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Long-term Debt, Short-term Borrowings and Finance Lease Obligations | 3 Months Ended
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Mar. 31, 2021
Debt Disclosure [Abstract] |
Long-term Debt, Short-term Borrowings and Finance Lease Obligations | Long-term Debt, Short-term Borrowings and Finance Lease Obligations During the three months ended March 31, 2021, we made principal payments of $644 million on our outstanding debt and finance lease obligations. We had pledged aircraft, engines, other equipment, and facilities with a net book value of $6.8 billion at March 31, 2021 as security under various financing arrangements. At March 31, 2021, scheduled maturities of our long-term debt and finance lease obligations were $351 million for the remainder of 2021, $419 million in 2022, $629 million in 2023, $955 million in 2024, $305 million in 2025, and $2.4 billion thereafter. The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at March 31, 2021 and December 31, 2020 were as follows (in millions):
| March 31, 2021 |  | December 31, 2020
| Carrying Value |  | Estimated Fair Value(2) |  | Carrying Value |  | Estimated Fair Value(2)
Public Debt |  |  |  |  |  |  |
Fixed rate special facility bonds, due through 2036 | $ | 42 |  |  | $ | 46 |  |  | $ | 42 |  |  | $ | 45 |
Fixed rate enhanced equipment notes: |  |  |  |  |  |  |
2019-1 Series AA, due through 2032 | 560 |  |  | 456 |  |  | 560 |  |  | 440 |
2019-1 Series A, due through 2028 | 175 |  |  | 155 |  |  | 174 |  |  | 152 |
2019-1 Series B, due through 2027 | 107 |  |  | 140 |  |  | 107 |  |  | 139 |
2020-1 Series A, due through 2032 | 627 |  |  | 676 |  |  | 627 |  |  | 658 |
2020-1 Series B, due through 2028 | 170 |  |  | 226 |  |  | 170 |  |  | 223 |
Non-Public Debt |  |  |  |  |  |  |
Fixed rate enhanced equipment notes, due through 2023 | 100 |  |  | 101 |  |  | 114 |  |  | 116 |
Fixed rate equipment notes, due through 2028 | 841 |  |  | 829 |  |  | 891 |  |  | 1,017 |
Floating rate equipment notes, due through 2028 | 140 |  |  | 133 |  |  | 152 |  |  | 144 |
Floating rate term loan credit facility, due through 2024 | 695 |  |  | 754 |  |  | 702 |  |  | 759 |
Unsecured CARES Act Payroll Support Program loan, due through 2030 | 259 |  |  | 214 |  |  | 259 |  |  | 207 |
Secured CARES Act Loan, due through 2025 | 104 |  |  | 106 |  |  | 104 |  |  | 104 |
Citibank line of credit, due through 2023 | — |  |  | — |  |  | 546 |  |  | 533 |
2020 sale-leaseback transactions, due through 2024 | 351 |  |  | 388 |  |  | 352 |  |  | 393 |
Unsecured Consolidated Appropriations Act Payroll Support Program Extension loan, due through 2031 | 121 |  |  | 100 |  |  | — |  |  | — |
0.50% convertible senior notes due 2026 | 734 |  |  | 659 |  |  | — |  |  | — |
Total(1) | $ | 5,026 |  |  | $ | 4,983 |  |  | $ | 4,800 |  |  | $ | 4,930 |
(1) Total excludes finance lease obligations of $56 million and $63 million at March 31, 2021 and December 31, 2020, respectively. (2) The estimated fair va lues 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 8 to our condensed 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. Unsecured Consolidated Appropriations Act Payroll Support Program Extension Loan On January 15, 2021, we entered into a Payroll Support Program Extension Agreement (the "PSP Extension Agreement") with the United States Department of the Treasury ("Treasury") governing our participation in the federal Payroll Support Program for passenger air carriers under the United States Consolidated Appropriations Act, 2021 (the “Payroll Support Program 2"). In the first quarter of 2021, Treasury provided us with total payments of $504 million (the "Payroll Support 2 Payments") under the program, consisting of $383 million in grants and $121 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until January 15, 2026, and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% thereafter until January 15, 2031. In consideration for the Payroll Support 2 Payments, we issued warrants to purchase approximately 0.8 million shares of our common stock to the Treasury at an exercise price of $14.43 per share. The warrants will expire five years after issuance and will be exercisable either through net cash settlement or net share settlement, at our option, in whole or in part at any time. In accordance with the PSP Extension Agreement, we are required to comply with the relevant provisions of the Payroll Support Program 2 which, among other things, includes the following: the requirement to use the Payroll Support 2 Payments exclusively for the continuation of payment of crewmember wages, salaries and benefits; the prohibition on involuntary furloughs and reductions in crewmember pay rat es and benefits through March 31, 2021; the requirement that certain levels of commercial air service be maintained until March 1, 2022; the prohibitions on share repurchases and the payment of common stock dividends; and restrictions on the payment of certain executive compensation until October 1, 2022. The carrying value relating to the payroll support extension grants are recorded within other accrued liabilities and are recognized as a contra-expense within special items on our consolidated statements of operations as the funds are utilized. The relative fair value of the warrants, estimated to be $8 million, are recorded within additional paid-in capital and reduced the total carrying value of the grants to $375 million. Proceeds from the payroll support extension grants and from the issuance of warrants are classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. As of March 31, 2021, the carrying value of our payroll support extension grants received under Payroll Support Program 2 was approximately $87 million. The carrying value relating to the unsecured term loans is recorded within long-term debt and finance lease obligations on our consolidated balance sheets. The proceeds from the loans were classified as financing activities on our condensed consolidated statement of cash flows. On April 29, 2021, Treasury provided us an additional payment of $76 million (the "Additional Payroll Support 2 Payment"), consisting of $53 million in grants and $23 million in an unsecured term loan under the PSP Extension Agreement. In consideration for the Additional Payroll Support 2 Payment, we issued warrants to Treasury to purchase approximately 0.2 million additional shares of our common stock at an exercise price of $14.43 per share (the "Additional Payroll Support 2 Warrants"). The terms of the unsecured term loan and additional warrants are identical to those issued in the first quarter of 2021 under the Payroll Support Program 2 as described above. 0.50% Convertible Senior Notes due 2026 In March 2021, we completed a private offering for $750 million of 0.50% convertible notes due 2026. The notes are general unsecured senior obligations and will rank equal in right of payment with all of our existing and future senior unsecured indebtedness and senior in right of payment to our existing and future subordinated debt. The notes will effectively rank junior in right of payment to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all of our indebtedness and other liabilities. The net proceeds from this offering were ap proximately $734 million. Holders of the notes may convert them into shares of our common stock prior to January 1, 2026 only under certain circumstances (such as upon the satisfaction of the sale price condition, the satisfaction of the trading price condition, notice of redemption, or specified corporate events) and thereafter at any time at a rate of 38.5802 shares of common stock per $1,000 principal amount of notes, which corresponds to an initial conversion price of approximately $25.92 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events, including, but not limited to, the issuance of certain stock dividends on common stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness or assets, cash dividends and certain issuer tender or exchange offers. Upon conversion, the notes will be settled in cash up to the aggregate principal amount of the notes to be converted and, at our election, in shares of our common stock, cash or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation. We are not required to redeem or retire the notes periodically. We may, at our option, redeem any of the notes for cash at a redemption price of 100% of their principal amount, plus accrued and unpaid interest at any time on or after April 1, 2024 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide a notice of redemption to the holders. As discussed in Note 1 to our condensed consolidated financial statements, we early adopted the provisions of ASU 2020-06. Accordingly, we evaluated the conversion feature of this note offering for embedded derivative in accordance with ASC 815, Derivatives and Hedging, and the substantial premium model in accordance with ASC 470, Debt. Based on our assessment, separate accounting for the conversion feature of this note offering is not required. Floating Rate Term Loan Credit Facility On June 17, 2020, we entered into a $750 million term loan credit facility with Barclays Bank PLC, as administrative agent. The loans under this term loan credit facility bear interest at a variable rate equal to LIBOR (subject to a 1.00% floor), or at our election another rate, in each case, plus a specified margin. Our obligations are secured on a senior basis by airport takeoff and landing slots at LaGuardia Airport, John F. Kennedy International Airport, and Reagan National Airport and the right to use certain intellectual property assets comprising the JetBlue brand. 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 term loan facility is subject to amortization payments of 5% per year, payable quarterly, commencing on September 30, 2020 with the remaining balance due and payable in a single payment on the maturity date of June 17, 2024. The interest rate on our outstanding balance was 6.25% as of March 31, 2021. The Coronavirus Aid, Relief, and Economic Security (CARES) Act On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). Under the CARES Act, assistance was made available to the aviation industry in the form of direct payroll support (the "Payroll Support Program") and secured loans (the "Loan Program"). Unsecured CARES Act Payroll Support Program Loan On April 23, 2020, we entered into a Payroll Support Program Agreement (the "PSP Agreement") under the CARES Act with the Treasury governing our participation in the Payroll Support Program. Under the Payroll Support Program, Treasury provided us with payments which totaled $963 million (the "Payroll Support Payments") consisting of $704 million in grants and $259 million in unsecured term loans. The loans have a 10-year term and bear interest on the principal amount outstanding at an annual rate of 1.00% until April 23, 2025, and the applicable SOFR plus 2.00% thereafter until April 23, 2030. The principal amount may be repaid at any time prior to maturity at par. As part of the agreement, JetBlue issued to the Treasury warrants to acquire more than 2.7 million shares of our common stock under the program at an exercise price of $9.50 per share. The warrants expire five years after issuance. The carrying value relating to the payroll support grants was recorded within other accrued liabilities and was recognized as a contra-expense within special items on our consolidated statements of operations as the funds were utilized. The relative fair value of the warrants, estimated to be $19 million, was recorded within additional paid-in capital and reduced the total carrying value of the grants to $685 million. Proceeds from the payroll support grants and from the issuance of warrants were classified within operating activities and financing activities, respectively, on our condensed consolidated statements of cash flows. Our funding from the payroll support grants under the CARES Act were fully utilized as of December 31, 2020. The carrying value relating to the unsecured term loans is recorded within long-term debt and finance lease obligations on our consolidated balance sheets. The proceeds from the loans were classified as financing activities on our condensed consolidated statement of cash flows. Secured CARES Act Loan Program Under the CARES Act Loan Program, JetBlue has the ability to borrow up to a total of approximately $1.9 billion from the Treasury. If we accept the full amount of the loan, we will issue warrants to purchase approximately 20.5 million shares of our common stock to the Treasury. Any amount received under the CARES Act Loan Program will be subject to the relevant provisions of the CARES Act, including many of those described above under the Payroll Support Program. Unless otherwise terminated early, all borrowings under the CARES Act Loan Program are due and payable on the fifth anniversary of the initial borrowing date. Borrowings bear interest at a variable rate equal to LIBOR (or another rate based on certain market interest rates, plus a margin of 1% per annum, in each case with a floor of 0%), plus a margin of 2.75% per annum. Our obligations under the CARES Act Loan Program are secured by liens on (i) certain eligible aircraft and engine collateral, (ii) certain loyalty program assets, including JetBlue's rights in certain loyalty program agreements, loyalty program data and intellectual property, and (iii) certain cash accounts (collectively, the "Collateral"). Under the terms of the CARES Act Loan Program, we may also pledge eligible spare parts, slots, gates and routes, and additional aircraft, real property, ground support equipment, flight simulators and equity interests. The CARES Act Loan Program includes affirmative and negative covenants that restrict our ability to, among other things, dispose of Collateral, merge, consolidate or sell assets, incur certain additional indebtedness or pay certain dividends. In addition, we are required to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities aggregating not less than $550 million and to maintain a minimum ratio of the borrowing base of the Collateral (determined as the sum of a specified percentage of the appraised value of each type of Collateral) to outstanding obligations under the CARES Act Loan Program of not less than 1.6 to 1.0. If we do not meet the minimum collateral coverage ratio, we must either provide additional Collateral to secure our obligations under the CARES Act Loan Program or repay the loans by an amount necessary to maintain compliance with the collateral coverage ratio. The CARES Act Loan Program contains events of default customary for similar financings. Upon the occurrence of an event of default, the outstanding obligations under the CARES Act Loan Program may be accelerated and become due and payable immediately. In addition, if certain change of control events occur with respect to JetBlue, we will be required to prepay the loans in full under the CARES Act Loan Program. We entered into a loan and guarantee agreement (the "Loan Agreement") with the Treasury with a borrowing capacity of $1.1 billion and made an initial drawing of $115 million under the CARES Act Loan Program on September 29, 2020. In connection with this initial drawing, we entered into a warrant agreement with Treasury, pursuant to which we issued to Treasury warrants to purchase approximately 1.2 million shares of our common stock at an exercise price of $9.50 per share. On November 3, 2020, we amended and restated the Loan Agreement and increased JetBlue's borrowing capacity from approximately $1.1 billion to approximately $1.9 billion. On January 15, 2021, we entered into a letter agreement with Treasury which provided an extension of the Loan Agreement allowing us the option to access the remaining borrowing capacity through May 28, 2021. As of March 31, 2021, $115 million remained outstanding under the Loan Agreement. Fixed Rate Enhanced Equipment Notes 2020-1A and B Equipment Notes In August 2020, we completed a public placement of equipment notes in an aggregate principal amount of $808 million secured by 24 Airbus A321 aircraft. The equipment notes were issued in two series: (i) Series A, bearing interest at the rate of 4.00% per annum in the aggregate principal amount equal to $636 million, and (ii) Series B, bearing interest at the rate of 7.75% per annum in the aggregate principal amount equal to $172 million. Principal and interest are payable semi-annually. 2019-1B Equipment Notes In August 2020, we completed a public placement of equipment notes in an aggregate principal amount of $115 million bearing interest at a rate of 8.00% per annum. These equipment notes are secured by 25 Airbus A321 aircraft, which were included in the collateral pool of our 2019-1 Series AA and Series A offerings completed in November 2019. Principal and interest are payable semi-annually. 2020 Sale-Leaseback Transactions In 2020, we executed $563 million of sale-leaseback transactions. Of these transactions, $354 million did not qualify as sales for accounting purposes. The assets associated with these transactions remain on our consolidated balance sheets within property and equipment and the related liabilities under the lease are classified within debt and finance leases obligations. These transactions are treated as cash from financing activities on our consolidated statements of cash flows. The remaining $209 million of sale-leaseback transactions qualified as sales and generated a loss of $106 million. The assets associated with these transactions which qualified as sales are recorded within operating lease assets. The liabilities are recorded within current operating lease liabilities and long-term operating lease liabilities on our consolidated balance sheets. These transactions are treated as cash from investing activities on our consolidated statements of cash flows. We did not execute any sale-leaseback transactions in the first quarter of 2021. Citibank Line of Credit We have a revolving Credit and Guaranty Agreement with Citibank N.A. as the administrative agent, for up to $550 million. The term of the facility runs 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 was previously 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. On May 29, 2020, we exercised our pre-existing right and removed the Slots from the collateral pool to the facility. In exchange for the Slots, we added unencumbered aircraft, simulators, and certain other assets as permitted thereunder. 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. We borrowed the full amount of $550 million under this revolving credit facility on April 22, 2020. We repaid the full balance of this facility in the first quarter of 2021. Short-term 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 periods ended March 31, 2021 and December 31, 2020, we did not have a balance outstanding or any borrowings under this line of credit.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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