Jetblue Loses 42.4 Mil

[Boeingman]

In the dictionary you might find this quote when you look up irony.

A pilot for an LCC blaming the "competition" for not being able to raise fares.

Interesting.

FJ

I think it is under hypocrisy as well.

 

[GVFlyer]

Jblu

Other than that it should be a good day to buy. If they get into the low $11's or better, I will be there with a small investment.


http://www.primezone.com/newsroom/news.html?d=93277

With a P/E of 93.10 and an Earnings Per Share of 0.14, I don't think I'd be buying this one. However, I think you could still make money shorting the stock. I started shorting it at at $29.00 and have done well.

GV

 

[Lampshade]

I wonder if ATA would really be better off with America West.

What the heck are you talking about?

 

[T45Flyer]

Off topic somewhat, and DS doesn't work for SW anyway, but here goes.

SW will always hedge fuel if they have the resources (ie cash) to do so and supplies remain tight and uncertain. They won't run out.

If they are unable to maintain their pricing advantage with hedges, they will actually raise their fares! Gasp! They will do what it takes to make a profit regardless of the price of fuel, that is the way they run their business. Fuel hedges are a key, yet small part of their business success. They don't just magically appear, they are bought and managed by very smart managers who just happen to make a profit year after year. Having cash on hand opens up all kinds of doors.

Ok, sorry for the rant.

Back to bashing DS.

FJ

Falconjet,
A well put together post. SWA's fuel hedges are one tool in a bag of tricks to maintain an advantage in our business model. SWA is not a one trick hedge pony as some people like to simplify on here. No one mailed Southwest a bag of fuel hedges and said "good luck", it was smart long term stability planning 5-7 years ago that worked out very well.

By the way, JetBlue was smart enough to hedge fuel in Q4 2005 also. It wasnt enough to offset a loss, but smart planning on their managment part also.

I have had a few buddies at Capt upgrade here at SWA lately that have talked to Gary Kelly. He is very proud of our hedging product and has stated that we have been squeezing the competition because of our cost advantage and will continue to do so in the near future. He also stated that these $1-$3 dollar price increases should be able to cover any loss of hedges we will have this year. We just saw that price increase a few days ago.

Hedges will not run out. They will decrease in benefit over time if fuel stays at $65-70 BBL. Southwest will continue hedging beyond 2009.

 

[FlyBoeingJets]

Originally Posted by FlyBoeingJets
I wonder if ATA would really be better off with America West

What the heck are you talking about?

I'm assuming you mean, "Why is that on a JetBlue thread?" Point taken, just ramblings on my part. You can disregard at any time and move on to the next post.

If you really mean, "What are talking about?", well, I suppose I'm more interested in and aware of the relationships between the LCCs than you. If you think ATA, SWA and America West have nothing to do with JetBlue's future, you will be surprised at some point.

 

[vetrider]

We did until fuel tripled, genius. Then competition ensured we couldn't raise fares fast enough to keep up. Good thing we have people like you around to show how it ought to be done.

I thought a while back he was wishing for $80 oil?

 

[Boeingman]

I thought a while back he was wishing for $80 oil?

He sure was and as my memory serves me he was not afraid of it either. I guess the numbers are telling a different story.The increase in casm trend will only get worse as the airline grows.

I wonder what $80/bbl oil would have really down to the numbers.

 

[skykid]

Then competition ensured we couldn't raise fares fast enough to keep up.

Now I have seen it all on this message board.

 

[D-Bo]

In the dictionary you might find this quote when you look up irony.

A pilot for an LCC blaming the "competition" for not being able to raise fares.

Interesting.

FJ

LOL. EXACTLY!!!!!!! Dead on. Forkin hillarious.

 

[MCDU]

I still do not get on why JB got 190's and started flying out of EWR and LGA. Something they said they would never do.

Could luck to all the guys at JetBlue. You have a great product.

Marty

 

[pilotyip]

G100 SWA does, Air Tran does, so everyone has to match them

 

[Dave Benjamin]

With a P/E of 93.10 and an Earnings Per Share of 0.14, I don't think I'd be buying this one. However, I think you could still make money shorting the stock. I started shorting it at at $29.00 and have done well.

GV

Anything with a P/E of 93.10 would cause me to run and not look back. The E-190's aren't working out quite as well as expected and Wal-Mart wages for the E-190 pilots isn't going to help matters much with oil headed north of $70/ barrel. Shorting the stock might not be too bad an idea. A few more quarters and the investors may be dumping their shares big time. Could go down to 5 bucks before (if) it recovers.

 

[vetrider]

I guess the media is gonna have to stop stroking and start bashing.

 

[SWA/FO]

o.k. how about Madrid, Spain??

That what the legacy airlines are for!! Last time I check JB doesn't go there either.

Fins Up = A$$.

 

[lowecur]

I would buy shares a little later. I'm thinking in the summer or beyond. More articles critical of their losses will come out at the Motley fool and other business oriented periodicals. I think you're right. I'll hold off, particulary given the poor forward look by Neeleman. But I think early to middle spring is the best bet. If you wait till the 2nd/3rd Q results, that will probably give the stock a boost.

I think the new "competitive" environment has not be properly researched. The pressure provided by the new USAir and UAL are going to push shares even lower. Not to mention oil prices. Virgin USA articles will also cause uncertainty. I think these will affect all the LCCs this year as these two look to mark their territory.

The positives like SWA raising prices and legacy fleet reductions may help, but it won't help EMB-190 fleet revenue. The RJ flying airlines will be in a full tilt fare war against it. Could be. DL is trying just that against AAI on selected thin routes. It certainly will not cost them much to try and find out. It will make sense until the fleet size on the 190s just overwelms the RJs. The BELF and cabin amenities on the 190 will eventually win out, but it will be a costly battle for those involved.

Overall, I'm looking for lackluster stock performance until later in '06. Me too.

Frontier is also feeling the pinch right now.

No one will be on sure footing until we get more consolidation of capacity with mergers or fuel prices go down. I still look for fuel to back off to the middle 50's by spring. My original forecast is out the window with the problems that Iran/Nigeria are presenting.

 

[Frank Lorenzo]

What's this? JBLU in trouble?

Me thinks me gonna buy me an airline!

 

[32LT10]

What's this? JBLU in trouble?

Me thinks me gonna buy me an airline!

Youv'e got custom made employees that will fit your needs and wishes. The type of folks you really like.

 

[Frank Lorenzo]

Youv'e got custom made employees that will fit your needs and wishes. The type of folks you really like.

I know! That's why me likey me likey!!

"We've got profit sharing." Ha ha! I can't believe they fell for that one! That's the oldest one in the book! Maybe I can "share" the LOSSES and deduct those from their pay checks.

I can't wait till I take over! They'll be bragging to their other pilot buddies about the beachfront property I'm promising them in Florida!

Suckers.

I'll have to buy another LCC or two and watch them fight over seniority. It will be whipsaw central. I can't wait to sit back and watch my little puppets dance while I pack my golden parachute!

 

[Dizel8]

With the mess you all are making, I think stocking up on Kleenex is in order and don't let your wifey catch you!

 

[starvingredtail]

Yeah Frank,
What D8 said.
SRT

 

[Hvy]

You got Southwest Airlines in SAT! Anywhere you want to go, baby!!

Really? Great...what is the fare from San Fran to Hong Kong? I would like to fly SWA there next month.

 

[SWA/FO]

Really? Great...what is the fare from San Fran to Hong Kong? I would like to fly SWA there next month.

You guys are funny. Thats what the legacy carriers are for. If we did it, it would be $59.00 each way before taxes. Yes, we would make money on that route.

 

[Occam's Razor]

Dogpile!

It's not right to kick a man when he's down, but it's often entertaining.

Those JetBlue guys who were kicking the legacy drivers ("dinosaurs!", they cried) are learning the inexorable truth of the proverb, "The sun don't shine on the same dog all the time."

Just last year I tolerated a JetBlue jumpseater on my aircraft that used a "Rules of the Old West" analogy on me. He explained that the legacy carriers (yes, I was flying him home in the jumpseat of my legacy aircraft) were like lame horses. You couldn't save 'em...so they should be shot...put out of their misery. That way their pilots could start looking for a new horse.

I wonder if he's got his Winchester out?

If nothing else, this thread has yielded one of the all-time greatest quotes in aviation history:

"Then competition ensured we couldn't raise fares fast enough to keep up."

 

[81Horse]

He explained that the legacy carriers (yes, I was flying him home in the jumpseat of my legacy aircraft) were like lame horses. You couldn't save 'em...so they should be shot...put out of their misery. That way their pilots could start looking for a new horse.

And they wonder why they get turned down for the occasional jumpseat?

 

[Vladimir Lenin]

stick a fork in 'em, they're done :crying:

 

[Blue Dude]

I think it is under hypocrisy as well.

Thick with irony? Oh, yeah. But hypocrisy, no. I am well aware that having an LCC unable to raise fares fast enough to cover rapidly rising costs is a real chuckler on this board. But it's not hypocritical to name competition as the culprit.

LCC's almost by definition charge fares less than the competition, but above their own costs. That is how competition is supposed to work. What is hypocritical is other carriers charging fares far below their own costs to crush another carrier, then complaining that their revenues are off. JetBlue has not done this, indeed has gone along with just about every fare increase offered. But costs beyond their control zoomed beyond all forecasts and they couldn't raise fares fast enough to keep pace. That's nobody's "fault", since it's easier to cut fares than raise them (thanks, NWA!). And yeah, it makes for one of FI.com's better sound bites. You're welcome.

 

[Blue Dude]

Just last year I tolerated a JetBlue jumpseater on my aircraft that used a "Rules of the Old West" analogy on me. He explained that the legacy carriers (yes, I was flying him home in the jumpseat of my legacy aircraft) were like lame horses. You couldn't save 'em...so they should be shot...put out of their misery. That way their pilots could start looking for a new horse.

I wouldn't have put up with it. Kick his arrogant a$$ off. If you see him again, give him a good kick in the shins for all the rest of us who are ashamed of this kind of thing. Then make him take the next flight. Thanks.

 

[Occam's Razor]

Quote:
o.k. how about Madrid, Spain??

That what the legacy airlines are for!! Last time I check JB doesn't go there either.

Um...Ok. How about Minneapolis? Does SWA fly to MSP?

 

[AKAAB]

In your dreams!

"For the full year 2005, net loss totaled $20.3 million, or a $0.13 loss per share."

"For the full year 2005, operating income was $47.6 million, resulting in an operating margin of 2.8%. Excluding the impact of the unusual items, operating margin for the full year 2005 would have been 3.6%."

"For the full year, operating revenues totaled $1.70 billion, representing growth of 34.5% over operating revenues of $1.26 billion for the full year 2004."

Take your shots at JetBlue while you can. Profit sharing will be back soon enough. In the mean time consider we brought in $1.7 billion in revenue, my paycheck never bounced, and my pension is intact (401k).

Management recognizes we need to make some changes to the model to return to profitability. Those changes are already being implemented; unlike other carriers that just stay the course hoping for a sudden windfall to solve all of the problems.

 

[Andy]

Just last year I tolerated a JetBlue jumpseater on my aircraft that used a "Rules of the Old West" analogy on me. He explained that the legacy carriers (yes, I was flying him home in the jumpseat of my legacy aircraft) were like lame horses. You couldn't save 'em...so they should be shot...put out of their misery. That way their pilots could start looking for a new horse.

The 5% rule is alive and well at every airline.
I guess this guy didn't understand how airline payscales work. With a startup, everyone's on year one pay. As your workforce gains years of seniority, your percentage of labor costs increases. All other things constant, JetBlue's labor costs will continue to be an increasing percentage of CASM. Just like the legacies. Imagine the salary costs at old USAirways in the late 90s when they hadn't hired pilots for almost a decade.

Anyway, I think now that FLYI is out of the picture, JBLU's yields (especially east coast) should show a marked improvement. FLYI's fares were ludicrously low.