First Inning: JBLU 0 DAL 1

Derg

Cap, Roci
Staff member
Associated Press
JetBlue to Exit Atlanta on Competition
Friday October 24, 12:55 pm ET
JetBlue Is Pulling Out of Atlanta After Intense Competition From Delta, AirTran


ATLANTA (AP) -- Discount airline JetBlue Airways is pulling out of Atlanta six months after it arrived, canceling flights to the West Coast because of intense competition from Delta Air Lines and AirTran Airways.

The setback was noted Friday by J.P. Morgan airline analyst Jamie Baker, who credited Delta with "taming one of its low fare competitors" and downgraded JetBlue's stock to "underweight."

Shares of JetBlue fell $5.94, or 9.6 percent, to $55.86 on the New York Stock Exchange in afternoon trading. Investors apparently considered JetBlue's fate in Atlanta a bad sign for discout carrier AirTran, too, as its stock price dropped $1.33, or 8 percent, to $14.47 on the NYSE.

JetBlue had entered the Atlanta market to challenge Delta' dominance between there and Long Beach, Calif., and the move roughly coincided with Delta's launch of its own discount airline, Song. It also prompted AirTran to add coast-to-coast flights.

JetBlue's Atlanta-Long Beach flight was the first nonstop service to the West Coast by a discount carrier, resulting in fares for advance-purchase flights that were as low as $176 round-trip at the height of the price war.

But on Thursday, JetBlue officials said they would pull out on Dec. 4, ending service to Long Beach and Oakland, Calif.

"We just thought it was a little crazy," JetBlue CEO David Neeleman said.

AirTran President Bob Fornaro said JetBlue, which has a hub at Kennedy Airport in New York, was at a disadvantage because it does not have an Atlanta hub feeding customers into its flights.
 

tonyw

Well-Known Member
Weren't they supposed to have eaten your breakfast, lunch, and dinner and then stole your after dessert, too?

I've got nothing against JetBlue and other LCCs. I just hate it when everyone says oh, the network carriers can't compete with them. I guess they can, huh?
 

pilot602

If specified, this will replace the title that
[ QUOTE ]
"We just thought it was a little crazy," JetBlue CEO David Neeleman said.

[/ QUOTE ]

I'm surprised he could get that out ... considering his foot is stuffed firmly in his mouth at this point.

I saw him speaking (on CSPAN) to Unniversity of Michigian and it was taped back at the first of the summer (I think it was Michigain ... in anycase it was his alma matter) and he was ripping DAL and "Song" every chance he got.

First, the give away "private" information and tick off a bunch of their own customers and now they hightail it out of 'Lanta. Kinda seems like they're losing some focus.
 

Derg

Cap, Roci
Staff member
The interesting thing is the fact that Neelman is a 'master of spin'.

In an article this afternoon, he was talking about how JBLU doesn't oversell and bump passengers the way the other carriers do.

But doesn't mention that JBLU tickets are now (were they always?) non-refundable/non-transferrable

Miss the flight, too bad, "Hootie and his Blowfish just finished their last set and aren't coming back onstage, see ya next year!"
 

Tim

New Member
I guess a new name for one of there jets will be Atlanta blues. I see there jet leave every morning and its never half full. Hard to many money charging an extremely cheap fare to the west coast. AirTran going west didnt help either.
 

Swabby

New Member
ATL might just be round ONE, BOS is next.

http://www.thestreet.com/_yahoo/markets/ericgillin/10122215.html

The fever for JetBlue (JBLU:Nasdaq - commentary - research) shares appears to have broken this week, with J.P. Morgan lowering its rating and investors sending shares down 16% over the last two days.

On Friday, J.P. Morgan analyst Jamie Baker downgraded JetBlue to underweight from neutral weight, telling investors that at 31 times his 2004 estimate, shares are too pricey. Baker also dropped his earnings estimates for the fourth quarter below current Wall Street consensus, citing increasing competition from network carriers such as Delta Air Lines (DAL:NYSE - commentary - research) and low-cost rival AirTran (AAI:NYSE - commentary - research).


A major factor in the J.P. Morgan downgrade was news this week that JetBlue will be leaving the Atlanta market just six months after it entered with great fanfare. Delta and AirTran vigorously defended market share in Atlanta, where both have hubs, by adding capacity and slashing fares. In an interview with the Atlanta Journal Constitution, JetBlue Chief Executive David Neeleman called the battle for Atlanta "crazy."

"While we applaud JetBlue for making a hasty exit from an inhospitable Atlanta market, its actions underscore a basic tenet of airlining: Dominant carriers defend hubs," said Baker, in his downgrade. "Following its rather unpleasant experience in Atlanta, we believe JetBlue's appetite to enter other airlines' hub markets has substantially lessened."

On Friday, JetBlue shares, which have doubled since their initial public offering 18 months ago, were down $4.43, or 7.2%, at $57.37. At this price, JetBlue now trades at 32.6 times projected 2004 earnings. In comparison, rival Southwest (LUV:NYSE - commentary - research), which was down 29 cents, or 1.6%, at $18.45, trades at 29.8 times 2004 earnings.

The Battle for Boston
Indeed, after the Atlanta battle, JetBlue may be more tentative about head-to-head competition at hubs down the road, limiting the markets where it can unleash its aggressive plans to expand over the next three years.

If other airlines' hub markets are factored out of JetBlue's near-term growth equation, Baker said, the low-cost carrier would eliminate 34% of the New York market from consideration. While there would be plenty of opportunities to add flights in markets that JetBlue already serves, in Baker's estimation, the company would have just $900 million in potential revenue from new markets out of JFK Airport in New York. (JetBlue flies only from JFK, which is its New York hub.)

With Delta winning the battle for Atlanta, JetBlue's plans to expand to Boston are even more important. At Logan Airport in Boston, Delta has 27% of the market, but no carriers call Logan a hub, making it an open territory for a new low-cost rival. With Delta building a new terminal in Boston and its low-cost Song unit adding flights, JetBlue's business model will face a big test.

"Boston offers hub-type demand -- annual revenue production between that of Atlanta and Houston -- without the market concentration and potential competition that accompanies Atlanta," said Baker. "This is the JetBlue business plan after all: the exploitation of large, unconcentrated markets. However, first-mover advantage belongs to Song at Boston."


Delta's victory may inspire other carriers to wage similar battles for key cities, even if that means operating flights at a loss in order to drive away competitors. For network carriers with much higher fixed costs, this strategy can be risky one, but it could be the only defense they have, barring a major change to the cost structure at network airlines.

High Valuation
To be sure, concerns about competition may prove to be isolated to Atlanta if Boston travelers take to JetBlue they way New Yorkers have -- but the company's high valuation will remain on people's radar. Over the last five months, analysts have begun to sour on JetBlue shares, worried that shares may have rallied too fast too soon.

In late May, the average analyst rating on JetBlue was 4.2, good enough to rate it above a buy, according to Bloomberg. As of Friday morning, however, JetBlue's average rating had slipped to 2.8, which is a hold rating. Only two analysts rate the company a buy, and rivals Southwest, AirTran and America West (AWA:NYSE - commentary - research) are now rated at 3.4 or better.

Because expectations and valuations are so lofty, investors have been growing skittish, dropping JetBlue shares 9% on Thursday after the company only topped expectations by a penny per share. With AMR (AMR:NYSE - commentary - research), parent of American Airlines, and Northwest Airlines (NWAC:Nasdaq - commentary - research) posting third-quarter profits, investors have begun warming to the network carriers in hopes that a powerful cyclical return to form will cause stocks to triple, as many have done so far this year.

"We believe that with modest revenue recovery and the potential for diminished corporate travel restraint in 2004, equity upside over the next 12 months could be superior at survival-challenged network carriers," said Baker.
 

PurduePilot

New Member
I don't think they'll be too quick to pull out of BOS. In fact, they just announced that they are going to add a BOS to LGB flight. JetBlue does have a really good agreement with MassPort, although I am unaware of any of the specifics. For that reason alone, I doubt they'll be leaving BOS anytime soon.

Another thing I don't understand is the viseral hatred a lot of people have for JetBlue. Nowhere else, and against no other carrier, is this hatred more felt than against B6. A lot of people really and truely want this airline to fail. I don't get it.
 

pilot602

If specified, this will replace the title that
I don't want to seem them fail. I don't want to see any airline fail. But when a CEO goes around talking trash about the "mainline dinosaurs" and how his company is better, fast, cooler, hipper, etc. - then gets his @$$ handed to him by the very airline he was trashing as outmoded and a "dying breed" I find it ironic, funny, ammusing, justifiable, etc.

The lesson? Keep your mouth shut and let your actions/service/products speak for you.


The other lesson? Don't count the mainlines out just yet. Everyone is so quick to claim SW, B6, AirTran etc is the future - well I dunno.



It also doesn't help that pilots their work on a 5yr renewable contract and unless I'm mistaken are among some of the lowest paid Airbus pilots in the industry. What kind of BS is that sh*t?
 

MQAAord

Scheherazade
Staff member
I don't understand why so many people call the established mainline carriers dinosaurs and other antique terms, as though being a company that's been around for 70 years is a bad thing!
 

PurduePilot

New Member
[ QUOTE ]
It also doesn't help that pilots there work on a 5yr renewable contract and unless I'm mistaken are among some of the lowest paid Airbus pilots in the industry. What kind of BS is that sh*t?

[/ QUOTE ]

Unless I'm mistaken, this contract in automatically renewable unless the pilot turns it down. There is a mechanism in place that allows management to decide not to renew this contract but there are safeguards.

The motive for the 5-year renewable contract is simple. It's to give a pilot the option of quitting, without penality, if (s)he feels that they don't like flying for JetBlue. If you've been laid off from your previous airline, JetBlue doesn't make you give up your seniority number. If you decide to go back to your old company if you're recalled, there is no penality to not exercise your remaining years on your contract.

Regarding pay... I think their Captains earn around $118,000 and then get stock options and profit sharing. The profit sharing brought in additional $20,000 per pilot (don't quote me here), so I don't think that's half bad. JetBlue is averaging around 4-5 years for Captain upgrades at the moment.
 

A320_DUDE

Well-Known Member
Ok Slow down everybody.......JBlu did not get its assed kicked in ATL(nor did David say we were gonna kick anyone's ass in ATL).

The offical reasoning for the pullout is beacause we are going in BOS and will need the LGB slots(and airplanes) for the transcons. ATL will reappear back on the schedule once the 190s are here.

The pilots do earn about 120k a year(not bad!). They also get profitsharing(15.5% last year
) and stock options. In return they get the quickest upgrades in the industry(about 2 years.)

As for the whole thing about people wanting JBlu to fail....they can wish all they want,we're here for the longhaul. We have and will continue to change the airline industry and this JBlu employee is proud as hell to be apart of this airline.

So Doug,go tell Leo....we'll be back!
 

John_Jones

New Member
[ QUOTE ]
The pilots do earn about 120k a year(not bad!).

[/ QUOTE ]
I thought I read some where that the most senior pilot at JetBlue only makes 96k a year...Anyone else read that
 

Derg

Cap, Roci
Staff member
[ QUOTE ]

So Doug,go tell Leo....we'll be back!

[/ QUOTE ]

And we'll be waiting!
You know it!
 

A320_DUDE

Well-Known Member
[/ QUOTE ]
I thought I read some where that the most senior pilot at JetBlue only makes 96k a year...Anyone else read that

[/ QUOTE ]

They got raises at the start of the year. That the good thing about not having a union here.....none of that "a contract is a contract" crap here. Mgmt thought the pilots deserved a raise and gave it to them.

And before anyone starts saying I drink "blue kood aid"...there are some things around here that I don't like....for example the push to get an exemption for the 8 in 24 rule....no way would I be doing transcontinental turns!
 

PurduePilot

New Member
[ QUOTE ]
Yup....Customer Service Crew/JFK.

[/ QUOTE ]

737 Dude: I'm going to pass my resume around to JetBlue when they open their BOS operations on January 7 for that exact position. I have a few questions regarding the CSA job. I would appreciate it if you took the time to answer them.

How many times do you have to "throw bags" or marshall aircraft?

Since the job is full time, do I get days off or do those come off my sick/vacation days?

Thanks!

P.S. To everyone else, sorry for hijacking the thread!
 

Swabby

New Member
Airlines are grounded, but gold valued

By Jenny Spitz, CBS.MarketWatch.com
Last Update: 5:01 PM ET Oct. 24, 2003

SAN FRANCISCO (CBS.MW) - A downgrade for JetBlue and cautious comments from AMR contributed to airline stocks losing altitude with investors this week.

The Amex Airline Index (XX:$XAL: news, chart, profile) fell 5 percent for the week. On Friday, J.P. Morgan downgraded JetBlue (JBLU: news, chart, profile) to "underweight" from "neutral" citing valuation and pricing pressure from Delta Air Line's (DAL: news, chart, profile) offshoot airline Song.
 

Jack

Well-Known Member
[ QUOTE ]
Many have tried and once again many have failed to top the mighty Widget (Delta)

[/ QUOTE ]


You're right, however.......
"The Widget's" own management will do them in long before any outside airline, as Leo & Company wage their war against their best customers. We continue to leave in droves.
 
Top