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JetBlue Airways Corporation (JBLU)

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NASD \ Services \ Regional Airlines

JetBlue Airways Corporation (NASDAQ: JBLU) is the owner of JetBlue Airways, an American low-cost airlinewhose home airport is John F. Kennedy International Airport. JetBlue is a non-union airline. In 2001, JetBlue began a focus city operation at Long Beach in southern California near Los Angeles, and another at Logan International Airport, Boston in 2004. It also has substantial operations at Oakland International Airport, Fort Lauderdale-Hollywood International Airport, and at Washington Dulles International Airport. The airline mainly serves destinations in the United States, along with flights to the Caribbean, the Bahamas, Bermuda, and Mexico.^[1] JetBlue focuses on serving markets that historically have had high average fares.^[2]

1 Company Facts
2 Company Analysis
3 Recent developments
- 3.1 Snowstorm fiasco
4 News Feed
5 Risks
6 Research Links
7 Message Boards
8 Options
9 Notes

Today

Max

Funds w/ JBLU:	42
Rank:	310 / 351

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Company Facts

As of February 14, 2007, JBLU operated a total of 502 daily flights and served 50 destinations in 21 states, Puerto Rico, Mexico and the Caribbean, with 98% of its flights having as an origin or destination one of its four focus cities: New York, Los Angeles (Long Beach/Burbank), Boston or Washington, D.C. For the year ended December 31, 2006, JetBlue was the 8th largest passenger carrier in the United States based on revenue passenger miles.^[2]

JetBlue had a net losses of $1 million and $20 million for 2006 and 2005, respectively. it generated operating margins of 5.4% in 2006 and 2.8% in 2005, which were the third and second highest operating margins, respectfully, among all traditional network and low-cost major U.S. airlines. Although this was its second consecutive year of losses, which resulted primarily from continued record high fuel prices, during 2006 it introduced initiatives to reduce fuel consumption through more fuel efficient operating practices, renewed our focus on low-cost carrier spending habits and implemented more efficient staffing in all aspects of our business. It also modified its revenue management practices to price its inventory to achieve a higher yield while relinquishing some of its load factor (the percentage of aircraft seating capacity actually utilized). As a result, its load factor decreased 3.6 points to 81.6% during 2006, which was still higher than all but two of the major U.S. airlines, whose weighted average load factor was 79.2%. In 2006, Jet Blue attained the highest completion factor and fewest incidents of delayed, mishandled or lost bags among all major U.S. airlines. It is committed to operating its scheduled flights whenever possible; however, this commitment to customer service, along with operating at three of the most congested and delay-prone domestic airports, contributed to a 72.9% on-time performance in 2006, which was lower than all but one major U.S. airline.^[2]

As a result of its low costs, it is able to offer low fares designed to stimulate demand in its markets, which it thinks it demonstrated through its ability to increase passenger traffic in the markets we serve. The efficient scheduling and operation of its aircraft and low distribution costs contribute to its low operating costs. It has a flexible workforce that strives to offer high quality customer service, while at the same time operating efficiently. JetBlue beleives that it offers its customers a high quality product, including new aircraft, roomy leather seats, reliable operating performance, 36 channels of free LiveTV (a satellite TV service with programming provided by DIRECTV � ), movie selections from FOX InFlight at every seat and 100 channels of free XM Satellite Radio. It is also scheduled to add 80 new Airbus A320 aircraft and 78 Embraer 190 aircraft to its current operating fleet of 98 Airbus A320 and 23 Embraer 190 aircraft by the end of 2014.^[2]

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Company Analysis

JetBlue (JBLU) is a relative newcomer to the airline industry. The company was founded just seven years ago, beginning operations out of JFK Airport, where the majority of its flights are still based.^{[citation needed]} JetBlue marketed itself as taking an entirely new approach to the air travel, offering low fares, leather seats, sattelite DirectTV for every seat, and a friendly, unconventional and informal attitude.^{[citation needed]} JetBlue focused on distinguishing itself from its peers by creating a positive customer experience. The company was able to offer low prices by making unorthodox choices, like flying only one model of airplane, the Airbus A320 (making repairs, crew organization and gate configuration simpler), leaving out the bad food, lowering the turn-around time for airplanes between arrivals and departures, and negotiating favorable terms with an efficient workforce.^{[citation needed]} JetBlue also hedged its fuel purchases, rendering it less volatile to price fluctuations on its most costly expense.^{[citation needed]} Also, the company took a "point to point" approach rather than the traditional hub and spokes approach to configuring its flights.^{[citation needed]} JetBlue enjoyed early buzz and expanded its operations aggressively over the next six years, all the while maintaining an enviable balance sheet with relative low debt (given its aggressive growth) and positive cash flows during a particularly difficult market cycle.^{[citation needed]} Jetblue enjoyed a load factor (percentage of seats filled) significantly higher than the industry average.^{[citation needed]}

Despite squeezing out more profits per plane than its competitors, JetBlue is famous for keeping its customers satisfied. It bumps less passengers than any other airline in the industry (aside from a disastrous holiday weekend in February 2007) and consistently wins customer satisfaction awards.^{[citation needed]}

JetBlue hit a bump, along with the rest of the industry, when oil prices spiked in 2005 and 2006 in Katrina's wake.^{[citation needed]} In 2005, the company posted an annual loss for the first time in its history-- a loss that the company attributed to "inability to raise fares to fully recover the increased cost of record high fuel prices."^{[citation needed]} In 2000, it cost the company US$ 19 in fuel to fly the average customer; in 2006 that cost peaked at US$ 70 per passenger. The timing was unfortunate, since JetBlue was still pursuing an aggressive growth model and had just added a second type of airplane to its fleet, the Embraer 190.^{[citation needed]} CEO and founder David Neeleman reacted quickly, announcing that expansion plans would be reigned in and the company would take a careful approach toward trying to regain reliable profitability. Rather than keep fares low enough to maintain a high load factor, Neeleman decided to raise fares to reflect higher fuel prices.^{[citation needed]}

A relative lowering of energy prices in the later part of 2006, combined with a slower paced growth model, restored profitability to the company. Net income for the fourth quarter of 2006 was ten cents per diluted share, compared with a loss of 25 cents per share, a year earlier. The yield per passenger was up 25% year over year. Operating revenues were 38.9% higher in 2006 compared to 2005. JetBlue posted a loss for the whole of 2006, but just barely. It expects to regain positive earnings for the year in 2007.^{[citation needed]}

As of February 2007, the company shares standed well below their historical highs. The share price turned sharply down when the company announced that it expected to post losses for the first quarter of 2007 (despite its expectation of returning to the black for the year).^{[citation needed]}

The company recently announced that it will be removing six seats from its main vehicle, the A320, giving passengers a bit of extra room. Paradoxically, however, this change will actually increase revenue for the company because it can use one less flight attendant on each flight. The company expects to save about $30 million annually in salaries, benefits and associated costs, and lose only $23 million in revenue. So although the move will improve the passenger's experience, it will save the company money.^{[citation needed]}

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Recent developments

JBLU vs Airlines Index, Feb 15-21

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Snowstorm fiasco

In February 2007, 1,096 flights were canceled, and thousands of passengers, flight attendants and pilots were stranded because of inclement weather in the mid-west. CEO Neeleman responded to the crisis by appearing live in many TV outlets including CNN's American Morning, NBC's Today, Fox's Fox and Friends and CNBC's Squawk Box.^[3]^[4] JetBlue also sent letters to its customers and emails to those listed, as well as published full-page newspaper ads, apologizing and promising a 'Customers Bill of Rights.'^[5]^[6] CEO Neeleman also recorded a video introducing the 'Bill of Rights.'^[7]

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News Feed

07/25/08 1:07 pm	Sector Snap: Airlines shares rise (AP)
07/25/08 12:07 pm	JETBLUE AIRWAYS CORP Files SEC form 10-Q, Quarterly Report (EDGAR Online)
07/25/08 11:07 am	UPDATE - Frontier says Perseus to sponsor reorganization (at Reuters)
07/24/08 3:07 pm	More Moody's Downgrades for JetBlue, US Airways (at The Wall Street Journal Online)
07/24/08 12:07 pm	Sector Snap: Airlines shares drop (AP)
07/24/08 11:07 am	Stop Complaining About Airplane Food (at Forbes.com)
07/24/08 10:07 am	Southwest's Hedge Fund Pays Huge (at Motley Fool)
07/24/08 10:07 am	Moody's downgrades US Airways, JetBlue (AP)
07/23/08 8:07 pm	[$$] Time for a Refuel at United (at Barron's Online)
07/23/08 4:07 pm	UPDATE - Moody's cuts JetBlue, US Airways deeper into junk (at Reuters)

More News...

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Risks

Oil price volatility remains the biggest risk to JetBlue. Further, acts of terror-- especially those involving airports and airplanes-- provide a continued threat to the tourism industry. As JetBlue's fleet of airplanes ages, the cost of repairs will slowly creep higher. JetBlue's competitors have also gotten smarter about pricing seats in particularly "hot" markets, creating fare wars that benefit the consumer but erode profit margins.

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