Jetblue Airways Corporation
JetBlue Airways Corporation (NasdaqGS: JBLU) was incorporated in Delaware in August, 1998, and started operations in February, 2000. Since then it has established itself as a low-fare passenger airline with a high-quality customer service. It focuses on serving underserved markets and large cities with high revenue.
JetBlue recorded income taxes using the liability method. JetBlues deferred liabilities are $516 million and $456 million in 2009 and 2008, respectively. The largest portion of these deferred tax liabilities, $512 million in 2009 and $453 million in 2008, was attributable to “Accelerated depreciation”.
To reduce the deferred tax assets to an amount that it considered, JetBlues valuation allowance related to deferred tax assets was $25 million, $26 million, and $3 million in 2009, 2008, and 2007, respectively. In 2009, the valuation allowance included $20 million for capital losses on investment securities, and $5 million for a realized capital loss carryforward that expires in 2015. The reason for JetBlue to increase valuation allowance significantly since 2007 was to reduce the amount of deferred tax assets, because it considered a tax benefit of company is more likely than not to be realized. Considering that an “ownership change” will occur in the future, the ability to use their Net operating losses (NOLs) could be limited. However, the valuation allowance did not include any amount attributable to this limitation. Also, it analyzed other 67 things, including the generation of future taxable income, such as reversals of deferred tax liabilities during the period in which the related temporary differences will be deductible.