NEW YORK -- Memories of the Valentine's Day ice storm that grounded more than a thousand JetBlue flights and tens of thousands of passengers didn't stop Suzanne Dohm from flying the airline.
"One incident like that is not going to turn me off. Those were extraordinary circumstances," said Dohm, of New York, while waiting for a JetBlue flight at New York's John F. Kennedy International Airport. "I know what it was like that day. It was horrible."
Customers may be willing to forgive the airline that offers free snacks and DirecTV at every seat, but investors have not: Shares of JetBlue Airways Corp. have been on a long slide and now trade for little more than half their January peak.
One big concern is that JetBlue has been forced to scale back its growth plans as it faces new competition from startup Virgin America and other carriers. Wall Street analysts say the seven-year-old carrier's high debt load, its chronically congested JFK hub and reliance on cutthroat domestic routes, are crimping profits and leave it vulnerable to a takeover.
Indeed, JetBlue's revenues per available seat mile have grown only 9.4 percent over the last five years, compared with growth rates of 23.5 percent at Southwest Airlines Co. and 28.6 percent at AMR Corp., which operates American Airlines. Per-seat costs, meanwhile, have jumped 29.4 percent at JetBlue, compared with increases of 20.7 percent at Southwest and 3.3 percent at AMR.
Fuel expenses, which make up nearly a quarter of airline costs, have risen sharply in recent years. Labor expenses have also increased.
JetBlue's new management team knows that boosting the airline's financial performance is imperative. They also have no choice but to keep their focus on operational issues. Another systemwide misstep could be fatal.
JetBlue made headlines in February when an ice storm that socked the Northeast collided head on with the carrier's policy of not canceling flights ahead of bad weather. JFK was particularly hard- hit as planes continued to arrive but none were allowed to leave. Thousands of people were trapped on planes for hours or stranded in terminals for days.
"We gridlocked ourselves," said Dave Barger -- named chief executive in May when JetBlue's board asked founder David Neeleman to step down.
Neeleman, who remains chairman, was criticized for spending more time apologizing than fixing problems. JetBlue didn't fly a full schedule for days.
Customers continue to be loyal. JetBlue topped consumer surveys by J.D. Power and Associates and Consumer Reports conducted since the February storm. "They don't treat you like you're an idiot or just a piece of cattle," Dohm said.
JetBlue earned $21 million, or 11 cents a share, in the second quarter, when it filled 83.5 percent of its seats. That fell a penny short of analysts' expectations.
JetBlue's struggles have many wondering whether it's an acquisition candidate, speculation fueled by a June Goldman Sachs research note on Delta Air Lines Inc.
Delta management "seemed eager to discuss the strategic logic of a JetBlue-Delta combination," Goldman analysts wrote after a meeting with top Delta executives. "We understand this was not the first time (Delta) articulated an interest in JetBlue."
A Delta spokeswoman declined to comment on what she called "rumors and speculation."
"Haven't been approached," Barger said when asked about the report.
JetBlue's reduced growth rate is part of Barger's plan to "calm" the airline's once frantic expansion pace. Last month, Barger cut aircraft purchase plans by 26 percent over the next six years and said JetBlue will expand to only 2 to 4 new cities a year, down from as many as 16.
However, JetBlue is not about to stop growing completely. Even with the cutbacks, the company will add 106 planes by 2012. After that, JetBlue's pace of growth will accelerate: Barger plans nearly to double previous aircraft acquisition plans between 2013 and 2015.
