JetBlue vs. SkyWest

[Rogue5]

JetBlue pressured as SkyWest gains

By Mike Maynard, CBS MarketWatch.com
Last Update: 10:14 AM ET June 10, 2003

WASHINGTON (CBS.MW) -- Airline stocks opened mostly higher Tuesday, with investors turning the spotlight on JetBlue Airways and SkyWest.

JetBlue, augmenting its fleet of Airbus A320s, ordered 100 jets from Brazil's Embraer.

Each of the Embraer 190s, now in development, will seat 100 passengers. If the low-cost carrier exercises options on another 100 of the aircraft, the deal would be valued at $6 billion.

The order is consistent with JetBlue's expansion plans. "With a combined Airbus and Embraer fleet, we believe we will be well-positioned to offer a better product to markets of all sizes across the U.S.," said David Neeleman, chief executive, in a statement.

JetBlue's shares lost $1.49, or 4.2 percent, to $33.12 in early action. Embraer's U.S.-listed shares scored a gain of $1.51, or 9 percent, to $18.26.

Meanwhile, SkyWest and United Airlines said they expect to sign an 11-year contract to expand United's regional carrier service.

SkyWest quickly rose more than 5 percent, trading lately at $16.18, up 86 cents. UAL Corp., the bankrupt parent of United, lost 61 cents to $1.24.

 

[Ben Dover]

Once again Neeleman show's his brilliance. I said it about a month ago, JetBlue will rule the world (naturally they will start by ruling the U.S.).

It's almost hilarious to watch as the rest of the industry limps along in survival mode, blaming the economy or 9/11 or labor or govt taxes for their problems. In the mean time Neeleman and company gobble up market share as everyone else wonders what happened.

 

[Skyward]

This sounds a lot like what Braniff did in 1980's, just before they closed the doors. I hope Jet Blue knows what it's doing.

 

[skootertrash]

Why didn't J-Blue just get A-318's? Aren't those just about 100 seats?

 

[vc10]

OEW of an A318 is 26,000 lbs greater than OEW of a EMB-190.

Why drag 13 extra tons of dead weight behind you?

 

[flyn96]

Hey whats the result of this?? Is skywest going to feed for JB?? If so I wonder if these deal is coeincedence or is it the Mormon connection.??? Skywest big in SLC and JB CEO a devoute Mormon??? Just wondering.

 

[Cardinal]

Take a second gander at that press release. Skwyest is not operating the Embraers, nor do they have anything to do with JBLU other than being on the same stock exchange.

 

[Rottweiller]

JetBlue pilots just lower pay

JetBlue Orders up to 200 Jets From Brazil's Embraer
Tuesday June 10, 9:53 am ET
By Susan Carey, Staff Reporter of The Wall Street Journal


CHICAGO -- JetBlue Airways Corp. (NasdaqNM:JBLU - News) , a profitable, three-year-old discount airline that has built its success on low costs and a single fleet type, said Tuesday it placed an order for up to 200 regional jets from Brazilian maker Empresa Brasileira de Aeronautica SA, or Embraer .
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The surprise announcement shows that JetBlue isn't a slave to the strategy of low-fare king Southwest Airlines Co. (NYSE:LUV - News) , which has famously hewed to a single type of plane for three decades. The move by the New York-based start-up also could change the economics of short-hop flying by putting pressure on the commuter affiliates of the major airlines, which now serve many of the smaller routes from the big airlines' hubs with relatively high costs.

JetBlue said it is the launch customer for the Embraer 190, a new 100-seat regional jet model just developed by the Brazilian company, and has placed firm orders for 100 planes and taken options on 100 more. If the options are exercised, the order would have a list price of $6 billion -- although it is thought that JetBlue is getting the planes for much less. Lease financing has been arranged for the first 30 deliveries. The new jets will start entering JetBlue's fleet in 2005 at a rate of about 18 per year and could vault the carrier's total fleet from 42 jets today to 290 by 2011.

"We're basically kicking up our growth," said David Neeleman, JetBlue's founder and chief executive officer.

When JetBlue got off the ground, it said its strategy was to focus on point- to-point service to large cities with high average fares or highly traveled markets that are underserved. And it did that, primarily from New York's Kennedy Airport and more recently from Long Beach, Calif., with a fleet of Airbus A320 jets, which can fly coast to coast with 162 seats in an all-coach layout. But now that the airline has grown, it has picked off some of those heavy routes and plans to start service to more when it takes delivery of the additional 111 A320s it has on firm order.

Mr. Neeleman said that more than a year ago the company started studying midsize domestic markets, which are much more numerous but currently lack meaningful low-fare service. To date, JetBlue has concentrated on routes that can support about 600 passengers a day in each direction. To be able to profitably jump into routes that currently attract just 200 or 400 passengers a day would represent more than 900 new potential markets, Mr. Neeleman said, "a real sweet spot." Many of those smaller routes are served by commuter carriers flying on behalf of the major airlines. Their planes are smaller and the costs to operate are high, so the fares tend to be high.

Mr. Neeleman said that because the Embraer 190s will have 100 seats and will be flown hard by JetBlue pilots paid less than their colleagues who operate A320s, his company should be able to offer lower fares and still turn a profit on the smaller routes.

The cost to fly the Embraer 190 on a 600-mile trip will be only $6 more per seat than the A320, he said. The new planes actually will have wider seats or aisles than JetBlue's A320s, he said, and will provide ample legroom and two-by- two seating. They will carry JetBlue's trademarks, leather seats and DirecTV programming at every seatback. JetBlue hopes to stimulate new traffic on these smaller routes. But the math didn't work "until this plane was developed," he said.

Mr. Neeleman wouldn't say where he plans to deploy the new regional jets, just as the company is coy about destinations for its A320s. But he offered that some of JetBlue's existing smaller routes, such as to cities in upstate New York and to Burlington, Vt., could be in line for four to five Embraer roundtrips a day to New York, instead of two daily Airbus trips. He said there are opportunities in the mid-Atlantic, the Midwest and New England, and also to secondary cities in Florida.

In 1999, before JetBlue began flying, the company said it was considering service to 44 cities from New York. It currently is in only 18, he said. With the Embraers, which can fly 2,100 nautical miles, it is expected JetBlue will more quickly fill in its network by serving some of those cities. They include Charlotte, N.C.; Cleveland; Dallas; Grand Rapids, Mich.; Memphis, Tenn.; Milwaukee; Pittsburgh; and Richmond, Va. Besides pioneering new routes, the Embraers could be used to provide additional daily service on A320 routes.

"It gives us tremendous flexibility," he said. JetBlue, unlike most U.S. airlines, was profitable in 2001, 2002 and in the first quarter of this year. In April it placed a big follow-on order for as many as 115 A320s. Mr. Neeleman said the new airplanes in no way will slow the growth of the A320 fleet.

-By Susan Carey, The Wall Street Journal; 312-750-4134

 

[greyhound]

The regional jet craze is alive and well!!

 

[temcgrew]

Hey whats the result of this?? Is skywest going to feed for JB?? If so I wonder if these deal is coeincedence or is it the Mormon connection.??? Skywest big in SLC and JB CEO a devoute Mormon??? Just wondering

what does that have to do with anything? doesnt' DELTA have a hub in Salt Lake?

by the way i'm Mormon also, but that is not getting me out of on demand charter and in jetBlue's door!