Long-term Debt, Short-term Borrowings, and Capital Lease Obligations

12 Months Ended

Dec. 31, 2019

Long-term Debt, Short-term Borrowings and Capital Lease Obligations

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, 2019 and 2018 consisted of the following (in millions):



	December 31, 2019					December 31, 2018
Secured Debt
Floating rate equipment notes, due through 2028⁽¹⁾	$	201		4.3	%	$	247		4.9	%
Fixed rate enhanced equipment notes, due through 2023⁽²⁾	134			4.5	%	152			4.5	%
Fixed rate enhanced equipment notes:⁽³⁾
Series AA, due through 2032	589			2.8	%	—			—	%
Series A, due through 2028	183			3.0	%	—			—	%
Fixed rate equipment notes, due through 2028⁽⁴⁾	1,113			4.2	%	1,131			4.7	%
Fixed rate specialty bonds, due through 2036⁽⁵⁾	43			4.9	%	43			4.9	%
Finance Leases⁽⁶⁾	89			4.8	%	107			4.7	%
Total debt and finance lease obligations	2,352					1,680
Less: Current maturities	(344		)			(309		)
Less: Debt acquisition cost	(18		)			(10		)
Long-term debt and finance lease obligations	$	1,990				$	1,361

(1)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.

(2)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.

(3)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.

(4)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.

(5) 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.

(6) As of December 31, 2019 and 2018, four finance leased Airbus A320 aircraft and two finance leased Airbus A321 aircraft were included in property and equipment at a cost of $250 million and $253 million, respectively, with accumulated amortization of $80 million and $72 million, respectively. The future minimum lease payments under these non-cancelable leases are $35 million in 2020, $39 million in 2021, $9 million in 2022, $9 million in 2023, $5 million in 2024 and no payments in the years thereafter. Included in the future minimum lease payments is $8 million representing interest, resulting in a present value of finance leases of $89 million with a current portion of $31 million and a long-term portion of $58 million.

As of December 31, 2019, 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):



	Maturities
2020	$	341
2021	340
2022	319
2023	298
2024	169
Thereafter	867

Aircraft, engines, and other equipment and facilities having a net book value of $4.3 billion at December 31, 2019 were pledged as security under various financing arrangements. Cash payments for interest related to debt and finance lease obligations, net of capitalized interest, aggregated $62 million, $59 million and $60 million in 2019, 2018, and 2017, respectively.

The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at December 31, 2019 and 2018 were as follows (in millions):



	December 31, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Public Debt
Fixed rate special facility bonds, due through 2036	$	42	$	46	$	42	$	44
Fixed rate enhanced equipment notes:
Series AA, due through 2032	581		586		—		—
Series A, due through 2028	181		186		—		—
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	133		141		151		153
Floating rate equipment notes, due through 2028	201		207		245		245
Fixed rate equipment notes, due through 2028	1,107		1,201		1,125		1,135
Total⁽¹⁾	$	2,245	$	2,367	$	1,563	$	1,577

(1) Total excludes finance lease obligations of $89 million and $107 million at December 31, 2019 and 2018, 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

Citibank Line of Credit

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 Credit and Guaranty Agreement is secured by Slots at John F. Kennedy International Airport, LaGuardia Airport, and Reagan National Airport, as well as certain other assets. Slots are rights to take-off or land at a specific airport during a specific time period during the day and a means by which airport capacity and congestion can be managed. 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. As of and for the years ended December 31, 2019 and 2018, we did not have a balance outstanding or borrowings under this line of credit.

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, 2019 and 2018, we did not have a balance outstanding or borrowings under this line of credit.