Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
JetBlue predominately provides air transportation services across the United States, Caribbean and Latin America. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., or U.S. GAAP, and include the accounts of JetBlue and our subsidiaries. All majority-owned subsidiaries are consolidated on a line by line basis, with all intercompany transactions and balances being eliminated. In June 2014, LiveTV, LLC (and LTV Global, Inc, and LiveTV International, Inc., subsidiaries of LiveTV, LLC) were sold to Thales Holding Corporation, or Thales, and ceased to be subsidiaries of JetBlue. In September 2014, LiveTV Satellite Communications, LLC was sold to Thales and ceased to be a subsidiary of JetBlue. Following the close of the sales on June 10, 2014 and September 25, 2014, the transferred LiveTV operations are no longer presented in our consolidated financial statements. Refer to Note 8 for more details on the sale. Air transportation services accounted for substantially all of the Company’s operations in 2014, 2013 and 2012. Accordingly, segment information is not provided for LiveTV operations before the sale. |
Use of Estimates | Use of Estimates |
The preparation of our consolidated financial statements and accompanying notes in conformity with U.S. GAAP require us to make certain estimates and assumptions. Actual results could differ from those estimates. |
Fair Value | Fair Value |
The Fair Value Measurements and Disclosures topic of the Financial Accounting Standards Board’s, 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 for more information. |
Cash and Cash Equivalents | 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 and commercial papers with maturities of three months or less when purchased. |
Cash equivalents |
Our cash equivalents include money market securities and commercial papers which are readily convertible into cash with maturities of three months or less when purchased. All of these instruments are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy. |
Restricted Cash | Restricted Cash |
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 |
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. |
Investment Securities | 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. |
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Available-for-sale investment securities |
Our available-for-sale investment securities include highly liquid investments such as certificates of deposits with maturities between three and twelve months which are stated at fair value. |
Held-to-maturity investment securities |
Our held-to-maturity investments consist of investment-grade interest bearing instruments, primarily corporate bonds, 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, 2014, 2013 or 2012. The estimated fair value of these investments approximated their carrying value as of December 31, 2014 and 2013. |
Also included in our held-to-maturity investment securities as of December 31, 2014 are deposits made to lower the interest rate on the debt secured by two aircraft as discussed in Note 2. These funds on deposit are readily available to us and are invested with a bank with a deposit maturity within the next 12 months. If we were to draw upon this deposit, the interest rates on the debt would revert to the higher rates in effect prior to the re-financing. As such, we have classified these time deposits as long-term held-to-maturity investments to reflect our intent to hold them in connection with the maturity of the associated debt. |
The carrying values of investment securities consisted of the following at December 31, 2014 and 2013 (in millions): |
Available-for-sale investment securities |
Included in our available-for-sale investment securities are time deposits with original maturities greater than three months but less than one year. 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 year ended December 31, 2014 or 2013. |
Marketable Securities, Available-for-sale Securities, Policy [Policy Text Block] | Available-for-sale investment securities |
Our available-for-sale investment securities include highly liquid investments such as certificates of deposits with maturities between three and twelve months which are stated at fair value. |
Held-to-maturity investment securities | Held-to-maturity investment securities |
Our held-to-maturity investments consist of investment-grade interest bearing instruments, primarily corporate bonds, 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, 2014, 2013 or 2012. The estimated fair value of these investments approximated their carrying value as of December 31, 2014 and 2013. |
Also included in our held-to-maturity investment securities as of December 31, 2014 are deposits made to lower the interest rate on the debt secured by two aircraft as discussed in Note 2. These funds on deposit are readily available to us and are invested with a bank with a deposit maturity within the next 12 months. If we were to draw upon this deposit, the interest rates on the debt would revert to the higher rates in effect prior to the re-financing. As such, we have classified these time deposits as long-term held-to-maturity investments to reflect our intent to hold them in connection with the maturity of the associated debt. |
Derivative Instruments | Derivative Instruments |
Derivative instruments, including fuel hedge contracts, fuel basis swap agreements and interest rate swap agreements are stated at fair value, net of any collateral postings. Derivative instruments are included in other current assets and other current liabilities in our consolidated balance sheets. Refer to Note 13 for more information. |
Aircraft fuel derivatives |
Our aircraft fuel derivatives include swaps, caps, collars, and basis swaps 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. |
Interest rate swaps |
The fair values of our interest rate swaps are based on inputs received from the related counterparty, which are based on observable inputs for active swap indications in quoted markets for similar terms. Their fair values are determined using a market approach based on inputs that are readily available from public markets; therefore, they are classified as Level 2 inputs. |
Inventories | Inventories |
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 is provided over the remaining useful life of the related aircraft fleet. |
Property and Equipment | 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, the interest related to predelivery 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: |
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| Estimated Useful Life | Residual Value |
Aircraft | 25 years | 20 | % |
In-flight entertainment systems | 5-10 years | 0 | % |
Aircraft parts | Fleet life | 10 | % |
Flight equipment leasehold improvements | Lower of lease term or economic life | 0 | % |
Ground property and equipment | 2-10 years | 0 | % |
Leasehold improvements—other | Lower of lease term or economic life | 0 | % |
Buildings on leased land | Lease term | 0 | % |
Property under capital 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 capital leases is on a straight-line basis over the expected useful life 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. Impairment losses are recorded in depreciation and amortization expense. |
Software | 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 between five and ten years. The net book value of computer software, which is included in other assets on our consolidated balance sheets, was $73 million and $70 million as of December 31, 2014 and 2013 respectively. Amortization expense related to computer software was $39 million, $18 million and $13 million for the years ended December 31, 2014, 2013 and 2012 respectively. The increase in amortization expense during 2014 is mainly due to accelerated amortization expense as a result of a change in the expected useful lives of certain software. As of December 31, 2014, amortization expense related to computer software is expected to be approximately $27 million in 2015, $15 million in 2016, $13 million in 2017, $9 million in 2018, and $5 million in 2019. |
Intangible Assets | Intangible Assets |
Our intangible assets consist primarily of acquired take-off and landing slots, or Slots, at certain domestic airports. 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 account for Slots at High Density Airports, including Reagan National Airport in Washington, D.C., LaGuardia Airport, and JFK Airport, both in New York City as indefinite life intangible assets which results in no amortization expense. Slots at other airports are amortized on a straight-line basis over their expected useful lives of up to 15 years. As of December 31, 2013, we changed our estimated lives for Slots at High Density Airports from 15 years to indefinite life. We incurred amortization expense of $5 million and $4 million related to Slots at High Density Airports for the years ended December 31, 2013 and 2012 respectively. |
In March 2014, we completed the purchase of 24 additional Slots at Reagan National for $75 million. We started using these Slots in the second half of 2014 and continue to announce new routes. Consistent with our accounting treatment for Slots at all High Density Airports, we have assigned these assets an indefinite life. |
Passenger Revenues | Passenger Revenue |
Passenger revenue is recognized when the transportation is provided or after the ticket or customer credit issued upon payment of a change fee expires. It is recognized net of the taxes that we are required to collect from our customers, including federal transportation taxes, security taxes and airport facility charges. Tickets sold but not yet recognized as revenue and unexpired credits are included in air traffic liability. |
Loyalty Program | Loyalty Program |
We account for our customer loyalty program, TrueBlue®, by recording a liability for the estimated incremental cost of outstanding points earned from JetBlue purchases that we expect to be redeemed. The estimated cost includes incremental fuel, insurance, passenger food and supplies and reservation costs. We adjust this liability, which is included in air traffic liability, based on points earned and redeemed, points that will ultimately go unused, or breakage, changes in the estimated incremental costs associated with providing travel and changes in the TrueBlue® program. This liability was $24 million and $19 million as of December 31, 2014 and 2013, respectively. We estimate breakage based on historical point redemptions. In June 2013, we amended the program so points earned by members never expire. As a result of this change, our estimate for the breakage decreased resulting in a $5 million reduction in revenue and a corresponding increase in air traffic liability in 2013. In October 2013, we introduced the pooling of points between small groups of people, branded as Family Pooling™. We believe Family Pooling™ has not had a material impact on the breakage calculation at year-end. We did not make any changes to our frequent flyer accounting in 2014. |
Points in TrueBlue® can also be sold to participating companies, including credit card and car rental companies. These sales are accounted for as multiple-element arrangements, with one element representing the fair value of the travel that will ultimately be provided when the points are redeemed and the other consisting of marketing related activities that we conduct with the participating company. The fair value of the transportation portion of these point sales is deferred and recognized as passenger revenue when transportation is provided. The marketing portion, which is the excess of the total sales proceeds over the estimated fair value of the transportation to be provided, is recognized in other revenue when the points are sold. TrueBlue® points sold to participating companies which are not redeemed are recognized as revenue when management determines the probability of redemption is remote. Deferred revenue was $162 million and $131 million at December 31, 2014 and 2013, respectively. We recorded no revenue related to point expirations during 2014 and $2 million, and $5 million during 2013 and 2012, respectively. |
Upon the re-launch of the TrueBlue® program in November 2009, we extended our co-branded credit card and membership rewards participation agreements. In connection with these extensions, we received a one-time payment of $37 million, which we deferred and are recognizing as other revenue over the term of the agreement through 2015. We recognized approximately $7 million of revenue related to this one-time payment during 2014, 2013 and 2012, respectively. In connection with exclusive benefits to be introduced for our co-branded credit card, we received a one-time payment of $6 million during 2012, which we have deferred and will recognize as other revenue over the remaining term of the agreement. For the year ended December 31, 2014, we have recorded $1 million of revenue related to this one-time payment. |
Live TV Revenues and Expenses | LiveTV Commercial Agreements |
LiveTV provides in-flight entertainment solutions for various commercial airlines. These solutions include equipment and related installation as well as agreements for ongoing service and support. In June 2014, we sold LiveTV and until this time we accounted for the equipment agreements as operating leases, with related revenue recognized ratably over the term of the related customer agreement in accordance with the Revenue Recognition-Multiple-Element Arrangements topic of the Codification. This determination was principally as a result of the long term nature of these agreements and the resulting uncertainties surrounding the total costs to provide ongoing equipment maintenance and upkeep throughout the contractual term. We accounted for payments for ongoing service and support ratably over the term of the related customer contract. Before the sale of LiveTV, customer advances that were to be applied in the next 12 months were included in other current liabilities on our consolidated balance sheets while those beyond 12 months were included in other liabilities. As of December 31, 2014, no LiveTV balances are included in our consolidated balance sheets. |
Airframe and Engine Maintenance and Repair | 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 hours 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. These agreements, whose original terms generally range from ten to 15 years, 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 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. One of our maintenance providers is a subsidiary of a large shareholder of ours and is a related party. We recorded approximately $20 million in 2014, $19 million in 2013 and $7 million in 2012 in maintenance expense provided by this related party. |
Advertising Costs | Advertising Costs |
Advertising costs, which are included in sales and marketing, are expensed as incurred. Advertising expense was $64 million in 2014, $61 million in 2013 and $57 million in 2012. |
Share-Based Compensation | 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 | 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 realizability 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. |
New Accounting Standards | New 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, including proposals related to leases and financial instruments. If and when enacted, these proposals may have a significant impact on our financial statements. |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern topic of the Codification. This standard provides specific guidance that requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. This amendment is effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter, early adoption is also permitted. We are still evaluating the new guidance and its impact, if any, on our consolidated financial statements disclosures. |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers topic of the Codification, which supersedes existing revenue recognition guidance. Under the new standard, a company will recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled to in exchange for those goods or services. The standard is effective for public companies for annual periods beginning after December 15, 2016, and allows for either full retrospective or modified retrospective adoption. Early adoption is not permitted. While we are still evaluating the full impact of adopting this standard on our consolidated financial statements and disclosures, we have determined that it will impact our loyalty program accounting. The new standard will no longer allow us to use the incremental cost method when recording the financial impact of points earned on JetBlue purchases and will require us to re-value our liability with a relative fair value approach. |
In July 2013, the FASB issued ASU 2013-10, amending the Derivatives and Hedging topic of the Codification. This update permits the Federal Funds Effective Swap rate (Overnight Index Swap rate, or OIS) to be designated as a benchmark interest rate for hedging accounting purposes for all new or redesigned hedging relationships as of the issue date of the final guidance. Adoption of this standard did not have a material impact on our consolidated financial statements or notes thereto. |