JetBlue in the red - article
02-02-2006 | 02:51 AM
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JetBlue in the red - article
Newsday is a Long Island, NY newspaper
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JetBlue in the red
Discount carrier posts loss, says it won’t make money this year as fuel costs, ‘old’ airlines cut profits
BY TOM INCANTALUPO, Newsday
STAFF WRITER
February 1, 2006, 10:51 PM EST
Reality has set in for JetBlue Airways.
The Forest Hills-based carrier yesterday posted a wider than expected loss for last year's fourth quarter and said it doesn't expect to make a profit this year, either.
The bad news from what has been an industry success story may soon affect the airline's passengers: The company said it is considering raising fares as it deals with spiraling fuel costs and increased competition.
"We are very disappointed in our performance this quarter as we continued to feel the effects of record-high fuel prices and a tough revenue environment, compounded by the impact of Hurricane Wilma and the residual effects of Hurricanes Katrina and Rita," David Neeleman, JetBlue's chairman, chief executive and founder said in a statement.
Neeleman said in a telephone conference with analysts that he planned to raise fares this year. "Our customers will pay us more to fly on JetBlue," he said. "We need to ask for it."
The $42.4 million loss for last year's final quarter was the first since the low-cost, low-fare carrier began offering shares to the public in 2002. Fuel costs were up 90 percent in the quarter over a year earlier.
The loss also illustrates, analysts said, that JetBlue's low-cost advantage over its larger competitors has diminished, as older, "legacy" carriers such as United, American and Delta extract wage and work rule concessions from their own workers and, in the case of United and Delta, use Chapter 11 bankruptcies to further reduce costs and become more competitive.
"We see a situation now where the window of opportunity has, to a large degree, closed," said Robert Mann, a private airline consultant based in Port Washington. "They [legacy carriers] have gotten their costs down to where they are at least within striking distance of the low-cost carriers."
United officially came out of bankruptcy yesterday and Mann said it's likely to aggressively attempt to win back customers it has lost to JetBlue and other discounters.
Mann and other analysts also cited phase-in costs to JetBlue of a new type of aircraft -- the Embraer 190 short- to medium-range jet -- as affecting the carrier's bottom line. "Expenses were crushingly higher than expected," Mann said.
The company's shares, traded on the NASDAQ, dropped 14 percent or $1.86 yesterday to close at $11.18, a new 52-week low.
Consultant Stuart Klaskin said that despite setbacks, the outlook for the carrier is good. "They're going to be around for a very long time," said Klaskin, who is based in Florida. "They have an extremely astute management team and anyone who tells you the sky is falling for them doesn't have a clue what they're talking about."
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JetBlue in the red
Discount carrier posts loss, says it won’t make money this year as fuel costs, ‘old’ airlines cut profits
BY TOM INCANTALUPO, Newsday
STAFF WRITER
February 1, 2006, 10:51 PM EST
Reality has set in for JetBlue Airways.
The Forest Hills-based carrier yesterday posted a wider than expected loss for last year's fourth quarter and said it doesn't expect to make a profit this year, either.
The bad news from what has been an industry success story may soon affect the airline's passengers: The company said it is considering raising fares as it deals with spiraling fuel costs and increased competition.
"We are very disappointed in our performance this quarter as we continued to feel the effects of record-high fuel prices and a tough revenue environment, compounded by the impact of Hurricane Wilma and the residual effects of Hurricanes Katrina and Rita," David Neeleman, JetBlue's chairman, chief executive and founder said in a statement.
Neeleman said in a telephone conference with analysts that he planned to raise fares this year. "Our customers will pay us more to fly on JetBlue," he said. "We need to ask for it."
The $42.4 million loss for last year's final quarter was the first since the low-cost, low-fare carrier began offering shares to the public in 2002. Fuel costs were up 90 percent in the quarter over a year earlier.
The loss also illustrates, analysts said, that JetBlue's low-cost advantage over its larger competitors has diminished, as older, "legacy" carriers such as United, American and Delta extract wage and work rule concessions from their own workers and, in the case of United and Delta, use Chapter 11 bankruptcies to further reduce costs and become more competitive.
"We see a situation now where the window of opportunity has, to a large degree, closed," said Robert Mann, a private airline consultant based in Port Washington. "They [legacy carriers] have gotten their costs down to where they are at least within striking distance of the low-cost carriers."
United officially came out of bankruptcy yesterday and Mann said it's likely to aggressively attempt to win back customers it has lost to JetBlue and other discounters.
Mann and other analysts also cited phase-in costs to JetBlue of a new type of aircraft -- the Embraer 190 short- to medium-range jet -- as affecting the carrier's bottom line. "Expenses were crushingly higher than expected," Mann said.
The company's shares, traded on the NASDAQ, dropped 14 percent or $1.86 yesterday to close at $11.18, a new 52-week low.
Consultant Stuart Klaskin said that despite setbacks, the outlook for the carrier is good. "They're going to be around for a very long time," said Klaskin, who is based in Florida. "They have an extremely astute management team and anyone who tells you the sky is falling for them doesn't have a clue what they're talking about."
02-02-2006 | 03:12 AM
#2
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From: B-737NG preferably in first class with a glass of champagne and caviar
I have to tell you the balloon payments on the leases aren't going to help matters either. Lets not forget spares. Airbus is very smart in limiting the availability of spares for their disposable aircraft too.
Welcome to reality Jet Blue
Welcome to reality Jet Blue
02-02-2006 | 03:22 AM
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From: A320 PIC
02-02-2006 | 07:14 PM
#5
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Originally Posted by captjns
I have to tell you the balloon payments on the leases aren't going to help matters either. Lets not forget spares. Airbus is very smart in limiting the availability of spares for their disposable aircraft too.
Welcome to reality Jet Blue
Welcome to reality Jet Blue
02-02-2006 | 08:36 PM
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From: right here
Originally Posted by Blue Dude
What baloney.
If you were around 18-24 months ago, you might still have a copy of BluePrint (the employee magazine back when it was 'pilots only') that included the article from Dave and David that explained our aircraft financing. Ironically, the article was intended to disprove the rumor that we receive our aircraft for ‘free.’ If only the 'free airplane' rumor was true now!
Last edited by bluechunks; 02-02-2006 at 08:43 PM.
02-03-2006 | 05:53 AM
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Originally Posted by diamonddd
Relax. Everything will be alllllright. What is needed to fix us is two things:
1. We need to unionize.
2. We need a touch of cowbell.
1. We need to unionize.
2. We need a touch of cowbell.
I do agree with you about JAPA. (Jetblue Airways Pilots Association).
It is time.
02-03-2006 | 06:04 AM
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Originally Posted by Double Digit
You relax.... I was being sarcastic to the clueless naysayers!
I do agree with you about JAPA. (Jetblue Airways Pilots Association).
It is time.
I do agree with you about JAPA. (Jetblue Airways Pilots Association).
It is time.
(There should be a "I knew you were kidding" font on here)
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