JetBlue''s turn in the barrell?

all of the aircraft delivered since except one are owned. That brings the percentage up to about half.

Jeff, JBLU might own 50% more or less of their fleet, but how many are financed, and how many were bought with cash? Owning 50% of your fleet is fine if it isn't encumbered, but if the owned fleet is also mortgaged, there's not a lot of value in owning vs. leasing...
 
From a different message board on a discussion of jetBlue:

>My understanding is that they have always been paying for their aircraft. The sweetheart deal that they have involves the warranties on their aircraft and their maint department. It is a way to allow the Euros to backdoor a subsidy to the airline and allows a startup to have a better cash flow initially. What Airbus does is allow airlines to charge them retail reimbursement for parts and services for warranty work while incurring a wholesale cost. This makes the maint department an initial profit center instead of a direct cost department. The incentive for the manufacturer is that the program encourages continuous additions of new aircraft, as older ones roll off warranty. There are capital advantages for the manufacturer that are back loaded, including high financing charges and higher parts costs when the aircraft do come off warranty. The carriers who participate in such deals hope that the early help will give them the leg up to deal with the downsides that eventually come. Boeing so far hasn't wanted to play that game, but may have to to compete. Mesa Airlines did a similar deal with Raytheon with the 1900D's that was good for them while the pyramid was building but killed them at the end. <

It was also said that jetBlue is using a non-standard depreciation schedule on their aircraft.
 
I heard B6 depreciates their planes over 25 years, with a residual value of 20%, but industry standard is 20/10.

Someone on another board stated this methodology accounts for a significant % of JB profits.

The 25 year depreciation/20% value was on page F-9 their prospectus. There really isn't an industry standard, but some feel the 25Yr/20% plan is a bit aggresive.

This might help their balance sheet out somewhat by overstating the book value of their assets, but I don't know that I'd call it significant...
 
Ualpilot,

Thanks so much for looking out for me. I know it was intended in the best possible way. [:halo:]

But I don't consider the stock options to be my retirement. I consider them a reward for taking a risk with a startup, not an essential part of my financial well-being. I have IRA's, a 401(k), and my own investments that will do the job, and (importantly) I have 26 more years to work on them. I plan to exercise my options when the time is right and roll the (at the moment) very considerable gains to something else. Buying company stock is great, but I'm not counting on it. Unfortunately, UAL's ESOP has made that lesson far too clear.

I could also make the argument that A funds require that your company fund them adequately, and that is also a risk. A B fund presupposes that you'll have a long time to work on it. My own admittedly more modest retirement will nevertheless survive regardless of what happens to JetBlue. It all really depends on perspective, and what you want out of a career. I never intended to get rich, but I'm not doing bad at the moment. You're doing well also, if you're not furloughed. At the end of our careers, we won't be keeping score by how much money we made but by how fulfilling our lives have been along the way. As I said, it's all in perspective.

Eventually the laborers (you) will get tired of working your butt off to line the pockets of your CEO...

It's this comment that I really don't understand. What do you mean? The guy makes a rather modest salary, plus a bonus if targets are met, and doesn't take stock options. The shares he already owns don't pay dividends. The company's profits are rolled back into operations, and a significant percentage is given back to us (the laborers). How is that lining his pockets?

This company isn't even three years old yet. In time, the pay and working conditions will improve, and they're not bad now. Ask me in ten years if things are utterly stagnant and then I'll happily b-itch, but I have a hard time feeling abused at the moment.