JB to retire aircraft?

[General Lee]

JetBlue seen slowing growth in face of challenges

Tuesday April 18, 2006 JetBlue Airways may "modestly retard its growth" through retirement of its oldest aircraft or deferrals of new deliveries and could make an announcement to that effect as early as next week, JP Morgan analyst Jamie Baker speculated in a report released Monday.A JetBlue spokesperson told ATWOnline the carrier is in a quiet period ahead of its quarterly results release on April 25 and could not comment. Yesterday, it announced it hired a new VP-revenue management, filling a position that had been vacant since last fall (see item below).
JetBlue capacity rose 29% in the first quarter while traffic grew just 24%, pushing load factor down 3.5 points. The airline lost $20.3 million in 2005 and does not expect to be profitable this year. As of mid-March it operated 87 A320s and 10 Embraer 190s and had 96 A320s and 91 190s on order, according to the Airclaims CASE database.
"JetBlue requires an estimated $2 billion in incremental capital over the next two years" to pay for new aircraft, according to Baker, who added that "given the cost and yield supremacy of the Embraer 190," the carrier likely will slow the growth of the A320 fleet. He suggested it will cut planned A320 deliveries next year from 17 to 10.
In the same report, JP Morgan was bullish on US Airways' prospects owing to strong unit revenue growth, which was up 20% in the first quarter compared to the year-ago period, and the fact that the carrier generates a larger share of its revenue in strong Southwest Airlines markets than any other US airline, making it "the chief beneficiary of [Southwest's] full court press for higher fares." Baker expects US Airways' EBIT margin in 2006 to top other US carriers excluding Southwest.

by Perry Flint



Bye Bye--General Lee

 

[zkmayo]

Word is that JB will sell a few (3-5) of the oldest 320s. Given the high demand for them worldwide, the feel they can get a premium for them now and get rid of some older airframes (oldest about 7 years old). the first 320 (503)is a bit different from the rest of the fleet and would prob be the first to go.

Slowing the growth is prob a prudent move. I think the co will focus on the 190 for awhile and shifting 320 into high revenue/yield mkts.

 

[dtfl]

Word is that JB will sell a few (3-5) of the oldest 320s. Given the high demand for them worldwide, the feel they can get a premium for them now and get rid of some older airframes (oldest about 7 years old). the first 320 (503)is a bit different from the rest of the fleet and would prob be the first to go.

Slowing the growth is prob a prudent move. I think the co will focus on the 190 for awhile and shifting 320 into high revenue/yield mkts.

Kinda funny talking about selling the "oldest" of the 320s. I mean that in a jesting way - not poking fun. Coming from someone that has flown 1960s model C130s his while life until recently...a 70s model was "new" and now there is talk about selling "old 1999/2000" model 320s. Just kinda made me laugh.

 

[Smoking Man]

Hey Gen,

What kind of growth has Delta or U.S. Airways had post 9-11? (Any aircraft with more that 76 seats)?

Makes slowing growth sound horrible eh? (only 24% oh crap)

To me it sounds like calling an audible. Not charging ahead with a plan that was based on an environment that has changed.

 

[General Lee]

Hey Gen,

What kind of growth has Delta or U.S. Airways had post 9-11? (Any aircraft with more that 76 seats)?

Makes slowing growth sound horrible eh? (only 24% oh crap)

To me it sounds like calling an audible. Not charging ahead with a plan that was based on an environment that has changed.

Sounds like you are getting nervous. I just posted the article without any commentary. Do you not want me to post anymore JB articles? Why not?


Bye Bye--General Lee

 

[FlyBoeingJets]

Sounds like a Saturday Night Live skit I remember---


"We're the change bank. You know, 20 nickels for a dollar. 500 pennies for a five. 100 dimes for a ten."

"Then how do you make a profit?"

"Volume!"

 

[pipejockey]

It looks like a storm is on the horizon for jb. Any other airline with just an average fleet age of 7 years would probably be considered as having the youngest fleet in the industry. So I had to laugh as well when hearing of jb's plans to "sell" some "older" 320's....yeah whatever! And funny out of the 2 responses thus far from the men in blue, one was quite defensive, actually resorting to criticizing Delta. The blue boys have had 6 good years while the majors have been decimated with bankruptcies, job losses and the all but criminal decimation of pilot contracts. The worm is about to turn. Look at SWA pushing for price increases, thats gotta tell you something.

The legacies and the LCC's have a different business model. When one does well the other struggles it seems. maybe we will now see the rise of the legacy once again. Peoples Express was once the darling of the industry as I remember, but I was just a kid with stars in my eyes.

 

[Spectre]

It looks like a storm is on the horizon for jb. Any other airline with just an average fleet age of 7 years would probably be considered as having the youngest fleet in the industry. So I had to laugh as well when hearing of jb's plans to "sell" some "older" 320's....yeah whatever! And funny out of the 2 responses thus far from the men in blue, one was quite defensive, actually resorting to criticizing Delta. The blue boys have had 6 good years while the majors have been decimated with bankruptcies, job losses and the all but criminal decimation of pilot contracts. The worm is about to turn. Look at SWA pushing for price increases, thats gotta tell you something.

The legacies and the LCC's have a different business model. When one does well the other struggles it seems. maybe we will now see the rise of the legacy once again. Peoples Express was once the darling of the industry as I remember, but I was just a kid with stars in my eyes.

I think the smart thing to do in this environment is to slow down JetBlue's growth. The fast growth was in hopes of a major carrier failing. That's not going to happen with endless CH11 bankruptcies. I think you'll see the E190 delivery schedule intact. Many RJ markets have great premiums on tickets and you'll see E190s going into those medium sized markets. You'll probably also see less transcons in the future. Like most companies, growth that goes straight up the graph in a vertical fashion is not sustainable. You'll see a level off in growth and then another big push upward when the time is right.

As for selling our aircraft. Probably not. The older ones, 503 and 505 just had the newer TV screens installed. It's like Northwest painting a DC-9 in new colors just to sell them...Not going to happen either. The DC-9s will be there forever.

 

[pipejockey]

Sounds reasonable. But I still feel the skies are no longer clear blue for jb...maybe partly cloudy. I wish the legacies would do some point to point. The only way you can get a point to point on a legacy is from a hub. I think there is a market for it at many less densely populated areas. It might get rid of the congestion at the major airports like Miami if there were more possibilities at FLL or PBI.

 

[lowecur]

Simple

Not complicated at all. Poor mgt decisions, coupled with high oil, coupled with the lack of cooperation of a legacy failure = no other choice. We'll know very shortly if slowdown, yield mgt, and redeployment are the only moves they will need to make.

Airlines will all have a tough time making money in the next few years as even US Airways and United will find themselves going through their war chest of new cash. Consolidation will be the buzzword. International strategies will backfire as the bird flu continues it's metamorphis. The next round of BKs will probably start in 5 years, but most will have no where to go but immediate Chapt 7, as reduction of expenses will not be an option. The playing field will really look quite different from today.

imp: