Why jetBlue will rule the world

[Ben Dover]

General & Bill,
You make some interesting points. I suppose time will tell who is right.

I make a hobby of studying business strategy and am obviously enamored by the jetBlue approach. What never ceases to amaze me about the airline industry is the perpetual conflict between labor and management. Everyone seems to accept this behavior as standard practice. Oddly, there is rarely a discussion of the cost associated with such strife.

I'm glad for someone like Neeleman who's been able to attract smart people that can work together, and don't buy into the fallacy that poor labor relations are just part of the cost of doing business.

Will jetBlue take over the world? Probably not. But their success is much more sure than the likes of the traditional airline.

B. Dover

 

[Midnight Mike]

Rule the world? Jetblue is a great company, but until the employees of Jetblue get their passport and fly their first international trip, the world is wayyyyyyyy in your future.

 

[typhoonpilot]

Mike:

Emily likes your flying pigs.

Jetblue flying into Peshawar, Mumbai, and Dhaka sure would be interesting. Still it's a good company and they will gain a much bigger portion of the U.S. market.

Typhoonpilot

 

[dgs]

But wait, in a couple years the company really starts to profit, and then the employees start asking themselves, "hey wait a second, I would like a bigger raise or share more of the profitability..."

Two words for you GL -- "profit sharing!" When the company really starts to profit (unlike the profits that already exceed EVERY other airline on a percentage basis), our paychecks go up automatically as the profit sharing checks get better. It's also all tax free, so the effect is even better for your personal bottom line and future financial security. Since it's across the company, no one group gains an advantage over another that starts the death spiral of increasing wages.

OK, I have two other words for you -- "brilliant management!" They are the ones who figured this stuff out. Works for me.

 

[dgs]

International already

.. until the employees of Jetblue get their passport and fly their first international trip, the world is wayyyyyyyy in your future.

Sorry to disappoint you Mike, but that was already done last summer. We have 3 a day going to San Juan and will begin a 4th next month. Technically, international RVSM procedures. We all have our passports (but only in case we divert).

Now if you mean "first trip across the pond," well then I agree with you.

 

[FlyDeltasJets]

I don't believe that it is tax free. It might be in a tax deferred account, but when you get the money, you will be paying taxes on it.

 

[higherflyer]

Two words for you GL -- "profit sharing!" It's also all tax free, so the effect is even better for your personal bottom line and future financial security.

How do you figure that? Tax-free?! I would have loved to have received tax-tree profit sharing. Never happened (I always paid lots of tax on my profit sharing) and never will as long as the IRS is around.

 

[active_herk]

Two words for you GL -- "profit sharing!" When the company really starts to profit (unlike the profits that already exceed EVERY other airline on a percentage basis), our paychecks go up automatically as the profit sharing checks get better.

I hope you are right for your sake when it comes to the profit sharing, but I wouldn't put all your eggs in that basket. At FedEx for instance, we have a profit sharing plan in place which effects all employee groups (except pilots). To be honest with you, I'm glad we aren't included in the profit sharing umbrella. Why? Because I find that a company can always hide the "profits" as they see fit. As an example, the profit sharing plan at FedEx has been suspended for well over a year. I highly doubt that the company is no longer making profits, they have just found a way to hide them. Our Osaka, Japan to Memphis MD-11 run generates nearly six million dollars in revenue every time the plane takes off! I also find it interesting that while this profit sharing plan has been suspended, the higher ups in management continue to get huge bonuses in addition to their salaries. Could it be from all the savings they are generating by not paying out profit sharing?

The pilots, on the other hand, have their salaries determined solely based on the contract. This is very importanat since it dictates what we will make whether or not the company is "profitable". That doesn't mean I don't want the company to be profitable, I just don't want my salary based on that fact, since as I have said before the company will find a way to hide the profit. I guess the key is in trusting your management to do the right thing. It sounds like for the time being you have a pretty good management in place. Hopefully when your management changes the same will be true.

As an aside (and I may be completely off base here), I don't see airlines making the huge returns that they have in the past with the incredible growth rates we have seen unless there is some major unforseen in our future. It is true that many Southwest pilots made a very nice return on their Southwest stock over the course of time, but that return is probably not sustainable, and will probably not be seen in another major airline. History has shown that with every major rise in the stock market, it has always been a different sector of industry which sees the biggest returns. I think airlines have already seen their best runups, and won't see returns of that magnitude again (speculation again). For you Jetblue pilots, I do hope the best for you, but don't be surprised if some of these predictions come to pass. Best of luck to us all in this scary economic time for the airlines!

 

[dgs]

Tax free vs. tax deferred

When I said tax free, I meant that it was going into our 401(k) tax free. That does add directly to my net worth without the influence of the IRS. I may have to pay taxes as I take the money out of the 401(k) for my retirement, but like my financial advisor said, "These are not bad problems to have."

As far as management changes go, David Neeleman and I are the same age. I hope he sticks around until he's 60. I think he will because this airline is his life dream.

David actually prides himself on the amount of profit sharing he can return to crewmembers every year. To meet him is to know that he is concerned about the people and their prosperity. I trust him and have faith that he'll do right by us. They have already articulated that they will give everybody a raise when they think the time is right. Meanwhile, the extra profits earn us a profit sharing bonus.

Meanwhile, if anything should happen, all that money is in my personal 401(k) and not some phantom retirement fund.

 

[dav8or]

I've often thought of becoming a golf club!

GP

Do you do drugs Danny?

Everyday

So whats the problem?