JetBlue puts in severance plan in case of takeover move
By James Bernstein
JetBlue Airways Corp., the discount airline that has been struggling to return to profitability, has established a severance plan to protect executives and workers in the event a competitor attempts a hostile takeover, company officials confirmed Friday.
Forest Hills-based JetBlue said its plan, disclosed in a government filing late Thursday, was not made in response to any possible takeover attempts but is basically to make it more difficult for a competitor to buy the airline, one of the country's leading low-cost carriers.
"JetBlue is the only airline that did not have a change in control plan," Bryan Baldwin, an airline spokesman, said Friday. "We feel our culture and our product have been key to our success. We don't want to grow through a merger."
David Barger, JetBlue's new chief executive officer, circulated a memo to employees Thursday. "You may have heard rumors over the last several months about possible consolidation," the memo said, without further elaboration. But, it added, "Our product and brand are so unique that our strategic growth should be driving organically, not necessarily through acquisition or merger."
Barger became JetBlue's CEO last month, replacing founder David Neeleman, who remains non-executive chairman. The management shakeup followed a loss in the first quarter and embarrassing service disruptions during a snow and ice storm at Kennedy Airport Feb. 14. Barger has announced a 60-day review of JetBlue's operations as the airline seeks to stem losses.
Some analysts speculated, however, that JetBlue or any other company would not go through the process of putting together such a severance plan unless there were some likelihood of a takeover attempt.
Investors, and employee stockholders, would be likely to make money if JetBlue were acquired.
In its filing with the Securities and Exchange Commission, JetBlue said its plan "provides severance and welfare benefits to eligible employees who are involuntarily terminated from employment without cause or, in certain circumstances, when they resigned during the two-year period following a change in control."
Top JetBlue executives, including the company's senior vice president, executive vice president or higher rank will be eligible for as much as two years' salary and bonus, along with other benefits, in the event they are fired after a takeover. Other workers, the filing said, will be eligible for 26 weeks pay.
JetBlue did not state in the filing a total dollar figure for the severance plan.
Robert W. Mann Jr., an independent airline analyst and consultant in Port Washington, said "The only reason to put this (plan) up is if there's a chance for a change of control." Mann said neither JetBlue not any other company would want to create "the churn" issuing such a plan creates unless there was a need for it. Mann said that Delta Air Lines, which competes with JetBlue along heavily-traveled East Coast, might be a likely contender for a merger.
Anthony Black, a Delta spokesman in Atlanta, said the airline does not comment on rumors or speculation.
By James Bernstein
JetBlue Airways Corp., the discount airline that has been struggling to return to profitability, has established a severance plan to protect executives and workers in the event a competitor attempts a hostile takeover, company officials confirmed Friday.
Forest Hills-based JetBlue said its plan, disclosed in a government filing late Thursday, was not made in response to any possible takeover attempts but is basically to make it more difficult for a competitor to buy the airline, one of the country's leading low-cost carriers.
"JetBlue is the only airline that did not have a change in control plan," Bryan Baldwin, an airline spokesman, said Friday. "We feel our culture and our product have been key to our success. We don't want to grow through a merger."
David Barger, JetBlue's new chief executive officer, circulated a memo to employees Thursday. "You may have heard rumors over the last several months about possible consolidation," the memo said, without further elaboration. But, it added, "Our product and brand are so unique that our strategic growth should be driving organically, not necessarily through acquisition or merger."
Barger became JetBlue's CEO last month, replacing founder David Neeleman, who remains non-executive chairman. The management shakeup followed a loss in the first quarter and embarrassing service disruptions during a snow and ice storm at Kennedy Airport Feb. 14. Barger has announced a 60-day review of JetBlue's operations as the airline seeks to stem losses.
Some analysts speculated, however, that JetBlue or any other company would not go through the process of putting together such a severance plan unless there were some likelihood of a takeover attempt.
Investors, and employee stockholders, would be likely to make money if JetBlue were acquired.
In its filing with the Securities and Exchange Commission, JetBlue said its plan "provides severance and welfare benefits to eligible employees who are involuntarily terminated from employment without cause or, in certain circumstances, when they resigned during the two-year period following a change in control."
Top JetBlue executives, including the company's senior vice president, executive vice president or higher rank will be eligible for as much as two years' salary and bonus, along with other benefits, in the event they are fired after a takeover. Other workers, the filing said, will be eligible for 26 weeks pay.
JetBlue did not state in the filing a total dollar figure for the severance plan.
Robert W. Mann Jr., an independent airline analyst and consultant in Port Washington, said "The only reason to put this (plan) up is if there's a chance for a change of control." Mann said neither JetBlue not any other company would want to create "the churn" issuing such a plan creates unless there was a need for it. Mann said that Delta Air Lines, which competes with JetBlue along heavily-traveled East Coast, might be a likely contender for a merger.
Anthony Black, a Delta spokesman in Atlanta, said the airline does not comment on rumors or speculation.
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