History repeating itself??....

[Spooky Magnum]

THE BOTTOM LINE
Return to Normalcy (Sort Of)
Once again, there are real business stories for investors to sink their teeth into.
FORTUNE
Thursday, June 12, 2003
By Adam Lashinsky


PALO ALTO, Calif. -- Business-news headlines have become interesting again. Hooray! It's no longer all good (like in the late 1990s) or all bad (the past three years).

There are winners and losers, savvy and stupid, fortunate and unlucky.

Déjà vu particularly seemed to be in the air with news that JetBlue, the young darling of the airline industry, would be buying 100 Brazilian medium-range jets for $3 billion. The market didn't like the news Tuesday, when JetBlue's shares fell about 5 percent. Investors seemed far more comfortable with JetBlue's plans by Wednesday, however, as the stock made back most of what it lost.

My gut tells me the market's first instinct was the right one. For me, JetBlue's move provoked memories of a fatal purchase by the proud old Midway Airlines in 1989.

No one much talks about Midway anymore. But it, along with Southwest Airlines, revolutionized the business by flying out of unpopular airports (like Chicago's Midway Airport), where it avoided direct competition from the big carriers. As a result it could charge far less for seats.

Midway's fatal move was buying a bunch of Philadelphia gates from the bankrupt Eastern Airlines. It was crystal clear the day the deal was announced that Midway was abandoning its humble ways by flying out of a major airport against major competition.

Midway eventually went bankrupt too.

Fast forward to JetBlue today. The Brazil purchase means JetBlue will be flying two kinds of planes instead of one. The number of aircraft it's buying means it will be in direct competition with many major carriers at once. The majors will be desperate to defend their turf. At least one of them (United) shortly will have a restructured balance sheet.

Mark the calendar. If JetBlue declines, it began this week.

 

[pilotyip]

big difference

JB has money, Midway did not.

 

[Dennis Miller]

Mistake number 1

 

[Redtails]

It's amazing how folks can predict our downfall without even a glimpse into why JBLU is so successful. The RJs are still two full years away from hitting the flightline. The management here is lightyears ahead of what the majors are trying to accomplish with "their" balance sheets. If anything, JBLU keeps them off-balance with our choice of future plans. From the press releases, the 100-seat EMB-190 will fit good with what we have planned for it. Our customers will enjoy the two-two seating with the same leather seats, Live TVs, and outstanding inflight service they already receive. Furthermore, with a 2300NM range, this RJ will introduce a wide range of flexible modes of operation.

 

[Slug]

bin space

Just a quick question (that I could research, but am too lazy):
What is the overhead bin space like on the EMB-190? I know its not an RJ, but if your business folks have to gate check their bags they aren't going to be too happy. That is my biggest complaint from flying around on United Express's smaller jets.

 

[JayDub]

First, look at this:

Thursday, June 12, 2003
By Adam Lashinsky


Mark the calendar. If JetBlue declines, it began this week. [/B]

Now this:JBLU Quote

Ok, I marked the calendar. I even marked his word. Now what?

It is waaaayyyy premature to predict a company's demise two years before they even receive the predicted "cause".

With all of this said I have spoken personally with the people that made this decision. I doubt Mr Lashinsky has. He basically claims Midway's demise was caused by deviating from a business plan. What Mr. Lashinsky fails to understand is this has always been a part of the plan for JetBlue. There are two things this part of the business model lacked: 1) publicity and 2) a suitable aircraft. They waited until they found the right aircraft before they publicized it.

UsAir and Horizon flew the F28 for years without spelling their demise. Same with NWA and the DC-9 (and a bunch of other airlines). I think the problem with this article is Mr. Lashinsky starts with a flawed premise.


JayDub

 

[JayDub]

Re: bin space

Just a quick question (that I could research, but am too lazy):
What is the overhead bin space like on the EMB-190? I know its not an RJ, but if your business folks have to gate check their bags they aren't going to be too happy. That is my biggest complaint from flying around on United Express's smaller jets.

EMB-190 Baggage space

Looks like it's still carry-on to me.


JayDub

 

[FightTheFuture]

Do you have to wear headsets?

I'm on the RJ for AMR's red-headed step child
It's not a bad aircraft but one of the things that irrritates me about it is the cockpit noise.

I saw a picture of the EMB-170 cockpit and there was a David Clark hiding in the corner.

Has anyone heard what the sound levels are like in the 170 series?

 

[pilotyip]

Midway Demise

Alot of my reserve buddies flew for Midway and they got me an interview at Midway in June of 1989. So I did alot of research for the interview and this is what I remenber. They were forced by the SWA competion to change in order to survive. In the late 80's SWA moved into MWD and started eating up Midway's pax on the money maker for Midway MWD-DTW, they needed to get out of direct competion with SWA, so their business plan was to get MD-87's, I believe, and go non-stop to the west coast and then they elected to buy EAL gates at PHL for 450M, they borrowed the money on a gamble to make the PHL hub work and it did not. I was not hired because in the last two years the only thing I had flown was the DC-3 and the C-182, interviewer told me to go to work for a commuter for a year and reapply, a year later they were in trouble. The slow down of the early 90's came along and they ceased operations about the same time as EAL.

 

[FlyingSig]

JetBlue's making a lot of interesting decisions lately that I'm curious how they'll pan out.... in addition to the EMB order

- competing in major Hubs (ATL) - memories of People Express

- removing seats to create legroom - ala American

I'm not saying this stuff won't work, but when you add it all up, the article does have a point, it does seem to be a big turn away from the original business plan.

Why haven't any of the other airlines currently making money seen the need to do this?

 

[jetblue320]

JB Sucessful?

Here's some food for thought:

jetBlue has something that Midway, People's Express, Eastern, and countless other's didn't have; we have all those before us to learn from. It's a history lesson.

As far as removing the seats to follow AA goes, there was more than one reason for that decision. There is some new law regarding the American Disibilty Act that makes you have space on board for a wheelchair. Don't know the details of it but part of our decision to remove the last row of seats factored that in as well.

Take Care