A JetBlue Airways plane prepares to depart New York’s LaGuardia Airport.
Leslie Josephs | CNBC
Within the 24 years since JetBlue Airways‘ first flight, the New York-based airline has pushed the envelope for a carrier of its size. Now, with some veteran executive hires and cost-cutting, it’s attempting to get back to basics.
JetBlue was a pioneer in seat-back entertainment, free Wi-Fi, good snacks and a business-class cabin with lie-flat seats that debuted at lower prices than rivals’. More recently, it’s ventured across the Atlantic with flights to London, Paris, Amsterdam and Dublin. And, until a judge blocked the deal last month, it planned to purchase budget airline Spirit Airlines for $3.8 billion. (The carriers are appealing that call.)
While JetBlue has never lacked big ideas, it has come up short on profits, cost control and reliability. Those challenges will probably be top of mind for incoming CEO Joanna Geraghty when she takes the helm on Monday, succeeding Robin Hayes.
Geraghty, 51, has been at JetBlue for nearly twenty years, most recently as president and chief operating officer. By naming her CEO, the corporate is promoting an insider who knows the complexities of running an airline with quirks like New York’s congested airspace.
She’s the primary woman to guide a U.S. passenger airline.
Joanna Geraghty, president and chief operating officer of JetBlue Airways Corp., speaks during a panel session on the World Aviation Festival in London, U.K., on Thursday, Sept. 5, 2019.
Chris Ratcliffe | Bloomberg | Getty Images
“The important thing strategic challenge we have all the time faced is the right way to thrive as a small player in an industry dominated by 4 large airlines,” Geraghty said on a Jan. 30 earnings call, referring to American, Delta, United and Southwest, which control about 80% of the domestic market.
Last week, JetBlue said it has hired back the airline’s former chief business officer, Marty St. George, 59, as president. St. George left the carrier in 2019 after 13 years and most recently worked at Latam Airlines as chief business officer. St. George, who also had previous posts at United Airlines and US Airways, is well regarded by industry watchers for his experience and good relationship with front-line employees.
“Marty will probably be a much needed force of excellent for JetBlue for improving the airline’s operational focus and reliability,” said Henry Harteveldt, a former airline executive who runs the consulting firm Atmosphere Research Group. “Legroom doesn’t matter, snacks don’t matter in case your schedule cannot be trusted.”
JetBlue also promoted Warren Christie, who previously was the top of safety, security, fleet operations and airports, to take over Geraghty’s role as COO.
Back to basics
Geraghty, whom JetBlue declined to make available for an interview, can have to persuade investors and customers in regards to the company’s turnaround.
JetBlue’s last annual profit was in 2019, before the pandemic. Wall Street analysts aren’t forecasting it would turn a profit until 2025, while other carriers have already returned to profitability within the post-Covid travel surge. JetBlue’s shares are down 29% over the past 12 months, while the NYSE Arca Airline index is up nearly 6% over that period.
JetBlue ranked ninth in punctuality for U.S. airlines from January through November 2023, with lower than 67% of its flights arriving on time, in keeping with the Department of Transportation.
“As we operate in one of the vital complex and difficult airspaces, operational reliability is foundational to all of our priorities, helping us deliver a greater customer experience while also improving revenues with fewer refunds and disruption vouchers and higher costs as we mitigate time beyond regulation and premium pay,” Geraghty said on the earnings call.
The corporate plans to stipulate the $300 million in new revenue initiatives in additional detail during an investor day in May, and said last month that it’s on target to chop as much as $200 million in costs by the tip of the yr.
“We have been given the appetizer however the major course is not until investor day,” said Brett Snyder, president of Cranky Concierge travel assistance company and the Cranky Flier site. “They’re hiring the fitting people. I’m cautiously optimistic for the primary time in years.”
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JetBlue has recently announced some cost cuts: offering staff buyouts, deferring some capital expenditures on aircraft, trimming unprofitable routes, and reducing frequencies on some routes to prioritize planes for moneymakers like premium leisure travel and the regular business from customers visiting friends and relatives.
Snyder said that JetBlue might want to take an extended, hard have a look at its network to chop what is not working, and to make hard decisions, like putting more slack within the system to enhance the operation.
“Customers expect good service, and after they do not get it, they’re vocal about it,” Geraghty said in an interview with CNBC in 2019. She said the airline on the time was “exiting that awkward teenage stage and becoming adults.”
Spirit up within the air
JetBlue’s most aggressive expansion was its pursuit of budget carrier Spirit Airlines. It made a surprise offer for the carrier in April 2022 when Spirit had already agreed to merge with fellow discounter Frontier Airlines.
A JetBlue Airways plane sits on the tarmac on the Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images
Spirit shareholders eventually rejected the cash-and-stock deal with Frontier and voted in favor of JetBlue’s acquisition of Spirit, a deal JetBlue argued it needed to higher compete against rivals when aircraft and space are limited for growth within the U.S.
The Justice Department sued to dam the deal in March 2023, arguing it would scale back competition, and in January a federal judge sided with the DOJ.
JetBlue and Spirit said they’re appealing the ruling, though analysts are skeptical a few reversal. Investors have appeared relieved thus far that JetBlue would not be paying $3.8 billion for Spirit, which had a market capitalization of $726 million as of Friday’s close.
Spirit executives last week sought to calm fears in regards to the airline’s future potentially and not using a JetBlue takeover, whilst Spirit navigates rocky financial footing, partially as a result of a Pratt & Whitney engine recall that’s grounding dozens of its planes.
Geraghty last month said JetBlue disagrees with the judge’s ruling to dam the merger and added if the airlines don’t win their appeal, “We have to be prepared with our organic plan.”
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