JetBlue announces quarterly results (Crewmembers)

[khysanth]

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

This message was delivered to all JetBlue crewmembers this morning.

And here is a link to the official press-release.

[B767Driver]

Where do you find ways to cut when you're already the lowest cost provider? Did the tone of the letter sound like they were justifying future actions to grumbling crews?

That is a pretty sizable loss for them...$42M.


Anyway...East coast capacity reductions should be good for everyone.

[Tim]

So they are having to pay the bills now

[RABIRZA69]

the tone of the letter is something to the tune of... hey im sure glad i cashed out 10m in options last month, and also along the lines of, oops guess it didnt work this time.. Our load factor is consistently in the %90 range there should be no reason we are not making money.. oh yeah wait... we only charged $69.00 for your JFK-FLL trip.. now it makes sense.

They're starting with a CQFO program (capt qualified first officer) which nobody is happy about.. Upgrades have been pushed back to Jan 07 and the 70 hr guarentee is gonna be just that..... I see a union walking in there within a year...


-Rabbi

[RABIRZA69]

This is an e-mail from the VP of flight ops and CP

Dear JetBlue Pilots,

Today, on our quarterly earnings call, we announced a significant change to our fleet plan for the next year. I encourage each of you to listen to the call, read David and Dave’s Bluenote and attend upcoming Pocket Sessions, to learn more about the business decisions associated with the sale of 2-5 aircraft within the next year and the slowing of deliveries. Please also take the time to review the other steps we are taking on the revenue and cost side, as a corporation, in order to return to profitability.

The moves are smart and they are nimble – reflective of our top leaders, who understand that economic models and economies change. Those who adapt in business can thrive. We plan on doing just that! By ensuring that we take delivery of the right number of aircraft based on projected fuel costs and revenues, we intend to prove that a company can make bold decisions to ensure our long-term success. And we can do it without cutting Crewmembers or affecting our cultural roots – we can adapt and be smart.

I wrote to you a month ago to tell you that we intended to tackle the challenges that confront us. Though the challenges are daunting, we are convinced that the moves that are being made will not only return us to profitability – they can ensure our long-term success as both a business and an airline.

How You Can Help: We have just launched a major new fuel initiative, aiming to save at least $10 million for the remainder of the year. Every department will be asked to join in, but I know that you, as the men and women with your hands on the thrust levers, will be the people who can lead us to success, as you did in the One Percent Fuel $ Challenge last year. Expect to hear more about the Fuel Initiative in the coming weeks.

In the near-term, the changes in the fleet will affect all of us. Based on projected aircraft and total block hours, here is what you can expect:

Hiring and Staffing:


· The last A320 First Officer classes will be held in May 2006. The last A320 Captain upgrade class is in June 2006, with most of the slots planned for BOS. No normal upgrades or hiring for the A320 can be expected until at least December 2006, or perhaps January of 2007.

· E190 deliveries will be unaffected. As a consequence, we will continue to upgrade the original 144 E190 Captains (all will be trained by September). We will continue to hire E190 Pilots commensurate with the number of aircraft arriving this year and next (there are 26 aircraft total for this year).

· We will likely launch a “Captain Qualified First Officer” program later this year, whereby First Officers can bid to be trained and qualified as Captains, and then be paid as Captains when they are assigned or requested to fly as Pilot-In-Command. Details will need to be worked out, but the training would likely occur in September.


· We will likely defer some Recurrent Training from August into September to compensate for the reduction in flying from the summer months to the fall.

· The number of IOE’s and OE’s on the A320 will drop dramatically after July.

· In September-October, we are strategically reducing our schedules in some markets, such as Transcons, based on input from Revenue and Schedule Planning.


· The normal lull in flying, when kids go back to school in September, will allow us to send our aircraft in for maintenance and needed modifications during September and October. This is a normal part our business, but we will try to be even more surgical on this than in previous years, working to preserve the profits from the summer months and being smart about the flying during “trough” months.

Flight Hours:

· Plan on normal bid divisors through June and then high bid divisors through July and August.

· September and October will see very low bid divisors on the A320, and, to some extent, on the E190. Regular line holders may see minimum and maximum numbers in the mid to low 70’s. Though we have explored ideas of R & R for our pilots, it seems to make sense for everybody to reduce the bid divisors (leaves, of course, will be granted if requested).

Bid Divisors will then go back up in the last two months of the year, as we once again enter the busy travel season.


Thank you!

[Doug Taylor]

Bid divisors? Blue Notes? Pocket Sessions?

What next, "Incremental Capacity Provider"?

[aloft]

"Additionally, we feel that as long as any of you is taking home a paycheck, there remains room for further cost savings. To that end, we are transforming the company into a new AmeriCorps-style all-volunteer[-labor] organization, appealing to recent college graduates who don't want a real job right away."

[TonyC]

Originally Posted by khysanth

This message was delivered to all JetBlue crewmembers this morning.

And here is a link to the official press-release.

Profound.







.

[Doug Taylor]

Paradigm shifty, TonyC! Gotta keep up.

[taildragger173]

mmmm...KoolAid

[alphaone]

The eye is in the beholder...

[WestIndian425]

Originally Posted by B767Driver

Where do you find ways to cut when you're already the lowest cost provider? Did the tone of the letter sound like they were justifying future actions to grumbling crews?

That is a pretty sizable loss for them...$42M.


Anyway...East coast capacity reductions should be good for everyone.

So I take it that not everyone is happy at B6? I was under the impression that the company morale (especially with the flight crews) is very good.

Neil

[khysanth]

Everyone I work with seems happy. I'm happy. I've never heard one of our pilots complain and I talk to several each day.

/shrug

As long as they don't touch my paycheck... :P

[pilot602]

Now there's a shocker.

Bitch too much and when your (as a pilot) individual five-year contract comes up guess what you just involuntarily volunteered to help "reduce cost."

When will companies learn you can't cut yourself into profitability. I see labor concessions and bankruptcy in JB's future.