JetBlue EMB190 to rock rivals
07-12-2005, 11:54 AM
#1
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JetBlue EMB190 to rock rivals
JetBlue's new plane to rock rivals
NEW YORK (Reuters) -- JetBlue Airways Corp., which rocked its competitors by offering cut-rate flights out of New York City, is gearing up to introduce a jet that may again shake up the airline industry.
The 100-seat Embraer 190 regional jet will begin commercial flights in November, allowing JetBlue to expand into new, mid-sized markets from its New York hub and pair comfort with low-ticket prices, analysts say.
JetBlue will have seven of the Brazilian-made Embraers in service by the end of the year, and 43 by the end of 2007, giving the No. 2 U.S. airline by market value a second equipment type alongside its larger Airbus 320 jets.
"The 100-seater allows you economics where you can get some low fares out there," JetBlue founder and Chief Executive David Neeleman told Reuters in an interview last week. "They're going to be everywhere."
The airline may serve destinations like Raleigh and Greensboro in North Carolina and Richmond, Virginia -- cities now serviced by less-comfortable 50-seat regional jets with walk-up fares of up to $700, he said.
Neeleman said JetBlue would offer fares about one third of that price.
"You've got to be pretty excited about that," he said.
Flights linking New York and Boston are also a possibility, especially with the recent brake problems experienced by Amtrak's high-speed Acela trains, Neeleman said.
Analysts agree that the Embraer 190, for which JetBlue was the launch customer, could further boost the airline's advantage over established carriers -- expected to lose billions of dollars this year even as JetBlue maintains its unbroken profit streak.
Dodging the squeeze
"I think it's going to be a grand slam home run," Ray Neidl, an analyst for Calyon Securities said of the new planes' introduction.
He said they would help JetBlue service smaller markets where it might have trouble filling its existing 156-seat A320s and would lure away passengers uncomfortable in rivals' more cramped 50-seat regional jets.
The two-to-a-side seating on the planes may be particularly attractive to passengers leery of being squeezed into the middle seat in a three-abreast row, he said.
Like JetBlue's A320s, the planes will be equipped with leather seats and in-flight satellite TV and radio.
Still, Neidl rates JetBlue's stock an "add" rather than "buy" -- citing its elevated price.
Neeleman expects the airline to be able to turn a profit even if fuel prices surge beyond the records which have slammed other airlines. But energy costs have taken their toll. JetBlue will miss its target operating margin target in the "mid-teens" on a percentage basis, he acknowledged.
JetBlue shares have tumbled from their all-time high of $46.85 and now trade at a little over $20 a share. But the airline still trades at a forward price-to-earnings ratio of 66.8 times -- by far the U.S. airline industry's highest.
"The stock right now is a little rich, which is why we don't have our highest rating on it," Neidl said, adding that he still thought there was "value in the stock for the long-term investor."
Jim Corridore, an equity analyst from Standard & Poor's, was also cautious.
"In this current environment where the stock is already priced high, I don't see extra value here," he said.
At the same time, he agreed that the Embraer 190s are "a very smart idea, one which other airlines will look to emulate."
Copyright 2005 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.
NEW YORK (Reuters) -- JetBlue Airways Corp., which rocked its competitors by offering cut-rate flights out of New York City, is gearing up to introduce a jet that may again shake up the airline industry.
The 100-seat Embraer 190 regional jet will begin commercial flights in November, allowing JetBlue to expand into new, mid-sized markets from its New York hub and pair comfort with low-ticket prices, analysts say.
JetBlue will have seven of the Brazilian-made Embraers in service by the end of the year, and 43 by the end of 2007, giving the No. 2 U.S. airline by market value a second equipment type alongside its larger Airbus 320 jets.
"The 100-seater allows you economics where you can get some low fares out there," JetBlue founder and Chief Executive David Neeleman told Reuters in an interview last week. "They're going to be everywhere."
The airline may serve destinations like Raleigh and Greensboro in North Carolina and Richmond, Virginia -- cities now serviced by less-comfortable 50-seat regional jets with walk-up fares of up to $700, he said.
Neeleman said JetBlue would offer fares about one third of that price.
"You've got to be pretty excited about that," he said.
Flights linking New York and Boston are also a possibility, especially with the recent brake problems experienced by Amtrak's high-speed Acela trains, Neeleman said.
Analysts agree that the Embraer 190, for which JetBlue was the launch customer, could further boost the airline's advantage over established carriers -- expected to lose billions of dollars this year even as JetBlue maintains its unbroken profit streak.
Dodging the squeeze
"I think it's going to be a grand slam home run," Ray Neidl, an analyst for Calyon Securities said of the new planes' introduction.
He said they would help JetBlue service smaller markets where it might have trouble filling its existing 156-seat A320s and would lure away passengers uncomfortable in rivals' more cramped 50-seat regional jets.
The two-to-a-side seating on the planes may be particularly attractive to passengers leery of being squeezed into the middle seat in a three-abreast row, he said.
Like JetBlue's A320s, the planes will be equipped with leather seats and in-flight satellite TV and radio.
Still, Neidl rates JetBlue's stock an "add" rather than "buy" -- citing its elevated price.
Neeleman expects the airline to be able to turn a profit even if fuel prices surge beyond the records which have slammed other airlines. But energy costs have taken their toll. JetBlue will miss its target operating margin target in the "mid-teens" on a percentage basis, he acknowledged.
JetBlue shares have tumbled from their all-time high of $46.85 and now trade at a little over $20 a share. But the airline still trades at a forward price-to-earnings ratio of 66.8 times -- by far the U.S. airline industry's highest.
"The stock right now is a little rich, which is why we don't have our highest rating on it," Neidl said, adding that he still thought there was "value in the stock for the long-term investor."
Jim Corridore, an equity analyst from Standard & Poor's, was also cautious.
"In this current environment where the stock is already priced high, I don't see extra value here," he said.
At the same time, he agreed that the Embraer 190s are "a very smart idea, one which other airlines will look to emulate."
Copyright 2005 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.
02-05-2006, 12:21 PM
#3
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We are making a big mistake buying brazilian!
One thing is maintenacne in El Salvador, but buying from brazil!!!
The other mistake is we are paying those pilots way too much. We should pay out at 50% less than the current rate. I mean it is an RJ on steroids and not a real Jet Airliner. That way we can put Delta out of business. I hope they are making those guys pay for training. That would save JetBlue tons of money we could use for our next Blue Kool Aid bash this summer!
One thing is maintenacne in El Salvador, but buying from brazil!!!
The other mistake is we are paying those pilots way too much. We should pay out at 50% less than the current rate. I mean it is an RJ on steroids and not a real Jet Airliner. That way we can put Delta out of business. I hope they are making those guys pay for training. That would save JetBlue tons of money we could use for our next Blue Kool Aid bash this summer!
02-05-2006, 12:54 PM
#4
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,292
Actually, as a CRJ900 driver, I do see the big ERJ's as a factor. They have RJ+ capacity, but their cabin width and seat size are supposed to be like a narrow body. Short and Fat. The customers will undoubtedly prefer them to my long narrow tube (well at least it's long...).
Hopefully all you mainline boyz wil grab your scope by the b@lls and keep them away from the regionals...
Hopefully all you mainline boyz wil grab your scope by the b@lls and keep them away from the regionals...
02-05-2006, 01:16 PM
#5
New Hire
Joined APC: Feb 2006
Position: F.O. 777
Posts: 2
Correct me if I am wrong, but this seems like an out of date post. First off JBLU stock is selling at around 11.50 not "just under 20" and JBLU CEO says exactly now that gas prices are their problem as opposed to your article that says they dont expect gas prices to be a problem........IMHO JBLU is not going to make it under a mounting sea of debt. TV's or not
02-05-2006, 07:31 PM
#7
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Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,292
Originally Posted by ERJ135
I have a friend who is a regional supervisor out of BOS and he says the EMB 190 is have terrible on time performence right now.
02-06-2006, 02:48 PM
#8
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Joined APC: Dec 2005
Position: FO, looking left
Posts: 1,057
I am a big believer in the phrase "YOU GET WHAT YOU PAY FOR!. I remember when Jetblue first announced it would launched its JFK-BOS service, and I remember chringing at the 25 minute turns for a 100 passenger jet. Especially with New York and Boston winter and summer weather.
You pay less on Jetblue, you get shorter turn times. You run into a little weather hick up, and these delays domino throughout the system. You pay a little more on a legacy carrier, you get longer turns and more cushion if you run into weather (More reliable).
No wonder they are having a hard time with on time preformance.
You pay less on Jetblue, you get shorter turn times. You run into a little weather hick up, and these delays domino throughout the system. You pay a little more on a legacy carrier, you get longer turns and more cushion if you run into weather (More reliable).
No wonder they are having a hard time with on time preformance.
02-11-2006, 08:32 PM
#10
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Joined APC: Aug 2005
Position: Airbus
Posts: 634
Originally Posted by FlyByWire
The other mistake is we are paying those pilots way too much. We should pay out at 50% less than the current rate. I mean it is an RJ on steroids and not a real Jet Airliner. That way we can put Delta out of business.
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