there expanding like crazy, its kinda hard to make a profit when you have to do $49 intro fares, once they solidify in the new places and start bringing in the crowds at regular price theyll be profitable again. There still in a better position to succeed than alot of others with such low CASM's
"Dear Crewmembers –
Today we will report First Quarter 2006 financial and operating results. The press release, included below, is being shared with you first as we have always done in the past. As forecasted, we will report a $32 million net loss for the quarter, a result that is both disappointing and unacceptable. It may be tempting to blame the high cost of fuel on our current financial performance, but at the same time the current economic pressures have served to highlight some areas of opportunity within our control that we can improve upon immediately and also for the long term. The fact of the matter is we have to be able to operate our airline profitability even in today’s “new normal” of high fuel costs.
To that end, we have developed and begun implementing a “Return to Profitability” plan as part of our Flight Plan 2006 that focuses on a combination of right-sizing capacity, optimizing revenues sources, introducing new revenue initiatives and implementing significant cost reductions. In order to be successful, we need everyone’s help and we know you are ready to do what it takes to help our airline succeed.
A major component of our Return to Profitability plan is to right-size our capacity. To this end, we intend to sell at least two, and possibly up to five, A320 aircraft in revenue service today. Even with these sales, we expect to grow our airline between 20-22% this year over last, including launching service to more than 10 new BlueCities. Clearly, our story is still a growth story, albeit at a slightly slower pace. We will reduce long-haul flying in the non-peak season and shift more of our overall flying to shorter-haul markets, utilizing our E190 fleet in addition to our A320 fleet, to boost our revenue. Shorter haul flying uses less fuel than long-haul flights and there are many new market opportunities for us to enter with fares up to 60% lower than current competitors’ rates.
Longer term, we have deferred 12 A320 deliveries originally scheduled to enter service between 2007-2009. Those aircraft are now scheduled to enter our fleet in 2011 and 2012. We have also adjusted A320 options. These actions allow us to remain well-positioned to take advantage of market opportunities now and into the foreseeable future.
Another major component of our Return to Profitability plan is to improve our revenue performance. As you know, we do not have a demand problem – Customers love to fly JetBlue. The bottom line is that we need a higher average fare, and to achieve this, we will improve the revenue mix on our flights. We expect this will result in a lower, more reasonable load factor, which will reduce stress on our operation and help us improve reliability.
In order to keep our regular fares low, we will begin charging for some premium services. In support of this initiative, you will hear more about specific initiatives soon, such as our new $25 confirmed same-day flight change program and our new unaccompanied minor fee, also $25. Recently, we also tightened our refund policies as we are an airline that offers non-refundable tickets. These moves, and more, help us provide more consistent service to our Customers and the fees help us cover the cost of providing them across our route network.
And finally, the last major component of our Return to Profitability plan is to reduce costs. We are a low cost airline – in a category of our own as a low-cost carrier with frills like inflight entertainment and all leather seats. However, we have identified areas of opportunities to reduce costs even further, which will ultimately allow us to be more competitive and further offset the high cost of fuel in today’s environment. Fuel is our largest line-item cost and we can do better at conserving and improving fuel efficiency, such as through single-engine taxi techniques, the use of ground power units and finding ways to remove excess weight from the aircraft. Our second largest line-item expense is labor. We will look for ways to improve efficiencies throughout the company such as through the BlueTurn rollout and the further use of technology to streamline the Customer experience. In addition, we plan to slow the pace of adding non-operational positions and departmental leadership will now have to justify the need to backfill replacements or add new positions through the end of the year.
There will be many more aspects of our Return to Profitability plan, not just designed to get us back to profitability in the short-term, but to also reinforce mindsets and instill new habits that will keep us successful over the long term. We have to believe that profitability is as important as our brand and our culture, and we have to start now and carry this behavior into the future. This being the case, we can only succeed if we work together toward these goals and based on the feedback we hear from many of you, we know we are ready to take this challenge head-on.
Thank you for all you do to support our airline.
With warmest regards –
David and Dave