Airline Pilot Central Forums - Thoughts on JB's direction

This was passed on to me. I'm JUST the messenger. I have cut some of the names to protect the parties involved. Thoughts folks ?

Dear Mr. XXXXX;
When Eric XXXXXXXXX was at The Dallas Morning News, I wrote to him on more than one occasion about JetBlue's David Neeleman's checkered past. I don't know if Eric shared my emails with you.

If not, and even if he did, I find the latest developments at JetBlue not that surprising. The implosion of the airline is in it's embryonic stages. Nevertheless its in progress while being spun by Neeleman as a "restructuring". The media and The Street have for some reason accepted his claims without question.

A brief background: Did you know Neeleman was the CEO of two previous failed airlines: Hawaii Express and Morris Air?

Neeleman leased two former Western Airlines 291 passenger DC-10's, somehow managing to shoe-horn 59 more seats into both aircraft setting up a two-point route system between LAX & HNL at, if I remember, a $99 fare.

Initially the response was strong. The other carriers serving the route matched the fares even though the market had one of the lowest yields before Hawaii Express even started to fly.

As is the case with a small fleet airline, any disruption of service, an inevitable fact of life in the industry (weather diversions, aircraft mechanical difficulties, crew duty time legalities) soon made for some miserable experiences for their passengers caught in the middle of the disruptions.

Truth is they were getting what they paid for. It wasn't long before Hawaii Express had painted itself into a financial corner it could not overcome and within a year it went away.

In Salt Lake City, there was a large downtown travel agency called the Morris Travel Agency. Morris had claimed for years Western Airlines had been ripping off the Salt Lake City passengers. Even after Western established their main hub there, whenever possible Morris booked their clients on any carrier other than Western.

Morris, decided to start their own airline. Thus Morris Air was born with a small fleet of Boeing 737-300's hubbing out of Salt Lake City. Morris hired David Neeleman as the CEO/COO.

After Delta merged with Western, Morris faced a formable foe. Soon Morris ran into the same problems Hawaii Express had experienced. The airline was ripe for plucking.

Southwest bought the airline at a fire sale price. The prize for Southwest wasn't the Morris route system, or even the hub for that matter. Rather it was the 737-300's Southwest needed to feed their expansion, mostly elsewhere.

As is the case when an airline purchases a failing airline, what employees are retained are placed at the bottom of the seniority list similar to what happened when American bought TWA. Morris Air's employees met the same fate.

Neeleman left Southwest within six months after Morris Air was folded into Southwest.

With two failures under his belt, Neeleman learned somewhat from his mistakes. For lack of any other way to reason why or how he succeeded, Neeleman initiated yet another shell game, only this time in a high profile market, New York City.

It has always struck me as odd The Street isn't that interested in researching the track record of those who are so charming while talking the talk but later stumble while walking the walk.

Neeleman successfully sweet talked investors somehow securing over $100 million to finance the start of JetBlue while negotiating a real sweet heart deal with AirBus who was anxious to make a large sale in the United States with their A-320's.

The terms of the deal with Airbus were mostly ignored by the media. As it has been said, the devil is in the details, but the media wasn't interested in those for all they saw was a rapidly expanding airline, with a growing fleet of new jets, with cabin amenities never before offered on a so called "low cost" airline, at never before seen airfares.

I wrote and said to many that it was really easy to literally give away the seats when you're not having to pay that much for the airplanes that are moving those seats around.

Why did I say that? The financing for the A-320's were back loaded. By that I mean the first 5-year payments were well below what most airlines were paying for their new airplanes they either purchased or leased, but the balloon payment for those A-320's after the five years was going to be huge.

A few warnings and/or comments about this financial arrangement were printed in the past in Aviation Week & Space Technology but again ignored by other members of the media and by The Street .

What's now happening at JetBlue? They've sold their first five A-320's with plans to taper their expansion by selling another batch of used A-320's next year while placing on hold the 12- 2007 deliveries of new A-320's.

As an aside: Few of the over 200 airlines that have started up since airline deregulation were successful. They stumbled and failed when they left the niche responsible for their initial success.

A few examples: Western Pacific out of Colorado Springs was doing well for the airline attracted passengers from the south side of Denver who didn't want to make the long drive out to the new airport northeast of the city.

Then Western Pacific decided to leave Colorado Springs and try to compete against United and Frontier at Denver. They were gone in a year.

The United Express commuter airline that fed United Airlines' hub at Dulles decided to strike out on their own when United failed to make payments to the commuter carrier after United declared bankruptcy.

Renamed Independence Air the media lapped up the new carrier with it's substantial lower fares like a kitten does milk. The airline started out with their fleet of commuter planes while swiftly bursting out of their niche by also signing a contract with AirBus for A-320's for the longer range flights across the country.

Independence Air was gone in a year.

Now, JetBlue made the same niche mistake in their fifth year when they decided to expand with the new Embraer 190 using the airplane to open what the airline claimed were untapped markets. Pilots would be dual qualified in the two completely different aircraft.

When the 190's arrived late last year, JetBlue's problems were only compounded. Rising fuel costs, disruptions due to numerous hurricanes, the untapped markets for the 190 which quickly tapped out, and the rising level of competition (in spite of Delta abandoning Song) were part of the mix.

Now following consecutive quarters of losses, Neeleman has announced JetBlue is considering canceling any further deliveries of Embraer 190's, selling the ones they have now plus those deliveries of 190's they are committed to accept next year.

JetBlue is starting to fall apart. Another "now you see it, now you don't" Neeleman shell game is in progress. I hope this time you will be observant enough to see what's really happening at that carrier.

Captain Roger XXXXXXX