Who will merge/partner with JetBlue?

[Bob_Sacamano]

FBJ,

I interviewed with jetBlue on September 20th. While there, I had the opportunity to speak with jetBlue's President David Barger one-on-one for about 5 minutes. Since David Neeleman had been with Morris Air when they were purchased by Southwest, I asked him that exact question. He replied that no-way, no-how, 100% absolutely never, would jetBlue ever buy or merge with another airline. He said they wouldn't be able to preserve the JB corporate culture that way, and they feel that 100% of jetBlue's success has been with hiring the right people. So, I'd say don't waste your time concocting merger scenarios.
Good Luck,
Bob

This may not happen for awhile but I think it's inevitable. Neeleman has done deals before and I think he will do it again when times get tough.


I think JetBlue and Airtran make the most sense for a merger with routes and compensation looking complimentary. But the fleets don't mesh well, IMHO. If it is just a partnership it would work well.

JetBlue--Alaska would be o.k. too. Could be merger. Would be harder to integrate. Not best match. Good match for just a partnership.

JetBlue--SWA. No way. Anti-trust and control issues.

JetBlue--Frontier. I wonder. I don't see much gain for the cost of this merger/partnersip.

What do I mean by a partnership? I don't exactly know. Something more than a codeshare. Something where there is a financial link. World bought North American and they are keeping the companies separate with one owner.

Then there is the possibility JetBlue could use bank money to buy NWA or DAL to get them out of BK. Or the other way around at a later date. Don't laugh, could happen. I think the DAL idea is more doable than the NWA. Both long shots.

 

[typhoonpilot]

I cannot see jetBlue codesharing anytime soon. They are concerned with quality and they are not going to let another company they have no control over tarnish there products image.

Don't kid yourself with the narrow view of U.S. airlines. There are many players in the international arena with a far superior product. JB would do well to codeshare with one or two that serve JFK.

TP

 

[Skank]

I answered my own question with the help of a google search. Acccelerated vesting does indeed remove the liability of stock options for tax purposes. The split, who knows?

 

[typhoonpilot]

FBJ,

I interviewed with jetBlue on September 20th. While there, I had the opportunity to speak with jetBlue's President David Barger one-on-one for about 5 minutes. ....... and they feel that 100% of jetBlue's success has been with hiring the right people. So, I'd say don't waste your time concocting merger scenarios.
Good Luck,
Bob

Hope you get the job offer.

I agree in regards to the merger idea, but code share and/or starting an International widebody operation might be a good move if they did it in the right markets.

In regards to hiring the right people, don't kid yourself. They have the same 10% rule as any outfit. The little RJ dweeb from Comair that interviewed me would be a prime example. He didn't seem to like it when I started out one of my stories with " you remember the summer of 2000 when the Port Authority let all the little airplanes start flying to LaGuardia and it was total gridlock" :laugh: I must have insulted his manhood as he was probably one of those little airplane drivers. Oh well, Joss, as the Chinese say. I'm in a much better place now.

I'll pine over my choice of stories tomorrow as I'm sitting in First Class eating caviar, drinking Dom Perignon, and choosing from one of five hundred on demand entertainment channels on my personal 19 inch monitor while returning to the States for some R&R.

Yeah, you're right JetBlue is a much better product

TP

 

[zkmayo]

I answered my own question with the help of a google search. Acccelerated vesting does indeed remove the liability of stock options for tax purposes. The split, who knows?

I think the split may be an attempt to get the stock price up(of course itll go down with the split itself) and create the sense of more value. The split would lower the P/E ratio and perhaps make the stock more attractive to some. With the accelerated stock options, it saves them tax $ of like $70 mil over the next 8 years although theyll have to pay a $9 mil charge this year. My best guess, Im not a financial guru.

When you movin' back east?

 

[KC-10 Driver]

I don't think that anyone here said that JetBlue has the best product in the world, or that JetBlue has better people than any other airline.

I think the point is that JetBlue's product and hiring practices and culture work, for whatever reason. We do not want to do anything to risk changing that. That is the point behind merger and code-share aversion.

typhoon,

Enjoy your flight back to the States -- I've been able to enjoy the same type of service on many occasions. Definitely nice, but different from what you'll get on JetBlue.

And, yes, the 10% rule does also apply at JetBlue (except maybe it's the 5%, or 7.5% rule!).

 

[bluejuice787]

The stock split was directly related to the option charge assumed going forward. By lowering the stock price the options that are currently being issued are of lesser value and the company will take less of a tax hit.

 

[Giggity]

Hope you get the job offer.

Oh well, Joss, as the Chinese say. I'm in a much better place now.

I'll pine over my choice of stories tomorrow as I'm sitting in First Class eating caviar, drinking Dom Perignon, and choosing from one of five hundred on demand entertainment channels on my personal 19 inch monitor while returning to the States for some R&R.

Yeah, you're right JetBlue is a much better product

TP

Women love me....Men want to be me. If I wasn't such a fabulous pilot, I could be a male supermodel. When I smile, a little flash of light "pings" off of my teeth...... and heads turn. James Bond has nothing on me. I should have my own theme music when I walk.

 

[CUZ]

I sincerely believe also that D&D dont want to acquire, or be acquired by any other carriers. Unfortunately, there is this little phenomenon known as a Hostile Takeover, whereas someone with lots of green stuff says Well pay your shareholders double, triple, quadruple, etc etc the stock price of the company to buy outright. The CEO of an organization has the moral obligation to present these offers to the Board Of Directors. From their, the institutional investors drive the wagon. Hope it never happens. My 2$ worth.

 

[Clyde]

It seems like most people start an airline for one purpose: to make a lot of money and not because they enjoy running an airline.

Just like any other business, money talks, and when push comes to shove at any carrier, the dollar becomes the main objective. Especially when the executives and shareholders can leave with a lot more than what they came in with.

 

[Blue Dude]

Unfortunately, there is this little phenomenon known as a Hostile Takeover, whereas someone with lots of green stuff says Well pay your shareholders double, triple, quadruple, etc etc the stock price of the company to buy outright.

A hostile takeover whereby someone pays JetBlue shareholders the equivalent of $4 billion (double), $6 billion (triple), etc., merely to acquire an airline with 100 aircraft? And in the process more or less destroy any chance the airline has to differentiate itself in the marketplace? That would be self-defeating, not to mention financially stupid.

 

[G4G5]

I have too agree.

Not enough unrestricted cash and too high of a debt burden.

Take AA for example: Amr stock has an approximate market cap of $2 billion(if you decided to purchase every share that's what you would have to pay). AMR reported that they had approximately $3.8 billion in free cash. So for a $2 billion acquisition fee you could get $3.8 billion in cash. One problem, AMR has between $15-20 billion in debt depending upon whose numbers you use.

This is the way airline stocks have always been, I can't ever remember a hostile takeover in the airline industry

 

[FlyBoeingJets]

I have too agree.

Not enough unrestricted cash and too high of a debt burden.

Take AA for example: Amr stock has an approximate market cap of $2 billion(if you decided to purchase every share that's what you would have to pay). AMR reported that they had approximately $3.8 billion in free cash. So for a $2 billion acquisition fee you could get $3.8 billion in cash. One problem, AMR has between $15-20 billion in debt depending upon whose numbers you use.

This is the way airline stocks have always been, I can't ever remember a hostile takeover in the airline industry

NWA had a leveraged buyout in 1989. One of the last. I don't think it was hostile though.

 

[Bob_Sacamano]

Oh god, please don't give them any ideas!

God, you just had to say it! A huge majority of the airline management teams out there ARE self-defeating AND financially stupid. I hope they don't read these posts for new ideas and try a hostile takeover of B6! :laugh:

Good Luck,
Bob

A hostile takeover whereby someone pays JetBlue shareholders the equivalent of $4 billion (double), $6 billion (triple), etc., merely to acquire an airline with 100 aircraft? And in the process more or less destroy any chance the airline has to differentiate itself in the marketplace? That would be self-defeating, not to mention financially stupid.

 

[CUZ]

A hostile takeover whereby someone pays JetBlue shareholders the equivalent of $4 billion (double), $6 billion (triple), etc., merely to acquire an airline with 100 aircraft? And in the process more or less destroy any chance the airline has to differentiate itself in the marketplace? That would be self-defeating, not to mention financially stupid.

You are correct blue dude. It would be self-defeating, and extremely financially stupid for anyone to do so. My numbers were ficticious. However, a quick review of history and (some) of the clowns that have run massive 121 carriers into the dirt might imply that there are indeed folks out there that are that self defeating and financially stupid. I'm convinced one does not need a degree in astrophysics to be a 121 manager anymore. My opinion, we have two good ones working for us.