Jet Blue AIRBUS A320 PURCHASE AGREEMENT

[Vladimir Lenin]

pompous and condescending as well

 

[Ty Webb]

Yup. When you're an AirTran, JetBlue or other LCC pilot, you can do nothing right.

Yes, the sins of the Legacy carriers' Management and MEC'S are irrelevant. The whole industry is going down the crapper because our average Captain only makes $135K flying 117 seat airplanes.

Mea-fricking-culpa. . . . . .. Not!

 

[Skank]

I usually strive to condescend before I pomp. But hey, that's just me....

 

[Flex]

I was hoping to hear some enlightening information on the lease agreements/purchase agreements with Airbus. I have heard all the same rumors about how in "x" amount of years, Jblue will have to take care of their own mx, etc. I was hoping to hear some Jblue guys explaining this. Anyone care to elaborate? I took a gander at that agreement, but I'm not sure what to look for.

 

[Andy]

Phew, long one, lots of words!

Did, however, not see any mention of deferred payments or free maintenance, not even free pilots! What's up with that?

I just briefly skimmed it, but it if I read section 16 correctly, the seller provided instruction to the buyer's pilots, flight attendants, and ground crews at no charge. It looks like the first 24 FAs were trained for free by Airbus; JBLU bears the cost for all FAs after the first 24. For pilots and ground crews, there are Xs, so it is unable to determine how many were trained by Airbus. It is most likely set number based on the number of aircraft that JBLU purchases.

On the deferred payment issue, the airbii are paid at time of delivery. However, the larger question is what kind of financing deal was obtained to pay for the airbii? EADS has in the past worked VERY closely with AXA, whom they have used as their financier of choice. It is very possible that JBLU's arrangement with AXA delays the bulk of payments until sometime in the future.
That's just speculation on my part; if someone can find a link to JBLU's financing contract, we will have a better picture.

The warranty period is 36 months, as specified in section 12. This does not cover normal wear and tear, but that should be minimal (brakes, tires, interior cabin) during the first 36 months of operation. As with any other complex machinery, the number and complexity of repairs increases over time.

 

[FLB717]

Andy,

A thoughtful post, thanks.

 

[jetblue320]

I just briefly skimmed it, but it if I read section 16 correctly, the seller provided instruction to the buyer's pilots, flight attendants, and ground crews at no charge. It looks like the first 24 FAs were trained for free by Airbus; JBLU bears the cost for all FAs after the first 24. For pilots and ground crews, there are Xs, so it is unable to determine how many were trained by Airbus. It is most likely set number based on the number of aircraft that JBLU purchases.

Andy,
You are correct in saying that it is determined by how many planes we bought with regards to the pilot training. I won't swear to it, but I think the number was in the neighborhood of 100 free training slots. That would be a good, educated guess because we stopped type rating our pilots in initial training at about the one year point. And that is aligned with roughly seniority #100 +/- a few. Makes sense to me anyway. And, I recall our "original deal" with Airbus was for 100 planes, including options. I do not know how much of this info is available to the public because we were a private company until April of 2002. I am not sure if we had to disclose info all the way back to the start when we went public.

As of today, I recall the number of firm orders + options = an A320 fleet of 203, including what we have now. And the EMB190 order is for 100 firm and 100 options which will bring our total fleet to 403 by I think 2012 or something like that. Maybe it was 2015, I don't remember. I do know it was past my time!

We are the biggest user of the Airbus Training Facility in MIA for sure with 20-30 initial pilots per month and a dozen or so upgrades and a dozen or so recurrent pc/pt sessions a month. That will stay that way until on or about June 2005 when we open our own facility in MCO. It will have (as of now anyway) 4 A320 and 4 EMB190 sims and a bunch of other advanced trainers for all departments.

I want to add to FLB717's post and also thank you for the informative post.

C yaaaa

 

[Andy]

Gentlemen, thank you for the compliment.
As with any other rumor in this business, there is some grain of truth to it, which is then overly exaggerated for maximum shock value.
I'll confess that I'm not a huge fan of JetBlue for a number of reasons, but I must give a great deal of credit to JBLU management for cutting what is probably an extremely good deal with Airbus. I suspect that they chose to go with the EMB-190 instead of 318/319s because Embraer offered a sweet deal that was too good to pass up.

It appears that JBLU is now entering a maturity phase where it is starting to require a great deal of nonrevenue producing capital expenditures, such as the simulator complex, maintenance hangars, and terminal improvements. Does anyone have a ballpark idea of the outlays that JBLU is looking at and how they are financing them?

 

[jobear]

Gentlemen, thank you for the compliment.
It appears that JBLU is now entering a maturity phase where it is starting to require a great deal of nonrevenue producing capital expenditures, such as the simulator complex, maintenance hangars, and terminal improvements. Does anyone have a ballpark idea of the outlays that JBLU is looking at and how they are financing them?

Here's what I found....
NEW YORK, March 4, 2004 (PRIMEZONE) -- JetBlue Airways Corporation (NasdaqNM:JBLU - News) today announced that the Securities and Exchange Commission has declared effective its universal shelf registration statement on Form S-3, filed in connection with the offer and sale, from time to time on a delayed basis, of up to $750,000,000 aggregate amount of its common stock, preferred stock, debt securities and/or pass through certificates. These securities, which may be offered in one or more offerings and in any combination, will in each case be offered pursuant to a separate prospectus supplement issued at the time of the particular offering that will describe the specific types, amounts, prices and terms of the offered securities. Unless otherwise described in the applicable prospectus supplement relating to the offered securities, the Company anticipates using the net proceeds of each offering to fund working capital and capital expenditures, including capital expenditures related to the purchase of aircraft and construction of facilities on or near airports.

This will effectively give JBLU plenty of manuvering room for the outlays you were mentioning.

Take care
Jobear

 

[AFcitrus]

Airbus offered the same deal to AirTran that they gave to JetBlue (according to AirTran insiders). As much as I would like to say we turned them down for patriotic reasons, it simply wasn't as good of a deal as Boeing gave us.

With this in mind if the Airbus deal would have kept our would be A320 fleet CASM as low as JetBlue's has been - for the long haul, we wouldn't have turned it down. (Our 737 CASM will be higher than 5.7 cents)

What I am saying is that I am not sure how JetBlue has kept their costs so low. However, don't plan on them staying that low. If they truly are paying for their airplanes, maintenance, salaries, etc then eventually their numbers will rise to that of the rest of the LCC's.

My suspicion (sp?) is that when they start flying shorter leg lengths, be it with the 320 or an RJ, their numbers will be more reflective of the rest of the LCC's.

Just my two cents.

G' day