True or False > JetBlue Article

[C601]

Can't be good long term for JB if True....


http://www.newyorkbusiness.com/news.cms?id=13154


"However, Mr. McAdoo suggested problems at JetBlue might stem from broader issues at the carrier. He said 17 of the last 20 markets the airline added have not been profitable, even with reduced fuel prices"

 

[wndshr]

Can't be good long term for JB if True....


http://www.newyorkbusiness.com/news.cms?id=13154


"However, Mr. McAdoo suggested problems at JetBlue might stem from broader issues at the carrier. He said 17 of the last 20 markets the airline added have not been profitable, even with reduced fuel prices"

there sure dont seem to be many... if any.... good, long term futures in the airline bizniz these days

 

[lowecur]

I believe it, afterall it came from the former CFO for People's Express? I don't think anyone would have a better handle on hyper-growth than McAdoo.

I think Jetblue has been keenly aware of the small to non-existant margins on many of these transcon routes for some time. A series of events quickly turned these routes into overnight losers. What is even more apparent to me is Neeleman's overconfidence that B6 could do no wrong. He actually felt that his product was so good that the airline could thrive on any route they chose. It's amazing how quickly you can be humbled in this business from many different fronts. Fuel, unpredictable Jetstream, an aircraft not well suited for transcons, poor route planning, lousy yield mgt, and a management team that has been on cruise control.

Sometimes humility is a great teacher. I personally believe they will defer deliveries on the 320 in the next few years to slow growth down. They also need to wake up to the high cost of doing transcon business in markets with only a few flts. Sacramento, San Diego, Seattle, Portland, San Jose, Salt Lake City, Denver, and Phoenix have all been a way to get the desired 12-14 hour utilization from the fleet, but the yields on coach fares are non-existant unless you start offering fewer discount buckets. They also need to start connecting the dots in many of these western cities to bump the RASM up. There is a reason WN does a minimum of 10 to 12 flts per day per city. Cost to maintain employees in these cities with only a few flts is expensive and unproductive.

Jetblue can no longer count on a liquidation of a legacy in the next 5 years to counteract this hyper-growth. They need to worry about their own liquidation in the next 5 years, as Chapt 11 would not be an option for an airline with an expense-side income statement already cut to the bone.

imp: