JetBlue execs forego annual bonuses
By JAMES BERNSTEIN
Newsday Staff Writer
April 21, 2006, 3:40 PM EDT
The chief executive officer and the two other top executives at JetBlue Airways Corp. waived their bonuses of $75,000 each in 2005 -- a year in which the low-cost carrier posted its first-ever quarterly loss, ranked among the worst in the industry in on-time performance, and said it did not expect a profit this year either.
In a filing with the Securities and Exchange Commission yesterday, the three -- David Neeleman, JetBlue's founder, chairman and CEO; David Barger, its president and chief operating officer, and John Owen, the airline's executive vice president and chief financial officer -- disclosed that they would forgo the annual bonuses, which are a guaranteed $75,000.
The three could not be reached for comment, but Jenny Dervin, a spokeswoman at JetBlue's headquarters in Forest Hills, said "They felt that even though they were contractually able to claim their bonus, it was inappropriate to take it. So they voluntarily waived it." The three have a base salary of $200,000 each.
In the SEC filing, JetBlue said the $75,000 bonuses are "subject to increase based on the achievement of performance-based milestones."
But by just about any yardstick, JetBlue did not achieve any great milestones in 2005. The entire industry suffered from high fuel prices. JetBlue acknowledged that it did not do a good job of betting on fuel costs. It hedged only 20 percent of its fuel costs, at $29.95 a barrel. Fuel was close to $70 a barrel last year.
JetBlue may also have expanded too rapidly, bringing on a new type of aircraft -- the Embraer 190 -- at a fast pace. The airline in some months last year was dead last among U.S. carriers when it came to on-time performance. JetBlue blamed bad weather and the fact that many of its flights are in the heavily-traveled East Coast corridor. By year's end, JetBlue reported its first-ever quarterly loss of $42 million and said it did not expect to be profitable this year.
Investors punished the stock, sending shares plummeting to about $9. In 2003, Jetblue stock hit a high of $31. Robert W. Mann, an independent airline analyst in Port Washington, said JetBlue "missed the boat on a couple of things. This is their way of saying mea culpa publicly." Copyright 2006 Newsday Inc.
By JAMES BERNSTEIN
Newsday Staff Writer
April 21, 2006, 3:40 PM EDT
The chief executive officer and the two other top executives at JetBlue Airways Corp. waived their bonuses of $75,000 each in 2005 -- a year in which the low-cost carrier posted its first-ever quarterly loss, ranked among the worst in the industry in on-time performance, and said it did not expect a profit this year either.
In a filing with the Securities and Exchange Commission yesterday, the three -- David Neeleman, JetBlue's founder, chairman and CEO; David Barger, its president and chief operating officer, and John Owen, the airline's executive vice president and chief financial officer -- disclosed that they would forgo the annual bonuses, which are a guaranteed $75,000.
The three could not be reached for comment, but Jenny Dervin, a spokeswoman at JetBlue's headquarters in Forest Hills, said "They felt that even though they were contractually able to claim their bonus, it was inappropriate to take it. So they voluntarily waived it." The three have a base salary of $200,000 each.
In the SEC filing, JetBlue said the $75,000 bonuses are "subject to increase based on the achievement of performance-based milestones."
But by just about any yardstick, JetBlue did not achieve any great milestones in 2005. The entire industry suffered from high fuel prices. JetBlue acknowledged that it did not do a good job of betting on fuel costs. It hedged only 20 percent of its fuel costs, at $29.95 a barrel. Fuel was close to $70 a barrel last year.
JetBlue may also have expanded too rapidly, bringing on a new type of aircraft -- the Embraer 190 -- at a fast pace. The airline in some months last year was dead last among U.S. carriers when it came to on-time performance. JetBlue blamed bad weather and the fact that many of its flights are in the heavily-traveled East Coast corridor. By year's end, JetBlue reported its first-ever quarterly loss of $42 million and said it did not expect to be profitable this year.
Investors punished the stock, sending shares plummeting to about $9. In 2003, Jetblue stock hit a high of $31. Robert W. Mann, an independent airline analyst in Port Washington, said JetBlue "missed the boat on a couple of things. This is their way of saying mea culpa publicly." Copyright 2006 Newsday Inc.
