CAL's Gordy B on Jetblue

[LearLove]

I found this on the MSN/Reuters web site. I have question at the bottom for jblu or other in the know.

www.msn.com in the stock quote section enter: jblu

Continental CEO sees dim prospects for JetBlue
April 17, 2002 4:03:00 PM ET


HOUSTON, April 17 (Reuters) - Continental Airlines (CAL) Chief Executive Gordon Bethune said on Wednesday he was skeptical that upstart rival JetBlue Airways (JBLU) would succeed and said its soaring stock price was proving P.T. Barnum correct.

Barnum, who founded the Barnum & Bailey Circus, was famous for supposedly saying "There's a sucker born every minute."

Bethune made his comments at Continental's annual shareholder meeting in response to a question about his thoughts on JetBlue's stock price rising 70 percent since an initial public offering on Friday. It opened at $27, soared to $45 the same day and has stayed at that level.

"It just says that P.T. Barnum was right," the outspoken Bethune said, drawing laughter from the audience.

"Since 1978 the record pretty well shows that no start-up airline...has really been successful, so the odds of JetBlue having long-term success are remote," he said.

"I'm not going to say it can't happen because stranger things have happened, but I personally believe P.T. Barnum was, in that respect, correct."

Officials at two-year-old JetBlue, a discount airline based in New York, were not immediately available for comment.

Continental would love to see similar success in an IPO for its regional airline unit, ExpressJet Holdings Inc. (XJT), which was in the process of being completed on Wednesday. It was expected to be priced between $14 and $16 per share when it hits the market on Thursday.

"We've had a lot of very, very favorable responses from institutions and retail sales and we expect them to go complete that transaction sometime today," Bethune said.

Bethune also said that Continental, still recovering from the effects of the Sept. 11 attacks, hoped to boost its cash reserves from the current level of about $1.1 billion to $1.5 billion by year's end as a cushion against future shocks.

He said the airline, which is the nation's fifth largest, had 55,000 employees when the attacks occurred, but laid off 8,000 afterwards in cost-cutting measures. The lost work force is slowly being brought back, he said.

"Today I'm pleased to report we are back above 48,000 and we continue to rehire our colleagues as demand returns," Bethune said. REUTERS

© 2002 Reuters

I didn't peg Mr. B for a guy who talks out is a$$. What do you guys think?

Also is it true that Jblu still dosen't pay ramp/terminal/landing fees?

I've also herd that they don't have to pay mx or lease payments on the a320's for a specified amount of time.

Is this why they are doing so well?

Again this is just something I herd and am not knocking the place. If anyone can clear this up I'd appreciate it as I tought Jblu was a good place to go.


Thanks
Happy Flying

 

[furloughed]

I don't know about ramp/terminal fees, but I do think that they do not have to pay leases on their Airbuses until 2003. Pretty easy to make a profit when you your not even paying for your airplanes.

 

[trueblue]

1) "I didn't peg Mr. B for a guy who talks out is a$$. What do you guys think?"

Huh. I completely disagree. I've read his book and absolutely think he talks out his a$$. I wonder what he thinks of SWA? Of course, I respect your opinion and kind of respect Gordon's opinion, but since you asked...I think "Mr. B" doesn't stand for Mr. Bethune, but rather, "Mother Beeattch"

2) "Also is it true that Jblu still dosen't pay ramp/terminal/landing fees?"

False. JB, in fact, pays among the highest landing fees in the world flying out of JFK, the most expensive airport in CONUS.

3) "I've also herd that they don't have to pay mx or lease payments on the a320's for a specified amount of time."

False. This had been asked before in other threads so do a search if you'd like, epecially on the thread comparing FedEx with jetBlue months ago. Others in the company know more here, but Al Spain told me and others at my interview, this claim is completely false. The company makes regular payments...often in cash.

4) "Is this why they are doing so well?"
Everyone is entitled to their opinion, but since you asked...at the forefront is their sound, solid business plan, their people, their values, their capital, their costs, their market niche, their equipment, their safety/security record, their performance, their loads factors and customer base, etc.

 

[side stick-n]

Sorry to disappoint you guys, but we make aircraft lease payments every month, landing fees every landing, and terminal lease payments. You are right on one point.... our aircraft are under warrenty just as all new airplanes are. Yes, we have said many times that our mtx cost will increase down the road. As for Bethune, do you really think he or any other airline CEO (other than our own) is going to make any positive remarks about our success? All of them would love to see us go away, so making negative remarks does not suprise me. And don't forget the XJT IPO coming out. I'm sure he would like to draw investors away from JBLU and flock to XJT or CAL. You think Bethune is cruel? Ask Don Carty what he thinks of JBLU....

 

[furloughed]

I agree the CEO of the biggies are displaying sour grapes about Jet Blue. I have read Bethune's book and I think he is a self absorbed A-hole, but at least he knows how to manage an airline alot better than my ex-employer could.

 

[dgs]

It never ceases to amaze me how people will make up stories to explain what they cannot understand. The secret is no secret--it is a brilliant business plan and inspired leadership who cares about people--employees and customers alike. There is no smoke and mirrors here. In fact, going public has made even more details of our operation open to scrutiny. Every time we enjoy success there is somebody who says it is a fluke. Funny thing is that the successes continue time and time again. Let the pundits say what they may, history will prove who is right.

I'm very proud and thankful to be part of the jetBlue team. The company is full of great people and our customers love us. I really enjoy saying goodbye to our passengers as they deplane so I can hear comments like, "That was the best flight I've ever taken." I hear it several times almost every time I fly. (BTW, that goes a long way toward job satisfaction for me!) Demand for our stock exceeded supply by 26 times and many shares were sold in blocks of 100-500, indicating that smaller investors who believe in our company have invested in our future. (I expect that many of our new stockholders are also our customers.) As long as we keep the customer happy with low fares and great service I expect we will continue to perform.

 

[norskman2]

What is Gordy smoking? I used to think he did a whale of job turning CAL around, but Gord-o's seriously in denial here.

Look at the record - David Neeleman has NEVER lost money in the airline industry. He turned MorrisAir from a tiny charter operator into a respectable scheduled service, sold it for a tidy sum to SWA, and now took JB from zero to profitable in less than 2 years.

Wake up and smell the Jet-A, Gord.

Go JetBlue!

 

[shon7]

I am pretty sure that Jet Blue is here to stay. They are trying to do things "right" and the employee force is pretty motivated. There were similar comments when Jet Blue was lobbying for take-off and landing rights in NY, when they confirmed their order with airbus etc etc etc.

However, as they say ... " only time will tell."

By the way is Neeleman a pilot himself?

 

[norskman2]

I don't believe Neeleman is a pilot - just a very, very sharp airline guy.

 

[jjbiv]

Neeleman isn't a pilot.

joe

 

[Eagleflip]

David Neeleman, however, drives a mean tug.

Picture this---

It's snowing like a dog at JFK this past winter, and the jetBlue Captain activates the interphone to talk the ground techs in preparation for the pushback.

"Cockpit, ground. How are you doing today, Captain?" a somewhat familiar voice rings over the intercom.

"Uh, great. Who is this?"

"David"

"Uh, David?" asks the Captain, a bit confused. This voice--it sounds like someone he has heard before, but he can't quite place it. Suddenly, the Captain's mind makes a quick face association..."uh, David Neeleman?"

"Yeah, it's David! I'm ready to go whenever you are!"

How many CEOs take the time to get out and find out what's happening first hand?

I wasn't there for this story, but heard it first hand from the Captain in question.

Yes, only time will tell, but my first and foremost thought about jetBlue is this: if I had the wherewithall, time and money to set up an organization, the JB model is what I would have selected. It is how I tried to run my squadron in the AF--with planning, communication and a sense of teamwork.

I'm not knocking ANYBODY else out there: there are plenty of great airlines on the market and each offers their own blend of style and substance. I, however, am happy to be where I am.

 

[SentryIP]

Success

Imagine that!

A CEO that gets away from his his desk and goes out to see things for himself. I bet he even talks to his employees! Sounds like another great and familiar airline that's been aound since 1971? I think jetBlue will be another success story. Best wishes and fly safe.

 

[Gulfstream 200]

well...
Im NOT an airline pilot or a fan of riding on the airlines...but..
why is JETBLUE doing so well, compared to the likes of Continental??
well, as a paying customer i can say i have used both and JETBLUE is a 1000X better experience....I will take a limo to JFK and relax anyday before dealing with the biggest armpit in the world (KEWR) that has to be the most disqusting airport in ther US, nice collection of folk working for all the airlines there... Ride on Jetblues new leather seats or Continentals ratty junk??? not hard to decide there either...and those headrest TVs???? well, Im sold...
to top it off, in my companys eyes, the last minute fares are often 50% less on Jetblue....that MORE than covers the 200$ limo ride, thanks.......
Keep EWR and Continental. Jetblue is simply the least painful airline to ride, keep up the good work jetblue folks, I hope it goes well.
now if only you guys flew to DFW area...

 

[jointops]

Gulfstream,

Stand by for new destinations. Apparently the guys are discussing where they'll expand next. We'll all taking bets, and wishing ourselves. I think the announcements are supposed to be late summer but don't hold me to that. I kind of glossed over that part of the welcome brief when I heard the profit share was 13.5% last year.

 

[dgs]

CEO comparison

David Neeleman (CEO) and Dave Barger (our President and COO) have regular meetings with employees of all types in New York and throughout our stations. They also both meet each new class in Miami and David teaches Airline Economics 101 to explain to neophytes why we are making money. David has trown bags, checked in passengers, and done ID checks during the peak holiday seasons. When he flies around the system, he almost drives the FAs nuts by handing out snacks and gripping and grinning with the customers. Brilliant, inspired leadership. I trust them and would follow them wherever they want to go. I'm proud to have them at the helm!

Continental? All I can say is take a look at ExpressJet's IPO. Raising money to pay Continentals debt. Where to I send my check--NOT! I'm sure Bethune was trying to boost the IPO. It's like my momma always used to say, "Insulting somebody else doesn't make you a better person." Apparently lots of other people saw through the smoke screen, too. All his comments did was hurt his own credibility.

We have seen doubters at every step. Kennedy used to be dead for domestic traffic. Now jetBlue is the #1 domestic carrier at JFK. Long Beach used to be a "dead" airport. Now we are fighting off American and Alaska for slots we own and promised to fill when nobody else wanted to go to Long Beach. We are able to make a profit where others have tried and failed. Sounds like a formula for long term success to me. Of course, time will tell, but my money is with jetBlue and I couldn't be happier!

 

[norskman2]

$200 for a limo???? Cal Olmypic Limosene or any of the other that advertised in the NYC visitor guides. They charge just a little more for a stretch than a cab ride! Best bargain in town! Save some money and fly more JetBlue!

 

[CRJFlyer]

I don't work for JetBlue....yet =)...but my girlfriend is a flight attendant there... As far as I can tell EVERYONE at JetBlue seems to be happy....they didn't lay off anyone after 9/11 and in fact my girlfriend started f/a class on 9/15 and even caught a ride with another trainee down to Ft. Lauderdale with the big boss himself because they're flight was later than everyone elses..

I think Bethune is just a suit who's stuck on himself thinking that his airline is the best... Every captain and fo i've met or had dinner with at JetBlue has been nothing but nice and never had one bad thing to say about my regional flying A$$...

Top notch company I say....

 

[SpeedBird]

Gordo's comments don't surprise me. He's typical of the current crop of major airline CEO's who don't show much class and public recognition of a competitor that has proven itself rather well over the last two years. The ONLY exception to this is Herb Kelleher who spoke admirably about David Neeleman and jetBlue during a business interview a few months back. That doesn't surprise me either, considering Herb's head and shoulders above all his peers (among the majors). He also knows David Neeleman better than anyone else among the rival gang of CEOs. Therefore, I value his opinion far more than G. Bethune's.

 

[enigma]

Bethune as probabally giving his honest assessment. It just shows that most managers JUST DON'T GET IT. They really don't seem to understand why a company like JB can succeed, so they assume that the other company won't succeed.

regards
8N

BTW, After extended talks with ScareBus, Spirits' owner reported to the MEC, that the rumors of JetBlues "sweetheart" deal were untrue.
Spirit was looking to buy Buses before 9/11 and the owner who is a qualified dc9 captain, was reporting to the pilots on how the talks were going.

 

[jjbiv]

Was Spirit ever owned by Comair or has Ned kept it privately held? I found this on dalpa.com:

Doesn't the Comair purchase of Spirit Airlines show our domestic Scope Clause to be ineffective?

Actually, just the contrary is true. As you will recall, we filed suit in Federal Court last year over ASA's purchase of BAE 146s based on a violation of the status quo. The courts ruled against the status quo issue and remanded the case to the System Board. Since Comair's acquisition, Delta management has already publicly stated that based on the new Scope Clause, these DC-9s cannot and will not be used in a code-sharing environment with Delta. There is a comprehensive flyer out dealing with this subject in more detail.

Are there two Spirit Airlines out there?

joe