significant which could materially
adversely affect our business.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
25
PART I | ITEM 1A RISK FACTORS
We are subject to certain restrictions on our
business as a result of our participation in
governmental programs under the CARES Act.
In April 2020, we entered into the PSP Agreement under the CARES
Act with the Treasury governing our participation in the Payroll
Support Program. Under the Payroll Support Program, Treasury
provided us a $936 million Payroll Support Payment, consisting
of $685 million in grants and $251 million in an unsecured term
loan. On September 30, 2020, Treasury provided a $27 million
Additional Payroll Support Payment, consisting of $19 million
in grants and $8 million in unsecured term loan under the PSP
Agreement. In consideration for the Payroll Support Payment and
the Additional Payroll Support Payment, we issued warrants to
purchase approximately 2.6 million and 85,540 shares of common
stock, respectively, to the Treasury at an exercise price of $9.50
per share.
Additionally, on September 29, 2020, we entered into a loan and
guarantee agreement (the “Loan Agreement”) with Treasury under
the Loan Program of the CARES Act, pursuant to which Treasury
agreed to extend loans to us in an aggregate principal amount of
up to $1.1 billion until March 26, 2021, subject to specified terms.
On September 29, 2020, JetBlue borrowed an initial $115 million
under the Loan Agreement and on November 3, 2020, JetBlue and
Treasury agreed to increase JetBlue’s allocation from $1.1 billion
to $1.9 billion. On January 15, 2021, JetBlue and Treasury agreed
to extend JetBlue’s option to borrow the full amount under the
Loan Agreement until May 28, 2021. In connection with the Loan
Agreement, on September 29, 2020, we entered into a warrant
agreement with Treasury, pursuant to which we issued to
Treasury warrants to purchase approximately 1.2 million shares
of our common stock at an exercise price of $9.50 per share.
In accordance with any grants and/or loans received under the
CARES Act, we are required to comply with the relevant provisions
of the CARES Act which, among other things, includes the
following: the requirement to use the Payroll Support Payment
and the Additional Payroll Support Payment exclusively for the
continuation of payment of crewmember wages, salaries and
benefits; the requirement that certain levels of commercial
air service be maintained until March 1, 2022; the prohibitions
on share repurchases and the payment of common stock
dividends; and restrictions on the payment of certain executive
compensation vary depending on the type of CARES Act support
received. Further, the Loan Agreement includes affirmative and
negative covenants that restrict our ability to, among other things,
dispose of certain assets, merge, consolidate or sell assets,
incur certain additional indebtedness or pay certain dividends.
In addition, we are required to maintain unrestricted cash and
cash equivalents and unused commitments available under all
revolving credit facilities aggregating not less than $550 million
and to maintain a minimum ratio of the borrowing base of the
collateral. If we do not meet the minimum collateral coverage
ratio, we must either provide additional collateral to secure our
obligations under the Loan Agreement or repay the loans by an
amount necessary to maintain compliance with the collateral
coverage ratio.
26
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
The substance and duration of restrictions to which we are
subject under the grants and/or loans under the CARES Act,
including, but not limited to, those outlined above, will materially
affect the Company’s operations, and the Company may not be
successful in managing these impacts. Further, these restrictions
could limit our ability to take actions that we otherwise might
have determined to be in the best interest of our Company
and our shareholders. In particular, limitations on executive
compensation, which, depending on the form of aid, could extend
up to six years, may impact the Company’s ability to attract and
retain senior management or attract other key employees during
this critical time. We cannot predict whether the assistance under
any of these programs will be adequate to support our business
for the duration of the COVID-19 pandemic or whether additional
assistance will be required or available in the future.
The Company has a significant amount of
indebtedness from fixed obligations and may
seek material amounts of additional financial
liquidity in the short-term, and insufficient
liquidity may have a material adverse effect
on the Company’s financial condition and
business.
The Company has a significant amount of indebtedness from fixed
obligations, including aircraft lease and debt financings, leases
of airport property, secured loan facilities and other facilities,
and other material cash obligations. In addition, the Company
has substantial non-cancelable commitments for capital
expenditures, including for the acquisition of new aircraft and
related spare engines.
In addition, in response to the travel restrictions, decreased
demand and other effects the COVID-19 pandemic has had and
is expected to have on the Company’s business, the Company
may continue to seek material amounts of additional financial
liquidity in the short-term, which may include the issuance of
additional unsecured or secured debt securities, equity securities
and equity-linked securities, the sale of assets, the entry into
sale-leaseback transactions, as well as additional bilateral and
syndicated secured and/or unsecured credit facilities, among
other items. If the Company’s credit ratings were to be further
downgraded, or general market conditions were to ascribe
higher risk to the Company’s rating levels, the airline industry,
or the Company, the Company’s access to capital and the cost
of any debt financing would be negatively affected. There can
be no assurance as to the timing of any such issuance, which
may be in the near term, or that any such additional financing
will be completed on favorable terms, or at all. In addition, as of
December 31, 2020, the Company has received a total of $963
million in funding under the Payroll Support Program of the CARES
Act and $115 million under the Loan Program of the CARES Act,
which financial assistance subjects the Company and its business
to certain restrictions . See “We are subject to certain restrictions
on our business as a result of our participation in governmental
programs under the CARES Act.”
PART I | ITEM 1A RISK FACTORS
Although the Company ’s cash flows from operations and
its available capital, including the proceeds from financing
transactions, have been sufficient to meet its obligations and
commitments to date, the Company’s liquidity has been, and may
in the future be, negatively affected by the risk factors described
herein. If the Company’s liquidity is materially diminished, the
Company might not be able to timely pay its leases and debts or
comply with certain operating and financial covenants under its
financing and credit card processing agreements or with other
material provisions of its contractual obligations. Moreover, as a
result of the Company’s recent financing activities in response
to the COVID-19 pandemic, the number of financings and the
aggregate amount of indebtedness with respect to which such
covenants and provisions apply has increased, thereby subjecting
the Company to more substantial risk of cross-default and cross-
acceleration in the event of breach, and additional operating and
financial covenants could become binding on the Company as it
continues to seek additional liquidity. In addition, the Company
has agreements with financial institutions that process customer
credit card transactions for the sale of air travel and other
services. Under certain of the Company’s credit card processing
agreements, the financial institutions in certain circumstances
have the right to require that the Company maintain a reserve
equal to a portion of advance ticket sales that have been
processed by that financial institution, but for which the Company
has not yet provided the air transportation. Such financial
institutions may require cash or other collateral reserves to be
established or withholding of payments related to receivables to
be collected, including if the Company does not maintain certain
minimum levels of unrestricted cash, cash equivalents and short-
term investments. In light of the affect COVID-19 is having on
demand and, in turn, capacity, the Company has seen an increase
in demand from consumers for refunds on their tickets, and we
anticipate this will continue to be the case for the foreseeable
future. Refunds lower our liquidity and put us at risk of triggering
liquidity covenants in these processing agreements and, in doing
so, could force us to post cash collateral with the credit card
companies for advance ticket sales. The Company also maintains
certain insurance- and surety-related agreements under which
counterparties may require collateral.
The Company’s substantial level of indebtedness, particularly
following the additional liquidity transactions completed and
contemplated in response to the impacts of COVID-19, and non-
investment grade credit rating, as well as market conditions
and the availability of assets as collateral for loans or other
indebtedness, which has been reduced as a result of the $2.3
billion in secured term loan facilities entered into since the
beginning of fiscal year 2020 and may be further reduced as
the Company continues to seek material amounts of additional
financial liquidity, together with the effect the COVID-19 pandemic
has had on the global economy generally and the air transportation
industry specifically, may make it difficult for the Company to
raise additional capital if needed to meet its liquidity needs on
acceptable terms, or at all.
See “Part II - Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of this report for
additional information regarding the Company’s liquidity as of
December 31, 2020.
The Company may never realize the full value
of its intangible assets or its long-lived assets
causing it to record impairments that may
negatively affect its financial condition and
operating results.
In accordance with applicable accounting standards, the
Company is required to test its indefinite-lived intangible assets
for impairment on an annual basis, or more frequently where
there is an indication of impairment. In addition, the Company is
required to test certain of its other assets for impairment where
there is any indication that an asset may be impaired.
The Company may be required to recognize losses in the future
due to, among other factors, extreme fuel price volatility, tight
credit markets, government regulatory changes, decline in the fair
values of certain tangible or intangible assets, such as aircraft,
route authorities, airport slots and frequent flyer database,
unfavorable trends in historical or forecasted results of operations
and cash flows and an uncertain economic environment, as
well as other uncertainties. For example, during the year ended
December 31, 2020, the Company recorded impairment charges
of $273 million associated with its E190 fleet due to COVID-19. The
Company can provide no assurance that a material impairment
loss of tangible or intangible assets will not occur in a future
period, and the risk of future material impairments has been
significantly heightened as result of the effects of the COVID-19
pandemic on our flight schedules and business. The value of the
Company’s aircraft could also be impacted in future periods by
changes in supply and demand for these aircraft. Such changes
in supply and demand for certain aircraft types could result from
the grounding of aircraft. A further impairment loss could have
a material adverse effect on the Company’s financial condition
and operating results.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
27
PART I | ITEM 1A RISK FACTORS
Risks Associated with the Airline Industry
We could be adversely affected by an outbreak
of a disease or an environmental disaster that
significantly affects travel behavior.
We may be affected by global climate change
or by legal, regulatory or market responses to
such change.
Any outbreak of another disease or variants of COVID-19, which
affect travel behavior, travel demand, or travel restrictions, or a
similar public health threat, or fear of such an event could have
a material adverse impact on airlines. In addition, outbreaks of
disease could result in quarantines of our personnel, business
partners and their suppliers, or an inability to access facilities or
our aircraft, which could adversely affect our operations. Similarly,
if an environmental disaster were to occur and adversely impact
any of our destination cities, travel behavior could be affected and
in turn, could materially adversely impact our business, operating
results, liquidity and financial condition.
Concern over climate change, including the impact of global
warming, has led to significant U.S. and international legislative
and regulatory efforts to limit GHG emissions, including our
aircraft and ground operations emissions. In October 2016, the
ICAO passed a resolution adopting the Carbon Offsetting and
Reduction Scheme for International Aviation (“CORSIA”), which is
a global, market-based emissions offset program to encourage
carbon-neutral growth beyond 2020. CORISA is scheduled to be
implemented through multiple phases beginning in 2021. ICAO
continues to develop details regarding implementation, but we
believe compliance with CORSIA will increase our operating costs.
Compliance with future environmental
regulations may harm our business.
Many aspects of airlines’ operations are subject to increasingly
stringent environmental regulations, and growing concerns
about climate change may result in the imposition of additional
regulation. Since the domestic airline industry is increasingly
price sensitive, we may not be able to recover the cost of
compliance with new or more stringent environmental laws and
regulations from our customers, which could adversely affect our
business. Although we don’t expect the costs of complying with
current environmental regulations will have a material adverse
effect on our financial position, results of operations, or cash
flows, no assurance can be made that the costs of complying
with environmental regulations in the future will not have such
an effect.
Federal budget constraints or federally
imposed furloughs due to budget negotiation
deadlocks may adversely affect our industry,
business, results of operations and financial
position.
Many of our airline operations are regulated by governmental
agencies, including, but not limited to, the DOT, FAA, CBP, and
the TSA. If the federal government were to continue experiencing
issues in reaching budgetary consensus in the future resulting
in mandatory furloughs and/or other budget constraints, or if a
government shutdown were to continue for an extended period of
time, our operations and results of operations could be materially
negatively impacted. The travel behaviors of the flying public
could also be affected, which may materially adversely impact
our industry and our business.
Changes in government regulations imposing
additional requirements and restrictions on
our operations could increase our operating
costs and result in service delays and
disruptions.
Airlines are subject to extensive regulatory and legal
requirements, both domestically and internationally, involving
significant compliance costs. In the last several years, Congress
has passed laws, and the agencies of the federal government,
including, but not limited to, the DOT, FAA, CBP, and the TSA
have issued regulations relating to the operation of airlines
that have required significant expenditures. We expect to
continue to incur expenses in connection with complying with
government regulations. Additional laws including executive
orders, regulations, taxes, and airport rates and charges have
been proposed from time to time that could significantly increase
the cost of airline operations or reduce the demand for air travel.
If adopted or materially amended, these measures could have
the effect of raising ticket prices affecting the perception of the
airline industry, reducing air travel demand and/or revenue, and
increasing costs. We cannot assure you these and other laws
including executive orders, regulations, or taxes enacted in the
future will not harm our business.
In addition, the U.S. Environmental Protection Agency, or EPA,
has proposed changes to underground storage tank regulations
that could affect certain airport fuel hydrant systems. In addition
to the proposed EPA and state regulations, several U.S. airport
authorities are actively engaged in efforts to limit discharges of
de-icing fluid to local groundwater, often by requiring airlines to
participate in the building or reconfiguring of airport de-icing
facilities.
28
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART I | ITEM 2 PROPERTIES
A future act of terrorism, the threat of such
acts or escalation of U.S. military involvement
overseas could adversely affect our industry.
Acts of terrorism, the threat of such acts or escalation of U.S.
military involvement overseas could have an adverse effect on the
airline industry. In the event of an act of terrorism, whether or not
successful, the airline industry would likely experience increased
security requirements and significantly reduced demand. We
cannot assure you these actions, or consequences resulting from
these actions, will not harm our business or the industry.
The airline industry is particularly sensitive to
changes in economic condition.
Fundamental and permanent changes in the domestic airline
industry have occurred over time as a result of several years of
repeated losses, among other reasons. These losses resulted in
airlines renegotiating or attempting to renegotiate labor contracts,
reconfiguring flight schedules, furloughing, or terminating
crewmembers, as well as considering other efficiency and cost-
cutting measures. Despite these actions, several airlines have
reorganized under Chapter 11 of the U.S. Bankruptcy Code to permit
them to reduce labor rates, restructure debt, terminate pension
plans, and generally reduce their cost structure. Since 2005, the
U.S. airline industry has experienced significant consolidation and
liquidations. A global economic recession and related unfavorable
general economic conditions, such as higher unemployment
rates, a constrained credit market, housing-related pressures,
and increased business operating costs can reduce spending for
both leisure and business travel. Unfavorable economic conditions
could also impact an airline’s ability to raise fares to counteract
increased fuel, labor, and other costs. It is possible that further
airline reorganizations, consolidation, bankruptcies, or liquidations
may occur in the current global economic environment, the effects
of which we are unable to predict. We cannot assure you the
occurrence of these events, or potential changes resulting from
these events, will not harm our business or the industry.
ITEM 1B UNRESOLVED STAFF COMMENTS
None.
ITEM 2
PROPERTIES
Aircraft
As of December 31, 2020, we operated a fleet consisting of one Airbus A220 aircraft, 63 Airbus A321 aircraft, 13 Airbus A321neo aircraft,
130 Airbus A320 aircraft, and 60 Embraer E190 aircraft as summarized below:
Aircraft
Airbus A220
Airbus A320
Airbus A321
Airbus A321neo
Embraer E190
Seating
Capacity
140
162/ 150(1)
200 / 159(2) (3)
200
100
Owned(4)
Finance Leased
Operating
Leased
Total
Average Age in
Years
1
96
61
13
30
201
—
2
2
—
—
4
—
32
—
—
30
62
1
130
63
13
60
267
—
15.3
4.5
0.8
12.2
11.3
(1) Our Airbus A320 with a restyled cabin configuration (72 aircraft) has a seating capacity of 162 seats. Our Airbus A320 with a classic cabin configuration has a seating
capacity of 150 seats.
(2) Our Airbus A321 with a single cabin layout has a seating capacity of 200 seats. Our Airbus A321 with our Mint® premium service has a seating capacity of 159 seats.
(3) During 2020, we completed the buyout of one of our A321 aircraft leases.
(4) Total owned aircraft include aircraft associated with sale-leaseback transactions that did not qualify as sales for accounting purposes.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
29
PART I | ITEM 2 PROPERTIES
As of December 31, 2020, our aircraft leases had an average
remaining term of approximately 3 years, with expiration dates
between 2022 and 2026. We have the option to extend most of
these leases for additional periods or to purchase the aircraft at
the end of the related lease term.
As of December 31, 2020, options for 50 additional A220-300
aircraft deliveries remain available to us and we retain the flexibility
to convert certain aircraft to the A220-100 model. Both members
of the A220 family share commonality in more than 99 percent
of their replaceable parts and utilize the same family of engines.
As of December 31, 2020, we had 141 aircraft on order and scheduled for delivery through 2027. Our future aircraft delivery schedule is
as follows:
Year
2021
2022
2023
2024
2025
2026
2027
TOTAL
Airbus A321neo
Airbus A220
Contractual Order Book
8
3
11
13
11
12
14
72
7
8
19
22
12
1
—
69
Total
15
11
30
35
23
13
14
141
Ground Facilities
Airports
All of our facilities at the airports we serve are under leases
or other occupancy agreements. This space is leased directly
or indirectly from the local airport authority on varying
terms dependent on prevailing practices at each airport.
Our passenger terminal service facilities consisting of ticket
counters, gate space, operations support area, and baggage
service offices generally have agreement terms ranging from
less than one year to five years. They can contain provisions
for periodic adjustments of rental rates, landing fees, and
other charges applicable under the type of lease. Under some
of these agreements, we are responsible for the maintenance,
insurance, utilities, and certain other facility-related expenses
and services.
A summary of our most significant lease agreements are:
■■ JFK - We have a lease agreement with the PANYNJ for T5
and T5i. We have the option to terminate the agreement in
2033, five years prior to the end of the original scheduled
lease term of October 2038. We also executed a supplement
to this lease agreement for the T6 property, our original base
of operations at JFK which afforded us the exclusive right to
develop on the T6 property. T5i, our expansion of T5 that we
use as an international arrivals facility opened to customers
in November 2014. Another supplement of the original T5
lease was executed in 2013. The lease, as amended, now
incorporates a total of approximately 19 acres of space for
our T5 facilities.
■■ Boston - We had an initial five year lease agreement with
Massport for five gates in Terminal C that started on May 1,
2005 and allowed JetBlue to grow to 11 gates by 2008. The
agreement included extension language which provided for
20 successive one-year automatic renewals after the initial
five year term. With the continued growth of our operations
in Boston, we have periodically amended our lease to add
additional gates and support spaces, most recently in 2017
to have the rights to six additional gates. As of December 31,
2020, we leased 27 gates in Boston. Our lease with Massport
is scheduled to expire in April 2030.
We have entered into use arrangements at each of the airports
we serve providing for the non-exclusive use of runways,
taxiways, and other airport facilities. Landing fees under these
agreements are typically based on the number of aircraft
landings and the weight of the aircraft.
Other
We lease the following hangars and airport support facilities at
our focus cities:
■■ New York - At JFK we have a ground lease agreement which
expires in 2030 for an aircraft maintenance hangar, an
adjacent office, and warehouse facility, including a storage
facility for aircraft parts. These facilities accommodate our
technical support and catering operations. We also lease a
building from the PANYNJ which is mainly used for ground
equipment maintenance work.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART I | ITEM 4 MINE SAFETY DISCLOSURES
■■ Boston - We have a ground lease agreement which expires in
2022 for a building which includes an aircraft maintenance
hangar and support space. We also have leases for facilities
to accommodate our ground support equipment maintenance
and catering operations.
■■ Orlando - We have a ground lease agreement for a hangar
which expires in 2035. We also occupy a training center,
JetBlue University, with a lease agreement expiring in 2035
which we use for the initial and recurrent training of our pilots
and inflight crewmembers, as well as support training for our
technical operations and airport crewmembers. This facility
is equipped with nine full flight simulators, nine flight training
devices, three cabin trainers, a training pool, classrooms,
and support areas. We began the planned expansion of
JetBlue University in April 2019 which has continued into
2020. As we continue to grow, developing our crewmembers'
technical, service, and hospitality skills that provide our
JetBlue Experience is crucial to our continued success. The
new learning space will include additional flight and cabin
simulators, an auditorium that can accommodate six new
classrooms, and a larger ditching pool.
In 2015, we opened the Lodge at OSC which is adjacent to
JetBlue University and is used for lodging our crewmembers
when they attend training.
Our primary corporate offices are located in Long Island City,
New York with our lease expiring in 2023. Our offices in Salt
Lake City, Utah contain a core team of crewmembers who
are responsible for group sales, customer service, at-home
reservation agent supervision, disbursements and certain other
finance functions. The lease for our Salt Lake City facility expires
in 2022. We also maintain other facilities that are necessary to
support our operations in the cities we serve.
ITEM 3
LEGAL PROCEEDINGS
In the ordinary course of our business, we are party to various legal proceedings and claims which we believe are incidental to the
operation of our business. Other than as described under Note 12 to our consolidated financial statements included in Part II, Item 8
of this Annual Report on Form 10-K, we believe the ultimate outcome of these proceedings to which we are currently a party will not
have a material adverse effect on our business, financial position, results of operations or cash flows.
ITEM 4 MINE SAFETY DISCLOSURES
Not applicable.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
31
PART II
ITEM 5
MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information and Stockholder Matters
Our common stock is traded on the NASDAQ Global Select Market
under the symbol JBLU. As of January 31, 2021, there were
approximately 408 holders of record of our common stock.
We have not paid cash dividends on our common stock and
have no current intention to do so. Any future determination to
pay cash dividends would be at the discretion of our Board of
Directors, subject to applicable limitations under Delaware law.
This decision would be dependent upon our results of operations,
financial condition, and other factors deemed relevant by our
Board of Directors.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
On December 8, 2017, the Board of Directors approved a two year
share repurchase program, or the 2017 Authorization, of up to
$750 million worth of common stock beginning on January 1, 2018.
The 2017 Authorization was completed in 2019.
repurchase programs include authorization for repurchases in
open market transactions pursuant to Rules 10b-18 and/or 10b5-1
of the Exchange Act, and/or one or more privately-negotiated
accelerated stock repurchase transactions. The timing, price,
and volume of any repurchases will be based on market conditions
and other relevant factors.
On September 19, 2019, the Board of Directors approved a
share repurchase program, or the 2019 Authorization, of up to
$800 million worth of common stock beginning on October 1,
2019 and ending no later than December 31, 2021. Our share
During 2020, the following shares were repurchased under the
above programs (in millions, except per share data):
Period
February 2020
March 2020
TOTAL
Total Number of
Shares Purchased
Average Price
Paid Per Share
8.1
4.9
13.0
(1) (2)
(1) (2)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
8.1
4.9
13.0
Approximate Dollar
Value of Shares that May
Yet be Purchased Under
the Plans or Programs
$
480
480
(1) On November 21, 2019, JetBlue entered into an accelerated share repurchase agreement, or ASR, paying $160 million for an initial delivery of 6.9 million shares. The term
of the ASR concluded on February 21, 2020 with delivery of 1.5 million additional shares to JetBlue on February 25, 2020. A total of 8.4 million shares, at an average price of
$19.03 per share, were repurchased under the agreement.
(2) On February 24, 2020, JetBlue entered into an ASR paying $160 million for an initial delivery of 6.6 million shares. The term of the ASR concluded on March 16, 2020 with
delivery of 4.9 million additional shares to JetBlue on March 18, 2020. A total of 11.5 million shares, at an average price of $13.91 per share, were repurchased under
the agreement.
In accordance with the Payroll Support Program Agreement and the Loan and Guarantee Agreement with the United States Department
of the Treasury under the CARES Act, JetBlue is temporarily restricted from making any share repurchases. We have suspended our
share repurchase program as of March 31, 2020.
32
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock Performance Graph
This performance graph shall not be deemed “filed” with the SEC or
subject to Section 18 of the Exchange Act, nor shall it be deemed
incorporated by reference in any of our filings under the Securities
Act, as amended.
The following line graph compares the cumulative total
stockholder return on our common stock with the cumulative total
return of the S&P 500 Stock Index and the NYSE Arca Airline Index
from December 31, 2016 to December 31, 2020. The comparison
assumes the investment of $100 in our common stock and in each
of the foregoing indices and reinvestment of all dividends. The
stock performance shown represents historical performance and
is not representative of future stock performance.
$
180
140
100
60
+168
+75
+65
2016
2017
2018
2019
2020
● JetBlue Airways Corporation ● S&P 500 Stock Index
● NYSE Arca Airline Index
JetBlue Airways Corporation
S&P 500 Stock Index
NYSE Arca Airline Index
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
$
100
100
100
$
100
$
119
105
72
112
82
$
83
144
99
$
65
168
75
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
33
PART II | ITEM 6 SELECTED FINANCIAL DATA
ITEM 6
SELECTED FINANCIAL DATA
The following financial information for each of the prior five years ending on December 31 has been derived from our consolidated
financial statements. This information should be read in conjunction with the consolidated financial statements and related notes
thereto included elsewhere in this Report.
(in millions except per share data)
STATEMENTS OF OPERATIONS DATA
Operating revenues
Operating expenses:
Aircraft fuel and related taxes
Salaries, wages and benefits
Landing fees and other rents
Depreciation and amortization
Aircraft rent
Sales and marketing
Maintenance, materials and repairs
Other operating expenses
Special items(2)
Total operating expenses
Operating (loss) income
Other income (expense)(3)
(Loss) income before income taxes
Income tax expense (benefit)(4)(5)
NET (LOSS) INCOME
(Loss) earnings per common share:
Basic
Diluted(2)(3)(4)(5)
Other Financial Data:
Operating margin
Pre-tax margin(6)
2020
2019
2018
2017
2016(1)
$ 2,957
$ 8,094
$ 7,658
$
7,012
$ 6,584
631
2,032
358
535
85
110
441
762
(283)
4,671
(1,714)
(179)
(1,893)
(539)
$ (1,354)
$
$
(4.88)
(4.88)
$
$
$
1,847
2,320
474
525
99
290
619
1,106
14
7,294
800
(32)
768
199
569
1.92
1.91
1,899
2,044
462
469
104
294
625
1,060
435
7,392
266
(47)
219
30
189
1,363
1,887
438
424
102
271
622
932
—
6,039
973
(55)
918
(222)
$
1,140
0.60
0.60
$
$
3.47
3.45
$
$
$
1,074
1,698
357
393
110
263
563
866
—
5,324
1,260
(96)
1,164
437
727
2.23
2.13
$
$
$
(58.0)%
(64.0)%
9.9 %
9.5 %
3.5 %
2.9 %
13.9 %
13.1 %
19.1 %
17.7 %
Net cash (used in) provided by operating activities
$
(683)
$ 1,449
$ 1,200
$
1,379
$
1,632
Net cash (used in) investing activities
Net cash provided by (used in) financing activities
(1,349)
2,983
(1,129)
165
(1,157)
131
(979)
(536)
(1,046)
(472)
(1) Amounts prior to 2017 do not reflect the impact of Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) of the Codification, adopted as of January 1, 2019.
(2) We had special items of $(283) million, $14 million, and $435 million in 2020, 2019, and 2018 respectively. Special items reduced our loss per share by $0.77 in 2020.
Special items in 2019 and 2018 reduced our diluted earnings per share by $0.03, and $1.04, respectively. Refer to Note 18 to our consolidated financial statements for details.
In 2019, we recognized a gain on equity method investments of $15 million. The impact of this gain to our diluted earnings per share was $0.04.
(3)
(4) Our 2017 results included a $564 million tax benefit, or $1.71 of diluted earnings per share, from the remeasurement of our deferred taxes to reflect the impact of the
enactment of the Tax Cuts and Jobs Act of 2017. The Tax Cuts and Jobs Act of 2017 made significant changes to the federal tax code, including a reduction in the federal
corporate statutory tax rate from 35% to 21%.
(5) Our 2018 results included a $28 million tax benefit, or $0.09 of diluted earnings per share, resulting from measurement period adjustments related to the enactment of the
Tax Cuts and Jobs Act of 2017.
(6) Pre-tax margin excluding special items and gain on equity method investments was (73.6)%, 9.5%, and 8.5% in 2020, 2019 and 2018, respectively.
34
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
(in millions)
Balance Sheet Data:
Cash and cash equivalents
Investment securities
Total assets
Total debt and finance leases
Common stockholders’ equity
Operating Statistics:
Revenue passengers (thousands)
Revenue passenger miles (millions)
Available seat miles (ASMs) (millions)
Load factor
Aircraft utilization (hours per day)
Average fare
Yield per passenger mile (cents)
Passenger revenue per ASM (cents)
Operating revenue per ASM (cents)
Operating expense per ASM (cents)
PART II | ITEM 6 SELECTED FINANCIAL DATA
2020
2019
2018
2017
2016(1)
$
1,918
$
1,137
13,406
4,863
3,951
959
372
11,918
2,334
4,799
$
474
416
10,959
1,670
4,685
$
303
392
10,402
1,199
4,805
$
433
628
9,323
1,384
3,933
2020
2019
2018
2017
2016(1)
14,274
18,598
32,689
56.9 %
5.4
42,728
53,617
63,841
84.0 %
11.9
42,150
50,790
59,881
84.8 %
11.8
40,038
47,240
56,007
84.3 %
11.7
38,263
45,619
53,620
85.1 %
12.0
$ 191.42
$ 182.23
$ 175.11
$ 168.88
$ 166.74
14.69
8.36
9.04
14.29
13.12
14.52
12.20
12.68
11.43
8.44
14.53
12.33
12.79
12.34
8.37
14.31
12.07
12.52
10.78
8.29
13.99
11.90
12.28
9.93
7.88
168,636
368,355
366,619
353,681
337,302
1,222
262.2
1.53
412
15,450
1,140
253.6
1,096
246.8
$
2.09
$
2.24
$
885
18,535
849
17,766
1,072
233.5
1.72
792
17,118
$
1,093
218.9
1.41
760
15,696
Operating expense per ASM, excluding fuel(2)
Departures
Average stage length (miles)
Average number of operating aircraft during period
Average fuel cost per gallon, including fuel taxes
$
Fuel gallons consumed (millions)
Average number of full-time equivalent crewmembers
(1) Amounts prior to 2017 do not reflect the impact of ASU 2016-02, Leases (Topic 842) of the Codification, adopted as of January 1, 2019.
(2) Refer to our “Regulation G Reconciliation of Non-GAAP Financial Measures” section for more information on this non-GAAP measure.
Glossary of Airline terminology
Airline terminology used in this section and elsewhere in this Report:
■■ Aircraft utilization - The average number of block hours
operated per day per aircraft for the total fleet of aircraft.
■■ Available seat miles - The number of seats available for
passengers multiplied by the number of miles the seats are flown.
■■ Average fare - The average one-way fare paid per flight segment
by a revenue passenger.
■■ Average fuel cost per gallon - Total aircraft fuel costs, including
fuel taxes and effective portion of fuel hedging, divided by the
total number of fuel gallons consumed.
■■ Average stage length - The average number of miles flown per
flight.
■■ Load factor - The percentage of aircraft seating capacity
actually utilized, calculated by dividing revenue passenger miles
by available seat miles.
■■ Operating expense per available seat mile - Operating expenses
divided by available seat miles.
■■ Operating expense per available seat mile, excluding fuel -
Operating expenses, less aircraft fuel, other non-airline
expenses, and special items, divided by available seat miles.
■■ Operating revenue per available seat mile - Operating revenues
divided by available seat miles.
■■ Passenger revenue per available seat mile - Passenger revenue
divided by available seat miles.
■■ Revenue passengers - The total number of paying passengers
flown on all flight segments.
■■ Revenue passenger miles - The number of miles flown by revenue
passengers.
■■ Yield per passenger mile - The average amount one passenger
pays to fly one mile.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
35
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Coronavirus (COVID-19) Pandemic
The unprecedented coronavirus (“COVID-19”) pandemic and the
related travel restrictions and physical distancing measures
implemented throughout the world have significantly reduced
demand for air travel. Beginning in March 2020, large public
events were canceled, governmental authorities began imposing
restrictions on non-essential activities, businesses suspended
travel, and popular leisure destinations temporarily closed to
visitors. Certain countries have imposed bans on international
travelers for specified periods or indefinitely.
Demand for air travel began to weaken at the end of February 2020.
The pace of decline accelerated throughout March into April 2020
and demand remained depressed throughout the rest of 2020.
This decline in demand has had a material adverse impact on
our operating revenues and financial position. Our operating
revenues for the year ended December 31, 2020 declined by 63.5%
year-over-year. Although demand began to improve as the year
progressed, it remained significantly lower than in prior years.
The exact timing and pace of the recovery is uncertain given
the significant impact of the pandemic on the overall U.S. and
global economy. Some states have experienced a resurgence
of COVID-19 cases after reopening and as a result, certain other
states have implemented travel restrictions or advisories for
travelers from such states. We have also seen a similar resurgence
of COVID-19 cases in other countries and we expect to continue
to see fluctuations in the numbers of cases, which we believe will
result in actions by governmental authorities restricting activities.
We expect the demand environment to remain depressed until the
majority of the U.S. population is vaccinated against COVID-19
and the medical community lifts the current physical distancing
guidelines. Our response to the pandemic and the measures we
take to secure additional liquidity may be modified as we have
more clarity on the timing of demand recovery.
In response to the COVID-19 pandemic, since March 2020 we have
implemented the following measures to focus on the safety of our
customers, our crewmembers, and our business.
Customers and Crewmembers
The safety of our customers and crewmembers continues to be
a priority. As the COVID-19 pandemic has developed, we have
taken steps to promote physical distancing and implemented new
procedures that reflect the recommendations of health experts,
including the following:
36
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
■■ Introduced “Safety from the Ground Up”, an initiative with a
multi-layer approach that encompasses enhanced safety and
cleaning measures on our flights, at our airports, and in our
offices;
■■ Instituted temperature checks for our customer-facing and
support-center crewmembers;
■■ Updated our sick leave policy to provide up to 14 days of paid
sick leave for crewmembers who were diagnosed with COVID-19
or were required to quarantine;
■■ Partnered with Northwell Direct to provide a comprehensive
set of COVID-19 services and programs to support our
crewmembers;
■■ Implemented a framework for internal contact tracing,
crewmember notification, and a return to work clearance
process for all crewmembers, wherever they may be located;
■■ Required face coverings for all crewmembers while boarding,
in flight, and when physical distancing cannot be maintained;
■■ Administered more frequent disinfecting of common surfaces
and areas with high touchpoints in our facilities;
■■ Enhanced daily and overnight cleaning of our aircraft and all
facilities, using electrostatic spraying of disinfectant in the
cabins of aircraft parked overnight at selected focus cities;
■■ Required customers to wear face coverings during check-in,
boarding, and inflight;
■■ Limited the number of seats sold on most flights through
January 7, 2021;
■■ Suspended group boarding and implemented a back-to-front
boarding process to minimize passing in the aisle;
■■ Eliminated layovers for crewmembers in New York City and
worked with crew transportation companies to ensure physical
distancing;
■■ Implemented jump seat buffers on our flights to further
promote physical distancing measures;
■■ Provided enhanced flexibility to our customers by waiving
change and cancel fees for customers with existing bookings
made through March 31, 2021, while also extending the
expiration date of travel credits issued between February 27,
2020 and June 30, 2020 for flight purchases to 24 months; and
■■ Announced our partnership with Vault Health to provide
discounted at-home COVID-19 testing to customers with
pending travel plans.
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
The COVID-19 pandemic drove a significant decline in demand
beginning in the second half of March 2020. We have significantly
reduced our capacity to a level that maintains essential services to
align with demand. Our capacity for the year ended December 31,
2020 declined by 48.8% year-over-year. For the first quarter of
2021, we expect capacity to be down by at least 40%, as compared
to the first quarter of 2019. As a result of the significant reduction
in demand expectations and lower capacity, we have temporarily
parked a portion of our fleet.
The reductions in demand and in our capacity have resulted in a
significant reduction to our revenue. As a result, we have, and will
continue to implement cost saving initiatives to reduce our overall
level of cash spend. Some of the initiatives we have undertaken
include:
■■ Adjustments in flying capacity to align with the expected
demand.
■■ Temporary consolidations of our operations in certain cities
that contain multiple airport locations.
■■ Renegotiated service rates with business partners and
extended payment terms.
■■ Instituted a company-wide hiring freeze.
■■ Implemented salary reductions for a portion of our
crewmembers, including our officers throughout 2020 and
into 2021.
■■ Offered crewmembers voluntary time off and separation
programs, with most departures for the separation program
occurring during the third quarter of 2020.
We believe the unprecedented impact of COVID-19 on the demand
for air travel and the corresponding decline in revenue will continue
to have an adverse impact on our results of operations, operating
cash flow, and financial condition. Given this situation, we have
taken actions to increase liquidity, strengthen our financial position,
and conserve cash. Some of the actions we have taken since the
onset of the pandemic through December 31, 2020 include:
■■ Executed a $1.0 billion 364-day delayed draw term loan
agreement in March 2020 and immediately drew down on the
facility for the full amount available. This term loan facility was
repaid during the third quarter.
■■ Borrowed on our existing $550 million revolving credit facility
in April 2020.
■■ Executed a $150 million pre-purchase arrangement of TrueBlue®
points with our co-brand credit card partner in April 2020.
■■ Suspended non-critical capital expenditure projects.
■■ Amended our purchase agreement with Airbus which
changed the timing of our Airbus A321 and A220 deliveries in
May and October 2020 resulting in approximately $2.0 billion of
reduction in aircraft capital expenditures through 2022.
■■ Suspended share repurchases.
■■ Obtained $963 million of government funding under the Payroll
Support Program of The Coronavirus Aid, Relief, and Economic
Security Act (“CARES Act”), which is discussed further below.
■■ Executed a $750 million term loan credit facility and
immediately drew down on the facility for the full amount
available in June 2020.
■■ Entered into $563 million of sale-leaseback transactions; which
is discussed further below.
■■ Completed public placements of equipment notes in an
aggregate principal amount of $923 million secured by 49 Airbus
A321 aircraft in August 2020, which is discussed further in Note
4 to our consolidated financial statements. The net proceeds
were primarily used to repay the outstanding borrowings under
our 364-day delayed draw term loan facility that was due to be
repaid in March 2021.
■■ Entered into a Loan and Guarantee agreement, as amended,
with the United States Department of the Treasury (“Treasury”)
under the Loan Program of the CARES Act which gives us access
to loans in an aggregate principal amount of up to $1.9 billion
until May 28, 2021, which is discussed further below. We drew
down $115 million under the Loan Program on September 29,
2020.
■■ Completed the public offering of 42 million shares of our
common stock for net proceeds of $583 million in December
2020.
As a result of these activities, we had cash, cash equivalents,
and short-term investments of approximately $3.1 billion at
December 31, 2020.
We continue to evaluate future financing opportunities in an
effort to build additional levels of liquidity.
We lowered our cash burn(1) from approximately $18 million per
day at the end of March 2020 to an average of approximately
$6.7 million per day during the fourth quarter of 2020.
Preparing for Recovery
As the COVID-19 pandemic progresses, we have taken a number
of steps to position the Company for recovery when demand for
air travel eventually returns.
In June 2020, we announced the addition of 30 new domestic
routes to serve customers in markets where leisure and visiting
friends and relatives travel were showing signs of strength. These
new routes include daily nonstop Mint® service from Newark
Liberty International Airport to both Los Angeles International
Airport and San Francisco International Airport. While the timeline
for recovery remains uncertain, these new routes offer us the
opportunity to generate revenue, bring aircraft back into service
that would otherwise sit idle, and add more flying opportunities
of our crewmembers and customers. We believe adding more
destinations in these key markets will make us more relevant to
travelers and increase customer loyalty.
In July 2020, we announced plans for a multi-year west coast
expansion from southern California which includes moving our
primary base of operations from Long Beach Airport to Los
Angeles International Airport. We plan to grow our operations at
Los Angeles International Airport from the average current level
of 20 flights per day to approximately 70 flights per day by 2025.
(1) Refer to our `’Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
37
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Also in July 2020, we announced our intention to enter into
a strategic relationship with American Airlines Group Inc.
(“American”). This arrangement, once fully implemented, will
include an alliance agreement with reciprocal code sharing on
domestic and international routes from or connecting through
New York (John F. Kennedy International Airport (“JFK”),
LaGuardia Airport, and Newark Liberty International Airport)
and Boston, excluding JetBlue’s future European transatlantic
flying. We believe this partnership will create more capacity,
seamless connectivity for travelers in the northeast, and offer
more choices for customers across the networks of both airlines.
In addition, we believe this relationship will also accelerate our
recovery as the travel industry adapts to new trends as a result
of the COVID-19 pandemic. Pursuant to federal law, American and
JetBlue submitted this proposed alliance arrangement to the
Department of Transportation (“DOT”) for review. After American,
JetBlue and the DOT agreed to a series of commitments, the DOT
terminated its review of the proposed alliance. The commitments
include growth commitments to ensure capacity expansion,
slot divestitures at JFK and at Reagan National Airport near
Washington, D.C. and antitrust compliance measures. Beyond
this agreement with the DOT, American and JetBlue will also be
limiting their coordination on certain city pair markets within
the scope of the alliance. In addition to the DOT review, the
Department of Justice and the New York Attorney General, the
Massachusetts Attorney General, and the Attorneys General of
certain other state and local jurisdictions are investigating this
proposed alliance, which are ongoing. American and JetBlue
intend to cooperate with those investigations, but are proceeding
with plans to implement this alliance.
In September 2020, we announced plans to launch 24 new routes
aimed at immediately capturing traffic on a variety of new,
nonstop routes as demand increases. These routes will introduce
new non-stop destinations from our focus cities and expand our
Mint® service in Newark and Los Angeles.
In December 2020, we announced plans to introduce service in
four new destinations as part of a broader plan to add 24 new
nonstop routes in the first half of 2021. These new destinations
include Miami and Key West in Florida; Guatemala City, Guatemala;
and Los Cabos, Mexico. The new services are aimed at capturing
traffic where we anticipate customer demand.
2020 Results
For the year end December 31, 2020:
■■ System capacity decreased by 48.8% year over year.
■■ We generated $3.0 billion in operating revenue, a decrease
of $5.1 billion compared to 2019, primarily due to a
66.6% decrease in revenue passengers.
■■ Operating revenue per available seat mile (RASM) decreased
by 28.7% to 9.04 cents.
■■ Operating expense decreased by 36.0% to $4.7 billion.
■■ Operating expense per available seat mile (CASM) increased by
25.1% to 14.29 cents.
■■ Our 2020 and 2019 results included the effects of special
items. Excluding fuel and related taxes, special items, as well
as operating expenses related to our non-airline businesses,
our operating expense(1) decreased by 20.4% to $4.3 billion.
■■ Excluding fuel and related taxes, special items, as well as
operating expenses related to our non-airline businesses, our
cost per available seat mile (CASM ex-fuel)(1) increased by 55.4%
to 13.12 cents.
Outlook for 2021
The length and severity of the reduction in demand due to the
COVID-19 pandemic is uncertain; accordingly, we expect the
adverse impact to continue in the first quarter of 2021 and beyond.
The exact timing and pace of the recovery is uncertain given
the significant impact of the pandemic on the overall U.S. and
global economy. We expect the demand environment to remain
depressed until the majority of the U.S. population is vaccinated
against COVID-19 and the medical community lifts the current
■■ Our operating margin was (58.0)% in 2020 compared to 9.9% in
2019. Excluding special items, our adjusted operating margin(1)
were (67.5)% and 10.1% for full year 2020 and 2019, respectively.
■■ Reported a net loss of $(1.4) billion in 2020 compared to net
income of $569 million in 2019.
■■ Our reported (loss) per share for full year 2020 was $(4.88)
compared to reported earnings per diluted share of $1.91 in
2019. Excluding special items, our adjusted (loss) per share(1)
was $(5.65) for full year 2020. Our adjusted earnings per diluted
share(1) for full year 2019 was $1.90.
■■ During 2020, we took delivery of seven Airbus A321neo aircraft
and our first Airbus A220 aircraft. We expect our first Airbus
A220 aircraft to enter into service in early 2021.
physical distancing guidelines. Our response to the pandemic
and the measures we take to secure additional liquidity may be
modified as we have more clarity in the timing of demand recovery.
We will continue to monitor customer behaviors as they evolve
throughout the pandemic. We plan to make strategic adjustments
to our network, as necessary, to maximize revenue potential and
accelerate recovery.
(1) Refer to our ‘’Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
38
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
2020 Compared to 2019
OVERVIEW
We reported a net (loss) of $(1.4) billion, an operating (loss) of
$(1.7) billion and operating margin of (58.0)% for the year ended
December 31, 2020. This compares to net income of $569 million,
operating income of $800 million, and operating margin of 9.9%
for the year ended December 31, 2019. Our (loss) per share was
$(4.88) for 2020 compared to earnings of $1.91 per diluted share
for 2019.
OPERATING REVENUES
(revenues in millions; percent changes based on unrounded numbers)
Passenger revenue
Other revenue
Operating revenues
Average fare
Yield per passenger mile (cents)
Passenger revenue per ASM (cents)
Operating revenue per ASM (cents)
Average stage length (miles)
Revenue passengers (thousands)
Revenue passenger miles (millions)
Available seat miles (ASMs) (millions)
Load factor
Passenger revenue accounted for 92.4% of our total operating
revenue for the year ended December 31, 2020. In addition to seat
revenue, passenger revenue includes revenue from our ancillary
product offerings such as Even More® Space. Revenue generated
from international routes, including Puerto Rico, accounted
for 36.1% of our total operating revenues in 2020. Passenger
revenue, including certain ancillary fees directly related to
passenger tickets, is recognized when the transportation is
provided. Passenger revenue from unused tickets and passenger
credits are recognized in proportion to flown revenue based
on estimates of expected expiration or when the likelihood of
the customer exercising his or her remaining rights becomes
remote. We measure capacity in terms of available seat miles,
which represents the number of seats available for passengers
multiplied by the number of miles the seats are flown. Yield, or the
average amount one passenger pays to fly one mile, is calculated
by dividing Passenger revenue by Revenue passenger miles. We
attempt to increase Passenger revenue primarily by increasing
Our 2020 and 2019 reported results included the effects of special
items. Adjusting for these one-time items(1), our adjusted net
(loss) was $(1.6) billion, operating (loss) was $(2.0) billion, and our
adjusted operating margin was (67.5)% for 2020. This compares
to adjusted net income of $568 million, operating income of
$814 million, and an operating margin of 10.1% for 2019. Excluding
one-time items(1), our adjusted (loss) per share was $(5.65) for
2020 compared to adjusted earnings per diluted share of $1.90
for 2019.
Year-over-Year Change
$
$
$
2020
2,733
224
2,957
191.42
14.69
8.36
9.04
1,222
14,274
18,598
32,689
2019
7,786
308
$
(5,053)
(84)
8,094
(5,137)
$
$
$
182.23
14.52
12.20
12.68
1,140
9.19
0.17
(3.84)
(3.64)
82
42,728
(28,454)
53,617
63,841
(35,019)
(31,152)
%
(64.9)
(27.3)
(63.5)
5.0
1.2
(31.5)
(28.7)
7.2
(66.6)
(65.3)
(48.8)
56.9 %
84.0 %
(27.1) pts
our yield per flight which produces higher revenue per available
seat mile. Our objective is to optimize our fare mix to increase our
overall average fare while continuing to provide our customers
with competitive fares.
In 2020, the decrease in Passenger revenue was primarily driven
by the unprecedented decline in demand for travel tied to COVID-19
and its effects. We saw a 66.6% decline in revenue passengers
compared to 2019. Fee revenue decreased by $324 million as a
result of the lack of flying, representing a 55.4% decline from
prior year. Revenue from our Even More® Space seats, which was
our largest ancillary product in 2019, decreased by $197 million,
or 65.6% year-over-year.
Other revenue is primarily comprised of the marketing component
of the sales of our TrueBlue® points. It also includes revenue from
the sale of vacation packages, ground handling fees received from
other airlines, and rental income.
(1) Refer to our ‘’Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
39
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING EXPENSES
(in millions; per ASM data in cents; percentages based
on unrounded numbers)
2020
2019
Aircraft fuel and related taxes
$
631
$
1,847
Salaries, wages and benefits
Landing fees and other rents
Depreciation and amortization
Aircraft rent
Sales and marketing
Maintenance, materials and repairs
Other operating expenses
Special items
2,032
2,320
358
535
85
110
441
762
(283)
474
525
99
290
619
1,106
14
Year-over-Year Change
per ASM
%
2020
2019 % Change
$
(1,216)
(288)
(116)
10
(14)
(180)
(178)
(344)
(297)
(65.9)
(12.4)
(24.4)
1.8
(14.4)
(62.0)
(28.8)
(31.0)
(2,073.5)
1.93
6.21
1.10
1.64
0.26
0.34
1.34
2.33
(0.86)
14.29
2.89
3.64
0.74
0.82
0.16
0.46
0.97
1.73
0.02
(33.3)
71.0
47.6
98.9
67.2
(25.7)
39.0
34.7
(3,954.2)
11.43
25.1
TOTAL OPERATING EXPENSES
$ 4,671
$ 7,294
(2,623)
(36.0)
Aircraft Fuel and Related Taxes
Aircraft fuel and related taxes represented 13.5% of our total
operating expenses in 2020 compared to 25.3% in 2019. The
average fuel price decreased 26.8% in 2020 to $1.53 per gallon.
Our fuel consumption decreased by 53.4%, or 473 million gallons,
due to capacity reductions in response to lower demand as a
result of the COVID-19 pandemic.
We recognized fuel hedge losses of $7 million and $5 million,
in 2020 and 2019, respectively. These losses were recorded in
Aircraft fuel and related taxes. We are unable to predict the
potential loss from hedge accounting, which is determined on a
derivative-by-derivative basis, due to the volatility in the forward
markets for these commodities. We have no outstanding fuel
hedges as of December 31, 2020.
Salaries, Wages and Benefits
Salaries, wages and benefits decreased $288 million, or 12.4% in
2020. This decrease was driven primarily by the actions taken as
a result of decreased demand for air travel due to the COVID-19
pandemic. Beginning in March 2020, we instituted a company-
wide hiring freeze, implemented salary reductions for a portion
of our crewmembers, including officers, offered voluntary time
off programs to our crewmembers, and reduced work hours for
all other management workgroups. In June 2020, we announced
voluntary separation programs to our crewmembers, with most
departures occurring in the third quarter. We had approximately
20,000 crewmembers as of December 31, 2020 as compared to
approximately 22,500 crewmembers at December 31, 2019. During
2020, the average number of full-time equivalent crewmembers
decreased by 16.6% and the average tenure of our crewmembers
was 8 years.
Landing Fees and Other Rents
Landing fees and other rents include landing fees, which are at
premium rates in the heavily trafficked northeast corridor of the
U.S. through which a large number of our flights operate. Other
rents primarily consist of rent for airports in our BlueCities.
Landing fees and other rents decreased $116 million, or
40
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
24.4%, in 2020 primarily due to capacity reductions in response
to the significant decline in demand beginning in the second half
of March 2020 amid the COVID-19 pandemic.
Depreciation and Amortization
Depreciation and amortization primarily include depreciation
for our owned and finance leased aircraft, engines, and inflight
entertainment systems. Depreciation and amortization increased
$10 million, or 1.8%, primarily driven by a 3.4% increase in the
average number of aircraft operating in 2020 compared to the
same period in 2019. We placed nine Airbus A321neo aircraft into
service and bought out the lease of one Airbus A321 aircraft in
2020. In addition, we also completed the cabin restyle on 21 Airbus
A320 aircraft.
Maintenance, Materials and Repairs
Maintenance, materials and repairs are generally expensed when
incurred unless covered by a long-term flight hour services
contract. The average age of our aircraft in 2020 was 11.3 years
which is relatively young compared to our competitors. However,
as our fleet ages our maintenance costs will increase significantly,
both on an absolute basis and as a percentage of our unit costs,
as older aircraft require additional, more expensive repairs over
time. We had an average of 8.6 additional total operating aircraft
in 2020 compared to 2019.
In 2020, Maintenance, materials and repairs decreased by
$178 million, or 28.8% compared to 2019. The decrease is primarily
driven by the COVID-19 related reduction in flying and timing of
heavy maintenance visits and engine maintenance.
Other Operating Expenses
Other operating expenses consist of the following categories:
outside services (including expenses related to fueling, ground
handling, skycap, security, and janitorial services), insurance,
personnel expenses, professional fees, onboard supplies, shop
and office supplies, bad debts, communication costs, and taxes
other than payroll and fuel taxes.
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In 2020, other operating expenses decreased by $344 million, or
31.0%, compared to 2019, due to capacity reductions in response
to the significant decline in demand beginning in the second
half of March 2020 coupled with the benefits from cost saving
initiatives implemented amid the COVID-19 pandemic.
Special Items
In 2020, special items included the following:
■■ Contra-expense of $685 million, which represents the amount
of CARES Act payroll support grants utilized during the period.
■■ Contra-expense of $36 million related to the recognition of
Employee Retention Credits provided by the CARES Act.
■■ Impairment charges of $273 million on our Embraer E190 fleet.
■■ Losses of $106 million related to sale-leaseback transactions.
■■ One-time costs of $59 million, consisting of severance and
health benefits, in connection with our voluntary separation
programs.
Special items in 2019 consisted of $6 million of one-time costs
related to the Embraer E190 fleet transition and $8 million of
one-time costs related to the implementation of our pilots’
collective bargaining agreement.
Income Taxes
Our effective tax rate was 28.5% in 2020, compared to 25.9% in
2019. The CARES Act permits net operating loss (NOL) carryovers
and carrybacks to offset 100% of taxable income for taxable years
OPERATING REVENUES
(revenues in millions; percent changes based on unrounded numbers)
Passenger revenue
Other revenue
OPERATING REVENUES
Average fare
Yield per passenger mile (cents)
Passenger revenue per ASM (cents)
Operating revenue per ASM (cents)
Average stage length (miles)
Revenue passengers (thousands)
Revenue passenger miles (millions)
Available seat miles (ASMs) (millions)
Load factor
beginning before 2021. In addition, the CARES Act allows NOLs
incurred in 2018, 2019, and 2020 to be carried back to each of the
five preceding taxable years to generate a refund of previously
paid incomes taxes. As a result, the Company’s effective tax rate
includes an income tax benefit related to the anticipated refunds
from tax losses generated during 2020 that are permitted to be
carried back to certain years when the U.S. federal income tax
rate was 35%.
2019 Compared to 2018
OVERVIEW
We reported net income of $569 million, operating income of
$800 million and operating margin of 9.9% for the year ended
December 31, 2019. This compares to net income of $189 million,
operating income of $266 million and operating margin of 3.5%
for the year ended December 31, 2018. Diluted earnings per share
were $1.91 for 2019 compared to $0.60 for 2018.
Our 2019 and 2018 reported results included the effects of special
items. Adjusting for these one-time items(1), our adjusted net
income was $568 million, operating income was $814 million, and
our adjusted operating margin was 10.1% for 2019. This compares
to adjusted net income of $488 million, operating income of
$701 million, and operating margin of 9.2% for 2018. Excluding
one-time items(1), diluted earnings per share were $1.90 and $1.55
for 2019 and 2018, respectively.
Year-over-Year Change
2019
7,786
308
8,094
$
$
$
182.23
14.52
12.20
12.68
1,140
42,728
53,617
63,841
2018
7,381
277
7,658
175.11 $
$
$
$
14.53
12.33
12.79
1,096
42,150
50,790
59,881
$
405
31
436
7.12
(0.01)
(0.13)
(0.11)
44
578
2,827
3,960
%
5.5
11.0
5.7
4.1
(0.1)
(1.1)
(0.9)
4.0
1.4
5.6
6.6
84.0 %
84.8 %
(0.8) pts
(1) Refer to our ‘’Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
41
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Passenger revenue accounted for over 96.2% of our total
operating revenues for the year ended December 31, 2019. In
addition to seat revenue, passenger revenue includes revenue
from our ancillary product offerings such as Even More® Space.
Revenue generated from international routes, including Puerto
Rico, accounted for 30.4% of our total operating revenues in 2019.
Passenger revenue, including certain ancillary fees directly related
to passenger tickets, is recognized when the transportation is
provided. Passenger revenue from unused tickets and passenger
credits are recognized in proportion to flown revenue based
on estimates of expected expiration or when the likelihood of
the customer exercising his or her remaining rights becomes
remote. We measure capacity in terms of available seat miles,
which represents the number of seats available for passengers
multiplied by the number of miles the seats are flown. Yield, or the
average amount one passenger pays to fly one mile, is calculated
by dividing Passenger revenue by Revenue passenger miles. We
attempt to increase Passenger revenue primarily by increasing
our yield per flight which produces higher revenue per available
seat mile. Our objective is to optimize our fare mix to increase our
overall average fare while continuing to provide our customers
with competitive fares.
In 2019, the increase in passenger revenue was mainly attributable
to a 1.4% increase in revenue passengers and a 4.1% increase
in average fare. Fee revenue increased by $76 million as a
result of changes in our baggage and change fee policies. Our
largest ancillary product was Even More® Space, generating
approximately $301 million in revenue, an increase of over 10%
compared to 2018.
Other revenue is primarily comprised of the marketing component
of the sales of our TrueBlue® points. It also includes revenue from
the sale of vacation packages, ground handling fees received from
other airlines, and rental income.
OPERATING EXPENSES
(in millions; per ASM data in cents; percentages based
on unrounded numbers)
2019
2018
Aircraft fuel and related taxes
$
1,847
$
1,899
Salaries, wages and benefits
Landing fees and other rents
Depreciation and amortization
Aircraft rent
Sales and marketing
Maintenance, materials and repairs
Other operating expenses
Special items
2,320
2,044
474
525
99
290
619
1,106
14
462
469
104
294
625
1,060
435
TOTAL OPERATING EXPENSES
$ 7,294
$ 7,392
Year-over-Year Change
$
(52)
276
12
56
(5)
(4)
(6)
46
(421)
(98)
%
(2.7)
13.5
2.6
12.1
(5.1)
(1.1)
(1.0)
4.2
(96.7)
(1.3)
2019
2.89
3.64
0.74
0.82
0.16
0.46
0.97
1.73
0.02
per ASM
2018 % Change
3.17
3.41
0.77
0.78
0.17
0.49
1.04
1.78
0.73
(8.8)
6.5
(3.7)
5.2
(11.0)
(7.3)
(7.2)
(2.2)
(96.9)
(7.4)
11.43
12.34
Aircraft Fuel and Related Taxes
Landing Fees and Other Rents
Aircraft fuel and related taxes represented 25% of our total operating
expenses in 2019 compared to 26% in 2018. The average fuel price
decreased 6.7% in 2019 to $2.09 per gallon. This was partially
offset by a 4.3% increase in our fuel consumption of approximately
36 million gallons. Additional fuel consumption was mainly due to
our increase in the average number of operating aircraft.
Landing fees and other rents include landing fees, which are at
premium rates in the heavily trafficked northeast corridor of
the U.S. where approximately 76% of our operations resided in
2019. Other rents primarily consisted of rent for airports in our
BlueCities. Landing fees and other rents increased $12 million, or
2.6%, in 2019 primarily due to our increased number of departures.
We recognized fuel hedge losses of $5 million and $2 million,
in 2019 and 2018, respectively. These losses were recorded in
Aircraft fuel and related taxes.
Salaries, Wages and Benefits
Salaries, wages and benefits represented approximately 32% of
our total operating expenses in 2019 compared to 28% in 2018. The
increase in salaries, wages and benefits was primarily driven by the
incremental costs of the new pilots’ collective bargaining agreement
which became effective on August 1, 2018. Our crewmember
headcount also increased year-over-year. During 2019, the average
number of full-time equivalent crewmembers increased by 4% and
the average tenure of our crewmembers was 7 years.
42
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
Depreciation and Amortization
Depreciation and amortization primarily include depreciation
for our owned and finance leased aircraft, engines, and inflight
entertainment systems. Depreciation and amortization increased
$56 million, or 12.1%, primarily driven by a 2.8% increase in the
average number of aircraft operating in 2019 compared to the
same period in 2018. We placed five Airbus A321 aircraft into
service and bought out the lease of one Airbus A320 aircraft in
2019. In addition, we also completed the cabin restyle on 42 Airbus
A320 aircraft.
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Maintenance, Materials and Repairs
Maintenance, materials and repairs are generally expensed when
incurred unless covered by a long-term flight hour services
contract. The average age of our aircraft in 2019 was 10.6 years
which was relatively young compared to our competitors.
However, as our fleet ages our maintenance costs will increase
significantly, both on an absolute basis and as a percentage of our
unit costs, as older aircraft require additional, more expensive
repairs over time. We had an average of 6.8 additional total
operating aircraft in 2019 compared to 2018.
In 2019, Maintenance, materials and repairs decreased by
$6 million, or 1.0% compared to 2018. The decrease is attributable
to lower cost structures achieved through the Structural Cost
Program and timing of heavy maintenance visits.
In 2019, other operating expenses increased by $46 million, or
4.2%, compared to 2018, primarily due to an increase in airport
services and passenger onboard supplies resulting from an
increased number of departures and customers flown.
Special Items
Special items in 2019 consisted of $6 million of one-time costs
related to the Embraer E190 fleet transition and $8 million of
one-time costs related to the implementation of our pilots’
collective bargaining agreement. Special items in 2018
consisted of $362 million of impairment and one-time costs
related to the Embraer E190 fleet transition, and $73 million of
one-time costs related to the ratification of our pilots’ collective
bargaining agreement.
Other Operating Expenses
Income Taxes
Other operating expenses consist of the following categories:
outside services (including expenses related to fueling, ground
handling, skycap, security, and janitorial services), insurance,
personnel expenses, professional fees, onboard supplies, shop
and office supplies, bad debts, communication costs, and taxes
other than payroll and fuel taxes.
Liquidity and Capital Resources
The airline business is capital intensive. Our ability to successfully
execute our 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 and investment
securities on-hand. During 2020, we have executed a significant
number of financing transactions to ensure that we have
adequate levels of liquidity to navigate through the COVID-19
pandemic. As of December 31, 2020, we had unrestricted cash
and cash equivalents of $1.9 billion and short-term investments
of $1.1 billion. We took numerous important steps throughout
2020 to strengthen our balance sheet. We believe our actions will
position us to successfully navigate through the challenges posed
by the COVID-19 pandemic. Our adjusted debt to capitalization
ratio(1) at December 31, 2020 was 57%.
We believe a healthy liquidity position is a crucial element of 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,
maintain financial flexibility, and be prudent with capital spending.
Analysis of Cash Flows
We had unrestricted cash and cash equivalents of $1.9 billion
as of December 31, 2020. This compares to $959 million and
$474 million as of December 31, 2019 and 2018, respectively.
We held both short and long-term investments in 2020, 2019
and 2018. Our short-term investments totaled $1.1 billion as of
December 31, 2020 compared to $369 million and $413 million as
of December 31, 2019 and 2018, respectively.
Our effective tax rate was 25.9% in 2019, compared to 13.9% in
2018. Our 2018 effective tax rate included a benefit of $28 million
related to implementation of various provisions of the Tax Cuts
and Jobs Act of 2017.
OPERATING ACTIVITIES
Cash used in operating activities totaled approximately
$(683) million in 2020, compared to cash provided by operating
activities of $1.5 billion and $1.2 billion in 2019 and 2018,
respectively. The $2.1 billion decrease in cash flows from
operating activities in 2020 compared to 2019 was principally
driven by the unprecedented decline in demand for travel
caused by COVID-19. The $249 million increase in cash flows from
operations in 2019 compared to 2018 was principally driven by an
increase in operating margin.
INVESTING ACTIVITIES
During 2020, capital expenditures related to our purchase of flight
equipment included $426 million for the purchase of seven new
Airbus A321neo aircraft, our first Airbus A220 aircraft, and the
buyout of one Airbus A321 aircraft lease, $76 million for flight
equipment deposits, $151 million for flight equipment work-in-
progress, and $15 million for spare part purchases. Other property
and equipment capital expenditures included ground equipment
purchases and facilities improvements for $123 million. Investing
activities also included the net purchase of $767 million in
investment securities.
We executed $563 million of sale-leaseback transactions in
2020. Of these transactions, $209 million qualified as sales for
accounting purposes and the related proceeds are classified
within investing activities.
During 2019, capital expenditures related to our purchase of flight
equipment included $478 million for the purchase of six new
Airbus A321neo aircraft and the buyout of one Airbus A320 aircraft
lease, $224 million for flight equipment deposits, $249 million
(1) Refer to our ‘’Regulation G Reconciliation of Non-GAAP Financial Measures” at the end of this section for more information on this non-GAAP measure.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
43
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for flight equipment work-in-progress, and $48 million for
spare part purchases. Other property and equipment capital
expenditures included ground equipment purchases and facilities
improvements for $158 million. Investing activities also included
the net purchase of $40 million in investment securities.
During 2018, capital expenditures related to our purchase of flight
equipment included $519 million for the purchase of 10 new Airbus
A321 aircraft and the buyout of two aircraft leases, $206 million
for flight equipment deposits, $163 million for flight equipment
work-in-progress, and $130 million for spare part purchases.
Other property and equipment capital expenditures included
ground equipment purchases and facilities improvements for
$97 million. Investing activities also included the net purchase
of $28 million in investment securities.
We currently anticipate 2021 capital expenditures to be
approximately $1.0 billion. We plan to restrict non-aircraft capital
expenditures to those with the highest returns.
FINANCING ACTIVITIES
Financing activities during 2020 primarily consisted of net
proceeds of $2.2 billion from drawdowns of our credit facilities
and the execution of a number of financing transactions which
include the following:
■■ $981 million from our 364-day delayed draw term loan facility
with Morgan Stanley Senior Funding Inc. as administrative
agent;
■■ $717 million from our term loan facility with Barclays Bank PLC
as administrative agent, and
■■ $550 million from our revolving credit facility with Citibank N.A.
as administrative agent.
Also included in financing activities are:
■■ Net proceeds of $913 million from the public placements of
equipment notes;
■■ Net proceeds of $583 million from the public offering of
42 million shares of our common stock;
■■ $354 million of sale-leaseback transactions which did not
qualify as sales for accounting purposes;
■■ Net proceeds of $259 million and $19 million from the issuance of
unsecured term loan and warrants, respectively, in connection
with the Payroll Support Program under the CARES Act;
■■ Net proceeds of $105 million and $9 million from the issuance
of secured term loan and warrants, respectively, in connection
with the Loan Program under the CARES Act; and
■■ $36 million in proceeds from the issuance of common stock
related to our crewmember stock purchase plan.
These proceeds are partially offset by the payoff of our 364-day
delayed draw term loan facility for $1.0 billion, scheduled
maturities of $372 million relating to debt and finance lease
obligations, $12 million of which were associated with scheduled
rent payments on sale-leaseback aircraft that did not qualify as
sales for accounting purposes, and the acquisitions of treasury
shares of $167 million, of which $160 million related to our
accelerated share repurchases, or ASRs. Our share repurchase
program has been suspended since March 31, 2020.
44
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
Financing activities during 2019 consisted of the net issuance of
$981 million of debt, $764 million of which relates to the offering
of our Enhanced Equipment Trust Certificates, Series 2019-1
(“2019-1 EETC”) in November, partially offset by the scheduled
repayment of $323 million in debt and finance lease obligations.
In addition, we acquired $542 million in treasury shares of which
$535 million related to ASRs during 2019. During this period,
we received $51 million in proceeds from the issuance of stock
related to employee share-based compensation.
Financing activities during 2018 consisted of the net issuance of
$687 million of debt partially offset by the scheduled repayment
of $222 million relating to debt and finance lease obligations. In
addition, we acquired $382 million in treasury shares of which
$375 million related to ASRs during 2018. During this period, we
received $48 million in proceeds from the issuance of stock
related to employee share-based compensation.
In March 2019, we filed an automatic shelf registration statement
with the SEC. Under this shelf registration statement, we may
offer and sell from time to time common stock, preferred stock,
debt securities, depositary shares, warrants, stock purchase
contracts, stock purchase units, subscription rights, and
pass-through certificates. We may utilize this shelf registration
statement, or a replacement filed with the SEC, in the future to
raise capital to fund the continued development of our products
and services, the commercialization of our products and services,
to repay indebtedness, or for other general corporate purposes.
The warrants issued in connection with the Payroll Support
Program and Loan Program of the CARES Act were made, and
any issuances of our underlying common stock are expected to be
made, in reliance on the exemption from the registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), for transactions not involving a public offering.
None of our lenders or lessors are affiliated with us.
Capital Resources
Dependent on market conditions, we anticipate using a mix of
cash and debt financing for our expected aircraft deliveries in
2021. 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 assurances we
will be able to secure financing on terms attractive to us, if at all.
Working Capital
We had working capital of $671 million as of December 31, 2020
compared to a deficit of $877 million as of December 31, 2019. Our
working capital improved by $1.5 billion due to several factors,
including cash proceeds from long-term debt and equity financing
activities, coupled with lower level of operational payables
resulting from various cost saving initiatives amid the COVID-19
pandemic.
Working capital deficits can be customary in the airline industry
since air traffic liability is classified as a current liability.
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In 2012, we entered into a revolving line of credit with Morgan
Stanley for up to approximately $200 million. 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 based upon the London
Interbank Offered Rate, or LIBOR, plus a margin. We did not borrow
under this facility in 2019 or 2018 and the line was undrawn as of
December 31, 2020.
In August 2019, we amended and restated our revolving Credit
and Guaranty Agreement with Citibank N.A. as the administrative
agent. The amendment increased our borrowing capacity by
$125 million to $550 million and extended the term of the facility
through August 2023. Borrowings under the Credit and Guaranty
Agreement bear interest at a variable rate equal to LIBOR, plus a
margin. The Amended and Restated Facility is secured by spare
parts, aircraft, and certain other assets. The Credit and Guaranty
Agreement includes customary covenants that require us to
maintain certain minimum balances in unrestricted cash, cash
equivalents, and unused commitments available under revolving
credit facilities. In addition, the covenants restrict our ability
to, among other things, dispose of certain collateral, or merge,
consolidate, or sell assets. In response to the unprecedented
decline in demand caused by the COVID-19 pandemic, we borrowed
the full amount under the Credit and Guarantee Agreement in April
2020, all of which remained outstanding as of December 31, 2020.
CARES ACT LOAN PROGRAM
Under the CARES Act Loan Program as signed in April 2020 and
subsequently amended in November 2020, JetBlue has the ability
to borrow up to approximately $1.9 billion from the Treasury. If
we accept the full amount of the loan, we will issue warrants
to purchase approximately 20.5 million shares of our common
stock to the Treasury. We borrowed $115 million of the $1.9 billion
available to us under the Loan Program on September 29, 2020.
As of December 31, 2020, approximately $1.8 billion of the
borrowing capacity under the Loan Program remained available
to us. On January 15, 2021, we entered into a letter agreement
with Treasury which provided an extension of the Loan Program
allowing us the option to access the remaining borrowing capacity
through May 28, 2021.
PAYROLL SUPPORT PROGRAM 2
Also on January 15, 2021, we entered into a Payroll Support
Program Extension Agreement (the “PSP Extension Agreement”)
with Treasury governing our participation in the federal Payroll
Support Program for passenger air carriers under the United
States Consolidated Appropriations Act, 2021 (the “Payroll
Support Program 2”).
Pursuant to the Payroll Support Program 2, on January 15,
2021, Treasury provided to JetBlue a payment of approximately
$252 million (the “2021 Payroll Support Payment”) under the PSP
Extension Agreement. The 2021 Payroll Support Payment includes
a grant of approximately $206 million and an unsecured loan of
$46 million. In consideration for the 2021 Payroll Support Payment,
we issued to Treasury warrants to purchase 316,583 shares of our
common stock at an exercise price of $14.43 per share.
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 and
federal government assistance programs, which 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 future developments related to the
COVID-19 pandemic and its impact on the economy and consumer
behavior, the extremely competitive environment in which we
operate, or from events beyond our control, such as volatile fuel
prices, economic conditions, weather-related disruptions, airport
infrastructure challenges, the spread of infectious diseases,
the impact of other 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.
Debt and Finance Leases
As part of our efforts to effectively manage our balance sheet,
we expect to continue to actively manage our debt balances.
Our approach to debt management includes managing the mix
of fixed and floating rate debt, annual maturities of debt, and the
weighted average cost of debt. Additionally, our unencumbered
assets allow some flexibility in managing our cost of debt and
capital requirements.
Contractual Obligations
Our contractual obligations at December 31, 2020 include the following (in billions):
Total
2021
2022
2023
2024
2025
Thereafter
Payments due in
Debt and finance lease obligations(1)
$
Operating lease obligations
Flight equipment purchase obligations
Other obligations(2)
TOTAL
5.8
1.2
7.8
2.6
$
0.6
$
0.2
1.0
0.3
$
0.6
0.2
0.7
0.4
$
17.4
$
2.1 $
1.9
$
1.3
0.1
1.5
0.4
3.3
$
$
1.1
0.1
1.8
0.4
3.4
$
0.4
$
0.1
1.2
0.4
2.1
$
$
1.8
0.5
1.6
0.7
4.6
Includes actual interest and estimated interest for floating-rate debt based on December 31, 2020 rates.
(1)
(2) Amounts include non-cancelable commitments for the purchase of goods and services.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
45
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The interest rates are fixed for $3.0 billion of our debt and finance
lease obligations, with the remaining $1.6 billion having floating
interest rates. The floating interest rates adjust either quarterly
or semi-annually based on LIBOR. The weighted average maturity
of all of our debt was eight years as of December 31, 2020.
As of December 31, 2020, we were in compliance with the
covenants of our debt and lease agreements and approximately
81% of our owned property and equipment were pledged as
security under various loan agreements.
Our firm aircraft order book as of December 31, 2020 was as follows:
Year
2021
2022
2023
2024
2025
2026
2027
TOTAL
Committed expenditures for our firm aircraft and spare engines
include estimated amounts for contractual price escalations
and pre-delivery deposits. We expect to meet our pre-delivery
deposit requirements for our aircraft by paying cash or by using
short-term borrowing facilities for deposits generally required
six to 24 months prior to delivery. Any pre-delivery deposits paid
by the issuance of notes are fully repaid at the time of delivery of
the related aircraft.
Our Terminal at JFK, T5, is governed by a lease agreement we
entered into with the PANYNJ in 2005. We are responsible for
making various payments under the lease. This includes ground
rents for the terminal site which began at the time of the lease
execution in 2005 and facility rents commenced in October 2008
upon our occupancy of T5. The facility rents are based on the
number of passengers enplaned out of the terminal, subject to
annual minimums. The PANYNJ reimbursed us for construction
costs of this project in accordance with the terms of the lease,
except for approximately $76 million in leasehold improvements
provided by us. In 2013, we amended this lease to include additional
Off-Balance Sheet Arrangements
We have determined that we hold a variable interest in, but are
not the primary beneficiary of, certain pass-through trusts. The
beneficiaries of these pass-through trusts are the purchasers
of equipment notes issued by us to finance the acquisition of
aircraft. Each trust maintains a liquidity facility whereby a third
party agrees to make payments sufficient to pay up to 18 months
of interest on the applicable certificates if a payment default
occurs.
46
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
As of December 31, 2020, we had operating lease obligations for
62 aircraft with lease terms that expire between 2022 and 2026.
Our aircraft lease agreements contain termination provisions
which include standard maintenance and return conditions.
Our policy is to record these lease return conditions when they
are probable and the costs can be estimated. We also lease
airport terminal space and other airport facilities in each of our
markets, as well as office space and other equipment. We have
approximately $27 million of restricted assets pledged under
standby letters of credit related to certain of our leases which
will expire at the end of the related leases. As of December 31,
2020, the average age of our operating fleet was 11.3 years.
Airbus A321neo
Airbus A220
Total
8
3
11
13
11
12
14
72
7
8
19
22
12
1
—
69
15
11
30
35
23
13
14
141
ground space for our international arrivals facility, T5i, which we
opened in November 2014. Minimum ground and facility rents at
JFK totaling $536 million are included in the commitments table
above as operating lease obligations.
We enter into individual employment agreements with each of
our non-unionized FAA-licensed crewmembers, inspectors,
and air traffic controllers. Each employment agreement is for
a term of five years and automatically renews for an additional
five-year term unless the crewmember is terminated for cause
or the crewmember elects not to renew it. Pursuant to these
agreements, these crewmembers can only be terminated for
cause. In the event of a downturn in our business requiring a
reduction in flying and related work hours, we are obligated to
pay these crewmembers a guaranteed level of income and to
continue their benefits. As we are not currently obligated to pay
this guaranteed income and benefits, no amounts related to
these guarantees are included in the contractual obligations
table above.
We have also made certain guarantees and indemnities to other
unrelated parties that are not reflected on our consolidated
balance sheets, which we believe will not have a significant
impact on our results of operations, financial condition or
cash flows. We have no other off-balance sheet arrangements.
See Notes 4, 5, and 12 to our consolidated financial statements
for a more detailed discussion of our variable interests and other
contingencies, including guarantees and indemnities.
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in
conformity with generally accepted accounting principles in
the United States, or GAAP, requires management to adopt
accounting policies as well as make estimates and judgments
to develop amounts reported in our financial statements and
accompanying notes. We maintain a thorough process to review
the application of our accounting policies and to evaluate the
appropriateness of the estimates that are required to prepare our
financial statements. We believe our estimates and judgments are
reasonable; however, actual results and the timing of recognition
of such amounts could differ from those estimates. In addition,
estimates routinely require adjustment based on changing
circumstances and the receipt of new or better information.
Passenger breakage revenue from unused tickets and passenger
credits will be recognized in proportion to flown revenue based
on estimates of expected expiration when the likelihood of the
customer exercising his or her remaining rights becomes remote.
Breakage revenue consists of non-refundable tickets that remain
unused past the departure date, have continued validity, and are
expected to ultimately expire unused, as well as passenger credits
that are not expected to be redeemed prior to expiration. JetBlue
uses estimates based on historical experience of expired tickets
and credits and considers other factors that could impact future
expiration patterns of tickets and credits. Tickets which do not
have continued validity past the departure date are recognized as
revenue after the scheduled departure date has lapsed.
Critical accounting policies and estimates are defined as those
that are reflective of significant judgments and uncertainties
that could potentially result in materially different results under
different assumptions and conditions. The policies and estimates
discussed below have been reviewed with our independent
registered public accounting firm and with the Audit Committee
of our Board of Directors. For a discussion of these and other
significant accounting policies, see Note 1 to our consolidated
financial statements.
Passenger Revenue
Ticket sales and the fees collected for related ancillary services
are initially deferred in air traffic liability. Air traffic liability
represents tickets sold but not yet flown, credits which can be
used for future travel, and a portion of the liability related to our
TrueBlue® loyalty program. We allocate the transaction price to
each performance obligation identified in a passenger ticket on
a relative standalone basis. Passenger revenue, including certain
ancillary fees directly related to passenger tickets, is recognized
when the transportation is provided. Taxes that we are required
to collect from our customers, including foreign and U.S. federal
transportation taxes, security taxes, and airport facility charges,
are excluded from passenger revenue. Those taxes and fees are
recorded as a liability upon collection and are relieved from the
liability upon remittance to the applicable governmental agency.
The majority of the tickets we sell are non-refundable.
Non-refundable fares may be canceled prior to the scheduled
departure date for a credit for future travel. Refundable fares may
be canceled at any time prior to the scheduled departure date.
Failure to cancel a refundable fare prior to departure will result in
the cancellation of the original ticket and an issuance of a credit for
future travel. Passenger credits can generally be used for future
travel up to a year from the date of issuance. In response to the
impact of COVID-19 on air travel, we extended the expiration dates
for travel credits issued from February 27, 2020 through June 30,
2020 to a 24-month period. The air traffic liability classified as
non-current as of December 31, 2020 represents our current
estimate of tickets and credits to be used or refunded beyond
one year, while the balance classified as current represents our
current estimate of tickets and credits to be used or refunded
within one year. We will continue to monitor our customers’ travel
behavior and may adjust our estimates in the future.
Passenger ticket costs primarily include credit card fees,
commissions paid, and global distribution systems booking fees.
Costs are allocated entirely to the purchased travel services and
are capitalized until recognized when travel services are provided
to the customer.
Loyalty Program
Customers may earn points under our customer loyalty program,
TrueBlue®, based on the fare paid and fare product purchased for a
flight. Customers can also earn points through business partners
such as credit card companies, hotels, car rental companies, and
our participating airline partners.
POINTS EARNED FROM A TICKET PURCHASE
When a TrueBlue® member travels, we recognize a portion of the
fare as revenue and defer in air traffic liabilities the portion that
represents the value of the points net of spoilage, or breakage. We
allocate the transaction price to each performance obligation on
a relative standalone basis. We determine the standalone selling
price of TrueBlue® points issued using the redemption value
approach. To maximize the use of observable inputs, we utilize the
actual ticket value of the tickets purchased with TrueBlue® points.
The liability is relieved and passenger revenue is recognized when
the points are redeemed and the free travel is provided.
POINTS SOLD TO TRUEBLUE® PARTNERS
Our most significant contract to sell TrueBlue® points is
with our co-branded credit card partner. Co-branded credit
card partnerships have the following identified performance
obligations: air transportation; use of the JetBlue brand name,
and access to our frequent flyer customer lists; advertising; and
other airline benefits. In determining the estimated selling price,
JetBlue considers multiple inputs, methods, and assumptions,
including: discounted cash flows; estimated redemption value,
net of fulfillment discount; points expected to be awarded and
redeemed; estimated annual spending by cardholders; estimated
annual royalty for use of JetBlue’s frequent flyer customer lists;
and estimated utilization of other airline benefits. Payments
are typically due monthly based on the volume of points sold
during the period, and the terms of our marketing contracts are
generally from one to seven years. The overall consideration
received is allocated to each performance obligation based on
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
47
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
their standalone relative selling prices. The air transportation
element is deferred and recognized as passenger revenue when
the points are utilized. The other elements are recognized as
other revenue when the performance obligation related to those
services are satisfied, which is generally the same period as when
consideration is received from the participating company.
Amounts allocated to the air transportation element which
are initially deferred include a portion that are expected to be
redeemed during the following twelve months (classified as
a component of Air traffic liability), and a portion that are not
expected to be redeemed during the following twelve months
(classified as Air traffic liability - non-current). We periodically
update this analysis and adjust the split between current and
non-current liabilities as appropriate.
Points earned by TrueBlue® members never expire. TrueBlue®
members can pool points between small groups of people,
branded as Points Pooling™. Breakage is estimated using
historical redemption patterns to determine a breakage rate.
Breakage rates used to estimate breakage revenue are evaluated
annually. Changes to breakage estimates impact revenue
recognition prospectively.
Accounting for Long-Lived Assets
In accounting for long-lived assets, we make estimates about the
expected useful lives, projected residual values, and the potential
for impairment. In estimating useful lives and residual values of
our aircraft, we have relied upon actual industry experience with
the same or similar aircraft types and our anticipated utilization
of the aircraft. Changing market prices of new and used aircraft,
government regulations, and changes in our maintenance
program or operations could result in changes to these estimates.
Our long-lived assets are evaluated for impairment when
events and circumstances indicate the assets may be impaired.
Indicators include operating or cash flow losses, significant
decreases in market value, or changes in technology.
To determine if impairment exists for our aircraft used in
operations, we group our aircraft by fleet-type (the lowest level for
which there are identifiable cash flows) and then estimate their
future cash flows based on projections of capacity, aircraft age,
maintenance requirements, and other relevant conditions. An
impairment occurs when the sum of the estimated undiscounted
future cash flows are less than the aggregate carrying value
of the fleet. The impairment loss recognized is the amount by
which the fleet’s carrying value exceeds its estimated fair value.
We estimate aircraft fair value using third party valuations which
consider the effects of the current market environment, age of
the assets, and marketability.
network requirements and may decide to adjust our fleet strategy
accordingly. Future decisions regarding the temporarily parked
aircraft and the timing of any return to service will be dependent
on the evolution of the demand environment.
In 2018, we recorded an impairment charge related to our decision
to exit the Embraer E190 fleet.
Refer to Note 18 to our consolidated financial statements for
further details of our impairment charges.
Lease Accounting
We operate airport facilities, office buildings, and aircraft under
operating leases with minimum lease payments. We recognize
the costs associated with these agreements as rent expense
on a straight-line basis over the expected lease term. Within
the provisions of certain leases, there are minimum escalations
in payments over the base lease term. There are also periodic
adjustments of lease rates, landing fees, and other charges
applicable under such agreements, as well as renewal periods.
The effects of the escalations and other adjustments have been
reflected in rent expense on a straight-line basis over the lease term.
This includes renewal periods when it is deemed to be reasonably
assured at the inception of the lease. The amortization period for
leasehold improvements is the term used in calculating straight-line
rent expense or their estimated economic life, whichever is shorter.
Derivative Instruments used for Aircraft Fuel
We utilize financial derivative instruments to manage the risk
of changing aircraft fuel prices. We do not purchase or hold
any derivative instrument for trading purposes. Fair values
are determined using commodity prices provided to us by
independent third parties. When possible, we designate these
instruments as cash flow hedges for accounting purposes, as
defined by the Derivatives and Hedging topic of the Codification
which permits the deferral of the effective portions of gains or
losses until contract settlement.
The Derivatives and Hedging topic is a complex accounting
standard. It requires us to develop and maintain a significant
amount of documentation related to:
(1) our fuel hedging program and fuel management approach,
(2) statistical analysis supporting a highly correlated relationship
between the underlying commodity in the derivative financial
instrument and the risk being hedged, i.e. aircraft fuel, on both
a historical and prospective basis, and
(3) cash flow designation for each hedging transaction executed,
to be developed concurrently with the hedging transaction.
Given the substantial reduction in our active aircraft and
diminished projections of future cash flows in the near term as
a result of the COVID-19 pandemic, we evaluated our fleet during
2020 and recorded impairment charges of flight equipment
and other property and equipment related to our Embraer E190
fleet. As we obtain greater clarity about the duration and extent
of reduced demand and potentially execute further capacity
adjustments, we will continue to evaluate our fleet compared to
This documentation requires us to estimate forward aircraft fuel
prices since there is no reliable forward market for aircraft fuel.
These prices are developed through the observation of similar
commodity futures prices, such as crude oil and/or heating oil,
and adjusted based on variations to those like commodities.
Historically, our hedges have settled within 24 months; therefore,
the deferred gains and losses have been recognized into earnings
over a relatively short period of time.
48
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Regulation G Reconciliation of Non-Gaap Financial Measures
We sometimes use non-GAAP financial measures in this report.
Non-GAAP financial measures are financial measures that
are derived from the consolidated financial statements, but
that are not presented in accordance with generally accepted
accounting principles in the United States, or GAAP. We believe
these non-GAAP financial measures provide a meaningful
comparison of our results to others in the airline industry and
our prior year results. Investors should consider these non-GAAP
financial measures in addition to, and not as a substitute for, our
financial performance measures prepared in accordance with
GAAP. Further, our non-GAAP information may be different from
the non-GAAP information provided by other companies. The
information below provides an explanation of each non-GAAP
financial measure and shows a reconciliation of non-GAAP
financial measures used in this filing to the most directly
comparable GAAP financial measures.
businesses, such as our subsidiaries, JetBlue Technology
Ventures and JetBlue Travel Products, and special items from
operating expenses to determine CASM ex-fuel, which is a
non-GAAP financial measure.
In 2020, special items include contra-expenses recognized on
the utilization of payroll support grants received under the CARES
Act, contra-expenses recognized on the Employee Retention
Credits provided by the CARES Act, impairment charges of our
Embraer E190 fleet, losses generated from certain sale-leaseback
transactions, and one-time costs associated with our voluntary
crewmember separation programs.
Special items for 2019 and 2018 include an impairment charge and
one-time costs related to the Embraer E190 fleet transition as well
as one-time costs related to the ratification and implementation
of our pilots’ collective bargaining agreement.
Operating Expense per Available Seat Mile,
excluding fuel and related taxes, other non-
airline operating expenses, and special items
(“CASM Ex-Fuel”)
Operating expenses per available seat mile, or CASM, is a common
metric used in the airline industry. We exclude aircraft fuel and
related taxes, operating expenses related to other non-airline
We believe that CASM ex-fuel is useful for investors because it
provides investors the ability to measure financial performance
excluding items beyond our control, such as fuel costs, which are
subject to many economic and political factors, or not related
to the generation of an available seat mile, such as operating
expense related to other non-airline businesses. We believe this
non-GAAP measure is more indicative of our ability to manage
airline costs and is more comparable to measures reported by
other major airlines.
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE PER ASM, EXCLUDING FUEL
2020
2019
2018
2017
2016(1)
(in millions; per ASM data in cents)
$ per ASM
$ per ASM
$ per ASM
$ per ASM
$ per ASM
Total operating expenses
$ 4,671
14.29 $ 7,294
11.43 $ 7,392
12.34 $ 6,039
10.78 $ 5,324
9.93
Less:
Aircraft fuel and related taxes
Other non-airline expenses(2)
Special items
Operating expenses,
excluding fuel
631
35
1.93
0.10
(283)
(0.86)
1,847
46
14
2.89
0.08
0.02
1,899
44
435
3.17
0.07
0.73
1,363
35
—
2.43
0.06
—
1,074
26
—
2.00
0.05
—
$ 4,288
13.12 $ 5,387
8.44 $ 5,014
8.37 $ 4,641
8.29 $ 4,224
7.88
(1) Amounts prior to 2017 do not reflect the impact of the adoption of ASU 2016-02, Leases (Topic 842) of the Codification, adopted as of January 1, 2019.
(2) Other non-airline expenses for 2016 includes operating expenses related to JetBlue Technology Ventures only.
Reconciliation of Operating Expense, Income
before Taxes, Net Income and Earnings
per Share, excluding special items, gain on
equity method investments, and impact of
tax reform
Our GAAP results in the applicable periods were impacted by
charges that are deemed special items and a one-time gain on
an equity method investment.
In 2020, special items include contra-expenses recognized on the
utilization of payroll support grants received under the CARES Act,
impairment charges of our Embraer E190 fleet, losses generated
from certain sale-leaseback transactions, and one-time costs
associated with our voluntary crewmember separation programs.
Special items for 2019 and 2018 include an impairment charge and
one-time costs related to the Embraer E190 fleet transition as well
as one-time costs related to the ratification and implementation
of our pilots’ collective bargaining agreement. In 2019, we also
recognized a one-time gain on an equity method investment.
Our GAAP results in 2018 also included the impact from the 2017
reform under the Tax Cuts and Jobs Act.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
49
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We believe the impact of these items distort our overall trends and that our metrics are more comparable with the presentation of our
results excluding the impact of these items. The table below provides a reconciliation of our GAAP reported amounts to the non-GAAP
amounts excluding the impacts of these items.
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF OPERATING EXPENSE, INCOME BEFORE TAXES, NET INCOME AND EARNINGS PER SHARE
EXCLUDING SPECIAL ITEMS, GAIN ON EQUITY METHOD INVESTMENT, AND IMPACT OF TAX REFORM
Year Ended December 31,
(in millions except per share amounts)
Total Operating Revenues
Total Operating Expenses
Less: Special items
TOTAL OPERATING EXPENSES EXCLUDING SPECIAL ITEMS
Operating (Loss) Income
Add back: Special items
Operating (Loss) Income Excluding Special Items
Operating Margin Excluding Special Items
(Loss) Income Before Income Taxes
Add back: Special items
Less: Gain on equity method investment
(LOSS) INCOME BEFORE INCOME TAXES EXCLUDING SPECIAL ITEMS AND
GAIN ON EQUITY METHOD INVESTMENT
Pre-Tax Margin Excluding Special Items and Gain on Equity Method Investment
Net (Loss) Income
Add back: Special items
Less: Income tax (expense) benefit related to special items
Less: Gain on equity method investments
Less: Income tax (expense) related to gain on equity method investments
Less: Income tax benefit related to tax reform
NET (LOSS) INCOME EXCLUDING SPECIAL ITEMS, GAIN ON EQUITY METHOD
INVESTMENT, AND TAX REFORM IMPACT
(Loss) Earnings Per Common Share:
Basic
Add back: Special items, net of tax
Less: Gain on equity method investment, net of tax
Less: Tax reform impact
BASIC EXCLUDING SPECIAL ITEMS, GAIN ON EQUITY METHOD INVESTMENT,
AND TAX REFORM IMPACT
Diluted
Add back: Special items, net of tax
Less: Gain on equity method investments, net of tax
Less: Tax reform impact
Diluted Excluding Special Items, Gain on Equity Method
Investments, and Tax Reform Impact
50
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
$
$
$
$
$
$
$
$
$
$
$
$
2020
2,957
4,671
(283)
4,954
(1,714)
(283)
(1,997)
(67.5)%
(1,893)
(283)
—
(2,176)
(73.6)%
(1,354)
(283)
(69)
—
—
(1,568)
(4.88)
(0.77)
—
—
(5.65)
(4.88)
(0.77)
—
—
$
$
$
$
$
$
$
$
$
$
$
$
2019
8,094
7,294
14
7,280
800
14
814
10.1 %
768
14
15
767
9.5 %
569
14
4
15
(4)
—
568
1.92
0.04
0.04
—
1.92
1.91
0.03
0.04
—
$
$
$
$
$
$
$
$
$
$
$
$
2018
7,658
7,392
435
6,957
266
435
701
9.2 %
219
435
—
654
8.5 %
189
435
108
—
—
28
488
0.60
1.05
—
0.09
1.56
0.60
1.04
—
0.09
$
(5.65)
$
1.90
$
1.55
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Daily Cash Burn
We present cash burn because we believe this metric is helpful to investors to evaluate our ability to maintain liquidity and evaluate
cash flows from our core operating performance. Our cash burn is calculated as net cash used in operating activities, net cash used in
investing activities, and net cash provided by financing activities adjusted for: cash payments associated with our voluntary separation
programs, net purchases of investment securities, and net proceeds from our common stock offering completed in December 2020.
NON-GAAP FINANCIAL MEASURE
DAILY CASH BURN
(in millions, except for days in period)
Net cash (used in) operating activities
Net cash (used in) investing activities
Net cash provided by financing activities
(Decrease) in Cash, Cash Equivalents, and Restricted Cash
Adjustments
Voluntary separation programs
Net purchases of investment securities
Proceeds from issuance of common stock
Total Adjustments
Adjusted (decrease) in cash
Days in period
Daily Cash Burn
Three Months Ended
December 31, 2020
$
$
(459)
(765)
614
(610)
5
570
(583)
(8)
(618)
92
(6.7)
Adjusted Debt to Capitalization Ratio
Adjusted debt to capitalization ratio is a non-GAAP financial measure which we believe is relevant in assessing the Company’s overall
debt profile. Adjusted debt includes aircraft operating lease liabilities, in addition to total debt and finance lease obligations. Adjusted
capitalization represents total equity plus adjusted debt. Investors should consider this non-GAAP financial measure in addition to,
and not as a substitute for, our financial measures prepared in accordance with GAAP.
NON-GAAP FINANCIAL MEASURE
ADJUSTED DEBT TO CAPITALIZATION RATIO
(in millions)
Long-term debt and finance lease obligations
Current maturities of long-term debt and finance lease obligations
Operating lease liabilities – aircraft
Adjusted Debt
Long-term debt and finance lease obligations
Current maturities of long-term debt and finance lease obligations
Operating lease liabilities — aircraft
Stockholders' equity
Adjusted Capitalization
Adjusted Debt to Capitalization Ratio
December 31,
2020
2019
$
4,413
$
1,990
$
$
450
273
5,136
4,413
450
273
3,951
$
$
344
183
2,517
1,990
344
183
4,799
$
9,087
$
7,316
57 %
34 %
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
51
PART II | ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Free Cash Flow
The table below reconciles cash provided by operations determined in accordance with GAAP to Free Cash Flow, a non-GAAP financial
measure. We believe that Free Cash Flow is a relevant metric in measuring our financial strength and is useful in assessing our ability
to fund future capital commitments and other obligations. Investors should consider this non-GAAP financial measure in addition to,
and not as a substitute for, our financial measures prepared in accordance with GAAP.
(in millions)
NON-GAAP FINANCIAL MEASURE
RECONCILIATION OF FREE CASH FLOW
Year Ended December 31,
2020
2019
2018
Net cash (used in) provided by operating activities
$
(683)
$
1,449
$
1,200
$
Less: Capital expenditures
Less: Pre-delivery deposits for flight equipment
(715)
(76)
(932)
(224)
(908)
(206)
Free Cash Flow
$
(1,474)
$
293
$
86
$
2017
1,379
(1,074)
(128)
177
2016(1)
$
1,632
(850)
(161)
621
$
(1) Amounts prior to 2017 do not reflect the impact of the adoption of ASU 2016-02, Leases (Topic 842) of the Codification, adopted as of January 1, 2019.
52
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The risk inherent in our market risk sensitive instruments and
positions is the potential loss arising from adverse changes to the
price of fuel and interest rates as discussed below. The sensitivity
analyses presented do not consider the effects such adverse
changes may have on the overall economic activity, nor do they
consider additional actions we may take to mitigate our exposure
to such changes. Variable-rate leases are not considered market
sensitive financial instruments and, therefore, are not included
in the interest rate sensitivity analysis below. Actual results may
differ from the sensitivity analyses. See Notes 1, 4 and 13 to our
consolidated financial statements for accounting policies and
additional information.
Aircraft fuel
Our results of operations are affected by changes in the price
and availability of aircraft fuel. Market risk is estimated as a
hypothetical 10% increase in the December 31, 2020 cost per
gallon of fuel. Based on projected 2021 fuel consumption, such
an increase would result in an increase to aircraft fuel expense of
approximately $89 million in 2021. We did not have any fuel hedges
outstanding as of December 31, 2020.
Interest
Our earnings are affected by changes in interest rates due
to the impact those changes have on interest expense from
variable-rate debt instruments and on interest income generated
from our cash and investment balances. The interest rate is
fixed for $3.0 billion of our debt and finance lease obligations,
with the remaining $1.6 billion having floating interest rates. If
interest rates were on average 100 basis points higher in 2021
than they were during 2020, our interest expense would increase
by approximately $16 million. This amount is determined by
considering the impact of the hypothetical change in interest
rates on our variable rate debt.
The financial derivative instrument agreements we have with
our counterparties may require us to fund all, or a portion of,
outstanding loss positions related to these contracts prior to
their scheduled maturities. The amount of collateral posted, if
any, is periodically adjusted based on the fair value of the hedge
contracts.
If interest rates were an average 100 basis points lower in 2021
than they were during 2020, our interest income from cash and
investment balances would decrease by approximately $2 million.
This amount is determined by considering the impact of the
hypothetical interest rates on the balances of our money market
funds and short-term, interest-bearing investments.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
53
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of JetBlue
Airways Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets
of JetBlue Airways Corporation (the Company) as of December 31,
2020 and 2019 and the related consolidated statements of
operations, comprehensive (loss) income, stockholders’
equity and cash flows for each of the three years in the period
ended December 31, 2020, and the related notes and financial
statement schedule listed in Item 15(2) (collectively referred to
as the ”consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material
respects, the consolidated financial position of JetBlue Airways
Corporation at December 31, 2020 and 2019, and the consolidated
results of its operations and its cash flows for each of the three
years in the period ended December 31, 2020, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting
as of December 31, 2020, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated March 2, 2021 expressed an
unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether
due to fraud or error. Our audits included performing procedures
to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters
arising from the current period audit of the financial statements
that were communicated or required to be communicated to the
audit committee and that: (1) relate to accounts or disclosures
that are material to the financial statements and (2) involved our
especially challenging, subjective or complex judgments. The
communication of the critical audit matters does not alter in any
way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
54
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Accounting for Loyalty Program - Breakage
Description of the
Matter
As discussed in Note 3 to the consolidated financial statements, under the customer loyalty program, the Company
issues points to customers based upon the fare paid for a ticket purchase or through sales to business partners,
including JetBlue’s co-branded credit card partners. The Company defers a portion of the transaction price allocable
to points issued and recognizes revenue when the points are utilized for travel. The Company estimates breakage
for issued points using historical redemption patterns and records revenue for points that are not expected to be
redeemed. Estimates of breakage are evaluated annually, and changes to breakage estimates prospectively impact
Passenger revenue and Air traffic liability. The balance of the Company’s Air traffic liability associated with the loyalty
program was $733 million at December 31, 2020.
Auditing management’s estimates and calculations used in its accounting for the loyalty program is significant to our
audit as the related impact to Passenger revenue and Air traffic liability is material and sensitive to changes in the
breakage rate. The estimate of breakage by management requires the Company to forecast redemption patterns,
which involves the application of judgment and estimation. As a result, auditing the Company’s accounting for the
loyalty program required complex auditor judgement.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the
Company’s accounting for the loyalty program, including controls over management's estimation of breakage rates
and review of the significant assumptions underlying the determination of estimated redemption patterns.
Our audit procedures included, among others, evaluating the significant assumptions and the accuracy and
completeness of the underlying data used in management's calculation including the total number of points issued to
and redeemed by customers. We involved our valuation professionals to assist us in our evaluation of the methodology
used by the Company to estimate expected redemption patterns. We performed a sensitivity analysis of management’s
estimate of points expected to be redeemed to evaluate the impact on Passenger revenue and Air traffic liability. We
also tested the calculation used to determine the amount recognized as revenue for the period.
E190 Fleet Impairment
Description of the
Matter
As discussed in Note 2 and Note 18 to the consolidated financial statements, the Company recorded impairment
charges of $273 million for the year ended December 31, 2020 related to its Embraer E190 aircraft, as well as the related
engines, operating lease assets, aircraft parts and other related flight equipment in that asset group. Management
records impairment charges for long-lived assets when events and circumstances indicate that the assets in an asset
group may be impaired, the future undiscounted cash flows forecasted to be generated by those assets are less than
their associated carrying value, and the net book value of the asset group exceeds its estimated fair value.
Auditing the Company’s impairment assessments was highly subjective due to the significant estimation required
in determining the fair values of long-lived assets. As a result of the COVID-19 pandemic, there is currently a very
limited market for aircraft and limited data on how the COVID-19 pandemic has affected the fair value of aircraft.
In estimating the fair value of the owned assets in the E190 fleet asset group, management considered the current
market environment, aircraft age, and maintenance condition. Management determined the fair value of operating
lease right-of-use assets based on the present value of current market lease rates utilizing a market discount rate for
the remaining term of each lease.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls relating to the
Company’s process to measure impairments of long-lived assets, including controls over the review of the significant
assumptions underlying the fair value estimates.
Our audit procedures included, among others, evaluating the significant assumptions used by the Company in its
estimate of the fair value of the E190 fleet asset group described above and evaluating the completeness and accuracy
of the underlying data supporting the significant assumptions and estimates. We involved our valuation specialists
to assist in our assessment of the valuation approach and certain significant inputs and assumptions, including the
consideration of market transactions, current market lease rates, and the reasonableness of adjustments made to
reflect maintenance conditions.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2001.
New York, New York
March 2, 2021
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
55
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of JetBlue
Airways Corporation
Opinion on Internal Control over Financial
Reporting
We have audited JetBlue Airways Corporation’s internal control
over financial reporting as of December 31, 2020, based on
criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, JetBlue Airways Corporation (the Company) maintained,
in all material respects, effective internal control over financial
reporting as of December 31, 2020, based on the COSO criteria.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as
of December 31, 2020 and 2019 and the related consolidated
statements of operations, comprehensive (loss) income,
shareholders’ equity and cash flows for each of the three years
in the period ended December 31, 2020, and the related notes and
financial statement schedule and our report dated March 2, 2021
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control
Over Financial Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
March 2, 2021
56
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Consolidated Balance Sheets
(in millions, except per share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Investment securities
Receivables, less allowance (2020 - $2; 2019-$1)
Inventories, less allowance (2020 - $27; 2019-$22)
Prepaid expenses and other
Total current assets
PROPERTY AND EQUIPMENT
Flight equipment
Pre-delivery deposits for flight equipment
Total flight equipment and pre-delivery deposits, gross
Less accumulated depreciation
Total flight equipment and pre-delivery deposits, net
Other property and equipment
Less accumulated depreciation
Total other property and equipment, net
Total property and equipment, net
OPERATING LEASE ASSETS
OTHER ASSETS
Investment securities
Restricted cash
Intangible assets, net of accumulated amortization of $360 and $319, at 2020 and
2019, respectively.
Other
Total other assets
TOTAL ASSETS
$
December 31,
2020
2019
$
1,918
1,135
98
71
123
3,345
10,256
420
10,676
2,888
7,788
1,202
591
611
8,399
804
2
51
261
544
858
959
369
231
81
146
1,786
10,332
433
10,765
2,768
7,997
1,145
528
617
8,614
912
3
59
241
303
606
$
13,406
$
11,918
See accompanying notes to consolidated financial statements.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
57
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Consolidated Balance Sheets
(in millions, except per share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
Air traffic liability
Accrued salaries, wages and benefits
Other accrued liabilities
Current operating lease liabilities
Current maturities of long-term debt and finance lease obligations
Total current liabilities
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS
LONG-TERM OPERATING LEASE LIABILITIES
DEFERRED TAXES AND OTHER LIABILITIES
Deferred income taxes
Air traffic liability - non-current
Other
Total deferred taxes and other liabilities
COMMITMENTS AND CONTINGENCIES (NOTES 11 & 12)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 25 shares authorized, none issued
Common stock, $0.01 par value; 900 shares authorized, 474 and 427 shares issued and
316 and 282 shares outstanding at 2020 and 2019, respectively
Treasury stock, at cost; 158 and 145 shares at 2020 and 2019, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total stockholders’ equity
December 31,
2020
2019
$
$
365
1,122
409
215
113
450
2,674
4,413
752
922
616
78
1,616
—
5
(1,981)
2,959
2,968
—
3,951
401
1,119
376
295
128
344
2,663
1,990
690
1,251
481
44
1,776
—
4
(1,782)
2,253
4,322
2
4,799
11,918
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
13,406
$
See accompanying notes to consolidated financial statements.
58
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
JETBLUE AIRWAYS CORPORATION
Consolidated Statements of Operations
(in millions, except per share data)
OPERATING REVENUES
Passenger
Other
Total operating revenues
OPERATING EXPENSES
Aircraft fuel and related taxes
Salaries, wages and benefits
Landing fees and other rents
Depreciation and amortization
Aircraft rent
Sales and marketing
Maintenance, materials and repairs
Other operating expenses
Special items
Total operating expenses
OPERATING (LOSS) INCOME
OTHER INCOME (EXPENSE)
Interest expense
Capitalized interest
Gain on equity method investments
Interest income and other
Total other income (expense)
(LOSS) INCOME BEFORE INCOME TAXES
Income tax (benefit) expense
NET (LOSS) INCOME
(LOSS) EARNINGS PER COMMON SHARE
Basic
Diluted
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Years Ended December 31,
2020
2019
$
2,733
$
7,786
$
224
2,957
631
2,032
358
535
85
110
441
762
(283)
4,671
(1,714)
(179)
13
—
(13)
(179)
(1,893)
(539)
(1,354)
(4.88)
(4.88)
$
$
$
308
8,094
1,847
2,320
474
525
99
290
619
1,106
14
7,294
800
(79)
14
15
18
(32)
768
199
569
1.92
1.91
$
$
$
$
$
$
2018
7,381
277
7,658
1,899
2,044
462
469
104
294
625
1,060
435
7,392
266
(70)
10
—
13
(47)
219
30
189
0.60
0.60
See accompanying notes to consolidated financial statements.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
59
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Consolidated Statements of Comprehensive (Loss) Income
(in millions)
NET (LOSS) INCOME
Changes in fair value of derivative instruments, net of reclassifications
into earnings, net of deferred taxes of $0, $(1), and $2 in 2020,
2019, and 2018, respectively
Total other comprehensive (loss) income
COMPREHENSIVE (LOSS) INCOME
Years Ended December 31,
2020
2019
(1,354)
$
569
$
(2)
(2)
5
5
(1,356)
$
574
$
$
$
2018
189
(3)
(3)
186
See accompanying notes to consolidated financial statements.
60
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Consolidated Statements of Cash Flows
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Years Ended December 31,
2020
2019
2018
Net (loss) income
$
(1,354)
$
569
$
189
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Deferred income taxes
Impairment of long-lived assets
Depreciation and amortization
Stock-based compensation
Losses on sale-leaseback transactions
Changes in certain operating assets and liabilities:
Decrease (increase) in receivables
Decrease (increase) in inventories, prepaid and other
Increase in air traffic liability
(Decrease) increase in accounts payable and other accrued liabilities
Other, net
Net cash (used in) provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Pre-delivery deposits for flight equipment
Purchase of held-to-maturity investments
Proceeds from the maturities of held-to-maturity investments
Purchase of available-for-sale securities
Proceeds from the sale of available-for-sale securities
Proceeds from sale-leaseback transactions
Other, net
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt
Proceeds from short-term borrowings
Proceeds from sale-leaseback transactions
Proceeds from issuance of common stock
Proceeds from issuance of stock warrants
Repayment of long-term debt and finance lease obligations
Repayment of short-term borrowings
(329)
273
535
28
106
144
52
66
(255)
51
(683)
(715)
(76)
—
21
(1,962)
1,174
209
—
(1,349)
2,541
981
354
620
28
(372)
(1,000)
139
—
525
31
—
(3)
188
118
(91)
(27)
90
319
469
28
—
46
(178)
131
103
3
1,449
1,200
(932)
(224)
(374)
534
(1,000)
880
—
(13)
(1,129)
981
—
—
51
—
(323)
—
(908)
(206)
(429)
505
(979)
875
—
(15)
(1,157)
687
—
—
48
—
(222)
—
See accompanying notes to consolidated financial statements.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
61
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(in millions)
Acquisition of treasury stock
Other, net
Net cash provided by financing activities
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period(1)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest (net of amount capitalized)
Cash payments for income taxes (net of refunds)
NON-CASH TRANSACTIONS
$
$
Years Ended December 31,
2020
(167)
(2)
2,983
951
1,018
1,969
139
5
$
$
2019
(542)
(2)
165
485
533
1,018
62
(52)
$
$
Operating lease assets obtained in exchange for operating lease liabilities
$
144
$
7
$
(1) Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets:
Cash and cash equivalents
Restricted cash
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH
December 31,
2020
1,918
51
1,969
$
$
$
$
2019
959
59
1,018
$
$
2018
(382)
—
131
174
359
533
59
11
20
2018
474
59
533
See accompanying notes to consolidated financial statements.
62
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Consolidated Statements of Stockholders’ Equity
(in millions)
Common
Shares
Common
Stock
Treasury
Shares
Treasury
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
BALANCE AT DECEMBER 31, 2017
418 $
Net income
Other comprehensive (loss)
Vesting of restricted stock units
Stock compensation expense
Shares issued under Crewmember
Stock Purchase Plan
Shares repurchased
—
—
1
—
3
—
BALANCE AT DECEMBER 31, 2018
422 $
Net income
Other comprehensive income
Vesting of restricted stock units
Stock compensation expense
Shares issued under Crewmember
Stock Purchase Plan
Shares repurchased
—
—
2
—
3
—
BALANCE AT DECEMBER 31, 2019
427 $
Net (loss)
Other comprehensive (loss)
Vesting of restricted stock units
Stock compensation expense
Shares issued under Crewmember
Stock Purchase Plan
Shares repurchased
CARES Act warrant issuance
Shares issued under common
stock offering
BALANCE AT DECEMBER 31, 2020
—
—
1
—
4
—
—
42
474 $
4
—
—
—
—
—
—
4
—
—
—
—
—
—
4
—
—
—
—
—
—
—
1
5
97 $
(890) $
2,127 $ 3,564 $
— $ 4,805
—
—
—
—
—
19
—
—
(7)
—
—
(375)
—
—
—
28
48
—
189
—
—
—
—
—
—
(3)
—
—
—
—
189
(3)
(7)
28
48
(375)
116 $ (1,272) $
2,203 $ 3,753 $
(3) $ 4,685
—
—
—
—
—
29
—
—
(6)
—
—
(504)
—
—
—
31
51
(32)
569
—
—
—
—
—
—
5
—
—
—
—
569
5
(6)
31
51
(536)
145 $ (1,782) $
2,253 $ 4,322 $
2 $ 4,799
—
—
—
—
—
13
—
—
—
—
(7)
—
—
(192)
—
—
—
—
—
28
35
32
28
583
(1,354)
—
—
—
—
—
—
—
—
(2)
—
—
—
—
—
—
(1,354)
(2)
(7)
28
35
(160)
28
584
158 $ (1,981) $
2,959 $ 2,968 $
— $ 3,951
See accompanying notes to consolidated financial statements.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
63
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JETBLUE AIRWAYS CORPORATION
Notes to Consolidated Financial Statements
JetBlue Airways Corporation, or JetBlue, is New York's Hometown
Airline®. We believe our differentiated product and service
offerings combined with our competitive cost advantage enables
us to effectively compete in the high-value geography we serve.
As of December 31, 2020, we served 98 destinations in 30 states,
the District of Columbia, the Commonwealth of Puerto Rico, the
U.S. Virgin Islands, and 23 countries in the Caribbean and Latin
America.
NOTE 1
Summary of Significant Accounting Policies
Basis of Presentation
Restricted Cash
JetBlue provides air transportation services across the United
States, the Caribbean, and Latin America. Our consolidated
financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, or
GAAP, and include the accounts of JetBlue and our subsidiaries.
All majority-owned subsidiaries are consolidated with all
intercompany transactions and balances being eliminated.
Use of Estimates
The preparation of our consolidated financial statements and
accompanying notes in conformity with GAAP requires us to make
certain estimates and assumptions. Actual results could differ
from those estimates.
Fair Value
The Fair Value Measurements and Disclosures topic of the
Financial Accounting Standards Board, or FASB, Accounting
Standards Codification®, or Codification, establishes a
framework for measuring fair value and requires enhanced
disclosures about fair value measurements. This topic clarifies
that fair value is an exit price, representing the amount that
would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants. The topic
also requires disclosure about how fair value is determined
for assets and liabilities and establishes a hierarchy for
which these assets and liabilities must be grouped, based on
significant levels of inputs. Refer to Note 14 to our consolidated
financial statements for more information.
Cash and Cash Equivalents
Our cash and cash equivalents include short-term, highly liquid
investments which are readily convertible into cash. These
investments include money market securities, commercial paper,
and time deposits with maturities of three months or less when
purchased.
Restricted cash primarily consists of security deposits, funds held
in escrow for estimated workers’ compensation obligations, and
performance bonds for aircraft and facility leases.
Accounts and Other Receivables
Accounts and other receivables are carried at cost. They primarily
consist of amounts due from credit card companies associated
with sales of tickets for future travel. We estimate an allowance
for doubtful accounts based on known troubled accounts, if any,
and historical experience of losses incurred, as well as current
and expected conditions.
Investment Securities
Investment securities consist of available-for-sale investment
securities and held-to-maturity investment securities. When sold,
we use a specific identification method to determine the cost of
the securities.
AVAILABLE-FOR-SALE INVESTMENT SECURITIES
Our available-for-sale investment securities include highly liquid
investments such as time deposits, U.S. Treasury bills with
maturities between three and twelve months, commercial paper,
and convertible debt securities which are stated at fair value.
HELD-TO-MATURITY INVESTMENT SECURITIES
Our held-to-maturity investments consist of investment-grade
interest bearing instruments, such as corporate bonds and U.S.
Treasury notes, which are stated at amortized cost. We do not
intend to sell these investment securities and the contractual
maturities are not greater than 24 months. Those with maturities
less than twelve months are included in short-term investments
on our consolidated balance sheets. Those with remaining
maturities in excess of twelve months are included in long-term
investments on our consolidated balance sheets. We did not
record any material gains or losses on these securities during
the years ended December 31, 2020, 2019 or 2018. The estimated
fair value of these investments approximated their carrying value
as of December 31, 2020 and 2019.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The carrying values of investment securities consisted of the following at December 31, 2020 and 2019 (in millions):
Available-for-sale securities
Time deposits
Commercial paper
Debt securities
Total available-for-sale securities
Held-to-maturity securities
Corporate bonds
Total held-to-maturity securities
TOTAL INVESTMENT SECURITIES
December 31, 2020
December 31, 2019
$
1,130
$
—
7
1,137
—
—
$
1,137
$
325
20
6
351
21
21
372
Equity Method Investments
Investments in which we can exercise significant influence
are accounted for using the equity method in accordance with
Topic 323, Investments - Equity Method and Joint Ventures of
the Codification. The carrying amount of our equity method
investments, which is recorded within other assets on our
consolidated balance sheets, was $34 million and $38 million
as of December 31, 2020 and 2019, respectively. In September
2019, we recognized a gain of $15 million on one of our equity
method investments related to its fair value measurement upon
the closing of a subsequent financing round.
accounted for under the measurement alternative. The carrying
amount of this investment was $14 million and $13 million as of
December 31, 2020 and 2019, respectively.
Derivative Instruments
Our derivative instruments include fuel hedge contracts, such as
jet fuel call options and call option spreads, which are stated at
fair value, net of any collateral postings. Derivative instruments
are included in other current assets and other current liabilities
on our consolidated balance sheets. Refer to Note 13 to our
consolidated financial statements for more information.
Other Investments
Inventories
Our wholly-owned subsidiary, JetBlue Technology Ventures,
LLC, or JTV, has equity investments in emerging companies
which do not have readily determinable fair values. In accordance
with Accounting Standards Update (”ASU”) 2016-01, Financial
Instruments-Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities, we
account for these investments using a measurement alternative
which allows entities to measure these investments at cost,
less any impairment, adjusted for changes from observable
price changes in orderly transactions for identifiable or similar
investments of the same issuer. The carrying amount of these
investments was $40 million and $41 million as of December 31,
2020 and December 31, 2019, respectively.
We have an approximate 10% ownership interest in the TWA Flight
Center Hotel at John F. Kennedy International Airport and it is also
Inventories consist of expendable aircraft spare parts and
supplies that are stated at average cost, as well as aircraft
fuel that is accounted for on a first-in, first-out basis. These
items are expensed when used or consumed. An allowance for
obsolescence on aircraft spare parts and supplies is provided over
the remaining useful life of the related aircraft fleet.
Property and Equipment
We record our property and equipment at cost and depreciate
these assets on a straight-line basis over their estimated useful
lives to their estimated residual values. We capitalize additions,
modifications enhancing the operating performance of our
assets, as well as the interest related to pre-delivery deposits
used to acquire new aircraft and the construction of our facilities.
Estimated useful lives and residual values for our property and equipment are as follows:
Property and Equipment Type
Estimated Useful Life
Residual Value
Aircraft
Inflight entertainment systems
Aircraft parts
25 years
5-10 years
Fleet life
Flight equipment leasehold improvements
Lower of lease term or economic life
Ground property and equipment
Leasehold improvements—other
Buildings on leased land
2-10 years
Lower of lease term or economic life
Lease term
20 %
0 %
10 %
0 %
0 %
0 %
0 %
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Property under finance leases is initially recorded at an amount
equal to the present value of future minimum lease payments
which is computed on the basis of our incremental borrowing
rate or, when known, the interest rate implicit in the lease.
Amortization of property under finance leases is on a straight-
line basis over the expected useful life to their estimated residual
values and is included in depreciation and amortization expense.
We record impairment losses on long-lived assets used in
operations when events and circumstances indicate the assets
may be impaired and the undiscounted future cash flows
estimated to be generated by the assets are less than the assets’
net book value. If impairment occurs, the loss is measured by
comparing the fair value of the asset to its carrying amount.
Software
We capitalize certain costs related to the acquisition and
development of computer software. We amortize these costs
using the straight-line method over the estimated useful life of
the software, which is generally five years. The net book value of
computer software, which is included in intangible assets on our
consolidated balance sheets, was $121 million and $102 million
as of December 31, 2020 and 2019, respectively. Amortization
expense related to computer software was $44 million, $52 million
and $46 million for the years ended December 31, 2020, 2019, and
2018, respectively. As of December 31, 2020, amortization expense
related to computer software is expected to be approximately
$38 million in 2021, $34 million in 2022, $27 million in 2023,
$16 million in 2024, and $6 million in 2025.
Indefinite-Lived Intangible Assets
Our indefinite-lived intangible assets consist primarily of
acquired Slots at certain High Density Airports which result in
no amortization expense. Slots are the rights to take-off or land
at a specific airport during a specific time period of the day and
are a means by which airport capacity and congestion can be
managed. We evaluate our indefinite-lived intangible assets for
impairment at least annually or when events and circumstances
indicate they may be impaired. Indicators include operating or
cash flow losses as well as various market factors to determine
if events and circumstances could reasonably have affected the
fair value. As of December 31, 2020 and 2019, our indefinite-lived
intangible assets, which are included in intangible assets on our
consolidated balance sheets, were $139 million. We performed an
impairment assessment as of December 31, 2020 and determined
our indefinite-lived intangible assets were not impaired.
Passenger Revenue
Ticket sales and the fees collected for related ancillary services
are initially deferred in air traffic liability. Air traffic liability
represents tickets sold but not yet flown, credits which can be
used for future travel, and a portion of the liability related to our
TrueBlue® loyalty program. We allocate the transaction price to
each performance obligation identified in a passenger ticket on
a relative standalone basis. Passenger revenue, including certain
ancillary fees directly related to passenger tickets, is recognized
when the transportation is provided. Taxes that we are required
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
to collect from our customers, including foreign and U.S. federal
transportation taxes, security taxes, and airport facility charges,
are excluded from passenger revenue. Those taxes and fees are
recorded as a liability upon collection and are relieved from the
liability upon remittance to the applicable governmental agency.
The majority of the tickets sold are non-refundable. Non-
refundable fares may be canceled prior to the scheduled
departure date for a credit for future travel. Refundable fares
may be canceled at any time prior to the scheduled departure
date. Failure to cancel a refundable fare prior to departure will
result in the cancellation of the original ticket and an issuance
of a credit for future travel. Passenger credits can be used for
future travel up to a year from the date of issuance. Passenger
breakage revenue from unused tickets and passenger credits will
be recognized in proportion to flown revenue based on estimates
of expected expiration when the likelihood of the customer
exercising his or her remaining rights becomes remote. Breakage
revenue consists of non-refundable tickets that remain unused
past the departure date, have continued validity, and are expected
to ultimately expire unused, as well as passenger credits that are
not expected to be redeemed prior to expiration. JetBlue uses
estimates based on historical experience of expired tickets and
credits and considers other factors that could impact future
expiration patterns of tickets and credits. Tickets which do not
have continued validity past the departure date are recognized as
revenue after the scheduled departure date has lapsed.
Passenger ticket costs primarily include credit card fees,
commissions paid, and global distribution systems booking fees.
Costs are allocated entirely to the purchased travel services and
are capitalized until recognized when travel services are provided
to the customer.
In response to the impact of COVID-19 on air travel, we extended
the expiration dates for travel credits issued from February 27,
2020 through June 30, 2020 to a 24-month period. The air
traffic liability classified as non-current as of December 31, 2020
represents our current estimate of tickets and credits to be used
or refunded beyond one year, while the balance classified as
current represents our current estimate of tickets and credits to
be used or refunded within one year. We will continue to monitor
our customers' travel behavior and may adjust our estimates in
the future.
Loyalty Program
Customers may earn points under our customer loyalty program,
TrueBlue®, based on the fare paid and fare product purchased for a
flight. Customers can also earn points through business partners
such as credit card companies, hotels, car rental companies, and
our participating airline partners.
POINTS EARNED FROM A TICKET PURCHASE
When a TrueBlue® member travels, we recognize a portion of the
fare as revenue and defer in air traffic liabilities the portion that
represents the value of the points net of spoilage, or breakage. We
allocate the transaction price to each performance obligation on
a relative standalone basis. We determine the standalone selling
price of TrueBlue® points issued using the redemption value
approach. To maximize the use of observable inputs, we utilize the
actual ticket value of the tickets purchased with TrueBlue® points.
The liability is relieved and passenger revenue is recognized when
the points are redeemed and the free travel is provided.
POINTS SOLD TO TRUEBLUE® PARTNERS
Our most significant contract to sell TrueBlue® points is
with our co-branded credit card partner. Co-branded credit
card partnerships have the following identified performance
obligations: air transportation; use of the JetBlue brand name
and access to our frequent flyer customer lists; advertising; and
other airline benefits. In determining the estimated selling price,
JetBlue considered multiple inputs, methods and assumptions,
including: discounted cash flows; estimated redemption value,
net of fulfillment discount; points expected to be awarded and
redeemed; estimated annual spending by cardholders; estimated
annual royalty for use of JetBlue's frequent flyer customer lists;
and estimated utilization of other airline benefits. Payments are
typically due monthly based on the volume of points sold during
the period, and the terms of our contracts are generally from one
to seven years. The overall consideration received is allocated to
each performance obligation based on their standalone relative
selling prices. The air transportation element is deferred and
recognized as passenger revenue when the points are utilized.
The other elements are recognized as other revenue when the
performance obligation related to those services are satisfied,
which is generally the same period as when consideration is
received from the participating company.
Amounts allocated to the air transportation element which
are initially deferred include a portion that are expected to be
redeemed during the following twelve months (classified as
a component of Air traffic liability), and a portion that are not
expected to be redeemed during the following twelve months
(classified as Air traffic liability - non-current). We periodically
update this analysis and adjust the split between current and non-
current liabilities as appropriate.
Points earned by TrueBlue® members never expire. TrueBlue®
members can pool points between small groups of people,
branded as Points Pooling™. Breakage is estimated using
historical redemption patterns to determine a breakage rate.
Breakage rates used to estimate breakage revenue are evaluated
annually. Changes to breakage estimates impact revenue
recognition prospectively.
Airframe and Engine Maintenance and Repair
Regular airframe maintenance for owned and leased flight
equipment is charged to expense as incurred unless covered by
a third-party long-term flight hour service agreement. We have
separate service agreements in place covering scheduled and
unscheduled repairs of certain airframe line replacement unit
components as well as the engines in our fleet. Certain of these
agreements require monthly payments at rates based either on
the number of cycles each aircraft was operated during each
month or the number of flight hours each engine was operated
during each month, subject to annual escalations. These power
by the hour agreements transfer certain risks, including cost
risks, to the third-party service providers. They generally fix the
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
amount we pay per flight hour or number of cycles in exchange
for maintenance and repairs under a predefined maintenance
program, which are representative of the time and materials that
would be consumed. These costs are expensed as the related
flight hours or cycles are incurred.
Advertising Costs
Advertising costs, which are included in sales and marketing,
are expensed as incurred. Advertising expense was $45 million
in 2020, $66 million in 2019 and $72 million in 2018.
Share-Based Compensation
We record compensation expense for share-based awards
based on the grant date fair value of those awards. Share-based
compensation expense includes an estimate for pre-vesting
forfeitures and is recognized over the requisite service periods
of the awards on a straight-line basis.
Income Taxes
We account for income taxes utilizing the liability method.
Deferred income taxes are recognized for the tax consequences
of temporary differences between the tax and financial statement
reporting bases of assets and liabilities. A valuation allowance for
deferred tax assets is provided unless realization of the asset is
judged by us to be more likely than not. Our policy is to recognize
interest and penalties accrued on any unrecognized tax benefits
as a component of income tax expense.
Recently Issued Accounting Standards
New accounting rules and disclosure requirements can impact our
financial results and the comparability of our financial statements.
The authoritative literature which has recently been issued and
that we believe will impact our consolidated financial statements
is described below. There are also several new proposals under
development. If and when enacted, these proposals may have a
significant impact on our financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes. The
update eliminates, clarifies, and modifies certain guidance
related to the accounting for income taxes. This update also
removed the requirement to calculate income tax expense for
standalone financial statements of wholly-owned subsidiaries.
ASU 2019-12 is effective for annual reporting periods beginning
after December 15, 2020. We have substantially completed our
assessment of the new standard and do not expect its adoption to
have a material impact on our consolidated financial statements.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments. The update requires the use of
an ”expected loss” model on certain types of financial instruments
and requires consideration of a broader range of reasonable and
supportable information to calculate credit loss estimates. For
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
67
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
trade receivables, loans, and held-to-maturity debt securities,
entities are required to estimate lifetime expected credit losses.
For available-for-sale debt securities, entities will be required to
recognize an allowance for credit losses rather than a reduction to
the carrying value of the asset. We adopted the requirements of
ASU 2016-13 as of January 1, 2020 using a modified retrospective
transition approach. The adoption of ASU 2016-13 did not have a
material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value
Measurement (Topic 820): Disclosure Framework - Changes to the
Disclosure Requirements for Fair Value Measurement. The update
eliminates, adds, and modifies certain disclosure requirements
for fair value measurements. We adopted the requirements of
ASU 2018-13 as of January 1, 2020. The adoption of ASU 2018-13
did not have a significant impact on our consolidated financial
statement disclosures.
The COVID-19 Pandemic
NOTE 2
The unprecedented coronavirus (”COVID-19”) pandemic and the
related travel restrictions and physical distancing measures
implemented throughout the world have significantly reduced
demand for air travel. Beginning in March 2020, large public
events were canceled, governmental authorities began imposing
restrictions on non-essential activities, businesses suspended
travel, and popular leisure destinations temporarily closed to
visitors. Certain countries have imposed bans on international
travelers for specified periods or indefinitely.
Demand for air travel began to weaken at the end of February
2020. The pace of decline accelerated throughout March into
April 2020 and demand remained depressed throughout the rest
of 2020. This decline in demand has had a material adverse impact
on our operating revenues and financial position. Our operating
revenues for the year ended December 31, 2020 declined by 63.5%
year-over-year. Although demand began to improve as the year
progressed, it remained significantly lower than in prior years.
The exact timing and pace of the recovery is uncertain given the
significant impact of the pandemic on the overall U.S. and global
economy. Some states have experienced a resurgence of COVID-19
cases after reopening and as a result, certain other states have
implemented travel restrictions or advisories for travelers from
such states. We have also seen a similar resurgence of COVID-19
cases in other countries and we expect to continue to see
fluctuations in the number of cases, which we believe will result
in actions by governmental authorities restricting activities. We
expect the demand environment to remain depressed until the
majority of the U.S. population is vaccinated against COVID-19.
Our response to the pandemic and the measures we take to secure
additional liquidity may be modified as we have more clarity on the
timing of demand recovery.
In response to the COVID-19 pandemic, since March 2020 we have
implemented the following measures to focus on the safety of our
customers, our crewmembers, and our business.
Customers and Crewmembers
The safety of our customers and crewmembers continues to be a
priority. As the COVID-19 pandemic developed, we took steps to
promote physical distancing and implemented new procedures
that reflect the recommendations of health experts, including
the following:
■■ Introduced ”Safety from the Ground Up”, an initiative with a multi-
layer approach that encompasses enhanced safety and cleaning
measures on our flights, at our airports, and in our offices;
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
■■ Instituted temperature checks for our customer-facing and
support-center crewmembers;
■■ Updated our sick leave policy to provide up to 14 days of paid
sick leave for crewmembers who were diagnosed with COVID-19
or were required to quarantine;
■■ Implemented a framework for internal contact tracing,
crewmember notification, and a return to work clearance
process for all crewmembers, wherever they may be located;
■■ Required face coverings for all crewmembers while boarding,
in flight, and when physical distancing cannot be maintained;
■■ Administered more frequent disinfecting of common surfaces
and areas with high touchpoints in our facilities;
■■ Enhanced daily and overnight cleaning of our aircraft and all
facilities, using electrostatic spraying of disinfectant in the
cabins of aircraft parked overnight at selected focus cities;
■■ Required customers to wear face coverings during check-in,
boarding, and inflight;
■■ Limited the number of seats sold on most flights through
January 7, 2021;
■■ Suspended group boarding and implemented a back-to-front
boarding process to minimize passing in the aisle;
■■ Eliminated layovers for crewmembers in New York City and
worked with crew transportation companies to ensure physical
distancing;
■■ Implemented jump seat buffers on our flights to further
promote physical distancing measures;
■■ Provided enhanced flexibility to our customers by waiving
change and cancel fees for customers with existing bookings
made through March 31, 2021, while also extending the
expiration date of travel credits issued between February 27,
2020 and June 30, 2020 for flight purchases to 24 months; and
■■ Announced our partnership with Vault Health to provide
discounted at-home COVID-19 testing to customers with
pending travel plans.
Our Business
The COVID-19 pandemic drove a significant decline in demand
beginning in the second half of March 2020. We significantly
reduced our capacity to a level that maintains essential
services to align with demand. Our capacity for the year ended
December 31, 2020 declined by 48.8% year-over-year. As a result
of the significant reduction in demand expectations and lower
capacity, we have temporarily parked a portion of our fleet.
The reductions in demand and in our capacity have resulted in a
significant reduction to our revenue. As a result, we have, and will
continue to implement cost saving initiatives to reduce our overall
level of cash spend. Some of the initiatives we have undertaken
include:
■■ Adjustments in flying capacity to align with the expected
demand.
■■ Temporary consolidations of our operations in certain cities
that contain multiple airport locations.
■■ Renegotiated service rates with business partners and
extended payment terms.
■■ Instituted a company-wide hiring freeze.
■■ Implemented salary reductions for a portion of our
crewmembers, including our officers throughout 2020 and
continuing into 2021.
■■ Offered crewmembers voluntary time off and separation
programs, with most departures for the separation program
occurring during the third quarter of 2020.
We believe the unprecedented impact of COVID-19 on the demand
for air travel and the corresponding decline in revenue will
continue to have an adverse impact on our operating cash flow.
Given this situation, we have taken actions to increase liquidity,
strengthen our financial position, and conserve cash. Some of the
actions we have taken since the onset of the pandemic through
December 31, 2020 include:
■■ Executed a $1.0 billion 364-day delayed draw term loan
agreement in March 2020 and immediately drew down on the
facility for the full amount available. This term loan facility was
repaid during the third quarter.
■■ Borrowed on our existing $550 million revolving credit facility
in April 2020.
■■ Executed a $150 million pre-purchase arrangement of TrueBlue®
points with our co-brand credit card partner in April 2020.
■■ Suspended non-critical capital expenditure projects.
■■ Amended our purchase agreement with Airbus which changed
the timing of our Airbus A321 and A220 deliveries in May
and October 2020 resulting in approximately $2.0 billion of
reduction in aircraft capital expenditures through 2022.
■■ Suspended share repurchases.
■■ Obtained $963 million of government funding under the Payroll
Support Program of The Coronavirus Aid, Relief, and Economic
Security Act (”CARES Act”), which is discussed further below.
■■ Executed a $750 million term loan credit facility and immediately
drew down on the facility for the full amount available in June
2020.
■■ Entered into $563 million of sale-leaseback transactions; which
is discussed further below.
■■ Completed public placements of equipment notes in an
aggregate principal amount of $923 million secured by 49
Airbus A321 aircraft in August 2020, which is discussed
further in Note 4 to our consolidated financial statements.
The net proceeds were primarily used to repay the outstanding
borrowings under our 364-day delayed draw term loan facility
that was due to be repaid in March 2021.
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
■■ Entered into a Loan and Guarantee agreement, as amended,
with the United States Department of the Treasury (”Treasury”)
under the Loan Program of the CARES Act which gives us
access to loans in an aggregate principal amount of up to
$1.9 billion until May 28, 2021, which is discussed further
below. We drew down $115 million under the Loan Program on
September 29, 2020.
■■ Completed the public offering of 42 million shares of our
common stock for net proceeds of $583 million in December
2020.
As a result of these activities, we had cash, cash equivalents,
and short-term investments of approximately $3.1 billion at
December 31, 2020.
In 2020, we executed $563 million of sale-leaseback transactions.
Of these transactions, $354 million did not qualify as sales
for accounting purposes. The assets associated with these
transactions remain on our consolidated balance sheets within
property and equipment and the related liabilities under the lease
are classified within debt and finance leases obligations. These
transactions are treated as cash from financing activities on our
consolidated statements of cash flows. The remaining $209 million
of sale-leaseback transactions qualified as sales and generated a
loss of $106 million. The assets associated with these transactions
which qualified as sales are recorded within operating lease assets.
The liabilities are recorded within current operating lease liabilities
and long-term operating lease liabilities on our consolidated
balance sheets. These transactions are treated as cash from
investing activities on our consolidated statements of cash flows.
Valuation of Long-Lived Assets
Under the Property, Plant, and Equipment topic of the
Codification, we are required to assess long-lived assets for
impairment when events and circumstances indicate that the
assets may be impaired. An impairment of long-lived assets exists
when the sum of the estimated undiscounted future cash flows
expected to be generated directly by the assets are less than
the book value of the assets. Our long-lived assets include both
owned and leased properties which are classified as property
and equipment, and operating lease assets on our consolidated
balance sheets, respectively.
As discussed above, our operations were adversely impacted
by the unprecedented decline in demand for travel caused by
the COVID-19 pandemic. To determine if impairment exists in
our fleet, we grouped our aircraft by fleet-type and estimated
their future cash flows based on projections of capacity, aircraft
age, and maintenance conditions. Based on the assessment, we
determined the future forecasted cash flows from the operation
of our Embraer E190 fleet were lower than the carrying value. For
those aircraft, including the ones that are under operating lease,
and related spare parts in our Embraer E190 fleet, we recorded
impairment losses of $273 million for the year ended December 31,
2020. These losses represent the difference between the book
value of these assets and their fair value. In determining fair value,
we obtained third party valuations for our Embraer E190 fleet,
which considered the effects of the current market environment,
age of the assets, and marketability. For our owned Embraer E190
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
69
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
aircraft and related spare parts, we made adjustments to the
valuations to reflect the impact of their current maintenance
conditions to determine fair value. Our estimate of fair value was
not based on distressed sales or forced liquidations. The fair value
of our Embraer E190 aircraft under operating lease and related
parts was based on the present value of current market lease
rates utilizing a market discount rate for the remaining term
of each lease. Since the fair value of our Embraer E190 fleet
was determined using unobservable inputs, it is classified as
Level 3 in the fair value hierarchy. We evaluated the remaining
fleet types and determined the future cash flows of our Airbus
A320 and Airbus A321 fleets exceeded their carrying value as of
December 31, 2020. As the extent of the ongoing impact from
the COVID-19 pandemic remains uncertain, we will update our
assessment as new information becomes available.
The Coronavirus Aid, Relief, and Economic
Security (CARES) Act
On March 27, 2020, Congress passed the CARES Act. Under
the CARES Act, assistance was made available to the aviation
industry in the form of direct payroll support (the ”Payroll Support
Program”) and secured loans (the ”Loan Program”).
PAYROLL SUPPORT PROGRAM
On April 23, 2020, we entered into a Payroll Support Program
Agreement (the ”PSP Agreement”) with the United States
Department of the Treasury (”Treasury”) governing our participation
in the Payroll Support Program. Under the Payroll Support Program,
Treasury provided us with a payment of $936 million (the ”Payroll
Support Payment”), consisting of $685 million in grants and $251
million in an unsecured term loan. The loan has a 10-year term and
bears interest on the principal amount outstanding at an annual
rate of 1.00% until April 23, 2025, and the applicable Secured
Overnight Financing Rate (”SOFR”) plus 2.00% thereafter until April
23, 2030. The principal amount may be repaid at any time prior to
maturity at par. In consideration for the Payroll Support Payment,
we issued warrants to purchase approximately 2.6 million shares
of our common stock to the Treasury at an exercise price of $9.50
per share. The warrants will expire five years after issuance and
will be exercisable either through net cash settlement or net share
settlement, at JetBlue's option, in whole or in part at any time. In
accordance with the PSP Agreement, we are required to comply
with the relevant provisions of the CARES Act which, among other
things, includes the following: the requirement to use the Payroll
Support Payment exclusively for the continuation of payment of
crewmember wages, salaries and benefits; the prohibition on
involuntary furloughs and reductions in crewmember pay rates
and benefits through September 30, 2020; the requirement that
certain levels of commercial air service be maintained until March
1, 2022; the prohibitions on share repurchases and the payment
of common stock dividends; and restrictions on the payment of
certain executive compensation until March 24, 2022.
On September 30, 2020, Treasury provided us with a payment of
$27 million (the ”Additional Payroll Support Payment”), consisting
of $19 million in grants and $8 million in an unsecured term loan
under the PSP Agreement. The terms of the unsecured term loan
70
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
are identical to those under the initial loan issued on April 23,
2020. In consideration for the Additional Payroll Support Payment,
we issued warrants to purchase approximately 85,540 additional
shares of our common stock to the Treasury (the ”Additional PSP
Warrants”). The Additional PSP Warrants have the same terms
and exercise price as the initial warrants issued on April 23, 2020
under the Payroll Support Program.
The total payroll support funding of $963 million received
under the CARES Act was originally classified as short-term
restricted cash since the funds had to be utilized to pay the
salaries and benefits costs of our crewmembers. The funds
were reclassified from short-term restricted cash within prepaid
expenses and other on our consolidated balance sheets to cash
and cash equivalents when the funds were utilized. No payroll
support funding remained available as of December 31, 2020.
The carrying value relating to the payroll support grants was
recorded within other accrued liabilities and was recognized
as a contra-expense within special items on our consolidated
statements of operations as the funds were utilized. The relative
fair value of the warrants, estimated to be $19 million, was
recorded within additional paid-in capital and reduced the total
carrying value of the grants to $685 million. Proceeds from the
payroll support grants and from the issuance of warrants were
classified within operating activities and financing activities,
respectively, on our consolidated statements of cash flows. Our
funding from the payroll support grants have been fully utilized
as of December 31, 2020.
The carrying value relating to the unsecured term loan is recorded
within long-term debt and finance lease obligations on our
consolidated balance sheets. The proceeds from the loan were
classified as financing activities on our consolidated statement
of cash flows.
LOAN PROGRAM
Under the CARES Act Loan Program as signed in April 2020
and subsequently amended in November 2020, JetBlue has the
ability to borrow up to a total of approximately $1.9 billion from
the Treasury. If we accept the full amount of the loan, we will
issue warrants to purchase approximately 20.5 million shares of
our common stock to the Treasury. Any amount received under
the Loan Program will be subject to the relevant provisions
of the CARES Act, including many of those described above under
the Payroll Support Program.
We made an initial drawing of $115 million under the Loan Program
on September 29, 2020. In connection with this initial drawing,
we entered into a warrant agreement with Treasury, pursuant to
which we issued to Treasury warrants to purchase approximately
1.2 million shares of our common stock at an exercise price of
$9.50 per share.
As of December 31, 2020, approximately $1.8 billion of the
borrowing capacity remained available to us. On January 15,
2021, we entered into a letter agreement with Treasury which
provided an extension of the Loan Agreement allowing us the
option to access the remaining borrowing capacity through
May 28, 2021.
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAYROLL TAX DEFERRAL
The CARES Act also provides for deferred payments of the
employer portion of social security taxes through the end of
2020, with 50% of the deferred amount due December 31, 2021
and the remaining 50% due December 31, 2022. We have deferred
$48 million in payments through December 31, 2020.
Income Taxes
Among other things, the CARES Act permits net operating loss
(NOL) carryovers and carrybacks to offset 100% of taxable income
for taxable years beginning before 2021. In addition, the CARES Act
allows NOLs incurred in 2018, 2019, and 2020 to be carried back
to each of the five preceding taxable years to generate a refund
of previously paid incomes taxes. As a result, the Company’s
effective tax rate includes an income tax benefit related to the
anticipated refunds from tax losses generated during 2020 that
are permitted to be carried back to certain years when the U.S.
federal income tax rate was 35%.
Consolidated Appropriations Act, 2021
On January 15, 2021, we entered into a Payroll Support Program
Extension Agreement (the ”PSP Extension Agreement”) with
Treasury governing our participation in the federal Payroll Support
Program for passenger air carriers under the United States
Consolidated Appropriations Act, 2021 (the ”Payroll Support
Program 2”).
Pursuant to the Payroll Support Program 2, on January 15, 2021,
Treasury provided to us a payment of approximately $252 million
(the ”2021 Payroll Support Payment”) under the PSP Extension
Agreement. The 2021 Payroll Support Payment includes a grant
of approximately $206 million and a loan of $46 million. In
consideration for the 2021 Payroll Support Payment, we issued
to Treasury warrants to purchase 316,583 shares of our common
stock at an exercise price of $14.43 per share. The loan will mature
10 years after issuance and the warrants will expire five years
after issuance. These transactions had no impact on our 2020
consolidated financial statements.
Except as noted above, the terms of the PSP Extension Agreement
are materially identical to those entered into in connection with
the Payroll Support Program under the CARES Act. In connection
with the participation in the Payroll Support Program 2, JetBlue
may also be entitled to receive an additional disbursement of
up to $252 million, including a loan of up to $76 million (with
respect to which we would issue to treasury additional warrants
to purchase common stock).
Revenue Recognition
NOTE 3
The Company categorizes the revenue received from contracts with its customers by revenue source as we believe it best depicts the
nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenue recognized by revenue
source for the years ended December 31, 2020, 2019, and 2018 (in millions):
Passenger revenue
Passenger travel
Loyalty revenue - air transportation
Other revenue
Loyalty revenue
Other revenue
TOTAL REVENUE
2020
2019
2018
$
2,551 $
7,395 $
182
168
56
391
201
107
7,061
320
168
109
$
2,957 $
8,094 $
7,658
TrueBlue® points earned from ticket purchases are presented as a reduction to Passenger travel within passenger revenue. Amounts
presented in Loyalty revenue - air transportation represent the revenue recognized when TrueBlue® points have been redeemed and
the travel has occurred.
Contract Liabilities
Our contract liabilities primarily consist of ticket sales for which transportation has not yet been provided, unused credits available to
customers, and outstanding loyalty points available for redemption (in millions):
Air traffic liability - passenger travel
Air traffic liability - loyalty program (air transportation)
Deferred revenue
TOTAL
December 31, 2020 December 31, 2019
$
$
$
964
733
41
929
661
10
1,738
$
1,600
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
71
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
During the years ended December 31, 2020 and 2019, we
recognized passenger revenue of $745 million and $878 million
respectively, that was included in passenger travel liability at the
beginning of the respective periods.
The Company elected the practical expedient that allows entities
to not disclose the amount of the remaining transaction price and
its expected timing of recognition for passenger tickets if the
contract has an original expected duration of one year or less or if
certain other conditions are met. We elected to apply this practical
expedient to our contract liabilities relating to passenger travel
and ancillary services as our tickets or any related passenger
credits expire one year from the date of issuance.
In response to the impact of COVID-19 on air travel, we extended
the expiration dates for travel credits issued from February 27,
2020 through June 30, 2020 to a 24-month period. Accordingly,
any revenue associated with these travel credits, which are
initially deferred in air traffic liability, will be recognized within
24 months. Based on our customers' behaviors and estimates of
breakage, we expect $80 million of the outstanding travel credits
at December 31, 2020 will be recognized into revenue beyond
12 months. We have, accordingly, reclassified this amount to air
traffic liability - non-current on our consolidated balance sheets.
Given the change in contract duration, our estimates of revenue
from unused tickets may be subject to variability and differ from
historical experience.
TrueBlue® points are combined in one homogeneous pool and are
not separately identifiable. As such, the revenue is comprised of
the points that were part of the air traffic liability balance at the
beginning of the period as well as points that were issued during
the period.
In April 2020, we executed a pre-purchase arrangement of
TrueBlue® points with our co-brand credit card partner for
$150 million. The funds are expected to be applied to future point
purchases ratably over the course of one year. As the funds are
not yet associated with a point, they are considered to be short-
term and have been included within other accrued liabilities on
our consolidated balance sheets. The value of funds received in
excess of points acquired for this arrangement was approximately
$38 million as of December 31, 2020.
The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points
earned and sold to participating companies (in millions):
Balance at December 31, 2018
TrueBlue® points redeemed
TrueBlue® points earned and sold
Balance at December 31, 2019
TrueBlue® points redeemed
TrueBlue® points earned and sold
Balance at December 31, 2020
$
$
580
(391)
472
661
(182)
254
733
The timing of our TrueBlue® point redemptions can vary; however, the majority of our points are redeemed within approximately three
years of the date of issuance.
72
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NOTE 4
Long-term Debt, Short-term Borrowings and Finance Lease
Obligations
Long-term debt and finance lease obligations and the related weighted average interest rate at December 31, 2020 and 2019 consisted
of the following (in millions):
Secured Debt
Fixed rate specialty bonds, due through 2036
$
43
4.9 % $
43
4.9 %
December 31, 2020
December 31, 2019
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032
2019-1 Series A, due through 2028
2019-1 Series B, due through 2027
2020-1 Series A, due through 2032
2020-1 Series B, due through 2028
Fixed rate enhanced equipment notes, due through 2023
Fixed rate equipment notes, due through 2028
Floating rate equipment notes, due through 2028
Floating rate term loan credit facility, due through 2024
Secured CARES Act Loan, due through 2025
Citibank line of credit, due through 2023
2020 sale-leaseback transactions, due through 2024
Finance Leases
Unsecured Debt
Unsecured CARES Act Payroll Support Program loan, due through 2030
Total debt and finance lease obligations
Less: Current maturities
Less: Debt acquisition cost
2.8 %
3.0 %
8.2 %
4.1 %
7.8 %
4.5 %
4.2 %
2.6 %
6.4 %
3.2 %
2.2 %
7.6 %
4.6 %
2.0 %
567
176
109
635
172
115
895
153
712
106
550
352
63
259
4,907
(450)
(44)
2.8 %
3.0 %
— %
— %
— %
4.5 %
4.2 %
4.3 %
— %
— %
— %
— %
4.8 %
— %
589
183
—
—
—
134
1,113
201
—
—
—
—
89
—
2,352
(344)
(18)
LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS
$
4,413
$
1,990
Fixed Rate Specialty Bonds
In November 2005, the Greater Orlando Aviation Authority, or
GOAA, issued special purpose airport facilities revenue bonds to
JetBlue as reimbursement for certain airport facility construction
and other costs. In April 2013, GOAA issued $42 million in special
purpose airport facility revenue bonds to refund the bonds issued
in 2005. The proceeds from the refunded bonds were loaned to
us and we recorded the issuance of $43 million, net of $1 million
premium, as long-term debt on our consolidated balance sheets.
Fixed Rate Enhanced Equipment Notes
2019-1 EQUIPMENT NOTES
In November 2019, we completed a public placement of equipment
notes in an aggregate principal amount of $772 million secured
by 25 Airbus A321 aircraft. The equipment notes were issued in
two series: (i) Series AA, bearing interest at the rate of 2.75% per
annum in the aggregate principal amount equal to $589 million,
and (ii) Series A, bearing interest at the rate of 2.95% per annum
in the aggregate principal amount equal to $183 million. Principal
and interest are payable semi-annually.
In August 2020, we completed a public placement of equipment
notes in an aggregate principal amount of $115 million bearing
interest at a rate of 8.00% per annum. These equipment notes
are secured by 25 Airbus A321 aircraft, which were included in
the collateral pool of our 2019-1 Series AA and Series A offerings
completed in November 2019. Principal and interest are payable
semi-annually.
2020-1 EQUIPMENT NOTES
In August 2020, we completed a public placement of equipment
notes in an aggregate principal amount of $808 million secured
by 24 Airbus A321 aircraft. The equipment notes were issued in
two series: (i) Series A, bearing interest at the rate of 4.00% per
annum in the aggregate principal amount equal to $636 million,
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
73
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
and (ii) Series B, bearing interest at the rate of 7.75% per annum
in the aggregate principal amount equal to $172 million. Principal
and interest are payable semi-annually.
Fixed Rate Enhanced Equipment Notes, Due
Through 2023
In March 2014, we completed a private placement of $226 million
in pass-through certificates, Series 2013-1. The certificates were
issued by a pass-through trust and are not obligations of JetBlue.
The proceeds from the issuance of the pass-through certificates
were used to purchase equipment notes issued by JetBlue and
secured by 14 of our aircraft. Principal and interest are payable
semi-annually.
Fixed Rate Equipment Notes, Due Through
2028
In 2019, we issued $219 million in fixed rate equipment notes due
through 2027, which are secured by 10 Airbus A320 aircraft and
two Airbus A321 aircraft. In 2018, we issued $567 million in fixed
rate equipment notes due through 2028, which are secured by 14
Airbus A320 aircraft and 10 Airbus A321 aircraft.
Floating Rate Equipment Notes, Due Through
2028
Interest rates adjust quarterly or semi-annually based on LIBOR,
plus a margin. In 2018, we issued $120 million in floating rate
equipment notes due through 2028, which are secured by six
Airbus A320 aircraft and one Airbus A321 aircraft.
Floating Rate Term Loan Credit Facility, Due
Through 2024
On June 17, 2020, we entered into a $750 million term loan
credit facility with Barclays Bank PLC, as administrative agent.
The loans under this term loan credit facility bear interest at a
variable rate equal to LIBOR (subject to a 1.00% floor), or at our
election another rate, in each case, plus a specified margin. Our
obligations are secured on a senior basis by airport takeoff and
landing slots at LaGuardia Airport, John F. Kennedy International
Airport, and Reagan National Airport and the right to use certain
intellectual property assets comprising the JetBlue brand. The
term loan facility is subject to amortization payments of 5% per
year, payable quarterly, commencing on September 30, 2020
with the remaining balance due and payable in a single payment
on the maturity date of June 17, 2024. The interest rate on our
outstanding balance was 6.25% as of December 31, 2020.
Secured CARES Act Loan Program
As discussed in Note 2 to our consolidated financial statements,
under the CARES Act Loan Program, we have the ability to borrow
up to a total of approximately $1.9 billion from the Treasury. Any
loans issued under the Loan Program are expected to be senior
secured obligations of the Company. If we accept the full amount
74
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
of the loan, we will issue warrants to purchase approximately
20.5 million shares of our common stock to the Treasury. Any
amount received under the Loan Program will be subject to the
relevant provisions of the CARES Act, including many of those
described above under the Payroll Support Program.
Unless otherwise terminated early, all borrowings under the Loan
Agreement are due and payable on the fifth anniversary of the
initial borrowing date. We made a drawing of $115 million under
the Loan Agreement on September 29, 2020. Borrowings under the
Loan Agreement bear interest at a variable rate equal to LIBOR (or
another rate based on certain market interest rates, plus a margin
of 1% per annum, in each case with a floor of 0%), plus a margin of
2.75% per annum. Our obligations under the Loan Agreement are
secured by liens on (i) certain eligible aircraft and engine collateral,
(ii) certain loyalty program assets, including JetBlue's rights in
certain loyalty program agreements, loyalty program data and
intellectual property, and (iii) certain cash accounts (collectively, the
”Collateral”). Under the terms of the Loan Agreement, we may also
pledge eligible spare parts, slots, gates and routes, and additional
aircraft, real property, ground support equipment, flight simulators
and equity interests. The Loan Agreement includes affirmative
and negative covenants that restrict our ability to, among other
things, dispose of Collateral, merge, consolidate or sell assets,
incur certain additional indebtedness or pay certain dividends. In
addition, we are required to maintain unrestricted cash and cash
equivalents and unused commitments available under all revolving
credit facilities aggregating not less than $550 million and to
maintain a minimum ratio of the borrowing base of the Collateral
(determined as the sum of a specified percentage of the appraised
value of each type of Collateral) to outstanding obligations under
the Loan Agreement of not less than 1.6 to 1.0. If we do not meet
the minimum collateral coverage ratio, we must either provide
additional Collateral to secure our obligations under the Loan
Agreement or repay the loans by an amount necessary to maintain
compliance with the collateral coverage ratio. The Loan Agreement
contains events of default customary for similar financings. Upon
the occurrence of an event of default, the outstanding obligations
under the Loan Agreement may be accelerated and become due
and payable immediately. In addition, if certain change of control
events occur with respect to JetBlue, we will be required to prepay
the loans in full under the Loan Agreement.
In connection with the Loan Agreement and the initial borrowing
amount of $115 million, on September 29, 2020, we entered into a
warrant agreement with Treasury, pursuant to which we issued to
Treasury warrants to purchase approximately 1.2 million shares of
our common stock at an exercise price of $9.50 per share.
As of December 31, 2020, approximately $1.8 billion of the
borrowing capacity remained available to us. On January 15, 2021,
we entered into a letter agreement with Treasury which provided
an extension of the Loan Agreement allowing us the option to
access the remaining borrowing capacity through May 28, 2021.
Citibank Line of Credit
In August 2019, we amended our revolving Credit and Guaranty
Agreement with Citibank N.A. as the administrative agent. The
amendment increased our borrowing capacity by $125 million to
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
$550 million and extended the term of the facility through August
2023. Borrowings under the Credit and Guaranty Agreement bear
interest at a variable rate equal to LIBOR, plus a margin. The Credit
and Guaranty Agreement is secured by spare parts, aircraft, and
certain other assets. The Credit and Guaranty Agreement includes
covenants that require us to maintain certain minimum balances
in unrestricted cash, cash equivalents, and unused commitments
available under revolving credit facilities. In addition, the
covenants restrict our ability to, among other things, dispose of
certain collateral, or merge, consolidate, or sell assets.
We borrowed the full amount of $550 million under this revolving
Credit and Guaranty Agreement on April 22, 2020. The interest
rate on our outstanding balance was 2.20% as of December 31,
2020.
2020 Sale-Leaseback Transactions
As discussed in Note 2 to our consolidated financial statements,
in 2020, we executed $563 million of sale-leaseback transactions.
Of these transactions, $354 million did not qualify as sales
for accounting purposes. The assets associated with these
transactions remain on our consolidated balance sheets within
property and equipment and the related liabilities under the
lease are classified within debt and finance leases obligations.
These transactions are treated as cash from financing activities
on our consolidated statements of cash flows. The remaining
$209 million of sale-leaseback transactions qualified as sales
and generated a loss of $106 million. The assets associated
with these transactions which qualified as sales are recorded
within operating lease assets. The liabilities are recorded within
current operating lease liabilities and long-term operating lease
liabilities on our consolidated balance sheets. These transactions
are treated as cash from investing activities on our consolidated
statements of cash flows.
Finance Leases
$188 million with accumulated amortization of $54 million. The
future minimum lease payments under these non-cancelable
leases are $40 million in 2021, $11 million in 2022, $11 million in
2023, $5 million in 2024, and no payments in the years thereafter.
Included in the future minimum lease payments is $4 million
representing interest, resulting in a present value of finance
leases of $63 million with a current portion of $37 million and a
long-term portion of $26 million.
As of December 31, 2019, four finance leased Airbus A320 aircraft
and two finance leased A321 aircraft were included in property
and equipment at a cost of $250 million with accumulated
amortization of $80 million.
Unsecured CARES Act Payroll Support
Program Loan
As discussed in Note 2 to our consolidated financial statements,
on April 23, 2020, we entered into the PSP Agreement under the
CARES Act with the Treasury. Pursuant to the agreement, JetBlue
received a Payroll Support Payment of $936 million (the ”Payroll
Support Payment”) which included a grant of $685 million and a
promissory note for $251 million. The note matures 10 years after
issuance and is payable in a lump sum at maturity. As part of the
agreement, JetBlue issued to the Treasury warrants to acquire
more than 2.6 million shares of our common stock under the
program at an exercise price of $9.50 per share. The warrants
expire five years after issuance. On September 30, 2020, Treasury
provided us Additional Payroll Support Payment of $27 million
consisting of $19 million in grants and $8 million in an unsecured
term loan under the PSP Agreement. The terms of the unsecured
term loan are identical to those under the initial loan issued on
April 23, 2020. In consideration for the Additional Payroll Support
Payment, we issued Additional PSP Warrants to purchase
approximately 85,540 additional shares of our common stock to
the Treasury. The Additional PSP Warrants have the same terms
and exercise price as the initial warrants issued on April 23, 2020.
As of December 31, 2020, two Airbus A320 aircraft, two Airbus
A321 aircraft, and various computer equipment under finance
leases were included in property and equipment at a cost of
As of December 31, 2020, we believe we were in material
compliance with all of our covenants in relation to our debt and
lease agreements.
Maturities of our debt and finance leases, net of debt acquisition costs, for the next five years are as follows (in millions):
2021
2022
2023
2024
2025
Thereafter
$
Maturities
440
421
1,181
962
308
1,551
Aircraft, engines, and other equipment and facilities having a net book value of $6.9 billion at December 31, 2020 were pledged as security
under various financing arrangements. Cash payments for interest related to debt and finance lease obligations, net of capitalized
interest, aggregated $128 million, $62 million and $59 million in 2020, 2019, and 2018, respectively.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
75
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at December 31, 2020 and 2019
were as follows (in millions):
Public Debt
Fixed rate special facility bonds, due through 2036
$
42
$
45
$
42
$
46
December 31, 2020
December 31, 2019
Carrying Value
Estimated
Fair Value
Carrying Value
Estimated
Fair Value
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032
2019-1 Series A, due through 2028
2019-1 Series B, due through 2027
2020-1 Series A, due through 2032
2020-1 Series B, due through 2028
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023
Fixed rate equipment notes, due through 2028
Floating rate equipment notes, due through 2028
Floating rate term loan credit facility, due through 2024
Unsecured CARES Act Payroll Support Program loan, due through 2030
Secured CARES Act loan, due through 2025
Citibank line of credit, due through 2023
2020 sale-leaseback transactions, due through 2024
560
174
107
627
170
114
891
152
702
259
104
546
352
440
152
139
658
223
116
1,017
144
759
207
104
533
393
581
181
—
—
—
133
1,107
201
—
—
—
—
—
586
186
—
—
—
141
1,201
207
—
—
—
—
—
TOTAL(1)
$
4,800
$
4,930
$
2,245
$
2,367
(1) Total excludes finance lease obligations of $63 million and $89 million at December 31, 2020 and 2019, respectively.
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 enhanced equipment notes and our special facility bonds
were based on quoted market prices in markets with low trading
volumes. 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 to our consolidated financial statements for an
explanation of the fair value hierarchy structure.
We have financed certain aircraft with Enhanced Equipment Trust
Certificates, or EETCs. One of the benefits of this structure 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 financial statements. Our assessment of our 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 and liquidity facilities,
and also to lower our total borrowing cost. We concluded that
we are not the primary beneficiary in these trusts because our
involvement in them is 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 financial statements.
Short-term Borrowings
MORGAN STANLEY DELAYED DRAW TERM LOAN AGREEMENT
In March 2020, we entered into a 364-day delayed draw term loan
credit agreement with Morgan Stanley Senior Funding Inc., as
the administrative agent. The delayed draw term loan agreement
provided for a term loan facility of up to $1 billion. Borrowings
under the credit agreement bore interest at a variable rate equal
to LIBOR (but not less than 1% per annum), plus a margin, or at
our election, another rate based on certain market interest rates.
Our obligations under the delayed draw term loan agreement
were secured by liens on certain aircraft and spare engines.
The delayed draw term loan agreement included provisions that
required us to maintain unrestricted cash and cash equivalents
76
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
and unused commitments available under all revolving credit
facilities (including the term loan facility) aggregating not less
than $550 million.
We borrowed the full amount of the delayed draw term loan
facility in March 2020. Amortization payments equal to 0.25% of
the outstanding principal of the term loan were due on the last
day of each quarter during the term. The remaining outstanding
principal amount of the term loan was required to be repaid in a
single installment on the maturity date on March 15, 2021.
We repaid the full balance of this delayed draw term loan facility
during the third quarter of 2020.
Leases
NOTE 5
Operating lease assets represent our right to use an underlying
asset for the lease term, and lease liabilities represent our
obligation to make lease payments arising from the lease.
Operating lease assets and liabilities are recognized at the lease
commencement date based on the estimated present value of
lease payments over the lease term. When available, we use the
rate implicit in the lease to discount lease payments to present
value. For leases that do not provide a readily determinable
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MORGAN STANLEY LINE OF CREDIT
We have a revolving line of credit with Morgan Stanley for up
to approximately $200 million. This line of credit is secured by
a portion of our investment securities held by Morgan Stanley
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 and for the years
ended December 31, 2020 and 2019, we did not have a balance
outstanding or borrowings under this line of credit.
implicit rate, we estimate our incremental borrowing rate to
discount the lease payments based on information available at
lease commencement.
Leases with a term of 12 months or less are not recorded on the
balance sheet. Our lease agreements do not contain any residual
value guarantees. For facility leases, we account for the lease and
non-lease components as a single lease component.
The table below presents the lease-related assets and liabilities recorded on our consolidated balance sheets as of December 31,
2020 and 2019 (in millions):
Assets
Classification on Balance Sheet
Operating lease assets
Operating lease assets
Finance lease assets
Property and equipment, net
Total lease assets
Liabilities
Current:
Classification on Balance Sheet
Operating lease liabilities
Current operating lease liabilities
Finance lease liabilities
Current maturities of long-term debt and finance lease obligations
Long-term:
Operating lease liabilities
Long-term operating lease liabilities
Finance lease liabilities
Long-term debt and finance lease obligations
Total lease liabilities
Weighted average remaining lease term (in years)
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
$
$
$
$
As of December 31,
2020
804
131
935
113
37
752
26
928
$
$
$
$
2019
912
171
1,083
128
31
690
58
907
As of December 31,
2020
2019
9
2
5.99 %
4.60 %
11
3
5.95 %
4.75 %
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
77
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Flight Equipment Leases
Facility Leases
We operated a fleet of 267 aircraft as of December 31, 2020. Of
our fleet, 62 aircraft were accounted for under operating leases
and four aircraft were accounted for under finance leases. These
aircraft leases generally have long durations with remaining terms
of nine months to five years.
The majority of aircraft operating leases can be renewed at rates
based on fair market value at the end of the lease term for one
or two years. None of our aircraft operating leases have variable
rent payments. We have purchase options for 40 of our aircraft
leases at the end of their lease terms. These purchase options are
at fair market value and have a one-time option during the term at
fixed amounts that were expected to approximate the fair market
value at lease inception.
As a result of the unprecedented decline in demand for travel
caused by the COVID-19 pandemic, we recorded impairment
losses of $273 million for the year ended December 31, 2020
relating to our Embraer E190 fleet. These losses were attributed
to aircraft and related spare parts including the ones under
operating leases. Refer to note 18 to our consolidated financial
statements for further details.
Our facility leases are primarily for space at the airports we
serve. These leases are classified as operating leases and reflect
our use of passenger terminal service facilities consisting
of ticket counters, gate space, operations support area, and
baggage service offices. We lease space directly or indirectly
from the local airport authority on varying terms dependent on
prevailing practices at each airport. The remaining terms of
our airport leases vary from 2 months to 14 years. Our leases
at certain airports contain provisions for periodic adjustments
of rental rates based on the operating costs of the airports or
the frequency of use of the facilities. Some of these leases
also include renewal options and/or termination options that
are factored into our determination of lease payments when
appropriate. Because of the variable nature of the rates, these
leases are not recorded as operating lease assets and operating
lease liabilities on our consolidated balance sheets.
We also have leases for our corporate offices, training center, and
various hangars and airport support facilities at our focus cities.
Other Ground and Property Equipment
We lease certain IT assets, ground support equipment, and
various other pieces of equipment. The lease terms of our ground
support equipment are less than 12 months. The amount of other
equipment we have is not significant.
Lease Costs
The table below presents certain information related to our lease costs during the years ended December 31, 2020, 2019, and 2018
(in millions):
Operating lease cost
Short-term lease cost
Finance lease cost:
Amortization of assets
Interest on lease liabilities
Variable lease cost
Sublease income
TOTAL NET LEASE COST
Other Information
2020
2019
$
160
$
180
$
1
6
2
282
(5)
2
9
3
391
(19)
$
446
$
566
$
2018
185
2
10
3
379
(15)
564
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and
2018 (in millions):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
2020
2019
2018
$
146
$
136
$
4
28
5
17
151
5
17
78
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Lease Commitments
The table below presents scheduled future minimum lease payments for operating and finance leases recorded on our consolidated
balance sheets, as of December 31, 2020 (in millions):
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less: amount of lease payment representing interest
Present value of future minimum lease payment
Less: current obligations under leases
LONG-TERM LEASE OBLIGATIONS
As of December 31, 2020
Operating Leases
Finance Leases
$
160
$
151
141
119
82
493
1,146
(281)
865
(113)
752
$
$
40
11
11
5
—
—
67
(4)
63
(37)
26
We did not have any lease commitments that have not yet commenced as of December 31, 2020.
Stockholders’ Equity
NOTE 6
On December 8, 2017, the Board of Directors approved a two-year
share repurchase program, or the 2017 Authorization, of up to
$750 million worth of common stock beginning on January 1, 2018.
The 2017 Authorization was completed in 2019.
On September 19, 2019, the Board of Directors approved a
share repurchase program, or the 2019 Authorization, of up to
$800 million worth of common stock beginning on October 1, 2019
and ending no later than December 31, 2021.
Our share repurchase programs include authorization for
repurchases in open market transactions pursuant to Rules 10b-18
and/or 10b5-1 of the Exchange Act, and/or one or more privately-
negotiated accelerated stock repurchase transactions.
In 2018, we entered into three separate ASR agreements for a sum
of $375 million. A total of 19.1 million shares were repurchased
under these ASR agreements with an average price paid per share
of $19.60.
In 2019, we entered into four separate ASR agreements for a sum
of $535 million. A total of 28.1 million shares were repurchased
under these ASR agreements with an average price paid per share
of $19.02.
During the first quarter of 2020, we repurchased 13.0 million
shares at an average price of $12.27 per share.
The total shares purchased by JetBlue under each of the ASRs
in 2020, 2019, and 2018 were based on the volume weighted
average prices of JetBlue's common stock during the terms of
the respective agreements.
In accordance with the PSP Agreement and the Loan Agreement
with the Treasury, we are prohibited from making any share
repurchases. We have suspended our share repurchase program
as of March 31, 2020.
On December 4, 2020, we completed the public offering of
42.0 million shares of our common stock at a public offering price
of $14.40 per share. We intend to use the net proceeds from the
offering for general corporate purposes.
As of December 31, 2020, we had a total of 26.5 million shares
of our common stock reserved for issuance. These shares are
primarily related to our equity incentive plans. Refer to Note 8 to
our consolidated financial statements for further details on our
share-based compensation.
As of December 31, 2020, we had a total of 158.0 million shares
of treasury stock.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
79
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(Loss) Earnings Per Share
NOTE 7
Basic earnings per share is calculated by dividing net (loss) income
by the weighted average number of shares outstanding during
the period. Diluted earnings per share is calculated similarly
but includes potential dilution from restricted stock units, the
Crewmember Stock Purchase Plan, and any other potentially
dilutive instruments using the treasury stock method. Anti-dilutive
common stock equivalents excluded from the computation of
diluted earnings per share amounts were 2.0 million for the year
ended December 31, 2020. There were no anti-dilutive common
stock equivalents for the years ended December 31, 2019 and 2018.
The following table shows how we computed basic and diluted earnings per common share for the years ended December 31 (dollars
and share data in millions):
Net (loss) income
Weighted average basic shares
Effect of dilutive securities
Weighted average diluted shares
Earnings per common share
Basic
Diluted
2020
2019
$
(1,354)
$
569
$
277.5
2.0
279.5
296.6
1.8
298.4
$
$
(4.88)
(4.88)
$
$
1.92
1.91
$
$
2018
189
312.9
1.6
314.5
0.60
0.60
As discussed in Note 6 to our consolidated financial statements,
JetBlue entered into various ASR agreements in 2020, 2019, and
2018 and purchased approximately 13.0 million, 28.1 million, and
19.1 million shares, respectively, for $160 million, $535 million, and
$375 million, respectively. The number of shares repurchased
are based on the volume weighted average prices of JetBlue's
common stock during the term of the ASR agreements.
Share-Based Compensation
NOTE 8
We have various equity incentive plans under which we have granted
stock awards to our eligible crewmembers and members of our
Board of Directors. These include the JetBlue Airways Corporation
Restated and Amended 2002 Stock Incentive Plan, or 2002 Plan,
the JetBlue Airways Corporation 2011 Incentive Compensation Plan,
or 2011 Plan, and the JetBlue Airways Corporation 2020 Omnibus
Equity Incentive Plan, or the 2020 Plan.
The 2002 Plan was replaced by the 2011 Plan and has an
immaterial amount of vested deferred stock units outstanding
as of December 31, 2020.
The 2011 Plan was replaced by the 2020 Plan in May 2020.
We additionally have a Crewmember Stock Purchase Plan, or
CSPP, that is available to all eligible crewmembers.
Unrecognized stock-based compensation expense was
approximately $21.2 million as of December 31, 2020. This
amount relates to a total of 2.4 million unvested restricted
stock units, or RSUs, performance stock units, or PSUs, and
deferred stock units, or DSUs, that were outstanding under
our 2011 and 2020 Plans. We expect to recognize this stock-
based compensation expense over a weighted average period
of approximately 17 months.
The total stock-based compensation expense, which is included
within salaries, wages and benefits on our consolidated
statements of operations, for the years ended December 31,
2020, 2019, and 2018 was $28 million, $31 million, and $28 million,
respectively.
80
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
2011 Incentive Compensation Plan
At our Annual Shareholders Meeting held on May 26, 2011, our
shareholders approved the JetBlue Airways Corporation 2011
Incentive Compensation Plan. Upon inception, the 2011 Plan had
15.0 million shares of our common stock reserved for issuance.
RSUs vest in annual installments over three years which can be
accelerated upon the occurrence of a change in control. Under
this plan, we grant RSUs to certain crewmembers. Our policy
is to grant RSUs based on the market price of the underlying
common stock on the date of grant. Under this plan, we grant
DSUs to members of our Board of Directors, and PSUs to certain
members of our executive leadership team.
The 2011 Plan was amended and restated effective January 1,
2014, to include the definition of retirement eligibility. Once
a crewmember meets the definition, they will continue to
vest their shares as if they remained employed by JetBlue,
regardless of their actual employment status with the Company.
In accordance with the Compensation-Stock Compensation topic
of the Codification, the grant’s explicit service condition is non-
substantive and the grant has effectively vested at the time
retirement eligibility is met.
At our Annual Shareholders Meeting held on May 21, 2015, our
shareholders approved amendments to the 2011 Plan increasing
the number of shares of Company common stock that remain
available for issuance under the plan by 7.5 million.
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RESTRICTED STOCK UNITS
The following is a summary of RSU activity under the 2011 Plan for the year ended December 31, 2020 (in millions except per share data):
Nonvested at beginning of year
Granted
Vested
Forfeited
NONVESTED AT END OF YEAR
The total intrinsic value, determined as of the date of vesting,
for all RSUs that vested during the year ended December 31,
2020, 2019 and 2018 was $18 million, $15 million and $16 million,
respectively. The weighted average grant-date fair value of share
awards during the years ended December 31, 2020, 2019 and 2018
was $17.96, $17.27, and $20.62, respectively.
The vesting period for DSUs under the 2011 Plan is either one or three
years of service. Once vested, shares are issued six months and one
day following a Director’s departure from our Board of Directors.
During the years ended December 31, 2020, 2019, and 2018, we
granted a nominal amount of DSUs, almost all of which remain
outstanding at December 31, 2020. In 2019 and 2018, we granted a
nominal amount of PSUs to members of our executive leadership
team, payment of which are based upon achievements of certain
performance criteria. No PSUs were granted in 2020 as a result of
the economic uncertainty brought on by the COVID-19 pandemic.
The 2011 Plan which was set to expire in May 2021 was replaced
by JetBlue Airways Corporation 2020 Omnibus Equity Incentive
Plan in May 2020.
2020 Omnibus Equity Incentive Plan
At our Annual Shareholders Meeting held on May 14, 2020, our
shareholders approved the JetBlue Airways Corporation 2020
Omnibus Equity Incentive Plan. Upon inception, the 2020 Plan had
10.5 million shares of our common stock reserved for issuance.
The 2020 Plan, by its terms, will terminate no later than May 2030.
Under the 2020 plan, we grant RSUs to certain crewmembers and
members of our Board of Directors. The vesting periods for the
RSUs varies by grant but no less than one year. We also grant
DSUs to members of our Board of Directors, and PSUs to certain
members of our executive leadership team under the 2020 Plan.
We have only granted an insignificant amount of RSUs and DSUs
under the 2020 Plan since its adoption in May 2020.
Crewmember Stock Purchase Plans
In May 2011, our shareholders approved the 2011 Crewmember
Stock Purchase Plan, or the 2011 CSPP. At inception, the 2011 CSPP
had 8.0 million shares of our common stock reserved for issuance.
At our Annual Shareholders Meeting held on May 21, 2015, our
shareholders approved amendments to the CSPP increasing
the number of shares of Company common stock that remain
available for issuance under the plan by 15 million.
Shares
Weighted Average
Grant Date Fair Value
$
2.0
1.2
(0.9)
(0.2)
2.1
18.59
17.96
18.99
18.07
18.08
In May 2020, our shareholders approved the JetBlue Airways
Corporation 2020 Crewmember Stock Purchase Plan, or the
2020 CSPP to replace the 2011 CSPP which was set to expire in
April 2021. At inception, the 2020 CSPP had 17.5 million shares of
our common stock reserved for issuance. The 2020 CSPP, by its
terms, will termination no later than May 2030. The other terms
of the 2020 CSPP are substantially identical to those of the 2011
CSPP.
Our CSPPs have a series of six-month offering periods, with a
new offering period beginning on the first business day of May
and November each year. Crewmembers can enroll in CSPP
nearly year-round, with the exception of specific blackout
dates. Crewmembers may contribute up to 10% of their pay
towards the purchase of common stock via payroll deductions.
Purchase dates occur on the last business day of April and
October each year. The purchase price is the stock price on the
purchase date, less a 15% discount. The compensation cost
relating to the discount is recognized over the offering period.
The total expense recognized relating to our CSPPs for the years
ended December 31, 2020, 2019, and 2018 was approximately
$6 million, $9 million and $9 million, respectively. Under the plans,
crewmembers purchased 4.1 million, 3.2 million, and 3.2 million
new shares for the years ended December 31, 2020, 2019, and
2018, respectively, at weighted average prices of $8.94, $16.06,
and $15.21 per share, respectively.
Under the CSPPs, should we be acquired by merger or sale of
substantially all of our assets or sale of more than 50% of our
outstanding voting securities, all outstanding purchase rights
will automatically be exercised immediately prior to the effective
date of the acquisition at a price equal to 85% of the fair market
value per share immediately prior to the acquisition.
Taxation
The Compensation-Stock Compensation topic of the Codification
requires deferred taxes be recognized on temporary differences
that arise with respect to stock-based compensation attributable
to nonqualified stock options and awards. However, no tax benefit
is recognized for stock-based compensation attributable to
incentive stock options, or ISO, or CSPP shares until there is a
disqualifying disposition, if any, for income tax purposes. A portion
of our historical stock-based compensation was attributable to
CSPP shares; therefore, our effective tax rate was subject to
fluctuation.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
81
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Note 9
Our income tax expense (benefit) consisted of the following for the years ended December 31 (in millions):
Income Taxes
Deferred:
Federal
State
Foreign
Deferred income tax (benefit) expense
Current:
Federal
State
Foreign
Current income tax (benefit) expense
TOTAL INCOME TAX (BENEFIT) EXPENSE
2020
(247)
(82)
—
(329)
(199)
(9)
(2)
(210)
(539)
2019
2018
$
$
119
20
—
139
36
19
5
60
$
199
$
82
7
1
90
(61)
(5)
6
(60)
30
$
$
On March 27, 2020, the CARES Act was enacted in response to
the COVID-19 pandemic. The CARES Act permits net operating
loss (NOL) carryovers and carrybacks to offset 100% of taxable
income for taxable years beginning before 2021. In addition,
the CARES Act allows NOLs incurred in 2018, 2019, and 2020
to be carried back to each of the five preceding taxable years
to generate a refund of previously paid incomes taxes. As a
result, the Company’s effective tax rate includes an income
tax benefit related to the anticipated refunds from tax losses
generated during 2020 that are permitted to be carried back to
certain years when the U.S. federal income tax rate was 35%.
The effective tax rate on income before income taxes differed from the federal income tax statutory rate for the years ended December 31
for the following reasons (in millions):
Income tax (benefit) expense at statutory rate
$
State income tax, net of federal benefit
Adjustment of net deferred tax liability from enacted tax
rate change
Nondeductible expenses
Net operating loss carryback
Foreign tax credit re-characterization
Foreign rate differential
Valuation allowance
Unrecognized tax benefit
Other, net
2020
(398)
(71)
$
2019
161
31
$
—
5
(73)
(13)
2
10
(3)
2
—
8
—
—
(3)
—
—
2
TOTAL INCOME TAX (BENEFIT) EXPENSE
$
(539)
$
199
$
2018
45
8
(28)
5
—
—
(2)
—
—
2
30
82
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The components of our deferred tax assets and liabilities as of December 31 are as follows (in millions):
2020
2019
Deferred tax assets:
Deferred revenue/gains
Employee benefits
Foreign tax credit
Net operating loss carryforward
Operating lease liabilities
Rent expense
Total deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Accelerated depreciation
Operating lease assets
Other
Total deferred tax liabilities
NET DEFERRED TAX LIABILITY
$
161
$
71
81
335
204
33
885
(69)
816
(1,538)
(197)
(3)
(1,738)
$
(922) $
127
47
42
31
212
17
476
(31)
445
(1,423)
(236)
(37)
(1,696)
(1,251)
We have a U.S. foreign tax credit carryforward of $79 million which
expires in 2028.
In evaluating the realizability of the deferred tax assets, we
assess whether it is more likely than not that some portion, or
all, of the deferred tax assets, will be realized. We consider, among
other things, the generation of future taxable income (including
reversals of deferred tax liabilities) during the periods in which
the related temporary differences will become deductible. At
December 31, 2020, we provided a $69 million valuation allowance
to reduce the deferred tax assets to an amount that we consider
is more likely than not to be realized. Of the total valuation
allowance, $59 million relates to foreign NOL carryforward, and
$10 million relates to U.S. foreign tax credit carryforward that
begins to expire in 2021.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
Unrecognized tax benefits at January 1,
Increases for tax positions taken during the period
Decreases for tax positions taken during a prior period
UNRECOGNIZED TAX BENEFITS DECEMBER 31,
$
$
2020
36
1
(5)
32
$
$
2019
33
6
(3)
36
$
$
2018
31
5
(3)
33
Interest and penalties accrued on unrecognized tax benefits were
not significant. If recognized, $12 million of the unrecognized tax
benefits as of December 31, 2020 would impact our effective tax
rate. We do not expect any significant change in the amount of
the unrecognized tax benefits within the next twelve months. As
a result of net operating losses and statute of limitations in our
major tax jurisdictions, years 2004 through 2019 remain subject
to examination by the relevant tax authorities.
NOTE 10 Crewmember Retirement Plan
We sponsor a retirement savings 401(k) defined contribution plan,
or the Plan, covering all of our crewmembers where we match
100% of our crewmember contributions up to 5% of their eligible
wages. The contributions vest over three years and are measured
from a crewmember’s hire date. Crewmembers are immediately
vested in their voluntary contributions.
Another component of the Plan is a Company discretionary
contribution of 5% of eligible non-management crewmember
compensation, which we refer to as Retirement Plus. Retirement
Plus contributions vest over three years and are measured from
a crewmember’s hire date.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
83
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Certain Federal Aviation Administration, or FAA, licensed
crewmembers receive an additional contribution of 3% of eligible
compensation, which we refer to as Retirement Advantage.
Effective August 1, 2018, pilots receive a non-elective Company
contribution of 15% of eligible pilot compensation per the terms
of the finalized collective bargaining agreement between JetBlue
and the Air Line Pilots Association, or ALPA, in lieu of the above
401(k) Company matching contribution, Retirement Plus, and
Retirement Advantage contributions. Refer to Note 11 to our
consolidated financial statements for additional information.
The Company's non-elective contribution of 15% of eligible pilot
compensation vests after three years of service.
Our non-management crewmembers are eligible to receive profit
sharing, calculated as 10% of adjusted pre-tax income before
profit sharing and special items up to a pre-tax margin of 18%
with the result reduced by Retirement Plus contributions and the
equivalent of Retirement Plus contributions for pilots. If JetBlue's
resulting pre-tax margin exceeds 18%, non-management
crewmembers will receive 20% profit sharing on amounts above
an 18% pre-tax margin.
Total 401(k) company match, Retirement Plus, Retirement
Advantage, pilot retirement contribution, and profit sharing
expensed for the years ended December 31, 2020, 2019, and 2018
were $177 million, $196 million, and $172 million, respectively.
NOTE 11
Commitments
Flight Equipment Commitments
As of December 31, 2020, our firm aircraft orders consisted
of 72 Airbus A321neo aircraft and 69 Airbus A220 aircraft, all
scheduled for delivery through 2027. Committed expenditures for
these aircraft and related flight equipment, including estimated
amounts for contractual price escalations and pre-delivery
deposits, is approximately $1.0 billion in 2021, $0.7 billion in 2022,
$1.5 billion in 2023, $1.8 billion in 2024, $1.2 billion in 2025 and
$1.6 billion thereafter. We are scheduled to receive 8 new Airbus
A321neo aircraft and 7 new Airbus A220 aircraft in 2021.
In October 2019, the Office of the U.S. Trade Representative
announced a 10% tariff on new commercial aircraft and related
parts imported from certain European Union member states,
which include aircraft and other parts we are already contractually
obligated to purchase, including those noted above. The U.S.
Trade Representative increased the tariff to 15% effective March
2020. We continue to work with our business partners, including
Airbus, to evaluate the potential financial and operational impact
of these announcements on our future aircraft deliveries. The
continued imposition of the tariff could substantially increase
the cost of new Airbus aircraft and parts.
Other Commitments
We utilize several credit card processors to process our ticket
sales. Our agreements with these processors do not contain
covenants, but do generally allow the processor to withhold
cash reserves to protect the processor from potential liability for
tickets purchased, but not yet used for travel. While we currently
do not have any collateral requirements related to our credit card
processors, we may be required to issue collateral to our credit
card processors, or other key business partners, in the future.
As of December 31, 2020, we had approximately $23 million
pledged related to our workers' compensation insurance policies
and other business partner agreements, which will expire
according to the terms of the related policies or agreements.
In April 2014, ALPA was certified by the National Mediation Board,
or NMB, as the representative body for JetBlue pilots after
winning a representation election. We reached a final agreement
for our first collective bargaining agreement which was ratified by
the pilots in July 2018. The agreement is a four-year, renewable
contract, which became effective August 1, 2018 and included
compensation, benefits, work rules, and other policies.
Amid the COVID-19 pandemic, we reached an Agreement in
Principle with ALPA to avoid involuntary furloughs of our pilots
through at least October 1, 2021 in exchange for short-term
changes to the collective bargaining agreement.
In April 2018, JetBlue inflight crewmembers elected to be solely
represented by the Transport Workers Union of America, or
TWU. The NMB certified the TWU as the representative body for
JetBlue inflight crewmembers. In November 2020, our inflight
crewmembers voted to reject the tentative collective bargaining
agreement between JetBlue and TWU. We are currently working
with TWU to determine next steps.
As of December 31, 2020, approximately 51 percent of our full-time
equivalent crewmembers were represented by unions.
Except as noted above, our crewmembers do not have third party
representation.
We enter into individual employment agreements with each of
our non-unionized FAA-licensed crewmembers which include
dispatchers, technicians, and inspectors as well as air traffic
controllers. Each employment agreement is for a term of five
years and automatically renews for an additional five years unless
either the crewmember or we elect not to renew it by giving at
least 90 days' notice before the end of the relevant term. Pursuant
to these agreements, these crewmembers can only be terminated
for cause. In the event of a downturn in our business that would
require a reduction in work hours, we are obligated to pay these
crewmembers a guaranteed level of income and to continue their
benefits if they do not obtain other aviation employment.
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JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
NOTE 12 Contingencies
We self-insure a portion of our losses from claims related to
workers’ compensation, environmental issues, property damage,
medical insurance for crewmembers, and general liability. Losses
are accrued based on an estimate of the ultimate aggregate
liability for claims incurred, using standard industry practices
and our actual experience.
We are a party to many routine contracts under which we
indemnify third parties for various risks. These indemnities
consist of the following:
All of our bank loans, including our aircraft mortgages obligate
us to reimburse the bank for any increased costs arising from
regulatory changes, including changes in reserve requirements
and bank capital requirements; these obligations are standard
terms present in loans of this type. These indemnities would
increase the interest rate on our debt if they were to be triggered.
In all cases, we have the option to repay the loan and avoid the
increased costs. These terms match the length of the related loan
up to 15 years.
Under both aircraft leases with foreign lessors and aircraft
mortgages with foreign lenders, we have agreed to customary
indemnities concerning withholding tax law changes. Under
these contracts we are responsible, should withholding taxes be
imposed, for paying such amount of additional rent or interest as
is necessary to ensure that the lessor or lender still receives, after
taxes, the rent stipulated in the lease or the interest stipulated
under the loan. The term of these indemnities matches the length
of the related lease or loan up to 20 years.
We have various leases with respect to real property as well as
various agreements among airlines relating to fuel consortia or
fuel farms at airports. Under these contracts we have agreed to
standard language indemnifying the lessor against environmental
liabilities associated with the real property or operations described
under the agreement, even if we are not the party responsible
for the initial event that caused the environmental damage. In
the case of fuel consortia at airports, these indemnities are
generally joint and several among the participating airlines. We
have purchased a standalone environmental liability insurance
policy to help mitigate this exposure. Our existing aviation hull
and liability policy includes some limited environmental coverage
when a cleanup is part of an associated single identifiable covered
loss.
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Under certain contracts, we indemnify specified parties against
legal liability arising out of actions by other parties. The terms of
these contracts range up to 25 years. Generally, we have liability
insurance protecting ourselves for the obligations we have
undertaken relative to these indemnities.
We are unable to estimate the potential amount of future
payments under the foregoing indemnities and agreements.
Under a certain number of our operating lease agreements we
are required to restore certain property or equipment to its
original form upon expiration of the related agreement. We have
recorded the estimated fair value of these retirement obligations
of approximately $5 million as of December 31, 2020. This liability
may increase over time.
Legal Matters
Occasionally, we are involved in various claims, lawsuits, regulatory
examinations, investigations, and other legal matters involving
suppliers, crewmembers, customers, and governmental agencies,
arising, for the most part, in the ordinary course of business. The
outcome of litigation and other legal matters is always uncertain.
The Company believes it has valid defenses to the legal matters
currently pending against it, is defending itself vigorously, and has
recorded accruals determined in accordance with GAAP, where
appropriate. In making a determination regarding accruals, using
available information, we evaluate the likelihood of an unfavorable
outcome in legal or regulatory proceedings to which we are a
party and record a loss contingency when it is probable a liability
has been incurred and the amount of the loss can be reasonably
estimated. These subjective determinations are based on the
status of such legal or regulatory proceedings, the merits of our
defenses, and consultation with legal counsel. Actual outcomes
of these legal and regulatory proceedings may materially differ
from our current estimates. It is possible that resolution of one or
more of the legal matters currently pending or threatened could
result in losses material to our consolidated results of operations,
liquidity, or financial condition.
To date, none of these types of litigation matters, most of which are
typically covered by insurance, has had a material impact on our
operations or financial condition. We have insured and continue
to insure against most of these types of claims. A judgment on
any claim not covered by, or in excess of, our insurance coverage
could materially adversely affect our consolidated results of
operations, liquidity, or financial condition.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
85
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NOTE 13 Financial Derivative Instruments and Risk Management
As part of our risk management techniques, we periodically
purchase over the counter energy derivative instruments and
enter into fixed forward price agreements, or FFPs, to manage
our exposure to the effect of changes in the price of aircraft fuel.
Prices for the underlying commodities have historically been
highly correlated to aircraft fuel, making derivatives of them
effective at providing short-term protection against volatility
in average fuel prices. We also periodically enter into jet fuel
basis swaps for the differential between heating oil and jet fuel,
to further limit the variability in fuel prices at various locations.
We do not hold or issue any derivative financial instruments for
trading purposes.
Ineffectiveness occurs, in certain circumstances, when the
change in the total fair value of the derivative instrument differs
from the change in the value of our expected future cash outlays
for the purchase of aircraft fuel. ASU 2017-12, Derivatives and
Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities, eliminated the requirement for companies
to separately measure and record ineffectiveness after initial
qualification. If a hedge does not qualify for hedge accounting,
the periodic changes in its fair value are recognized in interest
income and other. When aircraft fuel is consumed and the related
derivative contract settles, any gain or loss previously recorded
in other comprehensive income is recognized in aircraft fuel
expense. All cash flows related to our fuel hedging derivatives
are classified as operating cash flows.
Aircraft fuel derivatives
We attempt to obtain cash flow hedge accounting treatment for
each fuel derivative that we enter into. This treatment is provided
for under the Derivatives and Hedging topic of the Codification
which allows for gains and losses on the effective portion of
qualifying hedges to be deferred until the underlying planned jet
fuel consumption occurs, rather than recognizing the gains and
losses on these instruments into earnings during each period they
are outstanding. The effective portion of realized aircraft fuel
hedging derivative gains and losses is recognized in aircraft fuel
expense in the period the underlying fuel is consumed.
Our current approach to fuel hedging is to enter into hedges on a
discretionary basis without a specific target of hedge percentage
needs. We view our hedge portfolio as a form of insurance to help
mitigate the impact of price volatility and protect us against
severe spikes in oil prices, when possible.
We did not have any fuel hedging contracts outstanding as of
December 31, 2020.
The table below reflects quantitative information related to our derivative instruments and where these amounts are recorded in our
financial statements (dollar amounts in millions):
Fuel derivatives
Asset fair value recorded in prepaid expenses and other(1)
Longest remaining term (months)
Hedged volume (barrels, in thousands)
Estimated amount of existing (gains) losses expected
to be reclassified into earnings in the next 12 months
FUEL DERIVATIVES
Hedge effectiveness (gains) losses recognized
in aircraft fuel expense
Losses on derivatives resulting from the discontinuance of
hedge accounting recognized in interest income and other
Hedge (gains) losses on derivatives recognized in
comprehensive income
Percentage of actual consumption economically hedged
$
$
$
As of December 31,
2020
—
0
—
—
$
$
2019
8
6
2,112
(2)
$
$
Year Ended December 31,
2020
2019
2018
$
$
$
7
8
11
25 %
$
$
$
5
—
(1)
6 %
2
—
6
4 %
(1) Gross asset of each contract prior to consideration of offsetting positions with each counterparty and prior to impact of collateral paid.
86
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Any outstanding derivative instrument exposes us to credit loss in
connection with our fuel contracts in the event of nonperformance
by the counterparties to the agreements, but we do not expect
any of our counterparties will fail to meet their obligations. The
amount of such credit exposure is generally the fair value of our
outstanding contracts for which we are in a receivable position.
To manage credit risks we select counterparties based on credit
assessments, limit our overall exposure to any single counterparty,
and monitor the market position with each counterparty. Some
of our agreements require cash deposits from either JetBlue or
our counterparty if market risk exposure exceeds a specified
threshold amount.
We have master netting arrangements with our counterparties
allowing us the right of offset to mitigate credit risk in derivative
transactions. The financial derivative instrument agreements we
have with our counterparties may require us to fund all, or a portion
of, outstanding loss positions related to these contracts prior to
their scheduled maturities. The amount of collateral posted, if
any, is periodically adjusted based on the fair value of the hedge
contracts. Our policy is to offset the liabilities represented by these
contracts with any cash collateral paid to the counterparties.
There were no offsetting derivative instruments as of
December 31, 2020 and 2019.
NOTE 14 Fair Value
Under the Fair Value Measurements and Disclosures topic of the
Codification, disclosures are required about how fair value is
determined for assets and liabilities and a hierarchy for which
these assets and liabilities must be grouped is established, based
on significant levels of inputs as follows:
Level 1 observable inputs such as unadjusted quoted prices in
active markets for identical assets or liabilities;
Level 2 quoted prices in active markets for similar assets and
liabilities, and other inputs that are observable directly or
indirectly for the asset or liability; or
Level 3 unobservable inputs for the asset or liability, such as
discounted cash flow models or valuations.
The determination of where assets and liabilities fall within this
hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
The following is a listing of our assets and liabilities required to be measured at fair value on a recurring basis and where they are
classified within the fair value hierarchy (in millions):
Assets
Cash equivalents
$
1,330
$
130
$
Available-for-sale investment securities
—
1,137
$
—
—
As of December 31, 2020
Level 1
Level 2
Level 3
Total
1,460
1,137
As of December 31, 2019
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
Available-for-sale investment securities
Aircraft fuel derivatives
$
611
$
—
—
$
30
351
8
$
—
—
—
641
351
8
Refer to Note 4 to our consolidated financial statements for fair
value information related to our outstanding debt obligations
as of December 31, 2020 and 2019. The carrying values of all
other financial instruments approximated their fair values at
December 31, 2020 and 2019.
are therefore classified as Level 1 within our fair value hierarchy.
The fair values of remaining instruments are based on observable
inputs in non-active markets, which are therefore classified as
Level 2 in the hierarchy.
Cash equivalents
Our cash equivalents include money market securities,
commercial paper, and time deposits which are readily
convertible into cash, have maturities of three months or less
when purchased, and are considered to be highly liquid and
easily tradable. The money market securities are valued using
inputs observable in active markets for identical securities and
Available-for-sale investment securities
Our available-for-sale investment securities include investments
such as time deposits, commercial paper, and convertible debt
securities. The fair values of these instruments are based on
observable inputs in non-active markets, which are therefore
classified as Level 2 in the hierarchy. We did not record any
material gains or losses on these securities during the years
ended December 31, 2020, 2019, and 2018.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
87
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Aircraft fuel derivatives
Our aircraft fuel derivatives include call spread options which are
not traded on public exchanges. Their fair values are determined
using a market approach based on inputs that are readily available
from public markets for commodities and energy trading
activities; therefore, they are classified as Level 2 inputs. The
data inputs are combined into quantitative models and processes
to generate forward curves and volatilities related to the specific
terms of the underlying hedge contracts.
NOTE 15 Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes changes in fair value of our aircraft fuel derivatives which qualify for hedge accounting.
A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes for the years ended December 31,
2020, 2019, and 2018 is as follows (in millions):
Balance of accumulated income, at December 31, 2017
Reclassifications into earnings, net of deferred taxes of $0
Change in fair value, net of deferred taxes of $2
Balance of accumulated (loss), at December 31, 2018
Reclassifications into earnings, net of deferred taxes of $(1)
Change in fair value, net of deferred taxes of $0
Balance of accumulated income, at December 31, 2019
Reclassifications into earnings, net of deferred taxes of $(5)
Change in fair value, net of deferred taxes of $5
Aircraft Fuel
Derivatives(1)(2)
$
— $
Total
—
1
(4)
(3)
4
1
2
9
(11)
—
1
(4)
(3)
4
1
2
9
(11)
— $
Balance of accumulated income, at December 31, 2020
$
(1) Reclassified to aircraft fuel expense.
(2)
In 2020, the Company made several capacity reductions in response to the COVID-19 pandemic. These capacity reductions led to the discontinuance of hedge accounting
on a number of our aircraft fuel derivatives as the forecasted consumption of aircraft fuel was no longer probable. Losses of $5 million that were previously deferred in
other comprehensive loss were reclassified to interest income and other during the year ended December 31, 2020.
NOTE 16 Geographic Information
Under the Segment Reporting topic of the Codification, disclosures
are required for operating segments that are regularly reviewed
by chief operating decision makers. Air transportation services
accounted for substantially all of the Company’s operations in
2020, 2019 and 2018.
Operating revenues are allocated to geographic regions, as
defined by the Department of Transportation, or DOT, based
upon the origination and destination of each flight segment. As
Domestic
Caribbean & Latin America
TOTAL
of December 31, 2020, we served 31 locations in the Caribbean
and Latin American region, or Latin America as defined by the
DOT. However, our management includes our three destinations
in Puerto Rico and one destination in the U.S. Virgin Islands in our
Caribbean and Latin America allocation of revenues. Therefore,
we have reflected these locations within the Caribbean and
Latin America region in the table below. Operating revenues
by geographic regions for the years ended December 31 are
summarized below (in millions):
$
$
2020
1,890 $
1,067
2,957 $
2019
5,633 $
2,461
8,094 $
2018
5,386
2,272
7,658
Our tangible assets primarily consist of our fleet of aircraft, which is deployed systemwide, with no individual aircraft dedicated to any
specific route or region; therefore our assets do not require any allocation to a geographic area.
88
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NOTE 17 Quarterly Financial Data (Unaudited)
Quarterly results of operations for the years ended December 31, 2020 and 2019 are summarized below (in millions, except per share
amounts):
2020
Operating revenues
Operating (loss)(1)
Net (loss)(1)
(Loss) per share(1)
2019
Operating revenues
Operating income(2)
Net income(2)(3)
Basic earnings per share
Diluted earnings per share(2)(3)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
$
$
1,588 $
215 $
492 $
(334)
(268)
(410)
(320)
(516)
(393)
(0.97) $
(1.18) $
(1.44) $
1,871 $
2,105 $
2,086 $
76
42
0.14 $
0.14 $
250
179
0.60 $
0.59 $
247
187
0.63 $
0.63 $
661
(454)
(373)
(1.31)
2,031
227
161
0.56
0.56
(1) Our 2020 results include the effects of various special items. We record special items of $202 million, or ($0.55) per share in the first quarter of 2020, $(304) million, or
$0.84 per share in the second quarter of 2020, $(112) million, or $0.31 per share in the third quarter of 2020, and $(69) million, or $0.19 per share in the fourth quarter of
2020. See Note 18 to our consolidated financial statements for details.
(2) Our 2019 reported results include special items related to the Embraer E190 fleet transition and the ratification of our pilots' collective bargaining agreement. We recorded
special items of $12 million or ($0.02) per diluted share in the first quarter and $2 million or ($0.01) per diluted share in the second quarter of 2019. See Note 18 to our
consolidated financial statements for details.
(3) During the third quarter of 2019, we recorded a gain of $15 million, or $0.04 per diluted share, on one of our equity method investments related to its fair value measurement
upon the closing of a subsequent financing round.
The sum of the quarterly results may not equal the annual amount reported due to immaterial rounding differences.
The sum of the quarterly earnings per share amounts does not equal the annual amount reported since per share amounts are computed
independently for each quarter and for the full year based on respective weighted average common shares outstanding and other
dilutive potential common shares.
NOTE 18 Special Items
The following is a listing of special items presented on our consolidated statements of operations (in millions):
Year Ended December 31,
2020
2019
2018
Special Items
CARES Act payroll support grant recognition(1)
$
(685) $
— $
CARES Act employee retention credit(2)
Fleet impairment(3)
Severance and benefit costs(4)
Losses on sale-leaseback transactions(5)
Embraer E190 fleet transition costs(6)
Union contract costs(7)
TOTAL
(36)
273
59
106
—
—
—
—
—
6
8
$
(283) $
14 $
—
—
—
—
362
73
435
(1) As discussed in Note 2 to our consolidated financial statements, we entered into a PSP Agreement with the Treasury governing our participation in the Payroll Support
Program under the CARES Act. Under the Payroll Support Program, Treasury provided us with payroll support funding totaling $963 million, consisting of $704 million in
grants and $259 million in an unsecured term loan. The payroll support funds were to be used exclusively for the continuation of payment of crewmember wages, salaries
and benefits. The carrying value of the payroll support grants which totaled to $685 million (after consideration of the warrants we issued) was recorded within other
liabilities and were recognized as a contra-expense within special items on our consolidated statements of operations as the funds were utilized. The payroll support
grants were fully utilized in 2020.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
89
PART II | ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(2) The Employee Retention Credit (ERC) under the CARES Act is a refundable tax credit which encourages business to keep employees on the payroll during the COVID-19
pandemic. Eligible employers can qualify for up to $5,000 of credit for each employee based on qualified wages paid after March 12, 2020 and before January 1, 2021.
Qualified wages are the wages paid to an employee for the time that the employee is not providing services due to an economic hardship, specifically, either (1) a full or
partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts. We recognized $36 million of ERC as a
contra-expense within special items on our consolidated statements of operations in 2020.
(3) Under the Property, Plant, and Equipment topic of the Codification, we are required to assess long-lived assets for impairment when events and circumstances indicate
that the assets may be impaired. An impairment of long-lived assets exists when the sum of the forecasted undiscounted future cash flows expected to be generated
directly by the assets are less than the book value of the assets. Our long-lived assets include both owned and leased properties which are classified as property and
equipment, and operating lease assets on our consolidated balance sheets, respectively.
As discussed in Note 2 to our consolidated financial statements, our operations were adversely impacted by the unprecedented decline in demand for travel caused by
the COVID-19 pandemic. To determine if impairment exists in our fleet, we grouped our aircraft by fleet-type and estimated their future cash flows based on projections
of capacity, aircraft age, and maintenance conditions. Based on the assessment, we determined the future cash flows from the operation our Embraer E190 fleet were
lower than the carrying value. For those aircraft, including the ones that are under operating lease, and related spare parts in our Embraer E190 fleet, we recorded
impairment losses of $273 million for the year ended December 31, 2020. These losses represent the difference between the book value of these assets and their fair value.
In determining fair value, we obtained third party valuations for our Embraer E190 fleet, which considered the effects of the current market environment, age of the assets,
and marketability. For our owned Embraer E190 aircraft and related spare parts, we made adjustments to the valuations to reflect the impact of their current maintenance
conditions to determine fair value. Our estimate of fair value was not based on distressed sales or forced liquidations. The fair value of our Embraer E190 aircraft under
operating lease and related parts was based on the present value of current market lease rates utilizing a market discount rate for the remaining term of each lease. Since
the fair value of our Embraer E190 fleet was determined using unobservable inputs, it is classified as Level 3 in the fair value hierarchy. We evaluated the remaining fleet
types and determined the future cash flows of our Airbus A320 and Airbus A321 fleets exceeded their carrying value as of December 31, 2020. As the extent of the ongoing
impact from the COVID-19 pandemic remains uncertain, we will update our assessment as new information becomes available.
(5)
(6)
(4) The unprecedented declines in demand and in our capacity caused by COVID-19 has led to a significant reduction to our staffing needs. In June 2020, we announced a
voluntary separation program which allowed eligible crewmembers the opportunity to voluntarily separate from the Company in exchange for severance, health coverage
for a specified period of time, and travel privileges based on years of service. Virtually all of our crewmembers were eligible to participate in the voluntary separation
program with the exception of our union-represented crewmembers and crewmembers of our wholly-owned subsidiaries (JetBlue Technology Ventures and JetBlue Travel
Products). Separation agreements for the majority of the crewmembers who elected to participate in the voluntary program were executed in the third quarter. One-time
costs of $59 million, consisting of severance and health benefits, were recorded for the year ended December 31, 2020 in connection with the program. Approximately $44
million of this charge was disbursed during the year. Accruals related to the voluntary separation program are primarily recorded in accrued salaries, wages and benefits,
and accounts payable on our consolidated balance sheets. The remaining balance is expected to be disbursed throughout 2021.
In 2020, we executed $563 million of sale-leaseback transactions. Of these transactions, $354 million did not qualify as sales for accounting purposes. The remaining
$209 million qualified as sales and generated a loss of $106 million. These losses represent the difference between the book value of these assets and their fair value. We
estimated the fair value of the related aircraft considering third party valuations and considered specific circumstances such as aircraft age, maintenance requirements
and condition, and therefore classified as Level 3 in the fair value hierarchy.
In July 2018, we announced our decision to exit the Embraer E190 fleet and order 60 Airbus A220-300 aircraft, formerly known as the Bombardier CS300, for expected
deliveries beginning in 2020 with the option to purchase 60 additional aircraft. For the year ended December 31, 2018, fleet transition costs include a $319 million
impairment charge of flight equipment and other property and equipment related to our fleet review and certain termination costs associated with the transition. We
assessed our Embraer E190 asset group by comparing projected undiscounted cash flows over the remaining time period we expect to utilize the aircraft to the book value
of the asset group and determined the book value was in excess of the cash flows. We estimated the fair value of our Embraer E190 asset group using third party valuations
and considering specific circumstances of our fleet such as aircraft age, maintenance requirements and condition, and therefore classified as Level 3 in the fair value
hierarchy. We reassessed our Embraer E190 assets and adjusted the depreciable lives and salvage value to align with our expected transition dates to the Airbus A220-300
through 2025.
Fleet transition costs for the year ended December 31, 2019 include certain contract termination costs associated with the transition.
In 2019, we converted 10 of our options for the A220-300 aircraft into firm orders. Options for 50 additional A220-300 aircraft deliveries remain available to us as of
December 31, 2020.
In April 2014, ALPA was certified by NMB as the representative body for JetBlue pilots after winning a representation election. We reached a final agreement for our first
collective bargaining agreement which was ratified by the pilots in July 2018. The agreement is a four-year renewable contract, which became effective August 1, 2018
and included changes to compensation, benefits, work rules, and other policies. For the year ended December 31, 2018, contract costs include the one-time $50 million
ratification bonus and other negotiated contractual provisions related to our pilots' collective bargaining agreement. Union contract costs for the year ended
December 31, 2019 include various one-time costs incurred to implement the provisions of the collective bargaining agreement into our IT systems.
(7)
90
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART II | ITEM 9B OTHER INFORMATION
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined
in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act)
that are designed to ensure that information required to be
disclosed by us in reports that we file under the Exchange Act
is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms and that such
information required to be disclosed by us in reports that we file
under the Exchange Act is accumulated and communicated
to our management, including our Chief Executive Officer, or
CEO, and our Chief Financial Officer, or CFO, to allow timely
decisions regarding required disclosure. Management, with
the participation of our CEO and CFO, performed an evaluation
of the effectiveness of our disclosure controls and procedures
as of December 31, 2020. Based on that evaluation, our CEO and
CFO concluded that our disclosure controls and procedures were
effective as of December 31, 2020.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in
Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act). Under
the supervision and with the participation of our management,
including our CEO and CFO, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 Framework). Based on that
evaluation, our management concluded that our internal control
over financial reporting was effective as of December 31, 2020
Ernst & Young LLP, the independent registered public accounting
firm that audited our consolidated financial statements included
in this Annual Report on Form 10-K, audited the effectiveness of
our internal control over financial reporting as of December 31,
2020. Ernst & Young LLP has issued their report which is included
elsewhere herein.
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated financial
statements for external reporting purposes in accordance with
GAAP.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange
Act) identified in connection with the evaluation of our controls performed during the quarter ended December 31, 2020 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B OTHER INFORMATION
None.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
91
PART III
ITEM 10
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Code of Ethics
We adopted a Code of Ethics within the meaning of Item 406(b) of
SEC Regulation S-K. This Code of Ethics applies to our principal
executive officer, principal financial officer, and principal
accounting officer. This Code of Ethics is publicly available on
our website at http://investor.jetblue.com. If we make substantive
Executive Officers of the Registrant
Certain information concerning JetBlue’s executive officers as of
the date of this Report follows. There are no family relationships
between any of our executive officers.
Robin Hayes, age 54, is our Chief Executive Officer. He was
promoted to Chief Executive Officer on February 16, 2015 and
served as our President from January 2014 to May 2018. He
joined JetBlue as its Chief Commercial Officer in 2008, after
nineteen years at British Airways. In his last role at British
Airways, Mr. Hayes served as Executive Vice President for The
Americas and before that he served in a number of operational
and commercial positions in the UK and Germany.
Joanna Geraghty, age 48, is our President and Chief Operating
Officer. She was appointed to the position in May 2018. Ms. Geraghty
joined JetBlue in 2005 and was most recently our Executive Vice
President Customer Experience from 2014 to 2018. She served as
Executive Vice President Chief People Officer from 2010 to 2014
and was previously the airline’s Vice President and Associate
General Counsel and Director of Litigation and Regulatory Affairs.
Steve Priest, age 50, is our Chief Financial Officer, a position he
has held since February 2017. Mr. Priest joined JetBlue in August
2015 as our Vice President Structural Programs. Prior to JetBlue,
he worked at British Airways from 1996 to 2015 where he served as
Senior Vice President of the carrier’s North Atlantic joint venture
business with American Airlines, Iberia, and Finnair, as well as
several other leadership roles.
Brandon Nelson, age 46, is our General Counsel and Corporate
Secretary. He was appointed to the position in November 2018.
Mr. Nelson joined JetBlue in 2005 and previously served as
Director, Corporate Counsel and Assistant Secretary before being
promoted in 2009 to Vice President, Associate General Counsel.
Prior to JetBlue, Mr. Nelson practiced corporate and business
92
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
amendments to this Code of Ethics or grant any waiver, including
any implicit waiver, we will disclose the nature of such amendment
or waiver on our website or in a report on Form 8-K within four
days of such amendment or waiver.
litigation law at firms in California and New York, including
Shearman & Sterling LLP.
Eash Sundaram, age 49, was our Chief Digital & Technology
Officer. Mr. Sundaram joined JetBlue in March 2012 as our Chief
Information Officer. Prior to joining JetBlue, Mr. Sundaram served
as the Chief Information Officer at Pall Corporation and has also
held various leadership positions in the Healthcare and Supply
Chain Management industries.
Mr. Sundaram retired from his role as our Chief Digital &
Technology Officer effective February 2, 2021.
Scott Laurence, age 47, is our Head of Revenue and Planning. He
was appointed to the role in June 2019 and joined JetBlue in 2008.
Mr. Laurence oversees JetBlue’s sales and revenue management
organization, network planning, and operational planning &
analysis. Prior to joining JetBlue, Mr. Laurence served in various
commercial roles at US Airways and United Airlines for 13 years.
Alexander Chatkewitz, age 56, is our Vice President and Chief
Accounting Officer, a position he has held since December 2014.
Prior to joining JetBlue, Mr. Chatkewitz worked at Philip Morris
International, where he served as Vice President & Controller -
Financial Reporting & Accounting Research since 2008. Prior to
Phillip Morris, he served for a decade as Altria Group’s Vice President
Assistant Controller - Financial Reporting & Consolidations.
Mr. Chatkewitz also held positions at Marsh & McLennan Companies
as well as the audit practice of Deloitte & Touche.
The other information required by this Item will be included in
and is incorporated herein by reference from our definitive proxy
statement for our 2021 Annual Meeting of Stockholders to be filed
with the SEC pursuant to Regulation 14A within 120 days after the
end of our 2020 fiscal year, or our 2021 Proxy Statement.
PART III | ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 11 EXECUTIVE COMPENSATION
The information required by this Item will be included in and is incorporated herein by reference from our 2021 Proxy Statement.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The table below provides information relating to our equity compensation plans, including individual compensation arrangements,
under which our common stock is authorized for issuance as of December 31, 2020, as adjusted for stock splits:
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
TOTAL
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
Weighted average
exercise price
of outstanding
options, warrants
and rights
2,852,358
—
2,852,358
$
$
17.47
—
17.47
Number of securities
remaining available
for future issuance under
equity compensation
plans (excluding securities
reflected in first column)
26,520,293
—
26,520,293
Warrants issued to the U.S. Department of Treasury under the government support programs discussed in Note 2 to our consolidated
financial statements are not reflected in this table.
Refer to Note 8 to our consolidated financial statements for further information regarding the material features of the above plans.
Other information required by this Item will be included in and is incorporated herein by reference from our 2021 Proxy Statement.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
The information required by this Item will be included in and is incorporated herein by reference from our 2021 Proxy Statement.
ITEM 14
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item will be included in and is incorporated herein by reference from our 2021 Proxy Statement.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
93
PART IV
ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1.
Financial statements:
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets — December 31, 2020 and December 31, 2019
Consolidated Statements of Operations — For the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income — For the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows — For the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Stockholders’ Equity — For the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
2.
Financial Statement Schedules:
Schedule II — Valuation of Qualifying Accounts and Reserves
All other schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the
consolidated financial statements or notes thereto.
3.
Exhibits: See accompanying Exhibit Index included after the signature page of this Report for a list of the exhibits filed or furnished
with or incorporated by reference in this Report.
ITEM 16 FORM 10-K SUMMARY
Omitted.
94
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART IV
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 2, 2021
By:
JETBLUE AIRWAYS CORPORATION
(Registrant)
/s/ Alexander Chatkewitz
Vice President, Controller, and
Chief Accounting Officer
(Principal Accounting Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Brandon
Nelson his or her attorney-in-fact with power of substitution for
him or her in any and all capacities, to sign any amendments,
supplements or other documents relating to this Annual Report
on Form 10-K which he or she deems necessary or appropriate,
and to file the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that such
attorney-in-fact or their substitute may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
Signature
/S/ ROBIN HAYES
Robin Hayes
/S/ STEVE PRIEST
Steve Priest
/S/ ALEXANDER CHATKEWITZ
Alexander Chatkewitz
/S/ B. BEN BALDANZA
B. Ben Baldanza
/S/ PETER BONEPARTH
Peter Boneparth
/S/ MONTE FORD
Monte Ford
/S/ VIRGINIA GAMBALE
Virginia Gambale
/S/ ELLEN JEWETT
Ellen Jewett
/S/ ROBERT LEDUC
Robert Leduc
/S/ TERI P. MCCLURE
Teri P. McClure
/S/ SARAH ROBB O'HAGAN
Sarah Robb O'Hagan
/S/ VIVEK SHARMA
Vivek Sharma
/S/ THOMAS WINKELMANN
Thomas Winkelmann
Capacity
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Date
March 2, 2021
March 2, 2021
Vice President, Controller, and Chief Accounting
Officer (Principal Accounting Officer)
March 2, 2021
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
95
PART IV
Exhibit Index
3.1
3.1(a)
3.2
3.3
4.1
4.3
4.3(a)
4.3(b)
4.3(c)
4.3(d)
4.3(e)
4.3(f)
4.3(g)
4.3(h)
4.3(i)
4.3(j)
4.3(k)†
4.3(l)
Amended and Restated Certificate of Incorporation of JetBlue Airways Corporation—incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K dated May 20, 2016 (File No. 000-49728).
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of JetBlue Airways Corporation—
incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K dated May 14, 2020 and filed on May 20, 2020.
Amended and Restated Bylaws of JetBlue Airways Corporation—incorporated by reference to Exhibit 3.2 to our Current
Report on Form 8-K dated May 14,2020 and file on May 20, 2020.
Certificate of Designation of Series A Participating Preferred Stock dated April 1, 2002—incorporated by reference to
Exhibit 3.2 to our Current Report on Form 8-K dated July 10, 2003 (File No. 000-49728).
Specimen Stock Certificate—incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1, as
amended (File No. 333-82576).
Pass Through Trust Agreement, dated as of November 12, 2019, between JetBlue Airways Corporation and Wilmington
Trust Company—incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated November 12, 2019.
Trust Supplement No. 2019-1AA, dated as of November 12, 2019, between JetBlue Airways Corporation and Wilmington
Trust Company, as Class AA Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019—incorporated by
reference to Exhibit 4.2 to our Current Report on Form 8-K dated November 12, 2019.
Trust Supplement No. 2019-1A, dated as of November 12, 2019, between JetBlue Airways Corporation and Wilmington
Trust Company, as Class A Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019—incorporated by
reference to Exhibit 4.3 to our Current Report on Form 8-K dated November 12, 2019.
Form of Pass Through Trust Certificate, Series 2019-1AA (included in Exhibit A to Exhibit 4.3(a))—incorporated by reference
to Exhibit 4.4 to our Current Report on Form 8-K dated November 12, 2019.
Form of Pass Through Trust Certificate, Series 2019-1A (included in Exhibit A to Exhibit 4.3(b))—incorporated by reference
to Exhibit 4.5 to our Current Report on Form 8-K dated November 12, 2019.
Intercreditor Agreement (2019-1), dated as of November 12, 2019, among JetBlue Airways Corporation, Wilmington Trust
Company, as Trustee of the JetBlue Airways Pass Through Trust 2019-1AA and the JetBlue Airways Pass Through Trust
2019-1A, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class AA Liquidity
Provider and Wilmington Trust Company—incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K
dated November 12, 2019.
Revolving Credit Agreement (2019-1AA), dated as of November 12, 2019, between Wilmington Trust Company, as
Subordination Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2019-1AA and as
Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class AA Liquidity
Provider—incorporated by reference to Exhibit 4.7 to our Current Report on Form 8-K dated November 12, 2019.
Revolving Credit Agreement (2019-1A), dated as of November 12, 2019, between Wilmington Trust Company, as
Subordination Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2019-1A and as Borrower,
and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider—
incorporated by reference to Exhibit 4.8 to our Current Report on Form 8-K dated November 12, 2019.
Participation Agreement (N976JT), dated as of November 12, 2019, among JetBlue Airways Corporation, Wilmington
Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as
Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual
capacity as set forth therein*—incorporated by reference to Exhibit 4.9 to our Current Report on Form 8-K dated
November 12, 2019.
Indenture and Security Agreement (N976JT), dated as of November 12, 2019, between JetBlue Airways Corporation and
Wilmington Trust Company, as Loan Trustee†—incorporated by reference to Exhibit 4.10 to our Current Report on Form 8-K
dated November 12, 2019.
Form of Series 2019-1 Equipment Notes (included in Exhibit 4.3(i))—incorporated by reference to Exhibit 4.11 to our Current
Report on Form 8-K dated November 12, 2019.
Schedule I
Trust Supplement No. 2020-1A, dated as of August 17, 2020, between JetBlue Airways Corporation and Wilmington Trust
Company, as Class A Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019—incorporated by
reference to Exhibit 4.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
96
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART IV
Exhibit Index
4.3(m)
4.3(n)
4.3(o)
4.3(p)****
4.3(q)****
4.3(r)****
Trust Supplement No. 2020-1B, dated as of August 17, 2020, between JetBlue Airways Corporation and Wilmington Trust
Company, as Class B Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019—incorporated by
reference to Exhibit 4.3 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Form of Pass Through Trust Certificate, Series 2020-1A (included in Exhibit A to Exhibits 4.3(l))-incorporated by reference
to Exhibit A to Exhibit 4.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Form of Pass Through Trust Certificate, Series 2020-1B (included in Exhibit A to Exhibit 4.3(m))-incorporated by reference
to Exhibit A to Exhibit 4.3 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Intercreditor Agreement (2020-1), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington Trust
Company, as Trustee of the JetBlue Airways Pass Through Trust 2020-1A and the JetBlue Airways Pass Through Trust
2020-1B, Natixis S.A., acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider,
and Wilmington Trust Company, as Subordination Agent-incorporated by reference to Exhibit 4.6 to our Current Report on
Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Revolving Credit Agreement (2020-1A), dated as of August 17, 2020, between Wilmington Trust Company, as Subordination
Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2020-1A and as Borrower, and Natixis
S.A., acting through its New York Branch, as Class A Liquidity Provider-incorporated by reference to Exhibit 4.7 to our
Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Revolving Credit Agreement (2020-1B), dated as of August 17, 2020, between Wilmington Trust Company, as Subordination
Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2020-1B and as Borrower, and Natixis
S.A., acting through its New York Branch, as Class B Liquidity Provider-incorporated by reference to Exhibit 4.8 to our
Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
4.3(s)****,††
Participation Agreement (N946JL), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington
Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as
Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual
capacity as set forth therein-incorporated by reference to Exhibit 4.9 to our Current Report on Form 8-K dated August 17,
2020 and filed on August 18, 2020.
4.3(t)****,††
Indenture and Security Agreement (N946JL), dated as of August 17, 2020, between JetBlue Airways Corporation and
Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.10 to our Current Report on Form 8-K
dated August 17, 2020 and filed on August 18, 2020.
4.3(u)****,††† Participation Agreement (N2002J), dated as of August 17, 2020, among JetBlue Airways Corporation, Wilmington
Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust Company, as
Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual
capacity as set forth therein-incorporated by reference to Exhibit 4.11 to our Current Report on Form 8-K dated August 17,
2020 and filed on August 18, 2020.
4.3(v)****,†††
Indenture and Security Agreement (N2002J), dated as of August 17, 2020, between JetBlue Airways Corporation and
Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.12 to our Current Report on Form 8-K
dated August 17, 2020 and filed on August 18, 2020.
4.3(w)
4.3(x)††
4.3(y)†††
4.3(z)
4.3(aa)
Form of Series 2020-1 Equipment Notes (included in Exhibits 4.3.(t) and 4.3(v))-incorporated by reference to Exhibits 4.10
and 4.12 to our Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020.
Schedule I (setting forth the details by which the documents referred to therein differ from the corresponding
representative sample of documents included as Exhibits 4.3(s) and 4.3(t) with respect to Aircraft bearing Registration No.
N946JL)-incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 17, 2020 and filed on
August 18, 2020.
Schedule II (setting forth the details by which the documents referred to therein differ from the corresponding
representative sample of documents included as Exhibits 4.3(u) and 4.3(v) with respect to Aircraft bearing Registration No.
N2002J)-incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K dated August 17, 2020 and filed on
August 18, 2020.
Trust Supplement No. 2019-1B, dated as of August 27, 2020, between JetBlue Airways Corporation and Wilmington Trust
Company, as Class B Trustee, to the Pass Through Trust Agreement dated as of November 12, 2019-incorporated by
reference to Exhibit 4.2 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020.
Form of Pass Through Trust Certificate, Series 2019-1B (included in Exhibit A to Exhibit 4.3(z))-incorporated by reference to
Exhibit A to Exhibit 4.2 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
97
PART IV
Exhibit Index
4.3(ab)****
4.3(ac)****
4.3(ad)****,
††††
Amended and Restated Intercreditor Agreement (2019-1), dated as of August 27, 2020, among JetBlue Airways
Corporation, Wilmington Trust Company, as Trustee of the JetBlue Airways Pass Through Trust 2019-1AA, the JetBlue
Airways Pass Through Trust 2019-1A and the JetBlue Airways Pass Through Trust 2019-1B, Crédit Agricole Corporate and
Investment Bank, acting through its New York Branch, as Class AA Liquidity Provider, Class A Liquidity Provider and Class B
Liquidity Provider, and Wilmington Trust Company, as Subordination Agent-incorporated by reference to Exhibit 4.4 to our
Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020.
Revolving Credit Agreement (2019-1B), dated as of August 27, 2020, between Wilmington Trust Company, as Subordination
Agent, as agent and trustee for the trustee of JetBlue Airways Pass Through Trust 2019-1B and as Borrower, and Crédit
Agricole Corporate and Investment Bank, acting through its New York Branch, as Class B Liquidity Provider-incorporated
by reference to Exhibit 4.5 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020.
First Amendment to Participation Agreement (N976JT), dated as of August 27, 2020, among JetBlue Airways Corporation,
Wilmington Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements, Wilmington Trust
Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its
individual capacity as set forth therein-incorporated by reference to Exhibit 4.6 to our Current Report on Form 8-K dated
August 27, 2020 and filed on August 28, 2020.
4.3(ae)††††
First Amendment to Indenture and Security Agreement (N976JT), dated as of August 27, 2020, between JetBlue Airways
Corporation and Wilmington Trust Company, as Loan Trustee-incorporated by reference to Exhibit 4.7 to our Current
Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020.
4.3(af)
Form of Series 2019-1 Equipment Notes (incorporated by reference to Exhibit 4.11 to our Form 8-K filed on November 12,
2019, as amended by Exhibit 4.7 to our Current Report on Form 8-K dated August 27, 2020 and filed on August 28, 2020).
4.3(ag)††††
Schedule I (setting forth the details by which the documents referred to therein differ from the corresponding
representative sample of documents included as Exhibits 4.3(ad) and 4.3(ae) with respect to Aircraft bearing Registration
No. N976JT)-incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 27, 2020 and filed
on August 28, 2020.
4.4
4.14
4.14(a)
4.15
4.15(a)
4.16+
Summary of Rights to Purchase Series A Participating Preferred Stock—incorporated by reference to Exhibit 4.4 to the
Registration Statement on Form S-1, as amended (File No. 333-82576).
Warrant Agreement, dated as of April 23, 2020, between JetBlue Airways Corporation and the United States Department of the
Treasury—incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
Form of Warrant (incorporated by reference to Annex B to Exhibit 4.14)—incorporated by reference to Exhibit 4.2 to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
Warrant Agreement, dated as of September 29, 2020, between JetBlue Airways Corporation and the United States
Department of the Treasury—incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2020.
Form of Warrant—incorporated by reference to Exhibit 4.1(a) to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020.
Warrant Agreement, dated as of January 15, 2021, between JetBlue Airways Corporation and the United States Department
of the Treasury.
4.16(a)+
Form of Warrant (incorporated by reference to Annex B to Exhibit 4.16).
4.17+
10.3**
10.3(a)**
10.3(b)**
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation, including Side Letters
No. 1 through No. 3 and No. 5 through No. 9—incorporated by reference to Exhibit 10.2 to the Registration Statement on
Form S-1, as amended (File No. 333-82576).
Side Letter No. 10 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated April 25, 2002—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002 (File No. 000-49728).
Side Letter No. 11 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated February 10, 2003—incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the year ended
December 31, 2002 (File No. 000-49728).
98
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART IV
Exhibit Index
10.3(c)**
10.3(d)**
10.3(e)**
10.3(f)**
10.3(g)**
10.3(h)**
10.3(i)**
10.3(j)**
10.3(k)**
10.3(l)**
Side Letter No. 12 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated March 24, 2003—incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003 (File No. 000-49728).
Side Letter No. 13 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated April 23, 2003—incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K dated June 30, 2003
(File No. 000-49728).
Side Letter No. 14 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated October 3, 2003—incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K for the year ended
December 31, 2003 (File No. 000-49728).
Side Letter No. 15 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated November 10, 2003—incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the year ended
December 31, 2003 (File No. 000-49728).
Side Letter No. 16 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated February 20, 2004—incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004 (File No. 000-49728).
Side Letter No. 17 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated June 11, 2004—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004 (File No. 000-49728).
Side Letter No. 18 to V2500 General Terms of Sale between IAE International Aero Engines AG and NewAir Corporation,
dated November 19, 2004—incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on January 18,
2005 (File No. 000-49728).
Side Letter No. 19 to V2500 General Terms of Sale between IAE International Aero Engines AG and New Air Corporation,
dated July 21, 2005—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 (File No. 000-49728).
Side Letter No. 20 to V2500 General Terms of Sale between IAE International Aero Engines AG and New Air Corporation,
dated July 6, 2006—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 (File No. 000-49728).
Side Letter No. 21 to V2500 General Terms of Sale between IAE International Aero Engines AG and New Air Corporation,
dated January 30, 2007—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2007 (File No. 000-49728).
10.3(m)**
Side Letter No. 22 to V2500 General Terms of Sale between IAE International Aero Engines AG and New Air Corporation,
dated March 27, 2007—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007 (File No. 000-49728).
10.3(n)**
10.3(o)**
10.3(p)**
10.3(q)**
10.3(r)**
Side Letter No. 23 to V2500 General Terms of Sale between IAE International Aero Engines AG and New Air Corporation,
dated December 18, 2007—incorporated by reference to Exhibit 10.3(n) to our Annual Report on Form 10-K, as amended, for
the year ended December 31, 2007 (File No. 000-49728).
Side Letter No. 24 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated April 2, 2008—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2008 (File No. 000-49728).
Side Letter No. 25 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
May 27, 2008—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended June
30, 2008 (File No. 000-49728).
Side Letter No. 26 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
January 27, 2009—incorporated by reference to Exhibit 10.3(q) to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2009 (File No. 000-49728).
Side Letter No. 27 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
June 5, 2009–incorporated by reference to Exhibit 10.3(r) to our Quarterly Report on Form 10-Q for the quarter ended June
30, 2009 (File No. 000-49728).
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
99
PART IV
Exhibit Index
10.3(s)**
10.3(t)**
10.3(u)**
10.3(v)**
10.3(w)**
10.3(x)**
10.3(y)**
10.3(z)**
10.3(aa)**
10.3(ab)**
10.3(ac)**
10.3(ad)**
10.3(ae)**
10.3(af)**
10.3(ag)
10.15+
10.17**
Side letter No. 28 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
August 31, 2010—incorporated by reference to Exhibit 10.3(s) to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2010 (File No. 000-49728).
Side letter No. 29 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
March 14, 2011—incorporated by reference to Exhibit 10.3(t) to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2011 (File No. 000-49728).
Side letter No. 30 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
August 17, 2011—incorporated by reference to Exhibit 10.3(u) to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011(File No. 000-49728).
Side letter No. 31 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
September 27, 2011—incorporated by reference to Exhibit 10.3(v) to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011 (File No. 000-49728).
Side letter No. 32 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
November 8, 2011—incorporated by reference to Exhibit 10.3(w) to our Annual Report on Form 10-K for the year ended
December 31, 2011 (File No. 000-49728).
Side letter No. 33 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
December 1, 2011—incorporated by reference to Exhibit 10.3(x) to our Annual Report on Form 10-K for the year ended
December 31, 2011 (File No. 000-49728).
Side letter No. 34 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
February 21, 2012—incorporated by reference to Exhibit 10.3(y) to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2012 (File No. 000-49728).
Side letter No. 35 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
March 15, 2012—incorporated by reference to Exhibit 10.3(z) to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2012 (File No. 000-49728).
Side letter No. 36 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
May 1, 2012—incorporated by reference to Exhibit 10.3(aa) to our Quarterly Report on Form 10-Q for the quarter ended June
30, 2012 (File No. 000-49728).
Side letter No. 37 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation, dated
November 9, 2012—incorporated by reference to Exhibit 10.3(ab) to our Annual Report on Form 10-K for the year ended
December 31, 2012 (File No. 000-49728).
Side letter No. 38 to V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated October 2, 2013—incorporated by reference to Exhibit 10.3(ac) to our Annual Report on Form 10-K for the year ended
December 31, 2014.
Amendment No. 1 to the V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated December 15, 2014—incorporated by reference to Exhibit 10.3(ad) to our Annual Report on Form 10-K for the year
ended December 31, 2014.
Amendment No. 2 to the V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated December 4, 2015—incorporated by reference to Exhibit 10.3(ae) to our Annual Report on Form 10-K for the year
ended December 31, 2015.
Amendment No. 3 to the V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated August 15, 2017—incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017.
Amendment No. 4 to the V2500 General Terms of Sale between IAE International Aero Engines and New Air Corporation,
dated March 20, 2018—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2018.
Form of Director/Officer Indemnification Agreement.
Embraer-190 Purchase Agreement DCT-025/2003, dated June 9, 2003, between Embraer-Empresa Brasileira de
Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.4 to our Current Report on
Form 8-K dated June 30, 2003 (File No. 000-49728).
100
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Exhibit Index
10.17(a)**
10.17(b)**
10.17(c)**
10.17(d)**
10.17(e)**
10.17(f)**
10.17(g)**
10.17(h)**
10.17(i)**
10.17(j)**
10.17(k)**
10.17(l)**
10.17(m)**
10.17(n)**
10.17(o)**
10.17(p)**
Amendment No. 1 to Purchase Agreement DCT-025/2003, dated as of July 8, 2005, between Embraer-Empresa Brasileria
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.3 to our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005 (File No. 000-49728).
Amendment No. 2 to Purchase Agreement DCT-025/2003, dated as of January 5, 2006, between Embraer-Empresa
Brasileria de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.22(b) to our
Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 000-49728).
Amendment No. 3 to Purchase Agreement DCT-025/2003, dated as of December 4, 2006, between Embraer-Empresa
Brasileria de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.21(c) to our Annual
Report on Form 10-K for the year ended December 31, 2006 (File No. 000-49728).
Amendment No. 4 to Purchase Agreement DCT-025/2003, dated as of October 17, 2007, between Embraer-Empresa
Brasileria de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(d) to our Annual
Report on Form 10-K for the year ended December 31, 2007 (File No. 000-49728).
Amendment No. 5 to Purchase Agreement DCT-025/2003, dated as of July 18, 2008, between Embraer-Empresa Brasileira
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.1 to our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2008 (File No. 000-49728).
Amendment No. 6 to Purchase Agreement DCT-025/2003, dated as of February 17, 2009, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(f) to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (File No. 000-49728).
Amendment No. 7 to Purchase Agreement DCT-025/2003, dated as of December 14, 2009, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(g) to our Annual
Report on Form 10-K for the year ended December 31, 2009 (File No. 000-49728).
Amendment No. 8 to Purchase Agreement DCT-025/2003, dated as of March 11, 2010, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(h) to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (File No. 000-49728).
Amendment No. 9 to Purchase Agreement DCT-025/2003, dated as of May 24, 2010, between Embraer-Empresa Brasileira
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(i) to our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2010 (File No. 000-49728).
Amendment No. 10 to Purchase Agreement DCT-025/2003, dated as of September 10, 2010, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(j) to our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 000-49728).
Amendment No. 11 to Purchase Agreement DCT-025/2003, dated as of October 20, 2011, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(k) to our Annual
Report on Form 10-K for the year ended December 31, 2011 (File No. 000-49728).
Amendment No. 12 to Purchase Agreement DCT-025/2003, dated as of October 25, 2011, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(l) to our Annual
Report on Form 10-K for the year ended December 31, 2011 (File No. 000-49728).
Amendment No. 13 to Purchase Agreement DCT-025/2003, dated as of July 20, 2012, between Embraer-Empresa Brasileira
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(m) to our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2012 (File No. 000-49728).
Amendment No. 14 to Purchase Agreement DCT-025/2003, dated as of December 3, 2012, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(n) to our Annual
Report on Form 10-K for the year ended December 31, 2012 (File No. 000-49728).
Amendment No. 15 to Purchase Agreement DCT-025/2003, dated as of December 19, 2012, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.17(o) to our Annual
Report on Form 10-K for the year ended December 31, 2012 (File No. 000-49728).
Amendment No. 16 to Purchase Agreement DCT-025/2003, dated as of January 31, 2013 between Embraer S.A. (formerly
known as Embraer - Empresa Brasileira de Aeronáutica S.A.) and JetBlue Airways Corporation—incorporated by reference
to Exhibit 10.17(p) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
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Exhibit Index
10.17(q)**
10.17(r)**
10.17(s)**
10.17(t)**
10.18**
10.18(a)**
10.18(b)**
10.18(c)**
10.18(d)**
10.18(e)**
10.18(f)**
10.18(g)**
10.18(h)**
10.18(i)**
10.18(j)**
10.18(k)**
Amendment 17 to Purchase Agreement DCT-025/2003, dated as of May 14, 2013 between Embraer S.A. (formerly known as
Embraer—Empresa Brasileira de Aeronáutica S.A.) and JetBlue Airways Corporation—incorporated by reference to Exhibit
10.17(q) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
Amendment 18 to Purchase Agreement DCT-025/2003, dated as of June 25, 2013 between Embraer S.A. (formerly known
as Embraer—Empresa Brasileira de Aeronáutica S.A.) and JetBlue Airways Corporation—incorporated by reference to
Exhibit 10.17(r) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
Amendment No. 19 to Purchase Agreement DCT-025/2003, dated as of October 1, 2013 between Embraer S.A. (formerly
known as Embraer—Empresa Brasileira de Aeronautica S.A.) and JetBlue Airways Corporation—incorporated by reference
to Exhibit 10.17(s) to our Annual Report on Form 10-K for the year ended December 31, 2013.
Amendment No. 20 to Purchase Agreement DCT-025/2003, dated as of October 24, 2013 between Embraer S.A. (formerly
known as Embraer - Empresa Brasileira de Aeronáutica S.A.) and JetBlue Airways Corporation—incorporated by reference
to Exhibit 10.17(t) to our Annual Report on Form 10-K for the year ended December 31, 2013.
Letter Agreement DCT-026/2003, dated June 9, 2003, between Embraer-Empresa Brasileira de Aeronautica S.A. and
JetBlue Airways Corporation—incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K dated June 30,
2003 (File No. 000-49728).
Amendment No. 1, dated as of July 8, 2005, to Letter Agreement DCT-026/2003, between Embraer-Empresa Brasileira de
Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.4 to our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005 (File No. 000-49728).
Amendment No. 2, dated as of January 5, 2006, to Letter Agreement DCT-026/2003, between Embraer-Empresa Brasileira
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.22(b) to our Annual Report
on Form 10-K for the year ended December 31, 2006 (File No. 000-49728).
Amendment No. 3, dated as of December 4, 2006, to Letter Agreement DCT-026/2003, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.22( c) to our
Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 000-49728).
Amendment No. 4, dated as of October 17, 2007, to Letter Agreement DCT-026/2003, between Embraer-Empresa Brasileria
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(d) to our Annual Report on
Form 10-K for the year ended December 31, 2007 (File No. 000-49728).
Amendment No. 5 to Letter Agreement DCT-026/2003, dated as of March 6, 2008, between Embraer-Empresa Brasileira de
Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form
10-Q for the quarter ended September 30, 2008 (File No. 000-49728).
Amendment No. 6 to Letter Agreement DCT-026/2003, dated as of July 18, 2008, between Embraer-Empresa Brasileira de
Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.3 to our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2008 (File No. 000-49728).
Amendment No. 7 to Letter Agreement DCT-026/2003, dated as of February 17, 2009, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(g) to the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (File No. 000-49728).
Amendment No. 8 to Letter Agreement DCT-026/2003, dated as of December 14, 2009, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(h) to the Annual
Report on Form 10-K for the year ended December 31, 2009 (File No. 000-49728).
Amendment No. 9 to Letter Agreement DCT-026/2003, dated as of March 11, 2010, between Embraer-Empresa Brasileira
de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(i) to the Quarterly Report
on Form 10-Q for the quarter ended March 31, 2010 (File No. 000-49728).
Amendment No. 10 to Letter Agreement DCT - 026/2003, dated as of November 18, 2010, between Embraer-Empresa
Brasileira de Aeronautica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(j) to our Annual
Report on Form 10-K for the year ended December 31, 2013.
Amendment No. 11 to Letter Agreement DCT-026/2003, dated as of October 24, 2013 between Embraer - Empresa
Brasileira de Aeronáutica S.A. and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.18(k) to our Annual
Report on Form 10-K for the year ended December 31, 2013.
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10.20
10.20(a)
10.21*
10.22*
10.22(a)*
10.30**
10.31*
10.31(a)*
10.31(f)*
10.31(g)*
10.31(h)*
10.31(j)*
10.33**
10.33(b)**
10.33(c)**
10.33(d)**
10.33(e)**
Agreement of Lease (Port Authority Lease No. AYD-350), dated November 22, 2005, between The Port Authority of New
York and New Jersey and JetBlue Airways Corporation—incorporated by reference to Exhibit 10.30 to our Annual Report on
Form 10-K for the year ended December 31, 2005 (File No. 000-49728).
Supplement No. 3 to Agreement of Lease, dated July 1, 2012 between The Port Authority of New York and New Jersey and
JetBlue Airways Corporation—incorporated by reference to Exhibit 10.20(a) to our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2013.
Amended and Restated 2002 Stock Incentive Plan, dated November 7, 2007, and form of award agreement—incorporated
by reference to Exhibit 10.21 to the Annual Report for Form 10-K for the year ended December 31, 2008 (File No. 000-49728).
JetBlue Airways Corporation Executive Change in Control Severance Plan, dated as of June 28, 2007—incorporated by reference
to Exhibit 10.1 to our Current Report on Form 8-K, dated June 28, 2007 (File No. 000-49728).
JetBlue Airways Corporation Severance Plan, dated May 22, 2014—incorporated by reference to Exhibit 10.1 to our Current Report
on Form 8-K dated May 22, 2014.
Sublease by and between JetBlue Airways Corporation and Metropolitan Life Insurance Company—incorporated
by reference to Exhibit 10.30 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010
(File No. 000-49728).
JetBlue Airways Corporation 2011 Incentive Compensation Plan—incorporated by reference to Exhibit 10.31(a) to our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.
Amended and Restated JetBlue Airways Corporation 2011 Incentive Compensation Plan—incorporated by reference to
Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
Amended and Restated JetBlue Airways Corporation 2011 Incentive Compensation Plan form of Restricted Stock Unit
Award Agreement—incorporated by reference to Exhibit 10.2(a) to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015.
Amended and Restated JetBlue Airways Corporation 2011 Incentive Compensation Plan form of Deferred Stock Unit
Award Agreement—incorporated by reference to Exhibit 10.2(b) to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015.
Amended and Restated JetBlue Airways Corporation 2011 Incentive Compensation Plan form of Performance Share Unit
Agreement (2015)—incorporated by reference to Exhibit 10.2(c) to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015.
Form of Performance Share Unit Award Agreement as amended—incorporated by reference to Exhibit 10.1(a) to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
Airbus A320 Family Purchase Agreement, dated October 19, 2011, between Airbus S.A.S. and JetBlue Airways Corporation,
including Letter Agreements 1-8, each dated as of same date—incorporated by reference to Exhibit 10.33 to our Annual Report on
Form 10-K for the year ended December 31, 2011.
Amendment No. 1 to Airbus A320 Family Purchase Agreement, dated as of October 25, 2013, between Airbus S.A.S. and
JetBlue Airways Corporation, including Amended and Restated Letter Agreements 1, 2, 3 and 6, each dated as of the same
date—incorporated by reference to Exhibit 10.33(b) to our Annual Report on Form 10-K for the year ended December 31,
2013.
Amendment No. 2 to Airbus A320 Family Purchase Agreement, dated as of November 19, 2014, between Airbus S.A.S. and
JetBlue Airways Corporation, including Amended and Restated Letter Agreements 1 and 3, each dated as of the same
date—incorporated by reference to Exhibit 10.33(c) to our Annual Report on Form 10-K for the year ended December 31,
2014.
Amendment No. 3 to Airbus A320 Family Purchase Agreement, dated as of July 26, 2016, between Airbus S.A.S. and
JetBlue Airways Corporation-incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2016.
Amendment No. 4 to Airbus A320 Family Purchase Agreement, dated as of July 26, 2016, between Airbus S.A.S. and
JetBlue Airways Corporation, including Amended and Restated Letter Agreements 1, 2, 3 and 6 and Letter Agreement 9,
each dated as of the same date-incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2016.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
103
PART IV
Exhibit Index
10.33(f)**
10.33(g)**
10.33(h)**
10.33(i)**
10.33(j)**
10.33(k)**
10.33(l)***
Amendment No. 5 to Airbus A320 Family Purchase Agreement, dated as of August 9, 2016, between Airbus S.A.S. and
JetBlue Airways Corporation-incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2016.
Amendment No. 6 to Airbus A320 Family Purchase Agreement, dated as of April 11, 2017, between Airbus S.A.S. and JetBlue
Airways Corporation-incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017.
Amendment No. 7 to Airbus A320 Family Purchase Agreement, dated as of April 25, 2017, between Airbus S.A.S. and
JetBlue Airways Corporation-incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2017.
Amendment No. 8 to Airbus A320 Family Purchase Agreement, dated as of December 19, 2017, between Airbus S.A.S. and
JetBlue Airways Corporation-incorporated by reference to Exhibit 10.33(i) to our Annual Report on Form 10-K for the year
ended December 31, 2017.
Amendment No. 9 to Airbus A320 Family Purchase Agreement, dated as of March 30, 2018, between Airbus S.A.S. and
JetBlue Airways Corporation-incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2018.
Amendment No. 10 to Airbus A320 Family Purchase Agreement, dated as of July 7, 2018, between Airbus S.A.S. and JetBlue
Airways Corporation-incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018.
Amendment No. 11 to Airbus A320 Family Purchase Agreement, dated as of July 7, 2018, between Airbus S.A.S. and JetBlue
Airways Corporation-incorporated by reference to Exhibit 10.33(l) to our Annual Report on Form 10-K for the year ended
December 31, 2018.
10.33(m)**** Amendment No. 12 to Airbus Family Purchase Agreement, dated as of April 9, 2019, between Airbus S.A.S. and JetBlue
Airways Corporation-incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2019.
10.33(n)****
10.33(o)****
Amendment No. 13 to Airbus Family Purchase Agreement, dated as of June 20, 2019, between Airbus S.A.S. and JetBlue
Airways Corporation-incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2019.
Amendment No. 14 to Airbus Family Purchase Agreement, dated as of May 4, 2020, between Airbus S.A.S. and JetBlue
Airways Corporation—incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2020.
10.33(p)****,+ Amendment No. 15 to Airbus Family Purchase Agreement, dated as of October 8, 2020, between Airbus S.A.S. and JetBlue
Airways Corporation.
10.35*
10.36
10.36(a)
Amended and Restated JetBlue Airways Corporation 2011 Crewmember Stock Purchase Plan—incorporated by reference to
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
Amended and Restated Credit and Guaranty Agreement, dated as of April 6, 2017 among JetBlue Airways Corporation, as
Borrower, the Subsidiaries of JetBlue party thereto from time to time, as guarantors, the Lenders party thereto from time
to time, and Citibank, N.A., as Administrative Agent—incorporated by reference to Exhibit 10.1 to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2017.
First Amendment, dated August 1, 2019, to the Amended and Restated Credit and Guaranty Agreement, dated as of April
6, 2017, among JetBlue Airways Corporation, as Borrower, the Subsidiaries of the Borrower party thereto as Guarantors,
the Lenders party thereto and Citibank, N.A., as Administrative Agent—incorporated by reference to Exhibit 10.2 to our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.
10.36(b)****
Second Amendment, dated February 20, 2020, to the Amended and Restated Credit and Guaranty Agreement, dated
as of April 6, 2017, among JetBlue Airways Corporation, as Borrower, the Subsidiaries of the Borrower party thereto
as Guarantors, the Lenders party thereto and Citibank, N.A., as Administrative Agent—incorporated by reference to
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
10.38**
Engine Services Agreement between JetBlue Airways Corporation and GE Engine Services, LLC, dated as of May 1, 2013—
incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
104
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
PART IV
Exhibit Index
10.38(a)**
10.39*
10.41*
10.41(a)*
10.41(b)*
10.44*
10.44(a)*
10.45**
10.46
10.47
10.48
10.49
10.50*
10.51*
10.52*****
10.52(a)+
10.53
10.54****
Amendment No. 1 to Engine Services Agreement between JetBlue Airways Corporation and GE Engine Services, LLC,
dated as of December 23, 2014—incorporated by reference to Exhibit 10.38(a) to our Annual Report on Form 10-K for the
year ended December 31, 2014.
JetBlue Airways Corporation Retirement Plan, amended and restated effective as of January 1, 2013—incorporated by
reference to Exhibit 10.39 to our Annual Report on Form 10-K for the year ended December 31, 2013.
Employment Agreement, dated February 12, 2015, between JetBlue Airways Corporation and Robin Hayes—incorporated by
reference to Exhibit 10.41 to our Annual Report on Form 10-K for the year ended December 31, 2014.
Amendment No. 1 to the Employment Agreement, dated February 16, 2017, between JetBlue Airways Corporation and Robin
Hayes—incorporated by reference to Exhibit 10.41(a) to our current report on Form 8-K filed on February 22, 2017.
Amendment No. 2 to the Employment Agreement between JetBlue Airways Corporation and Robin Hayes, dated
February 13, 2020—incorporated by reference to Exhibit 10.41(B) to our Current Report on From 8-K dated February 13, 2020.
Separation Agreement dated May 17, 2018 by and between James Hnat and JetBlue Airways Corporation—incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K dated May 18, 2018.
Separation Agreement and General Release dated July 15, 2019 by and between Martin St. George and JetBlue Airways
Corporation—incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2019.
Amended and Restated PW100G-JM Engine Purchase and Support Agreement by and between International Aero Engines,
LLC and JetBlue Airways Corporation, dated as of March 30, 2018—incorporated by reference to Exhibit 10.3 to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.
Delayed Draw Term Loan Credit Agreement dated as of March 13, 2020 among JetBlue Airways Corporation, as Borrower, the
subsidiaries of the Borrower party hereto, as Guarantors, the Lenders party hereto, and Morgan Stanley Senior Funding, Inc.,
as Administrative Agent—incorporated by reference to Exhibit 10.1 to our Current Report on From 8-K dated March 13, 2020.
Payroll Support Program Agreement, dated as of April 23, 2020, between JetBlue Airways Corporation and the United
States Department of the Treasury—incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020.
Promissory Note, dated as of April 23, 2020, issued by JetBlue Airways Corporation in the name of the United States of the
Treasury—incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
Term Loan Credit Agreement dated as of June 17, 2020 among JetBlue Airways Corporation, as Borrower, the subsidiaries
of the Borrower party hereto, as Guarantors, the Lenders party hereto, and Barclays Bank PLC, as Administrative Agent—
incorporated by reference to Exhibit 10.1 to our Current Report on From 8-K dated June 17, 2020.
JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan—incorporated by reference to Exhibit 10.31 to our
Current Report on From 8-K dated May 14, 2020 and filed on May 20, 2020.
JetBlue Airways Corporation 2020 Crewmember Stock Purchase Plan—incorporated by reference to Exhibit 10.35 to our
Current Report on From 8-K dated May 14, 2020 and filed on May 20, 2020.
Loan and Guarantee Agreement, dated as of September 29, 2020, among JetBlue Airways Corporation, as Borrower, the
Subsidiaries of JetBlue Airways Corporation party thereto from time to time, as Guarantors, the United States Department
of the Treasury, as Lender, and The Bank of New York Mellon as Administrative Agent and Collateral Agent—incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Amendment, dated November 3, 2020, to Loan and Guarantee Agreement, dated as of September 29, 2020, among
JetBlue Airways Corporation, as Borrower, the Subsidiaries of JetBlue Airways Corporation party thereto from time
to time, as Guarantors, the United States Department of the Treasury, as Lender, and The Bank of New York Mellon as
Administrative Agent and Collateral Agent.
Amended and Restated JetBlue Airways Corporation Severance Plan dated July 8, 2020—incorporated by reference to
Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
Northeast Alliance Agreement, dated as of July 15, 2020, between JetBlue Airways Corporation and American Airlines, Inc.—
incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
10.54(a)****
First Amendment to the Northeast Alliance Agreement, dated as of September 11, 2020, between JetBlue Airways
Corporation and American Airlines, Inc.
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
105
PART IV
Exhibit Index
10.55****
Codeshare Agreement, dated as of July 15, 2020 between, JetBlue Airways Corporation and American Airlines,
Inc.—incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
10.56****
Mutual Growth Incentive Agreement, dated as of July 15, 2020, between JetBlue Airways Corporation and American Airlines,
Inc.—incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
10.57+
10.58+
21.1+
23+
31.1+
31.2+
32++
Payroll Support Program Agreement, dated as of January 15, 2021, between JetBlue Airways Corporation and the United
States Department of the Treasury.
Promissory Note, dated as of January 15, 2021, issued by JetBlue Airways Corporation in the name of the United States of
the Treasury.
List of Subsidiaries.
Consent of Ernst & Young LLP.
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
Section 1350 Certifications, furnished herewith.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
104
†
Cover Page Interactive Data File (embedded within the Inline XBRL document)
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(k) filed herewith contains a list of documents applicable to each Aircraft (other than Aircraft bearing
Registration No. N976JT) that relate to the offering of the JetBlue Airways Pass Through Certificates, Series 2019-1, which documents are substantially identical to
those which are filed herewith as Exhibits 4.3(h) and 4.3(i), except for the information identifying such Aircraft in question and various information relating to the
principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 4.3(k) sets forth the details by which such documents differ from the corresponding
representative sample of documents filed herewith as Exhibits 4.3(h) and 4.3(i) with respect to Aircraft bearing Registration No. N976JT.
†† Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(x), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August 17,
2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N946JL) that relate to the offering
of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.9 and 4.10 to our
Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft
in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.1 sets forth the details by which such
documents differ from the corresponding representative sample of documents filed as Exhibits 4.9 and 4.10 with respect to Aircraft bearing Registration No. N946JL.
††† Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(y), incorporated herein by reference to Exhibit 99.2 to our Current Report on Form 8-K dated August 17,
2020 and filed on August 18, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N2002J) that relate to the offering
of the JetBlue Airways Pass Through Certificates, Series 2020-1, which documents are substantially identical to those which were filed as Exhibits 4.11 and 4.12 to our
Current Report on Form 8-K dated August 17, 2020 and filed on August 18, 2020, incorporated by reference herein, except for the information identifying such Aircraft
in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.2 sets forth the details by which such
documents differ from the corresponding representative sample of documents filed as Exhibits 4.11 and 4.12 with respect to Aircraft bearing Registration No. N2002J.
†††† Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 4.3(ag), incorporated herein by reference to Exhibit 99.1 to our Current Report on Form 8-K dated August
28, 2020 and filed on August 28, 2020, contains a list of documents applicable to each Aircraft (other than Aircraft bearing Registration No. N976JT) that relate to the
offering of the JetBlue Airways Pass Through Certificates, Series 2019-1B, which documents are substantially identical to those which were filed as Exhibits 4.6 and 4.7 to
our Current Report on Form 8-K dated August 28, 2020 and filed on August 28, 2020, incorporated by reference herein, except for the information identifying such Aircraft
in question and various information relating to the principal amounts of the Equipment Notes relating to such Aircraft. Exhibit 99.3 sets forth the details by which such
documents differ from the corresponding representative sample of documents filed as Exhibits 4.6 and 4.7 with respect to Aircraft bearing Registration No. N976JT.
Filed herewith
+
++ Furnished herewith
*
** Pursuant to a Confidential Treatment Request under Rule 24b-2 filed with and approved by the SEC, portions of this exhibit have been omitted.
*** Pursuant to 17 CFR 240.24b-2, confidential information has been omitted and has been provided separately to the Securities and Exchange Commission pursuant to a
Compensatory plans in which the directors and executive officers of JetBlue participate.
Confidential Treatment Request filed with the Commission.
**** Information in this exhibit identified by brackets is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it (i) is not material and
(ii) would likely cause competitive harm to the Company if publicly disclosed.
***** Pursuant to Item 601(a)(5) of Regulation S-K, schedules have been omitted and will be furnished on a supplemental basis to the Securities and Exchange Commission
upon request.
106
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
FINANCIAL STATEMENT SCHEDULE
JETBLUE AIRWAYS CORPORATION
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Year Ended December 31, 2020
Valuation allowance for deferred tax assets
Allowance for obsolete inventory parts
Allowance for doubtful accounts
TOTAL
Year Ended December 31, 2019
Valuation allowance for deferred tax assets
Allowance for obsolete inventory parts
Allowance for doubtful accounts
TOTAL
Year Ended December 31, 2018
Valuation allowance for deferred tax assets
Allowance for obsolete inventory parts
Allowance for doubtful accounts
TOTAL
(1) Uncollectible accounts written off, net of recoveries.
Balance at
beginning of
period
Additions Charged
to Costs and
Expenses
Deductions
Balance at end
of period
$
$
$
$
$
$
31
22
1
$
38
$
5
6
54
$
49
$
21
18
1
$
10
$
4
6
40
$
20
$
1
14
1
$
20
$
4
6
16
$
30
$
—
—
5 (1)
5
—
—
6 (1)
6
—
—
6 (1)
6
$
$
$
$
$
$
69
27
2
98
31
22
1
54
21
18
1
40
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
107
EXHIBITS
EXHIBITS
EXHIBIT 21.1 List of Subsidiaries
As of December 31, 2020
NAME OF SUBSIDIARY
BlueBermuda Insurance, LTD
JetBlue Technology Ventures, L.L.C.
JBTP, LLC
Troupe, Inc.
TrueBlue Intellectual Property Assets Holdings 1 Ltd.
TrueBlue Intellectual Property Assets Holdings 2 Ltd.
TrueBlue Intellectual Property Assets Ltd.
STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION
Bermuda
Delaware
Delaware
Delaware
Cayman Islands
Cayman Islands
Cayman Islands
108
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
EXHIBITS
EXHIBIT 23 Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No. 333-86444) pertaining to the JetBlue Airways Corporation 2002 Stock Incentive Plan and the
JetBlue Airways Corporation Crewmember Stock Purchase Plan,
(2) Registration Statement (Form S-8 No. 333-129238) pertaining to the JetBlue Airways Corporation 2002 Stock Incentive Plan and the
JetBlue Airways Corporation Crewmember Stock Purchase Plan,
(3) Registration Statement (Form S-8 No. 333-161565) pertaining to the JetBlue Airways Corporation 2002 Stock Incentive Plan and the
JetBlue Airways Corporation Crewmember Stock Purchase Plan,
(4) Registration Statement (Form S-8 No. 333-174947) pertaining to the JetBlue Airways Corporation 2011 Incentive Compensation Plan
and the JetBlue Airways Corporation 2011 Crewmember Stock Purchase Plan,
(5) Registration Statement (Form S-3 ASR No. 333-202143) of JetBlue Airways Corporation,
(6) Registration Statement (Form S-3 ASR No. 333-230007) of JetBlue Airways Corporation,
(7) Registration Statement (Form S-8 No. 333-207242) pertaining to the JetBlue Airways Corporation 2011 Incentive Compensation Plan
and the JetBlue Airways Corporation 2011 Crewmember Stock Purchase Plan, and
(8) Registration Statement (Form S-8 No. 333-239511) pertaining to the JetBlue Airways Corporation 2020 Omnibus Equity Incentive Plan
and 2020 Crewmember Stock Purchase Plan;
of our reports dated March 2, 2021, with respect to the consolidated financial statements and financial statement schedule listed in Item 15(2)
of JetBlue Airways Corporation, and the effectiveness of internal control over financial reporting of JetBlue Airways Corporation included in this
Annual Report (Form 10-K) of JetBlue Airways Corporation for the year ended December 31, 2020.
/s/ Ernst & Young LLP
New York, New York
March 2, 2021
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
109
EXHIBITS
EXHIBITS
EXHIBIT 31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive
Officer
I, Robin Hayes, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of JetBlue Airways Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 2, 2021
By:
/s/ ROBIN HAYES
Chief Executive Officer
110
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
EXHIBITS
EXHIBIT 31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial
Officer
I, Steve Priest, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of JetBlue Airways Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 2, 2021
By:
/s/ STEVE PRIEST
Chief Financial Officer
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT
111
FINANCIAL STATEMENT SCHEDULE
EXHIBIT 32 Section 1350 Certifications
In connection with the Annual Report of JetBlue Airways Corporation on Form 10-K for the year ended December 31, 2020, as filed with the
Securities and Exchange Commission on March 2, 2021 (the “Report”), the undersigned, in the capacities and on the dates indicated below,
each hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of JetBlue
Airways Corporation.
Date: March 2, 2021
Date: March 2, 2021
By:
/s/ ROBIN HAYES
Chief Executive Officer
By:
/s/ STEVE PRIEST
Chief Financial Officer
112
JETBLUE AIRWAYS CORPORATION | 2020 ANNUAL REPORT