UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the Quarterly Period Ended June 30, 2002or
For the transition period from to
Commission file number: 000-49728
JETBLUE AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
(718) 286-7902 (Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. Yes ý No o
As of June 30, 2002, there were 42,045,404 shares of the Registrant's Common Stock, par value $0.01, outstanding.
JetBlue Airways CorporationFORM 10-Q
INDEX
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
(In thousands, except share data)
See accompanying notes to condensed financial statements.
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JETBLUE AIRWAYS CORPORATION STATEMENTS OF INCOME (unaudited, in thousands, except per share amounts)
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JETBLUE AIRWAYS CORPORATION STATEMENTS OF CASH FLOWS (unaudited, in thousands)
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JETBLUE AIRWAYS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1—Basis of Presentation
These condensed financial statements are unaudited and have been prepared by us following the rules and regulations of the United States Securities and Exchange Commission and, in our opinion, reflect all adjustments, consisting of normal recurring items which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year. These condensed financial statements and related notes should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2001, which were included as part of the Company's registration statement on Form S-1 (Registration No. 333-82576), as declared effective by the Securities and Exchange Commission on April 11, 2002 and in its final prospectus filed on April 12, 2002.
Note 2—Income Taxes
Income tax expense is based on estimated annual effective tax rates, which differ from the federal statutory rate of 35% primarily due to state income taxes, nondeductible expenses and stock option compensation, and for the three and six months ended June 30, 2001, the reduction of the deferred tax asset valuation allowance.
During 2001, we recognized the benefit from the future use of operating loss carryforwards and other deferred tax assets because our evaluation of all the available evidence in assessing the realizability of the tax benefits of such deferred tax assets indicated that it is more likely than not that such deferred tax assets would be realized.
Note 3—Long-term Debt
During the six months ended June 30, 2002, we issued $178 million in floating rate equipment notes due through 2014 which adjust quarterly and semi-annually based on the London Interbank Offered Rate. At June 30, 2002, the weighted average interest rate of our long-term debt was 3.93%, and maturities are $31.5 million for the remainder of 2002, $38.0 million in 2003, $34.0 million in 2004, $35.6 million in 2005, $34.4 million in 2006 and $33.8 million in 2007. Non-cash predelivery financing obtained in connection with the acquisition of new aircraft was zero and $18.1 million for the six months ended June 30, 2002 and 2001, respectively.
Note 4—Comprehensive Income
Comprehensive income for the three and six months ended June 30, 2002 and 2001 consisted solely of our net income as there were no other comprehensive income (loss) components.
Note 5—Employee Retirement Plan
Company contributions expensed under our 401(k) defined contribution and profit sharing plan for the three months ended June 30, 2002 and 2001 totaled $5.0 million and $2.1 million, respectively. For the six months ended June 30, 2002 and 2001, contributions expensed under the plan totaled $9.4 million and $3.7 million, respectively.
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Note 6—Earnings Per Share
The following table shows how we computed basic and diluted earnings per common share:
Note 7—Commitments
At June 30, 2002, our firm aircraft orders consist of 57 Airbus A320 aircraft scheduled for delivery through 2007. Committed expenditures for these aircraft and related equipment, including estimated amounts for contractual price escalations and predelivery deposits, will be approximately $325 million for the remainder of 2002, $510 million in 2003, $505 million in 2004, $440 million in 2005, $200 million in 2006 and $190 million in 2007. In addition, we have options to purchase 28 additional aircraft scheduled for delivery from 2004 through 2009. Financing has been arranged for all of the remaining nine 2002 deliveries and the first five of the 13 deliveries scheduled for 2003.
Note 8—Initial Public Offering
On April 17, 2002, we raised $182.2 million from an initial public offering of 6,746,667 shares of our common stock at a price to the public of $27.00 per share, all of which shares were issued and sold by us. Upon the closing of the initial public offering, all issued and outstanding shares of Series A Preferred Stock and Series B Preferred Stock were converted into 30,692,125 shares of common stock. The net proceeds received by the Company upon the consummation of such offering were $169.4 million, after deducting underwriting discounts and commissions. Pending specific application, they were invested in short-term, investment-grade, interest-bearing instruments. Total offering expenses were $2.0 million.
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In conjunction with the initial public offering of our common stock, the authorized shares of our capital stock were increased to 500,000,000 shares of common stock and 25,000,000 shares of preferred stock. In addition, the stockholder rights plan, our employee stock purchase plan and the 2002 Stock Incentive Plan all became effective. See Note 15 to the financial statements included in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002 for additional information.
Note 9—Stock Options
Certain options granted during 2001 and 2002 have exercise prices that are less than their deemed market value. Unearned compensation expense associated with these transactions is being amortized over the vesting periods of five or seven years and will be $926,000 for the remainder of 2002, $1,853,000 per year in 2003 through 2005, $1,784,000 in 2006, $1,251,000 in 2007 and $1,114,000 in 2008. Amortization of such deferred compensation amounted to $463,100 and zero during the three months ended June 30, 2002 and 2001, respectively. For the six months ended June 30, 2002 and 2001, amortization of deferred compensation was $838,700 and zero, respectively.
Note 10—Financial Instruments and Risk Management
We include gains and losses from changes in the value of our crude oil option contracts in interest income and other. Losses of $443,700 for the three months ended June 30, 2002 and gains of $857,800 for the six months ended June 30, 2002 have been recorded. These gains could reverse in future months as the contracts expire. As of June 30, 2002, we had hedged approximately 35 percent of our remaining 2002 fuel needs.
The Company determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. The $11.4 million in short-term investments purchased during the second quarter of 2002 are classified as held-to-maturity securities and are stated at amortized cost.
Note 11—Loyalty Program
Our customer loyalty program, "TrueBlue" was launched in June 2002. We record a liability for the estimated incremental cost of providing free travel awards as points are earned.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
Three Months Ended June 30, 2002 and 2001
Our net income for the three months ended June 30, 2002 increased to $14.6 million from $10.7 million for the three months ended June 30, 2001. We had operating income of $27.7 million for the second quarter of 2002 compared to operating income of $11.0 million in 2001. Diluted earnings per share was $0.33 for the second quarter of both 2002 and 2001. For the three months ended June 30, 2001, our effective tax rate was zero due to the reduction of our deferred tax asset valuation allowance compared to 41.7% in 2002. Additionally, the second quarter 2002 earnings per share reflects an increase in the number of weighted average shares outstanding compared to 2001 as a result of our capital raising efforts, including our initial public offering in April 2002.
Our operating margin for the three months ended June 30, 2002 was a record 18.6% compared to 14.1% for the same period in 2001. Our second quarter operating margin was better than expected primarily due to stronger passengers loads and higher than anticipated demand in the new markets we initiated during the quarter which included twice-daily non-stop service from Dulles International Airport to both Long Beach and Oakland, California and three daily round-trip flights from at New York's John F. Kennedy International Airport, or JFK, to San Juan, Puerto Rico.
Operating Revenues. Operating revenues increased 90.4%, or $70.9 million, primarily due to an increase in passenger revenues. Increased passengers resulting from a 59.3% increase in departures and a 4.3 point increase in load factor, or $85.4 million, partially offset by a 10.7% decrease in yield, or $17.3 million, drove the increase in passenger revenue of $68.1 million for the three months ended June 30, 2002. Other revenue increased 123%, or $2.8 million, primarily due to increased change fees of $1.4 million resulting from more passengers.
Operating Expenses. Operating expenses increased 80.5%, or $54.2 million, due to an average of 11.5 additional aircraft, which provided us with higher capacity. Operating capacity increased 101% to 1.93 billion available seat miles and an increase in transcontinental flights over 2001 resulted in a 26.2 percent increase in average stage length.
Operating expenses per available seat mile decreased 10.3% to 6.29 cents. In detail, operating costs per available seat mile were:
Salaries, wages and benefits increased 99.4%, or $18.8 million, due to an increase in average full-time equivalent employees of 83.2%, higher wage rates and a $2.5 million higher provision for our
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profit sharing plan in 2002 compared to 2001. Cost per available seat mile decreased .3% as a result of higher capacity.
Aircraft fuel expense increased 61.3%, or $6.5 million, due to 12.0 million more gallons of aircraft fuel consumed resulting in $10.0 million of additional fuel expense offset by a 17.2% decrease in average fuel cost per gallon, or $3.5 million. Cost per available seat mile decreased 19.8% primarily due to the decrease in average fuel cost per gallon.
Aircraft rent increased 26.7%, or $2.2 million, primarily due to having three more average aircraft under operating leases during the three months ended June 30, 2002 compared to 2001. Cost per available seat mile decreased 37.0% due to a lower percentage of the aircraft fleet being leased.
Sales and marketing expense increased 83.9%, or $5.4 million, due to increased advertising and higher credit card fees resulting from increased passenger revenues. On a cost per available seat mile basis, sales and marketing expense decreased 8.6% due to the increase in available seat miles and lower commissions due to elimination of travel agency commissions in April 2002. We booked the majority of our reservations through a combination of our website (61.3% in 2002) and our own reservation agents (35.0% in 2002).
Landing fees and other rents increased 49.1%, or $3.2 million, due to a 59.3% increase in departures. Cost per available seat mile decreased 27.4% due to higher capacity and an increase in average stage length.
Depreciation and amortization increased 150%, or $3.4 million, due to eight more average aircraft owned in the three months ended June 30, 2002 compared to 2001 and higher levels of aircraft spare parts. Cost per available seat mile increased 19.9% due to a higher percentage of the aircraft fleet being owned.
Maintenance materials and repairs increased 87.5%, or $.7 million, due to 11.5 more average aircraft in 2002 compared to 2001. The cost per available seat mile was unchanged due to higher capacity offset by the completion of three airframe checks in 2002 compared to one in 2001.
Other operating expenses increased 102.3%, or $14.2 million. Higher variable costs associated with increased capacity and number of passengers served, along with increased insurance costs as a result of the September 2001 terrorist attacks and operating costs for Terminal 6 at JFK, which we now lease directly from the Port Authority of New York and New Jersey, or PANYNJ, were the primary reasons for the increase. Cost per available seat mile only increased .6%.
Other Income (Expense). Interest expense increased 40%, or $1.3 million, due to the debt financing of eight additional aircraft and increased borrowings related to predelivery deposits on aircraft resulting in $2.2 million of additional interest expense, offset by lower interest rates resulting in $.9 million less interest expense. Capitalized interest decreased 40.7%, or $1.0 million, primarily due to lower interest rates. During 2001, we implemented a fuel hedging program under which we entered into crude oil option contracts that partially protect us against significant increases in fuel prices. Hedging activities resulted in a $443,700 loss for the three months ended June 30, 2002 due to the reversal of unrealized gains, which was offset by higher interest income.
Six Months Ended June 30, 2002 and 2001
Our net income for the six months ended June 30, 2002 increased to $27.6 million from $17.4 million for the six months ended June 30, 2001. We had operating income of $51.1 million and an operating margin of 18.1% for the first six months of 2002 compared to operating income of $18.6 million and an operating margin of 13.1% in 2001. Diluted earnings per share was $0.67 and $0.54 for the six months ended June 30, 2002 and 2001, respectively. For the six months ended June 30,
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2001, our effective tax rate was zero due to the reduction of our deferred tax asset valuation allowance compared to 41.7% for 2002.
Operating Revenues. Operating revenues increased 98.7%, or $140.4 million, primarily due to an increase in passenger revenues. Increased passengers resulting from a 68.1% increase in departures and a 2.5 point increase in load factor, or $158 million, partially offset by a 7.7% decrease in yield, or $22.7 million, drove the increase in passenger revenue of $135.3 million for the six months ended June 30, 2002. Other revenue increased 125%, or $5.2 million, primarily due to increased change fees of $2.8 million resulting from more passengers and concession sales from Terminal 6 at JFK of $.8 million.
Operating Expenses. Operating expenses increased 87.3%, or $107.9 million, due to an average of 11.6 additional aircraft, which provided us with higher capacity. Operating capacity increased 108% to 3.55 billion available seat miles due to scheduled capacity increases and an increase in transcontinental flights over 2001 partially offset by 1.1% lower aircraft utilization.
Operating expenses per available seat mile decreased 9.9% to 6.53 cents. In detail, operating costs per available seat mile were:
Salaries, wages and benefits increased 105%, or $36.4 million, due to an increase in average full-time equivalent employees of 87.8%, higher wage rates and a $5.1 million higher provision for our profit sharing plan in 2002 compared to 2001. Cost per available seat mile decreased 1.5% as a result of higher capacity.
Aircraft fuel expense increased 57.2%, or $10.9 million, due to 23.0 million more gallons of aircraft fuel consumed resulting in $19.4 million of additional fuel expense offset by a 22.2% decrease in average fuel cost per gallon, or $8.5 million. Cost per available seat mile decreased 24.4% primarily due to the decrease in average fuel cost per gallon.
Aircraft rent increased 44.1%, or $6.1 million, primarily due to having four more average aircraft under operating leases during the six months ended June 30, 2002 compared to 2001. Cost per available seat mile decreased 30.7% due to a lower percentage of the aircraft fleet being leased.
Sales and marketing expense increased 78.8%, or $9.5 million, due to increased advertising and higher credit card fees resulting from increased passenger revenues. On a cost per available seat mile basis, sales and marketing expense decreased 14.0% due to the increase in available seat miles. We booked the majority of our reservations through a combination of our website (58.3% in 2002) and our
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own reservation agents (37.0% in 2002). On April 24, 2002, we announced the elimination of travel agency commissions which will reduce our sales and marketing expense in the future.
Landing fees and other rents increased 60.4%, or $7.4 million, due to a 68.1% increase in departures. Cost per available seat mile decreased 24.2% due to higher capacity and an increase in average stage length.
Depreciation and amortization increased 136%, or $6.0 million, due to seven more average aircraft owned in the six months ended June 30, 2002 compared to 2001 and higher levels of aircraft spare parts. Cost per available seat mile increased 13.5%, and is anticipated to further increase in 2002 as six of our nine remaining aircraft deliveries for 2002 will be owned and financed.
Maintenance materials and repairs increased 128%, or $1.9 million, due to 11.6 more average aircraft and more scheduled airframe checks in 2002 compared to 2001. The cost per available seat mile increased 9.7% due to the completion of six airframe checks in the six months ended June 30, 2002 compared to one in the six months ended June 30, 2001.
Other operating expenses increased 115%, or $29.7 million. Higher variable costs associated with increased capacity and number of passengers served, along with increased insurance as a result of the September 2001 terrorist attacks and operating costs for Terminal 6 at JFK, which we now lease directly from PANYNJ, were the primary reasons for the increase. Cost per available seat mile increased 4.1%.
Other Income (Expense). Interest expense increased 27.3%, or $1.9 million, due to the debt financing of 10 additional aircraft and increased borrowings related to predelivery deposits on aircraft resulting in $3.7 million of additional interest expense, offset by lower interest rates resulting in $1.8 million less interest expense. Capitalized interest decreased 39.1%, or $1.8 million, primarily due to lower interest rates. During 2001, we implemented a fuel hedging program under which we entered into crude oil option contracts that partially protect us against significant increases in fuel prices. Hedging activities resulted in an $857,800 gain for the six months ended June 30, 2002, which could reverse in future months as the contracts expire.
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The following table sets forth our operating statistics for the three and six months ended June 30, 2002 and 2001:
Liquidity and Capital Resources
At June 30, 2002, we had cash and cash equivalents of $269.3 million, compared to $16.8 million at June 30, 2001. Cash flows from operating activities were $85.8 million for the six months ended June 30, 2002 compared to $26.7 million for the six months ended June 30, 2001. The increase in operating cash flows was primarily due to the growth of our business. In addition, as a result of our meeting certain financial targets, the amount of cash withheld by our credit card processor was reduced to zero during the second quarter of 2002. We rely primarily on operating cash flows to provide working capital. We presently have no lines of credit other than a short-term borrowing facility for certain aircraft predelivery deposits.
Investing activities. Investing activities for the six months ended June 30, 2002 consisted of the acquisition of six Airbus A320 aircraft and one spare engine, predelivery deposits for ordered aircraft, the purchase of held-to-maturity investments, security deposits for facilities, facilities improvements, ground equipment purchases, and spare parts purchases, aggregating $279 million.
Investing activities for the six months ended June 30, 2001 consisted of predelivery deposits for ordered aircraft and spare engines, security deposits for leased aircraft, facilities improvements, ground equipment purchases and spare parts purchases.
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Financing activities. Financing activities for the six months ended June 30, 2002 consisted of (i) the incurrence of $178 million of 10- to 12- year floating rate equipment notes issued to various European banks secured by five aircraft and a 5-year floating rate equipment note secured by a spare engine, (ii) the sale and leaseback over 18 years of one aircraft for $38.5 million financed by a Japanese institution, (iii) the repayment of debt of $34.5 million, and (iv) the completion on April 17, 2002 of our initial public offering of 6,746,667 shares of our common stock for net proceeds of $167.4 million. We invested the net proceeds in short-term, investment-grade, interest bearing instruments, pending their use to fund working capital and capital expenditures, including capital expenditures related to the purchase of aircraft. As of October 9, 2002, approximately 33 million shares of our common stock will be freely tradable subject to the restrictions of Rule 144 as the lock-up agreements expire with the underwriters of our initial public offering.
Financing activities for the six months ended June 30, 2001 consisted of the issuance of a $12.0 million 5-year floating rate equipment note secured by two spare engines, short-term borrowings and the repayment of long-term debt.
Commitments. At June 30, 2002, maturities of long-term debt were $31.5 million for the remainder of 2002, $38.0 million in 2003, $34.0 million in 2004, $35.6 million in 2005, $34.4 million in 2006 and $33.8 million in 2007. In addition, at June 30, 2002, we were in compliance with the covenants of all of our debt and lease agreements.
At June 30, 2002, our firm aircraft orders consist of 57 Airbus A320 aircraft scheduled for delivery as follows: nine during the remaining six months of 2002, 13 in 2003, 13 in 2004, 12 in 2005 and five each year in 2006 and 2007. Committed expenditures for these aircraft, including estimated amounts for contractual price escalations and predelivery deposits, will be $325 million for the remainder of 2002, $510 million in 2003, $505 million in 2004, $440 million in 2005, $200 million in 2006 and $190 million in 2007. In addition, we have options to acquire 28 additional aircraft through 2009. Financing has been arranged for all of the remaining nine aircraft deliveries in 2002 and the first five deliveries scheduled for 2003, of which seven will be financed under mortgages and seven will be financed under operating leases. Although we believe that debt and/or lease financing should be available for our remaining aircraft deliveries, we cannot assure you that we will be able to secure financing on terms attractive to us, if at all, which may require us to modify our aircraft acquisition plans.
We operated a fleet of 26 Airbus A320 aircraft, of which 13 are owned and 13 are leased under operating leases as of June 30, 2002. We had also taken delivery of one owned aircraft in June that began scheduled service in July 2002. The average age of the fleet was 15 months.
In June 2002, the PANYNJ approved a long-term lease through November 2006 with us for use of Terminal 6 and the adjoining ramp area at JFK. As a result of the lease, landing fees and other rents will increase $4.8 million per year and we continue to be responsible for the operating and maintenance costs of the terminal.
We also have $11.8 million of restricted cash pledged under standby letters of credit related to leases which expire at the end of the related lease terms.
Other Information
Stabilization Act. On June 25, 2002, we received $1.98 million as the third installment of compensation under the Air Transportation Safety and System Stabilization Act, or the Stabilization Act. Based on the DOT's review of our final application which was submitted on May 15, 2002, we expect that we will receive the remaining compensation by September 30, 2002 that we had recorded as a receivable. We have not reflected any change in compensation under the Stabilization Act due to the uncertainties regarding the Department of Transportation's, or DOT's, final interpretation under the Act.
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Aviation Insurance. As part of the Stabilization Act, the U.S. government has provided excess war risk coverage to the airline industry with a third party liability policy to cover losses to persons other than employees or passengers generally for renewable 60-day periods, currently in effect until August 17, 2002. We cannot predict whether the government will continue to renew this insurance or how much our premiums would increase if alternative insurance carriers were to provide this coverage.
Outlook. We expect our capacity to be up approximately 95 to 97 percent in the third quarter of 2002 compared to third quarter of 2001 and up approximately 77 to 79 percent in the fourth quarter of 2002 compared to the same period in 2001. Average stage length is projected at 1,223 and 1,100 for the third and fourth quarter of 2002, respectively. Our forecasted weighted average shares outstanding for diluted earnings per share are 45.6 million for the third quarter, 45.9 million for the fourth quarter and 43.6 million for year-to-date 2002.
Forward-Looking Information. This report contains forward-looking statements relating to future events and our future performance including, without limitation, statements regarding financial forecasts or projections, our expectations, beliefs, intentions or future strategies that are signified by the words "expects", "anticipates", "intends", "believes" or similar language. Our actual results and the timing of certain events could differ materially from those expressed in the forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date of this report. It is routine for our internal projections and expectations to change as the year or each quarter in the year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we may not inform you if they do. Our policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter.
You should understand that many important factors, in addition to those discussed in this report, could cause our results to differ materially from those expressed in the forward-looking statements. These factors include, without limitation, the continually changing airline industry and regulatory environment following the recent terrorist attacks and threats, future terrorist attacks or fear of such attacks, our limited operating history, our ability to implement our growth strategy, our fixed obligations, our ability to implement our growth strategy, our ability to establish lines of credit or obtain financing from third parties, our dependence on the New York market, our ability to renew or replace gate leases, our competitive environment, problems with our aircraft, economic and other conditions in the markets in which we operate, our reliance on third parties and sole suppliers, governmental regulation, our reliance on one type of aircraft and on automated systems, increases in maintenance costs, fuel prices, insurance premiums and purchase prices of aircraft, the loss of key personnel and potential problems with our workforce including work stoppages and seasonal fluctuations in our operating results.
Additional information concerning these and other factors which could cause differences between forward-looking statements and future actual results is contained in Item 3. Risk Factors contained in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in market risk from the information provided in Item 11h. Quantitative and Qualitative Disclosures About Market Risk in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002. See Note 10 to the unaudited condensed financial statements for additional information.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business. We believe that the outcome of the proceedings to which we are currently a party will not have a material adverse effect on our financial position, results of operations or cash flows.
Item 2. Changes in Securities and Use of Proceeds.
(d) On April 17, 2002, we consummated the initial public offering of 6,746,667 shares of our common stock, $0.01 par value. The shares of common stock sold in the offering were registered under the Securities Act of 1933, as amended on a Registration Statement (Registration No. 333-82576) that was declared effective by the Securities and Exchange Commission on April 11, 2002. The net proceeds to us from the offering were $167.4 million after deducting discounts and commissions paid to the underwriters and other expenses incurred in connection with the offering. From April 17, 2002 to June 30, 2002, we invested such net offering proceeds in short-term, investment-grade, interest-bearing instruments.
Item 5. Other Information
Director Resignation
On April 30, 2002, David Ferguson resigned from our board of directors. Mr. Ferguson was also the Chairman of the audit committee. Mr. Ferguson's resignation was not due to any disagreement with us on any matter relating to our operations, policies or practices. Neal Moszkowski and Joel Peterson continue to serve on the audit committee and Mr. Moszkowski is the new Chairman of the audit committee. Pursuant to our request, the Listing Qualifications of The Nasdaq National Market, Inc. granted us a grace period until August 12, 2002, to comply with the National Association of Securities Dealer's Marketplace Rules 4350(c) and 4350(d)(2) which require us to have at least three independent directors on our audit committee. We are currently evaluating eligible candidates to fill the vacancy on our audit committee created by Mr. Ferguson's resignation.
Customer Loyalty Program
On June 18, 2002, we announced, "TrueBlue", our customer loyalty program. Under TrueBlue, customers that participate in the program earn points for each one-way flight with us. The number of points awarded per flight depends on the length of the flight and points are automatically doubled when flights are booked via our website through December 31, 2002. TrueBlue program participants are awarded a free round-trip flight upon accumulating 100 points. Customers who wish to participate in the TrueBlue program may visit our website at www.jetblue.com to enroll.
Attached hereto and incorporated by reference in its entirety as Exhibit 99.1 is a copy of the press release, dated June 18, 2002, announcing the TrueBlue customer loyalty program.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) The Company filed no reports on Form 8-K during the quarter ended June 30, 2002.
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SIGNATURE
Pursuant to the requirements 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.
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EXHIBIT INDEX
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