This just in:
Question: Perhaps you can validate a rumor spreading around. I have heard that Jet BLue is operating their Airbus aircraft lease free and Airbus is providing free maintenance. Also, JFK provided them with no cost/low cost gates. Any of this true?
Answer: Details of the contractual agreement between Airbus and JetBlue are proprietary information and are not included in the financial reports released to the public. Specifics of this agreement are filed separately with the Securities Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 of the SEC Act of 1934, as amended.
However, the following extracts from JetBlue''s recent 10K filing may be helpful in answering your questions.
Regarding aircraft acquisitions
"We typically finance our aircraft through either secured or lease financing. At December 31, 2002, we operated a fleet of 37 Airbus A320 aircraft, of which 16 are financed under operating leases with the remaining 21 financed by secured debt. At December 31, 2002, financing in the form of operating leases had been arranged for the first six deliveries scheduled for 2003. Although we believe that debt and/or lease financing should be available for our remaining aircraft deliveries, we cannot make assurances that we will be able to secure financing on terms acceptable to us, if at all. While these financings may or may not result in an increase in liabilities on our balance sheet, our fixed costs will increase significantly regardless of the financing method ultimately chosen. To the extent we cannot secure financing, we may required to modify our aircraft acquisition plans to incur higher than anticipated financing costs."
Regading maintenance costs:
"Because the average age of our aircraft is 15.5 months, our aircraft require less maintenance now than they will in the future. We also currently incur lower maintenance expenses because most of the parts on our aircraft are under multi-year warranties. Our maintenance costs will increase on an absolute basis, on a per seat mile basis and as a percentage of our operating expenses, as our fleet ages and these warranties expire.
Although we cannot accurately predict how much our maintenance costs will increase in the future, we expect that they will increase significantly."
Regarding JFK gates:
"We currently operate from Terminal 6 at JFK under an expired permit from the Port Authority of New York and New Jersey. Our permit could be terminated at any time upon 30 day''s notice and alternate gate space may not be available on favorable terms, or at all. Although we are in the process of finalizing a long-term lease agreement through November 2006 with the Port Authority, we cannot assure you that we will be able to execute a lease agreement. Since JFK is our principal base of operations, our inability to maintain an adequate number of gates would harm our business".
Mor regarding JFK gates:
We also checked with the Port Authority of NY & NJ regarding your question. JetBlue is paying fees at the same rate as the other airlines at JFK in similar facilities. JetBlue paid fees from the commencement of their servise to JFK, and they have not received any special discounts or waivers".
