Jetblue CEO takes a haircut

[lowecur]

Nice gester to try and pacify the troops as up and coming employee payroll reductions and furloughs loom (I doubt this will settle them down). Certainly Jetblue can't complain about the bang for the buck they are getting from Barger, but they are paying for poor judgement by ex-CEO Neeleman as his breakneck early expansion has made it difficult to turn the ship around. I think the fall season is looming as a disaster for all the carriers, as ridiculous pricing has returned to get butts in the seat from an economy on the edge of a cliff.

imp:​

http://www.247wallst.com/2008/07/jetblue-jblu-ce.html

 

[Way2Broke]

I love the two quotes from the article:

"The fastest way to become a millionaire is to start off a billionaire and then buy an airline." -Richard Branson

"Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." -Warren Buffett

Good luck Jet Blue, I always have enjoyed flying on your airline.

 

[Scope out RJ's]

Ok, so he takes a 50% paycut for 1/2 the year going, supposedly from $500,000 to $250,000?
Um, I'm no math expert, I didn't even stay in a Holiday inn express last night, but his salary is being cut in half for less than half the year. Sorry, but that doesn't equal $250,000.
I agree the gesture is nice, and from his standpoint, come Jan 01 when his bonus and salary returns, it will be even nicer.

 

[BLUE BAYOU]

Our CEO currently is the only "advertised" paycut at our airline. Pilots will receive a paycut due to the lack of flying hours in the coming months, but some actually will be receiving a modest base pay increase from the last Pilot Compensation Review Board recommendations. Even with his $500,000 salary, I'd be willing to say it is probably lower than most of his peers. So, yes, his actions may seem just on the surface a small paycut since half the year's over-- but percentage wise, he'll be taking more of a hit than most of the pilots-- unless we furlough some, but right now that's not in the cards.

 

[lowecur]

Oh, whether it's $125,000 or $250,000 he's giving back is of little consequence. CEO pay at Jetblue has always been below the huge compensation packages from others in similar positions.

The reason the end of the year is the cut off probably has more to do with how the airline is doing at that point in time, and the price of oil. I think compensation reduction to the workforce and how they set it up will determine what he does beyond that point.

Airtran has asked for 5-8% payroll reductions, and 15% from management, along with a 25% cut in capacity for the fall period. I assume negotiations are underway for a timetable, and if the employees say no, then Fornaro will base his decision with the 4th Q on the economy and the price of oil.

Jetblue will probably set it up under a similar fashion. The price of oil is a better balance on the expense side to keep an airline viable than asking employees for givebacks, although Jetblue may just mandate a 5% pay reduction for the 3rd Q only with reinstatement to full pay for the 4th Q. If oil heads below $100 bbl by November, Barger will probably give the 5% back in bonus'.

Cash is king, and these small airlines don't have any outlets to bring more cash to the airline other than on the expense side of the P&L.

imp: ​

 

[johnsonrod]

I hear Barger is also pitching in by cleaning the office between shifts...