jetBlue Financial Question

[1-tacan-rule]

This question is coming from a JB wannabee who is simply trying to gather info about a company in the event that he is one day offered a job. It is NOT meant to be flamebait, or to drudge up the same 'ol BS that seems to get people riled up.

What I know / think I know:

a) JB hasn't "fired a bunch of captains who came in to renegotiate their contracts" as a UAL friend of mine informed me. JB buds laugh and say that they curiously haven't gained seniority, so where did those guys go.

b) JB does "pay for it's planes." If they didn't, then everyone on these boards should try like heck to work for them because they have the smartest leadership in the history of aviation: they figured out how to get planes for free.

c) Certainly (and logically) costs will increase with a more mature workforce (longevity pay on the scales).

Questions (based on rumors that pilots from other airlines have told me):

a) Airbus pays for all the pilot training
b) Airbus pays for maintenance as long as jb keeps buying jets
c) NYC subsidizes the gates/terminals at JFK
d) NYC subsidizes fuel for jb

Question (based on my research):

On the SEC website below, from last qtrs report, look at one of the last tables in the report: "Payments Due." They go from approx $360M to over $1.1B between 2004 and 2005. Why is that?


http://www.sec.gov/Archives/edgar/data/1158463/000110465904032878/a04-11378_310q.htm#Item1_FinancialStatements
Again, this is not intended to be flamebait. I know there has been some discussion about some of these topics on other threads, but I was hoping to encapsulate all the issues in one thread once and for all...and also clear up the SEC report issue.

Thanks for all the help from the Blue folks.

1-T-R

 

[Blue Dude]

Good questions. Thanks for using your head before posting more questionable stuff. You wouldn't believe the kind of crap that goes around.

Anyway.

a) Airbus pays for some training on a per plane basis. In other words, JB gets a training credit of a certain amount for each plane it buys. I don't know how that will work in a few months when JB is no longer training at the Airbus Training Center in Miami. Airbus certainly doesn't pay for all pilot training.

b) This is similar. Airbus warrants each plane for a certain number of years. But it's not covered stem to stern indefinitely, or even for basic wear and tear. Even now the earlest airplanes are coming off of warranty, and JB is fully responsible for their maintenance. The vast majority are still covered though.

c,d) Dunno. Maybe. Airport authorities are always cutting deals with airlines.

And the payments? Easy mistake to make. Your link was for the 3Q, correct? The $360M was for the remainder of the year (the 4th Q). The $1.1B figure was for the full year 2005. The payments aren't actually increasing year over year. They will increase starting in 2006, since the aircraft delivery rate will double with the E-190's coming on board.

Hope this helps.

 

[Flash]

Blue Dude,


1 more question if you don't mind.

Why does this 5 yr contract subject keep making the rounds, is there such a thing or is it some type of urban legend?

If there is, could you please explain what the deal is?

Thank You

 

[1-tacan-rule]

Thanks BlueDude

Bigtime rookie mistake by me in reading the financials. Thanks for clearing that and other issues up.

 

[Blue Dude]

There is such a thing, but it's a nonevent. The contracts are for five year terms, but they renew automatically. In effect, the contracts are indefinite.

Now if you're a cynic, you could look at it and say that the renewal process ensures that the pilots will stay in line. After all, you could be let go for any reason or no reason at the end of that period. There is some truth to this, but to be fair, not one pilot has been let go this way. And if it happens, I think it's a fair assumption that the pilots will organize quickly enough that it doesn't happen again. And they know it, so I doubt that you'll ever see it happen.

So why have a limited term contract at all? The best answer I can come up with is that in some ways it protects the pilot as well. Something that isn't nearly as often discussed is that the contract guarantees your pay for the life of the contract. That means that you draw a check regardless of the circumstances, industry downturn, whatever. I guess you could call it furlough protection of a sort, but one in which you're paid even if you're laid off. Among other things, this ensures that JB will only hire the pilots it needs, and deliberately refrains from cyclical boom or bust behavior. All those "boom" pilots are going to be paid their guarantees in a "bust" so they only hire what they're definitely going to need. It's a huge financial disincentive against hiring like mad right up until the end of a boom, then furloughing within months. Who wants to go through that?

 

[holdon]

In addition, it's something completely new. And JetBlue is all about New. It not only guarantees you a paycheck for the term but it also eliminates "probation", I've also heard that "unless you really step on your crank" (quote from the guy who said it) they are not going to fire anyone.

Another good example of Jetblues culture is this....When in the "Safe Room" during the interview someone asked "Why don't you ask pilots to resign seniority numbers from other carriers?" Answer "That's the craziest thing I've ever heard of and doesn't fit our model Here. Why in the world, If you didn't like it hear, would I want to force you into staying. Besides, I'm willing to bet when you get here your going to like it!"

 

[Bill Nelson]

Apparently they are paying for something! JB will post a loss next week. The investors are seeing through the smoke screen as well. JB stock is down more than 50% in the past 14 months. (High near $50 and in the $19 range today)

All airline stocks are suffering, but only the chapter 11 folks are doing worse than JB.

Hopefully you fellas exercised ALL of your options in 03.

BTW, now is a great time to have your union hit the company up for a ton of options then if your stock ever is worth anything again you can make a killing and by then you will have enough flight time to move up to a regional carrier. Good luck

 

[dlredline]

Still bitter 'bout that interview, huh?

 

[English]

Wow, and I thought this thread might just actually avoid the flamers.

It was refreshing to read some posts that didn't bash jetBlue, for once.

 

[klhoard]

What is the "Safe Room"??
.
.
.

 

[IB6 UB9]

Wow, and I thought this thread might just actually avoid the flamers.

It was refreshing to read some posts that didn't bash jetBlue, for once.

It made it to 7 posts this time.

 

[SWA/FO]

What union?

 

[FlyBoeingJets]

What is the "Safe Room"??
.
.
.

That depends on where you live.

Northern version: You know, if someone breaks into your house so you can hold out until the thieves go away. JetBlue must need one because they operate out of New York. Maybe its to hide out from management. Jodie Foster starred in a movie about one.


Southern version: The safe room is where you keep all the guns so you can shoot the thieves.

 

[walden]

Just saw on CNN that JetBlue and America West outsource their maintenance to El Salvador. Can anyone with some knowledge and industry experience tell me what this might mean for the industry as a whole? (oversight, expenses, public perception, et al)
Thanks!

 

[dlredline]

What is the "Safe Room"??
.
.
.

In regards to JetBlue, this is the room all the pilot applicants wait in prior to being called out for their interview. The company President and several Chief Pilots "hold court" and answer any question on the minds of the applicants.

 

[1-tacan-rule]

Outsourcing Maintenance

Walden,

first of all, as the article stated, since those maintenance facilities are monitored and inspected by not only the FAA but also the European and SAmercian host company equivalents, the argument can be made that they are operating safer and more standard than some facilities in the U.S.

Also, please remember that jB and AW are not the only US carriers outsourcing mx overseas. They all do it.

1TR

 

[wndshr]

Apparently they are paying for something! JB will post a loss next week. The investors are seeing through the smoke screen as well. JB stock is down more than 50% in the past 14 months. (High near $50 and in the $19 range today)



can this billy nelson guy just imagine.....all of these jetblue pilots buying stock through a company purchase plan at 15% off market....accumulating week after week in an account that keeps growing....i think it is going to sting for mr. bill nelson when all these jb pilots can afford to retire before age 50!

simple success formula: buy LOW on BAD news...sell HIGH on GOOD news! some people just can see very far!!

 

[jbucpt]

Apparently they are paying for something! JB will post a loss next week. The investors are seeing through the smoke screen as well. JB stock is down more than 50% in the past 14 months. (High near $50 and in the $19 range today)

All airline stocks are suffering, but only the chapter 11 folks are doing worse than JB.

Hopefully you fellas exercised ALL of your options in 03.

BTW, now is a great time to have your union hit the company up for a ton of options then if your stock ever is worth anything again you can make a killing and by then you will have enough flight time to move up to a regional carrier. Good luck

first of all, after reading the great "Spin Master" a.ka. general lee's dissertation defining what an airline loss is, it will not be a "real" loss, but a "paper" loss. therefore, realistically, there will be no loss.

having a union here would be a great way to spend 2% of my lcc salary ( oh, thats right, i now make more than a United airlines A320 captain) im sure their happy with their ALPA investment.......

"We don't want to kill the golden goose; we just want to choke it by the neck until it gives us every last egg it has"

 

[Skank]

This is worth a second reading. Rarely does one get to read such insightful analysis.

Apparently they are paying for something! JB will post a loss next week. The investors are seeing through the smoke screen as well. JB stock is down more than 50% in the past 14 months. (High near $50 and in the $19 range today)

All airline stocks are suffering, but only the chapter 11 folks are doing worse than JB.

Hopefully you fellas exercised ALL of your options in 03.

BTW, now is a great time to have your union hit the company up for a ton of options then if your stock ever is worth anything again you can make a killing and by then you will have enough flight time to move up to a regional carrier. Good luck

 

[skykid]

jbucpt, I'd wait till your airline has been around another 75 years or so before getting that cocky. Things change quickly.