JetBlue - rough skies ahead?

[Tom_Turner]

Well, I don't generally indulge in industry/finance predictions, not having any actual expertise... but being as that never stopped any of the teenage armchair CEOs on A.net forums.. let me join them. :lol: at least to pose a question anyway.

What does everyone think about the near term outlook for Jetblue's financial health?

Continental must be matching them from EWR, and is in no danger of fading out anytime soon.

Delta is going to go after them at JFK - not just to FLA, but to upstate and elsewhere. Won't that bleed jetblue even if they are on the "winning" side of that battle? Is Delta in bankruptcy yet? If not, and they can they maintain a beefed up JFK presence while under bankruptcy, can't they really begin to bleed BlueJet? I suspect they can and will.

[N790SW]

to be honest with u guys i think so - this airline has imo grown wayyyy too fasst. and i think getting the -190s was a mistake in itself considering the probs their having with them. Unfortantly i think B6 might be hitting iteself into a brick wall soon. sorry if others have a diff opinon but thats my 2$

[Midnight Mike]

Jetblue, still has some good potential as they have a very good product. Some of their problems can be attributed to the investment in the company, (JFK airport terminal & the huge training center in Orlando, & of course the fuel prices).

As to the E-190, tooo early to say if the aircraft was a bad choice, give it 6 more months to iron out the wrinkles as every new aircraft has its teething pains.

The only negative thing that I can say with Jetblue is that it is not partnering with anybody, whether it is with the training center or the terminal at JFK.

To bad for Jetblue that Airbus has not been more helpful, Jetblue has been requesting assistance from Airbus with the range problem of the A320 going coast to coast.

[Matt Molnar]

- It's very easy to find a flight cheaper than jetBlue on many routes
- jetBlue's early labor expenses were relatively small in the past because everyone was brand new. These veteran employees now are expected to pass on their knowledge to younger staff, and need to be paid accordingly. All while the legacy carriers slash their expenses with draconian paycuts. They'll probably be in the same ballpark soon, if they are not already.
- Maintenance expenses will grow as the A320s grow older, thereby needing expensive inspections and repairs.

There's no doubt jetBlue management knew these expenses were going to occur. The problem is how can you predict years in advance how the competing legacy dinosaurs are going to adapt and stay competitive. Perhaps B6 was relying on the seemingly impending collapse of these big guys, and that hasn't happened.

[Midnight Mike]

Jetblue over the years, has had the highest load factor in the industry, so, if there are cheaper tickets out, yet, people are still choosing to fly Jetblue, that is a good thing.

The only way to buy a ticket on Jetblue, is to go through the Jetblue website, so, people are intentially going to the Jetblue website & may not even bother shopping for a ticket. Kind of shows that not everybody will only choose the cheapest ticket.

I am really excited about Airtran, as they turned a profit in a really tough year while they are still receiving new aircraft. The 717 & the 737NG have been a great 1 2 punch.

Perhaps one of the best decisions that Air Tran made was by parnter with Alteon with the training center in Atlanta. Airtran does not own those simulators, but, rather leases them from Alteon. That save Airtran a tremendous amount of money as those simulators can cost about $15 million a piece.

[Ari707]

jetBlue will be fine, will they have problems of course, what airline doesn't.. They screwed up not hedging fuel.
Dl will try to compete up state but won't have the same capacity, would you rather fly an hour and half from buffalo in an RJ or Dash8 or a A-320 with a TV??? The E-190 will be fine its a brand new plane of course there will be problems, I'm sure AC has the same with their's and the 170's and I'm sure Air France had problems with the A320 when it first came on line.
It is a well run airline and the management will adjust if they have too.

[cancidas]

there comes a time when it's just not possible to grow anymore. that time has come for B6. that, mixed with the purchase of smaller aircraft, huge investments and rising fuel costs has led them to thier first net loss. while this is by no means the end of the road for then, the time has also come to seriously rethink the road they are travelling down. now is the time to make adjustments to business plans and thier operation in general, not when they are facing a bankrupcy judge.

[mikephotos]

The only way to buy a ticket on Jetblue, is to go through the Jetblue website, so, people are intentially going to the Jetblue website & may not even bother shopping for a ticket. Kind of shows that not everybody will only choose the cheapest ticket.

I'm sure the people looking for cheap seats will go to Jetblue.com, check the fares and then check the fares at other sites (if they haven't already) and go with the lower fare. Just because you can only book Jetblue at Jetblue.com doesn't mean everyone visiting Jetblue.com is walking (surfing) away as a paid-customer.

Mike

[T-Bird76]

jetBlue has a superb management team second only to Southwest and Continental, they realize the honeymoon is over and now a change in their business plan and forward planning needs to take place. I'm fully confident jetBlue will flourish into the future. Remember Southwest lost money early in their life to the point they almost went under but look at them now.

[bonanzabucks]

I had an interview at JetBlue HQ last week for a finance position in their training department. I thought it went really well and I hope I get the job, but I haven’t heard back from them yet, which isn’t a great sign. But they seem like an excellent company to work for with really first-rate staff and I’ve been trying to get on with them for years.

I asked the interviewers about B6 and their prognosis in the future. One used to work in marketing for Delta and the other was a recruiter. Both were optimistic that things would turn around and they had strong belief in their management team. But they conceded that fuel was the biggest concern for them. After that hurricane destroyed all those oil platforms in the Gulf Coast (I don’t think it was Katrina), fuel prices skyrocketed and have not gone down since. That’s what really hurt B6 (along with other airlines) the last quarter. Sure, as others suggested, other costs might be going up, but it was fuel that killed them.

On a side note, I asked the interviewer that worked for DL if she was surprised that they went into bankruptcy. She said she wasn’t at all because they were poorly managed and their Song strategy was what drove them into bankruptcy.

Someone commented on B6 “screwing up for not hedging fuel”. They’re a small airline with few assets, especially compared to Southwest. They don’t really have much say in how much or how they hedge their fuel. Southwest has been around for 30+ years and has more leveraging power. Southwest has been hedging for a long time and they re-hedged again in 2001, after 9/11. Why other airlines didn’t do this, is a mystery. B6 just started flying in 2000. They couldn’t really do much.

But I’d agree that their expansion, especially out of BOS, has been too much. I can see their reasoning for doing it because there is great potential out of BOS, especially since the legacies have essentially abandoned it and fares from there are really high. Most of their expansion the last year has been out BOS, not JFK. There isn’t much room at JFK until the new gates come in. I still think they should slow things down from BOS since the industry in general is in turmoil and oil prices are unlikely to go down soon.

Anyways, I think B6 has a good future and I think they have a good management team that’s taking action now to ensure the airline returns to profitability. But I think they’d have a better future if they hire me!