Jetblue Article.....Ouch

frank rizzo

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Alot of these guys are still drinking the coolaid ! how about management leasing those air bags from that gook !
 

pilotyip

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Sports forecasting

Wall street has as much luck forecasting outcomes as sports figures do at the start of the playoffs. These are the same people who told me I was crazy for buying Chrysler at $3.80 per share in 1982, my 500 shares would be worth over $250K, if I had not sold it at $11.00 a year later. You will only know if Jet Blue is a good or bad buy five years from now.
 

~~~^~~~

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Byron,

I'm no Jet Blue fan, but your article's mistakes are surprising. Since Jet Blue is a new turn key operation their management has been able adopt cutting edge technologies at a reduced cost compared to the established carriers who have older systems.

You write:
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For instance, all of our pilots use laptop computers in the cockpit to calculate the weight and balance of the aircraft and to access their manuals in electronic format during the flight.”
Does that sound smart to you? Would you like to fly in a plane whose “weight and balance” depend on the pilot’s ability to boot up his laptop? What if he wants to check the plane’s “manuals in electronic format during the flight” and winds up staring at the blue screen of death? Wouldn’t it be better just to have the manuals available in hard copy?
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The answer is no. The "laptops" are purpose built computers which do not utilize consumer level operating systems that may give the problems you reference. The systems must meet FAA certification requirements, just as the software that operates the flight controls does. In case you did not know, everything on the Airbus is software driven, primary flight controls to full authority digital engine controls.

Every month a tractor trailer backs up to the flight operations area of my crew base and dumps literally tons of paper, which is sorted and updated by every pilot, maintainenece technician and flight operations person. It is a cumbersome system of updates and revisions which due to its complexity is subject to human error.

Aside for the environmental impact, Jet Blue's chart and manual publication process is the envy of the industry. Other airlines will adopt Jet Blue's procedures (if) they begin to generate the positive cashflow needed for the initial cost of providing these resources for their employees. Having the materials on a ROM format ensures uniformity and accuracy.
 

BigFlyr

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Sounds to me like "BlueJet" is nothing but a big house of cards. You can only play with money for so long. Sooner or later someone's got to pay for all those shiney new airplanes, and they're not going to do it by offering cheap seats.
 

Eagleflip

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Yep, gang, no way jetBlue is going to pay for new airplanes while offering cheap seats... Hmmm...cheap seats? Wait a minute here.

Whoops, I guess Southwest and AirTran are going under next week too...

Hey, if anyone's interested, just ask for and read the company's prospectus. It'll tell you where we stand with respect to purchasing, leasing and paying for all these jets.

Life isn't necessarily all peaches and cream at JB, but hey--I absolutely believe that the company is going to make it in the long run.

And my laptop works just fine.
 

SennaP1

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I think JetBlue has some very good ideas in making it. I would love to fly for them someday. Lets see...Brandnew A320s, Laptops, and that cool tv thing they have in the back. They are innovators and I believe thats what the industry needs right now. Also, I think they are going to start offering broadband connections inflight pretty soon.

Anybody see their story on Tech TV?

WannabeBlue
 
3

350DRIVER

Time shall tell- I am in no way a fan of either SWA or JetBlue BUT there is that "group" of people who they continue to market the route and fare structure to that can't afford your UAL or DAL's of the industry so with that being said SWA appears to do quite well yearly and who knows how the whole JetBlue adventure will turn out.- I tend to enjoy your DAL's and UAL's of the industry-

Cheers
3 5 0
 

Ted Striker

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Two words...

I believe JBLU will be around for one reason: David Neelman.

Just a hunch, but this guy knows what he is doing.
 

HERCDRVR

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Another Interesting JBLU article

UBS Warburg Makes History with JetBlue
Sun May 12, 5:29 PM ET
By Per Jebsen

NEW YORK (Reuters) - UBS Warburg made history earlier this week: It publicly told investors to sell shares of a company it just had helped bring public.


UBS Warburg analyst Samuel Buttrick last Tuesday initiated coverage of discount airline JetBlue Airways Corp. as "reduce" -- UBS's second-lowest rating. Buttrick, who was not available for comment, also put a price target of $38 on JetBlue's shares, or 30 percent below what it was when he issued his report.

Experts could not recall the last time an investment bank that helped underwrite an initial public offering (IPO) came out so soon afterward with a recommendation for investors to unload it. JetBlue began trading on April 12.

"Finally, there is some honesty in terms of saying it's a great company, but it's overvalued," said Jay Ritter, a finance professor and IPO specialist at the University of Florida.

Buttrick's move stands out because an upbeat post-IPO analyst recommendation has long been considered to be a necessary part of the package offered by banks competing for underwriting business. UBS has made an aggressive bid this year for a bigger stake in the U.S. IPO market.

The bank has landed the lead bookrunning role for five IPOs this year, behind only Salomon Smith Barney in number.

The deals have had mixed success: Pharmaceuticals Inc. , software maker PrintCafe Inc. , and Mexican cable provider Cablevision SA were postponed for lack of demand. UBS-led IPOs by drugmaker Ribapharm Inc. and Brazilian (news - web sites) water firm Sabesp priced below expectations.

IPOs slated for this week include retailer Aeropostale Inc. , managed by Bear Stearns , and surveillance software maker Verint Systems Inc., managed by Lehman Brothers . Both are expected to be priced on Wednesday.

Global Preferred Holdings Inc. , a reinsurer, is expected to price on Tuesday in a sale led by William Blair. Kyphon Inc. , which makes medical instruments for spinal care, is expected to price on Wednesday, with USB Piper Jaffray as lead. Innovative Drug Delivery Systems Inc. , managed by Thomas Weisel, is listed as day-to-day.

REVOLUTIONARY

Buttrick's advice would have been noteworthy enough as just 2.5 percent of stock recommendations are equal to sell or strong sell, according to Thomson Financial/First Call. But by Wall Street standards it was extraordinary because UBS Warburg had served on the underwriting syndicate for JetBlue's much-anticipated IPO.

Buttrick praised JetBlue's business prospects, noting that the company has "lots of money, a strong management team, and a very big market." Yet he said that the New York-based airline's shares, having doubled from their IPO price, had risen too far. The 2-year old company's market capitalization had grown to be bigger than that of Northwest Airlines (news - web sites) or Continental Airlines (news - web sites) , he noted.

"(That) is something during the whole TMT bubble, analysts should have been saying," Ritter said. "I think the fact that the heat is on analysts is probably why we're seeing this now and we didn't see it during 1999."

Shares of TMT -- tech-media-telecom -- companies were bid sky-high with help from bullish analysts during the late 1990s boom, then plunged in the two-year bear market.

NO 'SELLS'

According to a sample of 1,611 IPOs between 1996 and 2000, not a single Wall Street analyst put out a "sell" where that analyst's employer participated in the underwriting syndicate, Ritter said. A precise tally is difficult because stock rating systems differ, he cautioned.

Data from StarMine, which tracks analyst picks, helps to confirm Ritter's observation. No lead underwriter issued a sell on a recent IPO between 1994 and August 2000, and there were just eight "hold" ratings, the San Francisco company said.

Wall Street's mentality: "If you can't say something good, don't say it at all, just like mother told you," Ritter said.

Analysts who report on an IPO are often the same analysts who help orchestrate it -- for instance, by answering questions during pre-IPO pitches to money managers. Then, like clockwork, when the securities-law "quiet period" expires, these analysts typically release glowing reports on the company's prospects.

This collaboration helps investment banks sell their IPO skills to prospective IPO candidates and illustrates why investment banks would not wish to alienate potential clients.

"Since (JetBlue) might do future underwriting or M&A (mergers (news - web sites) and acquisitions) business, putting out a negative recommendation hurts UBS Warburg's chances of getting that mandate," Ritter said.

HARSH SCRUTINY

Now, however, cozy cooperation between bankers and analysts is under scrutiny as never before.

State securities regulators, spearheaded by New York State Attorney General Eliot Spitzer, have launched probes into whether analysts produced tainted research to win banking business. The Securities and Exchange Commission (news - web sites), which has also begun an investigation, on Wednesday adopted new disclosure and other rules for analysts that among other things expand the IPO quiet period to 40 days from 25 days. Critics have charged these rules do not go far enough, and the SEC has said it may beef up the regulations.

Soured public opinion has spurred analysts to show they care about traditions of objectivity and independence. In March, Morgan Stanley unveiled a new approach, giving 22 percent of North American stocks it covers its lowest rating.

"The brouhaha about analyst practices has made analysts more aware of not wanting to be seen as hyping stocks," said Mitch Zacks, director of research at Zacks Investment Research. "They're reacting ... to the pendulum swinging to the opposite direction."

Surprisingly, the most notable previous instance of a high-profile IPO receiving lukewarm ratings was top-tier investment firm Goldman Sachs Group , Ritter said. Goldman rivals such as Bear Stearns, Merrill Lynch, Morgan Stanley, and Salomon Smith Barney -- who had been included in the syndicate for Goldman's May 1999 IPO -- gave Goldman shares a "neutral" rating when the quiet period ended.

Such brutal honesty about their competitor proved less well-founded than the myriad "buys" issued to tech companies going public, Ritter said. Goldman shares since then have beaten the Standard & Poor's 500 Index <.SPX>, and proven a far safer bet than the tech-laden Nasdaq Composite Index <.IXIC>.

--With reporting by Jake Keaveny
 

Mr. Irrelevant

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HERCDRVR,


Interesting piece. I don't believe it has anything to do with JBlue's long term viability however. It's nice to see an analyst telling us what they really think although in this case the IPO run up has more to do with it than the company's long-term prospects. Long-term underperformance in the market after the first day of an IPO is a pretty well-known hypothesis (and well documented) and should be a real hot subject the next few years when everyone looks at the 1997-2000 IPO's.

That business model they're using is clearly a winner. This fellow Byron that wrote the article is a writer, just that, not an expert in investment analysis of airlines. There were numerous holes in his story starting with his theory of low cost carriers competing out of LGA or Newark. Could happen, but really, Jet Blue is in pretty good with NY Pols and I doubt there is that chance, among many reasons. He also points out the difficulty airlines face in a down economy (what a genius) however if he had done his research he would know the airline that performs best in these types of markets, SWA, is the one Jet Blue is modeled after.

Cash flow will mean eveything as it always has but of course, SWA again, could finance all enternally if they wanted, the same way Jet Blue may be able to at some point. So, not all airlines at all points in their life cycle need to take out enormous amounts of debt. At least those that control their growth don't.

Jet Blue doesn't use these systems so they can have pretty colors for pilots and employees to look at on a laptop, they know it's a cost saver over the long haul.

I'm not a huge Jet Blue fan but the idea is clearly a winner. I'd be more than willing to put my money on it once the price settles down.

I wonder if this guy even realizes SWA has made money 30 years running now???? Yada, yada, yada.


Mr. I.
 
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